What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-05-12 compared with 2022-11-14 · 138 added, 186 removed, 82 unchanged (80% of the section changed)

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1 of this Quarterly Report on Form 10-Q.

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.

primarily through Integrity Israel.

are 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 obtain spot 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 approximately 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.

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.

In addition, following the recent acquisition of certain related

IP, the Company has commenced an R&D program to develop a long-term implantable glucose management technology to address the growing

Type 1 and insulin dependent Type 2 diabetes market.

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 clip with Bluetooth connectivity

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

The device will be pocket-sized and rechargeable,

facilitating easy and convenient portability.

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

Q2 of this year, 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 of multiple iterations, the Company achieved better than expected accuracy and performance.

Initial data collected indicates

that the Gen 2 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.

Further to that, the testing validated a dramatically faster speed

of measurement is possible, which will significantly improve the patient use experience.

The in-house testing also exposed some clip-based

human factors considerations that appear to impact consistent device performance.

Further improvements are being investigated to improve

device performance consistency prior to launching the first-in-human clinical study, which is expected to be conducted 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

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

Medical Center.

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

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 to this platform will facilitate data transfer to electronic medical records (EMRs) used by managing physicians to

effectively treat their patients.

Moreover, 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 has transitioned all operations and development to the

United States as of the end of Q3.

Remaining activities in Israel include accounting and as-needed contract resources to support the

first-in-human clinical trial.

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, has been appointed as President and Chief Executive 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

Mark Tapsak PhD, a medical research scientist, joined as Vice President of Sensor Technology, bringing over 25 years of

experience in the diabetes industry, including previous senior roles at DexCom and Medtronic, Inc.

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, Inc.

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

Alexander Raykhman PhD, a measurement

and artificial intelligence expert and Dr.

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

We are currently developing two products;

a non-invasive

glucose monitor for use by those with Type 2 diabetes and prediabetes, and an implantable continuous glucose monitor for those with Type

1 diabetes and insulin-dependent Type 2 diabetes.

Company was founded with a mission to develop GlucoTrack®, a noninvasive glucose monitoring device designed to help people with diabetes

and pre-diabetics obtain glucose level readings without the pain, inconvenience, cost and difficulty of conventional (invasive) spot finger

stick devices.

The first generation GlucoTrack (“GlucoTrack 1.0”), which successfully received CE Mark approval and ISO certifications,

utilized a combination of ultrasound, electromagnetic and thermal technologies to obtain glucose measurements in approximately 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 or interstitial fluid.

After a limited release beta test in Europe and the Middle East, the Company determined that it would focus

on developing its next generation non-invasive monitor (“GlucoTrack 2.0”), and we have since withdrawn our CE Mark and ISO

certifications for GlucoTrack 1.0.

are currently developing GlucoTrack 2.0.

The current clinical prototype utilizes ultrasound-only sensor technology, reduces the overall

cost and complexity of the device, and reduces the measurement time from approximately sixty seconds to less than two seconds.

testing has produced promising results, suggesting measurement accuracies could be relatively comparable with those of conventional,

already in-the-market CGM technologies.

We expect to begin our first-in-human (FIH) study in the second or third quarter of 2023.

Collecting data for sensor characterization and algorithm development will be the primary goals

of the FIH study.

The results of this study will also drive the development of the commercial version of the device, which is expected

to commence late in the fourth quarter of 2023.

the development of the commercial device version is complete, we intend to conduct a scaled down version of the FDA pivotal trial to

resolve any lingering device performance or human factors issues prior to executing the larger pivotal trial for FDA submission.

the acquisition of certain IP in the fourth quarter of 2022, we are also developing an implantable continuous glucose monitor for

use by Type 1 diabetes patients as well as insulin-dependent Type 2 patients.

Implant longevity is key to the success of such a device,

and we are currently in the feasibility phase to demonstrate the potential of a multi-year implant life.

We intend to complete the feasibility

study in the second quarter of 2023.

We believe our technology, if successful, has the potential to be more accurate, more convenient

and have a longer duration than other implantable glucose monitors that are either in the market or currently under development.

currently developing our own companion applications and a cloud-based solutions to offer an effective platform to provide real time, data

driven personalized tools to effectively help a user manage their diabetes, which will be utilized during the clinical trials.

to being a critical and effective management tool for the end user, we believe that third parties such as insurers, pharmaceutical companies

and advertisers would be willing to pay for the de-identified data that we will obtain through our platform, and that this is an opportunity

for us to develop an additional revenue source.

Senior Management team includes;

CEO and President, Paul V.

Goode PhD, who has a decorated career developing innovative medical technologies,

including at DexCom and MiniMed, James P.

