Glucotrack, Inc. — Q3 2022 Form 10-Q
Reporting period: Quarter and nine months ended September 30, 2022. Unaudited financial statements; amounts below are in thousands of U.S. dollars unless stated otherwise. Glucotrack develops glucose-monitoring technologies and is focused on GlucoTrack 2.0 and an implantable glucose-management technology. The filing says the company had not yet generated significant revenue from operations.
Financial performance and position
| Metric | Q3 2022 | Q3 2021 | Nine months 2022 | Nine months 2021 |
|---|---|---|---|---|
| Research and development expense | $434 | $447 | $1,363 | $1,077 |
| Marketing expense | $0 | $113 | $0 | $136 |
| General and administrative expense | $495 | $207 | $1,782 | $1,323 |
| Total operating expenses / operating loss | $929 / $(929) | $767 / $(767) | $3,145 / $(3,145) | $2,536 / $(2,536) |
| Net loss | $(928) | $(804) | $(3,148) | $(2,561) |
| Basic and diluted loss per share | $(0.06) | $(0.05) | $(0.20) | $(0.17) |
- Revenue and margins: The filing provides no clear revenue figure; it states that the company had not generated significant operating revenue. Gross profit and operating margins are not reported.
- Cash flow: Operating cash use was $2,789 for the first nine months of 2022, versus $2,796 in 2021. Investing cash use was $4, versus $3 provided in 2021. Cash, cash equivalents and restricted cash declined by $2,833 to $3,280.
- Liquidity: September 30 cash and cash equivalents were $3,241; current assets were $3,428 and current liabilities $965. Total assets were $3,511 and stockholders’ equity $2,355.
- Debt and obligations: Loans from stockholders were $191, down from $210 at year-end 2021. Total liabilities were $1,156. Operating lease liabilities were reported as zero at September 30, compared with $40 combined current and non-current at year-end.
- Accumulated deficit: $100,614 at September 30, 2022, compared with $97,466 at December 31, 2021.
Changes versus prior periods
- Nine-month net loss increased to $3,148 from $2,561, primarily reflecting higher operating expenses. Q3 net loss increased to $928 from $804.
- Nine-month R&D expense rose 27% to $1,363, attributed primarily to development and validation of the next-generation product. Q3 R&D expense was slightly lower year over year.
- G&A expense rose to $1,782 for the nine months and $495 for Q3. Management attributed the increases to expanded personnel and costs associated with Nasdaq listing.
- Marketing expense was zero in 2022 periods presented, as the company paused or reduced marketing pending completion of GlucoTrack 2.0 development.
Outlook, risks and other notable matters
- Going concern: Management states that losses, negative operating cash flow and dependence on external financing raise substantial doubt about the company’s ability to continue as a going concern. It plans to seek equity and/or debt financing, including under an effective shelf registration statement permitting up to $100 million of securities. There is no assurance financing will be available; the statements include no adjustments for the uncertainty.
- Product development: Management reported completion of lab testing of the GlucoTrack 2.0 clinical prototype and favorable preliminary in-house testing, but identified clip-related human-factors issues requiring further work before the planned first-in-human study in Israel. Study timing and results are uncertain; later U.S. studies are intended to support eventual FDA clearance.
- Spending outlook: Management expects R&D expense to increase as it hires and develops and validates products, but may adjust spending according to available resources and business needs. No quantified financial guidance was provided.
- Other development: In October 2022, after quarter-end, the company announced acquisition of certain IP related to a long-term implantable continuous glucose monitor and its intent to develop the technology. Operations and product development had transitioned to the United States by the end of Q3, with some accounting and clinical-trial support remaining in Israel.
- Disclosure controls: Management concluded disclosure controls and procedures were ineffective as of September 30, 2022 due to material weaknesses in internal control over financial reporting. No material change in internal control was reported during the quarter.
- The company reported no off-balance-sheet arrangements and no unregistered securities sales in the period.
Important facts for investors to verify
- Available cash, actual cash burn, and financing needs and availability, including any use of the $100 million shelf registration.
- Progress and timing of GlucoTrack 2.0 human studies, resolution of device-consistency issues, and regulatory pathway.
- Whether product development, including the newly acquired implantable-monitor IP, can be funded without materially diluting shareholders.
- Remediation of the disclosed material weaknesses and improvement in disclosure controls.
- Share-count and dilution exposure: 15,476,665 common shares were outstanding as of November 14, 2022; 6,562,279 options and warrants were excluded from nine-month diluted loss per share as anti-dilutive.