0001506983 false FY 0001506983 2022-01-01 2022-12-31 0001506983 us-gaap:CommonStockMember 2022-01-01 2022-12-31 0001506983 2022-06-30 0001506983 2023-03-28 0001506983 2022-12-31 0001506983 2021-12-31 0001506983 2021-01-01 2021-12-31 0001506983 us-gaap:CommonStockMember 2020-12-31 0001506983 us-gaap:AdditionalPaidInCapitalMember 2020-12-31 0001506983 IGAP:ReceiptsOnAccountOfSharesMember 2020-12-31 0001506983 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-12-31 0001506983 us-gaap:RetainedEarningsMember 2020-12-31 0001506983 2020-12-31 0001506983 us-gaap:CommonStockMember 2021-12-31 0001506983 us-gaap:AdditionalPaidInCapitalMember 2021-12-31 0001506983 IGAP:ReceiptsOnAccountOfSharesMember 2021-12-31 0001506983 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2021-12-31 0001506983 us-gaap:RetainedEarningsMember 2021-12-31 0001506983 us-gaap:CommonStockMember 2021-01-01 2021-12-31 0001506983 us-gaap:AdditionalPaidInCapitalMember 2021-01-01 2021-12-31 0001506983 IGAP:ReceiptsOnAccountOfSharesMember 2021-01-01 2021-12-31 0001506983 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2021-01-01 2021-12-31 0001506983 us-gaap:RetainedEarningsMember 2021-01-01 2021-12-31 0001506983 us-gaap:AdditionalPaidInCapitalMember 2022-01-01 2022-12-31 0001506983 IGAP:ReceiptsOnAccountOfSharesMember 2022-01-01 2022-12-31 0001506983 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2022-01-01 2022-12-31 0001506983 us-gaap:RetainedEarningsMember 2022-01-01 2022-12-31 0001506983 us-gaap:CommonStockMember 2022-12-31 0001506983 us-gaap:AdditionalPaidInCapitalMember 2022-12-31 0001506983 IGAP:ReceiptsOnAccountOfSharesMember 2022-12-31 0001506983 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2022-12-31 0001506983 us-gaap:RetainedEarningsMember 2022-12-31 0001506983 2021-08-11 2021-08-13 0001506983 srt:MinimumMember 2022-11-22 0001506983 srt:MaximumMember 2021-09-27 0001506983 IGAP:ComputersMember 2022-01-01 2022-12-31 0001506983 IGAP:FurnitureAndOfficeEquipmentMember srt:MinimumMember 2022-01-01 2022-12-31 0001506983 IGAP:FurnitureAndOfficeEquipmentMember srt:MaximumMember 2022-01-01 2022-12-31 0001506983 us-gaap:IsraelTaxAuthorityMember 2022-01-01 2022-12-31 0001506983 IGAP:OutstandingStockOptionAndWarrantsMember 2022-01-01 2022-12-31 0001506983 IGAP:OutstandingStockOptionAndWarrantsMember 2021-01-01 2021-12-31 0001506983 us-gaap:ComputerEquipmentMember 2022-12-31 0001506983 us-gaap:ComputerEquipmentMember 2021-12-31 0001506983 IGAP:FurnitureAndOfficeEquipmentMember 2022-12-31 0001506983 IGAP:FurnitureAndOfficeEquipmentMember 2021-12-31 0001506983 IGAP:FourSeparateLendersMember country:IL 2003-01-01 2004-12-31 0001506983 IGAP:IsraeliInnovationAuthorityMember 2004-03-04 0001506983 IGAP:IsraeliInnovationAuthorityMember srt:MinimumMember 2004-03-03 2004-03-04 0001506983 IGAP:IsraeliInnovationAuthorityMember srt:MaximumMember 2004-03-03 2004-03-04 0001506983 IGAP:IsraeliInnovationAuthorityMember 2005-03-04 0001506983 IGAP:IsraeliInnovationAuthorityMember 2022-12-31 0001506983 IGAP:IntellectualPropertyPurchaseAgreementMember us-gaap:CommonStockMember 2022-10-06 2022-10-07 0001506983 IGAP:IntellectualPropertyPurchaseAgreementMember us-gaap:CommonStockMember srt:MinimumMember 2022-10-06 2022-10-07 0001506983 IGAP:IntellectualPropertyPurchaseAgreementMember us-gaap:CommonStockMember srt:MinimumMember 2022-10-07 0001506983 IGAP:IntellectualPropertyPurchaseAgreementMember us-gaap:CommonStockMember srt:MinimumMember IGAP:TrueupSharesMember 2022-10-07 0001506983 2010-01-10 2010-01-11 0001506983 IGAP:ErezBenZviMember us-gaap:RestrictedStockUnitsRSUMember 2021-02-07 2021-02-08 0001506983 us-gaap:RestrictedStockUnitsRSUMember 2021-02-08 0001506983 IGAP:ErezBenZviMember 2022-01-01 2022-12-31 0001506983 IGAP:ErezBenZviMember 2021-01-01 2021-12-31 0001506983 IGAP:ShalomShushanMember us-gaap:RestrictedStockUnitsRSUMember 2020-11-28 2020-11-30 0001506983 IGAP:ShalomShushanMember us-gaap:RestrictedStockUnitsRSUMember IGAP:EmployeeMember 2020-11-28 2020-11-30 0001506983 IGAP:ShalomShushanMember us-gaap:RestrictedStockUnitsRSUMember 2020-11-30 0001506983 IGAP:ShalomShushanMember 2022-01-01 2022-12-31 0001506983 IGAP:ShalomShushanMember 2021-01-01 2021-12-31 0001506983 IGAP:ShalomShushanMember us-gaap:RestrictedStockUnitsRSUMember 2021-11-29 2021-11-30 0001506983 IGAP:MrPaulVMember 2021-11-30 0001506983 IGAP:MrPaulVMember 2021-11-29 2021-11-30 0001506983 IGAP:MrPaulVMember 2022-05-30 2022-05-31 0001506983 IGAP:MrPaulVMember 2022-01-01 2022-12-31 0001506983 IGAP:MrPaulVMember 2021-01-01 2021-12-31 0001506983 IGAP:MrJamesPMember us-gaap:RestrictedStockUnitsRSUMember 2021-12-01 2021-12-31 0001506983 IGAP:MrJamesPMember 2021-12-31 0001506983 IGAP:MrJamesPMember 2021-12-18 2021-12-20 0001506983 IGAP:MrJamesPMember 2022-01-01 2022-12-31 0001506983 IGAP:MrJamesPMember 2021-01-01 2021-12-31 0001506983 IGAP:MarkTapsakMember us-gaap:RestrictedStockUnitsRSUMember 2022-10-01 2022-10-31 0001506983 IGAP:MarkTapsakMember 2022-10-31 0001506983 IGAP:MarkTapsakMember 2022-12-31 0001506983 IGAP:MarkTapsakMember 2022-01-01 2022-12-31 0001506983 IGAP:AndrewGarrettIncMember 2017-01-01 2017-12-31 0001506983 IGAP:AndrewGarrettIncMember us-gaap:ShareBasedCompensationAwardTrancheOneMember us-gaap:CommonStockMember 2017-12-31 0001506983 IGAP:AndrewGarrettIncMember us-gaap:ShareBasedCompensationAwardTrancheTwoMember us-gaap:CommonStockMember 2017-12-31 0001506983 IGAP:AndrewGarrettIncMember us-gaap:ShareBasedCompensationAwardTrancheThreeMember us-gaap:CommonStockMember 2017-12-31 0001506983 IGAP:AndrewGarrettIncMember IGAP:ShareBasedCompensationAwardTrancheFourMember us-gaap:CommonStockMember 2017-12-31 0001506983 IGAP:AndrewGarrettIncMember us-gaap:CommonStockMember 2020-02-29 0001506983 IGAP:McGuireAndAssocLLCMember 2020-08-01 2020-08-31 0001506983 IGAP:McGuireAndAssocLLCMember us-gaap:CommonStockMember 2020-08-31 0001506983 IGAP:McGuireAndAssocLLCMember 2022-01-01 2022-12-31 0001506983 IGAP:McGuireAndAssocLLCMember 2021-01-01 2021-12-31 0001506983 IGAP:AndrewGarrettIncMember 2022-09-12 2022-09-12 0001506983 IGAP:NonEmployeeMember 2022-01-01 2022-12-31 0001506983 2020-01-01 2020-12-31 0001506983 IGAP:ExercisePriceOneMember 2022-01-01 2022-12-31 0001506983 IGAP:ExercisePriceOneMember 2022-12-31 0001506983 IGAP:ExercisePriceTwoMember 2022-01-01 2022-12-31 0001506983 IGAP:ExercisePriceTwoMember 2022-12-31 0001506983 IGAP:ExercisePriceThreeMember 2022-01-01 2022-12-31 0001506983 IGAP:ExercisePriceThreeMember 2022-12-31 0001506983 IGAP:ExercisePriceOneMember IGAP:NonEmployeeMember 2022-01-01 2022-12-31 0001506983 IGAP:ExercisePriceOneMember IGAP:NonEmployeeMember 2022-12-31 0001506983 IGAP:ExercisePriceTwoMember IGAP:NonEmployeeMember 2022-01-01 2022-12-31 0001506983 IGAP:ExercisePriceTwoMember IGAP:NonEmployeeMember 2022-12-31 0001506983 IGAP:ExercisePriceThreeMember IGAP:NonEmployeeMember 2022-01-01 2022-12-31 0001506983 IGAP:ExercisePriceThreeMember IGAP:NonEmployeeMember 2022-12-31 0001506983 IGAP:ExercisePriceFourMember IGAP:NonEmployeeMember 2022-01-01 2022-12-31 0001506983 IGAP:ExercisePriceFourMember IGAP:NonEmployeeMember 2022-12-31 0001506983 IGAP:ExercisePriceFiveMember IGAP:NonEmployeeMember 2022-01-01 2022-12-31 0001506983 IGAP:ExercisePriceFiveMember IGAP:NonEmployeeMember 2022-12-31 0001506983 IGAP:ExercisePriceSixMember IGAP:NonEmployeeMember 2022-01-01 2022-12-31 0001506983 IGAP:ExercisePriceSixMember IGAP:NonEmployeeMember 2022-12-31 0001506983 IGAP:NonEmployeeMember 2022-12-31 0001506983 srt:MinimumMember 2021-12-31 0001506983 srt:MaximumMember 2021-12-31 0001506983 us-gaap:ResearchAndDevelopmentArrangementMember us-gaap:ResearchAndDevelopmentExpenseMember 2022-01-01 2022-12-31 0001506983 us-gaap:ResearchAndDevelopmentArrangementMember us-gaap:ResearchAndDevelopmentExpenseMember 2021-01-01 2021-12-31 0001506983 us-gaap:ResearchAndDevelopmentArrangementMember us-gaap:GeneralAndAdministrativeExpenseMember 2022-01-01 2022-12-31 0001506983 us-gaap:ResearchAndDevelopmentArrangementMember us-gaap:GeneralAndAdministrativeExpenseMember 2021-01-01 2021-12-31 0001506983 us-gaap:ResearchAndDevelopmentArrangementMember 2022-01-01 2022-12-31 0001506983 us-gaap:ResearchAndDevelopmentArrangementMember 2021-01-01 2021-12-31 0001506983 IGAP:SalariesAndRelatedMember 2022-01-01 2022-12-31 0001506983 IGAP:SalariesAndRelatedMember 2021-01-01 2021-12-31 0001506983 us-gaap:ProfessionalFees 2022-01-01 2022-12-31 0001506983 us-gaap:ProfessionalFees 2021-01-01 2021-12-31 0001506983 IGAP:ExpensesDueToSlowInventoryMember 2022-01-01 2022-12-31 0001506983 IGAP:ExpensesDueToSlowInventoryMember 2021-01-01 2021-12-31 0001506983 us-gaap:Depreciation 2022-01-01 2022-12-31 0001506983 us-gaap:Depreciation 2021-01-01 2021-12-31 0001506983 IGAP:VehicleMaintenanceMember 2022-01-01 2022-12-31 0001506983 IGAP:VehicleMaintenanceMember 2021-01-01 2021-12-31 0001506983 us-gaap:OtherExpenseMember 2022-01-01 2022-12-31 0001506983 us-gaap:OtherExpenseMember 2021-01-01 2021-12-31 0001506983 us-gaap:GeneralAndAdministrativeExpenseMember 2022-01-01 2022-12-31 0001506983 us-gaap:GeneralAndAdministrativeExpenseMember 2021-01-01 2021-12-31 0001506983 us-gaap:IsraelTaxAuthorityMember 2022-12-31 0001506983 IGAP:AndrewGarrettIncMember 2022-09-11 2022-09-12 0001506983 srt:MaximumMember IGAP:AndrewGarrettIncMember 2022-09-11 2022-09-12 0001506983 IGAP:AndrewGarrettIncMember 2022-01-01 2022-12-31 0001506983 IGAP:MarkTapsakMember 2022-10-24 2022-10-25 0001506983 IGAP:MarkTapsakMember IGAP:TapsakEnterprisesLLCMember 2022-01-01 2022-12-31 iso4217:USD xbrli:shares iso4217:USD xbrli:shares xbrli:pure iso4217:ILS IGAP:Segment

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, 2022

☐ | 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: None

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 ☐

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 ☒

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 |  | GCTK |  | Nasdaq Capital Market

The aggregate market value of the voting stock held by non-affiliates is approximately $3930,000 based on the closing price of $2.58 per share of the registrant’s common stock, as reported on Nasdaq on June 30, 2022, the last business day of the registrant’s most recently completed second fiscal quarter of 2022.

As of March 28, 2023, 15,503,632 shares of the registrant’s common stock, par value $0.001 per share, were outstanding.

DOCUMENTS INCORPORATED BY REFERENCE:

None, except as noted for Part III information in the Company’s Definitive Schedule 14A or Form 10-K/A to be filed on or before April 30, 2023.

TABLE OF CONTENTS

GENERAL | 3
CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS | 3
PART I | 4
Item 1. Business. | 4
Item 1A. Risk Factors. | 19
Item 1B. Unresolved Staff Comments. | 33
Item 2. Properties. | 33
Item 3. Legal Proceedings. | 33
Item 4. Mine Safety Disclosures | 33
Part II | 34
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. | 34
Item 6. Selected Financial Data | 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. | 36
Item 8. Financial Statements and Supplementary Data. | 36
Item 9. Change in and Disagreements With Accountants on Accounting and Financial Disclosure. | 36
Item 9A. Controls and Procedures. | 37
Item 9B. Other Information. | 37
PART III | 37
Item 10. Directors, Executive Officers and Corporate Governance. | 37
Item 11. Executive Compensation. | 38
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. | 38
Item 13. Certain Relationships and Related Transactions, and Director Independence. | 38
Item 14. Principal Accounting Fees and Services. | 38
PART IV | 38
Item 15. Exhibits, Financial Statement Schedules. | 38
SIGNATURES | 41

2

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”), for all periods prior to July 15, 2010 and to Integrity Israel and Integrity Applications, Inc., a Delaware corporation, on a combined basis, for all periods from and including July 15, 2010 to March 14, 2022, and thereafter to Integrity Israel and GlucoTrack, Inc.

CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS

This Annual Report on Form 10-K 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 Annual Report on Form 10-K, 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. Risks that could affect our business include the duration and scope of the COVID-19 pandemic and the impact on the demand for our products; actions by governments, businesses and individuals taken in response to the pandemic; the length of time of the COVID-19 pandemic and the possibility of its reoccurrence; the timing required to develop effective treatments and a vaccine in the event of future outbreaks; the eventual impact of the pandemic and actions taken in response to the pandemic on global and regional economies; and the pace of recovery when the COVID-19 pandemic subsides. 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 Annual Report on Form 10-K 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 Annual Report on Form 10-K 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 Annual Report on Form 10-K under the caption “Risk Factors,” beginning on page 30. 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.

3

PART I

Item 1. Business.

Overview

We are a medical device company focused on the design, development and commercialization of novel technologies for use by people with diabetes and prediabetes. We are currently developing two products; a non-invasive glucose monitor for use by those with Type 2 diabetes and prediabetes, and an implantable continuous glucose monitor for those with Type 1 diabetes and insulin-dependent Type 2 diabetes.

We were incorporated in Delaware in May 2010 as Integrity Applications, Inc. In July 2010, we completed a reverse triangular merger with Integrity Israel and Integrity Acquisition Corp. Ltd., an Israeli corporation and a wholly owned subsidiary of ours, pursuant to which Integrity Acquisition Corp. Ltd. merged with and into Integrity Israel (the “Reorganization”). As a result of the Reorganization, Integrity Israel became a wholly owned subsidiary of ours. Until recently, we operated primarily through Integrity Israel and moved our operations primarily to the US in 2022.

In connection with our application to list our shares on Nasdaq Capital Market (“NASDAQ”), on August 13, 2021, we effected a reverse split of our Common Stock in a ratio of 1 for 13 (the “Reverse Share Split”). For accounting purposes, all Shares, options and warrants to purchase Common Stock and loss per share amounts have been adjusted to give retroactive effect to this Reverse Share Split for all periods presented in these interim consolidated financial statements. Any fractional shares resulting from the Reverse Share Split were rounded up to the nearest whole share.

On December 8, 2021 our shares of Common Stock were approved for listing on the Nasdaq Capital Market (“NASDAQ”) and trading on NASDAQ commenced on December 10, 2021 under the trading symbol, IGAP.

On March 14, 2022, we completed our corporate name change to GlucoTrack, Inc., and ticker symbol change to GCTK.

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 (“GlucoTrack 1.0”), which successfully received CE Mark approval and ISO certifications, utilized a combination of ultrasound, electromagnetic and thermal technologies to obtain glucose measurements in approximately one minute via a small sensor that is clipped onto one’s earlobe and connected to a small, handheld control and display unit, all without drawing blood or interstitial fluid. After a limited release beta test in Europe and the Middle East, the Company determined that it would focus on developing its next generation non-invasive monitor (“GlucoTrack 2.0”), and we have since withdrawn our CE Mark and ISO certifications for GlucoTrack 1.0.

We are currently developing GlucoTrack 2.0. The current clinical prototype utilizes ultrasound-only sensor technology, reduces the overall cost and complexity of the device, and reduces the measurement time from approximately sixty seconds to less than two seconds. Initial testing has produced promising results, suggesting measurement accuracies could be relatively comparable with those of conventional, already in-the-market CGM technologies. We expect to begin our first-in-human (FIH) study in the second quarter of 2023. Collecting data for sensor characterization and algorithm development will be the primary goals of the FIH study. The results of this study will also drive the development of the commercial version of the device, which is expected to commence late in the third quarter of 2023. Once the development of the commercial device version is complete, we intend to conduct a scaled down version of the FDA pivotal trial to resolve any lingering device performance or human factors issues prior to executing the larger pivotal trial for FDA submission.