Vice President of Engineering, a seasoned executive formerly of Sterling Medical Devices, Mindray DS USA and DexCom, Inc., and Mark Tapsak

PhD, Vice President of Sensor Technology, a medical research scientist who brings over 25 years of experience in the diabetes industry,

including previous senior roles at DexCom and Medtronic.

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

Alexander Raykhman PhD, a measurement and artificial intelligence

expert and Dr.

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.

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

Goode PhD 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, Mr.

He previously served as a member of the Company’s Board of Directors since December 17, 2020.

with his new appointment, Dr.

Goode stepped down from the Board.

As of the filing of this Quarterly Report, Mr.

been appointed Chief Executive Officer.

In December 2021, Mr.

Goode has been appointed Chief Executive Officer.

connection with our application to list our shares of common stock on Nasdaq Capital Market (“NASDAQ”), on August 13, 2021,

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Trading on NASDAQ commenced on

December 10, 2021, under its existing trading symbol, IGAP.

December 10, 2021, under the trading symbol IGAP.

March 14, 2022, we changed our name to GlucoTrack, Inc.

with Nasdaq and our trading symbol to GCTK.

and our trading symbol to GCTK.

March 22, 2022, Shalom Shushan, Chief Technology Officer, provided notice of his resignation from the Company, effective May 22, 2022,

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to the United States, James P.

Thrower PhD, Vice President of Engineering, will be assuming Mr.

Thrower PhD, Vice President of Engineering, assumed Mr.

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, Erez Ben-Zvi, VP of Product in Israel, resigned from the Company,

effective June 12, 2022.

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

as well as in preparation for U.S.

clinical trials, Erez Ben-Zvi, VP of Product in Israel, resigned from the Company, effective June

October 10, 2022, the Company announced that it has acquired certain IP related to a long-term implantable continuous glucose monitor

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Mark Tapsak as Vice President of Sensor Technology.

November 22, 2022, Nasdaq provided notice that pursuant to Nasdaq Listing Rule 5550(b)(1), the Company did not meet the alternatives

of market value of listed securities or net income from continuing operations.

January 4, 2023, Nasdaq provided notice that since the Company had not held an annual meeting of shareholders within twelve months of

the end of the Company’s fiscal year end ended December 31, 2021, it no longer complied with Listing Rules for continued listing.

February 7, 2023, Nasdaq issued a letter to the Company granting an extension until May 22, 2023 to obtain compliance with the Listing

Rule 5550(b).

March 31, 2023, GlucoTrack, Inc.

held its 2022 Annual Meeting of Shareholders.

The results of the voting with respect to this Annual

Meeting are as set forth below.

DIRECTORS INFORMATION

VOTES WITHHELD

BROKER NON-VOTE

Robert Fischell

Andrew Sycoff

PROPOSALS INFORMATION

VOTES AGAINST

VOTES ABSTAIN

BROKER NON-VOTE

Ratify Auditor

Nonbinding Say on Pay

17, 2023, the Company announced the closing of a firm commitment underwritten public offering of shares of its common stock with gross

proceeds to the Company of approximately $10.0 million, before deducting underwriting discounts and other estimated expenses payable by

The offering consisted of 7,352,942 shares of common stock and pre-funded warrants to purchase shares of common stock at

a price to the public of $1.36 per share (less $0.001 in exercise price per pre-funded warrant).

The Company entered into an underwriting

agreement with Aegis Capital Corp.

on April 13, 2023.

The Company intends to use the net proceeds from this offering primarily for working

capital and general corporate purposes, which may include, without limitation, engaging in acquisitions or other business combinations

or investments, sales and marketing activities, general and administrative matters and capital expenditures.

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

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In connection with the preparation of our financial statements, we are required to make assumptions and estimates about future events

and apply judgments that affect the reported amounts of assets, liabilities, revenue, expenses, and the related disclosures.

assumptions, estimates and judgments on historical experience, current trends, and other factors that management believes to be relevant

at the time our consolidated financial statements are prepared.

On a regular basis, management reviews the accounting policies, assumptions,

estimates and judgments to ensure that our financial statements are presented fairly and in accordance with U.S.

However, because

future events and their effects cannot be determined with certainty, actual results could differ from our assumptions and estimates,

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.

and apply judgments that affect the reported amounts of assets, liabilities, expenses and the related disclosures.

We base our assumptions,

estimates and judgments on historical experience, current trends and other factors that management believes to be relevant at the time

our consolidated financial statements are prepared.

On a regular basis, management reviews the accounting policies, assumptions, estimates

and judgments to ensure that our financial statements are presented fairly and in accordance with U.S.

However, because future

events and their effects cannot be determined with certainty, actual results could differ from our assumptions and estimates, and such

differences could be material.

of Operations

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

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

The discussion should be read in conjunction with the

financial statements and related notes included elsewhere in this report.

