What changed in this filing

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Item 7. Management’s Discussion and Analysis

2024-03-28 compared with 2023-03-31 · 93 added, 83 removed, 58 unchanged (75% of the section changed)

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the results described in or implied by the forward-looking statements contained in the following discussion and analysis .

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

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

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

Our mission is to become a leader in diabetes management by bringing to market innovative and cost-effective technologies that address

multiple verticals within the diabetes market.

We are developing an implantable CBGM.

This product is designed to have a 2-year implant

longevity without the requirement for any wearable components.

Accounting Policies

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discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which

have been prepared in accordance with USGAAP.

have been prepared in accordance with U.S.

The preparation of our consolidated financial statements and related disclosures requires

us to make estimates, assumptions and judgments that affect the reported amounts of assets, liabilities, net sales, costs and expenses

and related disclosures.

us to make estimates, assumptions and judgments that affect the reported amounts of assets, liabilities and expenses and related disclosures.

Management believes that there are no critical accounting estimates in these financial statements.

Accounting Pronouncements

June 2016, the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326):

Measurement of Credit Losses on Financial

Instruments” (“ASU 2016-13”), which changes the impairment model for most financial assets and certain other instruments.

For trade and other receivables, held-to-maturity debt securities, loans, and other instruments, entities will be required to use a new

forward-looking “expected loss” model that generally will result in the earlier recognition of allowances for losses.

guidance also requires increased disclosures.

For the Company, the amendments in the update were originally effective for fiscal years

beginning after December 15, 2019, including interim periods within those fiscal years.

In November 2019, the FASB issued ASU No.

which delayed the effective date of ASU 2016-13 for smaller reporting companies (as defined by the SEC) and other non-SEC reporting entities

to fiscal years beginning after December 15, 2022, including interim periods within those fiscal periods.

Early adoption is permitted.

the company is eligible to considered as smaller reporting company ASU 2016-13 is effective for fiscal years

beginning after December 15, 2022, including interim periods within those fiscal years.

The adoption of this standard is not expected

to result in a material impact to the Company’s financial statements.

November 2023, the Financial Standards Accounting Board (FASB) issued Accounting Standards Update (ASU) 2023-07 “Segment Reporting

Improvements to Reportable Segment Disclosures”, which expands annual and interim disclosure requirements for reportable

segments, primarily through enhanced disclosures about significant segment expenses.

ASU 2023-07 is effective for the Company’s

annual periods beginning January 1, 2024, and for interim periods beginning January 1, 2025, with early adoption permitted.

December 2023, the FASB issued ASU 2023-09 “Income Taxes (Topics 740):

Improvements to Income Tax Disclosures” to expand

the disclosure requirements for income taxes, specifically relating to the rate reconciliation and income taxes paid.

ASU 2023-09 is

effective for the Company’s annual periods beginning January 1, 2025, with early adoption permitted.

Company is currently evaluating the potential effects that ASU 2023-07 and ASU 2023-09 will have on the consolidated financial statement

of Operations

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and development expenses

and development expenses were $1,967 thousand for the year ended December 31, 2022, as compared to $1,810 thousand for the prior-year

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

and development expenses were $4,704 for the year ended December 31, 2023, as compared to $1,967 for the prior-year period.

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

and development expenses consist primarily of salaries and other personnel-related expenses, including stock-based compensation expenses,

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We expect research and development expenses to increase in 2024 and beyond,

primarily due to hiring additional personnel and developing our product line, as well the development of GlucoTrack® 2.0;

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 marketing expenses

and marketing expenses were $0 thousand for the year ended December 31, 2022, as compared to $139 thousand for the prior-year period.

The decrease is primarily attributable to the Company’s decision to reduce its business development expenses until the completion

of the development of the GlucoTrack® 2.0.

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

primarily due to hiring additional personnel, as well the development of Glucotrack CBGM;

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 CBGM models and others.

and administrative expenses

and administrative expenses were $2,465 thousand for the year ended December 31, 2022, as compared to $2,091 thousand for the prior-year

The increase is primarily attributable to insurance expenses of it directors and officers, which the Company accrued due to its

listing on the Nasdaq Capital Market (“NASDAQ”).

and administrative expenses were $2,278 for the year ended December 31, 2023, as compared to $2,465 for the prior-year period.

is primarily attributable to the decrease in stock based compensation expense in 2023 versus 2022.

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

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and accounting services.

Income, net was $11 thousand for the year ended December 31, 2022, as compared to financing Income, net, of $26 thousand for the prior-year

The decrease in the financing income is attributed to the decrease in interest income resulting from the reduction in the company’s

Financing Income, net

income, net was $7 for the year ended December 31, 2022, as compared to $11 for the prior-year period.

decrease in the financing income is attributed to the reduction in the company’s

cash balance over the year.

loss was $4,435 thousand for the year ended December 31, 2022, as compared to a net loss of $4,067 thousand for the prior-year period.

The increase in net loss is attributable primarily to the increase in our general and administrative expenses and development expenses

as described above.

loss was $7,097 for the year ended December 31, 2023, as compared to a net loss of $4,435 for the prior-year period.

The increase in

net loss is attributable primarily to the increase in our general and administrative expenses and development expenses as described above.

and Capital Resources

the years ended December 31, 2023 and December 31, 2022, our net losses were $7,097 million and $4,435, respectively.

As of December

31, 2023, we had an accumulated deficit of $109,853.

Our primary requirements for liquidity have been to fund our clinical trial activity

and general corporate and working capital needs.

