Glucotrack, Inc. — Q1 2024 Form 10-Q
Reporting period: Three months ended March 31, 2024. Glucotrack is a pre-revenue medical-device developer focused on an implantable continuous blood glucose monitor (CBGM) for people with Type 1 diabetes and insulin-dependent Type 2 diabetes.
Financial results and position
Amounts below are in U.S. dollars; financial statement figures are in thousands unless otherwise noted.
| Metric | Q1 2024 | Q1 2023 / comparison |
|---|---|---|
| Revenue | None reported | None reported |
| Research and development expense | $2,148 | $642 |
| General and administrative expense | $733 | $642 |
| Selling and marketing expense | $70 | $0 |
| Total operating expenses / operating loss | $2,951 | $1,284 |
| Net loss | $2,927 | $1,286 |
| Basic and diluted loss per share | $0.12 loss | $0.08 loss |
| Cash used in operating activities | $2,942 | $1,313 |
| Cash used in investing activities | $59 | $0 |
There is no revenue or gross margin to assess. R&D costs rose primarily because of accrued consulting fees; G&A increased due to accrued professional fees. Net finance income was $24, compared with $2 of finance expense in Q1 2023, primarily reflecting interest income.
At March 31, 2024, cash and cash equivalents were $1,497, down from $4,492 at December 31, 2023; restricted cash was $10. Total assets were $2,106 and total liabilities were $1,730, including $195 in loans from stockholders and $77 in operating lease liabilities. Current assets of $1,937 exceeded current liabilities of $1,482, but the company states available cash is insufficient for its planned needs over the next 12 months. Accumulated deficit was $112,780. The company reported no off-balance-sheet arrangements.
Material changes and capital activity
- Net loss increased to $2.927 million from $1.286 million, mainly as R&D expense more than tripled.
- Operating cash use increased to $2.942 million from $1.313 million.
- In January, 1,976,470 pre-funded warrants were exercised. In February, 4,381,953 warrants were exchanged for 3,593,203 common shares. These transactions increased shares outstanding; the filing reports 26,756,369 shares outstanding at quarter-end, versus 20,892,193 at year-end.
- In April 2024, the company issued 396,825 shares at $1.26 per share in a private placement for $500,000. The filing describes the proceeds as net proceeds.
Outlook, risks and unusual items
- Going concern: Management says substantial doubt exists about the company’s ability to continue as a going concern. It expects ongoing losses and negative operating cash flows and depends on external financing. There is no assurance additional financing will be available on acceptable terms, or at all; without it, the company may delay, reduce or eliminate trials or other operations.
- Development plans: Management reported a feasibility study indicating a minimum two-year implant life was highly probable with the current sensor design, and an initial animal study showing a simple implant procedure and good functionality. It planned to begin a long-term animal trial and commercial-device development in late Q4 2024, and targeted a late-2024 regulatory submission for a first-in-human study. These are forward-looking plans, not achieved milestones.
- Product strategy: The company has discontinued further development and commercialization of its earlier non-invasive GlucoTrack product and withdrawn its CE Mark, focusing instead on the implantable CBGM. Management says failure of this strategy could lead to further strategic changes, including possible dissolution and liquidation.
- Nasdaq listing: The company had until May 20, 2024 to regain compliance with the $1.00 minimum-bid-price requirement. Stockholders approved a reverse-split authorization at a ratio between 1-for-5 and 1-for-30, and the Board approved it on April 30. The split was not yet effective as of the May 15 filing date; delisting remained a risk.
- Controls: Management concluded disclosure controls and procedures were ineffective at March 31, citing material weaknesses involving insufficient accounting personnel, segregation of duties, and company-wide controls, including IT general controls. Remediation plans include additional hires and external reporting consultants; effectiveness is not assured.
- Commitments and contingencies: Future product sales may be subject to royalties on a prior grant; the remaining contingent obligation was approximately $73, excluding interest, with no expiration date. Additional shares may be due to the CEO under an IP purchase agreement if future milestones are achieved; the remaining milestones were not considered probable at quarter-end.
- Other subsequent event: The April private placement provided additional capital, but the filing does not state that it resolves the going-concern uncertainty.
Important facts for investors to verify
- Current cash runway, actual spending versus development plans, and terms and availability of additional financing.
- Progress and timing of the long-term animal trial, commercial-device development, regulatory submission and first-in-human study.
- Whether the company regained Nasdaq bid-price compliance by the stated deadline, whether the reverse split became effective, and current listing status.
- Progress in remediating internal-control weaknesses and whether disclosure controls are later deemed effective.
- Potential dilution from future financings, outstanding equity awards or warrants, and any shares issuable under the CEO IP milestone agreement.