4

Following the acquisition of certain IP in the fourth quarter of 2022, we are also developing an implantable continuous glucose monitor 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, and we are currently in the feasibility phase to demonstrate the potential of a multi-year implant life. We intend to complete the feasibility study in the second quarter of 2023. 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 companion applications and a cloud-based solutions to offer an effective platform to provide real time, data driven personalized tools to effectively help a user manage their diabetes, which will be utilized during the clinical trials. 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.

After a home-based short calibration process of approximately thirty minutes consisting of three typical blood glucose reference measurements, GlucoTrack 1.0 can be used to non-invasively measure glucose levels for six months before a user is required to repeat the calibration process. The entire calibration process can be performed by the user themselves without the need for a trained calibrator. We believe the simple-to-perform calibration, as well as the infrequency of the required re-calibration are significant advantages over our competition.

Our Senior Management team includes; CEO and President, Paul V. Goode PhD, who has a decorated career developing innovative medical technologies, including at DexCom and MiniMed, James P. Thrower PhD, Vice President of Engineering, a seasoned executive formerly of Sterling Medical Devices, Mindray DS USA and DexCom, Inc., and 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. Luis J. Malavé, formerly of Insulet Corp, Medtronic and MiniMed has joined as an independent board member. Several highly talented and accomplished executives joined the Company as senior advisors to the Board. These include Yair Briman, the former CEO of Philips Healthcare Informatics, Daniel McCaffrey MBA MA, a world-renowned behavioral scientist and digital health expert formerly at Samsung Health and Dexcom, Inc., Dr. Alexander Raykhman PhD, a measurement and artificial intelligence expert and Dr. David C. Klonoff, world renowned endocrinologist and diabetes technology thought leader. We intend to continue to invest in our talent and to expand and strengthen all areas within the Company.

Recent Events

On October 19, 2021, Paul V. Goode PhD was appointed as President and Chief Operating Officer of the Company, effective November 1, 2021 (“Effective Date”). He previously served as a member of the Company’s Board of Directors since December 17, 2020. Concurrent with his new appointment, Dr. Goode stepped down from the Board. In December 2021, Mr. Goode has been appointed Chief Executive Officer.

5

In connection with our application to list our shares of common stock on Nasdaq Capital Market (“NASDAQ”), on August 13, 2021, we effected a reverse split of our common stock in a ratio of 1 for 13 (the “Reverse Share Split”).

On September 27, 2021, our shelf registration statement on Form S-3 (file no. 333-259664) was declared effective by 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 December 8, 2021, we announced that our shares of common stock were approved for listing on the NASDAQ. Trading on NASDAQ commenced on December 10, 2021, under the trading symbol IGAP.

On March 14, 2022, we changed our name to GlucoTrack, Inc. and our trading symbol to GCTK.

On March 22, 2022, Shalom Shushan, Chief Technology Officer, provided notice of his resignation from the Company, effective May 22, 2022, for personal reasons. In connection with the Company’s previously announced plans to migrate certain aspects of product development to the United States, James P. Thrower PhD, Vice President of Engineering, assumed Mr. Shushan’s responsibilities.

In connection with the Company’s previously announced plans to migrate certain aspects of the product development to the United States, as well as in preparation for U.S. clinical trials, Erez Ben-Zvi, VP of Product in Israel, resigned from the Company, effective June 12, 2022.

On October 10, 2022, the Company announced that it has acquired certain IP related to a long-term implantable continuous glucose monitor and that it intends to develop the technology to address the growing Type 1 and insulin dependent Type 2 diabetes market.

On October 14, 2022, the Company announced the hiring of Dr. Mark Tapsak as Vice President of Sensor Technology.

On November 22, 2022, Nasdaq provided notice that pursuant to Nasdaq Listing Rule 5550(b)(1), the Company did not meet the alternatives of market value of listed securities or net income from continuing operations.

On January 4, 2023, Nasdaq provided notice that since the Company had not held an annual meeting of shareholders within twelve months of the end of the Company’s fiscal year end ended December 31, 2021, it no longer complied with Listing Rules for continued listing.

On February 7, 2023, Nasdaq issued a letter to the Company granting an extension until May 22, 2023 to obtain compliance with the Listing Rule 5550(b).

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 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.

6

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.

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. Diabetics generally manage their blood glucose levels by administering insulin or ingesting carbohydrates throughout the day to maintain blood glucose within normal ranges. Normal ranges in diabetics vary from person to person. In order to maintain blood glucose levels within normal ranges, diabetics 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 patients 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. Diabetics who take insulin usually need to test more often than those who do not take insulin.

Clinical data supports the recommendation that frequent monitoring of blood glucose levels is an important component of effective diabetes management. The Diabetes Control and Complications Trial1, consisting of patients with Type 2 diabetes, and the 1993 UK Prospective Diabetes Study2, consisting of patients with Type 2 diabetes, demonstrated that patients who intensely managed blood glucose levels delayed the onset and slowed the progression of diabetes-related complications. In the Diabetes Control and Complications Trial, a major component of intensive management was monitoring blood glucose levels at least four times per day using conventional spot finger stick blood glucose meters. The Diabetes Control and Complications Trial demonstrated that intensive management reduced the risk of complications by 76% for eye disease, 60% for nerve disease and 50% for kidney disease. Furthermore, a recent meta-analysis of over 25 prospective studies concluded that chronic hyperglycemia in type 2 diabetes is associated with increased risks of all-cause mortality and cardiovascular outcomes independently from other conventional risk factors.3 However, despite the evidence that intensive glucose management reduces the long-term complications associated with diabetes, Karter et al. reported in the 2000 issue of Diabetes Care that 67% of people with type 2 diabetes fail to routinely monitor their glucose levels.4

Spot finger stick devices are 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. This has resulted in a sub-optimal and irregular measurement regimen for many diabetics.

1 Group, 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.

2 Diabetes 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.

3 hang, 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.

4 Karter, A. J.; Ferrara, A.; Darbinian, J. A.; Ackerson, L. M.; Selby, J. V. Self-monitoring of blood glucose: language and financial barriers in a managed care population with diabetes. Diabetes Care 2000, 23, 477–483.

7

The FDA has approved continuous glucose monitoring system (“CGMS”) devices for blood glucose monitoring, when prescribed by a doctor. CGMS devices use sensors inserted under the skin to check glucose levels in interstitial fluid. The sensor stays in place for up to fourteen days and then must be replaced. A transmitter sends information about glucose levels via radio waves from the sensor to a pager-like wireless monitor.

The FDA has previously approved a single non-invasive product for glucose trend analysis, the GlucoWatch®, so long as the device was used with conventional finger stick glucose monitoring devices. However, the device is no longer available commercially. We are not aware of any other devices that have been approved for use in either the United Stated or the EU for spot or continuous non-invasive blood glucose measurement.

We believe that a significant market opportunity exists for our devices which could greatly increase compliance with blood glucose measurement recommendations and help many suffering from diabetes better manage their disease, providing significant benefits to both patients and payors.

Our Products

Our first generation GlucoTrack (“GlucoTrack 1.0”), which successfully received CE Mark approval and ISO certifications, utilized a combination of ultrasound, electromagnetic and thermal technologies to obtain glucose measurements in approximately one minute via a small sensor that is clipped onto one’s earlobe and connected to a small, handheld control and display unit, all without drawing blood or interstitial fluid. After a limited release beta test in Europe and the Middle East, the Company determined that it would focus on developing its next generation non-invasive monitor (“GlucoTrack 2.0”), and we have since withdrawn our CE Mark and ISO certifications for GlucoTrack 1.0.

We are currently in the development phase of GlucoTrack 2.0. Our development team began our Glucotrack 2.0 redesign program as a project to miniaturize the Glucotrack 1.0 technology into a smaller wireless ear clip that would connect to a smartphone via Bluetooth. As our miniaturization project progressed, the glucose sensing landscape evolved as continuous glucose monitoring (CGM) devices in the market reached similar accuracy as the conventional fingerstick blood glucose monitoring (BGM) devices. This inevitably raised the regulatory bar for any glucose sensor performance, as regulatory bodies such as the FDA could now point to the accuracy levels of BGM and CGM alternatives already available to the patient. In addition, the Company recognized the advent and significant growth of digital health. Particularly, CGM companies set a new bar for a mobile experience with diabetes data and its associated cloud management, with BGM companies quickly following. Also, from a user experience perspective, while a 60 second measurement time may have been acceptable to the market in the past, we determined this is no longer the case, and that we needed to significantly reduce the time it took to complete a measurement.

As a result of these changing dynamics, we concluded that the GlucoTrack 2.0 project scope not only had to reduce the size of our device, but also had to improve the user experience and to significantly improve sensor accuracy. Accordingly, the Company had to return to a research mode to design, develop, and test a new, more innovative device that would meet these criteria and to invest in software development to ensure that the GlucoTrack 2.0 product would be supported by both iOS and Android devices with a cloud-based infrastructure.

By the end of 2022 we had a clinical prototype of a newly designed system. This system utilizes ultrasound-only sensor technology, reduces the overall cost and complexity of the device, and reduces the measurement time from 60 seconds to 2 seconds. Initial testing produced promising results, suggesting measurement accuracies could be relatively comparable to those of conventional, already in-the-market CGM technologies. Continued testing however, exposed certain human factors that complicated consistent sensor placement. We have identified several mechanical techniques to address this challenge and we expect to complete this process and begin our first-in-human (FIH) study in the second quarter of 2023. Collecting data for sensor characterization and algorithm development will be the primary goals of the FIH study. The results of this study will also drive the development of the commercial version of the device, which is expected to commence late in the third quarter of 2023. Once the development of the commercial device version is complete, we intend to conduct a scaled down version of the FDA pivotal trial to resolve any lingering device performance or human factors issues prior to executing the larger pivotal trial for FDA submission.

8

In the fourth quarter of 2022 we acquired certain IP relating to an implantable continuous glucose monitor. We designed and developed a laboratory CGM sensing system, integrated into a cloud-based automated data collection system and a prototype model of this system was implemented and validated. We also designed, manufactured, and tested a prototype sensor lead. In addition, we have identified and consummated key vendor relationships with expertise in designing and manufacturing implantable leads and electronics, and we are developing a sensor life simulation system that will take real bench data as inputs and predict total enzyme longevity.

Our focus now is to complete the feasibility assessment of achieving a multi-year implant life. In parallel, we have initiated an implantable electronics design effort. A paper-based design has been completed, and a physical mock-up is expected in the second quarter of 2023, with a targeted prototype design for an animal study to commence in the third quarter of 2023.

By the end of 2023 we intend to have completed the feasibility assessment based on bench data and sensor life modeling/prediction, have bench data (in solution) demonstrating at least six months of sensor life without significant degradation, have animal data demonstrating at least three months of sensor life without significant degradation, and have initiated a human clinical device/system design and development program.

We have developed our own companion applications and a cloud-based solutions to offer an effective 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. These applications will be utilized during the clinical trials.

We do not have commercial manufacturing facilities and do not intend to build commercial manufacturing facilities of our own in the foreseeable future. Our suppliers and their manufacturing facilities must comply with applicable regulations in the jurisdictions in which our devices are to be marketed (including ISO 13485 in the 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 we will be able to enter into agreements with qualified manufacturers on terms acceptable to us, or at all, or that, once contracted, such manufacturers will perform as expected.

Research & Development

We focus significant time and resources on research and development in connection with our efforts to continue to develop and improve GlucoTrack, as well as in connection with our development of our implantable continuous glucose monitor. 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 2022 and 2021.

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.

9

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, 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 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 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.

10

In the United States, under Section 201(h) of the Food, Drug, and Cosmetic Act, 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. There is no guarantee, however, that the FDA will deem the device 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.

11

The GlucoTrack® 1.0 has not been approved for commercial sale in the United States. The GlucoTrack® 2.0 is still under development and has not yet been approved for commercial sale in or outside the United States. In prior discussions with the FDA regarding the regulatory pathway, the FDA is not yet entirely sure whether a de novo pathway is acceptable and recommended that the Company should plan to support this approach through risk analysis and an explanation of why the new measurement paradigm it is proposing does not introduce greater risks. FDA noted that no decision has been made that a PMA will be required. The implantable CGM product will most likely fall under the PMA process.

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, or substantially equivalent in terms of safety and effectiveness to a predicate device, a prerequisite for clearance under 510(k). 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 clearance or 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. A manufacturer of a device cleared through a 510(k) submission must submit another premarket notification if it intends to make a change or modification in the device that could significantly affect the safety or effectiveness of the device, such as a significant change or modification in design, material, chemical composition, energy source or manufacturing process. Any change in the intended uses of a PMA device or a 510(k) device requires an approval supplement or cleared premarket notification. Exported devices are subject to the regulatory requirements of each country to which the device is exported, as well as certain FDA export requirements.

12

The Patient Protection and Affordable Care Act was signed into law on March 23, 2010, and on March 30, 2010, a reconciliation bill that modifies certain provisions of the same was signed into law. These two laws are jointly referred to as the “Affordable Care Act” or “ACA.”

The principal aim of the ACA was to expand health insurance coverage to approximately 32 million Americans who were uninsured. The law’s most far-reaching changes did not take effect until 2014, including a requirement that most Americans carry health insurance. The consequences of these significant coverage expansions on the sales of our products is still unknown and speculative at this point, although the ACA and certain state initiatives may compel private insurers to reduce coverage or reimbursement for various items and services, including medical devices of the type that we contemplate distributing.

This legislation contains many provisions designed to generate the revenues necessary to fund the coverage expansions. The most relevant of these provisions are those that impose fees or taxes on certain health-related industries, including medical device manufacturers. Beginning in 2013, each medical device manufacturer is required to pay an excise tax (or sales tax) in an amount equal to 2.3% of the price for which such manufacturer sells its medical devices. The tax applies to all medical devices, including our products and product candidates. The ACA also provides for increased enforcement of the fraud and abuse regulations previously mentioned.

There are ongoing discussions in the EU regarding amending the relevant regulatory framework. It is difficult to predict what effect any amendments to the existing EU legislation may have. Furthermore, each individual EU member country has the authority to amend its regulations and requirements additional to the minimum harmonization required by the MDR. Because the EU member countries have diverse legal systems, it is difficult to predict what, if any, amendments may be implemented in each of the EU member countries and whether they may adversely affect us.

We anticipate that sales volumes and prices of our products will depend in large part on the availability of reimbursement from third-party payors. Third-party payors include governmental programs such as Medicare and Medicaid, private insurance plans and workers’ compensation plans. These third-party payors may deny reimbursement for a product or therapy if they determine that the product was not medically appropriate or necessary. Also, third-party payors are increasingly challenging the prices charged for medical products and services. Some third-party payors must also approve coverage for new or innovative devices before they will reimburse health care providers who use the products. Even though a new product may have been cleared for commercial distribution, it may find limited demand for the device until reimbursement approval has been obtained from governmental and private third-party payors.

Inasmuch as a percentage of the projected patient population that could potentially benefit from our products is elderly, Medicare would likely be a potential source of reimbursement in the United States. Medicare is a federal program that provides certain hospital and medical insurance benefits to persons age 65 and over, certain disabled persons, persons with end-stage renal disease and those suffering from Lou Gehrig’s disease. In contrast, Medicaid is a medical assistance program jointly funded by United States federal and state governments and administered by each state pursuant to which benefits are available to certain indigent patients. The Medicare and Medicaid statutory framework is subject to administrative rulings, interpretations and discretion that affect the amount and timing of reimbursement made under Medicare and Medicaid.

Medicare reimburses for 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 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, or at the national level by CMS. There are new statutory provisions intended to facilitate coverage determinations for new technologies under the Medicare Prescription Drug Improvement and Modernization Act of 2003 §731 and §942, but it is unclear how these new provisions will be implemented. Coverage presupposes that the device has been cleared or approved by the FDA and, further, that the coverage will be no broader than the approved intended uses of the device (i.e., the device’s label) as cleared or approved by the FDA, but coverage can be narrower. In that regard, a narrow Medicare coverage determination may undermine the commercial viability of a device.

13

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. On average, according to an industry report, Medicare coverage determinations for medical devices lag 15 months to five years or more behind FDA approval for respective devices. Moreover, Medicaid programs and private insurers are frequently influenced by Medicare coverage determinations. A key component in the reimbursement decision by most private insurers will be whether our products is reimbursed by virtue of a national coverage determination by CMS. We may negotiate contracted rates our products with private insurance providers for the purchase of our products by their members pending a coverage determination by CMS. Our inability to obtain a favorable coverage determination for our products may adversely affect our ability to market our products and thus, the commercial viability of the product. In international markets, reimbursement and healthcare payment systems vary significantly by country and many countries have instituted price ceilings on specific product lines. Distributors expressly support the reimbursement process and, depending on the distribution agreement and geographic area, may assume responsibility for the process.

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. Furthermore, deficit reduction and austerity measures in the United States and abroad may put further pressure on governments to limit coverage of, and reimbursement for, our products. 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 reimbursement or insurance coverage is established, patients will have to bear the financial cost of our products. Third-party coverage may be particularly difficult to obtain while our products is not approved by the FDA as a replacement for existing single-point finger stick devices.

Outside the United States, availability of reimbursement from third parties varies widely from country to country. Within the EU, member countries’ medical reimbursement and healthcare coverage regulations and systems differ significantly. It is, therefore, difficult to analyze and predict the prospect of consistent availability of adequate reimbursement in the various EU member countries.

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;

14

| ● | 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 False Claims Act (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 False Claims Act in 1986 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, 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.

15

Intellectual Property

We maintain a proactive intellectual property strategy, which includes patent filings in multiple jurisdictions, including the United States and other commercially significant markets. We currently hold 59 issued patents in various regions including patents issued by the United States, Australian, Brazilian, Canadian, Chinese, European, Hong Kong, Indian, Israeli, Japanese, Korean, Mexican, Philippine, Russian, South African, and Taiwanese patent offices that cover various parts of our technology, which include A Method Of Monitoring Glucose Levels, Device For Non-Invasively Measuring Glucose, Individual Measuring Channels For Non-Invasively Measuring Glucose, Ear Clip For Medical Monitoring Device. However, since we have taken Glucotrack 1.0 form the market, we have not maintained these patents across the geographies. New IP is being generated for both Glucotrack 2.0 and the Invasive CGM that will add to our patent portfolio while providing more longevity.

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 have obtained trademark registrations for GlucoTrack® in various countries, including the US, Europe, China and Israel, and also own an allowed trademark applications for GlucoTrack® in Canada. Trademark registrations were issued in ten countries for “JUST CLIP IT,” including France and China, and additional applications are pending in three countries, including the United States. In addition, trademark registrations were issued in seven countries for “YOUR TRACK TO HEALTH,” including France and China, and additional applications are pending in three countries, including the United States. Trademark registrations have been issued in Israel to register “Integrity,” the Company’s logo and the GlucoTrack logo. Registration have issued in Hong Kong and Taiwan and are pending in China and Singapore to register GlucoTrack in Chinese characters. Our application in South Korea to register GlucoTrack in Korean characters has been allowed.