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

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

March 31, 2023 compared with the same period ended March 31, 2022.

The discussion should be read in conjunction with the financial statements

and related notes included elsewhere in this report.

Months ended March 31, 2023 compared to Three Months ended March 31, 2022

and development expenses

and development expenses were $434 thousand for the three-month period ended September 30, 2022, as compared to $447 thousand for the

prior-year period.

The Decrease is immaterial.

and development expenses were $642 thousand for the three-month period ended March 31, 2023, as compared to $460 thousand for the prior-year

The increase is attributable to professional fees we accrued during the year.

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

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

expenses were $0 thousand for the three-month period ended September 30, 2022, as compared to $113 thousand for the prior-year period.

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

expenses until the completion of the development of the GlucoTrack® 2.0.

expenses during the three-month period ended September 30, 2021, consisted in primarily of professional services, salaries, travel expenses

and other related expenses.

and administrative expenses

and administrative expenses were $495 thousand for the three-month period ended September 30, 2022, as compared to $207 thousand for

the prior-year period.

The increase is primarily attributable to the additional expenses that the company accrued due to its listing

on the Nasdaq Capital Market (“NASDAQ”).

and administrative expenses were $642 thousand for the three-month period ended March 31, 2023, as compared to $633 thousand for the

prior-year period.

The increase is immaterial

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

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for legal and accounting services.

income, net was approximately $2 thousand for the three-month period ended September 30, 2022, as compared to financing income of $9

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 $928 thousand for the three-month period ended September 30, 2022, as compared to $804 thousand for the prior-year period.

expenses ,net

expenses, net was approximately $2 thousand for the three-month period ended March 31, 2023, as compared to financing income of $0 thousand

for the prior-year period.

The increase is immaterial .

loss was $1,286 thousand for the three-month period ended March 31, 2023, as compared to $1,093 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 September 30, 2022 compared to Nine Months ended September 30, 2021

and development expenses

and development expenses were $1,363 thousand for the nine-month period ended September 30, 2022, as compared to $1,077 thousand for

the prior-year period.

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 expenses.

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.

expenses were $0 thousand for the nine-month period ended September 30, 2022, as compared to $136 thousand for the prior-year period.

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.

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

and administrative expenses

and administrative expenses were $1,782 thousand for the nine-month period ended September 30, 2022, as compared to $1,323 thousand for

the prior-year period.

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

and to additional expenses that the company accrued due to its listing on the Nasdaq Capital

Market (“NASDAQ”).

and administrative expenses consist primarily of professional services, salaries, insurance, 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 $(2) thousand for the nine-month period ended September 30, 2022, as compared to financing income

of $21 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 $3,148 thousand for the nine-month period ended September 30, 2022, as compared to $2,561 thousand for the prior-year period.

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

Concern Uncertainty

of September 30, 2022, cash on hand was approximately $3.2 million.

The development and commercialization of non-invasive glucose monitoring

devices for use by people, are expected to require substantial further expenditures.

We remain dependent upon external sources for financing

our operations.

Since inception, we have incurred substantial accumulated losses and negative operating cash flow and have a significant

accumulated deficit.

These factors raise substantial doubt about our ability to continue as a going concern.

The financial statements

do not include any adjustments that might result from the outcome of this uncertainty.

We plan to finance our operations through the

sale of equity (including shelf registration statement on Form S-3 was declared effective on September 27, 2021 by the Securities and

Exchange Commission (SEC) which allows the Company to register up to $100,000 thousand of certain equity and/or debt securities of the

Company through prospectus supplement).

There can be no assurance that we will succeed in obtaining the necessary financing to continue

our operations.

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

cash used in operating activities was $2,789 thousand and $2,796 thousand for the nine-month periods ended September 30, 2022 and 2021,

development and commercialization of GlucoTrack 2.0

product are expected to require substantial further expenditures.

We remain dependent upon external

sources for financing our operations.

Since inception, we have incurred substantial accumulated losses and negative operating cash flow,

and have a significant accumulated deficit.

However, in April 2023 we completed an underwriting U.S.

public offering under which net

proceeds of $8,730 thousand has been raised.

As of March 31, 2023, cash on hand was approximately $1,003 thousand which together with

the proceeds received upon completion of the aforesaid underwriting U.S.

public offering is sufficient to continue the operation for

a period of twelve-months subsequent to the reporting period.

Cash Used in Operating Activities for the Three-Month Periods Ended March 31, 2023 and March 31, 2022

cash used in operating activities was $1,313 thousand and $1,265 thousand for the three-month periods ended March 31, 2023 and 2022,

respectively.

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respectively.

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

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

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

Sheet Arrangements

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

of March 31, 2023, 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.

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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