Glucotrack, Inc. 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations. Cautionary Note Regarding Forward-Looking Statements This Quarterly Report on Form 10-Q (the “Quarterly Report”) contains forward-looking statements. These forward-looking statements include statements about our expectations, beliefs or intentions regarding our product development efforts, business, financial condition, results of operations, strategies and prospects. All statements other than statements of historical fact included in this Quarterly Report, including statements regarding our future activities, events or developments, including such things as future revenues, capital raising and financing, product development, clinical trials, regulatory approval, market acceptance, responses from competitors, capital expenditures (including the amount and nature thereof), business strategy and measures to implement strategy, competitive strengths, goals, expansion and growth of our business and operations, plans, references to future success, projected performance and trends, and other such matters, are forward-looking statements. The words “believe,” “expect,” “anticipate,” “intend,” “estimate,” “plan,” “may,” “will,” “could,” “would,” “should” and other similar words and phrases, are intended to identify forward-looking statements. The forward-looking statements made in this Quarterly Report are based on certain historical trends, current conditions and expected future developments as well as other factors we believe are appropriate in the circumstances. These statements relate only to events as of the date on which the statements are made and we undertake no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. All of the forward-looking statements made in this Quarterly Report are qualified by these cautionary statements and there can be no assurance that the actual results anticipated by us will be realized or, even if substantially realized, that they will have the expected consequences to or effects on us or our business or operations. Whether actual results will conform to our expectations and predictions is subject to a number of risks and uncertainties that may cause actual results to differ materially. Risks and uncertainties, the occurrence of which could adversely affect our business, include the risks identified under the caption “Risk Factors” included in our Annual Report on Form 10-K for the year ended December 31, 2024 (the “Annual Report”). The following discussion should be read in conjunction with the condensed consolidated financial statements and the notes thereto included in Item 1 of this Quarterly Report. Overview The Company was incorporated on May 18, 2010 under the laws of the State of Delaware. We are currently developing an implantable continuous blood glucose monitor (“CBGM”). The Glucotrack CBGM is a long-term fully implantable continuous glucose monitor (CGM), consisting of a sensor lead implanted into the subclavian vein and connected to subcutaneous electronics that communicate with a mobile application. It measures glucose directly from the blood, eliminating the lag time associated with interstitial fluid glucose monitors. Designed for a three-year sensor life with continuous, accurate blood glucose monitoring, the system offers a more convenient and less burdensome solution for people with diabetes, with no on-body wearable component and minimal calibration requirements. The Glucotrack CBGM is being developed for use by diabetes patients who are dependent on daily glucose monitoring to manage their disease. These include patients who have the following conditions: Type 1 diabetes, Type 2 insulin-dependent diabetes, Type 2 diabetes using basal insulin and Type 2 diabetes at risk for hypoglycemia. We have continued to evolve our sensor chemistry following the results of an initial in-vitro feasibility study. In 2024, we announced that a 3-year longevity is feasible leveraging both in-vitro and in-silico test results. We have also completed multiple animal studies with initial prototype systems which demonstrated a simple implant procedure with good safety and functionality. The results of both were presented in poster form at the 2024 American Diabetes Association annual conference. We believe that implant accuracy and longevity is key to the success for long term use. We initiated a first-in-human (“FIH”) short-term clinical study outside of the United States in fourth quarter of 2024 and completed the study in first quarter of 2025. We recently presented results at the 2025 American Diabetes Association annual conference at the Innovation Hub podium as well as a poster. The ADA presentation reported that the FIH clinical study met all primary and secondary endpoints with no procedure or device related serious adverse events reported from implant through seven days post-removal of the CBGM sensor lead. The system also demonstrated excellent accuracy with a Mean Absolute Relative Difference (MARD) of 7.7% across 122 matched pairs, a 99% data capture rate, and no procedure or device-related serious adverse events. These findings validate the safety and performance of the system which measures glucose from blood rather than interstitial fluid, eliminating