Item
2. 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. 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:
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the
impact of the COVID-19 pandemic on our manufacturing, sales, business plan and the global economy;
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negative
clinical trial results or lengthy product delays in key markets;
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our
ability to maintain compliance with the Nasdaq Capital Market listing standards;
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our
ability to generate revenues from our products and obtain and maintain regulatory approvals for our products;
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our
ability to successfully obtain, maintain and adequately protect our intellectual property rights;
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our
dependence on a single manufacturing facility and our ability to comply with stringent manufacturing quality standards;
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our
ability to increase production as necessary;
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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;
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market
acceptance of our products;
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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;
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an
inability to secure and maintain regulatory approvals for the sale of our products;
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intense
competition in our industry, with competitors having greater financial, technological, research and development, regulatory and clinical,
manufacturing, marketing and sales, distribution and personnel resources than we do;
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entry
of new competitors and products and potential technological obsolescence of our products;
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inability
to carry out research, development and commercialization plans;
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loss
of a key customer or supplier;
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technical
problems with our research and products and potential product liability claims;
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product
malfunctions;
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price
increases for supplies and components;
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adverse
economic conditions;
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insufficient
or inadequate reimbursement by governmental and other third-party payers for our products;
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adverse
federal, state and local government regulation in the United States, Europe, Israel and other foreign jurisdictions;
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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 volatility in certain
jurisdictions;
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the
escalation of hostilities in Israel, which could impair our ability to manufacture our products; and
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loss
or retirement of key executives and research scientists.
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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.
All
information in this Quarterly Report on Form 10-Q relating to shares or price per share reflects the 1-for-15 reverse stock split effected
by us on April 26, 2021.
Overview
We
are a medical device company focusing on the development and commercialization of our proprietary MicroNet™ stent platform technology
for the treatment of complex vascular and coronary disease. A stent is an expandable “scaffold-like” device, usually constructed
of a metallic material, that is inserted into an artery to expand the inside passage and improve blood flow. MicroNet, a micron mesh
sleeve, is wrapped over a stent to provide embolic protection in stenting procedures.
Our
CGuard™ carotid embolic prevention system (“CGuard EPS”) combines MicroNet and a self-expandable nitinol stent in a
single device for use in carotid artery applications. Our CGuard EPS received CE mark approval in the European Union in March 2013 and
was fully launched in Europe in September 2015. Subsequently, we launched CGuard EPS in Russia and certain countries in Latin America
and Asia, including India. In September 2020, we launched CGuard EPS in Brazil after receiving regulatory approval in July 2020 and,
as discussed below, on February 3, 2021, we executed a distribution agreement with Chinese partners for the purpose of expanding our
presence in China. Currently, we are seeking strategic partners for a potential launch of CGuard EPS in Japan.
On
September 8, 2020, we received approval from the U.S. Food and Drug Administration (“FDA”) of our Investigation Device Exemption
(“IDE”), thereby allowing us to proceed with a pivotal study of our CGuard™ Carotid Stent System, C-Guardians, for
prevention of stroke in patients in the United States. C-Guardians is a prospective, multicenter, single-arm, pivotal study to evaluate
the safety and efficacy of the CGuard™ Carotid Stent System when used to treat symptomatic and asymptomatic carotid artery stenosis
in patients undergoing carotid artery stenting. The trial will enroll approximately 315 subjects in a maximum of 40
study sites located in the United States and Europe. Study sites in Europe may contribute a maximum of approximately 50% of the
total enrollees. The primary endpoint of the study will be the composite of incidence of death (all-cause mortality), all stroke, and
myocardial infarction (DSMI) through 30-days post-index procedure, based on the clinical events committee (CEC) adjudication and ipsilateral
stroke from 31-365 day follow-up, based on Clinical Events Committee (CEC) adjudication.
On
July 22, 2021, we announced the initiation of enrollment and successful completion of the first cases of our C-Guardian trial of CGuard
EPS. The first patients, who were under the care of principal investigator, Chris Metzger, M.D., system chair of clinical research at
Ballard Health System in Eastern Tennessee, were successfully implanted with the CGuard EPS stent device. These are the first of 315
patients who are expected to be enrolled in the trial and receive CGuard EPS in the treatment of carotid artery stenosis in symptomatic
and asymptomatic patients undergoing carotid artery stenting.