April 13, 2023, the Company completed an underwritten public offering under which the Company received gross proceeds of approximately

$10 million 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

on our operating plans, we do not expect that our current cash and cash equivalents as of December 31, 2023, will be sufficient to fund

our operating, investing, and financing cash flow needs for at least the next twelve months, assuming our programs advance as currently

contemplated.

Based upon this review and our current financial condition, the Company has concluded that substantial doubt exists as

to our ability to continue as a going concern.

We have and believe we will continue to be able to raise additional capital through debt

financing, private or public equity financings, license agreements, collaborative agreements or other arrangements with other companies,

or other sources of financing.

However, there can be no assurances that such financing will be available or will be at terms acceptable

to us, or at all.

If we are unable to raise capital when needed or on attractive terms, we would be forced to delay, reduce, or eliminate

our clinical trials or other operations.

If any of these events occur, our ability to achieve our operational goals would be adversely

Our future capital requirements and the adequacy of available funds will depend on many factors, including those described

in the section titled “Risk Factors.” Depending on the severity and direct impact of these factors on us, we may be unable

to secure additional financing to meet our operating requirements on commercially acceptable terms favorable to us, or at all.

Concern Uncertainty

of December 31, 2022, and December 31, 2021, cash on hand was $2,312 thousand and $6,062 thousand, respectively.

development and commercialization of non-invasive glucose monitoring devices for use by people, are expected to require substantial further

expenditures.

of December 31, 2023, cash on hand was $4,492.

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.

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

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 $90,000 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.

the years 2003-2004, Integrity Israel received loans from stockholders (four separate lenders).

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Consumer Price Index from their origination date and bear no interest.

The Group will be required to pay the loans, in quarterly installments,

commencing on the first quarter following the first fiscal year in which the Group reports net profit in its annual report.

At such time,

the Group will be required to make quarterly payments equal to 10% of its total sales for each quarter until the loans have been repaid

Notwithstanding the repayment mechanism, the Group will not be required to repay the loans during any period in which such payment

would cause a deficit in the Group’s working capital.

As of December 31, 2022, the Group does not expect to make any material repayments

during the following 12-month period, if any, and accordingly the balance of $195 thousand of the loans from stockholders, have been

presented as long-term liabilities.

are required to pay royalties to the Office of the Chief Scientist at a rate ranging between 3-5% of the proceeds from the sale of the

Company’s products arising from the development plan up to an amount equal to $93 thousand, plus interest at LIBOR from the date

As of December 31, 2022, the contingent liability with respect to royalty payment on future sales equals to approximately $80

thousand, excluding interest.

The Company will be required to pay the loans, in quarterly installments,

commencing on the first quarter following the first fiscal year in which the Company reports net profit in its annual report.

time, the Company will be required to make quarterly payments equal to 10% of its total sales for each quarter until the loans have been

repaid in full.

Notwithstanding the repayment mechanism, the Company will not be required to repay the loans during any period in which

such payment would cause a deficit in the Company’s working capital.

As of December 31, 2023, the Company does not expect to make

any material repayments during the following 12-month period, if any, and accordingly the balance of $196 of the loans from stockholders,

have been presented as long-term liabilities.

are required to pay royalties to the IIA at a rate ranging between 3-5% of the proceeds from the sale of the Company’s

products arising from the development plan up to an amount equal to $93, plus interest at LIBOR from the date of grant.

replacement of the LIBOR benchmark rate, even though the IIA has not declared the alternative benchmark rate to replace the LIBOR,

we do not believe it will have a significant impact.

As of December 31, 2023, the contingent liability with respect to royalty

payment on future sales equals to approximately $73, excluding interest.

Ended December 31, 2023 Compared to Year Ended December 31, 2022

Cash Used in Operating Activities for the Years Ended December 31, 2023 and December 31, 2022

cash used in operating activities was $3,729 thousand and $3,769 thousand for the years ended December 31, 2022 and 2021, respectively.

Net cash used in operating activities primarily reflects the net loss for those periods of $4,435 thousand and $4,067 thousand, respectively.

Cash Provided by (Used in) Investing Activities for the Years Ended December 31, 2022 and December 31, 2021

cash provided by (used in) investing activities was $1 thousand and $(1) thousand for the years ended December 31, 2022 and 2021, respectively,

mainly consisting of equipment sales and purchases (such as computers, research and development and office equipment).

cash used in operating activities was $6,558 and $3,729 for the years ended December 31, 2023 and 2022, respectively.

Net cash used in

operating activities primarily reflects the net loss for those periods of $7,097 and $4,435, respectively, less reduction in stock-based compensation expenses and change in working

Cash Provided by Investing Activities for the Years Ended December 31, 2023 and December 31, 2022

cash provided by investing activities was $0 and $1 for the years ended December 31, 2023 and 2022, respectively, mainly consisting of

equipment sales and purchases (such as computers, research and development and office equipment).

Cash Provided by Financing Activities for the Years Ended December 31, 2023 and December 31, 2022

cash provided by financing activities was $8,730 for the year ended December 31, 2023, due to the proceeds from the April 2023 public

There were no financing activities during the year ended December 31, 2022.

Sheet Arrangements

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Quantitative and Qualitative Disclosures About Market Risk.

required for smaller reporting companies.

a smaller reporting company, we are not required to provide the information required by this Item.

Financial Statements and Supplementary Data.

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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-K

Item 7. Management’s Discussion and Analysis