What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-08-15 compared with 2022-05-16 · 143 added, 142 removed, 100 unchanged (74% of the section changed)

28 unchanged sentences

1 of this Quarterly Report on Form 10-Q.

in Delaware in May 2010, we are a medical device company focused on the design, development and commercialization of non-invasive glucose

monitoring devices for use by people with diabetes and pre-diabetics.

On July 15, 2010, we completed a reverse triangular merger with

Integrity Israel and Integrity Acquisition Corp.

Ltd., an Israeli corporation and a wholly owned subsidiary of ours, pursuant to which

Integrity Acquisition Corp.

merged with and into Integrity Israel and all of the stockholders and option holders of Integrity Israel

became entitled to receive shares and options in us in exchange for their shares and options in Integrity Israel (the “Reorganization”).

Following the Reorganization, the former equity holders of Integrity Israel were entitled to the same proportional ownership in us as

they had in Integrity Israel prior to the Reorganization.

As a result of the Reorganization, Integrity Israel became a wholly owned subsidiary

We operate primarily through Integrity Israel.

are a medical device company focused on the design, development and commercialization of non-invasive glucose monitoring devices for

use by people with diabetes.

Integrity Israel was founded in 2001 with a mission to develop, produce and market non-invasive glucose

monitors for home use by diabetics.

We have developed a non-invasive blood glucose monitor, GlucoTrack®, which is designed to help

people with diabetes obtain blood glucose level readings without the pain, inconvenience, cost and difficulty of conventional (invasive)

spot finger stick devices.

Our first generation product, GlucoTrack® 1.0 utilizes a patented combination of ultrasound, electromagnetic

were incorporated in Delaware in May 2010.

On July 15, 2010, we completed a reverse triangular merger with Integrity Israel and Integrity

Acquisition Corp.

Ltd., an Israeli corporation and a wholly owned subsidiary of ours, pursuant to which Integrity Acquisition Corp.

merged with and into Integrity Israel and all of the stockholders and option holders of Integrity Israel became entitled to receive shares

and options in us in exchange for their shares and options in Integrity Israel (the “Reorganization”).

Following the Reorganization,

the former equity holders of Integrity Israel were entitled to the same proportional ownership in us as they had in Integrity Israel prior

to the Reorganization.

As a result of the Reorganization, Integrity Israel became a wholly owned subsidiary of ours.

We operate primarily

through Integrity Israel.

a medical device company focused on the design, development and commercialization of innovative technologies for use by people with diabetes

and prediabetes.

Our first product focus is GlucoTrack®, a non-invasive blood glucose monitor designed to help people with diabetes

and prediabetes obtain blood glucose level readings without the pain, inconvenience, cost and difficulty of conventional (invasive) spot

finger stick devices.

Our first-generation device, GlucoTrack® 1.0 utilized a patented combination of ultrasound, electromagnetic

and thermal technologies to obtain blood glucose measurements in less than one minute via a small sensor that is clipped onto one’s

earlobe and connected to a small, handheld control and display unit, all without drawing blood.

Our next generation product, GlucoTrack®

2.0 which is currently under development, utilizes substantially identical underlying sensor technology, and is expected to be a completely

wireless sensor to be clipped on the earlobe.

GlucoTrack eliminates the handheld unit and will transmit results directly to a user’s

development, recruiting and organizational health have been a critical focus of the Company.

A number of high-quality individuals have

joined the Company, each of whom bring extensive experience in their respective fields.

Goode PhD, who has a decorated career

developing innovative medical technologies, including at DexCom and MiniMed and was a member of the Board of Directors of the Company,

was appointed as President and Chief Operating Officer.

In addition, James P.

Thrower PhD, a seasoned executive formerly of Sterling

Medical Devices, Mindray DS USA and DexCom, Inc.

joined as Vice President of Engineering.

Malavé, formerly of Insulet

Corp, Medtronic and MiniMed has joined as an independent board member.

Several highly talented and accomplished executives joined the

Company as senior advisors to the Board.

