Glucotrack, Inc. 10-K

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations The discussion in this section contains forward-looking statements. These statements relate to future events, our future operations or our future financial performance. We have attempted to identify forward-looking statements by terminology such as “anticipate,” “believe,” “can,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “should,” “would” or “will” or the negative of these terms or other comparable terminology, but their absence does not mean that a statement is not forward-looking. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, which could cause our actual results to differ from those projected in any forward-looking statements we make. Several risks and uncertainties we face are discussed in more detail under “Risk Factors” in Part I, Item 1A of this Annual Report or in the discussion and analysis below. You should, however, understand that it is not possible to predict or identify all risks and uncertainties and you should not consider the risks and uncertainties identified by us to be a complete set of all potential risks or uncertainties that could materially affect us. You should not place undue reliance on the forward-looking statements we make herein because some or all of them may turn out to be wrong. We undertake no obligation to update any of the forward-looking statements contained herein to reflect future events and developments, except as required by law. The following discussion should be read in conjunction with the consolidated financial statements and the notes to those statements included elsewhere in this Annual Report. Unless otherwise noted, all information in this Item 7 regarding share amounts of our Common Stock and prices per share of our Common Stock has been adjusted to reflect the application of the one-for-five reverse stock split of our Common Stock that we effected on May 27, 2024 and the one-for-twenty reverse stock split of our Common Stock that we effected on February 3, 2025, as further described below, on a retroactive basis. Overview The Company was incorporated on May 18, 2010 under the laws of the State of Delaware. We are currently developing an implantable CBGM, the Glucotrack CBGM, for persons with Type 1 diabetes and insulin-dependent Type 2 diabetes. The Company was founded with a mission to develop Glucotrack®, a non-invasive 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, which successfully received CE Mark approval, obtained glucose measurements via a small sensor clipped onto one’s earlobe. A limited release beta test in Europe and the Middle East demonstrated the need for an updated product with improved accuracy and human factors. As the glucose monitoring landscape rapidly moved away from point-in-time measurement to continuous measurement since then, the Company recently determined that it would focus its efforts on developing its Glucotrack CBGM. As such, we have since withdrawn our CE Mark for Glucotrack and are no longer pursuing commercialization of this product or development of any further iterations. 35 The Company is currently developing the Glucotrack CBGM 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. We have continued to evolve our sensor chemistry following our successful in-vitro feasibility study demonstrating that a minimum two-year implant life is highly probable with the current sensor design. Recently we announced a 3-year longevity is feasible leveraging both in-vitro and in-silico test results. We have also completed four animal studies with evolving prototype systems, all four of which consistently demonstrated a simple implant procedure, good functionality, and safety. The Company has also successfully demonstrated continuous glucose sensing in the epidural space via two additional animal trials, both of which demonstrated a simple implant procedure, good functionality, and safety. This latter approach is of importance for patients with painful diabetic neuropathy contemplating spinal cord stimulation therapy for their condition. The results of these animal trials were recently presented in poster form at the American Diabetes Association, the Diabetes Technology Society, and the DiabetesMine annual conferences. A regulatory submission has been made for a first in human study outside of the United States. This will be an acute study intended to demonstrate device performance and safety. All preparatory clinical activities and applicable regulatory approvals are complete. In parallel, the Company is also preparing for a long-term clinical trial outside the United States that is expected to begin in the second quarter of 2025. 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. Our executive management team consists of our Chief Executive Officer and President, Paul V. Goode PhD, an experienced executive with a 25+ year career developing innovative medical technologies, including at Dexcom and MiniMed (now Medtronic Diabetes) and Chief Financial Officer, Peter C. Wulff, who has over 35 years of experience as a chief financial officer and chief operating officer in both public and private entities. Our senior management team consists of: Mark Tapsak PhD, Chief Scientific Officer, a medical research scientist who brings over 25 years of experience in the diabetes industry, including previous senior roles at Dexcom and Medtronic ; James P. Thrower PhD, Vice President of Advanced Technologies, a seasoned engineering executive with 20 years’ experience formerly of Sterling Medical Devices, Mindray DS USA and Dexcom; Drinda Benjamin, Vice President of Marketing, a medical device professional with over 20 years of experience in the medical device and diabetes industry with senior roles at Intuity Medical, Senseonics, Abbott Diabetes, and Medtronic Diabetes; Vincent Wong, Vice President of Operations, a medical device professional with 15 years of experience in quality system for implantable medical device manufacturing with senior roles at Cirtec Medical and TOMZ; Sandie Martha, Vice President Clinical Operations, a medical device professional with over 20 years of experience in the medical device and diabetes industry with senior roles at Dexcom and GlySens; and Ted Williams, Vice President Regulatory, a medical device professional with over 20 years of experience in the biotech and diabetes industry with a senior role at GlySens. Recent Developments Research and Development Completion of Preclinical Study On May 16, 2024, we announced that our implantable continuous glucose monitor successfully completed 30 days of a 60-day long-term preclinical study on measuring glucose in the epidural space. The Glucotrack sensor, implanted in the epidural space of animals, closely tracked both blood glucose and a commercially available subcutaneous CGM throughout the 30-day period. The implantation procedure took approximately 20 minutes, and the animals recovered without complications. No abnormal clinical signs or findings in the spinal cord or surrounding tissues were observed at the 30-day mark. On June 13, 2024, we announced that the 60-day long-term study was completed, demonstrating the feasibility of glucose monitoring in the epidural space. No abnormal clinical signs were observed throughout the study period, and no abnormal findings were observed in the spinal cord or surrounding tissues during post-explant analysis. The study also confirmed that the implanted sensor did not cause any delayed latent effects over the long-term period, which is particularly important as a complete healing process in animal studies with implanted devices may take several weeks. With the completion of this study, the durability of the epidural approach for continuous glucose monitoring has now been confirmed over the 60-day period. These developments mark another potential use of the Glucotrack technology by combining the technology with a conventional spinal cord stimulator for treating patients who have chronic lower back and lower limb pain, a significant proportion of which have diabetes. On February 4, 2025, we announced the successful completion of our first in-human clinical study, marking a significant milestone in continuous glucose monitoring. This study represents the first real-time CBGM placed in the subclavian vein, offering the potential for direct blood glucose measurement without the limitations often seen with traditional continuous glucose monitors that measure glucose levels in interstitial fluid. 36 The prospective single arm study was a short-term in-hospital study over a period of four days, focusing on the safety and procedural aspects of the Glucotrack CBGM sensor lead placement, use, and removal. The sensor lead was placed intravascularly via a percutaneous procedure and connected to a prototype sensor electronics component that was placed on the skin. The six study participants had been previously diagnosed with diabetes mellitus requiring glucose monitoring and intensive insulin therapy. The results established safety of the placement, usage and removal of the CBGM sensor lead. While neither the study nor prototype system was designed to evaluate sensor accuracy, the system performed as expected with similar accuracy results as previously seen in our animal studies. The study met its primary endpoint with no procedure or device related serious adverse events reported from implant through seven days post-removal of the CBGM sensor lead. The study also confirmed the function of the CBGM sensor lead in the subclavian vein. Placement and removal procedures were successfully performed by interventional cardiologists. ISO 13485:2016 Certification On January 21, 2025, we announced that we received ISO 13485:2016 certification from the British Standards Institute (“BSI”). We successfully completed Stage I and Stage II Assessments performed by the notified body, BSI, to verify the Company has established, and is maintaining, a quality management system that meets all requirements of the ISO 13485:2016 standard for design and development of its products. ISO 13485 is an internationally recognized standard for quality management systems, created by the International Organization for Standardization to ensure the safety and effectiveness of medical devices. It builds on the ISO 9001 standard with additional regulatory requirements specific to medical devices. In 2024, the FDA issued the Quality Management System Regulation Final Rule, which harmonizes U.S. requirements with global standards through the adoption of ISO 13485 for medical devices. ISO 13485 is also strongly recommended and widely used in the European Union. Corporate and Regulatory Nasdaq Listing Status Nasdaq Listing Rule 5550(b)(1) requires companies listed on Nasdaq to maintain a minimum of $2,500,000 in stockholders’ equity for continued listing. On May 21, 2024, Nasdaq notified us that our Quarterly Report on Form 10-Q for the period ended March 31, 2024, indicated that we no longer met the Minimum Stockholders’ Equity Requirement. Failure to meet the Minimum Stockholders’ Equity Requirement was a basis for delisting our Common Stock. Because we were not in compliance with the Bid Price Rule at the time we were notified about the non-compliance with the Minimum Stockholders’ Equity Requirement, we were not eligible to submit a plan to regain compliance with the Staff. However, we timely requested a hearing before the Nasdaq Hearings Panel and paid the fee, which resulted in a stay of any suspension or delisting action pending the hearing. The hearing took place on July 9, 2024, and on August 5, 2024, we received the decision of the Panel, and they granted us an extension until November 18, 2024 to regain compliance with the Minimum Stockholders’ Equity Requirement. On November 19, 2024, the Company received a Compliance Letter from Nasdaq, informing the Company that it had regained compliance with the Minimum Stockholders’ Equity Requirement. The Compliance Letter noted, that because the Company’s bid price has closed below the minimum required by the Bid Price Rule following the 2024 November Offering (defined below), the Panel had determined to impose on the Company a Discretionary Panel Monitor, pursuant to Listing Rule 5815(d)(4)(B), for a period of one year from the date of the Compliance Letter, to ensure that the Company maintains long-term compliance with the Minimum Stockholders’ Equity Requirement, the Bid Price Rule, and all of Nasdaq’s continued listing requirements. 37 On December 31, 2024, we received a notification from Nasdaq that for at least the last 30 consecutive business days, the Company was not in compliance with the Bid Price Rule and, in accordance with Nasdaq Listing Rule 5810(c)(3)(A), we have a compliance period of 180 calendar days, or until June 30, 2025, to regain compliance with the Bid Price Rule. If at any time before June 30, 2025, the bid price of our Common Stock closes at $1.00 per share or more for a minimum of ten consecutive business days, Nasdaq will provide us with a written confirmation of compliance with the Bid Price Rule and the matter will be deemed closed. If we do not regain compliance with the Bid Price Rule by June 30, 2025, we may be eligible for an additional 180-day compliance period. To qualify, we would be required to meet the continued listing requirement for market value of publicly held shares and all other initial listing standards for the Nasdaq Capital Market, with the exception of the Bid Price Rule, and would need to provide written notice of our intention to cure the bid price deficiency during the second compliance period by effecting a reverse stock split, if necessary. There can be no assurance that we will be able to continue to maintain compliance with Nasdaq’s continued listing requirements, the Bid Price Rule, or other Nasdaq listing requirements. See “ Risk Factors — Our failure to maintain compliance with Nasdaq’s continued listing requirements could result in the delisting of our Common Stock .” Reverse Stock Splits 2024 Reverse Stock Split We filed with the Delaware Secretary of State a Certificate of Amendment (the “May Certificate of Amendment”), to our Certificate of Incorporation, as amended (the “Certificate of Incorporation”), which became effective at 4:30 p.m. on May 17, 2024 (the “First Effective Time”) to implement a one-for-five (1:5) reverse stock split (the “2024 Reverse Stock Split”) of the shares of our Common Stock. The 2024 Reverse Stock Split was approved by our stockholders at the 2024 annual meeting of the stockholders on April 26, 2024. As a result of the 2024 Reverse Stock Split, every five (5) shares of issued and outstanding Common Stock were automatically combined into one (1) issued and outstanding share of Common Stock, without any change in the par value per share. No fractional shares were issued as a result of the 2024 Reverse Stock Split, and any person who would otherwise be entitled to a fractional share of Common Stock as a result of the 2024 Reverse Stock Split was entitled to receive a cash payment equal to the fraction of a share of Common Stock to which such holder would otherwise be entitled, multiplied by the closing price per share of the Common Stock on Nasdaq at the close of business on the date prior to the First Effective Time. Following the 2024 Reverse Stock Split, the number of shares of Common Stock outstanding was proportionally reduced. The shares of Common Stock underlying the outstanding stock options and warrants were similarly adjusted along with corresponding adjustments to their exercise prices. The 2024 Reverse Stock Split also proportionally reduced the total number of authorized shares of Common Stock from 500,000,000 shares to 100,000,000 shares. 2025 Reverse Stock Split We filed with the Delaware Secretary of State a Certificate of Amendment to our Certificate of Incorporation (the “2025 Certificate of Amendment”) which became effective at 4:30 p.m. on February 3, 2025 (the “Second Effective Time”), to implement a reverse stock split at a ratio of 1-for-20 (the “2025 Reverse Stock Split”) of the shares of our Common Stock. The 2025 Reverse Stock Split was approved by our stockholders at the special meeting of our stockholders held on January 3, 2025 (the “Special Meeting”). As a result of the 2025 Reverse Stock Split, every twenty (20) shares of issued and outstanding Common Stock were automatically combined into one (1) issued and outstanding share of Common Stock, without any change in the par value per share. No fractional shares were issued as a result of the 20254 Reverse Stock Split, and instead, stockholders who otherwise would have been entitled to receive fractional shares because they held a number of shares not evenly divisible by the Reverse Stock Split ratio were entitled to receive an additional fraction of a share of Common Stock to round up to the next whole share. In addition, the stockholders approved at the Special Meeting an 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 (further described below). 38 Increase in Authorized Common Stock On January 3, 2025, the Company filed an amendment to the Company’s Certificate of Incorporation, as to increase the Company’s authorized shares of Common Stock from 100,000,000 to 250,000,000. Financing February 2024 Exchange On February 13, 2024, we entered into the February Exchange Agreement with the February Holders, pursuant to which the Company and the February Holders agreed to exchange the February Warrants owned by the February Holders for shares of Common Stock to be issued by the Company. On February 13, 2024, the Company closed the February Exchange and issued to the February Holders an aggregate of 35,932 shares of Common Stock in exchange for 43,820 February Warrants. April Private Placement On April 22, 2024, we entered into a private placement agreement under which the Company issued 3,968 shares of its Common Stock at a price of $126.0 per share for aggregate gross proceeds of $500,000. The Offering included participation of certain members of the Company’s executive management, Board of Directors and existing shareholders. June 27 Private Placement On June 27, 2024, we entered into note and warrant purchase agreements with the June 27 Investors, providing for the private placement of unsecured promissory notes in the aggregate principal amount of $100,000 and to purchase up to an aggregate of 15,000 shares of Common Stock. The closing occurred on June 27, 2024. July 18 Private Placement On July 18, 2024, we entered into a series of convertible promissory notes with the July 18 Investors, providing for the private placement of unsecured convertible promissory notes in the aggregate principal amount of $360,000. On August 23, 2024, two of the June 27 Investors entered into conversion agreements with the Company, pursuant to which the Company agreed to convert the principal amount, plus any accrued but unpaid interest, of each of the June 27 Notes, totaling $20,076 each, held by the investors into Common Stock at a conversion price of $20.40 per share. On September 5, 2024, another June 27 Investor entered into a separate conversion agreement with the Company, under which the Company agreed to convert the principal amount, plus any accrued but unpaid interest, of the June 27 Note held by the investor, totaling $259,310, into Common Stock at the same conversion price of $20.40 per share. Also in satisfaction of the debt and pursuant to the August Conversion Agreement, the Company issued to each of the two June 27 Investors that converted their notes in August, three August 23 Warrants. Each August 23 Warrant becomes exercisable on August 16, 2025 and has term of 10 years. The August 23 Warrants are exercisable for cash only and have no price-based antidilution. The first August 23 Warrant is for 535 shares of Common Stock and is exercisable at $37.50 per share. The second August 23 Warrant is for 382 shares of Common Stock, exercisable at $52.50 per share. The third August 23 Warrant is for 297 shares of Common Stock, exercisable at $67.50 per share. The June 27 Investor that converted his note in September was issued three September 5 Warrants on the same terms as the August 23 Warrants. The first September 5 Warrant is for 6,915 shares of Common Stock and is exercisable at $37.50 per share. The second September 5 Warrant is for 4,940 shares of Common Stock, exercisable at $52.50 per share. The third September 5 Warrant is for 3,842 shares of Common Stock, exercisable at $67.50 per share. 39 July 30 Private Placement On July 30, 2024, we entered into the July 30 Note and three July 30 Warrants with the July 30 Holder, providing for the private placement of a secured convertible promissory note in the aggregate principal amount of $4,000,000. The July 30 Note bore simple interest at the rate of eight percent (8%) per annum and is due and payable in cash on the earlier of: (a) the twelve (12) month anniversary of July 30 Note, or (b) the date of closing of a Sale Transaction. The July 30 Note was secured by a first-priority security interest on all Company assets. $10.0 Million Public Offering and Concurrent Private Placement On November 13, 2024, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with certain purchasers identified on the signature pages therein, pursuant to which the Company sold in a “best efforts” public offering (the “2024 November Offering”), pursuant to an effective registration statement on Form S-1 (File No. 333- 282158) under the Securities Act, an aggregate of (i) 121,867 shares of its Common Stock (the “Shares”), (ii) 237,845 pre-funded warrants to purchase up to an aggregate of 237,845 shares of Common Stock in lieu of Shares (the “Pre-Funded Warrants”), (iii) 359,712 Series A Common Warrants, and (iv) 359,712 Series B Common Warrants. The public offering price for each Share and accompanying Common Warrants was $27.80, and the public offering price for each Pre-Funded Warrant and accompanying Common Warrants was $27.78 (the “Offering Price”). In a private placement offering completed concurrently with the Offering (the “Concurrent Private Offering”), the July 30 Holder, converted approximately $4,093,112 of debt, which represented the then outstanding principal and accrued interest under a convertible promissory note dated July 30, 2024 (the “July 30 Note Debt”). The July 30 Note Debt was converted to Common Stock and Series A Common Warrants and Series B Common Warrants on substantially the same terms as the November 2024 Offering, resulting in the issuance of 132,036 shares of Common Stock, 132,036 accompanying Series A Common Warrants, and 132,036 accompanying Series B Common Warrants, based on a conversion price of $31.00 per share, which is equal to the consolidated closing bid price of the Common Stock on the Nasdaq Capital Market on November 12, 2024. In addition, concurrently with the November 2024 Offering, the Company completed the July 18 Note Conversion of the outstanding July 18 Notes. The July 18 Notes, which represented an aggregate outstanding principal and accrued interest in the amount of $304,494 were converted at a conversion price of $31.20, which is equal to the Floor Price as defined in the July 18 Notes, for an aggregate of 9,760 shares of Common Stock, 9,760 Series A Common Warrants, and 9,760 Series B Common Warrants. 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 have agreed to issue and sell shares of Common Stock, having an aggregate offering price of up to $8.23 million, from time to time, through an “at-the-market” equity offering program under which Dawson James will act as sales agent (the “Agent”). As of December 31, 2024, no sales of Common Stock had been made pursuant to the Sales Agreement. On March 21, 2025, we sold 12,377,967 shares of Common Stock at an average offering price of $0.304 per share pursuant to the Sales Agreement (the “March ATM Sale”). We received net proceeds of approximately $3,643,000, after deducting fees owed to the placement agent from such sale. February 2025 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 2,638,042 shares of Common Stock at an offering price of $1.15 per share. The shares of Common Stock were offered by the Company pursuant to a prospectus supplement dated February 4, 2025, and accompanying prospectus dated October 3, 2024, in connection with a takedown from the Company’s shelf registration statement on Form S-3 (Registration No. 333-282297), which was declared effective by the SEC, on October 3, 2024 (the “February 2025 Offering” and, together with the March ATM Sale, the “2025 Offerings”). Dawson James acted as the placement agent for the offering pursuant to a placement agency agreement, dated February 4, 2025, by and between the Company and Dawson James. The net proceeds to the Company from the offering were approximately $2,706,000, after deducting fees owed to Dawson James and other offering expenses. The February 2025 Offering closed on February 5, 2025. 40 Warrant Exchange Beginning on January 6, 2025, through March 13, 2025, the Company received exchange notices from certain holders of the Series B Warrants, with respect to an aggregate of 359,612 of the Series B Warrants, requiring the delivery of 9,721,782 shares of Common Stock. The remaining 100 Series B Warrants are exchangeable for an aggregate of approximately 1,940 shares of Common Stock (subject to adjustment in the event of any stock dividend and split, reverse stock split, recapitalization, reorganization or similar transaction). Pro Forma Impact of Registered Direct Offerings, Warrant Exchange, and Series A Warrant Revaluation The following financial information has been developed by application of pro forma adjustments to the historical financial statements of the Company appearing elsewhere in this Annual Report. The unaudited pro forma information gives effect to the 2025 Offerings, the exchange of Series B Warrants to common stock, and the revaluation of Series A Warrants. The unaudited pro forma financial information is presented for informational purposes only and does not purport to represent what the results of operations or financial position of the Company would have been had the transactions described above actually occurred on the dates indicated, nor do they purport to project the financial condition of the Company for any future period or as of any future date. The unaudited pro forma financial information should be read in conjunction with the Company’s financial statements and notes thereto included elsewhere in this Annual Report. Unaudited Pro Forma Balance Sheet Year Ended December 31, 2024 Adjustments As Reported Series B Warrant Exercise 2025 Offerings Revaluation of Series A Warrants Pro Forma as Adjusted Current Assets Cash and cash equivalents 5,617 6,300 11,917 Other current assets 151 151 Total current assets 5,768 12,068 Operating lease right-of-use asset, net 59 59 Property and equipment, net 95 95 Restricted cash 10 10 TOTAL ASSETS 5,932 12,232 LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY Current Liabilities Accounts payable 992 992 Operating lease liability 26 26 Convertible promissory notes 5 5 Other current liabilities 252 252 Total current liabilities 1,275 1,275 Non-Current Liabilities Derivative financial liabilities 17,421 (14,877 ) (2,452 ) 92 Operating lease liability, non-current 33 33 Loans from stockholders 203 203 Total liabilities 18,932 1,603 Commitments and contingent liabilities Stockholders’ (Deficit) Equity Common Stock of $0.001 par value 100,000,000 shares authorized as of December 31, 2024 and 2023; 791,609 and 208,914 shares issued and outstanding as of December 31, 2024 and 2023, respectively 1 1 Additional paid-in capital 119,229 14,877 6,300 2,452 142,858 Receipts on account of shares 228 228 Accumulated other comprehensive income (8 ) (8 ) Accumulated deficit (132,450 ) (132,450 ) Total stockholders’ (deficit) equity (13,000 ) 10,629 TOTAL LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY 5,932 12,232 41 Financial Overview Operating Expenses 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 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 other product candidates. 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. Other (Income) Expense Other income expense, consist primarily of the change in fair value of derivatives liabilities, loss on the issuance of equity, loss on settlement of debt to equity and finance income. Results of Operations – Comparison of the Years Ended December 31, 2024 and 2023 All information below is stated in thousands of US dollars. The following discussion of our operating results explains material changes in our results of operations for the years ended December 31, 2024 and December 31, 2023. The discussion should be read in conjunction with the financial statements and related notes included elsewhere in this Annual Report. Research and Development Expense Research and development expenses were $9,499 for the year ended December 31, 2024, as compared to $4,704 for the prior-year period. The increase of $4,795 was primarily attributable to increased expenses related to product design, development and manufacturing activities and pre-clinical animal studies. General and Administrative Expense General and administrative expenses were $4,655 for the year ended December 31, 2024, as compared to $2,278 for the prior-year period. The increase of $2,377 is primarily attributable to increased legal and professional fees, personnel costs and placement agent fees. Share-based compensation expense included in research and development and general and administrative expense, for the fiscal years ended December 31, 2024 and 2023, was comprised as follows: December 31, 2024 December 31, 2023 Research and development 307 176 General and administrative 364 159 671 335 The increase in share-based compensation expense is attributable to the current year vesting of equity awards granted to employees, directors and consultants supporting our research and development and general and administrative functions. 42 Other (Income) Expense, net Other expense was $8,050 for the year ended December 31, 2024, as compared to other income $7 for the prior-year period. The increase in other expense is primarily attributed to recognized losses on the settlement of debt and the issuance of warrants containing derivative features. Net Loss Net loss was $22,597 for the year ended December 31, 2024, as compared to a net loss of $7,097 for the prior-year period. The increase in net loss is attributable primarily to the expense classifications discussed above. Liquidity and Capital Resources As of December 31, 2024, we had $5,617 in cash and cash equivalents compared with $4,492 in cash and cash equivalents as of December 31, 2023. The net increase in cash and cash equivalents was attributable to the $13,743 received from financing activities offset by cash used in operating and investing activities of $12,594. We have a history of recurring losses, and as of December 31, 2024, we have a stockholders’ deficiency of $13,000. During the fiscal year ended December 31, 2024, we recorded a net loss of $22,597. Our primary requirements for liquidity have been to fund product and clinical development activities and to satisfy our general corporate and working capital needs. Subsequent to December 31, 2024, we received approximately $6,349 through the February 2025 Offering and the March ATM Sale. In addition, as noted above, the impact of the subsequent financings, the exercise of Series B Warrants and the revaluation of Series A warrants has resulted in Stockholders’ Equity of $10,629 as of December 31, 2024, on a pro forma basis. Based on our operating plans, we do not expect that our current cash and cash equivalents as of December 31, 2024, 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 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. Going Concern Uncertainty To date, we have not yet commercialized the Glucotrack CBGM. Further development and commercialization efforts are expected to require substantial additional expenditure. Therefore, we are dependent upon external sources for financing our operations. As of December 31, 2024, we have incurred a stockholders’ deficiency of $13,000, which includes an accumulated deficit of $132,450. In addition, we have generated operating losses and negative operating cash flow for all reported periods. As of December 31, 2024, the balance of cash and cash equivalents amounted to $5,617. During the year ended December 31, 2024, we received approximately $13,734 through public offerings and debt issuances which were subsequently converted to equity. In addition, subsequent to the balance sheet date, we received $6,349 through the sale of shares of Common Stock. We plan to finance our operations through the sale of debt or equity securities (including the shelf registration statement on Form S-3 that was declared effective on October 3, 2024 by the SEC which allows us to register up to $30,000 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 or generating sufficient revenue from sale of the Glucotrack CBGM in order to continue our operations as a going concern. 43 Management has considered the significance of such conditions in relation to our ability to meet current obligations and to achieve our business targets and determined that these conditions raise substantial doubt about our ability to continue as a going concern. Critical Accounting Policies and Estimates The discussion and analysis of our financial condition and results of operations are based on our audited consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States, or GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, expenses, and related disclosures. We evaluate our estimates on an ongoing basis. We base our estimates on historical experience and on other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. We believe the following accounting policies and estimates are critical to aid you in understanding and evaluating our reported financial results. Share-Based Compensation We grant equity-based awards under share-based compensation plans. We estimate the fair value of share-based payment awards using the Black-Scholes option valuation model. This fair value is then amortized over the requisite service periods of the awards. The Black-Scholes option valuation model requires the input of subjective assumptions, including price volatility of the underlying stock, risk-free interest rate, dividend yield, and expected life of the option. Share-based compensation expense is based on awards ultimately expected to vest and therefore is reduced by expected forfeitures. Changes in assumptions used under the Black-Scholes option valuation model could materially affect our net loss and net loss per share. Derivative Financial Instruments We review the terms of the Common Stock, warrants and convertible debt we issue to determine whether there are derivative instruments, including embedded conversion options that are required to be bifurcated and accounted for separately as derivative financial instruments. In circumstances where the host instrument contains more than one embedded derivative instrument, including a conversion option, that is required to be bifurcated, the bifurcated derivative instruments are accounted for as a single, compound derivative instrument. Derivatives are initially recorded at fair value and are then revalued at each reporting date with changes in the fair value reported as non-operating income or expense. When the equity or convertible debt instruments contain embedded derivative instruments that are to be bifurcated and accounted for as liabilities, the total proceeds received are first allocated to the fair value of all the bifurcated derivative instruments. The remaining proceeds, if any, are then allocated to the host instruments themselves, usually resulting in those instruments being recorded at a discount from their face value. 44 Recent Accounting Pronouncements Information regarding recent accounting pronouncements is contained in Note 2 to the Consolidated Financial Statements, included elsewhere in this report. Off Balance Sheet Arrangements We do not have any off-balance sheet arrangements. Item 7A. Quantitative and Qualitative Disclosure About Market Risk As a smaller reporting company, we have elected not to provide the disclosure required by this item. Item 8. Financial Statements and Supplementary Data Reference is made to pages F-1 through F-31 comprising a portion of this Annual Report on Form 10-K, which are incorporated by reference under this Item. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None.