UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

☒	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2023

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________________________ to _________________________

Commission file number 000-54785

GLUCOTRACK, INC.

(Exact name of registrant as specified in its charter)

Delaware		98-0668934
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

301 Route 17 North, Suite 800

Rutherford, NJ

07070

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code (201) 842-7715

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, par value $0.001		GCTK		Nasdaq Capital Market

Securities registered pursuant to Section 12(g) of the Act: Common stock, par value $0.001 per share

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐		Accelerated filer ☐

Non-accelerated filer ☒		Smaller Reporting Company ☒

		Emerging growth Company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting fi rm that prepared or issued its audit report. ☐

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the fi ling reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The aggregate market value of the voting stock held by non-affiliates is approximately $5,362,999 based on the closing price of $0.35 per share of the registrant’s common stock, as reported on Nasdaq on June 30, 2023, the last business day of the registrant’s most recently completed second fiscal quarter of 2023.

As of March 28, 2024, 26,756,369 shares of the registrant’s common stock, par value $0.001 per share, were outstanding.

TABLE OF CONTENTS

GENERAL		3

CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS		3

PART I		4
	Item 1. Business.	4
	Item 1A. Risk Factors.	16
	Item 1B. Unresolved Staff Comments.	31
	Item 1C. Cybersecurity.	31
	Item 2. Properties.	32
	Item 3. Legal Proceedings.	32
	Item 4. Mine Safety Disclosures	32

Part II		33
	Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.	33
	Item 6. [Reserved.]	34
	Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.	34
	Item 7A. Quantitative and Qualitative Disclosures About Market Risk.	37
	Item 8. Financial Statements and Supplementary Data.	37
	Item 9. Change in and Disagreements With Accountants on Accounting and Financial Disclosure.	37
	Item 9A. Controls and Procedures.	37
	Item 9B. Other Information.	38
	Item 9C. Disclosure Regarding Foreign Jurisdictions That Prevent Inspection.	38

PART III		39
	Item 10. Directors, Executive Officers and Corporate Governance.	39
	Item 11. Executive Compensation.	43
	Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.	45
	Item 13. Certain Relationships and Related Transactions, and Director Independence.	47
	Item 14. Principal Accounting Fees and Services.	48

PART IV		49
	Item 15. Exhibits, Financial Statement Schedules.	49

SIGNATURES		51

GENERAL

Unless the context otherwise requires, the terms “we”, “our”, “ours” “us”, “GlucoTrack” and “Integrity”, refer to A.D. Integrity Applications, Ltd., an Israeli corporation (“Integrity Israel”) and GlucoTrack, Inc., a Delaware corporation.

CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS

This Annual Report on Form 10-K (this “Report”) includes forward-looking statements. These forward-looking statements include statements about our expectations, beliefs or intentions regarding our product development efforts, business, financial condition, results of operations, strategies or prospects. All statements other than statements of historical fact included in this Report, including statements regarding our future activities, events or developments, including such things as future revenues, product development, clinical trials, regulatory approval, market acceptance, responses from competitors, capital expenditures (including the amount and nature thereof), business strategy and measures to implement strategy, competitive strengths, goals, expansion and growth of our business and operations, plans, references to future success, projected performance and trends, and other such matters, are forward-looking statements. The words “believe,” “expect,” “intend,” “anticipate,” “estimate,” “plan,” “may,” “will,” “could,” “would,” “should” and other similar words and phrases or the negative of such terms, are intended to identify forward-looking statements. The forward-looking statements made in this Report are based on certain historical trends, current conditions and expected future developments, as well as other factors we believe are appropriate in the circumstances. These statements relate only to events as of the date on which the statements are made and we undertake no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. All of the forward-looking statements made in this Report are qualified by these cautionary statements and there can be no assurance that the actual results anticipated by us will be realized or, even if substantially realized, that they will have the expected consequences to or effects on us or our business or operations. Whether actual results will conform to our expectations and predictions is subject to a number of risks and uncertainties that may cause actual results to differ materially. Risks and uncertainties, the occurrence of which could adversely affect our business, include the risks identified in this Report under the caption “Risk Factors,” beginning on page 16. We undertake no obligation to publicly update or revise any forward-looking statements to reflect events or circumstances that may arise after the date of this report unless required by law.

PART I

Item 1. Business.

Overview

We are a medical device company focused on the design, development and commercialization of novel technologies for people with diabetes. Our mission is to become a leader in diabetes management by bringing to market innovative and cost-effective technologies that address multiple verticals within the diabetes market.

The Company was founded with a mission to develop GlucoTrack®, a noninvasive glucose monitoring device designed to help people with diabetes and pre-diabetics obtain glucose level readings without the pain, inconvenience, cost and difficulty of conventional (invasive) spot finger stick devices. The first generation GlucoTrack, which successfully received CE Mark approval, obtained glucose measurements via a small sensor clipped onto one’s earlobe. A limited release beta test in Europe and the Middle East demonstrated the need for an updated product with improved accuracy and human factors. As the glucose monitoring landscape rapidly moved away from point-in-time measurement to continuous measurement since then, the Company recently determined that it would focus its efforts on developing its Implantable continuous glucose monitor (“CGM”). As such, we have since withdrawn our CE Mark for GlucoTrack and are no longer pursuing commercialization of this product or development of any further iterations.

The Company is currently developing an Implantable CGM for use by Type 1 diabetes patients as well as insulin-dependent Type 2 patients. Implant longevity is key to the success of such a device. We have recently completed a feasibility study successfully demonstrating that a minimum two-year implant life is highly probable with the current sensor design. We have also initiated an animal study with an initial prototype system that has thus far demonstrated a simple implant procedure and good functionality. The Company will initiate a long-term animal trial in late Q4 as well as initiate development of its commercial device, also in late Q4, in preparation of regulatory submission in late 2024 for a first in human study. We believe our technology, if successful, has the potential to be more accurate, more convenient and have a longer duration than other implantable glucose monitors that are either in the market or currently under development.

We are currently developing our own mobile companion application and a cloud-based solution platform to provide real time, data driven personalized tools to effectively help a user manage their diabetes. In addition to being a critical and effective management tool for the end user, we believe that third parties such as insurers, pharmaceutical companies and advertisers would be willing to pay for the de-identified data that we will obtain through our platform, and that this is an opportunity for us to develop an additional revenue source.

Our Senior Management team includes; Chief Executive Officer and President, Paul V. Goode PhD, who has a decorated career developing innovative medical technologies, including at DexCom and MiniMed, CFO, James Cardwell, CPA who has over 16 years of experience as a Chief Financial Officer and Chief Operating Officer with a concentration in both SEC financial reporting and tax compliance, James P. Thrower PhD, Vice President of Engineering, a seasoned executive formerly of Sterling Medical Devices, Mindray DS USA and DexCom, Inc. (“DexCom”), Mark Tapsak PhD, Vice President of Sensor Technology, a medical research scientist who brings over 25 years of experience in the diabetes industry, including previous senior roles at DexCom and Medtronic plc (“Medtronic”); and Drinda Benjamin, Vice President of Marketing, an experienced commercial leader with experience at Medtronic and MiniMed, Abbott Diabetes Care, Senseonics and Intuitive Surgical; and Vincent Wong, Vice President of Quality, a proven quality systems leader with extensive high-volume implantable device manufacturing experience from Cirtec Medical Corp. (“Cirtec Medical”) and TOMZ Corporation. Luis J. Malavé, formerly of Insulet Corp, Medtronic and MiniMed is the Chairman of the Company’s Board of Directors (the “Board” or “Board of Directors”). We intend to continue to invest in our talent and to expand and strengthen all areas within the Company.

History

On September 27, 2021, our shelf Registration Statement on Form S-3 (File No. 333-259664) (the “Shelf Registration Statement”) was declared effective by the Securities and Exchange Commission (the “SEC”). The shelf registration statement permits us to register up to $100,000,000 of certain equity and debt securities of the Company via prospectus supplement.