Additionally,
we intend to continue to invest in current and future potential product and manufacturing enhancements for CGuard EPS that are expected
to reduce cost of goods and/or provide the best-in-class performing delivery system. In furtherance of our strategy that focuses on establishing
CGuard EPS as a viable alternative to vascular surgery, we are exploring adding new delivery systems and accessory solutions for procedural
protection to our portfolio.
We
consider the addressable market for our CGuard EPS to be individuals with diagnosed, symptomatic high-grade carotid artery stenosis (HGCS,
≥70% occlusion) for whom intervention is preferable to medical (drug) therapy. This group includes not only carotid artery stenting
patients but also individuals undergoing carotid endarterectomy, as the two approaches compete for the same patient population. Assuming
full penetration of the intervention caseload by CGuard EPS, we estimate that the addressable market for CGuard EPS was approximately
$1.0 billion in 2017 (source: Health Research International 2017 Results of Update Report on Global Carotid Stenting Procedures and Markets
by Major Geography and Addressable Markets).
Our
MGuard™ Prime™ embolic protection system (“MGuard Prime EPS”) is marketed for use in patients
with acute coronary syndromes, notably acute myocardial infarction (heart attack) and saphenous vein graft coronary interventions, or
bypass surgery. MGuard Prime EPS combines MicroNet with a bare-metal cobalt-chromium based stent. MGuard Prime EPS received CE mark approval
in the European Union in October 2010 for improving luminal diameter and providing embolic protection. However, as a result of a shift
in industry preferences away from bare-metal stents in favor of drug-eluting, or drug-coated, stents, in 2014 we decided to curtail further
development of this product in order to focus on the development of a drug-eluting stent product, MGuard DES™. Due to
limited resources, however, our efforts have been limited to testing drug-eluting stents manufactured by potential partners for compatibility
with MicroNet and seeking to incorporate MicroNet onto a drug-eluting stent manufactured by a potential partner. The FDA has clarified
that the primary mode of action for drug-eluting cardiovascular stents, which are regulated as combination products, is that of the device
component and has assigned the FDA Center for Devices and Radiological Health (CDRH) primary responsibility for premarket review and
regulation, providing some clarity about what to expect regarding the regulatory framework related to the development of MGuard DES™.
We
also intend to develop a pipeline of other products and additional applications by leveraging our MicroNet technology to new applications
to improve peripheral vascular and neurovascular procedures, such as the treatment of the superficial femoral artery disease, vascular
disease below the knee and neurovascular stenting to seal aneurysms in the brain.
Presently,
none of our products may be sold or marketed in the United States.
We
were organized in the State of Delaware on February 29, 2008.
Recent
Developments
Nasdaq
Listing
On
May 10, 2021, we announced that our 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 May 27,
2021, we announced that our warrants that previously traded on the NYSE American were approved for listing on Nasdaq, and such warrants
began trading on June 8, 2021. On July 7, 2021, our Series A warrants that previously traded under symbol “NSPRW” expired.
COVID-19
Developments
The
COVID-19 global pandemic has led governments and authorities around the globe to take various precautionary measures in order to limit
the spread of COVID-19, including government-imposed quarantines, lockdowns, and other public health safety measures. To date, the Company
has experienced a significant COVID-19 related impact on our financial condition and results of operations, which we primarily attribute
to the postponement of CGuard EPS procedures (non-emergency procedures), as hospitals have shifted resources to patients affected by
COVID-19. To the best of our knowledge, most European countries in which we operate reinstated non-emergency procedures. However, in
light of recent increases in COVID-19 cases in, Europe as well as Latin America, both territories in which we sell our products, we anticipate
that the continuation of the pandemic and related restrictions and safety measures will likely result in continued fluctuations in sales
of our products for the upcoming periods.
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, 2020. There have not been any material changes
to such critical accounting policies since December 31, 2020.