We believe that our patents 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 blood glucose monitoring devices is intensely competitive, subject to rapid change and significantly affected by new product introductions. Four companies, Roche; LifeScan, Inc., a division of Johnson & Johnson; Abbott Laboratories; and Ascensia, a spin off from the Bayer Corporation, currently account for substantially all of the worldwide sales of self-monitored glucose testing systems. These competitors’ products use a meter and disposable test strips to test blood obtained by pricking the finger or, in some cases, the palm or forearm.

16

Within the last few years, Continuous Glucose Monitoring (CGM) devices have been introduced into the market and will compete with GlucoTrack® and our future devices. Currently, to our knowledge, three different brands have obtained FDA clearance to market and are selling CGM devices in the U.S. These brands are sold by Medtronic plc., Abbott Laboratories, and Dexcom, Inc. Several new and smaller players have obtained clearance to market in EU, although their performances are significantly inferior to those of Medtronic, Abbott, and DexCom. CGM devices are invasive devices, in which a needle is inserted under the skin (either in the abdomen or the upper arm) and measures interstitial fluid. Although we cannot predict what standards will be employed by applicable regulatory authorities as we seek FDA clearance, the results achieved by GlucoTrack® 2.0 in our safety and performance clinical trial conducted were similar to the results obtained from the CGM devices that have been introduced to the market, as of the time of their introduction. As mentioned above, we expect the performance requirements from the regulating agencies will be more stringent as the CGM products have improved their performance since initial market introduction.

In addition, other companies are developing non-invasive glucose testing devices and technologies that could compete with our devices. There are also a number of academic and other institutions involved in various phases of technology development regarding blood glucose monitoring devices. We believe that the majority of non-invasive glucose monitors in development require frequent calibrations (from a few hours to a few days, compared to the GlucoTrack® 1.0, which has a demonstrated efficacy period of six months from the initial calibration). Other than Know Labs and Movano, companies known to be developing non-invasive measurement devices are all privately held such as Alertgy, Gwave, Diamontech, Boydsense, etc. Companies known to be developing an implantable CGM are Sensionics and privately-held Profusa and Indigo Diabetes NV.

Some of our 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.

Some of our other non-publicly traded competitors also enjoy these competitive advantages. As a result, we cannot assure that we will be able to compete effectively against these companies or their products.

17

GlucoTrack® does not directly measure the glucose level concentration in the blood. Rather, it measures several physiological phenomena that are correlated with the glucose level. In order to correlate between the measured signal and the glucose level, a translation is needed. This translation is accomplished through the individual calibration of the device by reference to a measurement obtained from an invasive device.

Non-invasive devices under different stages of development generally require frequent recalibration. For example, GlucoWatch, a single non-invasive product for glucose trend analysis that was previously approved for sale by the FDA, but which is no longer available commercially, required recalibrations approximately every 13 hours. The main reasons for calibration are that tissue parameters generally fluctuate in the area of the measurement and are sensitive to the location of the sensor and the impact of potential disturbances. Disturbances are less frequent in the earlobes, where GlucoTrack® takes its measurements. Utilizing three channels simultaneously reduces the noise contribution in the measurement. In addition, the personal ear clip contains sensors to help users attach the device to the proper part of the ear lobe.

GlucoTrack® 1.0 has received CE Mark approval, which allows us to market and sell GlucoTrack® 1.0 glucose monitoring device in EU member countries that have adopted the MDD without being subject to additional national regulations with regard to demonstration of performance and safety. While the MDD is applicable throughout the EU, it requires only a minimum level of harmonization among member countries. Accordingly, member countries may apply and enforce the MDD’s terms differently, and certain EU member countries may request or require performance and/or safety data additional to the MDD’s requirements from time to time, on a case-by-case basis. Moreover, the MDD notwithstanding, because the regulatory regimes of the EU member countries are significantly diverse, it is difficult to predict future regulatory developments and risks. GlucoTrack® 1.0 has not yet been cleared or approved for commercial sale in any other jurisdiction, including the United States. See “Government Regulation - Regulation of the Design, Manufacture and Distribution of Medical Devices” below for a discussion of the approval process for commercial sale in the United States. There can be no assurance that approval for commercial sale in any additional jurisdiction will be obtained on a timely basis or at all. GlucoTrack 2.0 is currently under development.

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; 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. There is no relationship between us and Integrity Applications, Incorporated, the engineering and software services company based in Chantilly, Virginia.

18

Board and Committees

We have five members on our Board, four 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, 2022, we had three full-time employees. None of our employees are represented by a collective bargaining agreement. In addition, as of December 31, 2022, 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 near future. Our initial product, GlucoTrack® 1.0, has not been approved for marketing in the United States and may not be sold or marketed without FDA clearance or approval in the United States. Our next generation product, GlucoTrack® 2.0 is currently under 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, 2022 and 2021 were approximately $4.4 million and $4.0 million, respectively, and we had an accumulated deficit of approximately $101.9 million as of December 31, 2022. 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® 2.0. If we are not successful in developing, manufacturing and distributing GlucoTrack® 2.0, or if GlucoTrack® 2.0 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.

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.

19

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® may not be approved for sale in the United States or other (non-CE Mark) jurisdictions.

We will likely be required to undertake significant clinical trials to demonstrate to the FDA that GlucoTrack® is either safe and effective for its intended use or is substantially equivalent in terms of safety and effectiveness to an existing, lawfully marketed non-Section 515 premarket approval (PMA) device (refer to “Management Discussion and Analysis - Government Regulatory”). We may also be required to undertake clinical trials by non-U.S. regulatory agencies in non-CE Mark jurisdictions. Clinical trials are expensive and uncertain processes that may 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 pre-clinical trials and safety and performance clinical trial that we have conducted should not be relied upon as evidence that later-stage or large-scale clinical trials will succeed. These trials involved limited patient populations and there is no assurance that the experimental protocol or protocols, as the case may be, used in these informal trials will be methodologically similar to ones submitted to the FDA or any other regulatory body for its approval. Because of the sample size, possible variation in methodology, differences in exclusion/inclusion criteria, or differences in endpoints, the results of these pre-clinical trials may not be indicative of future results. We will likely be required to demonstrate through well-controlled clinical trials that GlucoTrack® or future product candidates, if any, are safe and effective for their intended uses. In the event that the FDA deems GlucoTrack® to be a Class II device, which we do not believe is likely at this point, then we would be required to demonstrate that it is substantially equivalent in terms of safety and effectiveness to a device lawfully marketed either through a premarket notification or prior to May 28, 1976.

Additionally, although we have received our CE Mark approval for GlucoTrack® 1.0, EU member countries may request or require additional performance and/or safety data from time to time, on a case-by-case basis. GlucoTrack® 2.0 is currently under development.

Further, GlucoTrack® 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, its 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® or our future product candidates, if any.

We are highly dependent on the success of our next generation product candidate, GlucoTrack® 2.0, 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 next generation product candidate, GlucoTrack® model 2.0. 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 GlucoTrack® 2.0 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® 2.0 would have a material adverse effect on our business.

20

If our competitors develop and market products that are more effective, safer or less expensive than GlucoTrack® 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 persons 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 Roche; LifeScan, Inc., a division of Johnson & Johnson; the MediSense and TheraSense divisions of Abbott Laboratories; Ascensia, a spin off from Bayer Corporation; Dexcom, Inc. and Medtronic, Inc. In addition, many other 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;
| ● | the speed at which we develop product candidates;
| ● | our ability to obtain prompt and favorable IRB review and approval at each of our clinical sites;
| ● | our ability to commercialize and market any of our product candidates that may receive regulatory clearance or approval;
| ● | our ability to design and successfully execute appropriate clinical trials;
| ● | the timing and scope of regulatory clearances or approvals;
| ● | appropriate coverage and adequate levels of reimbursement under private and governmental health insurance plans, including Medicare; and
| ● | our ability to protect intellectual property rights related to our products.

If our competitors market products that are more effective, safer, easier to use or less expensive than GlucoTrack® or our future product candidates, if any, or that reach the market sooner than GlucoTrack® or our future product candidates, if any, we may not achieve commercial success. In addition, the medical device industry is characterized by rapid technological change. It may be difficult for us to stay abreast of the rapid changes in each technology. If we fail to stay at the forefront of technological change, we may be unable to compete effectively. Technological advances or products developed by our competitors may render our technologies or product candidates obsolete or less competitive.

21

Our product development activities could be delayed or stopped.

We do not know whether our future clinical trials will begin on time, or at all, and whether ongoing and/or future clinical trials will be completed on schedule, or at all.

The commencement of future clinical trials could be substantially delayed or prevented by several factors, including:

| ● | the failure to obtain sufficient funding to pay for all necessary clinical trials;
| ● | limited number of, and competition for, suitable patients that meet the protocol’s inclusion criteria and do not meet any of the exclusion criteria;
| ● | limited number of, and competition for, suitable sites to conduct the clinical trials, and delay or failure to obtain FDA approval, if necessary, to commence a clinical trial;
| ● | delay or failure to obtain sufficient supplies of the product candidate for clinical trials;
| ● | requirements to provide the medical device required in clinical trials at cost, which may require significant expenditures that we are unable or unwilling to make;
| ● | delay or failure to reach agreement on acceptable clinical trial agreement terms or clinical trial protocols with prospective sites or investigators; and
| ● | delay or failure to obtain IRB approval or renewal of such approval to conduct a clinical trial at a prospective or accruing site, respectively.

The completion of clinical trials in connection with our application for FDA approval could also be substantially delayed or prevented by several factors, including:

| ● | slower than expected rates of patient recruitment and enrollment;
| ● | failure of patients to complete the clinical trial;
| ● | unforeseen safety issues;
| ● | lack of efficacy evidenced during clinical trials;
| ● | termination of clinical trials by one or more clinical trial sites;
| ● | inability or unwillingness of patients or medical investigators to follow clinical trial protocols; and
| ● | inability to monitor patients adequately during or after treatment.

Our clinical trials may be suspended or terminated at any time by the FDA, other regulatory authorities, the IRB for any given site, or us. Any failure or significant delay in completing clinical trials for GlucoTrack® or future product candidates, if any, could materially harm our financial results and the commercial prospects for our product candidates.

22

The regulatory approval process is expensive, time-consuming and uncertain and may prevent us from obtaining approvals for the commercialization of GlucoTrack® or our future product candidates, if any.

The research, testing, manufacturing, labeling, approval, selling, marketing and distribution of medical devices are subject to extensive regulation by the FDA and other non-U.S. regulatory authorities, which regulations differ from country to country. We are not permitted to market our product candidates in the United States until we receive a clearance letter under the 510(k)-premarket notification process or approval of a Section 515 premarket approval, from the FDA, depending on the nature of the device. We have not submitted an application or premarket notification for or received marketing clearance or approval for any of our product candidates. Obtaining approval of any premarket approval can be a lengthy, expensive and uncertain process. While the FDA normally reviews, and clears a premarket notification in three months, there is no guarantee that our products will qualify for this more expeditious regulatory process, which is reserved for Class I and II devices, nor is there any assurance that, even if a device is reviewed under the 510(k)-premarket notification process, the FDA will review it expeditiously or determine that the device is substantially equivalent to a lawfully marketed non-premarket approval device. If the FDA fails to make this finding, then we cannot market the device. In lieu of acting on a premarket notification, the FDA may seek additional information or additional data which would further delay our ability to market the product. In addition, failure to comply with FDA, non-U.S. regulatory authorities or other applicable U.S. and non-U.S. regulatory requirements may, either before or after product clearance or approval, if any, subject us to administrative or judicially imposed sanctions, including:

| ● | restrictions on the products, manufacturers or manufacturing process;
| ● | adverse inspectional observations (Form 483), warning letters or non-warning letters incorporating inspectional observations, i.e., so-called “untitled letter”;
| ● | civil and criminal penalties;
| ● | injunctions;
| ● | suspension or withdrawal of regulatory clearances or approvals;
| ● | product seizures, detentions or import bans;
| ● | voluntary or mandatory product recalls and publicity requirements;
| ● | total or partial suspension of production;
| ● | imposition of restrictions on operations, including costly new manufacturing requirements; and
| ● | refusal to clear or approve pending applications or premarket notifications.

Regulatory approval of a PMA or PMA supplement or clearance pursuant to a 510(k)-premarket notification is not guaranteed, and the approval or clearance process, as the case may be, is expensive and may, especially in the case of the PMA, take several years. The FDA also has substantial discretion in the medical device clearance or approval processes. Despite the time and expense exerted, failure can occur at any stage and we could encounter problems that cause us to abandon clinical trials or to repeat or perform additional pre-clinical studies and clinical trials. The number of pre-clinical studies and clinical trials that will be required for FDA clearance or approval varies depending on the medical device candidate, the disease or condition that the medical device candidate is designed to address, and the regulations applicable to any particular medical device candidate. The FDA can delay, limit or deny clearance or approval of a medical device candidate for many reasons, including:

| ● | a medical device candidate may not be deemed safe or effective, in the case of a PMA;
| ● | a medical device candidate may not be deemed to be substantially equivalent to a lawfully marketed non-premarket approval device in the case of a 510(k)-premarket notification;
| ● | FDA officials may not find the data from the clinical trials sufficient;
| ● | the FDA might not approve our third-party manufacturer’s processes or facilities; or
| ● | the FDA may change its clearance or approval policies or adopt new regulations.

23

Further, while we have received CE Mark approval for GlucoTrack® 1.0, the MDD requires only minimum harmonization. In practice, uniform regulation throughout the EU is not ensured. Rather, member countries may apply and enforce the MDD’s terms differently, and certain EU member countries may request or require performance and/or safety data additional to the MDD’s requirements from time to time, on a case-by-case basis. Therefore, we cannot predict whether we will be able to successfully commercialize GlucoTrack® or our future product candidates, if any, in the EU.

Failure to recruit and enroll patients for clinical trials may cause the development of our product candidates to be delayed.

We may encounter delays if we are unable to recruit and enroll and retain enough patients to complete clinical trials. Patient enrollment depends on many factors, including the size of the patient population, the nature of the protocol, the proximity of patients to clinical sites and the eligibility criteria for the trial. Delays in patient enrollment are not unusual. Any such delays in planned patient enrollment may result in increased costs, which could harm our ability to develop products.

The terms of clearances or approvals and ongoing regulation of our products may limit how we manufacture and market our product candidates, which could materially impair our ability to generate anticipated revenues.

Once regulatory clearance or approval has been granted, the cleared or approved product and its manufacturer are subject to continual review. Any cleared or approved product may only be promoted for its indicated uses. In addition, if the FDA or other non-U.S. regulatory authorities clear or approve GlucoTrack® or our future product candidates, if any, the labeling, packaging, adverse event reporting, storage, advertising and promotion for the product will be subject to extensive regulatory requirements. We, and the manufacturers of our products, if other than us, also will be required to comply with the FDA’s Quality System Regulation, which includes requirements relating to quality control and quality assurance, as well as the corresponding maintenance of records and documentation. Moreover, device manufacturers are required to report adverse events by filing Medical Device Reports with the FDA, which are publicly available. Further, regulatory agencies must approve our manufacturing facilities before they can be used to manufacture products, and these facilities are subject to ongoing regulatory inspection. If we fail to comply with the regulatory requirements of the FDA and other non-U.S. regulatory authorities, or if previously unknown problems with our products, manufacturers or manufacturing processes are discovered, we could be subject to administrative or judicially imposed sanctions, including:

| ● | restrictions on the products, manufacturers or manufacturing process;
| ● | adverse inspectional observations (Form 483), warning letters, or non-warning letters incorporating inspectional observations;
| ● | civil or criminal penalties or fines;
| ● | injunctions;
| ● | product seizures, detentions or import bans;
| ● | voluntary or mandatory product recalls and publicity requirements;
| ● | suspension or withdrawal of regulatory clearances or approvals;
| ● | total or partial suspension of production;
| ● | imposition of restrictions on operations, including costly new manufacturing requirements; and
| ● | refusal to clear or approve pending applications or premarket notifications.

24

In addition, the FDA and other non-U.S. regulatory authorities, including the EU and each of the EU member countries individually, may change their policies and additional regulations may be enacted that could prevent or delay regulatory clearance or approval of our product candidates. We cannot predict the likelihood, nature or extent of government regulation that may arise from future legislation or administrative action, either in the United States or abroad. If we are not able to maintain regulatory compliance, we will likely not be permitted to market future product candidates and may not achieve or sustain profitability.

Even if we receive regulatory clearance or approval to market GlucoTrack® or our future product candidates, if any, the market may not be receptive to our products.

Even if GlucoTrack® or our future product candidates, if any, obtain regulatory clearance or approval, resulting products may not gain market acceptance among physicians, patients, health care payors or the medical community. We believe that the degree of market acceptance will depend on a number of factors, including:

| ● | timing of market introduction of competitive products;
| ● | safety and efficacy of our product;
| ● | prevalence and severity of any side effects;
| ● | potential advantages or disadvantages over alternative treatments;
| ● | strength of marketing and distribution support;
| ● | price of our product candidates, both in absolute terms and relative to alternative treatments; and
| ● | availability of coverage and reimbursement from government and other third-party payors.

If the GlucoTrack® or our future product candidates, if any, fail to achieve market acceptance, we may not be able to generate significant revenue or achieve or sustain profitability.

The coverage and reimbursement status of newly cleared or approved medical devices is uncertain, and failure to obtain adequate coverage and adequate reimbursement could limit our ability to market GlucoTrack® or future product candidates, if any, and may inhibit our ability to generate revenue from GlucoTrack® or our future product candidates, if any, that may be cleared or approved.

There is significant uncertainty related to the third-party coverage and reimbursement of newly cleared or approved medical devices. The commercial success of GlucoTrack® or our future product candidates, if any, in both domestic and international markets will depend in part on the availability of coverage and adequate reimbursement from third-party payors, including government payors, such as the Medicare and Medicaid programs, managed care organizations and other third-party payors. Government and other third-party payors are increasingly attempting to contain health care costs by limiting both coverage and the level of reimbursement for new products and, as a result, they may not cover or provide adequate payment for GlucoTrack® or our future product candidates, if any. These payors may conclude that our products are not as safe or effective as existing devices or that the overall cost of using one of our devices exceeds the overall cost of the competing device, and third-party payors may not approve GlucoTrack® or our future product candidates, if any, for coverage and adequate reimbursement. Furthermore, deficit reduction and austerity measures in the United States and abroad may put further pressure on governments to limit coverage of, and reimbursement for, our products. The failure to obtain coverage and adequate reimbursement for GlucoTrack® or our future product candidates, if any, or health care cost containment initiatives that limit or restrict reimbursement for such products may reduce any future product revenue.

We may not obtain insurance coverage to adequately cover all significant risk exposures.

We will be exposed to liabilities that are unique to the products we provide. We currently maintain premises insurance and there can be no assurance that we will acquire or maintain insurance for certain risks, that the amount of our insurance coverage will be adequate to cover all claims or liabilities, or that we will not be forced to bear substantial costs resulting from risks and uncertainties of business. It is also not possible to obtain insurance to protect against all operational risks and liabilities. The failure to obtain adequate insurance coverage on terms favorable to us, or at all, could have a material adverse effect on our business, financial condition and results of operations.

25

If product liability lawsuits are brought against us, we may incur substantial liabilities.

