Business context and reporting period
The supplied filing is Integrity Applications, Inc.’s Form 10-K for the fiscal year ended December 31, 2020—not a filing under the name Glucotrack, Inc. The company develops non-invasive glucose monitors and operates primarily through its Israeli subsidiary. GlucoTrack 1.0 has CE Mark authorization in certain markets; GlucoTrack 2.0 was under development. This is an annual report, not a standalone fourth-quarter report.
Financial results and liquidity
Amounts below are in thousands of U.S. dollars unless noted. The audited financial statements report:
| Metric | 2020 | 2019 |
|---|---|---|
| Revenue | $0 | $208 |
| Research and development | $1,532 | $1,606 |
| Selling and marketing | $415 | $573 |
| General and administrative | $1,185 | $1,535 |
| Operating loss | $(3,132) | $(3,506) |
| Net loss | $(2,696) | $(3,516) |
| Cash used in operating activities | $(3,501) | $(3,899) |
Cash and cash equivalents were $9,823 at year-end, compared with $419 in 2019; restricted cash was an additional $62. Current assets were $10,229 and current liabilities were $1,345. Total liabilities were $1,624, including $197 of long-term stockholder loans and $166 of operating lease liabilities. The company reported a $93,399 accumulated deficit and $8,982 of stockholders’ equity. No material recurring revenue source or commercial-scale manufacturing facility was reported.
Financing activities provided $13,009 in 2020, primarily from issuing 37.5 million common shares in February. The reported gross purchase price was $15 million; the filing also describes approximately $2 million in cash placement-related expenses. Management stated that available cash was expected to fund operations for significantly more than one year from the report date, while also stating that operating income would not sustain operations over the next 12 months.
Changes versus the prior year
- Revenue fell from $208 to zero.
- Operating cash use improved by $398, while audited net loss improved by $820.
- R&D, selling and marketing, and G&A expenses declined. The company attributed lower selling and marketing costs to reduced European business-development spending pending reimbursement progress, and lower G&A to position eliminations in Israel.
- Year-end cash rose substantially following the 2020 equity financing; shares outstanding increased from 161.9 million to 200.8 million.
Outlook, risks, contingencies and unusual items
Management expected R&D and selling and marketing spending to increase in 2021 and beyond, subject to available resources. Its strategy shifted toward accelerating GlucoTrack 2.0, described as a wireless, rechargeable earclip paired with a smartphone, and planning U.S. clinical trials and market entry. U.S. marketing clearance had not been obtained; the FDA pathway remained uncertain. European reimbursement progress was described as important to commercial prospects, and the company said it was working with European partners on a GlucoTrack 2.0 distribution roadmap.
Key risks include continued losses and dependence on external financing; development, clinical-trial and regulatory uncertainty; reimbursement and market-acceptance risk; reliance on third-party manufacturers and distributors; competition; COVID-19 disruption; and limited trading liquidity. The company reported no material litigation, no line of credit, and no off-balance-sheet arrangements. Potential future royalties to Israel’s Office of the Chief Scientist were approximately $43, excluding interest, payable on qualifying product sales. Stockholder loans of $197 are repayable under terms linked to future profitability and sales. A related-party placement agent controlled by a director received approximately $2 million in cash placement fees and warrants in 2020.
The auditor issued an unqualified opinion on the financial statements. Management reported disclosure controls and internal control over financial reporting were effective; the auditor did not attest to internal-control effectiveness.
Important facts for investors to verify
- Confirm the issuer identity: the filing names Integrity Applications, Inc., despite the request metadata naming Glucotrack, Inc.
- Reconcile the loss figures: MD&A states 2020 net loss of $3,132, while the audited statements report net loss of $2,696 and operating loss of $3,132. The audited statements also show $338 of other income and $98 of net financing income.
- Confirm the cash runway assumptions and planned funding needs, given recurring operating cash outflows and no material recurring revenue.
- Track GlucoTrack 2.0 development, FDA pathway and trial plans, CE/regulatory status, and progress toward reimbursement and distribution.
- Review dilution and placement costs: the 2020 offering, placement-agent warrants, and outstanding options and warrants may affect per-share value.