The
currency of the primary economic environment in which our operations are conducted is the U.S. dollar (“$” or “dollar”).
Contingencies
We
and our subsidiaries are involved in legal proceedings that arise from time to time in the ordinary course of business. We record accruals
for these types of contingencies to the extent that we conclude the occurrence of such contingencies is probable and that the related
liabilities are estimable. When accruing these costs, we recognize an accrual in the amount within a range of loss that is the best estimate
within the range. When no amount within the range is a better estimate than any other amount, we accrue for the minimum amount within
the range. Legal costs are expensed as incurred.
Results
of Operations
Three
months ended June 30, 2021 compared to the three months ended June 30, 2020
Revenues.
For the three months ended June 30, 2021, revenue increased by $725,000, or 231.6%, to $1,038,000, from $313,000 during the three months
ended June 30, 2020. This increase was predominantly driven by a 276.0% increase in sales volume of CGuard EPS from $271,000 during the
three months ended June 30, 2020, to $1,019,000 during the three months ended June 30, 2021. This sales increase was mainly due to the
fact that in the three months ended June 30, 2021, procedures with CGuard EPS, which are generally scheduled for non-emergency cases,
began to return to normal levels as compared to the three months ended June 30, 2020, when procedures with CGuard EPS were mostly postponed
as hospitals shifted resources to patients affected by COVID-19. This increase in sales of CGuard EPS was partially offset by a decrease
of 54.8% in sales of MGuard Prime EPS from $42,000 during the three months ended June 30, 2020, to $19,000 during the three months ended
June 30, 2021, largely driven by the predominant industry preferences favoring drug-eluting stents rather than bare metal stents such
as MGuard Prime EPS in ST-Elevation Myocardial Infarction (“STEMI”) patients.
With
respect to geographical regions, the increase in revenue was primarily attributable to a $677,000 increase in revenue from Europe (primarily
driven by a $697,000 increase of CGuard EPS sales for the reasons discussed in the paragraph above) as well as a $38,000 increase of
CGuard EPS revenue from sales made in Latin America.
Gross
Profit. For the three months ended June 30, 2021, gross profit (revenue less cost of revenues) increased by $382,000,
to $262,000, from a gross loss of $120,000 during the three months ended June 30, 2020. This increase in gross profit resulted from a
$237,000 increase in revenues less the related material and labor costs (as mentioned above), a decrease in write-offs of $144,000, which
were driven mainly by changes related to components supply issues and a decrease of $1,000 in miscellaneous expenses during the three
months ended June 30, 2021. Gross margin (gross profits as a percentage of revenue) increased to 25.2% during the three months ended
June 30, 2021 from (38.3)% during the three months ended June 30, 2020, driven mainly by the decrease in write-offs mentioned above.
Research
and Development Expenses. For the three months ended June 30, 2021, research and development expenses increased by 190.5%, or $846,000,
to $1,290,000, from $444,000 during the three months ended June 30, 2020. This increase resulted primarily from an increase of $437,000
in expenses related to the commencement of the C-Guardians FDA study, $297,000 in development expenses related to CGuard EPS accessory
solutions, an increase of $183,000 in compensation expenses primarily due to additional resources required to support various development
projects, offset, in part, by a decrease of $71,000 in miscellaneous expenses.
Selling
and Marketing Expenses. For the three months ended June 30, 2021, selling and marketing expenses increased by 68.7%, or $259,000,
to $636,000, from $377,000 during the three months ended June 30, 2020. This increase resulted primarily from an increase in compensation
expenses of $250,000 relating to increased activity associated with expansion of existing and new markets and an increase of $9,000 in
miscellaneous expenses.