We face a potential risk of product liability as a result of any of the products that we offer for sale. For example, we may be sued if any product we sell allegedly causes injury or is found to be otherwise unsuitable during product testing, manufacturing, marketing or sale. Any such product liability claims may include allegations of defects in manufacturing, defects in design, a failure to warn of dangers inherent in the product, negligence, strict liability and a breach of warranties. Claims could also be asserted under state consumer protection acts. If we cannot successfully defend ourselves against product liability claims, we may incur substantial liabilities. Even successful defense would require significant financial and management resources. Regardless of the merits or eventual outcome, liability claims may result in:

| ● | decreased demand for products that we may offer for sale;
| ● | injury to our reputation;
| ● | costs to defend the related litigation;
| ● | a diversion of management’s time and our resources;
| ● | substantial monetary awards to trial participants or patients;
| ● | product recalls, withdrawals or labeling, marketing or promotional restrictions; and
| ● | a decline in our stock price.

Our inability to obtain and retain sufficient product liability insurance at an acceptable cost to protect against potential product liability claims could prevent or inhibit the commercialization of products we develop. We currently maintain product liability insurance up to $5,000 thousand per claim and in the aggregate. Although we have product liability coverage, we may have to pay amounts awarded by a court or negotiated in a settlement that exceed our coverage limitations or that are not covered by our insurance, and we may not have, or be able to obtain, sufficient capital to pay such amounts.

If we fail to attract and retain key management and scientific personnel, we may be unable to successfully develop or commercialize GlucoTrack® or our future product candidates, if any.

We will need to expand and effectively manage our managerial, operational, financial, development and other resources in order to successfully pursue our research, development and commercialization efforts for GlucoTrack® or our future product candidates, if any. Our success depends on our continued ability to attract, retain and motivate highly qualified management and pre-clinical and clinical personnel. The loss of the services of any of our senior management could delay or prevent the development or commercialization of GlucoTrack® or our future product candidates, if any. At present, we do not have key man insurance policies with respect to any of our employees. We will need to hire additional personnel as we continue to expand our research and development activities and build a sales and marketing function.

We may not be able to attract or retain qualified management and scientific personnel in the future due to the intense competition for qualified personnel among medical device and other businesses. If we are not able to attract and retain the necessary personnel to accomplish our business objectives, we may experience constraints that will significantly impede the achievement of our research and development objectives, our ability to raise additional capital and our ability to implement our business strategy. In particular, if we lose any members of our senior management team, we may not be able to find suitable replacements in a timely fashion or at all and our business may be harmed as a result.

26

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, 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 rely on third parties to manufacture and supply our product.

We do not own or operate manufacturing facilities for clinical or commercial production of GlucoTrack®, other than a prototype lab. We have no experience in medical device manufacturing and lack the resources and the capability to manufacture the GlucoTrack® on a commercial scale. To date we have manufactured GlucoTrack® with a third-party manufacturer in Israel.

If our manufacturing partners are unable to produce our products in the amounts, timing or pricing that we require, we may not be able to establish a contract and obtain a sufficient alternative supply from another supplier on a timely basis and in the quantities or pricing we require. We expect to depend on third-party contract manufacturers for the foreseeable future.

GlucoTrack® does, and our future product candidates, if any, likely will require precise, high quality manufacturing. Any of our contract manufacturers will be subject to ongoing periodic unannounced inspections by the FDA and other non-U.S. regulatory authorities to ensure strict compliance with quality system regulations, including current good manufacturing practices and other applicable government regulations and corresponding standards. If our contract manufacturers fail to achieve and maintain high manufacturing standards in compliance with quality system regulations, we may experience manufacturing errors resulting in patient injury or death, product recalls or withdrawals, delays or interruptions of production or failures in product testing or delivery, delay or prevention of filing or approval of marketing applications for our products, cost overruns or other problems that could seriously harm our business.

Any performance failure on the part of our contract manufacturers could delay clinical development or regulatory clearance or approval of our product candidates or commercialization of our future product candidates, depriving us of potential product revenue and resulting in additional losses. In addition, our dependence on a third-party for manufacturing may adversely affect our future profit margins. Our ability to replace an existing manufacturer may be difficult because the number of potential manufacturers is limited and the FDA must approve any replacement manufacturer before it can begin manufacturing our product candidates. Such approval would require additional non-clinical testing and compliance inspections. It may be difficult or impossible for us to identify and engage a replacement manufacturer on acceptable terms in a timely manner, or at all.

27

Independent clinical investigators and contract research organizations that we may engage to conduct our clinical trials may not be diligent, careful or timely.

We will depend on independent clinical investigators to conduct our clinical trials. Contract research organizations may also assist us in the collection and analysis of data. These investigators and contract research organizations will not be our employees and we will not be able to control, other than by contract, the amount of resources, including time that they devote to products that we develop. If independent investigators fail to devote sufficient resources to the clinical trials, or if their performance is substandard, it will delay the approval or clearance and commercialization of any products that we develop. Further, the FDA requires that we comply with standards, commonly referred to as good clinical practice, for conducting, recording and reporting clinical trials to assure that data and reported results are credible and accurate and that the rights, integrity and confidentiality of trial subjects are protected. If our independent clinical investigators and contract research organizations fail to comply with good clinical practice, the results of our clinical trials could be called into question and the clinical development of our product candidates could be delayed. Failure of clinical investigators or contract research organizations to meet their obligations to us or comply with federal regulations could adversely affect the clinical development of our product candidates and harm our business.

If we are unable to obtain and enforce patent protection for our products, our business could be materially harmed.

Our success depends, among other things, on our ability to protect proprietary methods and technologies that we develop under the patent and other intellectual property laws of the United States and other countries, so that we can prevent others from unlawfully using our inventions and proprietary information. However, we may not hold proprietary rights to some patents required for us to commercialize proposed products. For this and other reasons, we may be unable to secure desired patent rights, thereby losing desired exclusivity. Although we do not believe that we need any licenses for GlucoTrack®, we may need to obtain licenses in the future for other products or in certain circumstances, such as if one of our patents were declared invalid in the future. If such licenses are not available to us on acceptable terms, we will not be able to market the affected products or conduct the desired activities, unless we successfully challenge the validity, enforceability or infringement of the third-party patent or otherwise circumvent the third-party patent.

Our strategy depends on our ability to rapidly identify and seek patent protection for our discoveries. The process of obtaining patent protection is expensive and time-consuming. Despite our efforts to protect our proprietary rights, unauthorized parties may be able to obtain and use information that we regard as proprietary.

The issuance of a patent does not guarantee that it is valid or enforceable. Any patents we have obtained, or which we may obtain in the future, may be challenged, invalidated, unenforceable or circumvented. Moreover, the United States Patent and Trademark Office (the “USPTO”) may commence interference proceedings involving our patents or patent applications. Any challenge to, finding of unenforceability or invalidation or circumvention of our patents or patent applications would be costly, would require significant time and attention of our management and could have a material adverse effect on our business. In addition, court decisions may introduce uncertainty in the enforceability or scope of patents owned by medical device companies.

Our pending patent applications may not result in issued patents. The patent position of medical device companies, including us, is generally uncertain and involves complex legal and factual considerations. The standards that the USPTO and its foreign counterparts use to grant patents are not always applied predictably or uniformly and can change. There is also no uniform, worldwide policy regarding the subject matter and scope of claims granted or allowable in medical device patents. Accordingly, we do not know the degree of future protection for our proprietary rights or the breadth of claims that will be allowed in any patents issued to us or to others. The legal systems of certain countries do not favor the aggressive enforcement of patents, and the laws of foreign countries may not protect our rights to the same extent as the laws of the United States. Therefore, the enforceability or scope of our patents in the United States or in foreign countries cannot be predicted with certainty, and, as a result, any patents that we own may not provide sufficient protection against competitors. We may not be able to obtain or maintain patent protection for our pending patent applications or those we may file in the future.

We cannot assure you that any patents that will issue, that may issue or that may be licensed to us will be enforceable or valid or will not expire prior to the commercialization of our product candidates, thus allowing others to more effectively compete with us. Therefore, any patents that we own may not adequately protect our product candidates or our future products.

28

If we are unable to protect the confidentiality of our proprietary information and know-how, the value of our technology and products could be adversely affected.

In addition to patent protection, we also rely on other proprietary rights, including protection of trade secrets, know-how and confidential and proprietary information. To maintain the confidentiality of trade secrets and proprietary information, we will seek to enter into confidentiality and non- disclosure agreements with our employees, consultants and collaborators upon the commencement of their relationships with us. These agreements generally require that all confidential information developed by the individual or made known to the individual by us during the course of the individual’s relationship with us be kept confidential and not disclosed to third parties. Our agreements with employees also generally provide and will generally provide that any inventions conceived by the individual in the course of rendering services to us shall be our exclusive property. However, we may not obtain these agreements in all circumstances, and individuals with whom we have these agreements may not comply with their terms. In the event of unauthorized use or disclosure of our trade secrets or proprietary information, these agreements, even if obtained, may not provide meaningful protection, particularly for trade secrets or other confidential information. To the extent that our employees, consultants or contractors use technology or know-how owned by third parties in their work for us, disputes may arise between us and those third parties as to the rights in related inventions.

Adequate remedies may not exist in the event of unauthorized use or disclosure of our confidential information. The disclosure of trade secrets would impair our competitive position and may materially harm our business, financial condition and results of operations.

Some jurisdictions may require us to grant licenses to third parties. Such compulsory licenses could be extended to include some of our product candidates, which may limit potential revenue opportunities.

Many countries, including certain countries in Europe, have compulsory licensing laws under which a patent owner may be compelled to grant licenses to third parties. In addition, most countries limit the enforceability of patents against government agencies or government contractors. In these countries, the patent owner may be limited to monetary relief and may be unable to enjoin infringement, which could materially diminish the value of the patent. Compulsory licensing of life-saving products is also becoming increasingly popular in developing countries, either through direct legislation or international initiatives. Such compulsory licenses could be extended to include some of our product candidates, which may limit our potential revenue opportunities.

Our commercial success depends significantly on our ability to operate without infringing the patents and other proprietary rights of third parties.

Other entities may have or obtain patents or proprietary rights that could limit our ability to manufacture, use, sell, offer for sale or import products or impair our competitive position. In addition, to the extent that a third party develops new technology that covers our products, we may be required to obtain licenses to that technology, which licenses may not be available on commercially reasonable terms, if at all. If licenses are not available on acceptable terms, we will not be able to market the affected products or conduct the desired activities unless we successfully challenge the validity, enforceability or infringement of the third-party patent or circumvent the third-party patent, which would be costly and would require significant time and attention of our management. Third parties may have or obtain valid and enforceable patents or proprietary rights that could block us from developing products using our technology. Our failure to obtain a license to any technology that we require may materially harm our business, financial condition and results of operations.

29

If we become involved in patent litigation or other proceedings related to a determination of rights, we could incur substantial costs and expenses, substantial liability for damages or be required to stop our product development and commercialization efforts.

Third parties may sue us for infringing their patent rights. Likewise, we may need to resort to litigation to enforce a patent issued or licensed to us or to determine the scope and validity of proprietary rights of others. In addition, a third party may claim that we have improperly obtained or used our confidential or proprietary information. The cost to us of any litigation or other proceeding relating to intellectual property rights, even if resolved in our favor, could be substantial, and the litigation would divert management’s efforts. Some of our competitors may be able to sustain the costs of complex patent litigation more effectively than we can because they have substantially greater resources. Uncertainties resulting from the initiation and continuation of any litigation could limit our ability to continue our operations.

If any parties successfully claim that our creation or use of proprietary technologies infringes upon their intellectual property rights, we might be forced to pay damages, potentially including treble damages, if we are found to have willfully infringed on such parties’ patent rights. In addition to any damages we might have to pay, a court could require us to stop the infringing activity or obtain a license. Any license required under any patent may not be made available on commercially acceptable terms, if at all. In addition, such licenses are likely to be non-exclusive and, therefore, our competitors may have access to the same technology. If we fail to obtain a required license and are unable to design around a patent, we may be unable to effectively market some of our technology and products, which could limit our ability to generate revenues or achieve profitability and possibly prevent us from generating revenue sufficient to sustain operations.

Non-U.S. governments often impose strict price controls, which may adversely affect our future profitability.

We intend to seek approval to market GlucoTrack® and our future product candidates, if any, in both the U.S. and in non-U.S. jurisdictions. If we obtain approval in one or more non-U.S. jurisdictions, we will be subject to rules and regulations in those jurisdictions relating to our products. In some countries, particularly countries of the EU, each of which has developed its own rules and regulations, pricing may be subject to governmental control under certain circumstances. In these countries, pricing negotiations with governmental authorities can take considerable time after the receipt of marketing approval for a medical device candidate. Each of the EU member states has its own unique legal system and thus it is difficult to predict the particular requirements to which we may be subject. To obtain reimbursement or pricing approval in some countries, we may be required to conduct a clinical trial that compares the cost-effectiveness of our product to other available products. If reimbursement of our product candidates is unavailable or limited in scope or amount, or if pricing is set at unsatisfactory levels, we may be unable to achieve or sustain profitability.

30

Our business may become subject to economic, political, regulatory and other risks associated with international operations, which could harm our business.

Our business is subject to risks associated with conducting business internationally. Accordingly, our future results could be harmed by a variety of factors, including:

| ● | difficulties in compliance with non-U.S. laws and regulations;
| ● | changes in non-U.S. regulations and customs;
| ● | changes in non-U.S. currency exchange rates and currency controls;
| ● | changes in a specific country’s or region’s political or economic environment;
| ● | trade protection measures, import or export licensing requirements or other restrictive actions by U.S. or non-U.S. governments;
| ● | negative consequences from changes in tax laws; and
| ● | difficulties associated with staffing and managing foreign operations, including differing labor relations.

We may not be able to enforce covenants not-to-compete under current Israeli law, which might result in added competition for our products.

We have non-competition agreements or provisions with all of our employees and executive officers, all of which are governed by Israeli law. These agreements or provisions prohibit our employees from competing with us or working for our competitors, generally during, and for up to nine months after termination of, their employment with us. However, Israeli courts are reluctant to enforce non-compete undertakings of former employees and tend, if at all, to enforce those provisions for only relatively brief periods of time or in restricted geographical areas. In addition, Israeli courts typically require the presence of additional circumstances, such as a demonstration of an employer’s legitimate interest which was damaged; breach of fiduciary duties, loyalty and acting not in good faith; a payment of a special consideration for employee’s non-compete obligation; material concern for disclosing employer’s trade secrets; or a demonstration that an employee has unique value to the employer specific to that employer’s business, before enforcing a non-competition undertaking against such employee.

The funding that we received through the Israeli Innovation Authority (IIA) for research and development activities restricts our ability to manufacture products or to transfer technology outside of Israel.

On March 4, 2004, the OCS agreed to provide us with a grant of 420 thousand New Israeli Shekels (“NIS”), or approximately $93 thousand at an exchange rate of 4.502 NIS/dollar (the exchange rate in effect on such date), for our plan to develop a non-invasive blood glucose monitor (the “development plan”). This grant constituted 60% of our research and development budget for the development plan at that time. Due to our acceptance of this grant, we are subject to the provisions of the Israeli Law for the Encouragement of Industrial Research and Development, 1984 (the “R&D Law”). Among other things, the R&D Law restricts our ability to sell or transfer rights in technology or know-how developed with OCS funding or transfer any Means of Control (as defined in the R&D Law) of us to non-Israeli entities. The Industrial Research and Development Committee at the OCS (the “research committee”) may, under special circumstances, approve the transfer outside of Israel of rights in technology or know-how developed with OCS funding subject to certain conditions, including the condition that certain payments be made to the OCS. Additionally, we may not manufacture products developed with OCS funding outside of Israel without the approval of the research committee. The restrictions regarding the sale or transfer of technology or manufacturing rights out of Israel could have a material adverse effect on our ability to enter into strategic alliances or enter into merger or acquisition transactions in the future that provide for the sale or transfer of our technology or manufacturing rights.

We are subject to certain employee severance obligations, which may result in an increase in our expenditures.

Under Israeli law, employers are required to make severance payments to dismissed employees and employees leaving employment in certain other circumstances, on the basis of the latest monthly salary for each year of service. This obligation results in an increase in our expenses, including accrued expenses. Integrity Israel currently makes monthly deposits to insurance policies and severance pay funds in order to provide for this liability.

31

The Company’s and its Israeli subsidiary’s agreements with all of their Israeli employees are in accordance with Section 14 of the Israeli Severance Pay Law -1963 (“Section 14”). Payments in accordance with Section 14 release the Company from any other future severance payments in respect of those employees. Deposits under Section 14 are not recorded as an asset in the Company’s balance sheet.

Our Common Stock may be delisted from The Nasdaq Capital Market (“Nasdaq”) if we fail to comply with continued listing standards.

Our Common Stock is currently traded on Nasdaq under the symbol “MARA”. 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 thousand;
| ● | 500,000 shares of publicly held Common Stock with a market value of at least $1,000 thousand;
| ● | 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.

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, 2022 and concluded that internal control over financial reporting as at December 31, 2022 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:

| ● | 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.

32

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.

Compliance with changing regulations concerning corporate governance and public disclosure may result in additional expenses.

There have been changing laws, regulations and standards relating to corporate governance and public disclosure, including the Sarbanes-Oxley Act of 2002, new regulations promulgated by the SEC and rules promulgated by the national securities exchanges. These new or changed laws, regulations and standards are subject to varying interpretations in many cases due to their lack of specificity, and, as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies, which could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices. As a result, our efforts to comply with evolving laws, regulations and standards are likely to continue to result in increased general and administrative expenses and a diversion of management time and attention from revenue-generating activities to compliance activities. Our directors, Chief Executive Officer and Chief Financial Officer could face an increased risk of personal liability in connection with the performance of their duties. As a result, we may have difficulty attracting and retaining qualified directors and executive officers, which could harm our business. If our efforts to comply with new or changed laws, regulations and standards differ from the activities intended by regulatory or governing bodies, we could be subject to liability under applicable laws or our reputation may be harmed.

Because a certain portion of our expenses is incurred in currencies other than the NIS, our results of operations may be harmed by currency fluctuations and inflation.

The functional currency of Integrity Israel is the NIS, and we pay a substantial portion of our expenses in NIS. However, we expect a portion of our future revenues to be denominated in U.S. dollars or in Euros. As a result, we will be exposed to the currency fluctuation risks relating to the recording of our revenues in NIS. For example, if the NIS strengthens against either the U.S. dollar or the Euro, our reported expenses in NIS may be higher than anticipated. The Israeli rate of inflation has not offset or compounded the effects caused by fluctuations between the NIS and the U.S. dollar or the Euro. To date, we have not engaged in hedging transactions. Although the Israeli rate of inflation has not had a material adverse effect on our financial condition to date, we may, in the future, decide to enter into currency hedging transactions to decrease the risk of financial exposure from fluctuations in the exchange rates of the currencies mentioned above in relation to the NIS. These measures, however, may not adequately protect us from material adverse effects.

Item 1B. Unresolved Staff Comments.

Not applicable.

Item 2. Properties.

None.

Item 3. Legal Proceedings.

We are not presently a party to any material litigation. We may, however, become involved in litigation from time to time relating to claims arising in the ordinary course of our business. These claims, even if not meritorious, could result in the expenditure of significant financial and managerial resources.

Item 4. Mine Safety Disclosures.

Not applicable.

33

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer

Holders

As of March 31, 2023, there were approximately 352 holders of record of our Common Stock.

Dividends

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.

Item 6. Selected Financial Data

[Reserved].

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Prospective investors should read the following discussion and analysis of our financial condition and results of operations together with our financial statements and the related notes and other financial information included elsewhere in this report. Some of the information contained in this discussion and analysis or set forth elsewhere in this report, including information with respect to our plans and strategy for our business and related financing, includes forward-looking statements that involve risks and uncertainties. You should review the “Risk Factors” section of this report for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.

Overview

We are a medical device company focused on the design, development and commercialization of non-invasive glucose monitoring devices for use by people with diabetes. Integrity Israel was founded in 2001 with a mission to develop, produce and market non-invasive glucose monitors for home use by diabetics. We have developed a non-invasive blood glucose monitor, GlucoTrack®, which is designed to help people with diabetes obtain blood glucose level readings without the pain, inconvenience, cost and difficulty of conventional (invasive) spot finger stick devices. Our first generation product, GlucoTrack® 1.0 utilizes a patented combination of ultrasound, electromagnetic and thermal technologies to obtain blood glucose measurements in less than one minute via a small sensor that is clipped onto one’s earlobe and connected to a small, handheld control and display unit, all without drawing blood. Our next generation product, GlucoTrack® 2.0 which is currently under development, utilizes substantially identical underlying sensor technology, and is expected to be a completely wireless sensor to be clipped on the earlobe. GlucoTrack eliminates the handheld unit and will transmit results directly to a user’s smartphone.

Critical Accounting Policies

This Management’s Discussion and Analysis of Financial Condition and Results of Operations discuss our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). In connection with the preparation of our financial statements, we are required to make assumptions and estimates about future events, and apply judgments that affect the reported amounts of assets, liabilities, revenue, expenses and the related disclosures. We base our assumptions, estimates and judgments on historical experience, current trends and other factors that management believes to be relevant at the time our consolidated financial statements are prepared. On a regular basis, management reviews the accounting policies, assumptions, estimates and judgments to ensure that our financial statements are presented fairly and in accordance with U.S. GAAP. However, because future events and their effects cannot be determined with certainty, actual results could differ from our assumptions and estimates, and such differences could be material.

Our significant accounting policies are discussed in Note 2, Summary of Significant Accounting Policies, of the Notes to Consolidated Financial Statements included elsewhere in this report.

Critical accounting estimates

Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with USGAAP. The preparation of our consolidated financial statements and related disclosures requires us to make estimates, assumptions and judgments that affect the reported amounts of assets, liabilities, net sales, costs and expenses and related disclosures. management believes that there are no critical accounting estimates in these financial statements.

34

Recent Accounting Pronouncements

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”), which changes the impairment model for most financial assets and certain other instruments. For trade and other receivables, held-to-maturity debt securities, loans, and other instruments, entities will be required to use a new forward-looking “expected loss” model that generally will result in the earlier recognition of allowances for losses. The guidance also requires increased disclosures. For the Company, the amendments in the update were originally effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. In November 2019, the FASB issued ASU No. 2019-10, which delayed the effective date of ASU 2016-13 for smaller reporting companies (as defined by the SEC) and other non-SEC reporting entities to fiscal years beginning after December 15, 2022, including interim periods within those fiscal periods. Early adoption is permitted.

As the company is eligible to considered as smaller reporting company ASU 2016-13 is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The adoption of this standard is not expected to result in a material impact to the Company’s financial statements.

Results of Operations

The following discussion of our operating results explains material changes in our results of operations for the years ended December 31, 2022 and December 31, 2021. The discussion should be read in conjunction with the financial statements and related notes included elsewhere in this report.

Year Ended December 31, 2022 Compared to Year Ended December 31, 2021

Research and development expenses

Research and development expenses were $1,967 thousand for the year ended December 31, 2022, as compared to $1,810 thousand for the prior-year period. The increase is attributable to professional fees we accrued during the year.

Research and development expenses consist primarily of salaries and other personnel-related expenses, including stock-based compensation expenses, materials, travel expenses, clinical trials and other expenses. We expect research and development expenses to increase in 2023 and beyond, primarily due to hiring additional personnel and developing our product line, as well the development of GlucoTrack® 2.0; however, we may adjust or allocate the level of our research and development expenses based on available financial resources and based on our commercial needs, including the FDA registration process, specific requirements from customers, development of new GlucoTrack® models and others.

Selling and marketing expenses

Selling and marketing expenses were $0 thousand for the year ended December 31, 2022, as compared to $139 thousand for the prior-year period. The decrease is primarily attributable to the Company’s decision to reduce its business development expenses until the completion of the development of the GlucoTrack® 2.0.

Selling and marketing expenses consist primarily of professional services, salaries, travel expenses and other related expenses.

General and administrative expenses

General and administrative expenses were $2,465 thousand for the year ended December 31, 2022, as compared to $2,091 thousand for the prior-year period. The increase is primarily attributable to insurance expenses of it directors and officers, which the Company accrued due to its listing on the Nasdaq Capital Market (“NASDAQ”).

General and administrative expenses consist primarily of professional services, salaries, travel expenses and other related expenses for executive, finance and administrative personnel, including stock-based compensation expenses. Other general and administrative costs and expenses include facility-related costs not otherwise included in research and development costs and expenses, and professional fees for legal and accounting services.

Financing Income, net

Financing Income, net was $11 thousand for the year ended December 31, 2022, as compared to financing Income, net, of $26 thousand for the prior-year period. The decrease in the financing income is attributed to the decrease in interest income resulting from the reduction in the company’s cash balance over the year.

Net Loss

Net loss was $4,435 thousand for the year ended December 31, 2022, as compared to a net loss of $4,067 thousand for the prior-year period. The increase in net loss is attributable primarily to the increase in our general and administrative expenses and development expenses as described above.

Going Concern Uncertainty

As of December 31, 2022, and December 31, 2021, cash on hand was $2,312 thousand and $6,062 thousand, respectively. The development and commercialization of non-invasive glucose monitoring devices for use by people, are expected to require substantial further expenditures. We remain dependent upon external sources for financing our operations. Since inception, we have incurred substantial accumulated losses and negative operating cash flow and have a significant accumulated deficit. These factors raise substantial doubt about our ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. We plan to finance our operations through the sale of equity (including shelf registration statement on Form S-3 was declared effective on September 27, 2021 by the Securities and Exchange Commission (SEC) which allows the Company to register up to $100,000 thousand of certain equity and/or debt securities of the Company through prospectus supplement). There can be no assurance that we will succeed in obtaining the necessary financing to continue our operations.

35

During the years 2003-2004, Integrity Israel received loans from stockholders (four separate lenders). The loans are indexed to the Israeli Consumer Price Index from their origination date and bear no interest. The Group will be required to pay the loans, in quarterly installments, commencing on the first quarter following the first fiscal year in which the Group reports net profit in its annual report. At such time, the Group will be required to make quarterly payments equal to 10% of its total sales for each quarter until the loans have been repaid in full. Notwithstanding the repayment mechanism, the Group will not be required to repay the loans during any period in which such payment would cause a deficit in the Group’s working capital. As of December 31, 2022, the Group does not expect to make any material repayments during the following 12-month period, if any, and accordingly the balance of $195 thousand of the loans from stockholders, have been presented as long-term liabilities.

We are required to pay royalties to the Office of the Chief Scientist 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 thousand, plus interest at LIBOR from the date of grant. As of December 31, 2022, the contingent liability with respect to royalty payment on future sales equals to approximately $80 thousand, excluding interest.

Year Ended December 31, 2022 Compared to Year Ended December 31, 2021

Net Cash Used in Operating Activities for the Years Ended December 31, 2022 and December 31, 2021

Net cash used in operating activities was $3,729 thousand and $3,769 thousand for the years ended December 31, 2022 and 2021, respectively. Net cash used in operating activities primarily reflects the net loss for those periods of $4,435 thousand and $4,067 thousand, respectively.

Net Cash Provided by (Used in) Investing Activities for the Years Ended December 31, 2022 and December 31, 2021

Net cash provided by (used in) investing activities was $1 thousand and $(1) thousand for the years ended December 31, 2022 and 2021, respectively, mainly consisting of equipment sales and purchases (such as computers, research and development and office equipment).

Off-Balance Sheet Arrangements

As of December 31, 2022, we did not have any off-balance sheet arrangements as defined in Item 303(a)(4) of Regulation S-K.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

Not required for smaller reporting companies.

Item 8. Financial Statements and Supplementary Data.

The financial statements required by this Item 8 are filed herewith commencing on page F-1 hereto and are incorporated herein by reference.

Item 9. Change in and Disagreements with Accountants on Accounting and Financial Disclosure.

None.

36

Item 9A. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Principal Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of December 31, 2022, or the Evaluation Date. Based on such evaluation, those officers have concluded that, as of the Evaluation Date, our disclosure controls and procedures are ineffective in recording, processing, summarizing and reporting, on a timely basis, information required to be included in periodic filings under the Exchange Act and that such information is not accumulated and communicated to management, including our principal executive and financial officers, in a manner sufficient to allow timely decisions regarding required disclosure, due to the material weaknesses in internal control over financial reporting described below.

Management’s Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13a-15(f) under the Exchange Act. Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based principally on the framework and criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission as of the end of the period covered by this report. Based on that evaluation, we have identified material weaknesses related to our internal control over financial reporting as of December 31, 2022 and concluded that internal control over financial reporting as at December 31, 2022 were not effective. As defined in Regulation 12b-2 under the Securities Exchange Act, a “material weakness” is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented, or detected on a timely basis. Specifically, as of December 31, 2022, 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.

Management has identified corrective actions to remediate such material weaknesses, which includes hiring additional employees. Management intends to implement procedures to remediate such material weaknesses during the fiscal year 2023; however, the implementation of these initiatives may not fully address any material weaknesses that we may have in our internal control over financial reporting.

Changes in Internal Control over Financial Reporting

During the year ended December 31, 2022, there were no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Attestation Report of the Registered Public Accounting Firm

This Annual Report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to rules of the SEC that permit the Company to provide only management’s report in this Annual Report.

Item 9B. Other Information.

None.

Item 9 C. Disclosure Regarding Foreign Jurisdictions That Prevent Inspection

None.

PART III

Item 10. Directors, Executive Officers, and Corporate Governance.

Except for the information about our Code of Ethics below, the information required by this Item 10 is incorporated by reference from our definitive proxy statement for our 2022 Annual Meeting of Stockholders (the “Proxy Statement”). The definitive Proxy Statement will be filed with the Securities and Exchange Commission within 120 days after the close of the fiscal year covered by this Annual Report on Form 10-K.

37

We maintain a Code of Business Conduct and Ethics (Code) that applies to all employees, including our principal executive officer, principal financial officer, principal accounting officer, controller and persons performing similar functions, and including our independent directors, who are not employees of the Company, with regard to their Integrity-related activities. The Code incorporates guidelines designed to deter wrongdoing and to promote honest and ethical conduct and compliance with applicable laws, rules and regulations. The Code also incorporates our expectations of our employees that enable us to provide accurate and timely disclosure in our filings with the SEC and other public communications. In addition, the Code incorporates guidelines pertaining to topics such as complying with applicable laws, rules, and regulations; insider trading; reporting Code violations; and maintaining accountability for adherence to the Code. The full text of our Code is published on our web site at http://www.integrity-app.com/investor-relations/corporate-governance/ and is incorporated by reference herein. We intend to disclose future amendments to certain provisions of our Code, or waivers of such provisions granted to our principal executive officer, principal financial officer, principal accounting officer or controller and persons performing similar functions on our web site. Except as expressly stated herein, the information contained on our website does not constitute a part of this Annual Report on Form 10-K and is not incorporated by reference herein.

Item 11. Executive Compensation.

The information required for this Item is incorporated by reference from our Proxy Statement.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

The information required for this Item is incorporated by reference from our Proxy Statement.

Item 13. Certain Relationships and Related Transactions, and Director Independence.

The information required for this Item is incorporated by reference from our Proxy Statement.

Item 14. Principal Accountant Fees and Services.

The information required for this Item is incorporated by reference from our Proxy Statement.

PART IV

Item 15. Exhibits, Financial Statement Schedules.

| (a) | Document List
| (1) | Financial Statements:

The financial statements of the Company filed herewith are set forth in Part II, Item 8 of this report.

| (2) | Financial Statement Schedules:

None.

| (3) | Exhibits:

Exhibit Number |  | Description
2.1 |  | Merger Agreement and Plan of Reorganization, dated as of May 25, 2010, by and among Integrity Applications, Inc., Integrity Acquisition Ltd. and A.D. Integrity Applications Ltd. (1)
3.1 |  | Certificate of Incorporation of Integrity Applications, Inc. (1)

38

3.2 |  | Certificate of Amendment to Certificate of Incorporation of Integrity Applications, Inc. (1)
3.3 |  | Bylaws of Integrity Applications, Inc. (1)
3.4 |  | Certificate of Designation of Preferences and Rights of Series A 5% Convertible Preferred Stock (2)
3.5 |  | Certificate of Designation of Preferences and Rights of Series B 5.5% Convertible Preferred Stock (3)
3.6 |  | Certificate of Designation of Preferences and Rights of Series C 5.5% Convertible Preferred Stock (8)
3.7 |  | Amendments to The Company’s Certificate of Incorporation **
4.1 |  | Specimen Certificate Evidencing Shares of Common Stock (1)
4.2 |  | Form of Common Stock Purchase Warrant (1)
4.3 |  | Form of Series A Securities Purchase Agreement (2)
4.4 |  | Form of Series A Common Stock Purchase Warrant (2)
4.5 |  | Form of Series A Registration Rights Agreement (2)
4.6 |  | Form of Series B Securities Purchase Agreement (3)
4.7 |  | Form of Series B-1 Common Stock Purchase Warrant (3)
4.8 |  | Form of Series B-2 Common Stock Purchase Warrant (3)
4.9 |  | Form of Series B Registration Rights Agreement (3)
4.10 |  | Form of Series C Securities Purchase Agreement (8)
4.11 |  | Form of Series C-1 Common Stock Purchase Warrant (8)
4.12 |  | Form of Series C-2 Common Stock Purchase Warrant (8)
4.13 |  | Form of Series C Registration Rights Agreement (8)
4.14 |  | Form of Series D Securities Purchase Agreement (12)
4.15 |  | Form of Series D-1 Common Stock Purchase Warrant (12)
4.16 |  | Form of Series D-2 Common Stock Purchase Warrant (12)
4.17 |  | Form of Series D-3 Common Stock Purchase Warrant (12)
4.18 |  | Form of Series D Registration Rights Agreement (12)
10.1* |  | Integrity Applications, Inc. 2010 Incentive Compensation Plan (1)
10.2* |  | Amendment No. 1 to Integrity Applications, Inc. 2010 Incentive Compensation Plan (13)
10.3* |  | Amendment No. 2 to Integrity Applications, Inc. 2010 Incentive Compensation Plan (11)
10.4* |  | Form of Director and Officer Indemnification Agreement (1)
10.5* |  | Personal Employment Agreement, dated as of October 19, 2010, between A.D. Integrity Applications Ltd. and Avner Gal (1)
10.6* |  | Letter Agreement, effective as of April 7, 2017, among Integrity Applications, Inc., A.D. Integrity Applications Ltd., and Avner Gal (11)
10.7* |  | Amended and Restated Personal Employment Agreement, effective as of April 7, 2017, between A.D. Integrity Applications Ltd. and David Malka (11)
10.8 |  | Irrevocable Undertaking of Indemnification, dated as of July 26, 2010, by and among Integrity Applications, Inc., Avner Gal, Zvi Cohen, Ilana Freger, David Malka and Alexander Raykhman (1)
10.9 |  | Investment Agreement, dated February 18, 2003, between A.D. Integrity Applications Ltd., Avner Gal, Zvi Cohen, David Freger and David Malka and Yigal Dimri (1)
10.10* |  | Form of Stock Option Agreement (1)
10.11* |  | Form of Stock Option Agreement (ESOP) (1)
10.12 |  | Letter of Approval, addressed to Integrity Applications Ltd. from the Ministry of Industry, Trade and Employment of the State of Israel (6)
10.13 |  | Letter of Undertaking, addressed to the Ministry of Industry, Trade and Employment of the State of Israel – Office of the Chief Scientist from Integrity Applications Ltd. (4)
10.14 |  | Investment Agreement, dated March 16, 2004, by and among A.D. Integrity Applications Ltd., Yitzhak Fisher, Asher Kugler and Nir Tarlovsky. (4)
10.15* |  | Personal Employment Agreement, dated as of October 22, 2013, between A.D. Integrity Applications Ltd. and Eran Hertz. (7)

39

10.16 |  | Personal Employment Agreement, dated as of February 1, 2017, between A.D. Integrity Applications Ltd. and Sami Sassoun (9)
10.17 |  | Amended and Restated Consulting Agreement, dated as of February 6, 2017, between Integrity Applications, Inc. and Strand Strategy (9)
10.18 |  | Personal Employment Agreement, dated as of March 20, 2017, between Integrity Applications, Inc. and John Graham (9)
10.19* |  | First Amendment to Employment Agreement, effective as of April 7, 2017, between Integrity Applications, Inc. and John Graham (11)
10.20* |  | Employment Agreement, effective as of June 26, 2017, between Integrity Applications, Inc. and David Podwalski (5)
14.1 |  | Code of Ethics (9)
21.1 |  | Subsidiaries of Integrity Applications, Inc. (10)
23.1 |  | Consent of Marcum LLP
31.1 |  | Certification of Principal Executive Officer Pursuant to Exchange Act Rule 13a-14(a) or 15(d)-14(a), as Adopted Pursuant to Section 302 of the Sarbanes Oxley Act of 2002 ***
31.2 |  | Certification of Principal Financial Officer Pursuant to Exchange Act Rule 13a-14(a) or 15(d)-14(a), as Adopted Pursuant to Section 302 of the Sarbanes Oxley Act of 2002 ***
32.1 |  | Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes Oxley Act of 2002 ***
32.2 |  | Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes Oxley Act of 2002 ***
101.INS |  | Inline XBRL Instance Document **
101.SCH |  | Inline XBRL Schema Document **
101.CAL |  | Inline XBRL Calculation Linkbase Document **
101.DEF |  | Inline XBRL Taxonomy Extension Calculation Linkbase **
101.LAB |  | Inline XBRL Label Linkbase Document **
101.PRE |  | Inline PRE XBRL Presentation Linkbase Document **
104 |  | Cover Page Interactive Data File (embedded within the Inline XBRL document)

(1) | Previously filed as an exhibit to the Company’s Registration Statement on Form S-1, as filed with the SEC on August 22, 2011.
(2) | Previously filed as an exhibit to the Company’s Current Report on Form 8-K, as filed with the SEC on March 18, 2013.
(3) | Previously filed as an exhibit to the Company’s Current Report on Form 8-K, as filed with the SEC on September 5, 2014.
(4) | Previously filed as an exhibit to Amendment No. 1 to the Company’s Registration Statement on Form S-1, as filed with the SEC on October 7, 2011.
(5) | Previously filed as an exhibit to the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2017, as filed with the SEC on August 18, 2017.
(6) | Previously filed as an exhibit to Amendment No. 3 to the Company’s Registration Statement on Form S-1, as filed with the SEC on November 10, 2011.
(7) | Previously filed as an exhibit to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2013, as filed with the SEC on March 27, 2014.
(8) | Previously filed as an exhibit to the Company’s Current Report on Form 8-K, as filed with the SEC on April 15, 2016.
(9) | Previously filed as an exhibit to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2016, as filed with the SEC on March 31, 2017.
(10) | Previously filed as an exhibit to the Company’s Registration Statement on Form S-1, as filed with the SEC on November 7, 2017.
(11) | Previously filed as an exhibit to the Company’s Current Report on Form 8-K, as filed with the SEC on April 15, 2017
(12) | Previously filed as an exhibit to the Company’s Current Report on Form 8-K, as filed with the SEC on March 7, 2018.
(13) | Previously filed as an exhibit to the Company’s Current Report on Form 8-K, as filed with the SEC on March 23, 2016.
* | Compensation Plan or Arrangement or Management Contract.
** | Previously filed.
*** | Filed herewith.

40

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized as of March 31, 2023.

| GLUCOTRACK, INC.
| By: | /s/ Paul Goode
| Name: | Paul Goode
| Title: | Chief Executive Officer (Principal Executive Officer)
| By: | /s/ Jolie Kahn
| Name: | Jolie Kahn
| Title: | Chief Financial Officer (Principal Financial Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature |  | Title |  | Date
/s/ Jolie Kahn |  | Chief Financial Officer |  | March 31, 2023
Jolie Kahn |  | (Principal Executive and Financial Officer and Principal Accounting Officer) |  |
/s/ Robert Fischell |  | Director |  | March 31, 2023
Dr. Robert Fischell |  |  |  |
/s/ Shimon Rapps |  | Director |  | March 31, 2023
Shimon Rapps |  |  |  |
/s/ Paul V.Goode |  | CEO |  | March 31, 2023
Paul V.Goode |  |  |  |
/s/ Luis Malave |  | Director |  | March 31, 2023
Luis Malave |  |  |  |

41

GLUCOTRACK INC.

Consolidated Financial Statements

as of December 31, 2022

Table of Contents

| Page
Report of Independent Registered Public Accounting Firm – PCAOB ID NUMBER 1375 | F-2
Consolidated Financial Statements |
Balance Sheets | F-3
Statements of Operations and Comprehensive Loss | F-4
Statements of Changes in Stockholders’ Equity (Deficit) | F-5
Statements of Cash Flows | F-6
Notes to Consolidated Financial Statements | F-7 – F-26

F-1

| Fahn Kanne & Co.
| Head Office
| 32 Hamasger Street
| Tel-Aviv 6721118, ISRAEL
| PO Box 36172, 6136101
| T +972 3 7106666
| F +972 3 7106660
| www.gtfk.co.il

Report of Independent Registered Public Accounting Firm

Board of Directors and the Stockholders of

GLUCOTRACK INC.

Opinion on the financial statements

We have audited the accompanying consolidated balance sheets of GlucoTrack Inc. (the “Company”) as of December 31, 2022 and 2021, the related consolidated statements of operations and comprehensive loss, changes in stockholders’ equity and cash flows for each of the two years in the period ended December 31, 2022, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America.

Going Concern

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1B to the financial statements, the Company has incurred net losses and negative cash flows from its operations and comprehensive loss since its inception and as of December 31, 2022, there is an accumulated deficit of $101,901. These conditions, along with other matters as set forth in Note 1B, raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans regarding these matters are also described in Note 1B. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical accounting matters

Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that there are no critical audit matters.

/s/ FAHN KANNE & CO. GRANT THORNTON ISRAEL |
Certified Public Accountants (Isr.) |
We have served as the Company’s auditor since 2010. |
Tel-Aviv, Israel |
March 31, 2023 |

F-2

GLUCOTRACK INC.

CONSOLIDATED BALANCE SHEETS

|  | December 31, 2022 |  |  | December 31, 2021 |
|  | In thousand of US dollars (except stock data) |
|  | December 31, 2022 |  |  | December 31, 2021 |
Current Assets |  |  |  |  |  |  |  |
Cash and cash equivalents (Note 2H) |  |  | 2,312 |  |  |  | 6,062 |
Other current assets |  |  | 67 |  |  |  | 43 |
Total current assets |  |  | 2,379 |  |  |  | 6,105 |
Operating lease right-of-use assets, net |  |  | - |  |  |  | 40 |
Property and equipment, net (Note 3) |  |  | 40 |  |  |  | 69 |
Restricted cash (Note 2H) |  |  | 19 |  |  |  | 51 |
TOTAL ASSETS |  |  | 2,438 |  |  |  | 6,265 |
LIABILITIES AND STOCKHOLDERS’ EQUITY |  |  |  |  |  |  |  |
Current Liabilities |  |  |  |  |  |  |  |
Accounts payable |  |  | 672 |  |  |  | 631 |
Operating lease liabilities, current |  |  | - |  |  |  | 23 |
Other current liabilities (Note 4) |  |  | 341 |  |  |  | 229 |
Total current liabilities |  |  | 1,013 |  |  |  | 883 |
Non-current Liabilities |  |  |  |  |  |  |  |
Loans from stockholders (Note 5) |  |  | 195 |  |  |  | 210 |
Operating lease liabilities, non-current |  |  | - |  |  |  | 17 |
Total non-current liabilities |  |  | 195 |  |  |  | 227 |
Total liabilities |  |  | 1,208 |  |  |  | 1,110 |
Commitments and contingent liabilities (Note 6) |  |  | - |  |  |  | - |
Stockholders’ Equity |  |  |  |  |  |  |  |
Common Stock of $ 0.001 par value (“Common Stock”): |  |  |  |  |  |  |  |
500,000,000 shares authorized; 15,500,730 and 15,470,402 shares issued and outstanding as of December 31, 2022 and 2021, respectively |  |  | 15 |  |  |  | 15 |
Common Stock of $ 0.001 par value (“Common Stock”):500,000,000 shares authorized; 15,500,730 and 15,470,402 shares issued and outstanding as of December 31, 2022 and 2021, respectively |  |  | 15 |  |  |  | 15 |
Additional paid-in capital |  |  | 103,095 |  |  |  | 102,612 |
Receipts on account of shares |  |  | 4 |  |  |  | - |
Accumulated other comprehensive income (loss) |  |  | 17 |  |  |  | (6 | )
Accumulated deficit |  |  | (101,901 | ) |  |  | (97,466 | )
Total stockholders’ equity |  |  | 1,230 |  |  |  | 5,155 |
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY |  |  | 2,438 |  |  |  | 6,265 |

The accompanying notes are an integral part of these consolidated financial statements

F-3

GLUCOTRACK INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

|  | 2022 |  |  | 2021 |
|  | In thousand of US dollars (except stock and per stock amounts) |
|  | 2022 |  |  | 2021 |
Research and development expenses (Note 8) |  |  | 1,967 |  |  |  | 1,810 |
Marketing expenses (Note 9) |  |  | - |  |  |  | 139 |
General and administrative expenses (Note 10) |  |  | 2,465 |  |  |  | 2,091 |
Total operating expenses |  |  | 4,432 |  |  |  | 4,040 |
Operating loss |  |  | 4,432 |  |  |  | 4,040 |
Other expense |  |  | 14 |  |  |  | 53 |
Financing income, net |  |  | (11 | ) |  |  | (26 | )
Loss for the year |  |  | 4,435 |  |  |  | 4,067 |
Other comprehensive loss (income): |  |  |  |  |  |  |  |
Foreign currency translation adjustment |  |  | (23 | ) |  |  | 21 |
Comprehensive loss for the year |  |  | 4,412 |  |  |  | 4,088 |
Loss per share (Basic and Diluted) |  |  | 0.29 |  |  |  | 0.26 |
Weighted average number of common stock outstanding used in computing basic and diluted net loss per share |  |  | 15,474,660 |  |  |  | 15,450,824 |

The accompanying notes are an integral part of the consolidated financial statements.

F-4

GLUCOTRACK INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

|  | Numbers of Shares |  |  | Amount |  |  | Paid-in Capital |  |  | account of shares |  |  | Comprehensive Loss |  |  | 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 Loss |  |  | Accumulated Deficit |  |  | Stockholders’ Equity |
Balance as of January 1, 2021 |  |  | 15,462,812 |  |  |  | 15 |  |  |  | 102,351 |  |  |  | - |  |  |  | 15 |  |  |  | (93,399 | ) |  |  | 8,982 |
Loss for the year |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (4,067 | ) |  |  | (4,067 | )
Other comprehensive loss |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (21 | ) |  |  | - |  |  |  | (21 | )
Issuance of restricted shares as compensation towards directors |  |  | 7,588 |  |  |  | (*)- |  |  |  | 38 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 38 |
Stock-based compensation |  |  | - |  |  |  | - |  |  |  | 223 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 223 |
Balance as of December 31, 2021 |  |  | 15,470,402 |  |  |  | 15 |  |  |  | 102,612 |  |  |  | - |  |  |  | (6 | ) |  |  | (97,466 | ) |  |  | 5,155 |
Balance as of January 1, 2022 |  |  | 15,470,402 |  |  |  | 15 |  |  |  | 102,612 |  |  |  | - |  |  |  | (6 | ) |  |  | (97,466 | ) |  |  | 5,155 |
Loss for the year |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (4,435 | ) |  |  | (4,435 | )
Other comprehensive income |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 23 |  |  |  | - |  |  |  | 23 |
Stock-based compensation |  |  | 13,105 |  |  |  | (*)- |  |  |  | 439 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 439 |
Issuance of restricted shares as compensation towards directors |  |  | 17,223 |  |  |  | (*)- |  |  |  | 44 |  |  |  | 4 |  |  |  | - |  |  |  | - |  |  |  | 48 |
Balance as of December 31, 2022 |  |  | 15,500,730 |  |  |  | 15 |  |  |  | 103,095 |  |  |  | 4 |  |  |  | 17 |  |  |  | (101,901 | ) |  |  | 1,230 |

(*) | Less than 1 thousand.

The accompanying notes are an integral part of the consolidated financial statements.

F-5

GLUCOTRACK INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

|  | 2022 |  |  | 2021 |
Cash flows from operating activities: |  |  |  |  |  |  |  |
Loss for the year |  |  | (4,435 | ) |  |  | (4,067 | )
Adjustments to reconcile loss for the year to net cash used in operating activities: |  |  |  |  |  |  |  |
Depreciation |  |  | 23 |  |  |  | 42 |
Capital loss from sale of property and equipment |  |  | 1 |  |  |  | 42 |
Stock-based compensation |  |  | 439 |  |  |  | 223 |
Issuance of restricted shares as compensation to directors |  |  | 48 |  |  |  | 38 |
Linkage difference on principal of loans from stockholders |  |  | 11 |  |  |  | 6 |
Changes in assets and liabilities: |  |  |  |  |  |  |  |
Decrease in accounts receivable |  |  | - |  |  |  | 68 |
Decrease in inventory |  |  | - |  |  |  | 293 |
Decrease (increase) in other current assets |  |  | (28 | ) |  |  | 15 |
Increase (Decrease) in accounts payable |  |  | 74 |  |  |  | (257 | )
Increase (Decrease) in other current liabilities |  |  | 138 |  |  |  | (172 | )
Net cash used in operating activities |  |  | (3,729 | ) |  |  | (3,769 | )
Cash flows from investment activities: |  |  |  |  |  |  |  |
Proceeds from sale of property and equipment |  |  | 2 |  |  |  | 4 |
Purchase of property and equipment |  |  | (1 | ) |  |  | (5 | )
Net cash provided by (used in) investment activities |  |  | 1 |  |  |  | (1 | )
Effect of exchange rate changes on cash and cash equivalents |  |  | (54 | ) |  |  | (2 | )
Change in cash, cash equivalents, and restricted cash |  |  | (3,782 | ) |  |  | (3,772 | )
Cash, cash equivalents, and restricted cash at beginning of the year |  |  | 6,113 |  |  |  | 9,885 |
Cash, cash equivalents, and restricted cash at end of the year |  |  | 2,331 |  |  |  | 6,113 |

The accompanying notes are an integral part of the consolidated financial statements.

F-6

GLUCOTRACK INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 – GENERAL

| A. | GlucoTrack Inc. (the “Company”) was incorporated on May 18, 2010 under the laws of the State of Delaware. The Company is a medical device company, focuses on the design, development and commercialization of non-invasive glucose monitoring devices for use by people with diabetes.
|  | To date, the Company developed indirectly through its wholly owned subsidiary, A.D. Integrity Applications Ltd. (the “Integrity Israel”), a non-invasive glucose monitor, the GlucoTrack® glucose monitoring device, which is 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 1.0”) utilizes a combination of ultrasound, electromagnetic and thermal technologies to obtain glucose measurements in less than one minute via a small sensor that is clipped onto one’s earlobe and connected to a small, handheld control and display unit, all without drawing blood or interstitial fluid.
|  | Currently, the Company is developing directly its new generation (“GlucoTrack 2.0”) which utilizes substantially identical underlying sensor technology and which is expected to be based on a completely wireless sensor to be clipped on the earlobe. GlucoTrack 2.0 is designed to eliminate the handheld unit and is expected to transmit results directly to a user’s smartphone.
|  | The Company and Integrity Israel are considered collectively as the “Group”
|  | In connection with its application to list its shares on Nasdaq Capital Market (“NASDAQ”), as detailed below, on August 13, 2021, the Company effected a reverse split of its Common Stock in a ratio of 1 for 13 (the “Reverse Share Split”). For accounting purposes, all the then Shares, options and warrants to purchase Common Stock and loss per share amounts have been adjusted to give retroactive effect to this Reverse Share Split for all periods presented in these consolidated financial statements. Any fractional shares resulting from the Reverse Share Split were rounded up to the nearest whole share.
|  | On December 8, 2021, the Company announced that its shares of common stock were approved for listing on the Nasdaq Capital Market (“NASDAQ”). Trading on NASDAQ commenced on December 10, 2021 under its existing trading symbol, IGAP.
|  | On March 14, 2022, the Company announced that it has completed its corporate name and ticker symbol change on the Nasdaq Capital Market from IGAP to GCTK, effective at the commencement of trading on March 14, 2022.
|  | On October 07, 2022, the Company entered into an agreement with its Chief Executive Officer under which intellectual property was purchased to be used for newly acquired continuous glucose monitoring (CGM) technology which is a multi-year implantable CGM targeting Type 1 patients and Type 2 patients on insulin therapy. The technology is in a feasibility assessment phase using bech testing and simulated data. Upon success, the project will migrate into development of a prototype implantable system for evaluation in animal studies. The goal of the implantable CGM technology is to provide a minimum of two years of CGM data without requiring the patient to have a wearable device, unlike current technology available in the market (see also note 6C).
|  | On November 22, 2022, Nasdaq provided notice that pursuant to Nasdaq Listing Rule 5550(b)(1), the Company is required to maintain a minimum of $2,500 in stockholders’ equity. In addition, the Company does not meet the alternatives of market value of listed securities or net income from continuing operations. Thus, the Company no longer complies with the Rule for continued listing. The Company has a 45-day period ending on January 6, 2023 to submit a plan of compliance to Nasdaq, and the Company’s plan was accepted, and the Company must regain compliance by May 22, 2023.

F-7

GLUCOTRACK INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (cont.)

NOTE 1 – GENERAL (cont.)

| B. | Going concern uncertainty

|  | To date, the Company has not yet generated significant revenues from selling of GlucoTrack 1.0 product. In addition, development and commercialization of GlucoTrack 2.0 product is expected to require substantial expenditures and therefore the Company is dependent upon external sources for financing its operations. As of December 31, 2022, the Company has incurred accumulated deficit of $101,901 thousand, and negative operating cash flows. Further, the Company has generated negative operating cash flow for all reported periods. As of December 31, 2022, the balance of cash and cash equivalents amounted to $2,312 is insufficient for the Company to realize its business plans for the twelve-month period subsequent to the reporting period. Management has considered the significance of such condition 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 Company plans to finance its operations through the sale of equity and/or debt securities (including shelf registration statement on Form S-3 that was declared effective on September 27, 2021 by the Securities and Exchange Commission (SEC) and which allows the Company to register up to $100,000 thousand of certain equity and/or debt securities of the Company through prospectus supplement). There can be no assurance that the Company will succeed in obtaining the necessary financing or generating sufficient revenues from sales of its GlucoTrack 2.0 product in order to continue its operations as a going concern.
|  | The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

| C. | Effect of the spread of the Coronavirus on the Company
|  | During the year ended December 31, 2022, there were no material adverse impacts on the consolidated financial statements. The duration, scope and effects of the ongoing COVID-19 pandemic, government and other third-party responses to it, the related macroeconomic effects, and the extent of its impact on the Company’s operational and financial performance will depend on future developments. As events continue to evolve and additional information becomes available, the Company’s estimates and assumptions may change in future periods.

F-8

GLUCOTRACK INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (cont.)

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

|  | The consolidated financial statements were prepared in accordance with accounting principles generally accepted in the United States of America (US GAAP).

| A. | Use of estimates in the preparation of financial statements

|  | The preparation of the 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.

| B. | Functional currency

|  | The functional currency of the Company is the US dollar, which is the currency of the primary economic environment in which it operates. In accordance with ASC 830, “Foreign Currency Matters” (ASC 830), balances denominated in or linked to foreign currency are stated on the basis of the exchange rates prevailing at the applicable balance sheet date. For foreign currency transactions included in the statement of operations, the exchange rates applicable on the relevant transaction dates are used. Gains or losses arising from changes in the exchange rates used in the translation of such transactions are carried as financing income or expenses. The functional currency of Integrity Israel is the New Israeli Shekel (“NIS”) and its financial statements are included in consolidation, based on translation into US dollars. Accordingly, assets and liabilities were translated from NIS to US dollars using year-end exchange rates, and income and expense items were translated at average exchange rates during the year. Gains or losses resulting from translation adjustments are reflected in stockholders’ equity, under “accumulated other comprehensive income (loss)”.

SCHEDULE OF OFFICIAL EXCHANGE RATE

|  | 2022 |  |  | 2021 |
Official exchange rate of NIS 1 to US dollar |  |  | 0.284 |  |  |  | 0.321 |
Increase (decrease) of the official exchange rate of NIS 1 to US dollar during the year: |  |  | (11.62 | )% |  |  | 3.22 | %

| C. | Principles of consolidation
|  | The consolidated financial statements include the accounts of the Company and its subsidiary. All intercompany balances and transactions have been eliminated in consolidation.

| D. | Cash and cash equivalents

|  | The Group considers all short-term investments, which are highly liquid investments with original maturities of three months or less at the date of purchase, to be cash equivalents.

F-9

GLUCOTRACK INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (cont.)

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)

| E. | Business Combinations and Assets Acquisitions

|  | 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), no goodwill is recognized and 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, is expensed immediately. Contingent consideration related to asset acquisition that will be paid subject to the achievement of performance milestones, which are outside the control of the Company, is recognized when the contingency is resolved or when it is considered as probable and reasonably estimable under ASC 450, Contingencies. During the reported periods, the Company was not involved in any Business Combinations transaction (see also Note 6D).

| F. | Property and equipment, net

| 1. | Property and equipment are stated at cost, net of accumulated depreciation. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets. When an asset is retired or otherwise disposed of, the related carrying value and accumulated depreciation are removed from the respective accounts and the net difference less any amount realized from disposition is reflected in the statements of operations.
| 2. | Rates of depreciation:

SCHEDULE OF PROPERTY AND EQUIPMENT, RATES OF DEPRECIATION

|  | % |
Computers |  |  | 33 |
Furniture and office equipment |  |  | 7-15 |

| G. | Impairment of long-lived assets

|  | The Group’s long-lived assets are reviewed for impairment in accordance with ASC 360, “Property, Plant and Equipment”, whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted cash flows expected to be generated by the asset. If such asset is considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds its fair value. To date the Group did not incur any material impairment losses related to long lived assets.

F-10

GLUCOTRACK INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (cont.)

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)

| H. | Cash and Cash Equivalents and Restricted cash

|  | Restricted cash is invested in certificates of deposit, which are used to secure Integrity Israel’s obligations in respect of its headquarters lease and credit card (See also Note 6C). For presentation of statement of cash flows purposes, restrict cash balances are included with cash and cash equivalents, when reconciling the reported period total amounts.

SCHEDULE OF RESTRICT CASH BALANCES ARE INCLUDED WITH CASH AND CASH EQUIVALENTS

|  | 2022 |  |  | 2021 |
|  | In thousand of US dollars |
|  | December 31 |  |  | December 31 |
|  | 2022 |  |  | 2021 |
Cash and cash equivalents |  | $ | 2,312 |  |  | $ | 6,062 |
Restricted cash |  | $ | 19 |  |  | $ | 51 |
Total cash, cash equivalents, and restricted cash shown in the statement of cash flows |  | $ | 2,331 |  |  | $ | 6,113 |

| I. | Income tax

|  | The Group accounts for income taxes in accordance with ASC 740, “Income Taxes”. Accordingly, deferred income taxes are determined utilizing the asset and liability method based on the estimated future tax effects of differences between the financial accounting and the tax bases of assets and liabilities under the applicable tax law. Deferred tax balances are computed using the enacted tax rates expected to be in effect when these differences reverse. Valuation allowances in respect of deferred tax assets are provided for, if necessary, to reduce deferred tax assets to amounts more likely than not to be realized.
|  | The Group accounts for uncertain tax positions in accordance with ASC Topic 740-10, which prescribes detailed guidance for the financial statement recognition, measurement and disclosure of uncertain tax positions recognized in an enterprise’s financial statements. According to ASC Topic 740-10, tax positions must meet a more- likely-than-not recognition threshold. The Group’s accounting policy is to classify interest and penalties relating to uncertain tax positions under income taxes, however the Group did not recognize such items in its fiscal 2022 and 2021 financial statements and did not recognize any liability with respect to unrecognized tax position in its balance sheet.

F-11

GLUCOTRACK INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (cont.)

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)

| J. | Liability for employee rights upon retirement

|  | Integrity Israel’s liability for employee rights upon retirement with respect to its Israeli employees was calculated pursuant to the Israeli Severance Pay Law, based on the most recent salary of each employee multiplied by the number of years of employment of each such employee as of the balance sheet date. Employees were entitled to one month’s salary for each year of employment, or ratable portion thereof for periods less than one year. Integrity Israel made monthly deposits to insurance policies and severance pay funds.
|  | The deposited funds were withdrawn upon the fulfillment of Integrity Israel’s severance obligations pursuant to Israeli severance pay laws or labor agreements with its employees. The value of the deposited funds was based on the cash surrender value of these policies, and includes immaterial profits or losses.
|  | Commencing in 2011, Integrity Israel’s agreements with its Israeli employees are in accordance with Section 14 of the Severance Pay Law. Payments in accordance with Section 14 release the employer from any future severance payments in respect of those employees. Related obligations and liabilities under Section 14 are not recorded as an asset or as a liability in the Company’s balance sheet.
|  | For the year ended December 31, 2022, and 2021, severance expenses have been recorded in total amount of $27 and $43 thousand, respectively.

| K. | Research and development expenses

|  | Research and development expenses are charged to operations as incurred.

| L. | Royalty-bearing grants

|  | Royalty-bearing grants from the Israeli Innovation Authority (IIA) to fund approved research and development projects are recognized at the time Integrity Israel is entitled to such grants, on the basis of the costs incurred and reduce research and development costs. To date, the cumulative research and development grants received by Integrity Israel from IIA amounted to $93 thousand.

F-12

GLUCOTRACK INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (cont.)

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)

| M. | Basic and diluted loss per share

|  | Basic loss per share is computed by dividing the loss for the period applicable for Common Stockholders by the weighted average number of shares of Common Stock outstanding during the period.
|  | In computing, diluted loss per share, basic earnings per share are adjusted to reflect the potential dilution that could occur upon the exercise of options or warrants issued or granted using the “treasury stock method”, if the effect of each of such financial instruments is dilutive.
|  | In computing diluted loss per share, the average stock price for the period is used in determining the number of common stock assumed to be purchased from the exercise of stock options or stock warrants.
|  | Shares that will be issued upon exercise of all stock options and stock warrants, have been excluded from the calculation of the diluted net loss per share for all the reported periods for which net loss was reported because the effect of the common shares issuable as a result of the exercise or conversion of these instruments was anti-dilutive
|  | An amount of 6,614,654 and 6,404,238 outstanding stock options and stock warrants have been excluded from the calculation of the diluted net loss per share for the years ended December 31, 2022 and 2021, respectively, because the effect of the common shares issuable as a result of the exercise of such instruments was determined to be anti-dilutive.

| N. | Stock-based compensation

|  | The Group measures and recognizes the compensation expense for all equity-based payments to employees based on their estimated fair values in accordance with ASC 718, “Compensation-Stock Compensation”. Share-based payments including grants of stock options are recognized in the consolidated statement of operations and comprehensive loss as an operating expense based on the fair value of the award at the date of grant. The fair value of stock options granted is estimated using the Black-Scholes option-pricing model. The Group has expensed compensation costs, net of estimated forfeitures, applying the accelerated vesting method, over the requisite service period or over the implicit service period when a performance condition affects the vesting, and it is considered probable that the performance condition will be achieved.
|  | Commencing January 1, 2019, following the adoption of ASU 2018-07, which aligns the measurement and classification guidance for share-based payments to nonemployees with the guidance for share-based payments to employees (with certain exceptions), share-based payments to non-employees are accounted in accordance with ASC 718.

F-13

GLUCOTRACK INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (cont.)

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)

| O. | 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 Group. The Group 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 fair value of the financial instruments included in the working capital of the Group (cash and cash equivalents, accounts payable and other current assets and liabilities) approximates their carrying value.
|  | The Group did not estimate the fair value of the loans received from stockholders since their repayment schedule has not yet been determined.

| P. | Concentrations of credit risk

|  | Financial instruments that potentially subject the Group to concentrations of credit risk consist primarily of cash and cash equivalents, and restricted cash. Cash and cash equivalents and restricted cash are deposited with major banks in United States. Management believes that such financial institutions are financially sound, accordingly, minimal credit risk exists with respect to these financial instruments. The Group does not have any significant off-balance-sheet concentration of credit risk, such as foreign exchange contracts, option contracts or other foreign hedging arrangements.

| Q. | Contingencies

|  | The Group records accruals for loss contingencies arising from claims, litigation and other sources when it is probable that a liability has been incurred and the amount can be reasonably estimated. These accruals are adjusted periodically as assessments change or additional information becomes available. Legal costs incurred in connection with loss contingencies are expensed as incurred.

| R. | Warrants with Down-Round Protection

|  | Following the application of Accounting Standard Update (ASU) No. 2017-11, “Earnings Per Share” (ASU 2017-11), the Company disregard the down round feature when assessing whether the instrument is indexed to its own stock, for purposes of determining liability or equity classification. Based on its evaluation, management has determined that such warrants with Down-Round Protection are eligible for equity classification. In accordance with the provisions of ASU 2017-11, upon the occurrence of an event that triggers a down round protection (i.e., when the exercise price of the warrants is adjusted downward because of the down round feature), the effect is accounted for as a deemed dividend and as a reduction of income available to common shareholders for purposes of basic earnings per share (EPS) calculation.

| S. | Modification of equity-classified contracts

|  | The modification or exchange of equity-classified contracts, such as warrants that were classified as equity before the modification or exchange and remained eligible for equity classification after the modification, is accounted for in a similar manner to a modification of stock-based compensation. Accordingly, the incremental fair value from the modification or exchange (the change in the fair value of the instrument before and after the modification or exchange) is recognized as a reduction of retained earnings of increase of accumulated deficit as a deemed dividend. Modifications or exchanges that result in a decrease in the fair value of an equity-classified share-based payment awards are not recognized. In addition, the amount of the deemed dividend is also recognized as an adjustment to earnings available to common shareholders for purposes of calculating earnings per share.

F-14

GLUCOTRACK INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (cont.)

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)

| T. | Operating Lease

|  | The Company applies ASC Update 2016-02, Leases (Topic 842) under which the Company determines if an arrangement is a lease at inception. Under Topic 842, arrangements meeting the definition of a lease are classified as operating or financing leases. A classification of a lease is determined based on the following criteria:

| 1. | The lease transfers ownership of the underlying asset to the lessee by the end of the lease term.
| 2. | The lease grants the lessee an option to purchase the underlying asset that the lessee is reasonably certain to exercise.
| 3. | The lease term is for the major part of the remaining economic life of the underlying asset (Generally, 75% or more of the remaining economic life of the underlying assets).
| 4. | The present value of the sum of the lease payments and any residual value guaranteed by the lessee equals or exceeds substantially all of the fair value of the underlying asset (Generally, 90% or more of the fair value of the underlying asset).
| 5. | The underlying asset is of such a specialized nature that it is expected to have no alternative use to the lessor at the end of the lease term.

If any of the above criteria are met, the lease is classified as a finance lease. Otherwise, the lease is classified as an operating lease.

Leases are recorded on the consolidated balance sheet as both a right of use asset and a lease liability, calculated by discounting fixed lease payments over the lease term at the rate implicit in the lease or the Company’s incremental borrowing rate. Lease liabilities are increased by interest and reduced by payments each period, and the right of use asset is amortized over the lease term. For operating leases, interest on the lease liability and the amortization of the right of use asset results in straight-line rent expense over the lease term. Variable lease expenses, if any, are recorded when incurred.

The Company also elected the short-term lease recognition exemption for all leases that qualify (leases with a term shorter than 12 months). For those leases, right-of-use assets or lease liabilities are not recognized and rent expense is recognized on a straight-line basis over the lease term.

In 2022, the Company terminated its lease agreement for vehicles, as the senior employees in Israel has resigned from the Company, and respectively have returned the vehicles to the lease dealership. As of December 31, 2022, the Company is subject to several non-cancelable lease agreements for workspaces for use in its operations, which are classified as operating leases.

F-15

GLUCOTRACK INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (cont.)

NOTE 3 – PROPERTY AND EQUIPMENT, NET

SCHEDULE OF PROPERTY AND EQUIPMENT, NET

Property and Equipment |  | In thousand of US dollars |
|  | December 31, 2022 |  |  | December 31, 2021 |
Computers |  |  | 224 |  |  |  | 306 |
Furniture and office equipment |  |  | 70 |  |  |  | 183 |
Property and equipment, gross |  |  | 294 |  |  |  | 489 |
Less – accumulated depreciation |  |  | (254 | ) |  |  | (420 | )
Property and equipment, net |  |  | 40 |  |  |  | 69 |

| During the years ended December 31, 2022 and 2021, depreciation expenses have been recorded in total amount of $23 and $42 thousand, respectively.

NOTE 4 – OTHER CURRENT LIABILITIES

SCHEDULE OF OTHER CURRENT LIABILITIES

Other Current Liabilities |  | In thousand of US dollars |
|  | December 31, 2022 |  |  | December 31, 2021 |
Employees and related institutions |  |  | 16 |  |  |  | 98 |
Accrued expenses and others |  |  | 325 |  |  |  | 131 |
Total other current liabilities |  |  | 341 |  |  |  | 229 |

NOTE 5 – LOANS FROM STOCKHOLDERS

| During the years 2003-2004, Integrity Israel received loans from stockholders (four separate lenders) in a total amount of approximately $400 thousand. However, following the repayment of the entire balance to certain lender in 2015, the remaining balance as of December 31,2022 is approximately $195 thousand. The loans are indexed to the Israeli consumer price index from their origination date and bear no interest.
| The Group will be required to pay the loans, in quarterly installments, commencing on the first quarter following the first fiscal year in which the Group reports net profit in its annual report. At such time, the Group will be required to make quarterly payments equal to 10% of its total sales for each quarter until the loans have been repaid in full. Notwithstanding the repayment mechanism, the Group will not be required to repay the loans during any period in which such payment would cause a deficit in the Group’s working capital.
| As of December 31, 2022, the Group does not expect to make any material repayments during the following 12-month period, if any, and accordingly the entire remaining balance of the loans from stockholders have been presented as non-current liability.

F-16

GLUCOTRACK INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (cont.)

NOTE 6 – COMMITMENTS AND CONTINGENT LIABILITIES

| A. | On March 4, 2004, the Israel innovation authority (IIA) provided Integrity Israel with a grant of approximately $93 thousand (NIS 420 thousand), 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 Group’s products arising from the Development Plan up to an amount equal to $93 thousand, plus interest at LIBOR from the date of grant. As of December 31, 2022, the remaining contingent liability with respect to royalty payment on future sales equals approximately $80 thousand. Such contingent obligation has no expiration date.
|  | As of December 31, 2022, the Group accrued royalties to the IIA in insignificant amounts.
| B. | Since March 2021 Integrity Israel is renting several workspaces at office building in the city Or – Yehoda. According to the lease agreement, Integrity Israel renting those flexible shared workspaces for period shorter than one year.
| C. | 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 shall sell, assign, transfer, convey and deliver to the Company, all of Seller’s right, title and interest in and to the following assets, properties and rights (collectively, the “Purchased Assets”):

|  | (a) | 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
|  | (b) | All of the goodwill relating to the Purchased Assets.
|  | In consideration for the sale by Seller of the Purchased Assets to the Company, at the Closing Date, the Company paid to Seller cash in the amount of one dollar and up to 1,000,000 shares of its common stock to be issued based upon the performance milestones as set forth in the Agreement (the “Purchase Price”). In addition, if upon the final issuance, the aggregate 1,000,000 shares represent less than 1.5% of the then outstanding shares 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 Company common stock that will be issued under this agreement shall be (i) restricted and issued in transactions exempt from registration under Section 4(a)(2) of the Securities Act of 1933, as amended 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, is expensed immediately. At the Closing Date, it was determined that the asset acquisition represent the purchase of IPR&D with no alternative future use. However, the achievement of each of the performance milestones is considered as contingent event outside the Company’s control and thus the contingent consideration which is equal to the Purchase Price as measured at the Closing Date will be recognized when it becomes probable that each target will be achieved within the reasonable period of time. Such additional contingent consideration will be recognized in subsequent periods if and when the contingency (the achievement of targets) is resolved, or when it will be considered as reasonably estimable under ASC 450, Contingencies. For the period commencing the Closing Date and through December 31, 2022, the Company did not record any amount related to the contingent consideration, relating to any of the aforesaid performance milestones.

F-17

GLUCOTRACK INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (cont.)

NOTE 7 – COMMON STOCK AND WARRANTS WITH-DOWN ROUND PROTECTION

| A. | Description of the rights attached to the Common Stock
|  | Each share of Common Stock entitles the holder to one vote, either in person or by proxy, on each matter submitted to the approval of the Company’s stockholders. The holders of Common Stock are not permitted to vote their shares cumulatively.

| B. | Stock-based compensation

| 1. | Plan
|  | On January 11, 2010, the Company’s Board of Directors approved and adopted the 2010 Share Incentive Plan (the “Plan”), pursuant to which the Company’s Board of Directors may award share options to purchase the Company’s Ordinary Shares as well as restricted shares, restricted stock units (the “RSU”) and other share-based awards to designated participants. Subject to the terms and conditions of the Plan, the Company’s Board of Directors has full authority in its discretion, from time to time and at any time, to determine (i) the designate participants; (ii) the terms and provisions of the respective award agreements, including, but not limited to, the number of share options to be granted to each optionee, the number of shares to be covered by each share option, provisions concerning the time and the extent to which the share options may be exercised and the nature and duration of restrictions as to the transferability or restrictions constituting substantial risk of forfeiture and to cancel or suspend awards, as necessary; (iii) determine the fair market value of the shares covered by each award; (iv) make an election as to the type of approved 102 Option under Israeli tax law; (v) designate the type of share options; (vi) take any measures, and to take actions, as deemed necessary or advisable for the administration and implementation of the Plan; (vii) interpret the provisions of the Plan and to amend from time to time the terms of the Plan.

| 2. | Grant of equity awards to employees

| A. | On February 8, 2021, The Company granted Mr. Erez Ben-Zvi, the then Vice President of Product of the Company, annual award with fair value of NIS 210 thousand (approximately $ 65 thousand) of RSU effective as of the employee start date and on each one-year anniversary following the employee start date subject to the approval of the board of directors (the “Additional RSU”). Both, the RSU and each of the Additional RSU (if approved by the board of directors), as applicable, shall be based on the stock price at actual the date of grant (and not lower than US$ 5.20 per share). 1/12 of the RSUs shall vest and become nonforfeitable three months following the Start Date, and an additional 1/12 of the RSUs shall vest and become nonforfeitable at the end of every 3-months period thereafter, provided that the employee continues to be employed by the Company at the applicable date of vesting. The vesting schedule shall be also applied to each of the Additional RSUs granted, mutatis mutandis, such that the vesting period of each of the respective Additional RSU shall commence from its actual date of grant. In June 2022, Erez Ben-Zvi resigned from the Company. Thus, his stock-based compensation was terminated in the last vesting date of April 2022. During the years ended December 31, 2022 and 2021, the Company recorded stock-based compensation expenses (income) of $(25) thousand and $76 thousand, respectively, with respect to the above grant.

F-18

GLUCOTRACK INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (cont.)

NOTE 7 – COMMON STOCK AND WARRANTS WITH-DOWN ROUND PROTECTION (cont.)

| B. | Stock-based compensation (cont.)

| 2. | Grant of equity awards to employees (cont.)

| B. | In November 2020, the Company granted Mr. Shalom Shushan, the then Chief Technology Officer of the Company, annual award with fair value of NIS 90 thousand (approximately $28 thousand) of RSU effective as of the employee start date. Furthermore, on each one-year anniversary following the employee start date subject to the approval of the board of directors, Company shall grant the Employee with fair value of NIS 60 thousand of Additional RSU (the “Additional RSU”). Both, the RSU and each of the Additional RSU (if approved by the board of directors), as applicable, shall be based on the stock price at actual the date of grant (and not lower than US$ 5.20 per share). 1/12 of the RSUs shall vest and become nonforfeitable three months following the Start Date, and an additional 1/12 of the RSUs shall vest and become nonforfeitable at the end of every 3-months period thereafter, provided that the Employee continues to be employed by the Company at the applicable date of vesting. The vesting schedule shall be also applied to each of the Additional RSUs granted to the Employee, mutatis mutandis, such that the vesting period of each of the respective Additional RSU shall commence from its actual date of grant. In May 2022, Shalom Shushan resigned from the Company. Thus, his stock-based compensation was terminated in the last vesting date of May 2022. During the years ended December 31, 2022 and 2021, the Company recorded stock-based compensation expenses (income) of $(6) thousand and $22 thousand, respectively, with respect to the above grant.
| C. | In November 2021, the Company granted Mr. Paul V. Goode, the President and Chief Executive Officer of the Company, options with the fair value of $484 thousand, to purchase up to 1.5% of the fully diluted common stock, par value $0.001 per share of the Company (approximately 328 thousand options), as of the grant date, with a per share exercise price equal to the greater of (A) $5.20 per share or (B) the closing price of a share of Common Stock on the grant date, as reported by Bloomberg L.P., which shall vest in equal monthly installments over a three year period following the grant date.
|  | In May 2022, the Company grated Mr. Paul V. Goode, a one-time grant of restricted stock of 18,000 shares (“RSU”), which be vest during one year, as long as he is employed by the Company. During the years ended December 31, 2022 and 2021, the Company recorded stock-based compensation expenses of $306 thousand and $98 thousand, respectively, with respect to the above grant.

| D. | In December 2021, the Company granted Mr. James p. Thrower, the Vice President Engineering of the Company, options with the fair value of $152 thousand, to purchase up to 1.15% of the fully diluted common stock, par value $0.001 per share of the Company (approximately 262 thousand options), as of the grant date, with a per share exercise price equal to the greater of (A) $5.20 per share or (B) the closing price of a share of Common Stock on the grant date, as reported by Bloomberg L.P., which shall vest in equal monthly installments over a three year period following the grant date. During the years ended December 31, 2022 and 2021, the Company recorded stock-based compensation expenses of $93 thousand and $16 thousand, respectively, with respect to the above grant.
| E. | In October 2022, the Company granted Mr. Mark Tapsak, the Vice President, Sensor Science of the Company, options with the fair value of $22 thousand, to purchase up to 0.75% of the fully diluted common stock, par value $0.001 per share of the Company (approximately 116 thousand options), as of the grant date, with a per share exercise price equal to the greater of (A) $5.20 per share or (B) the closing price of a share of Common Stock on the grant date, as reported by Bloomberg L.P., which shall vest in equal monthly installments over a three year period following the grant date. During the year ended December 31, 2022, the Company recorded stock-based compensation expenses of $5 thousand with respect to the above grant.

F-19

GLUCOTRACK INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (cont.)

NOTE 7 – COMMON STOCK AND WARRANTS WITH-DOWN ROUND PROTECTION (cont.)

| F. | The following table presents the Company’s share option activity for employees and members of the Board of Directors of the Company under the Plan, for the years ended December 31, 2022 and 2021:

SCHEDULE OF SHARE OPTION ACTIVITY FOR EMPLOYEES AND MEMBERS

|  | Number of Share Options |  |  | Weighted Average Exercise Price |  |  | Weighted average remaining contractual life |  |  | Intrinsic value |
|  |  |  |  | $ |  |  | (years) |  |  | $ |
Outstanding as of December 31, 2020 |  |  | 128,297 |  |  |  | 64.46 |  |  |  | 5.42 |  |  |  | - |
Granted |  |  | 589,933 |  |  |  | 5.2 |  |  |  | 2.88 |  |  |  | - |
Forfeited or expired |  |  | (98,177 | ) |  |  | 64.64 |  |  |  | - |  |  |  | - |
Outstanding as of December 31, 2021 |  |  | 620,053 |  |  |  | 8.05 |  |  |  | 2.99 |  |  |  | - |
Exercisable as of December 31, 2021 |  |  | 39,223 |  |  |  | 50.27 |  |  |  | 4.65 |  |  |  | - |

|  | Number of Share Options |  |  | Weighted Average Exercise Price |  |  | Weighted average remaining contractual life |  |  | Intrinsic value |
|  |  |  |  | $ |  |  | (years) |  |  | $ |
Outstanding as of December 31, 2021 |  |  | 620,053 |  |  |  | 8.05 |  |  |  | 2.99 |  |  |  | - |
Granted |  |  | 115,857 |  |  |  | 5.2 |  |  |  | 2.68 |  |  |  | - |
Forfeited or expired |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Outstanding as of December 31, 2022 |  |  | 735,910 |  |  |  | 7.6 |  |  |  | 2.1 |  |  |  | - |
Exercisable as of December 31, 2022 |  |  | 245,535 |  |  |  | 12.4 |  |  |  | 2.58 |  |  |  | - |

| The aggregate intrinsic value in the table above represents the total intrinsic value (the difference between the deemed fair value of the Company’s Ordinary Shares on the last day of each of the applicable reported period and the exercise price, multiplied by the number of in-the-money share options) that would have been received by the share option holders had all share options holders exercised their share options on December 31 of each of the reported period. This amount is impacted by the changes in the fair market value of the Company’s Ordinary Share.

F-20

GLUCOTRACK INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (cont.)

NOTE 7 – COMMON STOCK AND WARRANTS WITH-DOWN ROUND PROTECTION (cont.)

| G. | The outstanding and exercisable share options as of December 31, 2022 have been separated into ranges of exercise prices, as follows:

SCHEDULE OF OUTSTANDING AND EXERCISABLE SHARE OPTIONS

Exercise price - $ |  | Share options outstanding as of December 31, 2022 |  |  | Weighted average remaining contractual term |  |  | Share options exercisable as of December 31, 2022 |  |  | Weighted average remaining contractual term |
|  |  |  |  | (years) |  |  |  |  |  | (years) |
100.75 |  |  | 3,846 |  |  |  | 4.26 |  |  |  | 3,846 |  |  |  | 4.26 |
58.5 |  |  | 26,274 |  |  |  | 4.18 |  |  |  | 26,274 |  |  |  | 4.18 |
5.2 |  |  | 705,790 |  |  |  | 2.01 |  |  |  | 215,415 |  |  |  | 1.91 |
|  |  | 735,910 |  |  |  |  |  |  |  | 245,535 |  |  |  |  |

| H. | During the years ended December 31, 2022 and 2021, share options have not been exercised into Ordinary Shares.

| I. | The following table presents the assumptions used to estimate the fair values of the share options granted in the reported periods presented:

SCHEDULE OF ASSUMPTIONS USED TO VALUE OPTIONS

|  | 2022 |  |  | 2021 |
|  | Year ended December 31 |
|  | 2022 |  |  | 2021 |
Volatility (%) |  |  | 72.15 | % |  |  | 49.21 | %
Risk-free interest rate (%) |  |  | 2.5 | % |  |  | 2.5 | %
Dividend yield (%) |  |  | - |  |  |  | - |
Expected life (years) |  |  | 3 |  |  |  | 3 |
Exercise price ($) |  |  | 5.2 |  |  |  | 5.2 |
Share price ($) |  |  | 1.89 |  |  |  | 3.1-4.65 |

| J. | As of December 31, 2022, there was $186 thousand of unrecognized compensation expense related to unvested share options. The Company recognizes compensation expense on a straight-line basis over the requisite service periods, which results in a weighted average period of approximately 0.72 years over which the unrecognized compensation expense is expected to be recognized.

F-21

GLUCOTRACK INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (cont.)

NOTE 7 – COMMON STOCK AND WARRANTS WITH-DOWN ROUND PROTECTION (cont.)

| 3. | Grant of equity awards to non-employees

|  | A. | In connection with the 2017 Offering, the Company has issued to Andrew Garrett Inc, who served as a placement agent in fundraising transaction (a) 5-year warrants to purchase up to 1,062,717 shares of Common Stock at an exercise price of $3.354 per share, (b) 5-year warrants to purchase up to 108,305 shares of Common Stock at an exercise price of $23.40 per share, (c) 5-year warrants to purchase up to 8,331 shares of Common Stock at an exercise price of $46.80 per share and (d) 5-year warrants to purchase up to 8,331 shares of Common Stock at an exercise price of $70.20 per share. In connection with February 2020 Offering, the Company has issued to the Andrew Garrett Inc, who served as a placement agent a 5-year warrants to purchase up to 288,462 shares of Common Stock at an exercise price of $5.2 per share.
|  | B. | In August 2020, advisory agreement was made between the Company and Malcolm McGuire & Assoc. LLC, under which the advisor is providing strategic advisory services, which include, inter alia, interface with the investment community on behalf of the Company, build a database of appropriate brokers and investors, design and implement a plan for both the short and the long-term encouragement of investor interest in the Company and create a compelling perception of the Company within the investment community. The consideration was set as a monthly fee of $4 thousand cash and a monthly grant of non-qualified three-year options to purchase 461 shares of the Company’s Common Stock, at an exercise price equal to $6.5. During the years ended December 31, 2022 and 2021, the Company recorded stock-based compensation expenses of $9 thousand and $13 thousand, respectively, with respect to the above grant.
|  | C. | On September 12, 2022, the Company signed on Advisory agreement with Andrew Garrett Inc, under which the Company agreed to extend the exercise through July 1, 2026, for all warrants issued pursuant to the Exchange Agreement dated December 31, 2018. The Company accounted for the extension of the warrants exercise period pursuant to ASC 718 as a modification. Accordingly, additional compensation of $56 thousand was calculated as the fair value of the modified award in excess of the fair value of the original award measured immediately before its terms have been modified based on current circumstances and recorded this incremental fair value as an immediate expense in 2022 as the warrants were fully vested at the modification date (See also note 13A).

F-22

GLUCOTRACK INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (cont.)

NOTE 7 – COMMON STOCK AND WARRANTS WITH-DOWN ROUND PROTECTION (cont.)

|  | D. | The outstanding and exercisable share options as of December 31, 2022 have been separated into ranges of exercise prices, as follows:

SCHEDULE OF OUTSTANDING AND EXERCISABLE SHARE OPTIONS

Exercise price - $ |  | Share options outstanding and exercisable December 31, 2022 |  |  | Weighted average remaining contractual term (years) |
70.2 |  |  | 665,411 |  |  |  | 1.01 |
46.8 |  |  | 665,411 |  |  |  | 1.01 |
23.4 |  |  | 665,411 |  |  |  | 1.01 |
6.5 |  |  | 13,398 |  |  |  | 0.63 |
5.2 |  |  | 290,679 |  |  |  | 2.11 |
3.35 |  |  | 4,068,497 |  |  |  | 1.56 |
|  |  | 6,368,807 |  |  |  |  |

| The total compensation cost related to all of the Company’s equity-based awards recognized during the years ended December 31, 2022 and 2021 was comprised as follows:

SCHEDULE OF TOTAL COMPENSATION COST EQUITY BASED AWARDS

Research and Development |  | December 31, 2022 |  |  | December 31, 2021 |
|  | In thousand of US dollars |
Research and Development |  | December 31, 2022 |  |  | December 31, 2021 |
Research and development |  |  | 92 |  |  |  | 38 |
General and administrative |  |  | 395 |  |  |  | 223 |
Total compensation cost |  |  | 487 |  |  |  | 261 |

F-23

GLUCOTRACK INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (cont.)

NOTE 8 – RESEARCH AND DEVELOPMENT EXPENSES

SCHEDULE OF RESEARCH AND DEVELOPMENT EXPENSES

Research and Development |  | December 31, 2022 |  |  | December 31, 2021 |
|  | In thousand of US dollars |
Research and Development |  | December 31, 2022 |  |  | December 31, 2021 |
Salaries and related expenses |  |  | 749 |  |  |  | 916 |
Professional fees |  |  | 1,124 |  |  |  | 337 |
Expenses due to slow inventory write-off |  |  | - |  |  |  | 321 |
Depreciation |  |  | 20 |  |  |  | 32 |
Vehicle maintenance |  |  | 12 |  |  |  | 42 |
Other |  |  | 62 |  |  |  | 162 |
Total Research and Development Expense |  |  | 1,967 |  |  |  | 1,810 |

NOTE 9 – MARKETING EXPENSES

SCHEDULE OF MARKETING EXPENSE

Selling and Marketing |  | December 31, 2022 |  |  | December 31, 2021 |
Salaries and related expenses |  |  | - |  |  |  | 22 |
Professional fees |  |  | - |  |  |  | 115 |
Other |  |  | - |  |  |  | 2 |
Total selling and marketing expense |  |  | - |  |  |  | 139 |

NOTE 10 – GENERAL AND ADMINISTRATIVE EXPENSES

SCHEDULE OF GENERAL AND ADMINISTRATIVE EXPENSES

|  | In thousand of US dollars |
General and Administrative |  | December 31, 2022 |  |  | December 31, 2021 |
Salaries and related expenses |  |  | 617 |  |  |  | 608 |
Professional fees |  |  | 1,281 |  |  |  | 1,224 |
Bad debt expense |  |  | - |  |  |  | 59 |
Vehicle maintenance |  |  | 8 |  |  |  | 41 |
Depreciation |  |  | 3 |  |  |  | 10 |
Insurance |  |  | 457 |  |  |  | 97 |
Other |  |  | 99 |  |  |  | 52 |
Total general and administrative expenses |  |  | 2,465 |  |  |  | 2,091 |

F-24

GLUCOTRACK INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (cont.)

NOTE 11 – INCOME TAX

| A. | Measurement of results for tax purposes under the Israeli Income Tax (Inflationary Adjustments) Law, 1985 (the “Inflationary Adjustment Law”)
|  | Commencing January 1, 2008, the results of operations of Integrity Israel for tax purposes have been measured on a nominal basis.
| B. | Tax assessments
|  | For federal, state and local income tax purposes the Company remains open for examination by the tax authorities for the tax years from 2018 through 2021 under the general statute of limitations.
|  | Notwithstanding, pursuant and subject to the provisions of article 145 of the Income Tax Ordinance, Integrity Israel’s tax returns that were filed with the tax authority up to and including 2017 are considered final.
| C. | Loss for the year consists of the following:

SCHEDULE OF INCOME TAX LOSS FOR THE YEAR

|  | 2022 |  |  | 2021 |
|  | Year ended December 31 |
|  | 2022 |  |  | 2021 |
Domestic |  | $ | 3,528 |  |  | $ | 1,255 |
Foreign entity (Integrity Israel) |  |  | 907 |  |  |  | 2,812 |
Total loss for the year |  |  | 4,435 |  |  |  | 4,067 |

| D. | Net operating losses carryforward
|  | As of December 31, 2022, the Company had cumulative Net Operating Losses (NOL) carry forward for US federal purposes of approximately $14 million to offset against future taxable income for an indefinite period of time. Integrity Israel has cumulative NOL carry forward for Israeli income tax purposes of approximately $38.0 million to offset against future taxable income for an indefinite period of time.
| E. | For the years ended December 31, 2022 and 2021, the main reconciling item is the recognition of valuation allowance in respect of deferred taxes relating to accumulated net operating losses carried forward and other permanent and temporary differences due to the uncertainty of the realization of such deferred taxes.

F-25

GLUCOTRACK INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (cont.)

NOTE 11 – INCOME TAX (cont.)

| F. | Deferred taxes result principally from temporary differences in the recognition of certain revenue and expense items for financial and income tax reporting purposes. Significant components of the Group’s future tax assets are as follows:

SCHEDULE OF DEFERRED TAX ASSETS

Composition of deferred tax assets: |  | 2022 |  |  | 2021 |
|  | As of December 31 |
Composition of deferred tax assets: |  | 2022 |  |  | 2021 |
Vacation accrual |  |  | - |  |  |  | 6 |
Research and development credits |  |  | 174 |  |  |  | - |
Net operating losses carry forwards |  |  | 11,805 |  |  |  | 11,654 |
Net deferred tax asset before deferred tax liabilities and valuation allowance |  |  | 11,979 |  |  |  | 11,660 |
Valuation allowance |  |  | (11,979 | ) |  |  | (11,660 | )
Net deferred tax assets |  |  | - |  |  |  | - |

NOTE 12 – SEGMENT INFORMATION

The Company operates in one operating segment which is design, development and commercialization of non-invasive glucose monitoring devices. During the reported period no revenue were recognized.

All long-lived assets are owned by Integrity Israel which are located in Israel.

NOTE 13 – RELATED PARTIES

| A. | Andrew Garrett, Inc:
|  | On September 12, 2022, the Company signed on advisory agreement with Andrew Garrett Inc., which is controlled by one of member of the Company’s board of directors, Andrew Sycoff. The Company retains advisor on a non-exclusive basis to receive general business advisory services for total monthly consideration of $20 thousand. In addition, the Company also agreed to extend the exercise through July 1, 2026, for all warrants issued pursuant to the Exchange Agreement dated December 31, 2018. The Company accounted for the extension of the warrants’ exercise period pursuant to ASC 718 as a modification. Accordingly, additional compensation of $56 thousand was calculated as the fair value of the modified award in excess of the fair value of the original award measured immediately before its terms have been modified based on current circumstances and recorded this incremental fair value as an immediate expense in 2022 as the warrants were and remained fully vested at the modification date. For the year ended on December 31, 2022, the Company recognized in total expenses of $102 thousand due to the above agreement.
| B. | Intellectual Property Purchase Agreement - See Note 6C
| C. | Loans From Stockholders – See Note 5

| D. | Tapsak Enterprises LLC, dba Virginia Analytical
|  | On October 25, 2022, the Company entered into agreement with Tapsak Enterprises LLC dba Virginia Analytical, which fully owned by Mark Tapsak, who serves as the Vice President of Sensor Science of the Company, under which, Tapsak Enterprises LLC dba Virginia Analytical, will provide laboratory space, equipment and materials to support the Company sensor development activities for total consideration which estimates to be approximately $60 thousand. For the year ended on December 31, 2022, the Company recognized in total expenses of $38 thousand due to this agreement.

NOTE 14 – SUBSEQUENT EVENTS

The Company has evaluated all subsequent events through the date when these financial statements were issued to determine if these must be reported. The Company determined that there were no reportable subsequent events to disclose in these financial statements.

F-26