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SIGNIFICANT TRANSACTIONS

6 Months Ended

Jun. 30, 2024

NOTE 3 - SIGNIFICANT TRANSACTIONS

A.	Exercise of pre-funded warrants

	On January 3, 2024, a number of 395,294 pre-funded warrants granted through underwritten public offering in April 2023 have been fully exercised into the same number of shares of Common Stock of the Company.

B.	Exchange Agreement

	On February 13, 2024, the Company entered into an Exchange Agreement with certain warrant holders (the “Holders”), pursuant to which the Company and the Holders agreed to exchange (the “Exchange”) warrants with down round protection feature exercisable to common shares (the “Warrants”) owned by the Holders for shares of Common Stock to be issued by the Company.

	On February 13, 2024, the Company closed the Exchange and issued to the Holders on February 15, 2024 an aggregate of 718,641 shares of Common Stock in exchange for 876,391 Warrants (the “Shares”).

	It was also agreed that the Holders will not, during the period (“Lock-Up Period”) (i) offer, pledge, announce the intention to sell, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, or otherwise transfer or dispose of, directly or indirectly, any Shares, (ii) enter into any swap or other agreement that transfers, in whole or in part, any of the economic consequences of ownership of the Shares of, whether any such transaction described in clause (i) or (ii) above is to be settled by delivery of Shares or such other securities, in cash or otherwise, (iii) make any demand for or exercise any right with respect to, the registration of any Shares or any security convertible into or exercisable or exchangeable for shares of common stock, or (iv) publicly announce an intention to effect any transaction specific in clause (i), (ii) or (iii) above, provided however that the Holder, during the Lock-Up Period, may (a) sell or contract to sell Shares at a price higher than $0.50 per Share on any trading day up to 10% of the daily volume of Shares or (b) sell or contract to sell Shares at a price higher than $0.80 per Share on any trading day with no limitation on volume. The Lock-Up Period shall expire at the earliest of (i) 365 days after the date hereof or (ii) until the Shares traded above $1.00 per Share for five consecutive trading days. The Company accounted for the Exchange of the aforesaid warrants with shares as deemed dividend which was calculated at the closing date by the management using the assistance of external appraiser as the excess of fair value of the share to be issued after taking into consideration a discount for lack of marketability at a rate of 16.81% over the Lock-Up Period over the fair value of the original equity instrument (i.e. warrants which included down round protection feature). However, since the fair value of the new equity instrument was estimated as lesser than the fair value of the replaced equity instrument, deemed dividend was not recorded.

C.	Lease Agreement

	On February 19, 2024, the Company entered into Lease Agreement (the “Agreement”) with Tapsak Enterprises LLC dba Virginia Analytical (the “Landlord”) under which it was agreed that the Company will lease from the Landlord a premises located in Front Royal, Virginia area for a monthly rental fee of $2.5 over a period of 3-years commencing March 1, 2024 through February 28, 2027 (the “Initial Lease Period”). Security deposit of $2.5 which represents payment of one month is held by the Landlord which will be return to the Company at the end of the Initial Lease Period.

	In addition, the Company has an option to renew the Initial Lease Period for another two additional periods of 3-years each following the Initial Lease Period (the “Option Term”), following advanced notice as defined in the Agreement. The monthly rental fee over the Option Term shall be the fair market rate determined as what is a comparable cost for similar property in Front Royal, Virginia area.

GLUCOTRACK INC.

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

(in thousands of US Dollars)

NOTE 3 - SIGNIFICANT TRANSACTIONS (CONT.)

C.	Lease Agreement (Cont.)

In accordance with the provision of ASC 842, Leases, at the commencement date of the Agreement, the Company recognized the right to usage asset equals to lease liability in total amount of $79. The lease liability was measured at the present value of the future lease payments, which are discounted based on an estimate of the additional interest rate that the Company would be required to pay in order to borrow a similar amount for a similar period in order to obtain a similar amount on the date of first recognition of the lease.

As part of the leasing period, the Company considered only the Initial Lease Period as the realization of the option to extend the period was not considered as reasonably certain.

Operating lease:

SCHEDULE OF OPERATING LEASE

	June 30, 2024

Operating right of use asset	$	71
Current operating lease liability	$	25
Non-Current operating lease liability	$	46

Maturity analysis of the Company’s lease liability:

	June 30, 2024

Less than one year	$	30
Between 1-2 years		30
More than 2 years		20

Total operating lease payments	$	80

Less: imputed interest	$	(9	)

Present value of lease liabilities	$	71

Additional information on lease

The following is a summary of weighted average remaining lease terms and discount rate for Company’s leases:

	June 30, 2024
Lease term (years)		2.92
Weighted average discount rate		9.03	%

Private Placement Agreement

On April 22, 2024, the Company entered into a private placement agreement under which the Company issued 79,366 shares of its common stock at a price of $6.3 per share for aggregate gross proceeds of $500 (the “Offering”). The Offering included participation of certain members of the Company’s executive management, Board of Directors and existing shareholders.

GLUCOTRACK INC.

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

(in thousands of US Dollars)

NOTE 3 - SIGNIFICANT TRANSACTIONS (CONT.)

Adoption of 2024 Equity Incentive Plan and Reverse Share Split

On April 26, 2024, the Company held its Annual Meeting of Shareholders (the “Annual Meeting”) under which the Company’s stockholders approved, inter alia, the following proposals: (i) adoption of the Company’s 2024 Equity Incentive Plan and (ii) an amendment to Article IV of the Company’s Certificate of Incorporation, to effect a reverse stock split of the Company’s Common Stock at a ratio of between one-for-five and one-for-thirty, with such ratio to be determined at the sole discretion of the Board of Directors. Following the Annual Meeting, on April 30, 2024, the Company’s Board of Directors approved a one-for-five reverse stock split of the Company’s issued and outstanding shares of common stock (the “Reverse Stock Split”). On May 17, 2024, the Company filed a Certificate of Amendment to the Company’s Certificate of Incorporation with the Secretary of State of the State of Delaware which effected the Reverse Stock Split.

For accounting purposes, all shares, options and warrants to purchase shares of common stock and loss per share amounts have been adjusted to give retroactive effect to the Reverse Share Split for all periods presented in these interim consolidated financial statements. Any fractional shares resulting from the Reverse Share Split were rounded up to the nearest whole share.

Note and Warrant Purchase Agreements

On June 27, 2024, the Board of Directors approved the Company to enter into note and warrant purchase agreements with certain officers, directors and existing investors, providing for the private placement of unsecured promissory notes in the aggregate principal amount of $100 (the “Notes”) and warrants to purchase up to an aggregate of 300,000 shares of the Company’s Common Stock (the “Warrants”).

The Notes bear simple interest at the rate of 3% per annum and are due and payable in cash on the earlier of: (i) twelve months from the date of the Note; or (ii) the date the Company raises third-party equity capital in an amount equal to or in excess of $1,000 (the “Maturity Date”). The Company may prepay the Notes at any time prior to the Maturity Date without penalty. If an event of default occurs, the then-outstanding principal amount of the Notes plus any unpaid accrued interest will accelerate and become immediately payable in cash.

Each Warrant has an exercise price of $4.95 per share and immediately exercisable and have a five-year term. Such Warrant was determined as eligible for equity classification.

At the initial date, the total proceeds received of $80 were allocated to the Notes and the Warrants based on their relative fair value of the identified components (i.e. Notes and Warrants) as determined by the Company’s management as follows:

	Fair value at Closing Date

Notes (1)	$	12
Warrants (2)		68
Fair value at Closing Date	$	80

	(1)	The fair value of the Notes was determined based on rating model using a discount rate of 12% which represented the Company’s applicable rate of risk, as determined by management.

	(2)	The fair value of the Warrants determined by management based on Black-Scholes pricing model taking into account expected stock price volatility of 245% and risk-free interest rate of 4.52%.

The Note is accounted for as a financial liability measured at amortized cost. At subsequent dates, the Company recognized a discount expense over the economic life of the Notes based on the effective interest rate method. However, during the period of six month, discount expense were de minimis.

GLUCOTRACK INC.

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

(in thousands of US Dollars)