UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2019 [ ] 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 | Delaware | 98-0668934 | | --- | --- | | (State or other jurisdiction of ...

PART I - FINANCIAL INFORMATION [Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements.) This section presents the unaudited condensed consolidated financial statements for the nine and three months ended September 30, 2019, detailing financial position, performance, and cash flows, while highlighting a net loss and going concern uncertainty [Condensed Consolidated Financial Statements](index=4&type=section&id=Condensed%20Consolidated%20Financial%20Statements) This section presents the company's financial position and performance as of September 30, 2019, showing increased assets and revenues, a continued net loss, and a significant stockholders' deficit, with cash increasing due to financing activities Condensed Consolidated Balance Sheets (at period end) | | September 30, 2019 ($) | December 31, 2018 ($) | | :--- | :--- | :--- | | **Total current assets** | 1,440,292 | 314,145 | | **Total assets** | 1,973,641 | 688,186 | | **Total current liabilities** | 2,440,222 | 3,221,609 | | **Total liabilities** | 2,836,457 | 3,561,487 | | **Total stockholders' (deficit)** | (862,816) | (2,873,301) | Condensed Consolidated Statements of Operations | | Nine Months Ended Sep 30, 2019 ($) | Nine Months Ended Sep 30, 2018 ($) | | :--- | :--- | :--- | | **Revenues** | 140,255 | 43,488 | | **Total operating expenses** | 3,040,087 | 5,570,847 | | **Operating loss** | (2,899,832) | (5,527,171) | | **Loss for the period** | (2,917,287) | (5,383,155) | | **Loss per share (Basic & Diluted)** | (0.01) | (0.96) | Condensed Consolidated Statements of Cash Flows (Nine Months Ended Sep 30) | | 2019 ($) | 2018 ($) | | :--- | :--- | :--- | | **Net cash used in operating activities** | (3,102,508) | (3,802,460) | | **Net cash used in investing activities** | (22,554) | (13,669) | | **Net cash provided by financing activities** | 4,198,574 | 4,705,828 | [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section details the basis of presentation, significant accounting policies, and specific events, highlighting a going concern uncertainty, recent financing activities, and the adoption of new lease accounting standards - The company has an accumulated deficit of **$90,104,070**, negative operating cash flows, and negative working capital, which raises substantial doubt about its ability to continue as a going concern[28](index=28&type=chunk) - During the first nine months of 2019, the company raised approximately **$4.2 million** in net proceeds from the issuance and sale of 1,083,004 Series D Units[54](index=54&type=chunk) - The company adopted the new lease accounting standard (Topic 842), recognizing right-of-use (ROU) assets and corresponding liabilities of **$225 thousand** upon adoption[51](index=51&type=chunk) - Subsequent to the quarter end, an officer resigned in October 2019, and a new independent director, Allen E. Danzig, was appointed to the Board[70](index=70&type=chunk)[71](index=71&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=19&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations.) Management discusses the company's financial condition and results, highlighting cost-reduction measures, product development for its GlucoTrack® device, increased revenue, decreased operating expenses, and critical liquidity concerns requiring further capital raising - The company is focused on the commercialization of its GlucoTrack® non-invasive glucose monitor and is developing next-generation products, including a wireless ear-clip and a self-calibration module[75](index=75&type=chunk)[83](index=83&type=chunk)[84](index=84&type=chunk) - Management has taken measures to restructure, reduce costs, and streamline expenses to deploy capital towards business development and bringing the product fully to market[76](index=76&type=chunk)[77](index=77&type=chunk) - A going concern uncertainty exists due to a substantial accumulated deficit and negative operating cash flows, making the company dependent on external financing[88](index=88&type=chunk) [Results of Operations](index=24&type=section&id=Results%20of%20Operations) For the nine months ended September 30, 2019, revenues increased significantly due to new market entries, while total operating expenses and net loss decreased substantially due to broad cost reductions, with similar trends for the three-month period Comparison of Nine Months Ended September 30, 2019 vs 2018 | Metric | 9 Months 2019 ($) | 9 Months 2018 ($) | Change | Reason | | :--- | :--- | :--- | :--- | :--- | | **Revenues** | 140,255 | 43,488 | +222% | Orders shipped to two new markets | | **R&D Expenses** | 1,203,616 | 1,818,108 | -34% | Completion of clinical trials and lower salary expenses | | **S&M Expenses** | 444,555 | 857,386 | -48% | Reduced business development personnel in Europe | | **G&A Expenses** | 1,391,916 | 2,894,553 | -52% | Departure of former CEO and reduction in professional fees | | **Net Loss** | (2,917,287) | (5,383,155) | -46% | Increased revenue and lower operating expenses | - For the three months ended Sep 30, 2019, revenues were **$4,175** (vs. **$0** in 2018), and net loss decreased to **$996,777** from **$1,572,878** in the prior-year period, mainly due to lower operating expenses[117](index=117&type=chunk)[125](index=125&type=chunk) [Liquidity and Capital Resources](index=27&type=section&id=Liquidity%20and%20Capital%20Resources) The company's liquidity is critically low, with **$1.22 million** cash on hand projected to fund operations for only five months, necessitating additional capital raising despite recent financing activities - Cash on hand was approximately **$1,222,280** as of September 30, 2019[126](index=126&type=chunk) - Management believes current cash is only sufficient to fund operations for a period of **five months** from the date of the report, necessitating additional capital raising[126](index=126&type=chunk) - Net cash provided by financing activities was **$4.2 million** for the nine-month period, reflecting capital raised from the issuance of Series D Units[131](index=131&type=chunk) - Net cash used in operating activities for the nine-month period was **$3.1 million**[129](index=129&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=28&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk.) This section is not required for smaller reporting companies - As a smaller reporting company, Integrity Applications, Inc. is not required to provide these disclosures[134](index=134&type=chunk) [Controls and Procedures](index=28&type=section&id=Item%204.%20Controls%20and%20Procedures.) Management concluded that the company's disclosure controls and procedures were effective as of September 30, 2019, with no material changes to internal control over financial reporting identified during the quarter - Management concluded that as of September 30, 2019, the company's disclosure controls and procedures were effective at the reasonable assurance level[135](index=135&type=chunk) - There were no changes in internal control over financial reporting during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[136](index=136&type=chunk) PART II - OTHER INFORMATION [Unregistered Sales of Equity Securities and Use of Proceeds](index=28&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details the company's unregistered sales of equity securities, including a private placement of Series D Units that raised **$4.87 million** in gross proceeds and related compensation to the placement agent - The company received aggregate gross proceeds of **$4,873,520** from the private placement of its securities to accredited investors during the nine-month period ending September 30, 2019[138](index=138&type=chunk) - The private placement was conducted as a transaction exempt from registration under Section 4(a)(2) of the Securities Act of 1933[138](index=138&type=chunk) - The placement agent for the offering received a cash commission of **10%**, a non-accountable expense allowance of **3%**, and warrants to purchase common stock[141](index=141&type=chunk) [Exhibits](index=29&type=section&id=Item%206.%20Exhibits.) This section lists the exhibits filed with the Form 10-Q, including corporate governance documents, officer certifications, and XBRL interactive data files - Lists key exhibits filed with the report, including corporate formation documents, officer certifications (SOX 302 & 906), and XBRL data files[142](index=142&type=chunk)

[PART I - FINANCIAL INFORMATION](index=4&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements.](index=4&type=section&id=Item%201.%20Financial%20Statements.) This section presents the unaudited condensed consolidated financial statements, providing a snapshot of the company's financial position and performance [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) | ASSETS (US dollars) | June 30, 2019 (unaudited) | December 31, 2018 | | :-------------------- | :------------------------ | :------------------ | | Cash and cash equivalents | 2,276,293 | 97,079 | | Total current assets | 2,505,504 | 314,145 | | Total assets | 3,055,032 | 688,186 | | LIABILITIES AND STOCKHOLDERS' DEFICIT | | | | Total current liabilities | 2,627,741 | 3,221,609 | | Total liabilities | 3,039,681 | 3,561,487 | | Total stockholders' (deficit) surplus | 15,351 | (2,873,301) | [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) | (US dollars) | Six-month period ended June 30, 2019 | Six-month period ended June 30, 2018 | Three-month period ended June 30, 2019 | Three-month period ended June 30, 2018 | | :------------- | :----------------------------------- | :----------------------------------- | :------------------------------------- | :------------------------------------- | | Revenues | 136,080 | 43,488 | 110,518 | 15,279 | | Operating loss | (1,919,359) | (3,916,065) | (894,306) | (2,006,256) | | Loss for the period | (1,920,510) | (3,810,277) | (898,857) | (1,962,483) | | Loss per share (Basic) | (0.01) | (0.67) | (0.01) | (0.33) | [Condensed Consolidated Statement of Changes in Stockholders' Deficit](index=6&type=section&id=Condensed%20Consolidated%20Statement%20of%20Changes%20in%20Stockholders'%20Deficit) | (US dollars) | Common Stock (Amount) | Additional paid in capital | Accumulated other comprehensive income/loss | Accumulated deficit | Total Stockholders' (deficit) surplus | | :------------- | :-------------------- | :------------------------- | :------------------------------------------ | :------------------ | :------------------------------------ | | Balance as of January 1, 2019 | 141,638 | 84,007,612 | 164,232 | (87,186,783) | (2,873,301) |\ | Loss for the period | | | | (1,920,510) | (1,920,510) |\ | Other comprehensive (loss) | | | (26,638) | | (26,638) |\ | Amounts allocated to issuance of Common Stock from Series D offering | 18,892 | 3,898,155 | | | 3,917,047 |\ | Balance as of June 30, 2019 | 161,955 | 88,823,095 | 137,594 | (89,107,293) | 15,351 | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) | (US dollars) | Six-month period ended June 30, 2019 | Six-month period ended June 30, 2018 | | :------------- | :----------------------------------- | :----------------------------------- |\ | Net cash used in operating activities | (2,041,043) | (2,442,209) |\ | Net cash used in investing activities | (9,913) | (1,912) |\ | Net cash provided by financing activities | 4,198,574 | 2,418,490 |\ | Increase (decrease) in Cash, Cash equivalents, and restricted cash | 2,181,899 | (38,420) |\ | Cash, Cash equivalents, and restricted cash at end of the period | 2,331,583 | 54,924 | - During the six months ending June 30, 2019, the company settled **$307 thousand** in outstanding board fees and management payroll obligations by issuing **1,190,141 shares** of common stock[20](index=20&type=chunk) - The fair value of warrants issued as consideration for placement agent services amounted to **$249 thousand** during the six months ending June 30, 2019, recognized as an increase in additional paid-in capital[20](index=20&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) [NOTE 1 – GENERAL](index=9&type=section&id=NOTE%201%20%E2%80%93%20GENERAL) - Integrity Applications, Inc. was incorporated on May 18, 2010, with its wholly-owned Israeli subsidiary focusing on designing, developing, and commercializing non-invasive glucose monitoring devices[25](index=25&type=chunk) - The company faces substantial doubt about its ability to continue as a going concern due to an accumulated deficit of **$89.1 million**, immaterial stockholder's surplus of **$15 thousand**, negative operating cash flows, and negative working capital as of June 30, 2019[26](index=26&type=chunk) - During the first six months of 2019, the company raised approximately **$4.2 million** (net) through the issuance of Series D Units, which included **18,889,618 shares** of common stock and warrants[27](index=27&type=chunk) [NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES](index=10&type=section&id=NOTE%202%20%E2%80%93%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) - The financial statements are prepared in accordance with U.S. GAAP, requiring management estimates and assumptions, particularly for going concern, stock-based compensation, and inventory net realizable value[30](index=30&type=chunk) - The company adopted ASU 2018-07 (Nonemployee Share-Based Payment Accounting) in Q1 2019, which did not significantly impact its financial statements[35](index=35&type=chunk)[39](index=39&type=chunk)[41](index=41&type=chunk) - Upon adopting ASU 2016-02 (Leases) on January 1, 2019, the company recognized **$225 thousand** in right-of-use (ROU) assets and corresponding liabilities on its balance sheets, with no impact on retained earnings or prior year income/cash flow statements[43](index=43&type=chunk)[49](index=49&type=chunk) [NOTE 3 – RECENT EVENTS](index=13&type=section&id=NOTE%203%20%E2%80%93%20RECENT%20EVENTS) - In the first six months of 2019, the company received approximately **$4.2 million** (net) from the private placement of Series D Units, which included **18,889,618 common shares** and warrants[52](index=52&type=chunk) - The company issued warrants to its placement agent as compensation, including 5-year warrants to purchase up to **1,888,966 shares** of Common Stock at **$0.258 per share**, with cashless exercise and full ratchet anti-dilution protection[53](index=53&type=chunk) - On January 1, 2019, a ten-year non-qualified stock option for **75,000 shares** at an exercise price of **$4.50 per share** was issued to the President, with three-year quarterly vesting[54](index=54&type=chunk) [NOTE 4 – INVENTORIES](index=14&type=section&id=NOTE%204%20%E2%80%93%20INVENTORIES) | (US dollars) | June 30, 2019 (unaudited) | December 31, 2018 | | :------------- | :------------------------ | :------------------ | | Raw materials | 14,564 | 13,522 | | Work in process | 1,503,440 | 1,546,764 | | Finished products | 68,461 | 67,310 | | Total | 1,586,465 | 1,627,596 | | Less – provision for slow moving inventory | (1,456,597) | (1,456,597) | | Net Inventory | 129,868 | 170,999 | - The company has recorded a provision for slow-moving or obsolete inventory of approximately **$1.457 million** during 2017 and 2018 due to low sales volume of the GlucoTrack® model DF-F[57](index=57&type=chunk) [NOTE 5 – LEASES](index=14&type=section&id=NOTE%205%20%E2%80%93%20LEASES) | Lease Cost Component | Six Months Ended June 30, 2019 (US dollars) | | :------------------- | :------------------------------------------ | | Office space | 60,000 | | Vehicle | 3,826 | | Total Operating Lease Cost | 63,826 | | Remaining Lease Term (Office space) | 1.42 years | | Remaining Lease Term (Vehicle) | 1.92 years | | Weighted Average Discount Rate | 10% | | Operating Lease Liabilities Maturity (US dollars) | June 30, 2019 (unaudited) | | :-------------------------------- | :------------------------ | | The remainder of 2019 | 63,878 | | 2020 | 117,758 | | 2021 | 3,878 | | Total operating lease payments | 185,514 | | Less: imputed interest | 12,564 | | Present value of lease liabilities | 172,950 | [NOTE 6 – OTHER CURRENT LIABILITIES](index=15&type=section&id=NOTE%206%20%E2%80%93%20OTHER%20CURRENT%20LIABILITIES) | (US dollars) | June 30, 2019 (unaudited) | December 31, 2018 | | :------------- | :------------------------ | :------------------ | | Employees and related institutions | 264,778 | 239,964 | | Accrued expenses and other | 612,436 | 917,386 | | Total | 877,214 | 1,157,350 | [NOTE 7 – FINANCING INCOME (EXPENSE), NET](index=15&type=section&id=NOTE%207%20%E2%80%93%20FINANCING%20INCOME%20(EXPENSE)%2C%20NET) | (US dollars) | Six-month period ended June 30, 2019 | Six-month period ended June 30, 2018 | Three-month period ended June 30, 2019 | Three-month period ended June 30, 2018 | | :------------- | :----------------------------------- | :----------------------------------- | :------------------------------------- | :------------------------------------- | | Israeli CPI linkage difference on principal of loans from stockholders | (3,865) | 1,963 | (3,342) | 1,052 | | Exchange rate differences | 10,569 | (5,621) | 2,506 | 8,006 | | Change in fair value of warrants with down round protection | - | 160,028 | - | 82,081 | | Interest expenses on credit from banks and other | (7,855) | (6,302) | (3,715) | (3,086) | | Late fee penalty of dividend payments | - | (44,280) | - | (44,280) | | Total Financing income (loss), net | (1,151) | 105,788 | (4,551) | 43,773 | [NOTE 8 – LOSS PER SHARE](index=16&type=section&id=NOTE%208%20%E2%80%93%20LOSS%20PER%20SHARE) | (US dollars) | Six-month period ended June 30, 2019 | Six-month period ended June 30, 2018 | Three-month period ended June 30, 2019 | Three-month period ended June 30, 2018 | | :------------- | :----------------------------------- | :----------------------------------- | :------------------------------------- | :------------------------------------- | | Loss for the period | (1,920,510) | (3,810,277) | (898,857) | (1,962,483) | | Loss for the period attributable to common stockholders | (1,920,510) | (4,872,001) | (898,857) | (2,515,615) | | Weighted average number of shares used in the computation of basic and diluted earnings per share | 147,256,546 | 7,290,123 | 149,776,875 | 7,555,761 | - All outstanding stock options and warrants were excluded from diluted net loss per share calculations for all reported periods as their effect was anti-dilutive[64](index=64&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.](index=17&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations.) Management discusses the company's financial condition and operational results, highlighting key developments, strategic priorities, and accounting policies [Overview](index=17&type=section&id=Overview) - The company is a medical device firm focused on developing and commercializing non-invasive glucose monitoring devices for diabetics, specifically the GlucoTrack® model DF-F[66](index=66&type=chunk) - The GlucoTrack® model DF-F uses ultrasound, electromagnetic, and thermal technologies for blood glucose measurements via an earlobe sensor, without drawing blood[66](index=66&type=chunk) - The device received initial CE Mark approval in June 2013, allowing marketing and sales in EU member countries, with subsequent approvals improving calibration, expanding user population, and increasing accuracy[67](index=67&type=chunk)[69](index=69&type=chunk) [Recent Developments](index=18&type=section&id=Recent%20Developments) - The company received approximately **$4.2 million** (net) from a private placement of Series D Units in the first six months of 2019, with Series D Warrants exercisable for **7,351,680 common shares** as of June 30, 2019[71](index=71&type=chunk) - Strategic priorities include enhancing GlucoTrack® usability and developing new products, focusing on wireless connectivity (GlucoTrack Link), digital health applications, self-personalization, and miniaturization[74](index=74&type=chunk)[75](index=75&type=chunk)[76](index=76&type=chunk)[77](index=77&type=chunk)[78](index=78&type=chunk) - The company issued a ten-year non-qualified stock option for **75,000 shares** to its President on January 1, 2019, with a **$4.50 exercise price** and three-year quarterly vesting[73](index=73&type=chunk) [Significant Accounting Policies](index=19&type=section&id=Significant%20Accounting%20Policies) - The consolidated financial statements adhere to U.S. GAAP, requiring management to make assumptions and estimates, particularly for the going concern assessment, stock-based compensation measurement, and inventory net realizable value[79](index=79&type=chunk)[80](index=80&type=chunk) [Going Concern Uncertainty](index=20&type=section&id=Going%20Concern%20Uncertainty) - The company's ability to continue as a going concern is in substantial doubt due to significant product development expenditures, lack of material revenues, accumulated deficit, and negative operating cash flows, necessitating external financing[81](index=81&type=chunk) [Recently Issued Accounting Pronouncements](index=20&type=section&id=Recently%20Issued%20Accounting%20Pronouncements) - The company adopted ASU 2018-07 (Compensation—Stock Compensation: Improvements to Nonemployee Share-Based Payment Accounting) in Q1 2019, aligning nonemployee share-based payment accounting with employee guidance, with no significant financial statement impact[82](index=82&type=chunk)[87](index=87&type=chunk)[89](index=89&type=chunk) - The company adopted ASU 2016-02 (Leases) on January 1, 2019, recognizing **$225 thousand** in ROU assets and liabilities, and elected practical expedients for short-term leases, which did not impact beginning retained earnings or prior year income/cash flow statements[90](index=90&type=chunk)[95](index=95&type=chunk)[97](index=97&type=chunk) [Results of Operations](index=23&type=section&id=Results%20of%20Operations) [Six Months ended June 30, 2019 compared to Six Months ended June 30, 2018](index=23&type=section&id=Six%20Months%20ended%20June%2030%2C%202019%20compared%20to%20Six%20Months%20ended%20June%2030%2C%202018) | Metric (US dollars) | 6 Months Ended June 30, 2019 | 6 Months Ended June 30, 2018 | Change (Absolute) | Change (%) | | :------------------ | :--------------------------- | :--------------------------- | :---------------- | :--------- | | Revenues | 136,080 | 43,488 | 92,592 | 212.9% | | R&D Expenses | 826,239 | 1,284,591 | (458,352) | (35.7%) | | S&M Expenses | 276,296 | 592,104 | (315,808) | (53.3%) | | G&A Expenses | 952,904 | 2,082,858 | (1,129,954) | (54.2%) | | Financing Income (Expense), net | (1,151) | 105,788 | (106,939) | (101.1%) | | Net Loss | (1,920,510) | (3,810,277) | 1,889,767 | (49.6%) | - Revenue increase was driven by orders shipped to two new markets in Q2 2019[102](index=102&type=chunk) - Decreases in R&D, S&M, and G&A expenses were primarily due to the completion of clinical trials, reduction in business development personnel, departure of the former CEO, and lower stock-based compensation[104](index=104&type=chunk)[106](index=106&type=chunk)[108](index=108&type=chunk) - The shift from financing income to expense was mainly due to the early adoption of ASU 2017-11, which reclassified warrants with down-round protection from liabilities to stockholders' deficit, ceasing quarterly fair value adjustments[110](index=110&type=chunk) [Three Months ended June 30, 2019 compared to three Months ended June 30, 2018](index=24&type=section&id=Three%20Months%20ended%20June%2030%2C%202019%20compared%20to%20three%20Months%20ended%20June%2030%2C%202018) | Metric (US dollars) | 3 Months Ended June 30, 2019 | 3 Months Ended June 30, 2018 | Change (Absolute) | Change (%) | | :------------------ | :--------------------------- | :--------------------------- | :---------------- | :--------- | | Revenues | 110,518 | 15,279 | 95,239 | 623.3% | | R&D Expenses | 401,122 | 691,894 | (290,772) | (42.0%) | | S&M Expenses | 150,953 | 283,467 | (132,514) | (46.7%) | | G&A Expenses | 452,749 | 1,046,174 | (593,425) | (56.7%) | | Financing Income (Expense), net | (4,551) | 43,773 | (48,324) | (110.4%) | | Net Loss | (898,857) | (1,962,483) | 1,063,626 | (54.2%) | - Revenue growth was attributed to shipments to two new markets in Q2 2019[111](index=111&type=chunk) - Decreases in R&D, S&M, and G&A expenses were primarily due to reduced salary and personnel-related costs, including stock-based compensation, and the departure of the former CEO[112](index=112&type=chunk)[114](index=114&type=chunk)[116](index=116&type=chunk) - The change from financing income to expense was mainly due to the early adoption of ASU 2017-11, which eliminated quarterly fair value adjustments for warrants with down-round protection[118](index=118&type=chunk) [Liquidity and Capital Resources](index=25&type=section&id=Liquidity%20and%20Capital%20Resources) - As of July 23, 2019, the company had approximately **$1.98 million** in cash on hand and expects its current cash and cash equivalents to sustain operations for **five months** from the report date[120](index=120&type=chunk) - The company raised approximately **$4.2 million** (net) from Series D Units issuance in 2019 but anticipates needing additional capital to fund operations beyond the current five-month period[120](index=120&type=chunk) - Net cash used in operating activities was **$2.04 million** for the six months ended June 30, 2019, a decrease from **$2.44 million** in the prior-year period, primarily reflecting a reduced net loss[123](index=123&type=chunk) - Net cash provided by financing activities increased to **$4.2 million** for the six months ended June 30, 2019, from **$2.41 million** in the prior-year period, mainly due to capital raised from Series D Units[125](index=125&type=chunk) [Off-Balance Sheet Arrangements](index=26&type=section&id=Off-Balance%20Sheet%20Arrangements) - As of June 30, 2019, the company had no off-balance sheet arrangements as defined by Regulation S-K[126](index=126&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk.](index=26&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk.) Market risk disclosures are not required as the company qualifies as a smaller reporting company - Quantitative and qualitative disclosures about market risk are not required for the company as it is a smaller reporting company[127](index=127&type=chunk) [Item 4. Controls and Procedures.](index=27&type=section&id=Item%204.%20Controls%20and%20Procedures.) This section evaluates the company's disclosure controls and procedures, reporting on changes in internal control over financial reporting [Evaluation of Disclosure Controls and Procedures](index=27&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) - Management, including the President and Interim Chief Financial Officer, concluded that the company's disclosure controls and procedures were effective at a reasonable assurance level as of June 30, 2019[129](index=129&type=chunk) [Changes in Internal Control over Financial Reporting](index=27&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) - There were no material changes in the company's internal control over financial reporting during the most recent fiscal quarter[130](index=130&type=chunk) [PART II - OTHER INFORMATION](index=28&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=28&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details unregistered equity sales, including Series D Units private placement, placement agent compensation, and stock option issuance [Offering of Series D Units](index=28&type=section&id=Offering%20of%20Series%20D%20Units) - During the six-month period ending June 30, 2019, the company received aggregate gross proceeds of **$4.87 million** from a private placement of Series D Units to accredited investors[133](index=133&type=chunk) - The final closing on June 14, 2019, involved the issuance of **13,972,100 units** at **$0.258 per unit**, each comprising one common share and fractional five-year warrants (Series D-1, D-2, D-3) with exercise prices of **$1.80, $3.60, and $5.40 per share**, respectively[134](index=134&type=chunk) [Placement Agent Compensation](index=28&type=section&id=Placement%20Agent%20Compensation) - The company paid its placement agent a cash commission of **10%** of the aggregate sales price of Series D Units and a **3%** non-accountable expense allowance[136](index=136&type=chunk) - Additionally, the placement agent received warrants to purchase common stock equal to **10%** of the aggregate shares sold and **10%** of the total warrants issued to purchasers, with cashless exercise and full ratchet anti-dilution protection[136](index=136&type=chunk) [Issuance of Non-Qualified Stock Options to Employees](index=28&type=section&id=Issuance%20of%20Non-Qualified%20Stock%20Options%20to%20Employees) - On January 1, 2019, a ten-year non-qualified stock option for **75,000 shares** of Common Stock at an exercise price of **$4.50 per share** was issued to the President and Chief Operating Officer, with three-year quarterly vesting[137](index=137&type=chunk) [Item 6. Exhibits.](index=29&type=section&id=Item%206.%20Exhibits.) This section lists all exhibits filed with the Form 10-Q, including organizational documents, certifications, and XBRL data - The exhibits include the Merger Agreement, Certificate of Incorporation, Bylaws, CEO and CFO certifications (Sarbanes-Oxley Act Sections 302 and 906), and various XBRL interactive data files[138](index=138&type=chunk)[139](index=139&type=chunk) [SIGNATURES](index=30&type=section&id=SIGNATURES) This section contains the required signatures from authorized officers, affirming the report's submission - The report was signed on August 14, 2019, by David Podwalski, Director, President and Chief Operating Officer (Principal Executive Officer), and Jolie Kahn, Interim Chief Financial Officer (Principal Accounting Officer)[141](index=141&type=chunk)[142](index=142&type=chunk)

Financial Performance - Revenues for the three-month period ended March 31, 2019, were $25,562, a decrease from $28,209 in the prior-year period, indicating a decline of approximately 5.8%[101] - Research and development expenses decreased to $425,117 for the three-month period ended March 31, 2019, from $592,697 in the prior-year period, a reduction of approximately 28.3%[102] - Selling and marketing expenses were $125,343 for the three-month period ended March 31, 2019, down from $308,637 in the prior-year period, reflecting a decrease of approximately 59.3%[104] - General and administrative expenses decreased to $500,155 for the three-month period ended March 31, 2019, compared to $1,036,684 in the prior-year period, a decline of approximately 51.7%[106] - Net loss for the three-month period ended March 31, 2019, was $1,021,653, down from $1,847,794 in the prior-year period, representing a decrease of approximately 44.7%[109] - Net cash used in operating activities was $821,023 for the three-month period ended March 31, 2019, compared to $1,426,868 in the prior-year period, a reduction of approximately 42.4%[113] - Net cash provided by financing activities was $756,111 for the three-month period ended March 31, 2019, down from $1,697,700 in the prior-year period, a decrease of approximately 55.5%[115] - As of March 31, 2019, cash on hand was approximately $31,000, indicating a critical liquidity position[110] Research and Development - The company is focusing on four strategic pillars for R&D: Wireless Connectivity, Digital Health Applications, Self-Personalization, and Miniaturization[77][78][79][80] - The wireless module developed will enable data transmission to a cloud-based server, enhancing user interaction with glucose data[77] - The development of self-calibration for the GlucoTrack® DF-F aims to reduce costs for distributors and improve user experience[79] - The next generation of GlucoTrack® is in design, with expectations for improved user acceptance and lower manufacturing costs[80] - The company expects research and development expenses to increase in 2019 and beyond, primarily due to hiring additional personnel and developing its product line[103] Product Development and Approval - The GlucoTrack® model DF-F glucose monitoring device has received CE Mark approval, allowing it to be marketed in EU member countries[70] - Improvements to the GlucoTrack® model DF-F have reduced the initial calibration process from approximately 2.5 hours to about 30 minutes, expanding the potential user market to include pre-diabetics[71] Capital and Financing - The company reported net proceeds of approximately $756 thousand from the issuance and sale of 200,652 Series D Units in a private placement transaction during Q1 2019[73] - The company issued a ten-year non-qualified stock option for the purchase of 75,000 shares at an exercise price of $4.50 per share[76] - The company anticipates that its income from operations will not be sufficient to sustain operations in the next 12 months, necessitating the need to raise additional capital[110] Accounting and Compliance - The adoption of ASU 2018-07 did not significantly impact the company's consolidated financial statements[90] - The company has not generated material revenues and has incurred a substantial accumulated deficit, raising concerns about its ability to continue as a going concern[83]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2018 [ ] 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 INTEGRITY APPLICATIONS, INC. (Exact name of registrant as specified in its ...