What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2025-05-14 compared with 2024-11-14 · 379 added, 751 removed, 64 unchanged (95% of the section changed)

Financial Statements

CONSOLIDATED BALANCE SHEETS

thousands of US dollars except share data)

September 30,

GLUCOTRACK INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(i n thousands of US dollars except share data)

In thousands of US dollars

(except stock data)

Current Assets

2 unchanged sentences

Total current assets

Operating lease right-of-use asset, net (Note 3C)

Operating lease right-of-use asset, net

Property and equipment, net

Restricted cash

LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)

Current Liabilities

Accounts payable

Operating lease liability, current (Note 3C)

Promissory notes (Note 3G and Note 3H)

Convertible promissory notes (Note 3F)

Derivative financial liabilities (Note 3G and Note 3H)

Operating lease liability, current

Convertible promissory notes

Other current liabilities

1 unchanged sentence

Non-Current Liabilities

Derivative financial liabilities (Note 2F and Note 3B)

Operating lease liability, non-current

Loans from stockholders

Operating lease liability, non-current (Note 3C)

Total liabilities

Commitments and contingent liabilities (Note 4)

Stockholders’ equity

Stockholders’ Equity (Deficit)

Common Stock of $ 0.001 par value (“Common Stock”):

100,000,000 shares authorized as of September 30, 2024 and December 31, 2023;

5,772,026 and 4,178,274 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively

Common Stock of $ 0.001 par value (“Common Stock”):100,000,000 shares authorized as of September 30, 2024 and December 31, 2023;

5,772,190 and 4,178,274 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively

250,000,000 and 100,000,000 shares authorized as of March 31, 2025 and December 31, 2024, respectively;

25,585,853 and 791,609 shares issued and outstanding as of March 31, 2025 and December 31, 2024, respectively

Common Stock of $0.001 par

value (“Common Stock”) 250,000,000 and 100,000,000 shares authorized as of March 31, 2025 and December 31, 2024, respectively;

25,585,853 and 791,609 shares issued and outstanding as of March 31, 2025 and December 31, 2024, respectively

Additional paid-in capital

2 unchanged sentences

Accumulated deficit

Total stockholders’ (deficit) equity

TOTAL LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY

accompanying notes are an integral part of these condensed interim consolidated financial statements.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

thousands of US dollars except share data) (unaudited)

Total stockholders’ equity (deficit)

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)

The accompanying notes are an integral part of these

condensed interim consolidated financial statements.

GLUCOTRACK INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE LOSS

(in thousands of US dollars except share data) (unaudited)

Three-month period ended

September 30,

Nine-month period ended

September 30,

Research and development expenses

Marketing expenses

General and administrative expenses

Operating expenses

Research and development

General and administrative

Selling and marketing expenses

Total operating expenses

Operating loss

Finance (income) expenses, net (Note 5)

Other comprehensive (income) loss:

Other (income) expense

Change in fair value of derivative liabilities

Other (income) expense, net

Finance expenses (income), net

Other comprehensive income:

Foreign currency translation adjustment

2 unchanged sentences

Weighted average number of common stock used in computing basic and diluted loss per common stock

accompanying notes are an integral part of these condensed interim consolidated financial statements.

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY

thousands of US Dollars except share data) (unaudited)

In thousands of US Dollars (except share data)

The accompanying notes are an integral part of these

condensed interim consolidated financial statements.

GLUCOTRACK INC.

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’

(in thousands of US Dollars except share data) (unaudited)

Comprehensive

Stockholders’

In thousands of US Dollars (except share data)

Accumulated Other

Comprehensive

Balance as of January 1, 2023

$ ( 101,901 )

Loss for the period

Other comprehensive income

Stock-based compensation

Deemed dividend resulted from trigger of down round protection feature of certain warrants granted

Issuance of Common Stock and pre-funded warrants upon completion of public offering, net of offering expenses

Issuance of restricted shares as compensation towards directors

Balance as of September 30, 2023

$ ( 107,441 )

Balance at July 1, 2023

$ ( 105,218 )

Loss for the period

Other comprehensive income

Stock-based compensation

Balance as of September 30, 2023

$ ( 107,441 )

Balance as of January 1, 2024

$ ( 109,853 )

Stockholders’

Balance as of January 1, 2024 (Audited)

Loss for the period

2 unchanged sentences

Issuance of restricted shares as compensation towards directors

Issuance of restricted shares as payment for achievement of milestone pursuant to purchase agreement (Note 4B)

Exercise of prefunded warrants into shares

Exchange of warrants into shares

Restricted shares to be issued as compensation towards directors

Exercise of prefunded warrants into shares (Note 3A)

Exchange of warrants into shares (Note 3B)

Issuance of Common Stock upon private placement transaction (Note 3D)

Issuance of detachable warrants through private placement transactions

(Note 3F and Note 3H)

Issuance of shares and warrants as settlement of financial liabilities

(Note 3I and Note 3J)

Issuance of restricted shares as payment for a previous achievement of milestone pursuant to purchase agreement (Note 4B)

Balance as of September 30, 2024

$ ( 122,356 )

Balance as of July 1, 2024

$ ( 117,269 )

Balance as of March 31, 2024 (Unaudited)

Balance as of January 1, 2025

Loss for the period

1 unchanged sentence

Stock-based compensation

Restricted shares to be issued as compensation towards directors

Issuance of detachable warrants through private placement transactions

(Note 3F and Note 3H)

Issuance of shares and warrants as settlement of financial liabilities

(Note 3I and Note 3J)

Balance as of September 30, 2024

$ ( 122,356 )

amount lower than $1.

accompanying notes are an integral part of these condensed interim consolidated financial statements.

CONSOLIDATED STATEMENTS OF CASH FLOWS

thousands of US Dollars) (Unaudited)

Nine-month period ended

September 30,

Issuance of common stock upon completion of public offering, net of offering expenses

Cashless exercise of warrants into common stock

Stock split adjustment

Balance as of March 31, 2025 (Unaudited)

Represents amount lower than $1.

The accompanying notes are an integral part of these

condensed interim consolidated financial statements.

GLUCOTRACK INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands of US Dollars)

Three-month period ended

CASH FLOWS FROM OPERATING ACTIVITIES:

1 unchanged sentence

Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation and amortization

Stock-based compensation

Issuance of restricted shares as compensation towards directors

Change in fair value of derivative liability (Note 2H)

Amortization of debt discount and interest expense related to promissory notes

Linkage difference on principal of loans from stockholders

Revaluation expenses incurred from settlement of financial liabilities (Note 3I and Note 3J)

Revaluation expenses related to derivative financial liabilities (Note

Discount amortization and interest expenses related to promissory notes

(Note 3F, Note 3G and Note 3H)

Changes in assets and liabilities:

Other current assets

Accounts payable

Other current liabilities

Increase in other current assets

Increase in accounts payable

Increase (Decrease) in other current liabilities

Net cash used in operating activities

3 unchanged sentences

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds received from private placement transaction (Note 3D)

Issuance of promissory notes and detachable warrants through private placement

transaction (Note 3F)

Issuance of convertible promissory notes and bifurcated conversion feature

through private placement transaction (Note 3G)

Issuance of convertible promissory note, bifurcated conversion and redemption

features and detachable warrants through private placement transaction (Note 3H)

Net proceeds received from underwritten U.S.

public offering

Net proceeds from underwritten U.S.

public offerings (Note 3A)

Net cash provided by financing activities

3 unchanged sentences

Cash and cash equivalents, and restricted cash, end of period

Three-month period ended

Supplemental disclosure of cash flow activities:

(a) Net cash (received) paid during the year for:

(b) Non-cash investment and financing activities:

Deemed dividend upon trigger of down round protection

Recognition of right for use asset against a lease liability (Note 3C)

Issuance of shares and warrants as settlement of financial liabilities (Note 3I and Note 3J)

accompanying notes are an integral part of these condensed interim consolidated financial statements.

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

thousands of US Dollars, except share and per share data)

(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 development of an Implantable Continuous Glucose Monitor (CGM) for persons with Type 1 diabetes and insulin-dependent

Type 2 diabetes (the “Glucotrack CBGM Product”).

and capital resources

date, the Company has not yet commercialized the Glucotrack CBGM Product.

Further development and commercialization efforts are

expected to require substantial additional expenditure.