General
and Administrative Expenses. For the three months ended June 30, 2021, general and administrative expenses increased by 18.0%, or
$271,000, to $1,776,000, from $1,505,000 during the three months ended June 30, 2020. This increase resulted primarily from an increase
in compensation expenses of $599,000. This was mainly due to an increase in salary expenses and related accruals of $327,000 primarily
related to temporary salary reductions during the three months ended June 30, 2020, that were implemented in response to the COVID-19
effect on revenues as well as additional headcount. In addition, compensation expenses increased due to an increase in $259,000 of share-based
compensation-related expenses following the expense recognition of grants made after June 30, 2020. In addition, we had an increase in
Directors’ and Officers’ Liability Insurance expenses of $108,000, due to increased premiums caused by recent trends in the
overall insurance industry. These increases were partially offset by a decrease of $400,000 due to expenses for a settlement agreement
with an underwriter of prior offerings which occurred in the three months ended June 30, 2020, and a decrease of $36,000 in miscellaneous
expenses.
Financial
Expenses (Income). For the three months ended June 30, 2021, financial expenses increased by 97.1%, or $33,000, to $67,000, from
$34,000 during the three months ended June 30, 2020. The increase in financial income primarily resulted from an increase of $29,000
in financial expenses related to changes in exchange rates and an increase of $4,000 in miscellaneous expenses.
Tax
Expenses. For the three months ended June 30, 2021, there was no change in our tax expenses as compared to the three months ended
March 31, 2020.
Net
Loss. Our net loss increased by $1,027,000, or 41.4%, to $3,507,000, for the three months ended June 30, 2021, from $2,480,000 during
the three months ended June 30, 2020. The increase in net loss resulted primarily from an increase of $1,376,000 in operating expenses
offset by an increase of $382,000 in gross profit.
Six
months ended June 30, 2021 compared to the six months ended June 30, 2020
Revenues.
For the six months ended June 30, 2021, revenue increased by $697,000, or 51.7%, to $2,044,000, from $1,347,000 during the six months
ended June 30, 2020. This increase was predominantly driven by a 60.0% increase in sales volume of CGuard EPS from $1,242,000 during
the six months ended June 30, 2020, to $1,987,000 during the six months ended June 30, 2021. This sales increase was mainly due to the
fact that in the six months ended June 30, 2021, procedures with CGuard EPS, which are generally scheduled for non-emergency procedures
began to return to normal levels as compared to the six months ended June 30, 2020, when procedures with CGuard EPS were postponed as
hospitals shifted resources to patients affected by COVID-19 beginning in February 2020. This increase in sales of CGuard EPS was partially
offset by a decrease of 45.7% in sales of MGuard Prime EPS from $105,000 during the six months ended June 30, 2020, to $57,000 during
the six months ended June 30, 2021, largely driven by the predominant industry preferences favoring drug-eluting stents rather than bare
metal stents such as MGuard Prime EPS in STEMI patients.
With
respect to geographical regions, the increase in revenue was primarily attributable to a $665,000 increase in revenue from sales made
in Europe (driven by a $702,000 increase of CGuard EPS sales, offset, in part, by a $37,000 decrease of MGuard Prime EPS sales for reasons
discussed in the paragraph above), as well as a $53,000 increase in CGuard EPS revenue from sales made in Latin America.
Gross
Profit. For the six months ended June 30, 2021, gross profit (revenue less cost of revenues) increased by 110.3%, or $193,000,
to $368,000, compared to a $175,000 for the same period in 2020. This increase in gross profit resulted from a $257,000 increase in
revenues less the related material and labor costs (as mentioned above). This increase was partially offset by an increase of
$64,000 in miscellaneous expenses. Gross margin (gross profits as a percentage of revenue) increased to 18.0% during the six months
ended June 30, 2021 from 13.0% during the six months ended June 30, 2020, driven by the reasons mentioned above.
Research
and Development Expenses. Research and Development Expenses. For the six months ended June 30, 2021, research and development
expenses increased by 120.2%, or $1,162,000, to $2,129,000, from $967,000 during the six months ended June 30, 2020. This increase resulted
primarily from an increase of $521,000 in development expenses related to CGuard EPS accessory solutions, $483,000 in expenses related
to the commencement of the C-Guardians FDA study, and an increase of $294,000 in compensation expenses, offset, in part, by a decrease
of $136,000 in miscellaneous expenses.