the typical lag time associated with traditional continuous glucose monitoring systems. The MARD value demonstrates very high accuracy and compares favorably to commercially available CGM systems. The FIH study also confirmed the function of the CBGM sensor lead in the subclavian vein. Placement and removal procedures were successfully performed by interventional cardiologists. We have initiated a long-term clinical study outside the United States to evaluate the CBGM product performance and safety over an initial period of one (1) year. The first phase of the clinical study provided early product learnings about how the complexity of certain health conditions may impact study eligibility. Consequently, we are undertaking certain protocol amendments to refine participant selection criteria before enrolling additional participants. In parallel, we intend to implement certain product improvements. We are committed to advancing our clinical program and intend to proceed swiftly with the relevant protocol amendments and product enhancements, subject to approval by the institutional review board. During the second quarter 2025, we initiated discussions with the Food & Drug Administration (“FDA”) in preparations for a pre-investigational device exemption (“IDE”) submission. The discussions pertain to the protocol study design and related requirements to secure IDE approval for future long-term human clinical trials in the United States. We remain in active review with the FDA to accommodate their requirements and expects to file the IDE submission to the FDA during the Spring of 2026. We believe our technology, if successful, has the potential to be a long-term, implantable system that continually measures blood glucose levels with a sensor longevity of 3 years, no on-body wearable component and with minimal calibration. 17 Recent Events 2025 Reverse Stock Splits and Increase in Authorized Common Stock February 2025 1-for-20 Reverse Stock Split We filed with the Delaware Secretary of State a Certificate of Amendment to our Certificate of Incorporation which became effective at 4:30 p.m. on February 3, 2025, to implement a reverse stock split at a ratio of 1-for-20 (the “February 2025 Reverse Stock Split”) of the shares of our Common Stock. The February 2025 Reverse Stock Split was approved by our stockholders at the special meeting of stockholders held on January 3, 2025 (the “Special Meeting”). On January 3, 2025, we filed an amendment to our Certificate of Incorporation to increase the Company’s authorized shares of Common Stock from 100,000,000 to 250,000,000. On February 3, 2025, the stockholders approved at the Special Meeting the increase in our authorized shares of Common Stock from 100,000,000 to 250,000,000, as well as the full issuance of shares of Common Stock issuable by us upon the exercise of Series A Warrants and Series B Warrants (defined herein). June 2025 1-for-60 Reverse Stock Split We filed with the Delaware Secretary of State a Certificate of Amendment to our Certificate of Incorporation which became effective at 4:30 p.m. on June 13, 2025, to implement a reverse stock split at a ratio of 1-for-60 (the “June 2025 Reverse Stock Split”) of the shares of its Common Stock. The June 2025 Reverse Stock Split was approved by the Company’s stockholders at the 2025 annual meeting of the stockholders held on May 22, 2025. All shares, options and warrants to purchase shares of Common Stock and loss per share amounts have been adjusted to give retroactive effect to the February and June 2025 reverse share splits, (the “Reverse Stock Splits”) for all periods presented in these interim consolidated financial statements. Any fractional shares resulting from the Reverse Stock Splits were rounded up to the nearest whole share. ATM Sales Agreement On December 17, 2024, we entered into an ATM sales agreement (the “Sales Agreement”) with Dawson James Securities, Inc. (“Dawson James”), pursuant to which we agreed to issue and sell shares of Common Stock, having an aggregate offering price of up to $8,230, from time to time, through an “at-the-market” equity offering program (the “ATM Program”) under which Dawson James will act as sales agent (the “Agent”). On March 21, 2025, we sold 206,300 shares of Common Stock at an average offering price of $18.24 per share pursuant to the Sales Agreement, for net proceeds of $3,643, after deducting fees owed to the Agent from such sale. During the three months ended June 30, 2025, we sold 414,785 shares of Common Stock at an average offering price of $10.74 per share pursuant to the Sales Agreement for net proceeds of $4,320, after deducting fees owed to the Agent from such sale. As of September 30, 2025, there was no remaining capacity available under the ATM Program. The shares of Common Stock sold in conformance to the Sales Agreement were offered by us pursuant to a prospectus supplement dated December 17, 2024, and accompanying prospectus dated October 3, 2024, which forms a part of our registration statement on Form S-3 (Registration No. 333-282297) (the “S-3 Registration Statement”), which was declared effective by the Securities and Exchange Commission, on October 3, 2024. Registered Direct Offering On February 4, 