Therefore, the Company is dependent upon external sources for financing its

As of September 30, 2024, the Company has incurred an accumulated deficit of $ 122,356 .

in addition, the Company has generated operating losses and negative operating cash flow for all reported periods.

As of September

30, 2024, the balance of cash and cash equivalents amounted to $ 346 ,

together with the net proceeds in total amount of $ 8,873 which expected to be received upon closing of a public offering through

registration statements on Form S-1 (see also Note 6 below) on November 14, 2024.

the year ended December 31, 2023, the Company raised net proceeds of $ 8,730

through completion of underwritten public offering.

Moreover, during the period of nine months ended September 30, 2024, the Company entered into (i) exchange agreement with certain shareholders

under which warrants with down round protection feature have been exchanged into shares of common stock in order to facilitate its equity

structure (see also Note 3B below), (ii) private placement agreement under which the Company raised proceeds of $ 500

(see also Note 3D below), (iii) unsecured promissory notes

and warrant agreements under which the Company raised proceeds of $ 100 (see also Note 3F below), (iv) unsecured promissory notes under

which the Company raised proceeds of $ 360 (see also Note 3G below), (v) secured promissory note and warrant agreements under which the

Company raised proceeds of $ 4,000 (see also Note 3H below) and (vi) conversion agreements under which certain financial liabilities have

been settled for issuance of shares of common stock and warrants of the Company (see also Note 3I and Note 3J below ).

Company plans to finance its operations through the sale of equity securities (including shelf registration statement on Form S-3 was declared effective on October 3, 2023 by the Securities

and Exchange Commission (SEC) which allows the Company to register up to $ 30,000 of certain equity and/or debt securities of

the Company through prospectus supplement) and/or debt securities.

There can be no assurance that the Company

will succeed in obtaining the necessary financing or generating sufficient revenue from sale of its Glucotrack CBGM Product in

order to continue its operations as a going concern.

(a) Net cash paid during the quarter for:

(b) Non-cash activities:

Recognition of right for usage asset against a lease liability

The accompanying notes are an integral part of these

condensed interim consolidated financial statements.

GLUCOTRACK INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands of US Dollars)

NOTE 1 – GENERAL

Company was incorporated on May 18, 2010 under the laws of the State of Delaware.

The Company is currently developing an implantable

continuous blood glucose monitor , the Glucotrack CBGM, for persons with Type 1 diabetes and insulin-dependent Type 2 diabetes.

Glucotrack CBGM is being developed 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.

The Company has continued to evolve its sensor chemistry following the results

of the in-vitro feasibility study.

Recently the Company announced that a 3-year longevity is feasible leveraging both in-vitro and

in-silico test results.

The Company has 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.

to the above progress on the Glucotrack CBGM, the Company has also successfully demonstrated continuous glucose sensing in the epidural

This latter approach is intended for patients with diabetes already contemplating spinal cord stimulation therapy for their

regulatory submission has been made for a first in human study outside of the United States.

This is intended to demonstrate acute

device performance and safety.

All preparatory clinical activities and applicable regulatory approvals were completed in the fourth

quarter of 2024.

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.

Company believes its 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.

and Going Concern

date, the Company has not yet commercialized the Glucotrack CBGM.

Further development and commercialization efforts are expected

to require substantial additional expenditure.

Therefore, the Company is dependent upon external sources for financing its operations.

As of March 31, 2025, the Company has incurred an accumulated deficit of $ 139,283 .

In addition, the Company has generated operating

losses and negative cash flow from operations since inception.

As of March 31, 2025, the balance of cash and cash equivalents amounted

the three months ended March 31, 2025, the Company raised $ 6.4 million through the sale of shares of common stock, par value $ 0.001

per share (the “Common Stock”).

The Company plans to finance its operations through the sale of equity securities

(and/or debt securities).

There can be no assurance that the Company will succeed in obtaining the necessary financing or generating

sufficient revenue from sale of its Glucotrack CBGM in order to continue its operations as a going concern.

has considered the significance of such conditions in relation to the Company’s ability to meet its current obligations and

1 unchanged sentence

continue as a going concern.

condensed interim consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

thousands of US Dollars)

2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

of Presentation

accompanying unaudited condensed interim consolidated financial statements and related notes should be read in conjunction with the

Company’s consolidated financial statements and related notes included in the Company’s annual report on Form 10-K for

the fiscal year ended December 31, 2023, as was filed with the Securities and Exchange Commission (“SEC”) on March 28,

The unaudited condensed interim 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.

condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Reverse Stock Split and Increase in Authorized Common Stock

Company filed with the Delaware Secretary of State a Certificate of Amendment to its Certificate of Incorporation which became effective

on February 3, 2025, to implement a reverse stock split at a ratio of 1-for-20 (the “2025 Reverse Stock Split”)

of the shares of its Common Stock.

The 2025 Reverse Stock Split was approved by the Company’s stockholders at the special meeting

of stockholders held on January 3, 2025 (the “Special Meeting”).

All shares and per share numbers in these interim condensed

consolidated financial statements have been retroactively adjusted and are reflected on a post-reverse share split basis.

January 3, 2025, the Company filed an amendment to the Company’s 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 the Company’s 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 the Company upon the exercise of Series A Warrants (defined below) and the cashless

exchange of Series B Warrants (defined below).

GLUCOTRACK INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands of US Dollars)

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING

Basis of Presentation

The accompanying unaudited condensed interim consolidated financial statements and related notes should be read in conjunction with the Company’s consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024, as was filed with the SEC on March 31, 2025.

The unaudited condensed interim 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.

results for the period of three and nine months ended September 30, 2024 are not necessarily indicative of the results to be expected

for the year ending December 31, 2024 or for any other interim period or for any future period.

of Estimates in the Preparation of Financial Statements

preparation of the financial statements in conformity with 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 financial statements, and the reported amounts of expenses during the reporting periods.

Actual results could

differ from those estimates.

As applicable to these interim financial statements, the most significant estimates and assumptions include identification and measurement of financial instruments.

of Consolidation

condensed interim consolidated financial statements include the accounts of the Company and its subsidiary.

Significant intercompany

balances and transactions have been eliminated in consolidation.

and Cash Equivalents

equivalents are short-term highly liquid investments which include short-term bank deposits (up to three months from date of deposit),

that are not restricted as to withdrawals or use that are readily convertible to cash with maturities of three months or less as

of the date acquired.

of equity-classified contracts

modification or exchange of equity-classified contracts, such as warrants that were classified as equity before the modification

or exchange and remained eligible for equity classification after the modification, is accounted for in a similar manner to a modification

of stock-based compensation.

Accordingly, the incremental fair value from the modification or exchange (the change in the fair value

of the instrument before and after the modification or exchange) is recognized as a reduction of retained earnings of increase of

accumulated deficit as a deemed dividend.

Modifications or exchanges that result in a decrease in the fair value of an equity-classified

share-based payment awards are not recognized.

In addition, the amount of the deemed dividend is also recognized as an adjustment

to earnings available to common shareholders for purposes of calculating earnings per share.

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

thousands of US Dollars)

2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)

Convertible Promissory Notes

initial recognition of convertible promissory notes and similar instruments, the Company considers the provisions of ASC 815-40,

“Derivatives and Hedging - Contracts in Entity’s Own Equity” (“ASC 815-40”) in order to determine whether

the conversion features embedded within the convertible instrument should be separated from the host instrument.

it is determined that an embedded derivative required to be bifurcated (such as embedded conversion feature that does not qualify

for equity classification), the Company recognized the embedded derivative bifurcated as a separate derivative liability upon

initial recognition and on subsequent periods at fair value.

The remaining consideration amount received or allocated to the entire

convertible instrument is allocated to the host debt instrument.

The difference between the face value of the host and such an

allocated amount represents a discount which is amortized as finance expense to profit or loss using an effective interest method

over the term of the note until its stated maturity.

it is determined that the embedded conversion feature qualifies for equity classification (such when the embedded conversion option,

if it were freestanding, is not qualified as a derivative in accordance with the provisions of ASC 815-10, “Derivatives and

Hedging” since its terms did not require or permit net settlement or when the embedded conversion option is indexed to the

entity’s own stock), the conversion option is not bifurcated.

When bifurcation is not required, the Company considers whether

the debt instrument involves a significant premium (i.e.

when the proceeds received or allocated upon issuance exceed the principal

amount that will be paid at maturity).

When it is determined that a substantial premium exists, the entire premium is allocated to

paid-in capital and when it is determined, otherwise no additional accounting is required and the convertible promissory note is

accounted for at amortized cost using effective interest method over the term of the note until its stated maturity.

of proceeds and related issuance costs

multiple instruments are issued in a single transaction (package issuance), the total net proceeds from the transaction are allocated

among the individual freestanding instruments identified.

The allocation occurs after identifying all freestanding instruments and

the subsequent measurement basis for those instruments.

instruments that are required to be subsequently measured at fair value (such as derivative liabilities) are measured at fair value

and the remaining consideration is allocated to other financial instruments that are not required to be subsequently measured at

fair value (such as liabilities measured at amortized cost, common shares and warrants eligible for equity classification), based

on the relative fair value basis for such instruments.

costs allocated to financial instruments that are required to be subsequently measured at fair value immediately expensed.

costs allocated to shares and warrants classified as equity components and are recorded as a reduction of additional paid-in capital.

Issuance costs allocated to financial liabilities measured at amortized cost are recorded as a discount and accreted over the contractual

term of the financial instrument using the effective interest method.

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

thousands of US Dollars)

2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)

warrants that were issued to several holders are classified as a component of permanent equity since they are freestanding financial

instruments that are legally detachable and separately exercisable, do not embody an obligation for the Company to repurchase its

own shares, and permit the holders to receive a fixed number of Ordinary Shares upon exercise for a fixed exercise price and thus,

are considered as indexed to the Company’s own shares.

As such warrants were issued together with financial instruments that

are not subsequently measured at fair value and the warrants were measured based on allocation of the proceeds received by the Company

in accordance with the relative fair value basis.

When applicable, direct issuance expenses that were allocated to certain warrants

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 three

months’ period ended March 31, 2025 are not necessarily indicative of the results to be expected for the year ending December 31,

2025 or for any other interim period or for any future period.

Use of Estimates in the Preparation of Financial

The preparation of the condensed

consolidated financial statements in conformity with US 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 financial statements, and

the reported amounts of expenses during the reported periods.

Actual results could differ from those estimates.

As applicable to these

financial statements, the most significant estimates and assumptions relate to evaluation of going concern, the classification of financial

instruments as equity or liability and the determination of the fair value of derivative liabilities.

Principles of Consolidation

The condensed interim consolidated financial statements include the accounts of the Company and its subsidiary.

Significant intercompany balances and transactions have been eliminated in consolidation.

Cash and Cash Equivalents

Cash equivalents are short-term highly liquid investments which include short term bank deposits (up to three months from the date of deposit), that are not restricted as to withdrawals or use that are readily convertible to cash with maturities of three months or less as of the date acquired.

Equity classified warrants

Certain warrants that were determined to be freestanding

financial instruments that are legally detachable and separately exercisable, do not embody an obligation for the Company to repurchase

its own shares, and permit the holders to receive a fixed number of Ordinary Shares upon exercise for a fixed exercise price and thus,

are considered as indexed to the Company’s own shares, were classified as equity instruments.

As such warrants were issued together

with financial instruments that are not subsequently measured at fair value, the warrants were measured based on allocation of the proceeds

received by the Company in accordance with the relative fair value basis.

Direct issuance expenses that were allocated to such warrants

were deducted from additional paid-in capital.

Company applies ASC Topic 842, “Leases” (“ASC 842”) under which the Company determines if an arrangement

is a lease at inception.

are classified as either finance leases or operating leases.

A lease is classified as a finance lease if any one of the following

criteria are met:

(i) the lease transfers ownership of the asset by the end of the lease term, (ii) the lease contains an option

to purchase the asset that is reasonably certain to be exercised, (iii) the lease term is for a major part of the remaining useful

life of the asset, (iv) the present value of the lease payments equals or exceeds substantially all of the fair value of the asset,

or (v) the underlying asset is of such a specialized nature that it is expected to have no alternative use to the lessor at the end

of lease term.

A lease is classified as an operating lease if it does not meet any one of these criteria.

Since all the Company’s

lease contracts for premises do not meet any of the criteria above, the Company concluded that all its lease contracts should be

classified as operating leases.

of Use (“ROU”) assets and liabilities are recognized on the commencement date based on the present value of remaining

lease payments over the lease term.

For this purpose, the Company considers only payments that are fixed and determinable at the

time of commencement.

As most of the Company’s leases do not provide an implicit rate, the Company uses its Incremental Borrowing

Rate (“IBR”) based on the information available on the commencement date in determining the present value of lease payments.

The Company’s IBR is estimated to approximate the interest rate for collateralized borrowing with similar terms and payments

and in economic environments where the leased asset is located.

The ROU asset also includes any lease payments made prior to commencement

and is recorded net of any lease incentives received.

Moreover, the ROU asset may also include initial direct costs, which are incremental

costs of a lease that would not have been incurred if the lease had not been obtained.

The Company uses the long-lived assets impairment

guidance in ASC 360-10, “Property, Plant, and Equipment - Overall”, to determine whether a ROU asset is impaired, and

if so, the amount of the impairment loss to recognize.

Certain leases include options to extend or terminate the lease.

to extend the lease is considered in connection with determining the ROU asset and lease liability when it is reasonably certain

that the Company will exercise that option.

An option to terminate is considered unless it is reasonably certain that the Company

will not exercise the option.

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

thousands of US Dollars)

2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)

and diluted loss per share

loss per share is computed by dividing the loss for the period applicable (after considering the effect of deemed dividend related

to trigger of down round protection feature) for Common Stockholders by the weighted average number of shares of Common Stock

outstanding and shares of Common Stock to be issued upon achievement of certain performance milestones during the period and

upon exercise of pre-funded warrants.

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” and using the if-converted method with respect to certain convertible promissory notes and bifurcated redemption

feature accounted for as derivative financial liability, 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 proceeds to be

received from the exercise of stock options or stock warrants.

to be issued upon exercise of all options and warrants, convertible promissory notes and bifurcated redemption feature, 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 shares issuable as result

of the exercise or conversion of these instruments was anti-dilutive.

net loss and the weighted average number of shares of Common Stock used in computing basic and diluted net loss per Common Stock

for the period of three and nine months ended September 30, 2024 and 2023, is as follows:

OF ANTIDILUTIVE NET LOSS AND WEIGHTED AVERAGE

US dollars (except share data)

Three-month period ended

September 30,

Deemed dividend related to trigger of down round protection feature

Net loss attributable to common stockholders

Shares of Common Stock used in computing basic and diluted net loss per common stock

Shares of Common Stock to be issued upon exercise of pre-funded warrants

Shares of Common Stock to be issued upon achievement of performance milestones

Weighted average number of Common Stock outstanding used in computing basic and diluted net loss per share

Basic and diluted net loss per common stock

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)(CONT.)

thousands of US Dollars)

3 - SIGNIFICANT TRANSACTIONS

of pre-funded warrants

January 3, 2024, 395,294 pre-funded warrants granted through underwritten public offering in April 2023 have been fully

exercised into the same number of shares of Common Stock of the Company.

February 13, 2024, the Company entered into an Exchange Agreement with certain warrant holders (the “Holders”), pursuant

to which the Company and the Holders agreed to exchange (the “Exchange”) warrants with down round protection feature

exercisable to common shares (the “Warrants”) owned by the Holders for shares of Common Stock to be issued by the

On February 15, 2024, 718,641 shares of Common Stock have been issued in exchange for 876,391 Warrants (the “Shares”).

was also agreed that the Holders will not, during the period (“Lock-Up Period”) (i) offer, pledge, announce the intention

to sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option,

right or warrant to purchase, or otherwise transfer or dispose of, directly or indirectly, any Shares, (ii) enter into any swap or

other agreement that transfers, in whole or in part, any of the economic consequences of ownership of the Shares of, whether any

such transaction described in clause (i) or (ii) above is to be settled by delivery of Shares or such other securities, in cash or

otherwise, (iii) make any demand for or exercise any right with respect to, the registration of any Shares or any security convertible

into or exercisable or exchangeable for shares of common stock, or (iv) publicly announce an intention to effect any transaction

specific in clause (i), (ii) or (iii) above, provided that the Holder, during the Lock-Up Period, may (a) sell or contract

to sell Shares at a price higher than $0.50 per Share on any trading day up to 10% of the daily volume of Shares or (b) sell or contract

to sell Shares at a price higher than $0.80 per Share on any trading day with no volume limitation.

Lock-Up Period shall expire at the earliest of (i) 365 days after the date hereof or (ii) until the Shares traded above $ 1.00 per

Share for five consecutive trading days.

Company accounted for the Exchange of the aforesaid warrants with shares as deemed dividend which was calculated at the closing date

by the management using the assistance of external appraiser as the excess of fair value of the share to be issued after taking into

consideration a discount for lack of marketability at a rate of 16.81% over the Lock-Up Period over the fair value of the original

equity instrument (i.e.

warrants which included down round protection feature).

However, since the fair value of the new equity

instrument (common shares) was estimated as lesser than the fair value of the replaced equity instrument, deemed dividend was not

February 19, 2024, the Company entered into Lease Agreement (the “Agreement”) with Tapsak Enterprises LLC dba Virginia

Analytical (the “Landlord”) under which it was agreed that the Company will lease from the Landlord a premises located

in Front Royal, Virginia area for a monthly rental fee of $ 2.5 over a period of 3 -years commencing March 1, 2024 through February

28, 2027 (the “Initial Lease Period”).

Security deposit of $ 2.5 which represents payment of one month is held by the

Landlord which will be return to the Company at the end of the Initial Lease Period.

addition, the Company has an option to renew the Initial Lease Period for another two additional periods of 3-years each following the

Initial Lease Period (the “Option Term”), following advanced notice as defined in the Agreement.

The monthly rental fee over

the Option Term shall be the fair market rate determined as what is a comparable cost for similar property in Front Royal, Virginia area.

In accordance

with the provision of ASC 842, Leases, at the commencement date of the Agreement, the Company recognized the right to use asset

equals to lease liability in total amount of $ 79 .

The lease liability was measured at the present value of the future lease

payments, which are discounted based on an estimate of the incremental interest rate that the Company would be required to pay to

borrow a similar amount for a similar period in order to obtain a similar amount on the initial recognition date of the lease.

As part of the leasing period, the Company considered only the Initial Lease Period as the realization of the option

to extend the period was not considered as reasonably certain.

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)(CONT.)

thousands of US Dollars)

3 - SIGNIFICANT TRANSACTIONS (CONT.)

Agreement (Cont.)

September 30, 2024

Operating right-of-use asset

Current operating lease liability

Non-Current operating lease liability

analysis of the Company’s lease liability:

ANALYSIS OF LEASE LIABILITY

September 30, 2024

Less than one year

Between 1-2 years

More than 2 years

Total operating lease payments

imputed interest

Present value of lease liabilities

information on lease

following is a summary of the weighted average remaining lease terms and discount rate for the lease:

OF WEIGHTED AVERAGE REMAINING LEASE TERMS AND DISCOUNT RATE

September 30, 2024

Lease term (years)

Weighted average discount rate

Placement Agreement

April 22, 2024, the Company entered into a private placement agreement under which the Company issued 79,366 shares of its common

stock at a price of $ 6.30 per share for aggregate gross proceeds of $ 500 (the “Offering”).

The Offering included participation

of certain members of the Company’s executive management, Board of Directors and existing shareholders.

of 2024 Equity Incentive Plan and Reverse Share Split

April 26, 2024, the Company held its Annual Meeting of Shareholders (the “Annual Meeting”) under which the Company’s

stockholders approved, inter alia, the following proposals:

(i) adoption of the Company’s 2024 Equity Incentive Plan and (ii)

an amendment to Article IV of the Company’s Certificate of Incorporation, to effect a reverse stock split of the Company’s

Common Stock at a ratio of between one-for-five and one-for-thirty, with such ratio to be determined at the sole discretion of the

Board of Directors.

Following the Annual Meeting, on April 30, 2024, the Company’s Board of Directors approved a one-for-five

reverse stock split of the Company’s issued and outstanding shares of common stock (the “Reverse Stock Split”).

On May 17, 2024, the Company filed a Certificate of Amendment to the Company’s Certificate of Incorporation with the Secretary

of State of the State of Delaware which effected the Reverse Stock Split.

accounting purposes, 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 Reverse Share Split for all periods presented in these interim consolidated financial statements.

Any fractional shares resulting from the Reverse Share Split were rounded up to the nearest whole share.

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)(CONT.)

thousands of US Dollars)

3 - SIGNIFICANT TRANSACTIONS (CONT.)

and Warrant Purchase Agreements

June 27, 2024, the Company entered into note and warrant purchase agreements (the “Purchase Agreement”) with certain

investors (the “June 27 Investors”), providing for the private placement of unsecured promissory notes in the aggregate

principal amount of $ 100

(the “June 27 Notes” and each a “June 27 Note”) and warrants to purchase up to an aggregate of 300,000

shares of the Company’s Common Stock (the “June 27 Warrants”).

June 27 Notes bear simple interest at a rate of 3% per annum and are due and payable in cash on the earlier of:

(a) 12 months

from the date of the June 27 Note;

or (b) the date the Company raises third-party equity capital in an amount equal to or in excess

of $1,000 (the “Maturity Date”).

The Company may prepay the June 27 Notes at any time prior to the Maturity Date without

If an event of default occurs, the then-outstanding principal amount of the June 27 Notes plus any unpaid accrued interest

will accelerate and become immediately payable in cash.

of June 27 Warrants has an exercise price of $ 4.95

The June 27 Warrants are immediately exercisable and have a 5-year

Upon initial recognition, the management allocated the gross cash proceeds received based on the relative fair value

of the June 27 Notes and the detachable June 27 Warrants in total amount of $ 15 and $ 85 , respectively.

The fair value of the June 27 Note

was determined based on a rating model using a debt discount rate of 28.65 % which represented the Company’s applicable rate of risk.

The fair value of the June 27 Warrants was determined by using Black-Scholes pricing model taking into account, inter alia, expected stock

price volatility of 245 % and risk-free interest rate of 4.52 %.

The amount allocated to June 27 Warrants was classified as a component

of permanent equity (as their terms permit the holders to receive a fixed number of shares of common stock upon exercise for a fixed exercise

June 27 Notes are accounted for as a financial liability measured at amortized cost.

In subsequent periods, the Company recognized a

discount and interest expense over the economic life of the June 27 Notes based on the effective interest rate method.

The following tabular presentation reflects the reconciliation of the carrying amount of the June 27 Notes during

the period of nine months ended September 30, 2024:

OF RECONCILIATION OF THE CARRYING AMOUNT OF JUNE 27 NOTES

Nine-month period ended

September 30, 2024

Total proceeds received

proceeds allocated to June 27 Warrants at initial recognition

Discount amortization and interest expenses related to June

27 Notes (Note 5 below)

Partial conversion June 27 Notes and accrued

Interest (Note 3I and Note 3J below)

Ending balance

During the period commencing the issuance date through September 30, 2024,

none of the June 27 Warrants have been exercised.

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)(CONT.)

thousands of US Dollars)

3 - SIGNIFICANT TRANSACTIONS (CONT.)

Convertible Promissory Notes

July 18, 2024, the Company entered into a series of convertible promissory notes with three directors, and one member of the

Company’s executive management (the “July 18 Investors”), providing for the private placement of unsecured

convertible promissory notes in the aggregate principal amount of $ 360

(the “July 18 Notes” and each a “July 18 Note”).

July 18 Notes bear simple interest at a rate of 8 %

Interest on the outstanding principal will accrue and, unless converted earlier as set forth below, be due and payable on

(i) the 12-month anniversary of the date hereof, or (ii) the closing date of a Qualified Financing, as defined herein (the

“Maturity Date”).

regarding the conversion of the July 18 Notes as discussed below, the Company may not prepay the July 18 Notes without the written

consent of the July 18 Investors.

If not sooner repaid, all outstanding principal and accrued but unpaid interest on the July 18

Notes (the “July 18 Note Balance”), as of the close of business on the day immediately preceding the date of the closing

of the next issuance and sale of capital stock of the Company, in a single transaction or series of related transactions, to

investors resulting in gross proceeds to the Company of at least $ 500

(excluding indebtedness converted in such financing) (a “Qualified Financing”), will automatically be converted into

that number of shares of equity securities of the Company sold in the Qualified Financing equal to the number of shares calculated

by dividing (X) the July 18 Note Balance by (Y) an amount equal to the price per share or other unit of equity securities issued in

such Qualified Financing, and otherwise on the same terms as the security issued in the Qualified Financing, provided that the

conversion price per share shall not be lower than $ 1.56 .

the occurrence of an Event of Default (as defined below), each July 18 Investors may, by written notice to the Company, declare the

July 18 Note to be due immediately and payable with respect to the July 18 Note Balance.

An “Event of Default” means (i)

failure by the Company to pay the July 18 Note Balance on the Maturity Date, (ii) voluntary bankruptcy, or (iii) involuntary

Upon the occurrence of an Event of Default specified in clause (iii) above, the July 18 Note Balance shall automatically

and immediately become due and payable, in all cases without any action on the part of any July 18 Investors.

Upon initial date, the management measured the fair value of the embedded

conversion feature which is accounted for as embedded derivative liability.

The difference between the total gross cash proceeds received

and the fair value of the embedded conversion feature is allocated to July 18 Notes that are measured at amortized cost under which in

subsequent periods the Company recognizes a discount expense over the economic life of the July 18 Notes based on the effective interest

However, the fair value of the embedded derivative liability related to the conversion feature was determined by the management

at an insignificant amount since upon closing of a Qualified Financing the conversion will be done based on market conditions (i.e.

price will be equal to the fair value of the share upon conversion) and thus all proceeds received of $ 360 were allocated to the July

The following tabular presentation reflects the reconciliation of the carrying

amount of the July 18 Notes during the period of nine months ended September 30, 2024:

OF RECONCILIATION OF THE CARRYING AMOUNT OF JUNE 27 NOTES

Nine-month period ended

September 30, 2024

Total proceeds allocated to July 18 Notes at initial recognition

Interest expenses related to July 18 Notes (Note 5 below)

Partial conversion July 18 Notes and accrued Interest (Note 3J below)

Ending balance

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)(CONT.)

thousands of US Dollars)

3 - SIGNIFICANT TRANSACTIONS (CONT.)

Convertible Promissory Note and Warrant Agreements

July 30, 2024, the Company entered into a convertible promissory note and three warrant agreements (the “July 30

Warrants”) with an existing investor (the “July 30 Holder”), providing for the private placement of a secured

convertible promissory note in the aggregate principal amount of $ 4,000

(the “July 30 Note”).

The July 30 Note is not convertible until and unless approved at a meeting of the Company’s

stockholders (the “Stockholder Approval”).

July 30 Note bears simple interest at a rate of 8 %

per annum and is due and payable in cash on earlier of:

12 months anniversary of July 30 Note, or (ii) closing date of a Sale Transaction (defined below) (the “Maturity

The July 30 Note is secured by a first-priority security interest on all Company’s assets.

regarding the conversion of the July 30 Note or a Sale Transaction as discussed below, the Company may not prepay the July 30 Note

without the written consent of the July 30 Holder.

If Stockholder Approval is obtained, the July 30 Note (i)

is convertible at the discretion of the July 30 Holder at a price equal to the closing price of the Common Stock on the date of

conversion and, (ii) if the Closing Price of the Common stock exceeds $ 5.00

per share for a period of 5 consecutive trading days, will automatically convert at a price equal to the 5 daily Volume Weighted

Average Price (“VWAP”) of the Common Stock (subject to adjustment for any stock split, stock dividend, reverse stock

split, combination or similar transaction).

Sale Transaction on or prior to the Maturity Date, the Company will repay the July 30 Holder, at the July 30 Holder’s

election, as follows:

cash equal to 200% of the Note balance, or (ii) transaction consideration in the amount to be received by the Holder in such Sale

Transaction if the July 30 Note was converted pursuant to an optional conversion.

“Sale Transaction” means a merger or

consolidation of the Company with or into any other entity, or a sale of all or substantially all of the Company’s assets, or any other transaction or series of related transactions in which the Company’s stockholders immediately prior

to such transaction(s) receive cash, securities or other property in exchange for their shares and, immediately after such

transaction(s), own less than 50% of the equity securities of the surviving corporation or its parent.

the occurrence of an Event of Default (defined below), the July 30 Holder may, by written notice to the Company, declare the Note to

be due immediately and payable with respect to the July 30 Note balance.

An “Event of Default” means (i)

failure by the Company to pay the July 30 Note balance on the Maturity Date, (ii) the Company becomes subject to a judgement of more

than $ 50,000 ,

(iii) voluntary bankruptcy, or (iv) involuntary bankruptcy.

Upon the occurrence of an Event of Default specified in clause (iii)

above, the July 30 Note balance shall automatically and immediately become due and payable, in all cases without any action on the

part of the July 30 Holder.

July 30 Warrant becomes exercisable 12 months after its issuance and has term of 10

The July 30 Warrants are exercisable for

cash only and have no price-based antidilution.

The first July 30 Warrant is for 2,133,334

shares at $ 1.875

The second July 30 Warrant is for

shares at $ 2.625

The third July 30 Warrant is for 1,185,186

shares at $ 3.375

the initial date, the Company has issued two instruments that include (i) a financial instrument that is considered as “host”

which comprised of July 30 Note and two embedded derivative financial instruments (i.e.

an embedded conversion feature and an embedded

redemption feature to receive cash equals to 200 % of July 30 Note balance upon Sale Transaction) and (ii) three series of detachable

At the initial date, the Company is required to estimate the fair value of both two instruments and allocate the total gross

proceeds received between them based on that relative fair value identified.

The fair value of the embedded derivative financial instruments

the conversion right and the redemption right) should be bifurcated from the host instrument and remeasured on recurring basis

at each reporting period under marked to market approach, the July 30 Note is accounted for under carrying amount whereby discount and

interest expenses are recorded over the economic life of the July 30 Note based on the effective interest rate method and the July 30

Warrants are classified into equity without any further subsequent measurement.

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)(CONT.)

thousands of US Dollars)

3 - SIGNIFICANT TRANSACTIONS (CONT.)

Promissory Note and Warrant Agreements (Cont.)

initial recognition, the management by using the assistance of an external appraiser allocated the gross cash proceeds received

based on the relative fair value of the July 30 Note and the detachable July 30 Warrants in total amount of $ 1,450

and $ 2,550 ,

respectively.

The fair value of the convertible note was determined by using hybrid method that includes conversion

scenario and liquidation scenario taking into account, inter alia, a debt discount rate of 28.65 %.

The fair value of the July 30 Warrants was determined by using Black-Scholes pricing model taking into account, inter alia, expected

stock price volatility of 122.8 %

and risk-free interest rate of 4.78 %.

The amount allocated to July 30 Warrants was classified as a component of permanent equity (as their terms permit the holders to

receive a fixed number of shares of common stock upon exercise for a fixed exercise price).

it was determined that the embedded conversion feature and embedded redemption feature are required to be bifurcated from the host loan

The fair value of the bifurcated derivatives was determined by the management using the assistance of an external appraiser

in a total amount of $ 35

upon initial recognition and in subsequent periods

as derivative liability at fair value through profit and loss.

The remaining amount of $ 1,415

was allocated to the host loan instrument which

in subsequent periods is accounted for using the effective interest method over the term of the loan, until its stated maturity.

following tabular presentation reflects the reconciliation of the carrying amount of the July 30 Note during the period of nine months

ended September 30, 2024:

OF RECONCILIATION OF THE CARRYING AMOUNT OF JULY 30 NOTES

Nine-month period ended

September 30, 2024

Total proceeds received

Total proceeds allocated to July 30 Warrants at initial recognition

Total proceeds allocated to embedded redemption feature at initial recognition

Amortization of discount and interest expenses related to July 30 Note (Note 5 below)

Ending balance

following tabular presentation reflects the reconciliation of the fair value of the embedded conversion feature and embedded redemption

feature during the period of nine months ended September 30, 2024:

OF RECONCILIATION OF FAIR VALUE OF EMBEDDED CONVERSION FEATURE

Nine-month period ended

September 30, 2024

Proceeds allocated to embedded redemption feature at initial recognition

Revaluation expenses related to embedded redemption feature (Note 5 below)

Ending balance

September 24, 2024, the Company held a special meeting of its stockholders under which shares of common stock issuable by the Company

upon conversion of the July 30 Note and exercise of the July 30 Warrants has been approved.

However, through September 30, 2024, July

30 Holder has not elected to trigger the conversion of July 30 Note or the exercise of the July 30 Warrants into shares of common stock.

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)(CONT.)

thousands of US Dollars)

3 - SIGNIFICANT TRANSACTIONS (CONT.)

August 23, 2024 (the “Commitment Date”), the Company and two of June 27 Investors entered into conversion agreement,

under which the Company agreed to convert the principal nominal amount plus any accrued but unpaid interest pursuant to each of June

27 Notes, totalling approximately $ 20 each (the “Debt”), held by the Investors to Common Stock at a conversion price

of $ 1.02 per share.

On October 15, 2024, the Company issued 19,682 shares of common stock for each of the two of the June 27 Investors

in respect of each respective Debt converted.

satisfaction of the Debt, the Company also issued to each of the two June 27 Investors three warrants (each an “August 23 Warrant”).

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 10,707 shares of Common Stock and is exercisable

at $ 1.875 per share.

The second August 23 Warrant is for 7,648 shares of Common Stock, exercisable at $ 2.625 per share.

August 23 Warrant is for 5,948 shares of Common Stock, exercisable at $ 3.375 per share.

above transaction was accounted for as settlements of financial liabilities under which the instruments issued or to be issued to

the June 27 Investors (i.e.

shares of common stock and August 23 Warrants) are eligible for equity classification and thus both have

been recorded as part of the permanent equity based on the total fair value of $ 238 at the Commitment Date.

The difference between

the fair value of these equity instruments and the carrying amount of each of the respective Debt at the Commitment Date amounted

to $ 11 was charged immediately to the finance expenses (see also Note 5 below).

the period commencing the issuance date through September 30, 2024, none of the August 23 Warrants have been exercised.

Sep 5 Conversion

September 5, 2024 (the “Commitment Date”), the Company and one of June 27 Investors and July 18 Investors entered into

a conversion agreement, under which the Company agreed to convert outstanding board fees amounted $ 113 and the principal nominal

amount plus any accrued but unpaid interest pursuant to June 27 Note and July 18 Note, totalling $ 146 (referring together as a “Debt”),

held by the Investor to Common Stock at a conversion price of $ 1.02 per share.

On October 15, 2024, the Company issued 254,226 shares

of common stock for the June 27 Investor in respect of the Debt converted.

satisfaction of the Debt, the Company also issued to June 27 Investor and July 18 Investor three warrants (each an “September

Each September 5 Warrant becomes exercisable on August 16, 2025 and has term of 10 years.

The September 5 Warrants

are exercisable for cash only and have no price-based antidilution.

The first September 5 Warrant is for 138,299 shares of Common

Stock and is exercisable at $ 1.875 per share.

The second September 5 Warrant is for 98,785 shares of Common Stock, exercisable at

$ 2.625 per share.

The third September 5 Warrant is for 76,833 shares of Common Stock, exercisable at $ 3.375 per share.

above transaction was accounted for as settlements of financial liabilities under which the instruments issued or to be issued to

the July 18 Investor (i.e.

shares of common stock and September 5 Warrants) are eligible for equity classification and thus both

have been recorded as part of permanent equity based on the total fair value of $ 1,505 at the Commitment Date.

The difference between

the fair value of these equity instruments and the carrying amount of the Debt at the Commitment Date amounted to $ 227 was charged

immediately to the finance expenses (see also Note 5 below).

the period commencing the issuance date through September 30, 2024, none of the September 5 Warrants have been exercised.

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)(CONT.)

thousands of US Dollars)

4 - COMMITMENTS AND CONTINGENT LIABILITIES

2004, the Israeli Innovation Authority (IIA) provided Integrity Israel with a grant of approximately $ 93

(NIS 420,000 ),

for develop a non-invasive blood glucose monitor (the “Development Plan”).

Integrity Israel is required to pay royalties

to IIA at a rate ranging between 3 - 5 %

of the proceeds from sale of the Company’s products arising from the Development Plan up to an amount equal to $ 93 ,

plus interest at LIBOR from the grant date.

As to replacement of the LIBOR benchmark rate, even though the IIA has not

declared the alternative benchmark rate to replace the LIBOR, the Company does not believe it will have a significant impact.

September 30, 2024, the remaining contingent liability with respect to royalty payment on future sales equals approximately $ 73 ,

excluding interest.

Warrants classified as derivative liabilities

Upon initial recognition of Series A Warrants and

Series B Warrants that were issued in November 2024 as part of an equity issuance and debt conversions, management considered the provisions

of ASC 815-40, Derivatives and Hedging — Contracts in Entity’s Own Equity and determined that the settlement amount of Series

A Warrants and Series B Warrants might not be based on an exchange of a fixed number of shares for a fixed amount of consideration and

thus such warrants are not eligible to be considered as indexed to the Company’s own shares.

Accordingly, the Series A Warrants

and Series B Warrants were accounted for as warrant derivative liability at fair value and the changes in fair values are carried to profit

In accordance with ASC 210-10-20, the warrant derivative liability is presented as a noncurrent liability since its settlement

will require the issuance of shares and not the use of any resources that are properly classified as current assets.

GLUCOTRACK INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands of US Dollars)

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING

POLICIES (CONT.)

Fair value of financial instruments

ASC Topic 825-10, “Financial Instruments” defines financial instruments and requires disclosure of the fair value of financial instruments held by the Company.

The Company considers the carrying amount of cash and cash equivalents, restricted cash, accounts receivable, other current assets, accounts payable and other current liabilities balances, to approximate their fair values due to the short-term maturities of such financial instruments.

ASC Topic 825-10, establishes the following fair value hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value:

1 – Quoted prices (unadjusted) in active markets that are accessible at the measurement

date for assets or liabilities.

The fair value hierarchy gives the highest priority to Level

2 – Observable prices that are based on inputs not quoted on active markets but corroborated

by market data.

3 – Unobservable inputs are used when little or no market data is available.

3 inputs are considered as the lowest priority under the fair value hierarchy.

The Company did not estimate the fair value of the loans received

from stockholders since their repayment schedule has not yet been determined.

The Company used Level 3 inputs for the valuation methodology

of the derivative liabilities.

The derivative liabilities are adjusted to reflect estimated fair value at each period end, with any decrease

or increase in the estimated fair value being recorded in other income or expense accordingly.

There were no Level 3 assets or liabilities for the three months

ended March 31, 2024.

The following table provides a reconciliation of the beginning and ending balances of the Series A Warrants and

Series B Warrants classified as derivative liabilities for the three months ended March 31, 2025:

Fair Value of Significant Unobservable Inputs (Level

SCHEDULE OF DERIVATIVE LIABILITIES MEASURED AT FAIR VALUE

Balance – November 14, 2024 – Warrant issuance date

Fair value adjustments – Derivative financial liability

Balance – December 31, 2024

Fair value adjustments – Derivative financial liability

Settlement of warrant liability

Balance – March 31, 2025

Segment reporting

Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision maker, or (“CODM”).

The Company has identified its Chief Executive Officer, Paul V.

Goode, as the CODM who is responsible for making decisions regarding resource allocation and assessing performance.

The Company views its operations and manages its business as one operating segment.

The Company’s long-lived assets consist primarily of property and equipment, net, which are all held in the United States.

280, “Segment Reporting” establishes standards for reporting information about

operating segments on a basis consistent with the Company’s internal organization structure

as well as information about services categories, business segments and major customers in

financial statements.

The Company has only one reportable segment, the Glucotrack CBGM Product

Segment, as all their research and development activities are related the development of

the Glucotrack CBGM Product.

Since the Company operates in one operating segment, all required

financial segment information can be found in the consolidated financial statements.

Company adheres to the provisions of ASC 280, Segment Reporting, which establishes standards for the way public business enterprises

report information about operating segments in annual financial statements and requires that those enterprises report selected information

about operating segments in financial statements issued to shareholders.

As the Company is currently involved in the development of one

product, the Platform, the Company has determined that it operates in a single reportable segment.

The Company’s Chief Operating

Decision Maker (CODM), its Chief Executive Officer (CEO), reviews the consolidated results of operations when making decisions about

allocating resources and assessing the performance of the Company as a whole and, hence, the Company has only one reportable segment.

The Company’s assets are located in the United States of America.

Basic and diluted loss per share

Basic net loss per common share is computed as net loss divided by the weighted average number of common shares outstanding for the period.

The Company’s diluted net loss per common share is the same as our basic net loss per common share because it incurred a net loss during each period presented, and the potentially dilutive securities from the assumed exercise of all outstanding stock options and warrants would have an anti-dilutive effect.

As of March 31, 2025 and 2024, stock options and shares issuable upon the conversion of warrants of 3,535,505 and 9,310 , respectively, have been excluded from the computation of diluted shares outstanding.

OF ANTI DILUTIVE SECURITIES

Common stock options

Shares issuable upon the conversion of warrants

GLUCOTRACK INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)(CONT.)

(in thousands of US Dollars)

NOTE 3 - SIGNIFICANT TRANSACTIONS

Equity Issuances

ATM Sales Agreement

On December 17, 2024, the Company entered into an

ATM sales agreement (the “Sales Agreement”) with Dawson James Securities, Inc.

(“Dawson James”), pursuant to which

the Company 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”).

On March 21, 2025, the Company sold 12,377,967 shares

of Common Stock at an average offering price of $ 0.304 per share pursuant to the Sales Agreement for net proceeds of $ 3.6 million, after

deducting fees owed to the Agent from such sale.

As of March 31, 2025, approximately $ 4.5 million remains under the Sales Agreement.

Registered Direct Offering

On February 4, 2025, the Company 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 for gross proceeds of $ 3.0

The net proceeds to the Company from the offering were approximately $ 2.7

million, after deducting fees owed to the placement agent and other offering expenses.

The February 2025 offering closed on February

Dawson James acted as the placement agent for the

offerings pursuant to a placement agency agreement, dated February 4, 2025, by and between the Company and Dawson James.

Warrant Net Share Exercise into Common Stock

As previously disclosed, on November 12, 2024, the

Company commenced a best efforts public offering, and concurrent with the offering entered into a private placement, collectively (the

“2024 November Offerings”) whereas the Company issued an aggregate of (i) 501,507 Series A Warrants (the “Series A Warrants”)

and (ii) 501,507 Series B Warrants (the “Series B Warrants”).

On January 3, 2025, subject to shareholder approval

the number of shares of Common Stock issuable upon exercise of the Series A Warrants and Series B Warrants issued pursuant to the 2024

November Offerings was reset from 501,507 shares to 3,241,886 shares, respectively.

The Company accounted for the 6,483,772

warrants issued in connection with the 2024 November Offerings in accordance with the accounting guidance for derivatives.

further described in the annual financial statements for the year ended December 31, 2024, the Company analyzed the terms of the

Series A and Series B Warrants and determined that such warrants are not eligible for equity classification and thus would be

classified as derivative liabilities and recorded at fair value, with changes in fair value recorded through profit or loss.

Company used the Monte Carlo Simulation method for determining the fair value of the warrants.

The Series A warrant assumptions used

in the Monte Carlo simulations are an expected term of 4.62

years, an exercise price of $ 36.20 ,

comparable company volatility of 113.5 %,

risk-free interest rate of 3.95 %

and share price of $ 6.17 .

The Series B warrant assumptions used in the Monte Carlo simulations are an expected term of 2.5

years, an exercise price of $ 36.20 ,

company historical volatility of 378.6 %,

risk-free interest rate of 4.30 %

and share price of $ 6.17 .

During the three months’ period ended March 31, 2025, there

were cashless exercises of an aggregate 3,241,240 Series B Warrants issued in connection with the 2024 November Offerings, which resulted

in the issuance of 9,723,723 shares of Common Stock.

As these warrants were exercised, as permitted under the respective warrant agreements,

the Company did not receive any cash proceeds.

The warrants were measured at fair value as of the settlement dates, and the change in

fair value of $ 5,745,851 was recognized to net loss.

Upon the exercise of the Series B Warrants, the fair value of the warrants exercised

as of the settlement dates of $ 20,260,138 was classified to equity under additional paid-in capital.

In addition, the remaining 646 Series B Warrants and

3,241,886 Series A Warrants were revalued as of March 31, 2025, resulting in a reduction to the warrant liability of $ 2,369,457 .

GLUCOTRACK INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)(CONT.)

(in thousands of US Dollars)

NOTE 4 – COMMITMENTS AND CONTINGENT LIABILITIES

On March 4, 2004, the Israeli Innovation Authority (the

“IIA”) provided Integrity Israel with a grant of approximately $ 93 (NIS 420,000 ), for its plan to develop a non-invasive blood glucose monitor (the “Development Plan”).

Integrity Israel is 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.

As to the replacement of the LIBOR benchmark rate, even though the IIA has not declared the alternative benchmark rate to replace the LIBOR, the Company does not believe it will have a significant impact.

As of March 31, 2025, the remaining contingent liability with respect to royalty payment on future sales equals approximately $ 93 excluding interest.

Such contingent obligation has no expiration date.

October 7, 2022 (“the Closing Date”), the Company entered into Intellectual Property Purchase Agreement (the “Agreement”)

with Paul Goode, which is the Company’s Chief Executive Officer (the “Seller”), under which it was agreed that

on and subject to the terms and conditions of the Agreement, at the Closing Date, Seller sold and assigned to the Company, all of Seller’s right, title and interest in and to the following assets, properties and rights (collectively,

the “Purchased Assets”):

(i) all rights, title, interests in all current and future intellectual

property, including, but not limited to patents, trademarks, trade secrets, industry know-how and other IP rights relating to an implantable

continuous glucose sensor (collectively, the “Conveyed Intellectual Property”);

and (ii) all the goodwill relating to the

Purchased Assets.

consideration for the sale of the Purchased Assets to the Company, at the Closing Date, the Company paid to Seller cash

in the amount of one dollar and obligated to issue up to 200,000 shares of Common Stock to be issued based upon specified performance

milestones as set forth in the Agreement (the “Purchase Price”).

In addition, if upon the final issuance, the aggregate

200,000 shares represent less than 1.5 % of the then outstanding Common Stock of the Company, the final issuance will include such

number of additional shares so that the total aggregate issuance equals 1.5 % of the outstanding shares (the “True-Up Shares”).

All shares of Common Stock of the Company that will be issued under the agreement shall be (i) restricted over a limited period

as defined in the Agreement and (ii) subject to the lockup provisions.

the Company acquires net assets that do not constitute a business, as defined under ASU 2017-01 Business Combinations (Topic 805)

Clarifying the Definition of a Business (such when there is no substantive process in the acquired entity) the transaction is accounted

for as asset acquisition and no goodwill is recognized.

The acquired In-Process Research and Development intangible asset (“IPR&D”)

to be used in research and development projects which have been determined not to have alternative future use at the acquisition

date, is expensed immediately.

the Closing Date, it was determined that the asset acquisition represents the purchase of IPR&D with no alternative future use.

However, the achievement of each of the performance milestones is considered as a contingent event outside the Company’s

control and thus the contingent consideration which is equal to the fair value of the Purchase Price as measured at the Closing Date

will be recognized when it becomes probable that each target will be achieved within the reasonable period.

Such additional

contingent consideration will be recognized in subsequent periods if and when the contingency (the achievement of targets) is

June 2023, the Company achieved the first performance milestone out of the five performance milestones outlined in the Agreement

executed between the Company and the Seller as of the Closing Date.

As a result, upon the date of the fulfilment of the first performance

milestone the Company was committed to issue 20,000 restricted shares to the Seller.

Accordingly, the Company recorded an amount

of $ 131 as research and development expenses with a similar amount as an increase to additional paid-in capital.

The first performance

milestone shares were issued on February 6, 2024.

May 2024, the Company achieved the second performance milestone out of the five performance milestones outlined in the Agreement

executed between the Company and the Seller as of the Closing Date.

As result, the Company is committed to issue 30,000 restricted

On October 7, 2022 (“the Closing Date”), the Company entered into Intellectual Property Purchase Agreement (the “Agreement”) with Paul Goode, which is the Company’s Chief Executive Officer (the “Seller”), under which it was agreed that on and subject to the terms and conditions of the Agreement, at the Closing Date, Seller sold and assigned to the Company, all of Seller’s right, title and interest in and to the following assets, properties and rights (collectively, the “Purchased Assets”):

(i) all rights, title, interests in all current and future intellectual property, including, but not limited to patents, trademarks, trade secrets, industry know-how and other IP rights relating to an implantable continuous glucose sensor (collectively, the “Conveyed Intellectual Property”);

and (ii) all the goodwill relating to the Purchased Assets.

In consideration for the sale of the Purchased Assets

to the Company, at the Closing Date, the Company paid to Seller cash in the amount of one dollar and obligated to issue up to 10,000 shares

of Common Stock to be issued based upon specified performance milestones as set forth in the Agreement (the “Purchase Price”).

In addition, if upon the final issuance, the aggregate 10,000 shares represent less than 1.5 % of the then outstanding Common Stock of

the Company, the final issuance will include such number of additional shares so that the total aggregate issuance equals 1.5 % of the

outstanding shares (the “True-Up Shares”).

All shares of Common Stock of the Company that will be issued under the agreement

shall be (i) restricted over a limited period as defined in the Agreement and (ii) subject to the lockup provisions.

When the Company acquires net assets that do not constitute

a business, as defined under ASU 2017-01 Business Combinations (Topic 805) Clarifying the Definition of a Business (such when there is

no substantive process in the acquired entity) the transaction is accounted for as asset acquisition and no goodwill is recognized.

acquired In-Process Research and Development intangible asset (“IPR&D”) to be used in research and development projects

which have been determined not to have alternative future use at the acquisition date, is expensed immediately.

At the Closing Date, it was determined that the asset

acquisition represents the purchase of IPR&D with no alternative future use.

However, the achievement of each of the performance milestones

is considered as a contingent event outside the Company’s control and thus the contingent consideration which is equal to the fair

value of the Purchase Price as measured at the Closing Date will be recognized when and if it becomes probable that each target will be

achieved within the reasonable period.

Such additional contingent consideration will be recognized in subsequent periods if and when the

contingency (the achievement of targets) is resolved.

In June 2023, the Seller achieved the first performance

milestone out of the five performance milestones outlined in the Agreement executed between the Company and the Seller as of the Closing

As a result, upon the date of the fulfilment of the first performance milestone the Company was committed to issue 1,000 restricted

shares to the Seller.

Accordingly, the Company recorded stock-based compensation expenses amounted to $ 192 which represents the

quoted price of its Common Stock at the Closing Date, after taking into consideration a discount for lack of marketability in a rate

Accordingly, the Company recorded an amount of $ 131 as stock-based compensation expenses with a similar amount as

an increase to additional paid-in capital.

The first performance milestone shares were issued on February 6, 2024.

In May 2024, the second performance milestone was

achieved out of the five performance milestones outlined in the Agreement executed between the Company and the Seller as of the Closing

As result, the Company was committed to issue 1,500

restricted shares to the Seller.

Accordingly, the Company recorded stock-based compensation expenses amounted to $ 192 which represents

the quoted price of its Common Stock at the Closing Date, after taking into consideration a discount for lack of marketability in a rate

of 30 % over the applicable restriction period.

As of September 30, 2024, the second performance milestone shares were not yet issued.

of September 30, 2024, the achievement of all other remaining performance milestones was not considered probable and thus no

stock-based compensation expenses were recorded with respect to thereof.

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)(CONT.)

thousands of US Dollars)

5 - FINANCE (INCOME) EXPENSES, NET

OF FINANCE EXPENSES

Three-month period ended

Nine-month period ended

Discount amortization and interest expenses related to June 27 Notes

Interest expenses related to July 18 Notes

Discount amortization and interest expenses related to July 30 Note

Revaluation expenses related to derivative financial liabilities

Revaluation expenses incurred from settlement of financial liabilities

Interest on bank deposits

Exchange rate differentials, bank commissions and miscellaneous

Finance (income) expenses,

The second performance milestone shares were issued on November 20, 2024, excluding 11,000

shares that were issued erroneously and were returned to the Company subsequent to the balance sheet date.

On March 26, 2025, the Board determined that the third

milestone was met and that an additional 2,500 shares of Common Stock have been earned under the terms of the IP Purchase Agreement.

a result, an amount of $ 0.6 was recognized to stock-based compensation.

The shares were issued in reliance on the exemption from

registration requirements thereof provided by Section 4(a)(2) of the Securities Act.

As of March 31, 2025, the achievement of all other

remaining performance milestones was not considered probable and thus no stock-based compensation expenses were recorded with respect

GLUCOTRACK INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)(CONT.)

(in thousands of US Dollars)

SUBSEQUENT EVENTS

Management evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that the condensed interim consolidated financial statements were available to be issued.

Based upon this review, the Company did not identify any other significant subsequent events that would have required adjustment or disclosure in the financial statements, except as disclosed below.

of underwritten U.S.

public offering

November 12, 2024, the Company completed a public offering (the “Offering”) under which the Company received gross proceeds

of $ 10,000 in exchange for issuance of an aggregate of (i) 2,437,340 shares (the “Shares”) of its Common Stock, (ii) 4,756,900

pre-funded warrants (the “Pre-Funded Warrants”) to purchase up to an aggregate of 4,756,900 shares of Common Stock (the “Pre-Funded

Warrant Shares”) in lieu of Shares, (iii) Series A Warrants (the “Series A Warrants”) to purchase up to 7,194,240 shares

of Common Stock (the “Series A Warrant Shares”) and (iv) Series B Warrants (the “Series B Warrants” and, together

with the Series A Warrants, the “Common Warrants”) to purchase up to 7,194,240 shares of Common Stock (“the “Series

B Warrant Shares” together with the Series A Warrant Shares, the “Warrant Shares”).

Each Share or Pre-Funded Warrant,

as applicable, was sold together with one Series A Warrant to purchase one share of Common Stock and one Series B Warrant to purchase

one Common Share.

The public offering price for each Share and accompanying Common Warrants was $ 1.39 , and the public offering price

for each Pre-Funded Warrant and accompanying Common Warrants was $ 1.389 (the “Offering Price”).

Pre-Funded Warrants have an exercise price of $ 0.001 per share, are exercisable immediately and expire when exercised in full.

A Common Warrant will have an exercise price per share of $ 1.81 and will be exercisable beginning on the date on which Stockholder

Approval (as defined below) is received and deemed effective (the “Initial Exercise Date” or the “Stockholder Approval

The Series A Warrants will expire on the five-year anniversary of the Initial Exercise Date.

The Series B Warrants will

have an exercise price per share of $ 1.81 and will be exercisable beginning on the Initial Exercise Date.

The Series B Warrants

will expire on the two and one-half year anniversary of the Initial Exercise Date.

The issuance of Common Warrant Shares upon exercise

of the Common Warrants is subject to stockholder approval under applicable rules and regulations of The Nasdaq Stock Market LLC (“Nasdaq”)

(“Stockholder Approval” and the date on which Stockholder Approval is received and deemed effective, the “Stockholder

Approval Date”).

exercise price of Series A Warrants and Series B Warrants is subject to certain adjustments.

If at the time of exercise there is no effective

registration statement registering, or the prospectus contained therein is not available for the issuance of the Series A Warrants Shares

and Series B Warrant Shares to the holders, then the Series A Warrants and Series B Warrants may also be exercised, in whole or in part,

at such time by means of a “cashless exercise”.

In addition, the holders are entitled to an option to require the Company

to purchase the Series A Warrants and Series B Warrants for cash in an amount equal to their Black-Scholes Option Pricing Model value,

in the event that certain fundamental transactions (which some of them are not considered solely within the control of the Company) as

defined in the Series B Warrants agreement, occur.

Additionally, holders of Series B Warrants may also effect an “alternative cashless

exercise” at any time while the Series B Warrants are outstanding following the Initial Exercise Date.

Under the alternate cashless

exercise option, the holder of the Series B Warrant has the right to receive an aggregate number of shares equal to the product of (i)

the aggregate number of shares of Common Stock that would be issuable upon a cashless exercise of the Series B Warrant and (ii) 3.0.

incremental and direct issuance costs are estimated at the total amount of $ 1,127 .

closing of the public offering occurred on November 14, 2024 (the “Closing Date”).

a private placement offering completed concurrently with the completion of the public offering, the July 30 Investor voluntarily

converted approximately $ 4,089 of Debt, which represents the outstanding minimal amount of principal and accrued interest under

the July 30 Note as of November 12, 2024, on substantially the same terms as the public offering, resulting in the issuance of 2,640,717

shares of Common Stock (plus 2,640,717 accompanying Series A Warrants and 2,640,717 accompanying Series B Common Warrants), based on

a conversion price of $ 1.55 per share.

ATM Sales Agreement

On December 17, 2024, the Company entered into an

ATM sales agreement (the “Sales Agreement”) with Dawson James Securities, Inc.

(“Dawson James”), pursuant to which

the Company 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”).

See Note 3A above.

From April 30, 2025 to May 9, 2025, the Company

sold 3,056,856

shares of Common Stock at an average offering price of $ 0.183

share pursuant to the Sales Agreement for net proceeds of $ 543 ,

after deducting fees owed to the Agent from such sale.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements