Glucotrack, Inc. 10-Q

Item 1. Financial Statements GLUCOTRACK INC. CONDENSED CONSOLIDATED BALANCE SHEETS (i n thousands of US dollars except share data) March 31, 2025 December 31, 2024 In thousands of US dollars (except stock data) March 31, 2025 December 31, 2024 Unaudited Current Assets Cash and cash equivalents 9,100 5,617 Other current assets 355 151 Total current assets 9,455 5,768 Operating lease right-of-use asset, net 53 59 Property and equipment, net 94 95 Restricted cash 10 10 TOTAL ASSETS 9,612 5,932 LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) Current Liabilities Accounts payable 1,612 992 Operating lease liability, current 26 26 Convertible promissory notes 9 5 Other current liabilities 303 252 Total current liabilities 1,950 1,275 Non-Current Liabilities Derivative financial liabilities (Note 2F and Note 3B) 177 17,421 Operating lease liability, non-current 26 33 Loans from stockholders 201 203 Total liabilities 2,354 18,932 Commitments and contingent liabilities (Note 4) Stockholders’ Equity (Deficit) 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 26 1 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 26 1 Additional paid-in capital 146,259 119,229 Receipts on account of shares 228 228 Accumulated other comprehensive income 28 ( 8 ) Accumulated deficit ( 139,283 ) ( 132,450 ) Total stockholders’ equity (deficit) 7,258 ( 13,000 ) TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) 9,612 5,932 The accompanying notes are an integral part of these condensed interim consolidated financial statements. 4 GLUCOTRACK INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (in thousands of US dollars except share data) (unaudited) 2025 2024 Three-month period ended March 31, 2025 2024 Operating expenses Research and development $ 1,871 $ 2,148 General and administrative 1,499 733 Selling and marketing expenses 128 70 Total operating expenses 3,498 2,951 Operating loss 3,498 2,951 Other (income) expense Change in fair value of derivative liabilities 3,376 - Other (income) expense, net ( 4 ) - Finance expenses (income), net ( 37 ) ( 24 ) Net Loss 6,833 2,927 Other comprehensive income: Foreign currency translation adjustment ( 36 ) ( 6 ) Comprehensive loss for the period $ 6,797 $ 2,921 Basic and diluted net loss per common stock $ ( 0.67 ) $ ( 11.73 ) Weighted average number of common stock used in computing basic and diluted loss per common stock 10,160,725 249,598 The accompanying notes are an integral part of these condensed interim consolidated financial statements. 5 GLUCOTRACK INC. CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY (in thousands of US Dollars except share data) (unaudited) Numbers of Shares Amount Paid-in Capital account of shares Comprehensive Income Accumulated Deficit Stockholders’ Equity In thousands of US Dollars (except share data) Common Stock Additional Receipts on Accumulated Other Total Numbers of Shares Amount Paid-in Capital account of shares Comprehensive Income Accumulated Deficit Stockholders’ Equity Balance as of January 1, 2024 (Audited) 208,914 - * 112,986 48 16 ( 109,853 ) 3,197 Loss for the period - - - - - ( 2,927 ) ( 2,927 ) Other comprehensive income - - - - 6 - 6 Stock-based compensation - - 22 - - - 22 Issuance of restricted shares as compensation towards directors 1,945 - * 48 ( 48 ) - - - Issuance of restricted shares as payment for achievement of milestone pursuant to purchase agreement (Note 4B) 1,000 - * ( 1 ) - - - - Exercise of prefunded warrants into shares 19,765 - * ( 2 ) - - - - Exchange of warrants into shares 35,932 - * ( 4 ) - - - - Restricted shares to be issued as compensation towards directors - - - 78 - - 78 Balance as of March 31, 2024 (Unaudited) 267,564 - 113,029 78 22 ( 112,780 ) 376 Balance as of January 1, 2025 791,609 1 119,229 228 ( 8 ) ( 132,450 ) ( 13,000 ) Balance 791,609 1 119,229 228 ( 8 ) ( 132,450 ) ( 13,000 ) Loss for the period - - - - - ( 6,833 ) ( 6,833 ) Other comprehensive income - - - - 36 - 36 Stock-based compensation - - 40 - - - 40 Issuance of common stock upon completion of public offering, net of offering expenses 15,016,009 15 6,379 - - 6,394 Cashless exercise of warrants into common stock 9,723,723 10 20,610 - - - 20,620 Stock split adjustment 54,512 - * - * - - - Balance as of March 31, 2025 (Unaudited) 25,585,853 26 146,259 228 28 ( 139,283 ) 7,258 Balance 25,585,853 26 146,259 228 28 ( 139,283 ) 7,258 (*) Represents amount lower than $1. The accompanying notes are an integral part of these condensed interim consolidated financial statements. 6 GLUCOTRACK INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands of US Dollars) 2025 2024 Three-month period ended March 31, 2025 2024 (Unaudited) CASH FLOWS FROM OPERATING ACTIVITIES: Loss for the period $ ( 6,833 ) $ ( 2,927 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 8 4 Stock-based compensation 40 22 Issuance of restricted shares as compensation towards directors - 78 Change in fair value of derivative liability (Note 2H) 3,376 Amortization of debt discount and interest expense related to promissory notes 3 - Linkage difference on principal of loans from stockholders - ( 1 ) Changes in assets and liabilities: Increase in other current assets ( 204 ) ( 64 ) Increase in accounts payable 620 175 Increase (Decrease) in other current liabilities 51 ( 229 ) Net cash used in operating activities ( 2,939 ) ( 2,942 ) CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of property and equipment ( 9 ) ( 59 ) Net cash used in investing activities ( 9 ) ( 59 ) CASH FLOWS FROM FINANCING ACTIVITIES: Net proceeds from underwritten U.S. public offerings (Note 3A) 6,395 - Net cash provided by financing activities 6,395 - Effect of exchange rate changes on cash and cash equivalents, and restricted cash 36 6 Change in cash and cash equivalents, and restricted cash 3,483 ( 2,995 ) Cash and cash equivalents, and restricted cash at beginning of the period 5,627 4,502 Cash and cash equivalents, and restricted cash, end of period $ 9,110 $ 1,507 2025 2024 Three-month period ended March 31, 2025 2024 (Unaudited) Supplemental disclosure of cash flow activities: (a) Net cash paid during the quarter for: Interest $ 4 $ 28 (b) Non-cash activities: Recognition of right for usage asset against a lease liability $ - $ 79 The accompanying notes are an integral part of these condensed interim consolidated financial statements. 7 GLUCOTRACK INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (in thousands of US Dollars) NOTE 1 – GENERAL A. The 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. The 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. Further to the above progress on the Glucotrack CBGM, the Company has also successfully demonstrated continuous glucose sensing in the epidural space. This latter approach is intended for patients with diabetes already contemplating spinal cord stimulation therapy for their condition. A 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. The 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. B. Liquidity and Going Concern To 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 to $ 9,100 . During 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”). See Note 3A. 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. Management has considered the significance of such conditions in relation to the Company’s ability to meet its current obligations and to achieve its business targets and determined that these conditions raise substantial doubt about the Company’s ability to continue as a going concern. The condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. C. 2025 Reverse Stock Split and Increase in Authorized Common Stock The Company filed with the Delaware Secretary of State a Certificate of Amendment to its Certificate of Incorporation which became effective at 4:30 p.m. on February 3, 2025, to implement a reverse stock split at a ratio of 1-for-20 (the “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. On 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). See Note 3B. 8 GLUCOTRACK INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (in thousands of US Dollars) NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A. 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. 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. B. Use of Estimates in the Preparation of Financial Statements 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. C. 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. D. 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. E. Warrants 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. 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 or loss. 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. 9 GLUCOTRACK INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (in thousands of US Dollars) NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.) F. 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: ● Level 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 1 inputs. ● Level 2 – Observable prices that are based on inputs not quoted on active markets but corroborated by market data. ● Level 3 – Unobservable inputs are used when little or no market data is available. Level 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 3) SCHEDULE OF DERIVATIVE LIABILITIES MEASURED AT FAIR VALUE Warrant Liability Balance – November 14, 2024 – Warrant issuance date $ 16,626 Fair value adjustments – Derivative financial liability 795 Balance – December 31, 2024 $ 17,421 Fair value adjustments – Derivative financial liability 3,376 Settlement of warrant liability ( 20,620 ) Balance – March 31, 2025 $ 177 G. 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. ASC 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. The 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. H. 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. SCHEDULE OF ANTI DILUTIVE SECURITIES 2025 2024 March 31, 2025 2024 Common stock options 16,436 9,310 Shares issuable upon the conversion of warrants 3,519,069 - Total 3,535,505 9,310 10 GLUCOTRACK INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)(CONT.) (in thousands of US Dollars) NOTE 3 - SIGNIFICANT TRANSACTIONS A. 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 million. 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 5, 2025. 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. B. 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. As 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. The 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 . 11 GLUCOTRACK INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)(CONT.) (in thousands of US Dollars) NOTE 4 – COMMITMENTS AND CONTINGENT LIABILITIES A. 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. B. 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. 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. 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 Date. 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 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 Date. 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. 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. As 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 to thereof. 12 GLUCOTRACK INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)(CONT.) (in thousands of US Dollars) NOTE 5. SUBSEQUENT EVENTS 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 per share pursuant to the Sales Agreement for net proceeds of $ 543 , after deducting fees owed to the Agent from such sale. 13