GlucoTrack(GCTK) - 2021 Q1 - Quarterly Report

PART I - FINANCIAL INFORMATION Item 1. Financial Statements This section presents the unaudited condensed consolidated financial statements for the three-month period ended March 31, 2021, including the balance sheet, statement of operations, statement of changes in stockholders' equity, and statement of cash flows, reporting a net loss of $904 thousand and $8.9 million in cash and cash equivalents Condensed Consolidated Balance Sheets Total assets decreased to $9.6 million from $10.6 million at year-end 2020, primarily due to reduced cash and cash equivalents, with total liabilities falling to $1.5 million and stockholders' equity to $8.1 million Condensed Consolidated Balance Sheet Highlights (in thousands of US dollars) | Account | March 31, 2021 (Unaudited) | December 31, 2020 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | 8,887 | 9,823 | | Total current assets | 9,280 | 10,229 | | TOTAL ASSETS | 9,628 | 10,606 | | Liabilities & Equity | | | | Total Current Liabilities | 1,248 | 1,345 | | Total Liabilities | 1,479 | 1,624 | | Total Stockholders' equity | 8,149 | 8,982 | | TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | 9,628 | 10,606 | Condensed Consolidated Statements of Operations and Comprehensive Loss The company reported no revenue and a net loss of $904 thousand for the three months ended March 31, 2021, an increase from $734 thousand in 2020, primarily due to higher general and administrative expenses Condensed Consolidated Statements of Operations (in thousands of US dollars) | Account | Three-month period ended March 31, 2021 | Three-month period ended March 31, 2020 | | :--- | :--- | :--- | | Research and development expenses | 309 | 413 | | Selling and Marketing | 23 | 91 | | General and administrative expenses | 564 | 252 | | Total operating expenses | 896 | 756 | | Operating loss | 896 | 756 | | Loss for the period | 904 | 734 | | Comprehensive Loss for the period | 882 | 715 | | Loss per share (Basic and Diluted) | (0.00) | (0.00) | Condensed Consolidated Statement of Changes in Stockholders' Equity Stockholders' equity decreased from $9.0 million to $8.1 million as of March 31, 2021, primarily due to the $904 thousand net loss incurred during the quarter, partially offset by other comprehensive income and stock-based compensation Changes in Stockholders' Equity for Q1 2021 (in thousands of US dollars) | Description | Amount | | :--- | :--- | | Balance as of January 1, 2021 | 8,982 | | Loss for the period | (904) | | Other comprehensive income | 22 | | Stock-based compensation | 49 | | Balance as of March 31, 2021 | 8,149 | Condensed Consolidated Statements of Cash Flows Net cash used in operating activities was $933 thousand for Q1 2021, with no investing or financing activities, contrasting with $13.0 million in financing cash inflow in Q1 2020, leading to a decrease in cash, cash equivalents, and restricted cash from $9.9 million to $9.0 million Condensed Consolidated Statements of Cash Flows (in thousands of US dollars) | Cash Flow Activity | Three-month period ended March 31, 2021 | Three-month period ended March 31, 2020 | | :--- | :--- | :--- | | Net cash used in operating activities | (933) | (989) | | Net cash used in investing activities | - | (15) | | Net cash provided by financing activities | - | 13,009 | | Change in cash, cash equivalents, and restricted cash | (932) | 12,002 | | Cash, cash equivalents, and restricted cash at end of the period | 8,953 | 12,478 | Notes to Condensed Consolidated Financial Statements The notes confirm the company's ability to operate as a going concern for at least 12 months with $8.9 million in cash, detail its focus on non-invasive glucose monitoring device development, and outline significant accounting policies and operating lease liabilities - The company expects its cash and cash equivalents of approximately $8.9 million as of March 31, 2021, to be sufficient to meet its capital needs for at least 12 months, allowing it to operate as a going concern[24] - The company's subsidiary, Integrity Israel, focuses on the design, development, and commercialization of non-invasive glucose monitoring devices for people with diabetes and prediabetes[25] - As of March 31, 2021, total future operating lease payments amount to $163 thousand, with a present value of $149 thousand[37] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's non-invasive glucose monitor, GlucoTrack®, including CE Mark approval and self-calibration, reporting no revenue for Q1 2021, a net loss of $904 thousand (up from $734 thousand), and $8.9 million in cash, deemed sufficient for over a year Overview The company, a medical device firm, focuses on its non-invasive glucose monitor, GlucoTrack®, with CE Mark approval and recent self-calibration enhancements, while developing companion apps and a cloud-based platform for future data-driven revenue streams - The company's primary product is the GlucoTrack® model DF-F, a non-invasive blood glucose monitor that uses ultrasound, electromagnetic, and thermal technologies via an earlobe clip[40] - Key product enhancements have received CE Mark approval, simplifying the calibration process from 3 hours monthly to 30 minutes every six months, which can now be performed by the user at home[43][44][45] - Future strategy includes developing companion applications and a cloud-based solution to provide personalized diabetes management tools and monetize de-identified user data[41] Results of Operations For Q1 2021, the company reported no revenue, with total operating expenses increasing to $896 thousand from $756 thousand due to a rise in general and administrative expenses from $252 thousand to $564 thousand, resulting in a widened net loss of $904 thousand from $734 thousand year-over-year Comparison of Operating Results (in thousands of US dollars) | Account | Q1 2021 | Q1 2020 | | :--- | :--- | :--- | | Revenues | 0 | 0 | | Research and development expenses | 309 | 413 | | Selling and marketing expenses | 23 | 91 | | General and administrative expenses | 564 | 252 | | Net Loss | 904 | 734 | - The increase in general and administrative expenses is primarily attributable to the hiring of new and augmented personnel to advance the company's business agenda[58] Liquidity and Capital Resources As of March 31, 2021, the company held approximately $8.9 million in cash from a $15 million private placement, which management deems sufficient for over one year of operations, with net cash used in operating activities at $933 thousand for the quarter - The company had cash on hand of approximately $8.9 million as of March 31, 2021[62] - Management believes current cash and cash equivalents will enable operations for a period exceeding one year from the report date[62] Net Cash Flow Summary (in thousands of US dollars) | Cash Flow Activity | Q1 2021 | Q1 2020 | | :--- | :--- | :--- | | Net Cash Used in Operating Activities | (933) | (989) | | Net Cash Used in Investing Activities | 0 | (15) | | Net Cash Provided by Financing Activities | 0 | 13,009 | Item 3. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, the company is not required to provide quantitative and qualitative disclosures about market risk - Disclosure is not required for smaller reporting companies[67] Item 4. Controls and Procedures Management concluded that the company's disclosure controls and procedures were effective as of March 31, 2021, with no material changes in internal control over financial reporting during the quarter - Based on an evaluation as of March 31, 2021, the President and Interim CFO concluded that the company's disclosure controls and procedures were effective at the reasonable assurance level[68] - No changes occurred in the company's internal control over financial reporting during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, these controls[69] PART II - OTHER INFORMATION Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section discloses a private placement on February 14, 2020, involving the sale of 37,500,000 shares for $15 million in gross proceeds, with the placement agent receiving $1.95 million in fees and a warrant to purchase 3,750,000 shares - On February 14, 2020, the company entered into a Securities Purchase Agreement with an accredited investor, selling 37,500,000 shares for a gross purchase price of $15,000 thousand[71] - In Q1 2020, the placement agent, Andrew Garrett, was paid $1,950 thousand in fees and issued a warrant to purchase 3,750,000 shares[72] Item 6. Exhibits This section lists exhibits filed with the Form 10-Q report, including certifications from the Principal Executive Officer and Financial Officer under Sarbanes-Oxley Act Sections 302 and 906, and various XBRL data files - The report includes certifications from the Principal Executive and Financial Officer pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act[73] - XBRL Instance, Schema, Calculation, Label, Presentation, and Definition documents are included as exhibits[73]