2025, we entered into a securities purchase agreement with certain institutional investors, relating to the registered direct offering and sale of an aggregate of 43,968 shares of Common Stock at an offering price of $69.00 per share (the “February 2025 Offering”). The net proceeds to us from the February 2025 Offering were approximately $2,752, after deducting fees owed to placement agent and other offering expenses. The February 2025 Offering closed on February 5, 2025. The shares of Common Stock from the February 2025 Offering were offered by us pursuant to a prospectus supplement dated February 4, 2025, and accompanying prospectus dated October 3, 2024, which forms a part of our S-3 Registration Statement. Dawson James acted as the placement agent for the offerings pursuant to a placement agency agreement, dated February 4, 2025, by and between us and Dawson James. Promissory Note On September 12, 2025, we entered into a Note Purchase Agreement, with an investor, pursuant to which we issued a Promissory Note to the Investor in the principal amount of $3,600,000 for a purchase price of $3,000,000. Warrant Exchange Beginning on January 6, 2025, through March 15, 2025, we received exchange notices from certain holders of the Series B Warrants, with respect to an aggregate of 54,021 of the Series B Warrants, requiring the delivery of 162,603 shares of Common Stock according to the alternative cashless exercise provision of the Series B Warrants sold in the November 2024 registered direct offering. The remaining 11 Series B Warrants are exchangeable for 11 shares of Common Stock (subject to adjustment in the event of any stock dividend and split, reverse stock split, recapitalization, reorganization or similar transaction). Warrant Repurchase During the nine months ended September 30, 2025, we repurchased 51,529 of its Series A Warrants form existing warrant holders for $166. The fair value of the Series A Warrants on the date of exercise was $67, resulting in a loss on repurchase of $99. Appointment of Peter C. Wulff as Chief Financial Officer Mr. Cardwell’s resigned as Chief Financial Officer of the Company, and on January 28, 2025, our board of directors (the “Board”) appointed Peter C. Wulff as Chief Financial Officer of the Company. 18 Financial Overview Operating Expenses General and Administrative General 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. Research and Development Research and development expenses consist primarily of salaries and other personnel-related expenses, including stock-based compensation expenses, materials, travel expenses, clinical trials and other expenses. We expect research and development expenses to increase in 2025 and beyond, primarily due to expanding clinical trial activities, hiring additional personnel, as well the development of the 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, development of new Glucotrack CBGM models and other product candidates. Marketing Marketing expenses consist primarily of personnel-related expenses and professional service costs. Other (Income) Expense Other income expense, consist primarily of the change in fair value of derivative liabilities, finance (income) expense and other (income) expense. Results of Operations The following discussion of our operating results explains material changes in our results of operations for the three and nine months ended September 30, 2025 compared with the same periods ended September 30, 2024. The discussion should be read in conjunction with the financial statements and related notes included elsewhere in this report. Consolidated Results of Operations for the Three Months ended September 30, 2025 and 2024 All information below is stated in thousands of U.S. dollars. General and administrative expenses General and administrative expenses were approximately $1,024 for the three-month period ended September 30, 2025, as compared to approximately $1,063, for the prior-year period. The decrease is primarily attributable to reduced board of director and legal fees, offset by increased professional fees, and personnel costs. Research and development expenses Research and development expenses were approximately $3,165 for the three-month period ended September 30, 2025, as compared to approximately $2,063 for the prior-year period. The increase is attributable to product and manufacturing development costs we accrued during the period related to the development of the Glucotrack CBGM Product. Marketing expenses Marketing expenses were approximately $120 for the three-month period ended September 30, 2025, as compared to $125 for the prior-year period. The decrease is primarily attributable to a reduction in market research fees. Change in derivative liability Change in derivative liability for the three months ended September 30, 2025, was less than $1.0. 19 Other (income) expense, net Other income was $136 for the three-month period ended September 30, 2025, as compared to $12 for the prior-year period. The increase was due to the receipt of a non-recurring research grant. Financing income (expenses), net Financing income, net was approximately $2 for the three-month period ended September 30, 2025, as compared to financing expense of approximately $1,848 for the prior-year period. This increase was primarily due to $1,505 in revaluation expenses incurred from settlement of financial liabilities and $330 in discount amortization and interest expenses recognized in the prior-year period. Net Loss Net loss was $4,171 for the three-month period ended September 30, 2025, as compared to $5,087 for the prior-year period. The reduction in net loss is primarily attributed to the prior year revaluation expenses, discussed above, offset by the current year increase in research and development expense. Consolidated Results of Operations for the Nine Months ended September 30, 2025 and 2024 General and administrative expenses General and administrative expenses were approximately $3,987 for the nine-month period ended September 30, 2025, as compared to approximately $2,598, for the prior-year period. The increase is primarily attributable to increased legal and professional fees, and personnel costs. Research and development expenses Research and development expenses were approximately $8,186 for the nine-month period ended September 30, 2025, as compared to approximately $7,800 for the prior-year period. The increase is attributable to product and manufacturing development costs we accrued during the period related to the development of the Glucotrack CBGM Product. Marketing expenses Marketing expenses were approximately $430 for the nine-month period ended September 30, 2025, as compared to $295 for the prior-year period. This increase is primarily attributable to increased market research fees. Change in derivative liability Change in derivative liability for the nine-month period ended September 30, 2025, was a $3,269. The change is primarily due to adjustments of the estimated fair value of the exchanged and repurchased warrants, as well as the outstanding 2,518 Series A and Series B Warrants. Other (income) expense, net Other income was $44 for the nine-month period ended September 30, 2025, as compared to $12 for the prior-year period. Financing income (expenses), net Financing income, net was approximately $68 for the nine-month period ended September 30, 2025, as compared to financing expense of approximately $1,822 for the prior-year period. This increase was primarily due to $1,505 in revaluation expenses incurred from settlement of financial liabilities and $330 in discount amortization and interest expenses recognized in the prior-year period. Net Loss Net loss was $15,760 for the nine-month period ended September 30, 2025, as compared to $12,503 for the prior-year period. The increase in net loss is primarily attributed to the increase in general and administrative expenses and the fair value change of the derivative liability, as described above. 20 Liquidity and Going Concern As of September 30, 2025, we had $7,869 in cash and cash equivalents compared with $5,627 in cash, cash equivalents and restricted cash as of December 31, 2024. The net increase in cash and cash equivalents was attributable to the $13,549 of net proceeds received from financing activities offset by cash used in operating and investing activities of $11,380. We have a history of recurring losses, and as of September 30, 2025, we have an accumulated deficit of $148,210. During the nine-months ended September 30, 2025, we recorded a net loss of $15,760. Our primary requirements for liquidity have been to fund product and clinical development activities and to satisfy our general corporate and working capital needs. Based on our operating plans, we do not expect that our current cash and cash equivalents as of September 30, 2025, will be sufficient to fund our operating cash flow needs for at least the next twelve months, assuming our programs advance as currently contemplated. The Company estimates it will require approximately $15.0 million in cash to fund operations over this period. 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 raised 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 affected. 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. Critical Accounting Policies This Management’s Discussion and Analysis of Financial Condition and Results of Operations discuss our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). 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, 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 condensed 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. GAAP. 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. The summary of our significant accounting policies is included under Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations of our Annual Report. An accounting policy is deemed to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made, if different estimates reasonably could have been used, or if changes in the estimate that are reasonably possible could materially impact the financial statements. There have been no material changes to the critical accounting policies and estimates as filed in such report. Off Balance Sheet Arrangements We do not have any off balance sheet agreements. Item 3. Quantitative and Qualitative Disclosures About Market Risk. As a smaller reporting company, we are not required to provide the information required by this Item. 21