Glucotrack, Inc. 10-Q

Item 1. Financial Statements GLUCOTRACK INC. CONDENSED CONSOLIDATED BALANCE SHEETS March 31, 2023 December 31, 2022 In thousands of US dollars (except share data) March 31, 2023 December 31, 2022 (Unaudited) Current Assets Cash and cash equivalents 1,003 2,312 Other current assets 203 67 Total current assets 1,206 2,379 Property and equipment, net 35 40 Restricted Cash 10 19 TOTAL ASSETS 1,251 2,438 LIABILITIES AND STOCKHOLDERS’ EQUITY Current Liabilities Accounts payable 652 672 Other current liabilities 395 341 Total Current Liabilities 1,047 1,013 Non-current Liabilities Loans from Stockholders 193 195 Total Non-current liabilities 193 195 Total Liabilities 1,240 1,208 Stockholders’ Equity Common Stock of $ 0.001 par value (“Common Stock”): 500,000,000 shares authorized; 15,503,632 and 15,500,730 shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively 15 15 Common Stock of $ 0.001 par value (“Common Stock”): 500,000,000 shares authorized; 15,503,632 and 15,500,730 shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively 15 15 Additional paid-in capital 103,156 103,095 Accumulated other comprehensive income 22 17 Receipts on account of shares 5 4 Accumulated deficit ( 103,187 ) ( 101,901 ) Total Stockholders’ equity 11 1,230 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY 1,251 2,438 The accompanying notes are an integral part of these condensed consolidated financial statements. 3 GLUCOTRACK INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS 2023 2022 In thousands of US dollars (except share data) Three-month period ended March 31, 2023 2022 (Unaudited) Research and development expenses 642 460 General and administrative expenses 642 633 Total operating expenses 1,284 1,093 Operating loss 1,284 1,093 Financing expense, net 2 - Loss for the period 1,286 1,093 Other comprehensive income: Foreign currency translation income ( 5 ) ( 7 ) Comprehensive loss for the period 1,281 1,086 Loss per share (Basic and Diluted) ( 0.08 ) ( 0.07 ) Weighted average number of common stock outstanding used in computing basic and diluted net loss per share 15,503,632 15,461,757 The accompanying notes are an integral part of these condensed consolidated financial statements. 4 GLUCOTRACK INC. CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY Numbers of Shares Amount Paid-in Capital account of shares Comprehensive income (loss) Accumulated Deficit Stockholders’ Equity In thousands of US dollars (except share data) (Unaudited) Common Stock Additional Receipts on Accumulated Other Total Numbers of Shares Amount Paid-in Capital account of shares Comprehensive income (loss) Accumulated Deficit Stockholders’ Equity Balance at January 1, 2022 15,470,402 15 102,612 - ( 6 ) ( 97,466 ) 5,155 Loss for the period - - - - - ( 1,093 ) ( 1,093 ) Other comprehensive income - - - - 7 - 7 Stock-based compensation - - 151 - - - 151 Issuance of restricted shares as compensation towards directors (*) - - - 11 - - 11 Balance as of March 31, 2022 15,470,402 15 102,763 11 1 ( 98,559 ) 4,231 In thousands of US dollars (except share data) (Unaudited) Common Stock Additional Receipts on Accumulated Other Total Numbers of Shares Amount Paid-in Capital account of shares Comprehensive income Accumulated Deficit Stockholders’ Equity Balance at January 1, 2023 15,500,730 15 103,095 4 17 ( 101,901 ) 1,230 Loss for the period - - - - - ( 1,286 ) ( 1,286 ) Other comprehensive income - - - - 5 - 5 Stock-based compensation - - 57 - - - 57 Issuance of restricted shares as compensation towards directors (*) 2,902 - 4 ( 4 ) - - - Restricted shares to be issued as compensation towards directors 5 5 Balance as of March 31, 2023 15,503,632 15 103,156 5 22 ( 103,187 ) 11 (*) Actual issuance occurred subsequent to the balance sheet date. The accompanying notes are an integral part of these condensed consolidated financial statements. 5 GLUCOTRACK INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS 2023 2022 In Thousands of US dollars Three-month period ended March 31, 2023 2022 (unaudited) Cash flows from operating activities: Loss for the period ( 1,286 ) ( 1,093 ) Adjustments to reconcile loss for the period to net cash used in operating activities: Depreciation 4 9 Stock-based compensation 57 151 Issuance of restricted shares as compensation towards directors (*) 5 11 Linkage difference on principal of loans from stockholders 2 2 Changes in assets and liabilities: Increase in other current assets ( 137 ) ( 400 ) Decrease in accounts payable ( 13 ) ( 35 ) Increase in other current liabilities 55 90 Net cash used in operating activities ( 1,313 ) ( 1,265 ) Effect of exchange rate changes on cash, cash equivalents and restricted cash ( 5 ) ( 9 ) Change in cash, cash equivalents, and restricted cash ( 1,318 ) ( 1,274 ) Cash, cash equivalents, and restricted cash at beginning of the period 2,331 6,113 Cash, cash equivalents, and restricted cash at end of the period 1,013 4,839 ( * ) Actual issuance occurred subsequent to the balance sheet date. The accompanying notes are an integral part of these condensed consolidated financial statements. 6 GLUCOTRACK INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) NOTE 1 - GENERAL A. GlucoTrack Inc. (the “Company”) was incorporated on May 18, 2010 under the laws of the State of Delaware. The Company is 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. The Company and Integrity Israel are considered collectively as the “Group”. On December 8, 2021, the Company announced that its shares of Common Stock were approved for listing on the Nasdaq Capital Market (“NASDAQ”). Trading on NASDAQ commenced on December 10, 2021 under its existing trading symbol, IGAP. On March 14, 2022, the Company announced that it has completed its corporate name and ticker symbol change on the Nasdaq Capital Market (from IGAP to GCTK), to be effective at the commencement of trading on March 14, 2022. B. Liquidity and Going concern uncertainty To date, the Company has not yet generated significant revenues from selling of GlucoTrack 1.0 product. In addition, development and commercialization of GlucoTrack 2.0 product is expected to require substantial expenditures and therefore the Company is dependent upon external sources for financing its operations. As of March 31, 2023, the Company has incurred accumulated deficit of $ 103,187 thousand. Further, the Company has generated operating losses and negative operating cash flow for all reported periods. Management has considered the significance of such conditions in relation to the Company’s ability to meet its current obligations and to achieve its business targets and determined that these conditions are not raising substantial doubt about the Company’s ability to continue as a going concern, taking into consideration, the balance of cash and cash equivalents As of March 31, 2023 which amounted to $ 1,003 , together with the net proceeds in total amount of $ 8,730 thousand which were received upon closing of a public offering through prospectus supplement on Form S-3 (see also Note 3) on April 17 2023. Based on its assessment, management believe that such funds are sufficient for the Company to realize its business plans for the twelve-months subsequent to the reporting period. 7 GLUCOTRACK INC NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (cont.) NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A. Basis of presentation Accounting Principles The accompanying unaudited condensed consolidated interim financial statements and related notes should be read in conjunction with our consolidated financial statements and related notes contained in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, filed with the Securities and Exchange Commission (“SEC”) on March 31, 2023. The unaudited condensed consolidated financial statements have been prepared in accordance with the rules and regulations of the SEC related to interim financial statements. As permitted under those rules, certain information and footnote disclosures normally required or included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. The financial information contained herein is unaudited; however, management believes all adjustments have been made that are considered necessary to present fairly the results of the Company’s financial position and operating results for the interim periods. All such adjustments are of a normal recurring nature The results for the period of three months ended March 31, 2023 are not necessarily indicative of the results to be expected for the year ending December 31, 2023 or for any other interim period or for any future period. Principles of Consolidation The consolidated financial statements include the accounts of the Company and its subsidiary. Significant intercompany balances and transactions have been eliminated in consolidation Net Loss Per Share Basic loss per share is computed by dividing the loss for the period applicable for holders of our Common Stock by the weighted average number of shares of Common Stock outstanding during the period. In computing, diluted loss per share, basic earnings per share are adjusted to reflect the potential dilution that could occur upon the exercise of options or warrants issued or granted using the “treasury stock method”, if the effect of each of such financial instruments is dilutive. In computing diluted loss per share, the average stock price for the period is used in determining the number of Common Stock assumed to be purchased from the exercise of stock options or stock warrants. Shares to be issued upon exercise of all stock options and stock warrants, have been excluded from the calculation of the diluted net loss per share for all the reported periods for which net loss was reported because the effect of the Common Stock issuable as a result of the exercise or conversion of these instruments was anti-dilutive. B. Use of estimates in the preparation of financial statements The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the dates of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. As applicable to these consolidated interim condensed financial statements, the most significant estimates and assumptions relate to the going concern assumptions. 8 GLUCOTRACK INC NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (cont.) NOTE 3 - SUBSEQUENT EVENTS Completion of underwritten U.S. public offering On April 13, 2023, the Company completed an underwritten U.S. public offering under which the Company received gross proceeds of approximately $ 10,000 thousand for issuance of (i) 5,376,472 shares of common stock and (ii) 1,976,470 pre-funded warrants at a price to the public of $ 1.36 per share. The pre-funded warrants are exercisable for the same number of shares of common stock and may be exercised at any time until exercised in full at an exercise price of $ 0.001 . Upon satisfaction of customary closing conditions, the closing date of the public offering was April 17, 2023 (the “Closing Date”). Since the Company receives substantially all of the pre-funded warrant’s proceeds upfront (without any conditions) as part of the pre-funded warrant’s purchase price and in return the Company is obligated to issue fixed number of shares of common stock to the holders. Thus, pre-funded warrants will be accounted for and classified as additional paid-in capital as part of the Company’s stockholders’ equity. The total incremental and direct issuance costs amounted to $ 1,270 thousand. These expenses will be deducted from additional paid-in capital as they should be allocated to shares of common stock and pre-funded warrants. On November 22, 2022, Nasdaq provided notice that pursuant to Nasdaq Listing Rule 5550(b)(1), the Company is required to maintain a minimum of $ 2,500 thousand in stockholders’ equity. In addition, the Company does not meet the alternatives of market value of listed securities or net income from continuing operations. Upon closing of underwritten U.S. public offering, the Company meets the requirement under the above rule as on a pro forma basis, with giving effect to approximately $ 8,730 thousand net raise, the balance sheet as of March 31, 2023 has assets of approximately $ 9,777 thousand and shareholders’ equity of $ 8,741 thousand. 9