Selling
and Marketing Expenses. For the six months ended June 30, 2021, selling and marketing expenses increased by 34.3%, or $343,000, to
$1,344,000, from $1,001,000 during the six months ended June 30, 2020. This increase resulted primarily from an increase in compensation
expenses of $412,000 relating to increased activity associated with expansion of existing and new markets partially offset by a decrease
of $69,000 in miscellaneous expenses.
General
and Administrative Expenses. For the six months ended June 30, 2021, general and administrative expenses increased by 36.5%, or $975,000,
to $3,649,000, from $2,674,000 during the six months ended June 30, 2020. This increase resulted primarily from an increase in compensation
expenses of $1,033,000 mainly due to increases in salary expenses and related accruals of $524,000 primarily related to temporary salary
reductions during the six months ended June 30, 2020 that were implemented in response to the COVID-19 effect on revenues as well as
additional headcount. In addition, compensation expenses increased due to an increase in $469,000 of share-based compensation-related
expenses following the expense recognition of grants made after June 30, 2020. In addition, we had an increase in Directors’ and
Officers’ Liability insurance expenses of $226,000, due to increased premiums caused by recent trends in the overall insurance
industry and an increase in shareholder related expenses of $118,000 mainly due to a special shareholders meeting (which occurred in
2021, but not in 2020, during the first half of the fiscal year). These increases were partially offset by a decrease of $400,000 due
to expenses for a settlement agreement with an underwriter of prior offerings which occurred in the three months ended March 31, 2020
and a decrease of $2,000 in miscellaneous expenses.
Financial
Expenses (Income). For the six months ended June 30, 2021, financial income decreased by 55.6%, or $5,000, to $4,000 of financial
income, from $9,000 of financial income during the six months ended June 30, 2020. The decrease in financial income primarily resulted
from an increase of $19,000 in miscellaneous expenses, offset, in part, by an increase of $14,000 in financial income related to changes
in exchange rates.
Tax
Expenses. For the six months ended June 30, 2021, there was no material change in our tax expenses as compared to the six months
ended June 30, 2020.
Net
Loss. Our net loss increased by $2,292,000, or 51.4%, to $6,750,000, for the six months ended June 30, 2021, from $4,458,000 during
the six months ended June 30, 2020. The increase in net loss resulted primarily from an increase of $2,480,000 in operating expenses,
offset by an increase of $193,000 in gross profit.
Liquidity
and Capital Resources
As
of June 30, 2021, we have the ability to fund our planned operations for at least the next 12 months from issuance date of the financial
statement. However, we expect to continue incurring losses and negative cash flows from operations until our products (primarily CGuard™
EPS) reach commercial profitability. Therefore, in order to fund our operations until such time that we can generate substantial revenues,
we may need to raise additional funds.
On
July 28, 2020, we entered into a Sales Agreement with A.G.P. pursuant to which we were able to offer and sell, from time to time, at
our option, through or to A.G.P., up to an aggregate of approximately $9,300,000 of shares of our common stock (the “ATM Facility”).
On January 11, 2021, we increased the aggregate amount of our shares of common stock that may be sold under the Sales Agreement from
$9,300,000 to $10,382,954, and, as a result, utilized and sold the maximum amount allowable under the ATM Facility, which resulted in
an aggregate amount of $10,381,958.
On
February 3, 2021, we entered into a Distribution Agreement with three China-based partners and on the same day, we entered into an investment
transaction with QIDI, which included (i) a securities purchase agreement (“SPA”), pursuant to which QIDI agreed to invest
$900,000 in exchange for shares of our common stock at a purchase price of $10.062 per share, and (ii) an IRA, whereby QIDI was provided
certain customary registration rights, including a commitment by us to file a registration statement with the SEC on Form S-1 or Form
S-3 and have such registration statement become effective not later than 150 days following the closing of the transactions under the
SPA. The transaction closed on February 5, 2021.
On
February 8, 2021, we closed an underwritten public offering of 1,935,484 units, with each such unit being comprised of one share of our
common stock, par value $0.0001 per share, and one Series G Warrant to purchase one-half of one share of common stock. The offering price
to the public was $9.30 per unit. The Series G Warrants were immediately exercisable at a price of $10.23 per share, subject to adjustment
in certain circumstances, and expire five years from the date of issuance. We also granted the underwriter of the offering an option
to purchase an additional 290,322 shares of common stock and Series G Warrants to purchase 145,161 shares of common stock, which the
underwriter exercised in full. In connection with the offering, we granted to the underwriter a compensation warrant to purchase up to
111,290 shares of common stock with an exercise price of $10.23 per share and which are exercisable for five years from February 3, 2021,
the date of effectiveness of the registration statement filed in connection with the offering. Our net proceeds 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 estimated expenses associated with the offering, but excluding the proceeds, if any, from
the exercise of Series G Warrants sold in the offering.
Six
months ended June 30, 2021 compared to the six months ended June 30, 2020
General.
At June 30, 2021, we had cash and cash equivalents of $41,419,000, as compared to $12,645,000 as of December 31, 2020. 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 six months ended June 30, 2021, net cash used in our operating activities increased by $2,317,000 to $6,154,000, from $3,837,000
during the same period in 2020. The primary reason for the increase in cash used in our operating activities was an increase of $1,102,000
in payments for third party related expenses and for professional services (primarily due to the commencement of the C-Guardians study
and a settlement payment made to a former distributor) and an increase of $1,006,000 in compensation costs paid during the six months
ended June 30, 2021, from $3,006,000 in the six months ended June 30, 2020 to $4,012,000 during the same period in 2021 as well as a
decrease of $209,000 in payments received from customers, to $1,545,000 during the six months ended June 30, 2021, from $1,754,000 during
the same period in 2020.
Cash
used in our investing activities was $114,000 during the six months ended June 30, 2021, compared to $34,000 during the six months ended
June 30, 2020. The primary reasons for the increase in cash used by our investing activities were an increase of $80,000 in payments
made for purchase of property, plant and equipment to $80,000 during the six months ended June 30, 2021, from $0 during the same period
in 2020.
Cash
provided by financing activities for the six months June 30, 2021, was $35,069,000, compared to $12,237,000 during the same period in
2020. The principal sources of the cash provided by financing activities during the six months ended June 30, 2021 were our February
2021 public offering of common stock and warrants, exercise of Series F and Series G warrants, proceeds from an At-the-market offering
as well as proceeds from the issuance of shares to Chinese distributor that resulted in approximately $35,069,000 of aggregate net proceeds.
The principal sources of the cash provided by financing activities during the six months ended June 30, 2020 were our June 2020 public
offering of common stock, pre-funded warrants and warrants, the subsequent exercise of the pre-funded warrants sold in the offering,
as well as exercise of our Series F warrants and unit purchase options that resulted in approximately $12,237,000 of aggregate net proceeds.
As
of June 30, 2021, our current assets exceeded our current liabilities by a multiple of 11.9. Current assets increased by $28,583,000
during the period and current liabilities decreased by $26,000 during the period. As a result, our working capital increased by $28,609,000
to $40,243,000 as of June 30, 2021.
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 impact of the COVID-19 pandemic, cyclical nature of the ordering patterns of our distributors, timing of regulatory approvals, the
implementation of various phases of our clinical trials and manufacturing efficiencies due to the learning curve of utilizing new materials
and equipment. Our operating results could also be impacted by a weakening of the Euro and strengthening of the New Israeli Shekel, or
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. For a discussion of these and other risks that relate to our business, you
should carefully review the risks and uncertainties described under the heading “Part II – Item 1A. Risk Factors” and
elsewhere in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K for the year ended December 31, 2020, and those
described from time to time in our future reports filed with the Securities and Exchange Commission.
The
ultimate impact of the COVID-19 pandemic on the Company’s operations remains undetermined and will depend on future developments,
which are highly uncertain and cannot be predicted with confidence at this time, including the duration of the COVID-19 pandemic, new
information which may emerge concerning the severity of the COVID-19 pandemic, and any additional preventative and protective actions
that regulators, or the board or management of the Company, may determine are needed.
Contractual
Obligations and Commitments
During
the six months ended June 30, 2021, there were no material changes to our contractual obligations and commitments.