On October 7, 2022, the Company announced that it has acquired certain intellectual property related to a long-term implantable CGM from Paul V. Goode, the Chief Executive Officer and that it intends to develop the technology to address the growing Type 1 and insulin-dependent Type 2 diabetes market.

On April 13, 2023, the Company completed an underwritten public offering under which the Company received gross proceeds of approximately $10 million for issuance of (i) 5,376,472 shares of common stock and (ii) 1,976,470 pre-funded warrants at a price to the public of $1.36 per share. After completing this transaction, the Company regained compliance with NASDAQ regarding the notice it received on November 22, 2022.

On April 17, 2023, the Company announced the closing of a firm commitment underwritten public offering of shares of its common stock with gross proceeds to the Company of approximately $10 million, before deducting underwriting discounts and other estimated expenses. The offering consisted of 5,376,472 shares of common stock and 1,976,470 pre-funded warrants to purchase shares of common stock at a price to the public of $1.36 per share (less $0.001 in exercise price per pre-funded warrant). The Company entered into an underwriting agreement with Aegis Capital Corp. on April 13, 2023. The Company intends to use the net proceeds from this offering primarily for working capital and general corporate purposes, which may include, without limitation, engaging in acquisitions or other business combinations or investments, sales and marketing activities, general and administrative matters and capital expenditures.

On July 25, 2023, the Company announced the completion and positive results of its feasibility study for its implantable continuous glucose monitor technology for patients with Type 1 and Type 2 insulin-dependent diabetes. The primary goal of the feasibility study was to demonstrate that the CGM sensor design could reliably report glucose measurements for two years post-implant. Laboratory bench testing confirmed that a minimum two-year implant longevity is highly probable with the current sensor design. The implant longevity was independently verified by a third-party using sensor parameters to simulate sensor performance over time. Given the positive results of the study, the Company is now preparing for long-term animal studies, which are expected to begin later this year. On October 12, 2023, the Company issued a press release with respect to its initial Animal Study.

Effective as of October 6, 2023, Jolie Kahn resigned as Chief Financial Officer of GlucoTrack, Inc. (the “Company”) to pursue other career interests. Ms. Kahn’s resignation was not because of any disagreement with the Company on any matter relating to the Company’s operations, policies or practices, including accounting principles and practices.

On October 11, 2023, the Company appointed James S Cardwell, 63, as Chief Financial Officer of the Company, effective immediately.

James Cardwell has over 16 years of experience as a Chief Financial Officer and Chief Operating Officer with a concentration in both SEC financial reporting and tax compliance. He also serves as the Chief Operating Officer of the CFO Squad LLC, an accounting firm, since July 2015 providing additional accounting and financial reporting services to the Company. In connection with his role at the CFO Squad LLC, he also served as interim Chief Financial Officer at several entities.

Mr. Cardwell has no family relationships with any of the Company’s directors or executive officers, and he is not a party to, and does not have any direct or indirect material interest in, any transaction requiring disclosure under Item 404(a) of Regulation S-K.

On October 11, 2023, in connection with Mr. Cardwell’s appointment as the Company’s Chief Financial Officer, Mr. Cardwell entered into a consulting agreement (the “Cardwell Consulting Agreement”) with the Company. Pursuant to the terms of the Cardwell Consulting Agreement, Mr. Cardwell will perform all duties typically required of a Chief Financial Officer. As compensation for his services, the Company shall pay Mr. Cardwell One Thousand Five Hundred Dollars ($1,500) per month. The Cardwell Consulting Agreement is for a term of one year. Either party may terminate the agreement upon thirty (30) day written notice.

On November 13, 2023, the Company announced its decision to shift its strategic focus from non-invasive point-in-time glucose monitoring (“GlucoTrack 2.0”) to CGM technology. This decision was driven by market trends indicating a growing preference for CGM and supported by changes in clinical guidelines recommending CGM over point-in-time monitoring for certain patient populations. This historical shift reflects the Company’s proactive response to evolving industry dynamics, aiming to better align its offerings with the needs of individuals managing diabetes.

On November 24, 2023, we received a letter from the Staff of Nasdaq notifying us that we have been granted an additional 180 calendar days, or until May 20, 2024, to regain compliance with the Bid Price Rule. If at any time during the Extended Compliance Period, the closing bid price of our Common Stock is at least $1.00 per share for a minimum of 10 consecutive business days, the Staff of Nasdaq will provide written confirmation that we have achieved compliance with the Bid Price Rule. If we cannot demonstrate compliance during the Extended Compliance Period, then the Staff of Nasdaq will provide notice that our Common Stock will be subject to delisting. At that time, the Company may appeal the Staff’s determination to a hearings panel. The stock price on March 12, 2024, was $0.31. The Company agreed to do a reverse stock split if the stock does not trade for more than $1.00 for more than 10 consecutive days before May 20, 2024.

On February 13, 2024, the Company entered into an exchange agreement with certain shareholders (the “Holders”), pursuant to which the Company and the Holders agreed to exchange 4,381,953 of common stock purchase warrants owned by the Holders for 3,593,203 shares of the Company’s common stock, par value $0.001 per share.

Market Opportunity

Diabetes

Diabetes is a chronic, life-threatening disease for which there is no known cure. Diabetes is caused by the body’s inability to produce or effectively utilize the hormone insulin. This inability prevents the body from adequately regulating blood glucose levels. Glucose, the primary source of energy for cells, must be maintained at certain concentrations in the blood in order to permit optimal cell function and health. Normally, the pancreas provides control of blood glucose levels by secreting the hormone insulin to decrease blood glucose levels when concentrations are too high. In people with diabetes, blood glucose levels fluctuate between very high levels, a condition known as hyperglycemia, and very low levels, a condition known as hypoglycemia. Hyperglycemia can lead to serious long-term complications, such as blindness, kidney disease, nervous system disease, amputations, stroke and cardiovascular disease. Hypoglycemia can lead to confusion, loss of consciousness or death.

Diabetes is typically classified into two major groups: Type 1 and Type 2. Type 1 diabetes is characterized by the body’s inability to produce insulin, resulting from destruction of the insulin producing cells of the pancreas. Individuals with Type 1 diabetes must rely on frequent insulin injections in order to regulate and maintain blood glucose levels. Type 1 diabetes is frequently diagnosed during childhood or adolescence, although disease onset can occur at any age. Type 2 diabetes, the more common form of diabetes, is a metabolic disorder that is characterized by the body’s inability to either properly utilize insulin or produce enough insulin. Type 2 diabetes is associated with older age, obesity, family history of diabetes, history of gestational diabetes, impaired glucose metabolism, physical inactivity and race or ethnicity. Depending on the severity of Type 2 diabetes, individuals may require diet and nutrition management, exercise, oral medications or insulin injections to regulate blood glucose levels.

According to the Diabetes Atlas (Ninth Edition) published by the International Diabetes Federation in 2021, approximately 537 million adults worldwide, between the ages of 20 and 79, or approximately 10% of the world’s adult population, were estimated to suffer from diabetes in 2021 (not including those persons who suffer from impaired glucose tolerance or gestational diabetes, diabetic conditions first arising during pregnancy). The International Diabetes Federation estimates that this number will grow to approximately 784 million adults worldwide by 2045. The Centers for Disease Control and Prevention in its National Diabetes Statistics Report, 2023 provided crude estimates for 2021 that there are approximately 38 million people with diabetes in the U.S., of which 29.7 million have diagnosed diabetes. Among US adults ages 18 years or older, there were 1.2 million new cases of diabetes diagnosed in 2021.

Glucose Monitoring

Blood glucose levels can be affected by many factors, including the carbohydrate and fat content of meals, exercise, stress, illness or impending illness, hormonal releases, medications, variability in insulin absorption and changes in the effects of insulin in the body. Given the many factors that affect blood glucose levels, maintaining glucose within a normal range can be difficult. People with diabetes generally manage their blood glucose levels by administering insulin or ingesting carbohydrates throughout the day to maintain blood glucose within normal ranges. Normal ranges vary from person to person. In order to maintain blood glucose levels within normal ranges, people with diabetes must first measure their blood glucose levels so that they can make the proper therapeutic adjustments. As adjustments are made, additional blood glucose measurements may be necessary to gauge the individual’s response to the adjustments. More frequent testing of blood glucose levels provides these individuals with information that can be used to better understand and manage their diabetes. Testing of blood glucose levels is usually done before meals, after meals and before going to sleep. People with diabetes who take insulin usually need to test more often than those who do not take insulin.

The Company is developing a CGM that will allow continuous monitoring of glucose level, which the Company believes is a significant improvement in quality compared to spot finger stick devices. Spot finger stick devices have been the most prevalent devices for blood glucose monitoring. These devices require users to insert a strip into a glucose meter, take a blood sample with a finger stick and place a drop of blood on a test strip that yields a single point in time blood glucose measurement. Despite continued developments in the field of blood glucose monitors, the routine measurement of glucose levels remains invasive, painful, inconvenient, difficult and costly. In contrast, CGM systems involve the insertion of sensors into the body to measure glucose levels in the interstitial fluid throughout the day and night, providing real-time data that shows trends in glucose measurements. Several published clinical studies demonstrate that CGMs improve glycemic control in people with type 1 diabetes or people with insulin-requiring type 2 diabetes. As a result, CGM use is rapidly increasing and has become the clinically recommended standard of care for these patients.

Despite the benefits in glycemic control, many people with diabetes still have not adopted CGM. We believe that a significant market opportunity exists for an innovative CGM devices that addresses the remaining barriers to adoption. According to a 2017 Diabetes Care study, these barriers include the hassle of wearing devices all the time, dislike for having diabetes devices on the body, and dislike for how diabetes devices look on the body. Additionally, the study reported that reasons that people discontinued using a CGM included the device being uncomfortable or painful and the belief that the device is not accurate. ⁴ We believe that improved CGM devices that address these barriers could provide significant benefits to patients, healthcare providers and payors, thereby increasing overall CGM adoption and ongoing satisfaction.

¹Group, U. P. D. S. (UKPDS); others Intensive blood-glucose control with sulphonylureas or insulin compared with conventional treatment and risk of complications in patients with type 2 diabetes (UKPDS 33). The Lancet 1998, 352, 837–853.

²Diabetes Control and Complications Research Group; others The effect of intensive treatment of diabetes on the development and progression of long-term complications in insulin-dependent diabetes mellitus. N Engl J Med 1993, 329, 977–986.

³Hang, Y.; Hu, G.; Yuan, Z.; Chen, L. Glycosylated Hemoglobin in Relationship to Cardiovascular Outcomes and Death in Patients with Type 2 Diabetes: A Systematic Review and Meta-Analysis. PLOS ONE 2012, 7, e42551, doi:10.1371/journal.pone.0042551.

⁴Tanenbaum ML, Hanes SJ, Miller KM, Naranjo D, Bensen R, Hood KK. Diabetes device use in adults with type 1 diabetes: barriers to uptake and potential intervention targets. Diabetes Care 2017 Feb 1;40(2):181-7.

Our Product

As mentioned in the “History” section above, the Company retired its non-invasive point-in-time glucose monitoring (“GlucoTrack 2.0”) and shifted its focus to CGM technology. As such, we are currently developing a long-term implantable Continuous Blood Glucose Monitor (CBGM) with no requirement for an additional wearable component with maintained calibration status. The CBGM utilizes an intravascular approach, in which the device is implanted subcutaneously and connected to a lead that is placed directly into a blood vessel. This facilitates continuous blood glucose measurements with zero lag time. In comparison, all CGM systems measure glucose in the interstitial fluid, which lags behind blood glucose. The approach is based on design elements, implant techniques, and implant tools commonly used for active implantable devices in the cardiovascular space. As a result, it employs a recognized, established, and widely utilized implant procedure and device form factor.

In the second quarter of 2023, we completed the laboratory-based feasibility study demonstrating that the CBGM sensor is capable of measuring glucose for at least two years post-implant. By the end of 2023 we completed our initial preclinical in vivo animal study. This initial preclinical study produced very strong results, demonstrating at least three months of well-sustained sensor life while also demonstrating that the sensor is safe for animals. The study also indicated the CBGM is capable of a high level of measurement accuracy as compared with conventional CGM technologies on the market.

In the fourth quarter of 2023, we also initiated a human clinical device/system design and development program and expect to begin our first-in-human (“FIH”) study in the first quarter of 2025. This will require a submission to, and eventual approval from, the eventual U.S. Food and Drug Administration (“FDA”). We are targeting up to 30 patients across up to 3 US clinical centers; however, the FDA may limit number of patients and/or clinical centers. Collecting data for sensor characterization and algorithm development, along with implant procedure characterization and refinement, will be the primary goals of the FIH study. These results will drive any necessary refinements to the system. Upon incorporation of any required refinements, we intend to conduct a pilot study of the eventual FDA pivotal trial to prepare for the larger pivotal trial for FDA clearance.

In parallel, we are also currently developing the Glucotrack CBGM a companion mobile application and a cloud-based solution to provide real time, data-driven personalized tools to effectively help a user manage their diabetes and assist healthcare providers with making treatment decisions. In addition to being a critical and effective management tool for the end user, we believe such data may be effectively monetized for use by third parties such as insurers, pharmaceutical companies and advertisers.

We do not have commercial manufacturing facilities and do not intend to build commercial manufacturing facilities of our own in the foreseeable future. Our strategy has been to select leaders in the manufacturing of similar or complementary products. We recently announced a development and manufacturing agreement with Cirtec Medical (Brooklyn Park, MN), one of the leading medical device solutions providers of implantable therapies. We require our critical suppliers and their manufacturing facilities to comply with applicable regulations in the jurisdictions in which our devices are to be marketed (including ISO 13485 in the European Union (“EU”)), current quality system regulations, which include current good manufacturing practices, and to the extent laboratory analysis is involved, current good laboratory practices. There can be no assurance that our manufacturing partners will perform as expected.

Research and Development

We focus significant time and resources on research and development in connection with our efforts to continue to develop our implantable blood continuous glucose monitor, CBGM. 2023 was focused on proving the feasibility of the acquired technology, specifically that the CBGM technology may last at least two (2) years in a human body, could accurately measure during that time, and would be safe to implant and use. This was accomplished via three major studies: in vitro (in liquid solution), in silico (computer modeling and simulation), and in vivo (animal study). These studies required development of laboratory and animal study prototypes necessary for these evaluations, as well as partnering with experts in computational modeling of chemical materials and their interaction with the body. The in vitro and in silico efforts successfully completed by late Q2, both confirming that a two-year implant life was possible. These results triggered development of the animal prototype and initiation of those studies, which were successfully completed in late Q4 demonstrating very good accuracy and safety profile.

In 2023, we began our migration from feasibility to product development. More specifically, we have partnered with an experienced contract manufacturing organization, Cirtec Medical, to manufacture the implantable products for the commercial version of the CBGM system that will be used in forthcoming clinical trials. Cirtec is one of the leading contract manufacturing organizations specializing in implantable medical device production. These efforts have already begun and are expected to provide clinical trial use units in late Q4 of 2024.

In parallel, we are developing a dedicated mobile app and cloud system for collecting and managing CBGM System data. The initial version will be scaled appropriately for a FIH clinical trial. This version will serve as a foundation for the eventual commercial version, incrementally increasing features along with regulatory guidance through clinical trials prior to commercialization.

With respect to clinical trials, we are targeting Q1 2025 for initiation of the FIH trial. This trial is expected to use the commercial version of the implantable system products (device and sensor), along with the scaled mobile app and cloud as described above. Throughout 2024, we will identify potential clinical sites, obtain regulatory approval, and prepare the sites for trial initiation. We will also be working with key physician partners to refine the implant, explant, and replacement procedures and associated tool set.

Likewise, we will continue to increment the implantable sensor design for even better performance. These efforts will focus on techniques that can lead to increased longevity of the implanted sensor, increased accuracy of the sensor, and simpler and safer implant, explant, and replacement tools and procedures. Further to that, we continue to research materials and techniques that can reduce overall system cost.

See “Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operation – Results of Operation” below for a discussion of the research and development expenses for the fiscal years ended 2023 and 2022.

Regulatory Considerations

Healthcare is heavily regulated by federal, state and local governments in the United States, and by similar authorities in other countries. Any product that we develop must receive all relevant regulatory approvals or clearances, as the case may be, before it may be marketed in a particular country. The laws and regulations affecting healthcare change regularly, thereby increasing the uncertainty and risk associated with any healthcare related venture. The United States government has in the past considered, is currently considering and may in the future consider healthcare policies and proposals intended to curb rising healthcare costs, including those that could significantly and adversely affect reimbursement for healthcare products such as our devices. These policies have included and may in the future include: basing reimbursement policies and rates on clinical outcomes, the comparative effectiveness and costs of different treatment technologies and modalities; imposing price controls and taxes on medical device providers; and other measures. Future significant changes in the healthcare systems in any jurisdiction in which our devices, may be cleared for sale could also have a negative impact on the demand for our devices. These include changes that may reduce reimbursement or payment rates for such products.

In the United States, the federal government regulates healthcare through various agencies, including but not limited to the following: (i) the FDA, which administers the Food, Drug, and Cosmetic Act (the “FDCA”) as well as other relevant laws; (ii) the Centers for Medicare & Medicaid Services (“CMS”), which administers the Medicare and Medicaid programs; (iii) the Office of Inspector General, which enforces various laws aimed at curtailing fraudulent or abusive practices including, by way of example, the Anti-Kickback Law, the Anti-Physician Referral Law, commonly referred to as the Stark Law, the Anti-Inducement Law, the Civil Money Penalty Law, and the laws that authorize the Office of Inspector General to exclude health care providers and others from participating in federal healthcare programs; and (iv) the Office of Civil Rights which administers the privacy and security aspects of the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”). All of the aforementioned are agencies within the Department of Health and Human Services. Healthcare is also provided or regulated, as the case may be, by the Department of Defense through its TriCare program, the Department of Veterans Affairs under, among other laws, the Veterans Health Care Act of 1992, the Public Health Service within the Department of Health and Human Services under the Public Health Service Act, the Department of Justice through the federal False Claims Act (the “FCA”) and various criminal statutes, and state governments under the Medicaid program and their internal laws regulating all healthcare activities. If and when we receive FDA approval to market our devices in the United States, we will be subject to regulation by some or all of the foregoing agencies.

The applicable regulatory schemes in the EU are significantly more diverse than those in the United States and do not lend themselves to similar summary. Although the CE Mark system and the Medical Device Regulation (“MDR”) require a minimum level of harmonization in the EU, each EU member country may impose additional regulatory requirements. Because there are numerous EU member countries with distinct legal systems, the scope of potential regulatory requirements in each of the EU countries (additional to the harmonized EU requirements) is difficult to summarize or predict.

Regulation of the Design, Manufacture and Distribution of Medical Devices

Any product that we develop must receive all relevant regulatory clearances or approvals, as the case may be, before it may be marketed in a particular country.

Sales of medical devices outside the United States are subject to foreign regulatory requirements that vary widely from country to country. These laws and regulations range from simple product registration requirements in some countries to complex clearance and production controls in others. As a result, the processes and time periods required to obtain foreign marketing approval may be longer or shorter than those necessary to obtain FDA approval (as described below). These differences may affect the efficiency and timeliness of international market introduction of our devices. For countries in the EU, medical devices must display a CE Mark before they may be imported or sold and must comply with the requirements of the MDR. However, although the MDR is applicable throughout the EU, in practice it does not ensure uniform regulation throughout the EU. Rather, the MDR requires only a minimum level of harmonization in the EU. Accordingly, member countries may apply and enforce the MDR’s terms differently, and certain EU member countries may request or require performance and/or safety data in addition to the MDR’s requirements from time to time, on a case-by-case basis. The CE Mark also permits the sale in countries that have an MDR Mutual Recognition Agreement with the EU.

In the United States, under Section 201(h) of the FDCA, a medical device is an article which, among other things, is intended for use in the diagnosis of disease or other conditions or in the cure, mitigation, treatment or prevention of disease in man or other animals. We believe that our devices will be classified as medical devices and subject to regulation by numerous agencies and legislative bodies, including the FDA and its foreign counterparts. Devices are subject to varying levels of regulatory control, the most comprehensive of which requires that a clinical evaluation be conducted before a device receives approval for commercial distribution. The FDA classifies medical devices into one of three classes. Class I devices are relatively simple and can be manufactured and distributed with general controls. Class II devices are somewhat more complex and require greater scrutiny. Class III devices are new and frequently help sustain life.

In the United States, a company generally can obtain permission to distribute a new device in two ways – through a so-called “510(k)” premarket notification application or through a Section 515 premarket approval (“PMA”) application. The 510(k) submission applies to any device that is substantially equivalent to a device first marketed prior to May 28, 1976 or to another device marketed after that date, but which was substantially equivalent to a pre-May 28, 1976 device. These devices are either Class I or Class II devices. Under the 510(k) submission process, the FDA will issue an order finding substantial equivalence to a predicate device (pre-May 28, 1976 or post-May 28, 1976 device that was substantially equivalent to a pre- May 28, 1976 device) and permitting commercial distribution of that device for its intended use. A 510(k) submission must provide information supporting its claim of substantial equivalence to the predicate device. The FDA permits certain low risk medical devices to be marketed without requiring the manufacturer to submit a premarket notification. In other instances, the FDA may require that a premarket notification not only be submitted, but also be accompanied by clinical data. If clinical data from human experiments are required to support the 510(k) submissions, these data must be gathered in compliance with investigational device exemption regulations for investigations performed in the United States. The FDA review process for premarket notifications submitted pursuant to section 510(k) should take about 90 days, but it can take substantially longer if the FDA has concerns, and there is no guarantee that the FDA will clear the device for marketing, in which case the device cannot be lawfully distributed in the United States. If the FDA finds that the device subject to the premarket notification is substantially equivalent to a proper predicate device, then the FDA may “clear” that device for marketing. These devices are not “approved” by the FDA. It is very unlikely, however, that the FDA will deem our CBGM subject to the 510(k) process, as opposed to the more time-consuming, resource intensive and problematic PMA application process described below.

The more comprehensive PMA process applies to a new device that either is not substantially equivalent to a pre-May 28, 1976 product or is to be used in supporting or sustaining life or preventing impairment. These devices are normally Class III devices and can only be marketed following approval of a PMA application. For example, most implantable devices are subject to the PMA approval process. Two steps of FDA approval generally are required before a company can market a product in the U.S. that is subject to Section 515 PMA approval, as compared to a Section 510(k) clearance. First, a company must comply with investigational device exemption regulations in connection with any human clinical investigation of the device; however, those regulations permit a company to undertake a clinical study of a “non-significant risk” device without formal FDA approval. Prior express FDA approval is required if the device is a significant risk device. If there is any doubt as to whether a device is a “non-significant risk” device, companies normally seek prior approval from the FDA. Normally, clinical studies of new diagnostic products are conducted in tandem with a cleared or approved device and treatment decisions are based on the results from the existing diagnostic device. In such a setting, the FDA may consider the clinical trial as one not posing a significant risk. However, FDA action is always uncertain and dependent on the contours of the design of the clinical trial and the device and there is no assurance that the FDA would consider any proposed clinical trial as one posing a non-significant risk. Moreover, before undertaking any clinical trial, the company sponsoring the trial and the investigator conducting the trial are required by federal law to seek and obtain the approval of institutional review boards (“IRB”). An IRB weighs the risks and benefits of a proposed trial to ensure that the human subjects are not exposed to unnecessary risk and reviews the informed consent form to ensure that it meets federal requirements and accurately describes the risks and benefits, if any, of the clinical trial. IRB review occurs annually, and annual re-approval is required. University medical centers as well as other entities maintain and operate IRB. Second, the FDA must review a company’s PMA, which contains, among other things, clinical information acquired under the investigational device exemption. The FDA will approve the PMA if it finds there is reasonable assurance that the device is safe and effective for its intended use. The premarket approval process takes substantially longer than the 510(k) process.

The Glucotrack CBGM is still under development and has not yet been approved for commercial sale in or outside the United States. Given the implantable nature of the Glucotrack CBGM, it is most likely that the device will be assigned a Class III designation and need to follow the PMA process for regulatory approval. The Company is preparing for this approach.

Even when a clinical study has been approved or cleared by the FDA or a notified body or deemed approved, the study is subject to factors beyond a manufacturer’s control, including, but not limited to the fact that the IRB at a given clinical site might not approve the study, might decline to renew approval which is required annually, or might suspend or terminate the study before the study has been completed. Also, the interim results of a study may not be satisfactory, in which case the sponsor may terminate or suspend the study on its own initiative or the FDA or a notified body may terminate or suspend the study. There is no assurance that a clinical study at any given site will progress as anticipated; there may be an insufficient number of patients who qualify for the study or who agree to participate in the study, or the investigator at the site may have priorities other than the study. Also, there can be no assurance that the clinical study will provide sufficient evidence to assure the FDA or a notified body that the product is safe and effective, a prerequisite for FDA approval of a PMA. Even if the FDA or a notified body approves or clears a device, it may limit its intended uses in such a way that manufacturing and distributing the device may not be commercially feasible.

After approval to market is given, the FDA and foreign regulatory agencies, upon the occurrence of certain events, are authorized under various circumstances to withdraw the clearance or approval or require changes to a device, its manufacturing process or its labeling or additional proof that regulatory requirements have been met.

A manufacturer of a device approved through the PMA process is not permitted to make changes to the device which affects its safety or effectiveness without first submitting a supplement application to its PMA and obtaining FDA approval for that supplement. In some instances, the FDA may require clinical trials to support a supplement application. Any change in the intended uses of a PMA device or a 510(k) device requires an approval supplement. Exported devices are subject to the regulatory requirements of each country to which the device is exported, as well as certain FDA export requirements.

The Company plans to leverage the FDA approval for immediate ability to sell product in Switzerland (as well as the US). The Swiss competent authority, SwissMedic, allows entry into the Swiss market with FDA approval. This will be an initial entry to the central European market until CE Mark can be obtained. Geographical proximities enable servicing self-paying customers from nearby countries such as Germany, France, Austria, and Italy.

The Company plans to leverage the PMA clinical trial data, if successful, along with the associated development and manufacturing information, for CE Mark certification. The company will choose a notified body and submit via the MDR regulations to obtain this necessary clearance for marketing in EU member states. Upon approval, if granted, the Company may consider alternative markets that can leverage both the FDA and CE Mark approvals.

Reimbursement Considerations

In the U.S. market, coverage and reimbursement from Medicare, Medicaid or other governmental healthcare programs or systems, and private third-party healthcare payors is critical to the success of a medical device company. CGM systems have been broadly accepted by Medicare and commercial third-party payors. Currently, Medicare covers CGM systems, which includes supplies necessary for the use of the device under the Durable Medical Equipment, or DME, benefit category. Previously, Medicare coverage for CGM was only available to Medicare patients who take at least three doses of insulin a day. The Local Coverage Determination, or LCD, that the Medicare Administrative Contractors (MACs) released in April 2023 extends Medicare CGM coverage to all patients using insulin. The LCD also allows coverage for patients not taking insulin if the patient has a history of problematic hypoglycemia.

There is currently one commercially available implantable CGM product and the current reimbursement landscape includes coverage for the product itself, coverage for the implantation process and coverage for the removal and reinsertion process. Additionally, an LCD was recently released (NGS ICGM LCD - Effective 4/1/2024) allowing for expanded access of this product to include all people with diabetes using insulin, removing the previous requirement for at least three doses of insulin a day. Like non-implantable CGM, the LCD also allows coverage for patients not taking insulin if the patient has a history of problematic hypoglycemia.

Even though CGM coverage is broad, we anticipate that sales volumes and prices of our implantable Continuous Blood Glucose Monitor (CBGM) product will depend in large part on the availability of adequate reimbursement from Medicare and third-party payors. Medicare reimburses medical devices in a variety of ways depending on where and how the device is used. However, Medicare only provides reimbursement if CMS determines that the device should be covered and that the use of the device is consistent with the coverage criteria. A coverage determination can be made at the national level by CMS or at the local level by the Medicare administrative contractor (formerly called carriers and fiscal intermediaries) or a private contractor that processes and pays claims on behalf of CMS for the geographic area where the services were rendered. Obtaining a coverage determination, whether local or national, is a time-consuming, expensive and highly uncertain proposition, especially for a new technology, and inconsistent local determinations are possible. Our inability to obtain a favorable coverage determination for our CBGM product may adversely affect our ability to market the product and thus, the commercial viability of the product.

Additionally, we believe that the overall escalating cost of medical products and services has led to and will continue to lead to increased pressures on the healthcare industry to reduce the costs of products and services. There can be no assurance that third-party reimbursement and coverage will be available or adequate, or that future legislation, regulation, or reimbursement policies of third-party payors will not adversely affect the demand for our products or our ability to sell these products on a profitable basis. The unavailability or inadequacy of third-party payor coverage or reimbursement could have a material adverse effect on our business, operating results, and financial condition. Until adequate reimbursement or insurance coverage is established, patients may have to bear the financial cost of our products.

To mitigate these risks, we are starting our reimbursement planning process early, well in advance of obtaining regulatory approval. We have engaged a leading reimbursement consultancy to complete an analysis of the current landscape for CGM technologies. Additionally, since our product is an implantable device and very similar in form factor and procedure to commercially available cardiovascular devices, we are also assessing the current reimbursement landscape for those technologies. This will enable us to craft a reimbursement strategy that is best suited to our CBGM product and reflects the different healthcare providers that may be involved in utilizing the product.

Our reimbursement strategy also incorporates coverage for the product , the implantation procedure, and the removal and reinsertion procedures. While we can proactively prepare our reimbursement strategy, some activities such as coding applications, if needed, are not able to be executed until FDA approval is obtained.

Outside the United States, availability of reimbursement from third parties varies widely from country to country. Within the EU member countries, healthcare reimbursement, coverage regulations, and systems differ significantly. An EU reimbursement analysis and strategy may begin if and when we decide to enter the EU market.

Anti-Fraud and Abuse Rule

There are extensive United States federal and state laws and regulations prohibiting fraud and abuse in the healthcare industry that can result in significant criminal and civil penalties that can materially affect us, if and when we receive FDA approval to market our products in the United States. These federal laws include, by way of example, the following:

	●	The anti-kickback statute (Section 1128B(b) of the Social Security Act), which prohibits certain business practices and relationships that might affect the provision and cost of healthcare services reimbursable under Medicare, Medicaid and other federal healthcare programs, including the payment or receipt of remuneration for the referral of patients whose care will be paid by Medicare or other governmental programs;

	●	The physician self-referral prohibition (Ethics in Patient Referral Act of 1989, as amended, commonly referred to as the Stark Law, Section 1877 of the Social Security Act), which prohibits referrals by physicians of Medicare or Medicaid patients to providers of a broad range of designated healthcare services in which the physicians (or their immediate family members) have ownership interests or with which they have certain other financial arrangements;

	●	The anti-inducement provisions of the Civil Monetary Penalties Law (Section 1128A(a)(5) of the Social Security Act), which prohibit providers from offering anything to a Medicare or Medicaid beneficiary to induce that beneficiary to use items or services covered by either program;

	●	The FCA (31 U.S.C. § 3729 et seq.), which prohibits any person from knowingly presenting or causing to be presented false or fraudulent claims for payment to the federal government (including the Medicare and Medicaid programs); and

	●	The Civil Monetary Penalties Law (Section 1128A of the Social Security Act), which authorizes the United States Department of Health and Human Services to impose civil penalties administratively for fraudulent or abusive acts.

Sanctions for violating these federal laws include criminal and civil penalties that range from punitive sanctions, damage assessments, monetary penalties, imprisonment and/or denial of Medicare and Medicaid payments or exclusion from the Medicare and Medicaid programs, or both. These laws also impose an affirmative duty on those receiving Medicare or Medicaid funding to ensure that they do not employ or contract with persons excluded from the Medicare and other government programs.

Many states have adopted or are considering legislative proposals similar to the federal fraud and abuse laws, some of which extend beyond the Medicare and Medicaid programs, to prohibit the payment or receipt of remuneration for the referral of patients and physician self-referrals regardless of whether the service was reimbursed by Medicare or Medicaid. Many states have also adopted or are considering legislative proposals to increase patient protections, such as limiting the use and disclosure of patient specific health information. These state laws also impose criminal and civil penalties similar to the federal laws.

Similarly, the EU and EU member countries may have similar fraud and abuse laws which would regulate our business in those jurisdictions. However, given the diversity of legal systems within the EU, it is difficult to predict with specificity what anti-fraud legislation and regulations may be implemented and the penalties that they impose.

In the ordinary course of their business, medical device manufacturers and suppliers have been and are subject regularly to inquiries, investigations and audits by federal and state agencies that oversee these laws and regulations. Recent federal and state legislation has greatly increased funding for investigations and enforcement actions, which have increased dramatically over the past several years. This trend is expected to continue. Private enforcement of healthcare fraud also has increased due in large part to amendments to the civil FCA that were designed to encourage private persons to sue on behalf of the government. These whistleblower suits by private persons, known as qui tam relators, may be filed by almost anyone, including present and former patients or nurses and other employees, as well as competitors. HIPAA, in addition to its privacy provisions, created a series of new healthcare-related crimes.

As federal and state budget pressures continue, federal and state administrative agencies may also continue to escalate investigation and enforcement efforts to root out waste and to control fraud and abuse in governmental healthcare programs. A violation of any of these federal and state fraud and abuse laws and regulations could have a material adverse effect on a supplier’s liquidity and financial condition. An investigation into the use of a device by physicians may dissuade physicians from recommending that their patients use the device. This could have a material adverse effect on our ability to commercialize our products.

The Privacy Provisions of HIPAA

In the United States, HIPAA, among other things, protects the privacy and security of individually identifiable health information by limiting its use and disclosure. HIPAA directly regulates “covered entities,” such as healthcare providers, insurers and clearinghouses, and regulates “business associates,” with respect to the privacy of patients’ medical information. All entities that receive and process protected health information are required to adopt certain procedures to safeguard the security of that information. It is uncertain whether we would be deemed to be a covered entity under HIPAA and, owing to changes in the law, it is uncertain, based on our current business model, whether we would be a business associate. Nevertheless, we will likely be contractually required to physically safeguard the integrity and security of any patient information that we receive, store, create or transmit in the United States. If we fail to adhere to our contractual commitments, then our physician, hospital or insurance customers may be subject to civil monetary penalties, which could adversely affect our ability to market our devices. Changes in the law wrought by the provisions of Health Information Technology for Economic and Clinical Health (“HITECH”) Act, enacted as part of the American Recovery and Reinvestment Act of 2009 (“ARRA”), increase the duties of business associates and covered entities with respect to protected health information that thereby subject them to direct government regulation, increasing its compliance costs and exposure to civil monetary penalties and other government sanctions. While HITECH does not alter the definition of a business associate, it makes it more likely that covered entities with whom we are likely to do business in the United States, if and when we receive FDA approval to market GlucoTrack in the United States, will require us to enter into business associate agreements.

Intellectual Property

We are pursuing a proactive intellectual property strategy, which includes patent filings in multiple jurisdictions, including the United States and other commercially significant markets. We understand the importance of obtaining patent and trade secret protection for new technologies, products and processes. Our success will depend in large part on our ability to file for and obtain patent protection of our principal products and procedures, to defend existing or future patents, to maintain trade secrets and to operate without infringing upon the proprietary rights of others.

We currently have a published U.S. patent application number 17/932,238 Methods and Systems for Continuously Monitoring the Glucose Level of a Patient, awaiting review as well as its associated international application PCT/US22/76435. Multiple new filings are planned for 2024 that will broaden the intellectual property protection for our core product, the Glucotrack CBGM. We have also obtained trademark registrations for Glucotrack® in the U.S. and Europe. and various other jurisdictions.

We believe that our intellectual property and products do not and will not infringe patents or violate proprietary rights of others, although it is possible that our existing patent rights may not be valid or that infringement of existing or future patents or proprietary rights may occur. Litigation may be necessary to defend or enforce our patent rights or to determine the scope and validity of the proprietary rights of others. Defense and enforcement of patent claims can be expensive and time consuming, even in those instances in which the outcome is favorable and could result in the diversion of substantial resources and management time and attention from our other activities. An adverse outcome could subject us to significant liability to third parties, require us to obtain licenses from third parties, require us to alter our products or processes, or require that we cease altogether any related research and development activities or product sales.

Patent protection is highly uncertain and involves complex legal and factual questions and issues. The patent application and issuance process can be expected to take several years and entails considerable expense. There can be no assurance that patents will be issued as a result of any applications or that any patents resulting from such applications, or our existing patents will be sufficiently broad to afford protection against competitors with similar or competing technology. Patents that we obtain may be challenged, invalidated or circumvented, or the rights granted under such patents may not provide us with any competitive advantages.

Competition

The market for CGM devices is intensely competitive, subject to rapid change and significantly affected by new product introductions. Three companies, Abbott Laboratories (“Abbott”), DexCom and Medtronic currently account for substantially all of the worldwide sales of CGM systems. These products are all transcutaneous systems with sensor longevities of 7-15 days. These systems have a sensor that is worn on the back of the upper arm or the abdomen, depending on the system. The sensor measures glucose in the interstitial fluid, which lags glucose in the blood, so the CGM readings may lag about 15-20 minutes behind blood glucose readings. Depending on the system, the sensor provides glucose readings every one to five minutes and streams directly to the users’ compatible smartphone. Following the insertion of a new Abbott FreeStyle Libre 3 or DexCom G7 sensor, there is a warm-up period of 30-60 minutes, depending on the system, during which time no readings are available. After that period, both systems are factory-calibrated, which means that no fingersticks (blood glucose measurements using a glucometer) are required for calibration. For the Medtronic Guardian 4 system, there is a 2-hour warm-up period; after that period, no fingersticks are required for calibration when using as a part of the MiniMed 780G insulin pump system.

There is currently one implantable CGM that is commercially available in the US and Europe: Senseonics Holdings, Inc. The sensor is inserted by a doctor under the skin of the upper arm and lasts up to 180 days. The wearable smart transmitter provides on-body vibe alerts and is worn over the sensor using a daily adhesive. There is a 24-hour warm up period with this system and, after that period, fingersticks are required for calibration twice a day for the 1st 21 days and then once daily. Similar to the transcutaneous systems, this system also measures glucose in the interstitial fluid.All four competitors are either publicly traded or are divisions of publicly traded companies, and they enjoy several competitive advantages, including:

	●	significantly greater name recognition;

	●	established relations with healthcare professionals, customers and third-party payors;

	●	established distribution networks;

	●	additional lines of products, and the ability to offer rebates or bundle products to offer higher discounts or incentives to gain a competitive advantage;

	●	greater experience in conducting research and development, manufacturing, clinical trials, obtaining regulatory approval for products and marketing approved products; and

	●	greater financial and human resources for product development, sales and marketing, and patent litigation.

As a result, we cannot ensure that we will be able to compete effectively against these companies or their products.

There are several new and smaller players that have obtained clearance to market in EU or Asia. Their systems are transcutaneous systems with similar form factors and longevity as the Abbott, DexCom and Medtronic systems. None of these companies has yet achieved a significant user base.

Additionally, Medtronic and other companies have developed or are developing, insulin pumps integrated with CGM systems that provide, among other things, the ability to suspend insulin administration while the user’s glucose levels are low and to automate basal or bolus insulin dosing. Both Abbott and DexCom have received FDA clearance to integrate certain versions of their sensors into automated insulin delivery systems.

Although we face potential competition from many different sources, we believe that our technology, experience and scientific knowledge provide us with competitive advantages of accuracy, longevity, discretion and usability, though our technology is not in any way integrated with an automatic insulin delivery system.

Corporate Information

Our principal offices are located at 301 17 North, Suite 800, Rutherford NJ 07070, and our telephone number is 201-842-7715. Our website address is http://www.glucotrack.com; the reference to such website address does not constitute incorporation by reference of the information contained on the website and such information should not be considered part of this report.

Board and Committees

We have six members on our Board, five of whom are independent. The Board has an Audit Committee and a Compensation Committee and Nominating and Corporate Governance Committee, the Audit consisting solely of independent directors. We are continuing to consider expansion of the Board and the establishment of additional appropriate Board committees to support the Company.

Employees

As of December 31, 2023, we had six full-time employees. None of our employees are represented by a collective bargaining agreement. In addition, as of December 31, 2023, we had five significant consultants.

Item 1A. Risk Factors.

An investment in our Common Stock involves a high degree of risk. Before making an investment decision, you should carefully consider the following risk factors. If any of these risks actually occur, our business, financial condition and results of operations could be materially harmed. In addition, risks and uncertainties not presently known to us or that we currently deem immaterial may also materially harm our business, financial condition and results of operations. If this were to happen, the value of our Common Stock could decline significantly, and you could lose all or part of your investment.

We have a history of operating losses, and there is no assurance that we will generate material revenues or become profitable in the near future.

We are a medical device company with a limited operating history. We are not profitable and have incurred losses since our inception. To date we have not generated material revenue from the sale of products, and we do not anticipate that we will report operating income in the foreseeable future. Our initial product, Glucotrack CBGM, has not been approved for marketing in the United States and is currently under preclinical development. We continue to incur research and development and selling, marketing and general and administrative expenses related to our operations, development and commercialization of our first product. Our operating losses for the years ended December 31, 2023 and 2022 were approximately $7.1 million and $4.4 million, respectively, and we had an accumulated deficit of approximately $109.8 million as of December 31, 2023. We expect to continue to incur losses for the foreseeable future, and these losses will likely increase as we develop and prepare to commercialize Glucotrack CBGM. If we are not successful in developing, manufacturing and distributing Glucotrack CBGM, or if Glucotrack CBGM does not achieve market acceptance, we may never become profitable. Even if we achieve profitability in the future, we may not be able to sustain profitability in subsequent periods.

As we continue to evolve from a company primarily involved in development to a company also involved in commercialization, we may encounter difficulties in managing our growth and expanding our operations successfully.

We anticipate that, as our operations expand and, assuming that our development, testing, studies and trials are successful, we will need to expand our manufacturing, marketing and sales capabilities by contracting with third parties. Maintaining these relationships and managing our future growth will impose significant added responsibilities on members of our management. We must be able to manage our development efforts effectively; manage our clinical trials effectively; hire, train and integrate additional management, development, administrative and sales and marketing personnel; improve managerial, development, operational and finance systems; and expand our facilities, all of which may impose a strain on our administrative and operational infrastructure.

We may have future capital needs and may not be able to obtain additional financing on acceptable terms.

Economic and credit market conditions, the performance of our industry and our financial performance, as well as other factors, may constrain our financing abilities. Our ability to secure additional financing, if available, and to satisfy our financial obligations under indebtedness outstanding from time to time will depend upon our future operating performance, the availability of credit, economic conditions and financial, business and other factors, many of which are beyond our control.

We may require additional financing to fund our operations and growth. The failure to secure additional financing could have an adverse effect on our continued development or growth. None of our officers, directors or stockholders is required to provide any financing to us.

Raising additional capital may cause dilution to our existing stockholders and investors, restrict our operations, or require us to relinquish rights to our products and/or product candidates on unfavorable terms to us.

We will seek additional capital through a variety of means, including through private and public equity offerings and debt financings, collaborations, strategic alliances and marketing, distribution, or licensing arrangements. To the extent that we raise additional capital through the sale of equity or convertible debt securities, or through the issuance of shares under other types of contracts, or upon the exercise or conversion of outstanding options, warrants, convertible debt or other similar securities, the ownership interests of our stockholders will be diluted, and the terms of such financings may include liquidation or other preferences, anti-dilution rights, conversion and exercise price adjustments and other provisions that adversely affect the rights of our stockholders, including rights, preferences and privileges that are senior to those of our holders of common stock in terms of the payment of dividends or in the event of a liquidation. In addition, debt financing, if available, could include covenants limiting or restricting our ability to take certain actions, such as incurring additional debt, making capital expenditures, entering into licensing arrangements, or declaring dividends and may require us to grant security interests in our assets. If we raise additional funds through collaborations, strategic alliances, or marketing, distribution, or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, product or product candidates or grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds through equity or debt financing when needed, we may need to curtail or cease our operations.

Our independent registered public accounting firm’s report contains an explanatory paragraph that expresses substantial doubt about our ability to continue as a “going concern.”

We may not have sufficient liquidity to meet our anticipated obligations over the next year from the issuance of the financial statements contained in this Report. We have incurred net losses and negative cash flows from our operations and comprehensive loss since our inception and as of December 31, 2023, there is an accumulated deficit of $109,853. These conditions raise substantial doubt about the Company’s ability to continue as a going concern.

Risks Related to Owning our Common Stock

We have never declared or paid any cash dividends on our Common Stock and do not anticipate paying any dividends on our Common Stock in the foreseeable future.

We have never declared or paid any cash dividends on our Common Stock and do not anticipate paying any dividends on our Common Stock in the foreseeable future. Any cash that might be available for payment of dividends will be used to expand our business. Payments of any cash dividends in the future will depend on our financial condition, results of operation and capital requirements, as well as other factors deemed relevant to our Board of Directors.

Our Common Stock may be delisted from Nasdaq if we fail to comply with continued listing standards.

Our Common Stock is currently traded on Nasdaq under the symbol “GCTK.” If we fail to meet any of the continued listing standards of Nasdaq, for which we have one or more deficiencies, our Common Stock could be delisted from Nasdaq. The continued listing standards include specifically enumerated criteria, such as:

	●	A $1.00 minimum closing bid price;

	●	Stockholders’ equity of $2,500;

	●	500,000 shares of publicly held Common Stock with a market value of at least $1,000;

	●	300 round-lot stockholders; and

	●	Compliance with Nasdaq’s corporate governance requirements, as well as additional or more stringent criteria that may be applied in the exercise of Nasdaq’s discretionary authority.

On May 26, 2023, we received a notice from the Staff of Nasdaq that we no longer complied with Nasdaq Listing Rule 5550(a)(2), which requires listed securities to maintain a minimum bid price of $1.00 per share. The Nasdaq letter stated that we had 180 days, or until November 22, 2023, to regain compliance with the Bid Price Rule. On November 24, 2023, we received a letter from the Staff of Nasdaq notifying us that we have been granted an additional 180 calendar days, or until May 20, 2024, to regain compliance with the Bid Price Rule. If at any time during the Extended Compliance Period, the closing bid price of our Common Stock is at least $1.00 per share for a minimum of 10 consecutive business days, the Staff of Nasdaq will provide written confirmation that we have achieved compliance with the Bid Price Rule. If we cannot demonstrate compliance during the Extended Compliance Period, then the Staff of Nasdaq will provide notice that our Common Stock will be subject to delisting. At that time, we may appeal the Staff’s determination to a hearings panel. The stock price on March 19, 2024 was $0.32, and, as such, we are not currently in compliance with the Bid Price Rule.

If Nasdaq delists our Common Stock from trading on its exchange for failure to meet the Bid Price Rule or any other listing standards, we and our stockholders could face significant material adverse consequences including:

	●	a limited availability of market quotations for our securities;

	●	a determination that our common stock is a “penny stock,” which will require brokers trading in our common stock to adhere to more stringent rules, possibly resulting in a reduced level of trading activity in the secondary trading market for our common stock;

	●	a limited amount of analyst coverage; and

	●	a decreased ability to issue additional securities or obtain additional financing in the future.

We had identified a material weakness in our internal control over financial reporting, and we may not be able to successfully implement remedial measures.

We identified material weaknesses related to our internal control over financial reporting as of December 31, 2023 and concluded that internal control over financial reporting as at December 31, 2023 were not effective. The ineffectiveness of the Company’s internal control over financial reporting was due to identification of material weaknesses related to lack of sufficient internal accounting personnel, segregation of duties, and lack of sufficient internal controls (including IT general controls) that encompass the Company as a whole with respect to entity and transactions level controls in order to ensure complete documentation of complex and non-routine transactions and adequate financial reporting.

Further, there can be no assurance that we will not suffer from other material weaknesses or significant deficiencies in the future. If we fail to remediate these material weaknesses or fail to otherwise maintain effective internal controls over financial reporting in the future, such failure could result in a material misstatement of our annual or quarterly financial statements that would not be prevented or detected on a timely basis and which could cause investors and other users to lose confidence in our financial statements, limit our ability to raise capital and have a negative effect on the trading price of our Common Stock. Additionally, failure to remediate the material weakness or otherwise maintain effective internal controls over financial reporting may also negatively impact our operating results and financial condition, impair our ability to timely file our periodic and other reports with the SEC, subject us to additional litigation and regulatory actions and cause us to incur substantial additional costs in future periods relating to the implementation of remedial measures.

The market price of our Common Stock may fluctuate significantly.

The market price of the Common Stock may fluctuate significantly in response to numerous factors, some of which are beyond our control, such as:

	●	Results of trials or studies;

	●	the announcement of new products or product enhancements by us or our competitors;

	●	developments concerning intellectual property rights and regulatory approvals;

	●	variations in our and our competitors’ results of operations;

	●	changes in earnings estimates or recommendations by securities analysts, if the Common Stock is covered by analysts;

	●	developments in the medical device industry;

	●	the results of product liability or intellectual property lawsuits;

	●	future issuances of Common Stock or other securities;

	●	the addition or departure of key personnel;

	●	announcements by us or our competitors of acquisitions, investments or strategic alliances; and

	●	general market conditions and other factors, including factors unrelated to our operating performance.

Further, in recent years, the stock market in general, and the market for medical device companies in particular, have experienced extreme price and volume fluctuations. Continued or renewed market fluctuations could result in extreme volatility in the price of our Common Stock, which could cause a decline in the value of the Common Stock.

Risks Related to our Business and Industry

Economic crises and market instability may materially and adversely affect the demand for our products, as well as our ability to obtain credit or secure funds through sales of our stock, which may materially and adversely affect our business, financial condition and ability to fund our operations.

Economic crises may reduce the demand for new and innovative medical devices, resulting in delayed market acceptance of our products, if and when they are approved. Such a delay could have a material adverse impact on our business, expected cash flows, results of operations and financial condition. Additionally, we have funded our operations to date primarily through private sales of securities, including Common Stock and other securities convertible into or exercisable for shares of our Common Stock. Economic turmoil and instability in the world’s equity and credit markets and in the unstable world may materially adversely affect our ability to sell additional securities and/or borrow cash. There can be no assurance that we will be able to raise additional working capital on acceptable terms or at all, and any failure to do so may materially adversely affect our ability to continue operations.

Glucotrack CBGM is not approved for sale in the United States or other jurisdictions.

We will likely be required to undertake significant clinical trials to demonstrate to the FDA that Glucotrack CBGM is safe and effective for its intended use (refer to “Management Discussion and Analysis - Government Regulatory”). We may also be required to undertake similar clinical trials by non-U.S. regulatory agencies, particularly for the European Union (CE Mark). Clinical trials for implantable medical devices are expensive and uncertain processes that take years to complete. Failure can occur at any point in the process and early positive results do not ensure that the entire clinical trial will be successful. Product candidates in clinical trials may fail to show desired efficacy and safety traits despite early promising results. A number of companies in the medical device industry have suffered significant setbacks in advanced clinical trials, even after their product candidates demonstrated promising results at earlier points.

Positive results from the limited safety and performance pre-clinical trials that we have conducted should not be relied upon as evidence that early-stage or large-scale clinical trials will succeed. Despite efforts to choose the proper animal model reflecting our intended use, our pre-clinical animal trials cannot be a guarantee of clinical trial success because human physiology and anatomy are different. Because of the sample size, possible variation in methodology, or differences in physiology, the results of these pre-clinical trials may not be indicative of future results. We will be required to demonstrate through well-controlled clinical trials that Glucotrack CBGM or future product candidates, if any, are safe and effective for their intended uses.

Further, the Glucotrack CBGM or our future product candidates, if any, may not be cleared or approved, as the case may be, even if the clinical data are satisfactory and support, in our view, it’s or their clearance or approval. The FDA or other non-U.S. regulatory authorities may disagree with our trial design or interpretation of the clinical data. In addition, any of these regulatory authorities may change requirements for the clearance or approval of a product candidate even after reviewing and providing comment on a protocol for a pivotal clinical trial that has the potential to result in FDA approval. In addition, any of these regulatory authorities may also clear or approve a product candidate for fewer or more limited uses than we request or may grant clearance or approval contingent on the performance of costly post-marketing clinical trials. In addition, the FDA or other non-regulatory authorities may not approve the labeling claims necessary or desirable for the successful commercialization of Glucotrack CBGM or our future product candidates, if any.

We are highly dependent on the success of our product candidate, Glucotrack CBGM, and cannot give any assurance that it will receive regulatory approval or clearance or be successfully commercialized.

We are highly dependent on the success of our product candidate, Glucotrack CBGM. We cannot give any assurance that the FDA will permit us to clinically test the device, nor can we give any assurance that the clinical trials will be successful or that GluctTrack CBGM will receive regulatory clearance or approval or be successfully commercialized, for a number of reasons, including, without limitation, the potential introduction by our competitors of more clinically-effective or cost-effective alternatives, failure in our sales and marketing efforts, or the failure to obtain positive coverage determinations or reimbursement. Any failure to obtain approval to conduct clinical trials, favorable clinical data, clearance or approval of or to successfully commercialize Glucotrack CBGM would have a material adverse effect on our business.

If our competitors develop and market products that are more effective, safer or less expensive than Glucotrack CBGM or our future product candidates, if any, our commercial opportunities will be adversely affected.

The life sciences industry is highly competitive; and we face significant competition from many medical device companies that are researching and marketing products designed to address the needs of people suffering from diabetes. We are currently developing medical devices that will compete with other medical devices that currently exist or are being developed. Some of our competitors have significantly greater financial, manufacturing, marketing and product development resources than we do. Large medical device companies, in particular, have extensive experience in clinical testing and in obtaining regulatory clearances or approvals for medical devices. These companies also have significantly greater research and marketing capabilities than us. Some of the medical device companies that we expect to compete with include Abbott Laboratories, DexCom, Medtronic, and Senseonics. In addition, many universities and private and public research institutions are or may become active in research involving blood glucose measurement devices.

We believe that our ability to successfully compete will depend on, among other things:

	●	our ability to have partners manufacture and sell commercial quantities of any approved products to the market;

	●	acceptance of product candidates by physicians and other health care providers;

	●	the results of our clinical trials;

	●	our ability to recruit and enroll patients for our clinical trials;

	●	the efficacy, safety, performance and reliability of our product candidates;

SEC Form 10-K filed by GlucoTrack Inc.