These include Yair Briman, the former CEO of Philips Healthcare Informatics, Daniel McCaffrey

MBA MA, a world-renowned behavioral scientist and digital health expert currently VP of Digital Health and Software at OMRON Healthcare,

GlucoTrack® 1.0, which received CE

Mark approval, underwent a limited release beta test in Europe and the Middle East.

The Company is now focused on the development of its

next generation non-invasive glucose monitor, GlucoTrack® 2.0.

2.0 utilizes a different and significantly simplified and less costly sensor technology than our 1.0 technology.

We are designing a form

factor that will shed the wired handheld unit from the GlucoTrack 1.0 design to be a completely wireless earclip with Bluetooth connectivity

for pairing directly with the user’s own mobile device (smartphone and/or tablet).

The earclip will be rechargeable and stored

in a small carrying case for storage and recharging when not in use, similar to wireless earbuds.

This facilitates the smallest earclip

design by reducing battery size requirements.

Eliminating the cabled main unit hardware is also expected to significantly lower our manufacturing

This will enable an attractive end-user price point while maintaining healthy margins for the company.

In addition, we believe

that this new sensor technology will lead to a substantially faster measurement than our 1.0 version.

early Q2 the Company completed lab testing of its 2.0 clinical prototype system.

This process included testing of multiple iterations

of electronics, ear clip, and mobile app with cloud-based software.

In addition, human factors testing of the mobile app has been completed

through simulated use in focus groups and by conducting a rigorous external design review for system architecture, stability, and cybersecurity.

The completion of bench testing and analyses of the clinical prototype system was followed by simulated use testing.

During this in-house

testing, the Company achieved better than expected accuracy and performance.

Initial data collected indicates that the GlucoTrack® 2.0 system may

achieve an accuracy comparable to invasive Continuous Glucose Monitors (CGM’s) currently available in the market when conducting

the upcoming first in-human clinical study.

Company has recently received Ethics Committee and clinical center approvals to conduct its first in-human study at the Rabin Medical

Center in Israel.

The initial results from this study will drive a follow-up multi-center study in the United States, led by Dr.

Chair of the Company’s Scientific Advisory Board and Medical Director of the Diabetes Research Institute of Mills-Peninsula Medical

study is intended to be a precursor to the eventual pivotal trial for FDA clearance.

The Company aims to begin its first

in-human study in Israel in Q3 and in U.S.

centers in Q4.

are also developing a wireless mobile platform that will support capturing anonymized data that can leverage novel machine learning (AI)

and data analytic techniques to facilitate device iterations and glucose sensing accuracy improvements.

In addition, mobile device pairing

will facilitate data transfer to electronic medical records (EMRs) used by managing physicians to effectively treat their patients.

this data can provide a potential revenue stream for valuable T2DM and pre-T2DM de-identified patient data that can be used by third-party

organizations such as pharma, insurance, and others.

historically the Company has operated out of its Israel location, the Company is now transitioning all operations and development to

the United States.

A number of high-quality individuals have joined the Company, each of whom bring extensive experience in their respective

Goode PhD, who has a decorated career developing innovative medical technologies, including at DexCom and MiniMed and

was a member of the Board of Directors of the Company, has been appointed as President and Chief Executive Officer.

In addition, James

Thrower PhD, a seasoned executive formerly of Sterling Medical Devices, Mindray DS USA and DexCom, Inc.

joined as Vice President of

Malavé, formerly of Insulet Corp, Medtronic and MiniMed has joined as an independent board member.

highly talented and accomplished executives joined the Company as senior advisors to the Board.

These include Yair Briman, the former

CEO of Philips Healthcare Informatics, Daniel McCaffrey MBA MA, a world-renowned behavioral scientist and digital health expert currently

VP of Digital Health and Software at OMRON Healthcare, Inc.

and formerly at Samsung Health and Dexcom, Inc., Dr.

Alexander Raykhman PhD, a measurement and artificial intelligence expert and

Klonoff, world renowned endocrinologist and diabetes technology thought leader.

We intend to continue to invest in our talent

and to expand and strengthen all areas within the Company.

the Company performed a top-down analysis of the GlucoTrack 1.0 model to identify areas of potential enhancement, as it relates to the

platform, integrations, sensor technologies, accuracy as well as manufacturing costs.

The result of this comprehensive review is an accelerated

development plan for GlucoTrack 2.0.

GlucoTrack 2.0 will be a completely wireless and rechargeable earclip to be paired with a smartphone,

with more capabilities and features, increased accuracy, significantly greater margins for the Company and lower cost to the end-user

as compared to GlucoTrack 1.0.

previously reported, the Company made significant progress towards receiving insurance reimbursement in the Netherlands.

accelerated development plan for GlucoTrack 2.0, and all of the expected advantages over GlucoTrack 1.0, it became clear to the Company

that introducing GlucoTrack 2.0 rather than the GlucoTrack 1.0 would serve the diabetes market and the Company more effectively.

currently working with our European partners on the roadmap for distribution of GlucoTrack 2.0 when completed and ready to market.

In addition to the European markets, the Company is now focused on the U.S.

market as well, including building

go-to-market strategy and planning the required FDA clinical trials and field testing to support its entrance into the market.

The Company is currently in the process of identifying clinical sites in the U.S., interviewing Contract Research Organizations (CRO’s),

and forming its Scientific and Medical Advisory Boards.

We intend to build out a team to support the U.S.

activities while continuing

our technology development in our R&D facility located in Israel.

Recent Events

June 22, 2021, Luis J.

Malavé has been appointed to the Company’s Board of Directors.

Malavé brings more than

30 years of leadership experience in the MedTech industry, primarily in diabetes management, spanning all company stages, from private

startups to large-cap publicly listed companies.

He has extensive expertise in product development, operations, marketing, strategic

partnerships, and US FDA regulatory strategy.

October 2017, Mr.

Malavé has served as President of EOFLOW CO.

Ltd., a company listed on the Korea Stock Exchange that has developed

a wearable disposable insulin pump.

From October 2014 to June 2016, he was COO of Mikroscan Technologies.

Prior to that, Mr.

was the President and CEO of Palyon Medical, maker of an implantable drug-delivery system that spun out from German medical-technology

giant Fresenius SE.

Prior to Palyon, he spent nearly a decade at insulin pump maker Insulet Corp., including as its Senior Vice President

of Research, Development and Engineering, and as Chief Operating Officer.

He also held various senior positions at Medtronic and MiniMed,

overseeing product development of various diabetes management devices.

Malavé earned his Bachelor’s degree in Mathematics

and Computer Science from the University of Minnesota, a Master’s degree in Software Engineering from the University of St.

and an MBA from the University of Maryland.

Alexander Raykhman PhD,

a measurement and artificial intelligence expert and Dr.

Klonoff, world renowned endocrinologist and diabetes technology thought

We intend to continue to invest in our talent and to expand and strengthen all areas within the Company.

October 19, 2021, Paul V.

Goode was appointed as President and Chief Operating Officer of the Company, effective November 1, 2021 (“Effective

Goode was appointed as President and Chief Operating Officer of the Company, effective November 1, 2021

(“Effective Date”).

He has served as a member of Integrity’s Board of Directors since December 17, 2020.

Concurrent with his new appointment,

Goode will be stepping down from the Board.

In this role, Goode will lead the company’s operations, overseeing strategy, design,

manufacturing, business and product development and begin to build the U.S.

infrastructure in preparation for the U.S.

clinical trials

of GlucoTrack.

He will devote such time as necessary to perform his duties but shall be able to pursue other professional opportunities

at the same time.

His base salary shall be $175,000 per year, and he shall be entitled to a cash bonus of up to 20% of his annual base

salary as determined by the Company’s Compensation Committee and shall be granted options to purchase up to One and half Percent

(1.5%) of the fully diluted common stock, par value $0.001 per share, of the Company (“Common Stock”) as of the Effective

Date, with a per share exercise price equal to the greater of (A) $5.20 per share or (B) the closing price of a share of Common Stock

on the Effective Date, as reported by Bloomberg L.P., which shall vest in equal monthly installments over a three year period following

the Effective Date.

The bonus and equity incentives shall be subject to clawback rights if there is a misstatement of financials which

changes any metrics upon which a bonus or incentives are based and the clawback will be pro rata based upon the changes in the financials

with respect to the effect on any underlying metrics.

Concurrent with his new appointment, Mr.

Goode stepped down from the Board.

As of the filing of this Quarterly Report, Mr.

been appointed Chief Executive Officer.

connection with our application to list our shares of common stock on Nasdaq Capital Market (“NASDAQ”), on August 13,

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Shushan’s responsibilities.

connection with the Company’s previously announced plans to migrate certain aspects of the product development of GT 2.0 to the

United States, as well as in preparation for U.S.

clinical trials, on May 15, 2022 Erez Ben-Zvi, VP of Product in Israel, provided notice

of his resignation from the Company, to be effective June 26, 2022.

in connection with the Company’s previously announced plans to migrate certain aspects of product development to the United States,

as well as in preparation for U.S.

clinical trials, on May 11, 2022 Erez Ben-Zvi, VP of Product in Israel, provided notice of his resignation

from the Company, to be effective June 12, 2022.

summary of our significant accounting policies is included under Item 7 – Management’s Discussion and Analysis of Financial

16 unchanged sentences

and such differences could be material.

As applicable to the consolidated financial statements included elsewhere in this report, the most significant estimates

and assumptions relate to the going concern assumptions.

As applicable to the consolidated financial statements included elsewhere in this report, the

most significant estimates and assumptions relate to the going concern assumptions.

of Operations

following discussion of our operating results explains material changes in our results of operations for the three-month period ended

March 31, 2022 compared with the same period ended March 31, 2021.

The discussion should be read in conjunction with the financial statements

and related notes included elsewhere in this report.

Months ended March 31, 2022 compared to Three Months ended March 31, 2021

the three-month period ended March 31, 2022 and 2021, we had no revenues.

following discussion of our operating results explains material changes in our results of operations for the three and six months period

ended June 30, 2022 compared with the same period ended June 30, 2021.

The discussion should be read in conjunction with the financial

statements and related notes included elsewhere in this report.

Months ended June 30, 2022 compared to Three Months ended June 30, 2021

and development expenses

and development expenses were $460 thousand for the three-month period ended March 31, 2022, as compared to $309 thousand for the comparative

and development expenses were $469 thousand for the three-month period ended June 30, 2022, as compared to $321 thousand for the prior-year

The increase is primarily attributable to developing and validating our next generation product line.

and development expenses consist primarily of salaries and other personnel-related expenses, materials, clinical trials and other

We expect research and development expenses to increase in 2022 and beyond, primarily due to hiring additional personnel

and developing and validating our next generation product line, however, we may adjust or allocate the level of our research and

development expenses based on available financial resources and based on our commercial needs, including the FDA registration

process, specific requirements from customers, development of new GlucoTrack® models and others.

and administrative expenses

and administrative expenses were $654 thousand for the three-month period ended June 30, 2022, as compared to $552 thousand for the prior-year

The increase is primarily attributable to hiring of new and augmented personnel to move forward our business agenda.

and development expenses consist primarily of salaries and other personnel-related expenses, materials, clinical trials and other expenses.

We expect research and development expenses to increase in 2022 and beyond, primarily due to hiring additional personnel and developing

our next generation product line, however, we may adjust or allocate the level of our research and development expenses based on available

financial resources and based on our commercial needs, including the FDA registration process, specific requirements from customers,

development of new GlucoTrack® models and others.

Marketing expenses

expenses were $0 thousand for the three-month period ended March 31, 2022, as compared to $23 thousand for the comparative

and administrative expenses consist primarily of professional services, salaries, travel expenses and other related expenses for executive,

finance and administrative personnel, including stock-based compensation expenses.

Other general and administrative costs and expenses

include facility-related costs not otherwise included in research and development costs and expenses, and professional fees for legal

and accounting services.

income (expenses), net

income (expenses), net was approximately $(4) thousand for the three-month period ended June 30, 2022, as compared to financing income

of $20 thousand for the prior-year period.

The decrease in the financing income is mainly attributed

to the decrease in interest income resulting from the reduction in the company’s cash balance over the year.

loss was $1,127 thousand for the three-month period ended June 30, 2022, as compared to $853 thousand for the prior-year period.

increase in net loss is attributable primarily to the increase in our operating expenses, as described above.

Months ended June 30, 2022 compared to Six Months ended June 30, 2021

and development expenses

and development expenses were $929 thousand for the six-month period ended June 30, 2022, as compared to $630 thousand for the prior-year

The increase is primarily attributable to developing and validating our next generation product line.

and development expenses consist primarily of salaries and other personnel-related expenses, materials, clinical trials and other

We expect research and development expenses to increase in 2022 and beyond, primarily due to hiring additional personnel

and developing and validating our next generation product line, however, we may adjust or allocate the level of our research and

development expenses based on available financial resources and based on our commercial needs, including the FDA registration

process, specific requirements from customers, development of new GlucoTrack® models and others.

and marketing expenses

and marketing expenses were $0 thousand for the six-month period ended June 30, 2022, as compared to $23 thousand for the prior-year

The decrease is primarily attributable to the Company’s decision to reduce/stop its

Selling and marketing expenses until the completion of the development of the GlucoTrack® 2.0.

Marketing expenses during the

three-month period ended March 31, 2021, consisted in primarily of professional services, salaries, travel expenses and other related

General and administrative expenses

were $633 thousand for the three-month period ended March 31, 2022, as compared to $564 thousand for the comparative period.

and marketing expenses consisted primarily of professional services, salaries, travel expenses and other related expenses.

and administrative expenses

and administrative expenses were $1,287 thousand for the six-month period ended June 30, 2022, as compared to $1,116 thousand for the

prior-year period.

The increase is primarily attributable to hiring of new and augmented personnel to move forward our business agenda.

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and accounting services.

expenses, net

Financing expenses, net were

approximately $0 thousand for the three-month period ended March 31, 2022, as compared to $8 thousand for the comparative

The change is immaterial.

Net loss was $1,093 thousand

for the three-month period ended March 31, 2022, as compared to $904 thousand for the comparative period.

The Increase in net

loss is attributable primarily to hiring of new and augmented personnel to move forward our business agenda.

income (expenses), net

income (expenses), net was approximately $(4) thousand for the six-month period ended June 30, 2022, as compared to financing income

of $12 thousand for the prior-year period.

The decrease in the financing income is attributed to

the decrease in interest income resulting from the reduction in the company’s cash balance over the year.

loss was $2,220 thousand for the six-month period ended June 30, 2022, as compared to $1,757 thousand for the prior-year period.

increase in net loss is attributable primarily to the increase in our operating expenses, as described above.

Concern Uncertainty

of March 31, 2022, cash on hand was approximately $4.8 million.

of June 30, 2022, cash on hand was approximately $3.8 million.

The development and commercialization of non-invasive glucose monitoring

13 unchanged sentences

our operations.

Cash Used in Operating Activities for the Three-Month Periods Ended March 31, 2022 and March 31, 2021

cash used in operating activities was $1,265 thousand and $933 thousand for the three-month periods ended March 31, 2022 and 2021, respectively.

Cash Used in Operating Activities for the Six-Month Periods Ended June 30, 2022 and June 30, 2021

cash used in operating activities was $2,181 thousand and $1,902 thousand for the six-month periods ended June 30, 2022 and 2021, respectively.

Net cash used in operating activities primarily reflects the net loss for those periods of $2,220 thousand and $1,757 thousand, respectively.

Cash Used (provided ) in Investing Activities for the Six-Month Periods Ended June 30, 2022 and June 30, 2021

cash used (provided) in investing activities was $4 and $(3) thousand for the six-month periods ended June 30, 2022 and 2021, respectively,

and was used (provided) mostly to purchase and sale equipment.

Sheet Arrangements

of March 31, 2022, we did not have any off-balance sheet arrangements as defined in Item 303(a)(4) of Regulation S-K.

of June 30, 2022, we did not have any off-balance sheet arrangements as defined in Item 303(a)(4) of Regulation S-K .

Quantitative and Qualitative Disclosures About Market Risk.

1 unchanged sentence

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis