Integrity Applications, Inc. (Form: S-1/A, Received: 10/07/2011 10:56:54)

BUSINESS

Overview

On July 15, 2010, Integrity U.S., Integrity Israel, and Integrity Acquisition completed a reorganization, pursuant to which Integrity Acquisition merged with and into Integrity Israel and all of the stockholders and option holders of Integrity Israel became entitled to receive shares and options in us, in exchange for their shares and options in Integrity Israel. Following the reorganization, the former equity holders of Integrity Israel were entitled to the same proportional ownership in us as they had in Integrity Israel prior to the reorganization. As a result of the reorganization, Integrity Israel became our wholly-owned subsidiary.

On April 29, 2010, Integrity Israel received a tax ruling from the Israeli Tax Authorities pursuant to which the former stockholders and options holders of Integrity Israel will be exempt from tax liability with respect to the reorganization until they sell their holdings in our Company, provided that they deposit all their shares and options with a trustee for a period of two years from the issuance of shares in connection with the reorganization, give their written consent to the tax ruling and satisfy additional conditions detailed in the ruling. As a result, none of such stockholders will be entitled to sell any of their shares of common stock for such two year period. Approximately 82% of our stockholders at the time of the reorganization (holding 3,280,000 of 3,999,998 shares then outstanding) complied with the ruling.

We are a development stage medical device company focused on the design, development and commercialization of non-invasive glucose monitoring devices for use by persons suffering from diabetes. Integrity Israel was founded in 2001 with a mission to develop, produce and market non-invasive glucose monitors for home use by diabetics. We have developed a non-invasive blood glucose monitor, the GlucoTrack DF-F, which is designed to help people with diabetes obtain blood glucose level readings without the pain, inconvenience, cost and difficulty of conventional (invasive) spot finger stick devices. The GlucoTrack DF-F utilizes a patented combination of ultrasound, electromagnetic and thermal technologies to obtain blood glucose measurements in less than one minute via a small sensor that is clipped onto one’s earlobe and connected to a small, handheld control and display unit, all without drawing blood. Integrity Israel has conducted pre-clinical trials involving over 5,000 readings from approximately 350 patients over the last five years. Clinical data collected during 2009 at the Soroka University Medical Center in Be’er Sheva, Israel indicate a positive correlation between GlucoTrack DF-F readings and those obtained from conventional invasive devices. More specifically, a set of pre-clinical trials conducted on 89 patients of various weights, age, diabetes type and gender involved 1,772 measurements, of which 96% were within the clinically acceptable zones of the CEG, (zones A and B). Similarly, an at home study of four participants resulted in approximately 90% of the measurements within clinically acceptable zones A and B of the CEG. Measurements are clinically acceptable, as compared to a referenced invasive device, when the variance, if any, between the devices would have little or no effect on the patients. These pre-clinical trials involved small patient populations. Because of the small sample size, the results of these pre-clinical trials may not be indicative of future results. Analyses from the at home study show that there are a few parameters that reduce accuracy, such as the learning curve, the use of a home use device as a reference and failure to properly follow instructions for use, including use of the reference (invasive) device. We have already made some modifications to the GlucoTrack DF-F to limit the effect of these parameters, which we believe will improve the device’s results. Further modifications are in process. We believe that the results of the home study show that with some modifications to the GlucoTrack DF-F, we will be able to improve the accuracy and reliability measurements of glucose levels in the home and home-like environments. We expect to begin the performance and safety stage of formal clinical trials in Israel and Europe by the second quarter of 2012 and, expect to begin clinical trials in the United States by late 2012, if our clinical trial protocol is approved by the FDA. The GlucoTrack DF-F has not yet been approved for commercial sale in the United States, the European Union or any other jurisdiction. See “Business - Government Regulation - Regulation of the Design, Manufacture and Distribution of Medical Devices” below for a discussion of the approval process for commercial sale. There can be no assurance that approval for commercial sale in any jurisdiction will be obtained.

To our knowledge, there are currently no devices approved for use in either the United States or the European Union for spot or continuous non-invasive blood glucose measurement.

We were incorporated in Delaware and Integrity Acquisition was incorporated in Israel, in May 2010. Integrity Israel was incorporated on September 30, 2001. Integrity Israel recently conducted the reorganization pursuant to which, through a reverse triangular merger, Integrity Israel’s stockholders received newly issued shares of our common stock for their shares in Integrity Israel. We operate primarily through Integrity Israel. Our principal offices are located at 102 Ha’Avoda St., Ashkelon, Israel 78100 and our telephone number is 972-8-675-7878. There is no relationship between Integrity Applications, Inc., the registrant under the registration statement of which this prospectus is a part, and Integrity Applications, Incorporated, the engineering and software services company based in Chantilly, Virginia.

Our website address is http://www.integrity-app.com; the reference to such website address does not constitute incorporation by reference of the information contained on the website and such information should not be considered part of this prospectus.

Market Opportunity

Diabetes

Diabetes is a chronic, life-threatening disease for which there is no known cure. Diabetes is caused by the body’s inability to produce or effectively utilize the hormone insulin. This inability prevents the body from adequately regulating blood glucose levels. Glucose, the primary source of energy for cells, must be maintained at certain concentrations in the blood in order to permit optimal cell function and health. Normally, the pancreas provides control of blood glucose levels by secreting the hormone insulin to decrease blood glucose levels when concentrations are too high. In people with diabetes, blood glucose levels fluctuate between very high levels, a condition known as hyperglycemia, and very low levels, a condition called hypoglycemia. Hyperglycemia can lead to serious long-term complications, such as blindness, kidney disease, nervous system disease, amputations, stroke and cardiovascular disease. Hypoglycemia can lead to confusion, loss of consciousness or death.

Diabetes is typically classified into two major groups: Type 1 and Type 2. Type 1 diabetes is characterized by the body’s inability to produce insulin, resulting from destruction of the insulin producing cells of the pancreas. Individuals with Type 1 diabetes must rely on frequent insulin injections in order to regulate and maintain blood glucose levels. Type 1 diabetes is frequently diagnosed during childhood or adolescence, although disease onset can occur at any age. Type 2 diabetes, the more common form of diabetes, is characterized by the body’s inability to either properly utilize insulin or produce enough insulin. Type 2 diabetes is associated with older age, obesity, family history of diabetes, history of gestational diabetes, impaired glucose metabolism, physical inactivity and race or ethnicity. Depending on the severity of Type 2 diabetes, individuals may require diet and nutrition management, exercise, oral medications or insulin injections to regulate blood glucose levels.

According to the Diabetes Atlas (Fourth Edition) published by the International Diabetes Federation in 2009, an estimated 285 million adults aged from 20 to 79 worldwide, or 6.4% of the world’s adult population, will suffer from diabetes in 2010, not including those persons who suffer from IGT or Gestational Diabetes. The International Diabetes Federation estimates that this number will grow to approximately 438 million adults worldwide, or 7.7% of the world’s adult population, in 2030, and that by 2030 the number of adults suffering from diabetes will have increased by 98.1% in Africa, 93.9% in the Middle East and North Africa, 72.1% in Southeast Asia, 65.1% in South and Central America, 47.0% in the Western Pacific, 42.4% in North America and the Caribbean and 20.0% in Europe, over such regions’ respective 2010 levels. According to a statement made by the President of the International Diabetes Federation at a press briefing at the European Association for the Study of Diabetes in September 2011, an estimated 366 million people currently suffer from diabetes, and approximately 4.6 million deaths are attributable to diabetes annually.

We believe that individuals with IGT generally do not take glucose level measurements because they do not find the pain and cost of monitoring to outweigh the risk they take by not monitoring their glucose level. Having knowledge about the glucose level can postpone, or even, to some extent prevent the development of diabetes. A simple to use, painless device may encourage this population to monitor themselves more frequently. We believe that a device like GlucoTrack (not necessarily the DF-F) may be attractive to the IGT community, given that the device is expected to be less expensive than conventional (invasive) spot finger stick devices, easy to use and painless.

The CDC, in its 2011 National Diabetes Fact Sheet, estimated that in the United States alone, more than 25.8 million people, or 8.3% of the U.S. population, suffered from diabetes in 2010. According to the National Diabetes Education Program, approximately 5-10% of the diabetes population had Type 1 diabetes at the time of measurement.

According to the National Diabetes Education Program, about 75% of all newly diagnosed cases of Type 1 diabetes in the United States occur in juveniles younger than 18 years of age. In addition, according to the National Diabetes Education Program, Type 2 diabetes is occurring with increasing frequency in young people. The increase in prevalence is related to an increase in obesity amongst children. According to the 2007-2008 National Health and Examination Survey, approximately 16% of children and teens were overweight, about double the number two decades before.

The CDC, in its 2011 National Diabetes Fact Sheet, estimates that the direct medical costs and indirect expenditures attributable to diabetes in the United States were $174 billion in 2007, an increase of $42 billion since 2002. Of this amount, the CDC estimates that approximately $116 billion were direct medical costs. The International Diabetes Federation estimates that worldwide healthcare expenditures to treat and prevent diabetes and its complications will total at least $376 billion in 2010, $198 billion in the United States alone, and $490 billion worldwide in 2030. According to a May 2010 special report by Pharmalive.com, a leading publisher of market research in medical markets, the market for self-monitoring glucose tests is estimated to be approximately $8 billion in 2010.

Glucose Monitoring

Blood glucose levels can be affected by many factors, including the carbohydrate and fat content of meals, exercise, stress, illness or impending illness, hormonal releases, variability in insulin absorption and changes in the effects of insulin in the body. Given the many factors that affect blood glucose levels, maintaining glucose within a normal range can be difficult. Diabetics generally manage their blood glucose levels by administering insulin or ingesting carbohydrates throughout the day to maintain blood glucose within normal ranges. Normal ranges in diabetics vary from person to person. In order to maintain blood glucose levels within normal ranges, diabetics must first measure their blood glucose levels so that they can make the proper therapeutic adjustments. As adjustments are made, additional blood glucose measurements may be necessary to gauge the individual’s response to the adjustments. More frequent testing of blood glucose levels provides patients with information that can be used to better understand and manage their diabetes. Testing of blood glucose levels is usually done before meals, after meals and before going to sleep. Diabetics who take insulin usually need to test more often than those who do not take insulin.

The outcome of clinical data supports the recommendation that frequent monitoring of blood glucose levels is an important component of effective diabetes management. The Diabetes Control and Complications Trial, consisting of patients with Type 1 diabetes, and the 1998 UK Prospective Diabetes Study, consisting of patients with Type 2 diabetes, demonstrated that patients who intensely managed blood glucose levels delayed the onset and slowed the progression of diabetes-related complications. In the Diabetes Control and Complications Trial, a major component of intensive management was monitoring blood glucose levels at least four times per day using conventional spot finger stick blood glucose meters. The Diabetes Control and Complications Trial demonstrated that intensive management reduced the risk of complications by 76% for eye disease, 60% for nerve disease and 50% for kidney disease. However, the Diabetes Control and Complications Trial also found that intensive management led to a two- to three-fold increase in the frequency of hypoglycemic events. In the December 2005 edition of the New England Journal of Medicine, the authors of a peer-reviewed study concluded that intensive diabetes therapy has long-term beneficial effects on the risk of cardiovascular disease in patients with Type 1 diabetes. The study showed that intensive diabetes therapy reduced the risk of cardiovascular disease by 42% and the risk of non-fatal heart attack, stroke or death from cardiovascular disease by 57%. However, despite evidence that intensive glucose management reduces the long-term complications associated with diabetes, the American Diabetes Association reported in a 2001 issue of its publication Diabetes Care that up to 67% of patients with diabetes fail to routinely monitor their glucose levels.

Spot finger stick devices are the most prevalent devices for blood glucose monitoring. These devices require inserting a strip into a glucose meter, taking a blood sample with a finger stick and placing a drop of blood on the test strip that yields a single point in time blood glucose measurement. Despite continued developments in the field of blood glucose monitors, the routine measurement of glucose levels remains invasive, painful, inconvenient, difficult and costly. This has resulted in a sub-optimal measurement regimen for many diabetics.

The FDA, has also recently approved continuous glucose monitoring systems for blood glucose monitoring, when prescribed by a doctor. Continuous glucose monitoring systems use sensors inserted under the skin to check glucose levels in interstitial fluid. The sensor stays in place for several days to a week and then must be replaced. A transmitter sends information about glucose levels via radio waves from the sensor to a pager-like wireless monitor. According to the National Institute of Diabetes and Digestive and Kidney Diseases at the National Institutes of Health, continuous glucose monitoring device users must check blood samples with a conventional glucose meter to calibrate the continuous glucose monitoring systems devices, and because currently approved continuous glucose monitoring systems are not as accurate as standard blood glucose meters, users should confirm glucose levels with a meter before changing treatment.

To our knowledge, there are currently no devices approved for use in either the United States or the European Union for spot or continuous non-invasive blood glucose measurement. The FDA has previously approved a single non-invasive product for glucose trend analysis, the GlucoWatch®, so long as the device was used with conventional finger stick glucose monitoring devices. However, the device is no longer available commercially.

We believe that a significant market opportunity exists for a reliable, inexpensive, non-invasive blood glucose measurement device and that such a device could greatly increase compliance with blood glucose measurement recommendations and help many diabetics better manage their disease, providing significant benefits to both patients and payors.

The Product

Our non-invasive blood glucose monitor, the GlucoTrack DF-F, utilizes a combination of ultrasound, electromagnetic and thermal technologies to obtain blood glucose measurements in less than one minute via a small sensor that is clipped onto one’s earlobe and connected to a handheld control and display unit. See Figure A, below.

Figure A

We believe that the GlucoTrack DF-F addresses the expressed, currently unmet needs of the diabetic market as it removes or diminishes two of the most significant barriers to the recommended frequent monitoring of blood glucose by diabetics:

pain, as the GlucoTrack DF-F is a truly non-invasive device; and

cost, as, despite the relatively high upfront cost of purchasing a GlucoTrack DF-F, we anticipate that the total cost of purchasing a device and purchasing replacement ear clips every six months (anticipated to be the only recurring cost, other than recalibration costs, which are expected to be minimal) over the useful life of the device will be significantly lower than the cost of purchasing single use glucose sticks over that same period. See Figure B on page 37 and the accompanying footnotes for a direct cost comparison of the GlocoTrack DF-F and conventional (invasive) spot finger stick devices.

Integrity estimates that over a five-year period, a GlucoTrack DF-F user could save an average of $6,405 when compared to the cost of a conventional invasive blood glucose monitoring system, while also taking advantage of the benefits of more frequent blood glucose testing. See Figure B, below.

Figure B

The direct cost comparison assumes (i) a single invasive measurement costs $1.00; (ii) the average user of an invasive device takes five measurements daily; (iii) the average retail price for the GlucoTrack DF-F is $2,000 (including one personal ear clip); and (iv) the personal ear clip is replaced every six months at a cost of $80. The direct cost comparison excludes recalibration costs, which are expected to be approximately $70, in total, over a five year period.

Instead of using blood as conventional spot finger stick devices do, the GlucoTrack DF-F uses a small, non-invasive sensor that is clipped onto a user’s earlobe to obtain certain body measurements using three technologies, which are then analyzed using a proprietary algorithm on a small, handheld control and display unit. Within one minute, the GlucoTrack DF-F will produce a blood glucose measurement that can be simultaneously audibly announced and displayed on the control unit, as well as recorded on internal flash memory. A conceptual block diagram of the GlucoTrack DF-F is set forth below as Figure C.

Figure C

As shown in Figure C, the GlucoTrack DF-F contains two units: the main unit, which contains the triggers that produce the signals to obtain the necessary measurements utilizing three distinct technologies, which the main unit signals to the transmission module, which is located in the second unit, the personal ear clip. The personal ear clip is attached to the user’s earlobe. The transmission module in the personal ear clip transmits the signal through the earlobe. The receiving sensor in the personal ear clip receives signals from the earlobe with modified characteristics, impacted by the glucose concentration in the earlobe. The receiving sensor in the personal ear clip converts the signals into digital data and transmits the data to the receiver in the main unit. The data is then analyzed and compared to the transmitted signals based on the calibration data by the main processor and the result is displayed on the large screen of the main unit, as well as recorded for further analysis. The entire process is synchronized by the main clock, located in the main unit. The main unit and the personal ear clip are connected through a multi-wire flexible cable. When and if we develop our continuous measurement model, we plan for this connection to be wireless.

Although we have not yet commenced the clinical trials that we will use for our regulatory clearances and approvals, in 2009, Integrity Israel completed its initial hospital pilot study at Soroka University Medical Center in Be’er Sheva, Israel using the GlucoTrack DF-F on 89 patients of varying weights, age, diabetes type and gender for a total of two discrete, non-successive days each. The study produced a total of 1,772 reference blood glucose measurements. The primary statistical tools used to evaluate the performance of GlucoTrack DF-F were CEG analysis and Mean Absolute Relative Difference, which we refer to as MARD mean . The CEG analysis was developed by Dr. William Clarke and his team from the University of Virginia as a universal tool for assessing the accuracy of glucose monitors and is currently used (and has been used for the last two decades) widely all over the world as the industry-standard analytical tool to assess such accuracy. The purpose of the CEG is to assess measurement error from a clinical point of view, i.e. the statistical difference in the readings and the impact of any error on the patient. The CEG is a plot of all data pairs categorized into five discrete zones: A (clinically accurate reading), B (the decision based on the reading is benign or no treatment is given), C (the decision based on the reading leads to normal glucose levels being overcorrected), D (the decision based on the reading results in a failure to treat high and low levels) and E (the decision based on the reading results in an erroneous treatment decision). The A and B zones are the most clinically desirable zones and the D and E zones are the least clinically desirable zones. For example, a pair of data points at 200 mg/dl for the reference device compared to 280 mg/dl for the unit under testing are within zone B despite the significant difference between the two while measurements of 50 mg/dl for the reference device compared to 110 for the unit under testing are in zone D because of the possible failure to treat a low level of glucose. Devices with a higher combined A and B percentage (closer to 100%) and lower combined D and E percentage (closer to 0) are considered to have better performance. MARD mean is an error calculation tool that measures the average relative difference between the unit under testing and the reference measurements, on a percentage basis. While CEG is a specific tool to evaluate clinical risk due to errors in measuring glucose, MARD mean is a common statistical tool, subtracting the measurement value of a measurement of a specific subject with respect to a tested device from the measurement value of that subject’s measurement from a reference device and then taking the absolute value of the result. The last step is to calculate the mean of these absolute values to obtain MARD mean . MARD mean is a common statistical index that is used to compare a set of paired measurements coming from two devices or systems in order to evaluate the bias between the two.

CEG analysis of data from the study conducted by Integrity Israel during 2009 at Soroka University Medical Center showed that GlucoTrack DF-F had 96% of the data in the combined A and B zones, with approximately 60% in the A zone, 36% in the B zone, 2% in each of the C and D zones and 0% in the E zone. MARD mean for the study was approximately 22%. We believe that the results of the Soroka University study show that GlucoTrack DF-F accurately and reliably measured blood glucose readings using the same calibration set. See also the home measurement study below.

In plotting the CEG analysis, the horizontal axis represents the reference device, while the vertical axis represents the unit under testing. See Figure D below. The relevant range of glucose measurements (generally 40-500 mg/dl) is measured on each axis. The CEG is split into two halves by a line of full correlation which represents where the measurements obtained from the reference device and the unit under testing are identical. This line forms a 45° angle from both the vertical and horizontal axes. Zones A, B, C, D and E are on each side of the 45° line.

Each measurement is taken simultaneously by the reference device and the unit under testing. A point in the CEG is plotted at the intersection of the two readings. The location within the CEG is checked against the various zones to determine which zone the data pair falls within. Figure E sets forth an example of an A zone case. The error between the unit under testing and the reference device of 16.7% is considered clinically accurate as no risk is involved due to this particular error.

Figure D

Figure E

An even more extreme example is set forth in Figure F. The deviation between the unit under testing and the reference device is 60%, but since the CEG point falls within zone B, which suggests benign decisions (as in this particular example) or no treatment due to the error, the result is clinically accepted, as the risk is slight.

Figure F

A full explanation of the different CEG zones is set forth below in Figure G:

Figure G

Zone	Description	Definition of Risk	Risk

A	Clinically accurate, would lead to correct treatment decisions	No effect on clinical action	None

B	Would lead to benign decisions or no treatment	Altered clinical action, little or no effect on clinical outcome	Slight

C	Would lead to overcorrection of normal glucose levels	Altered clinical action, likely to affect clinical outcome	Moderate

D	Would lead to failure to detect & treat high or low glucose levels	Altered clinical action, could have significant medical risk	Significant

E	Would lead to erroneous treatment decisions	Altered clinical action, could have dangerous consequences	Dangerous

The CEG analysis from the testing of the GlucoTrack DFF-F in the clinic is set forth below in Figure H:

Figure H

Since the GlucoTrack DF-F non-invasive measurement does not directly measure glucose levels, but rather measures a series of physiological characteristics that correlate with glucose levels, each patient must be calibrated by using a reference to a measurement obtained from an invasive device. Calibration consists of comparing each individual patient’s physiological measurements by GlucoTrack DF-F to the measurements from the invasive device under different circumstances over a defined period (such as fasting and after eating). Pre-clinical trials indicate that recalibration is necessary every few months, while to our knowledge, competing products require recalibration significantly more frequently. However, to date, in informal discussions with the FDA, the FDA has indicated that initially it would require recalibration of the GlucoTrack DF-F every month. Recalibration of the device would be accomplished in the same manner as the initial calibration of the device, as described above, by using a reference to a measurement obtained from an invasive device.

The following results for the GlucoTrack DF-F set forth below in Figure I measured between 1 to 22 days after calibration, but without re-calibration for each patient, demonstrates that calibration of the GlucoTrack DF-F remains valid for the period tested without degredation in the accuracy level.

Figure I

We conducted an initial study of home users to test the performance of the GlucoTrack DF-F outside of the clinic environment while the device is being operated by the patients themselves, without being monitored by professionals at the clinic. In this study, the performance of the GlucoTrack DF-F was monitored under normal home or home-like use conditions for four participants and 222 data points, with each subject performing the measurement procedure him or herself in the home or home-like environment for at least seven days. In this group, GlucoTrack readings were compared with each participant’s own invasive glucose monitoring device, which served as the reference for calibration and comparison of measurements. Each participant was monitored according to his or her own routine of glucose monitoring, but no less than five measurements per day were taken. In the home study, GlucoTrack DF-F had 90% of the data in the combined A and B C E G zones, with approximately 54% in the A zone, 36% in the B zone, 1% in the C zone, 9% in the D zone and 0% in the E zone. The MARD mean for the study was approximately 23.6%.

Within the last three years a new type of device, the continuous glucose monitoring system device, was introduced into the market. Currently, three different brands have obtained FDA clearance to market, and are selling, continuous glucose monitoring system devices in the US and EU markets. These brands are sold by Medtronic-MiniMed, Abbott and Dexcom. Continuous glucose monitoring system devices are invasive devices in which a needle is inserted under the skin (either in the abdomen or the upper arm) and measures Interstitual Fluid. Although we cannot predict what standards will be employed by applicable regulatory authorities as we seek a CE mark and FDA clearance, the average results, to date, in our pre-clinical trials of the GlucoTrack DF-F are similar to the results obtained from the continuous glucose monitoring devices that have been introduced to the market, as of the time of their introduction.

Analyses of our at home tests show that there are a few parameters that reduce accuracy of the measurements obtained from the GlucoTrack DF-F, such as the learning curve, the use of a home use device as a reference and failure to properly follow instructions for use, including use of the reference (invasive) device. We have already made some modifications to the GlucoTrack DF-F to limit the effect of these parameters, which we believe will improve these results. Further modifications are in process. We believe that the results of the home study show that with some modifications to the GlucoTrack DF-F, we will be able to improve the accuracy and reliability measurements of glucose levels in the home and home-like environments.

The three different technologies used by GlucoTrack DF-F, ultrasound, electromagnetic and thermal, simultaneously measure three independent criteria. As indicated in the Soroka University study, these three criteria are correlated to produce an acceptable measurement of a user’s blood glucose level. Additional development and wider studies will be necessary in order to demonstrate that GlucoTrack DF-F produces an acceptable measurement of a user’s blood glucose level outside of the clinic setting prior to our beginning formal clinical trials of the device.

The technologies operate as follows:

Ultrasound: The GlucoTrack DF-F uses ultrasound technology to measure the change of speed of sound through the earlobe, which is impacted by the glucose concentration in the capillary blood vessels.

Electromagnetic: The GlucoTrack’s DF-F’s electromagnetic technology uses a measurement of conductivity to measure the change in tissue impedance, which is a function of glucose concentration. The GlucoTrack DF-F’s electromagnetic technology analyzes criteria similar to those analyzed by conventional invasive devices, such as spot finger stick devices, but does so in a non-invasive manner.

Thermal: The GlucoTrack DF-F’s thermal technology uses heat transfer characteristics of the tissue, which are influenced by glucose concentration.

The GlucoTrack DF-F does not directly measure the glucose level concentration in the blood. Rather, it measures several physiological phenomena which are correlated with the glucose level. In order to correlate between the measured signal and the glucose level, a translation is needed. This translation is accomplished through the calibration of the device by reference to a measurement obtained from an invasive device.

Non-invasive devices (under different stages of development) generally require frequent recalibration. The former GlucoWatch required recalibrations approximately every 13 hours. The main reasons for calibration are that tissue parameters generally fluctuate in the area of the measurement, and are sensitive to the location of the sensor and the impact of potential disturbances. For various reasons, we believe that the GlucoTrack DF-F will have significantly less need for recalibration initially, just once a month and hopefully less later. Disturbances are less frequent in the earlobes, where the GlucoTrack DF-F takes its measurements. Utilizing three channels simultaneously reduces the noise contribution in the measurement. In addition, the personal ear clip also contains sensors that help locate it in the right place. In informal clinical trials to date, the measurements were conducted between one and 22 days post-calibration, with a median duration of six days. Although these measurements were based on the same calibration, no degradation in accuracy was observed.

The GlucoTrack does not use any optical method (either Infra Red (IR) or Near Infra Red (NIR) technology), which we understand are being used by other developers of noninvasive blood glucose measurement devices. Integrity believes that optical technologies are less reliable than the GlucoTrack’s combination of ultrasound, electromagnetic and thermal technologies due to inherent physiological limitations with optical technology. More specifically, optical technology is based on dispersion of a beam that is analyzed by spectrometric methods. As such devices are non-invasive, the beam passes through other components in the finger tip, such as skin, bone, muscle and fat tissue, which interfere with the measurements. Generally, most of these interferences have been overcome, but not the epidermis, primarily due to roughness, pigmentation and perspiration, which act like lenses in optical wavelengths.

Unlike conventional spot finger stick devices, which require single-use glucose test strips, the GlucoTrack DF-F requires no short term disposables. We believe that the personal ear clip which accompanies each GlucoTrack DF-F will need to be replaced only every six months. Since there is no additional cost or pain involved with each blood glucose measurement using the GlucoTrack DF-F, we believe that users of the device would be encouraged to take multiple blood glucose measurements per day, significantly increasing compliance with blood glucose measurement recommendations and helping diabetics better manage their disease. More frequent testing of blood glucose levels may provide a patient with information that can be used to determine optimal timing and dosage for corrective treatments such as insulin, and can also direct a patient to seek a clinical analysis or detailed testing and diagnosis. We believe that the GlucoTrack DF-F’s non-invasive advantages will particularly appeal to diabetic markets which require special care, including the premature infant (through a separate GlucoTrack device to be developed later), pediatric and elderly care markets.

We intend to eventually develop a family of GlucoTrack devices, including devices for night time usage, devices which would provide advance warnings of potential hypoglycemic episodes, continuous measurement devices, driver alert devices, a basic model to be used in poorer countries, a device for use in pediatric incubators, and a device for people with pre-diabetes. The current GlucoTrack device, or DF-F, measures glucose levels at discrete times as desired by the user, known as spot measurement. We intend that next generation models of GlucoTrack will include both spot and continuous measurements of glucose levels. We also intend to develop accessories for GlucoTrack, including colored ear clips for use with those models of GlucoTrack where a single main unit supports up to three different users, belt holders, desktop stands and software applications for data processing and analysis. Certain models of the device will include a USB port to allow for offline analysis of downloaded data. All of the above models will be derivative of the current DF-F model. The modifications involve mostly engineering changes as opposed to development. Notwithstanding the foregoing, there is no assurance that we will be successful in developing or engineering any of these models or accessories. We are currently replacing the display in the Main Unit with a color touch-screen.

The GlucoTrack DF-F has not yet been approved for commercial sale in the United States, the European Union or any other jurisdiction. See “Government Regulation - Regulation of the Design, Manufacture and Distribution of Medical Devices” below for a discussion of the approval process for commercial sale. There can be no assurance that approval for commercial sale in any jurisdiction will be obtained.

Manufacturing

We do not have commercial manufacturing facilities and do not intend to build commercial manufacturing facilities of our own in the foreseeable future. We intend to enter into agreements with various third parties for the formulation and manufacture of our products. We make prototypes of GlucoTrack devices for testing, including for limited use in clinical testing, in the prototype laboratory located at our Ashkelon, Israel offices. We intend to enter into agreements with third-party manufacturers for the manufacture of prototypes for certain GlucoTrack devices. These suppliers and their manufacturing facilities must comply with FDA regulations, current quality system regulations, which include current good manufacturing practices, and to the extent laboratory analysis is involved, current good laboratory practices.

Sales & Marketing

We do not have dedicated sales or marketing personnel yet, because neither the GlucoTrack DF-F nor other GlucoTrack devices are approved for commercial sale. In order to commercialize the GlucoTrack DF-F, if it is approved for commercial sale, we intend to collaborate with third parties with established sales and marketing operations in the medical device industry to market and sell the GlucoTrack DF-F to end users or for personal use. However, there can be no assurance that we will be able to enter into distribution agreements on terms acceptable to it or at all. We have signed an agreement with a leading chain of private diabetes clinics to purchase GlucoTrack DF-F devices, pending approval for commercial sale by that chain’s headquarters, which will depend on performance of the device in upcoming clinical trials. The agreement requires tests of a few devices by the clinics (no FDA or CE Mark approval is required in this particular country) as a prerequisite for sales. If the device is approved by the chain, then it will purchase devices directly from us for sale directly to its patients, without the need for third-party marketing or sales. If the device is approved by the chain’s headquarters, this chain will have an annual obligation during the first year to purchase a minimum of 10,000 units at a price of $835 per unit. Minimum obligations for the second and following years are subject to mutual agreement. There is no assurance that any sales will be made pursuant to this agreement. We anticipate that we will begin sales efforts in various jurisdictions as the GlucoTrack DF-F receives commercial approval in such jurisdictions.

Government Regulatory

Healthcare is heavily regulated in the United States by federal, state and local governments, and by similar authorities in other countries. Any product that we develop must receive all relevant regulatory approvals or clearances, as the case may be, before it may be marketed in a particular country. The laws and regulations affecting healthcare change regularly thereby increasing the uncertainty and risk associated with any healthcare-related venture. The United States government has in the past considered, is currently considering and may in the future consider healthcare policies and proposals intended to curb rising healthcare costs, including those that could significantly and adversely affect reimbursement for healthcare products such as GlucoTrack DF-F devices. These policies have included, and may in the future include: basing reimbursement policies and rates on clinical outcomes, the comparative effectiveness and costs of different treatment technologies and modalities; imposing price controls and taxes on medical device providers; and other measures. Future significant changes in the healthcare systems in the United States or elsewhere could also have a negative impact on the demand for GlucoTrack, if it is approved or cleared for sale, or our future products, if any. These include changes that may reduce reimbursement rates for such products and changes that may be proposed or implemented by the current administration or Congress. We cannot predict, however, if any proposal that has been or will be considered will be adopted or what effect any such legislation will have on us.

In the United States, the federal government regulates healthcare through various agencies, including but not limited to the following: (i) the FDA which administers the Food, Drug, and Cosmetic Act, as well as other relevant laws; (ii) the Centers for Medicare & Medicaid Services, which we refer to as the CMS, which administers the Medicare and Medicaid programs; (iii) the Office of Inspector General, which we refer to as the OIG, which enforces various laws aimed at curtailing fraudulent or abusive practices including, by way of example, the Anti-Kickback Law, the Anti-Physician Referral Law, commonly referred to as Stark, the Anti-Inducement Law, the Civil Money Penalty Law, and the laws that authorize the OIG to exclude health care providers and others from participating in federal healthcare programs; and (iv) the Office of Civil Rights which administers the privacy aspects of the Health Insurance Portability and Accountability Act of 1996, which we refer to as the HIPAA. All of the aforementioned are agencies within the Department of Health and Human Services, which we refer to as the HHS. Healthcare is also provided or regulated, as the case may be, by the Department of Defense through its TriCare program, the Department of Veterans Affairs under, among other laws, the Veterans Health Care Act of 1992, the Public Health Service within HHS under the Public Health Service Act, the Department of Justice through the Federal False Claims Act and various criminal statutes, and state governments under the Medicaid program and their internal laws regulating all healthcare activities.

Regulation of the Design, Manufacture and Distribution of Medical Devices

Any product that we develop must receive all relevant regulatory clearances or approvals, as the case may be, before it may be marketed in a particular country. In the United States, under Section 201(h) of the Food, Drug, and Cosmetic Act, a medical device, which we refer to as device, is an article, which, among other things, is intended for use in the diagnosis of disease or other conditions, or in the cure, mitigation, treatment or prevention of disease, in man or other animals. We believe that GlucoTrack devices will be classified as medical devices and subject to regulation by numerous agencies and legislative bodies, including the FDA and its foreign counterparts. Devices are subject to varying levels of regulatory control, the most comprehensive of which requires that a clinical evaluation be conducted before a device receives approval for commercial distribution. The FDA classifies medical devices into one of three classes. Class I devices are relatively simple and can be manufactured and distributed with general controls. Class II devices are somewhat more complex and require greater scrutiny. Class III devices are new and frequently help sustain life.

In the United States, a company generally can obtain permission to distribute a new device in two ways – through a Section 510(k) premarket notification application, which we refer to as 510(k) submission, or through a Section 515 premarket approval, which we refer to as PMA, application. The 510(k) submission applies to any device that is substantially equivalent to a device first marketed prior to May 1976 or to another device marketed after that date, but which was substantially equivalent to a pre-May 1976 device. These devices are either Class I or Class II devices. Under the 510(k) submission process, the FDA will issue an order finding substantial equivalence to a predicate device (pre-May 1976 or post-May 1976 device that was substantially equivalent to a pre-May 1976 device) and permitting commercial distribution of that device for its intended use. A 510(k) submission must provide information supporting its claim of substantial equivalence to the predicate device. The FDA permits certain low risk medical devices to be marketed without requiring the manufacturer to submit a premarket notification. In other instances, the FDA may require that a premarket notification not only be submitted, but also be accompanied by clinical data. If clinical data from human experience is required to support the 510(k) submission, this data must be gathered in compliance with investigational device exemption, which we refer to as IDE, regulations for investigations performed in the United States. The FDA review process for premarket notifications submitted pursuant to section 510(k) should take about 90 days, but it can take substantially longer if the agency has concerns, and there is no guarantee that the agency will clear the device for marketing, in which case the device cannot be distributed in the United States. Nor is there any guarantee that the agency will deem the device subject to the 510(k) process, as opposed to the more time-consuming, resource intensive and problematic PMA process described below.

The more comprehensive PMA approval process applies to a new device that is not substantially equivalent to a pre-May 28, 1976 product or to one that is to be used in supporting or sustaining life or preventing impairment. These devices are normally Class III devices and can only be marketed following approval of a PMA. For example, most implantable devices are subject to the PMA approval process. Two steps of FDA approval generally are required before a company can market a product in the U.S. that is subject to Section 515 PMA approval, as compared to a Section 510(k) clearance. First, a company must comply with IDE regulations in connection with any human clinical investigation of the device; however those regulations permit a company to undertake a clinical study of a “non-significant risk” device without formal FDA approval. Prior express FDA approval is required if the device is a significant risk device. If there is any doubt as to whether a device is a “non-significant risk” device, companies normally seek prior approval from the FDA. Normally, clinical studies of new diagnostic products are conducted in tandem with a cleared or approved device and treatment decisions are based on the results from the existing diagnostic device. In such a setting, the FDA may well consider the clinical trial as one not posing a significant risk. However, FDA action is always uncertain and dependent on the contours of the design of the clinical trial and the device and there is no assurance that the FDA would consider any proposed clinical trial as one posing a non-significant risk. Moreover, before undertaking any clinical trial, the company sponsoring the trial and the investigator conducting the trial are required by federal law to seek and obtain the approval of institutional review boards, which we refer to as IRB. An IRB weighs the risks and benefits of a proposed trial to ensure the human subjects are not exposed to unnecessary risk. University medical centers as well as other entities maintain and operate IRBs. The GlucoTrack DF-F will be classified as a significant risk device, although that may not be true with other products mentioned in this prospectus. Second, the FDA must review a company’s PMA application, which contains, among other things, clinical information acquired under the IDE. The FDA will approve the PMA application if it finds there is reasonable assurance the device is safe and effective for its intended use. The PMA process takes substantially longer than the 510(k) process.

We believe that the GlucoTrack DF-F device will be classified as a Class III device that will be subject to the PMA approval process and require human clinical trials, although that may not be true with other products mentioned in this prospectus. We currently anticipate that we will submit the protocol for U.S. clinical trials of the GlucoTrack DF-F to the FDA by mid-2012. Following approval of the clinical trial protocol for the GlucoTrack DF-F by the FDA, we intend to conduct clinical trials of the GlucoTrack DF-F device at two locations in the U.S. We have commenced negotiations for these locations.

Sales of medical devices outside the United States are subject to foreign regulatory requirements that vary widely from country to country. These laws and regulations range from simple product registration requirements in some countries to complex clearance and production controls in others. As a result, the processes and time periods required to obtain foreign marketing approval may be longer or shorter than those necessary to obtain FDA approval. These differences may affect the efficiency and timeliness of international market introduction of GlucoTrack DF-F. For countries in the European Union, or EU, medical devices must display a CE mark before they may be imported or sold and must comply with the requirements of the European Medical Device Directive, which we refer to as the MDD, or the Active Implantable Medical Device Directive. Integrity anticipates that the GlucoTrack devices will be subject to the MDD. Compliance with the MDD and obtaining a CE Mark involve obtaining International Organization for Standardization, or ISO, 13485 certification, an internationally recognized quality system, and approval of the product’s technical file by a notified body that is recognized by applicable authorities of an EU Member State. We have selected Kema, a Dutch company, as the notified body with which we will seek approval of GlucoTrack. Kema has approved the clinical protocol for the GlucoTrack DF-F device and the protocol has been approved by the ethical committee of Soroka University Medical Center in Be’er Sheva, Israel, enabling the commencement of clinical trials at the center. We have also had an initial meeting with a Spanish medical center with respect to conducting clinical trials in that center as well. We currently anticipate that clinical trials of the GlucoTrack DF-F at Soroka University Medical Center and in the Spanish medical center (assuming agreement is reached) by late 2011. The Soroka University Medical Center and Spanish center trials are anticipated to last for approximately four months each, following which the results of such trials will be analyzed and submitted to Kema for review and audit. Further, we currently anticipate receiving the CE Mark no earlier than the fourth quarter of 2012 and FDA approval approximately one year thereafter, however, there can be no assurance that either such approval will be obtained within such time frames, or at all. We may also seek regulatory approval to market the GlucoTrack devices in foreign countries that do not rely on the CE Mark. The requirements for regulatory approval in such countries vary by country, and there can be no assurance that we will be able to obtain any such approvals.

Even when a clinical study has been approved or cleared by the FDA or a notified body or deemed approved, the study is subject to factors beyond a manufacturer’s control, including, but not limited to the fact that the institutional review board at a given clinical site might not approve the study, might decline to renew approval which is required annually, or might suspend or terminate the study before the study has been completed. Also, the interim results of a study may not be satisfactory, leading the sponsor to terminate or suspend the study on its own initiative or the FDA or a notified body may terminate or suspend the study. There is no assurance that a clinical study at any given site will progress as anticipated; there may be an insufficient number of patients who qualify for the study or who agree to participate in the study, or the investigator at the site may have priorities other than the study. Also, there can be no assurance that the clinical study will provide sufficient evidence to assure the FDA or a notified body that the product is safe and effective, a prerequisite for FDA approval of a PMA, or substantially equivalent in terms of safety and effectiveness to a predicate device, a prerequisite for clearance under 510(k). Even if the FDA or a notified body approves or clears a device, it may limit its intended uses in such a way that manufacturing and distributing the device may not be commercially feasible.

After clearance or approval to market is given, the FDA and foreign regulatory agencies, upon the occurrence of certain events, are authorized under various circumstances to withdraw the clearance or approval or require changes to a device, its manufacturing process or its labeling or additional proof that regulatory requirements have been met.

A manufacturer of a device approved through the PMA process is not permitted to make changes to the device which affect its safety or effectiveness without first submitting a supplement application to its PMA and obtaining FDA approval for that supplement. In some instances, the FDA may require clinical trials to support a supplement application. A manufacturer of a device cleared through a 510(k) submission must submit another premarket notification if it intends to make a change or modification in the device that could significantly affect the safety or effectiveness of the device, such as a significant change or modification in design, material, chemical composition, energy source or manufacturing process. Any change in the intended uses of a PMA device or a 510(k) device requires an approval supplement or cleared premarket notification. Exported devices are subject to the regulatory requirements of each country to which the device is exported, as well as certain FDA export requirements.

Recently Enacted Health Care Reform Legislation

Congress recently passed health care reform legislation. The President signed the measure into law on March 23, 2010 and on March 30, 2010, the President signed into law a reconciliation bill that modifies certain provisions of the same.

The principal aim of the law as currently enacted is to expand health insurance coverage to approximately 32 million Americans who are currently uninsured. The law’s most far-reaching changes do not take effect until 2014, including a requirement that most Americans carry health insurance. The consequences of these significant coverage expansions on the sales of our products is unknown and speculative at this point.

The enacted legislation contains many provisions designed to generate the revenues necessary to fund the coverage expansions. The most relevant of these provisions are those that impose fees or taxes on certain health-related industries, including medical device manufacturers.

Beginning in 2013, each medical device manufacturer will have to pay an excise tax (or sales tax) in an amount equal to 2.3% of the price for which such manufacturer sells its medical devices. The tax applies to all medical devices, including our products and product candidates.

Additionally, the legislation as enacted also provides for increased enforcement of the fraud and abuse regulations previously mentioned.

Reimbursement

We anticipate that sales volumes and prices of the GlucoTrack DF-F and any other products we commercialize will depend in large part on the availability of reimbursement from third-party payors. Third-party payors include governmental programs such as Medicare and Medicaid, private insurance plans and workers’ compensation plans. These third-party payors may deny reimbursement for a product or therapy if they determine that the product was not medically appropriate or necessary. Also, third-party payors are increasingly challenging the prices charged for medical products and services. Some third-party payors must also approve coverage for new or innovative devices before they will reimburse health care providers who use the products. Even though a new product may have been cleared for commercial distribution, it may find limited demand for the device until reimbursement approval has been obtained from governmental and private third-party payors.

Inasmuch as a percentage of the projected patient population that could potentially benefit from the GlucoTrack DF-F is elderly, Medicare would likely be a potential source of reimbursement. Medicare is a federal program that provides certain hospital and medical insurance benefits to persons age 65 and over, certain disabled persons, persons with end-stage renal disease and those suffering from Lou Gehrig’s Disease. In contrast, Medicaid is a medical assistance program jointly funded by federal and state governments and administered by each state pursuant to which benefits are available to certain indigent patients. The Medicare and Medicaid statutory framework is subject to administrative rulings, interpretations and discretion that affect the amount and timing of reimbursement made under Medicare and Medicaid.

Medicare reimburses for medical devices in a variety of ways depending on where and how the device is used. However, Medicare only provides reimbursement if CMS determines that the device should be covered and that the use of the device is consistent with the coverage criteria. A coverage determination can be made at the local level, known as a Local Coverage Determination, by the Medicare administrative contractor (formerly called carriers and fiscal intermediaries), a private contractor that processes and pays claims on behalf of CMS for the geographic area where the services were rendered, or at the national level by CMS through a National Coverage Determination. There are new statutory provisions intended to facilitate coverage determinations for new technologies under the Medicare Prescription Drug Improvement and Modernization Act of 2003, or MMA, §§ 731 and 942, but it is unclear how these new provisions will be implemented. Coverage presupposes that the device has been cleared or approved by the FDA and, further, that the coverage will be no broader than the approved intended uses of the device (i.e., the device’s label) as cleared or approved by the FDA, but coverage can be narrower. In that regard, a narrow Medicare coverage determination may undermine the commercial viability of a device.

Obtaining a coverage determination, whether local or national, is a time-consuming, expensive and highly uncertain proposition, especially for a new technology, and inconsistent local determinations are possible. On average, according to an industry report, Medicare coverage determinations for medical devices lag 15 months to five years or more behind FDA approval for respective devices. Moreover, Medicaid programs and private insurers are frequently influenced by Medicare coverage determinations. A key component in the reimbursement decision by most private insurers will be whether the GlucoTrack DF-F is reimbursed by virtue of a National Coverage Determination by CMS. We may negotiate contracted rates for the GlucoTrack DF-F with private insurance providers for the purchase of the GlucoTrack DF-F by their members pending a coverage determination by CMS. Our inability to obtain a favorable coverage determination for the GlucoTrack DF-F may adversely affect our ability to market the GlucoTrack DF-F and thus, the commercial viability of the product. In international markets, reimbursement and healthcare payment systems vary significantly by country and many countries have instituted price ceilings on specific product lines. Distributors expressly support the reimbursement process and, depending on the distribution agreement and geographic area, may assume responsibility for the process.

We believe that the overall escalating cost of medical products and services has led to, and will continue to lead to, increased pressures on the healthcare industry to reduce the costs of products and services. Furthermore, deficit reduction and austerity measures in the United States and abroad may put further pressure on governments to limit coverage of, and reimbursement for, our products. There can be no assurance that third-party reimbursement and coverage will be available or adequate, or that future legislation, regulation, or reimbursement policies of third-party payors will not adversely affect the demand for our products or our ability to sell these products on a profitable basis. The unavailability or inadequacy of third-party payor coverage or reimbursement could have a material adverse effect on our business, operating results and financial condition. Until reimbursement or insurance coverage is established, patients will have to bear the financial cost of GlucoTrack. Third-party coverage may be particularly difficult to obtain while the GlucoTrack DF-F is not approved by the FDA as a replacement for existing single-point finger stick devices.

Until a reimbursement code is achieved, in order to reduce out of pocket money for users and increase the number of devices sold, a leasing program is planned (Europe and USA). Leases for a period of one, two or three years may be offered for the end-users of the device. The pay per month will then be similar to the current monthly payment for the invasive measurement, although there will be no limitation on the number of measurements per day a patient can perform. In this approach, the device will pay for itself in a shorter time.

Anti-Fraud and Abuse Rule

There are extensive federal and state laws and regulations prohibiting fraud and abuse in the healthcare industry that can result in significant criminal and civil penalties that can materially affect us. These federal laws include, by way of example, the following:

The anti-kickback statute (Section 1128B(b) of the Social Security Act) prohibits certain business practices and relationships that might affect the provision and cost of healthcare services reimbursable under Medicare, Medicaid and other federal healthcare programs, including the payment or receipt of remuneration for the referral of patients whose care will be paid by Medicare or other governmental programs;

The physician self-referral prohibition (Ethics in Patient Referral Act of 1989, as amended, commonly referred to as the Stark Law, Section 1877 of the Social Security Act), which prohibits referrals by physicians of Medicare or Medicaid patients to providers of a broad range of designated healthcare services in which the physicians (or their immediate family members) have ownership interests or with which they have certain other financial arrangements;

The anti-inducement law (Section 1128A(a)(5) of the Social Security Act), which prohibits providers from offering anything to a Medicare or Medicaid beneficiary to induce that beneficiary to use items or services covered by either program;

The False Claims Act (31 U.S.C. § 3729 et seq.), which prohibits any person from knowingly presenting or causing to be presented false or fraudulent claims for payment to the federal government (including the Medicare and Medicaid programs); and

The Civil Monetary Penalties Law (Section 1128A of the Social Security Act), which authorizes the United States Department of Health and Human Services to impose civil penalties administratively for fraudulent or abusive acts.

Sanctions for violating these federal laws include criminal and civil penalties that range from punitive sanctions, damage assessments, monetary penalties, imprisonment and/or denial of Medicare and Medicaid payments or exclusion from the Medicare and Medicaid programs, or both. These laws also impose an affirmative duty on those receiving Medicare or Medicaid funding to ensure that they do not employ or contract with persons excluded from the Medicare and other government programs.

Many states have adopted or are considering legislative proposals similar to the federal fraud and abuse laws, some of which extend beyond the Medicare and Medicaid programs, to prohibit the payment or receipt of remuneration for the referral of patients and physician self-referrals regardless of whether the service was reimbursed by Medicare or Medicaid. Many states have also adopted or are considering legislative proposals to increase patient protections, such as limiting the use and disclosure of patient specific health information. These state laws also impose criminal and civil penalties similar to the federal laws.

In the ordinary course of their business, medical device manufacturers and suppliers have been and are subject regularly to inquiries, investigations and audits by federal and state agencies that oversee these laws and regulations. Recent federal and state legislation has greatly increased funding for investigations and enforcement actions, which have increased dramatically over the past several years. This trend is expected to continue. Private enforcement of healthcare fraud also has increased due in large part to amendments to the civil False Claims Act in 1986 that were designed to encourage private persons to sue on behalf of the government. These whistleblower suits by private persons, known as qui tam relators, may be filed by almost anyone, including present and former patients or nurses and other employees, as well as competitors. HIPAA, in addition to its privacy provisions, created a series of new healthcare-related crimes.

As federal and state budget pressures continue, federal and state administrative agencies may also continue to escalate investigation and enforcement efforts to root out waste and to control fraud and abuse in governmental healthcare programs. A violation of any of these federal and state fraud and abuse laws and regulations could have a material adverse effect on a supplier’s liquidity and financial condition. An investigation into the use of a device by physicians may dissuade physicians from recommending that their patients use the device. This could have a material adverse effect on our ability to commercialize the GlucoTrack DF-F.

The Privacy Provisions of HIPAA

HIPAA, among other things, protects the privacy and security of individually identifiable health information by limiting its use and disclosure. HIPAA directly regulates “covered entities,” such as healthcare providers, insurers and clearinghouses, and regulates “business associates,” with respect to the privacy of patients’ medical information. All entities that receive and process protected health information are required to adopt certain procedures to safeguard the security of that information. It is uncertain whether we would be deemed to be a covered entity under HIPAA and it is unlikely that, based on its current business model, we would be a business associate. Nevertheless, we will likely be contractually required to physically safeguard the integrity and security of any patient information that we receive, store, create or transmit. If we fail to adhere to our contractual commitments, then our physician, hospital or insurance customers may be subject to civil monetary penalties, which could adversely affect our ability to market our devices. Recent changes in the law wrought by the HITECH Act provisions of the American Recovery and Reinvestment Act of 2009 increase the duties of business associates and covered entities with respect to protected health information that thereby subject them to direct government regulation, increasing its compliance costs and exposure to civil monetary penalties and other government sanctions. While the new law does not alter the definition of a business associate, it makes it more likely that covered entities with whom we are likely to do business will require us to enter into business associate agreements.

Intellectual Property

We believe that intellectual property is important to our business and to the medical device industry overall. We rely on a combination of patent, copyright and other intellectual property laws, trade secrets, nondisclosure agreements and other measures to protect our intellectual property and proprietary rights.

We understand the importance of obtaining patent and trade secret protection for new technologies, products and processes. Our success will depend in large part on our ability to file for and obtain patent protection of our principal products and procedures, to defend existing or future patents, to maintain trade secrets and to operate without infringing upon the proprietary rights of others.

We have obtained an issued patent for “A Method of Monitoring Glucose Level” in the United States, Europe, Australia, Canada, China, Israel, Japan, Mexico, the Philippines, Russia, South Africa and South Korea. This patent expires in April 2024 in the United States, and in August 2023 in all other jurisdictions. Additional patent applications are pending in various stages of review in Brazil and India.

We have filed patent applications in the United States, Taiwan and the PCT for an invention entitled “Device For Non-Invasively Measuring Glucose.”

We have obtained a registered trademark for GlucoTrack in the United States, Europe and fifteen other countries, including Australia, Brazil, Canada, Israel Japan, South Korea, Russia and South Africa, and have trademark applications for GlucoTrack in various stages of approval in two other countries. We have two additional trademark applications filed in the United States and Israel.

Patent protection is highly uncertain and involves complex legal and factual questions and issues. The patent application and issuance process can be expected to take several years and entail considerable expense. There can be no assurance that patents will issue as a result of any applications or that our existing patents, or any patents resulting from such applications, will be sufficiently broad to afford protection against competitors with similar or competing technology. Patents that we obtain may be challenged, invalidated or circumvented, or the rights granted under such patents may not provide us with any competitive advantages.

We believe that our patents and products do not and will not infringe patents or violate proprietary rights of others, although it is possible that our existing patent rights may not be valid or that infringement of existing or future patents or proprietary rights may occur. Litigation may be necessary to defend or enforce our patent rights or to determine the scope and validity of the proprietary rights of others. Defense and enforcement of patent claims can be expensive and time consuming, even in those instances in which the outcome is favorable, and could result in the diversion of substantial resources and management time and attention from our other activities. An adverse outcome could subject us to significant liability to third parties, require us to obtain licenses from third parties, alter our products or processes, or require that we cease altogether any related research and development activities or product sales.

We are currently pursuing further patents covering the technologies related to GlucoTrack’s particular measurements, as well as the combination of the three technologies used by GlucoTrack. A provisional patent has recently been filed and final application(s) will be made later.

Competition

The market for blood glucose monitoring devices is intensely competitive, subject to rapid change and significantly affected by new product introductions. Four companies, Roche Disetronic, a division of Roche Diagnostics; LifeScan, Inc., a division of Johnson & Johnson; the MediSense and TheraSense divisions of Abbott Laboratories; and Bayer Corporation, currently account for substantially all of the worldwide sales of self-monitored glucose testing systems. These competitors’ products use a meter and disposable test strips to test blood obtained by pricking the finger or, in some cases, the forearm.

In addition, other companies are developing or marketing minimally invasive or noninvasive glucose testing devices and technologies that could compete with our devices. There are also a number of academic and other institutions involved in various phases of technology development regarding blood glucose monitoring devices. We believe that the majority of noninvasive blood glucose monitors in development monitor glucose via trend analysis, rather than spot or continuous measurement. Trend analysis devices do not provide specific glucose measurements, as do spot or continuous testing devices, rather they alert a patient that their blood glucose levels are increasing or decreasing, and require frequent calibrations (from a few hours to a few days, compared to initially once a month for GlucoTrack and less frequently as the device is used). Accordingly, patients using such devices must also use conventional spot finger stick devices in order to determine optimal timing and dosage for corrective treatments such as insulin, whereas GlucoTrack provides patients with noninvasive spot blood glucose measurements that can be used for this purpose without the need for trend analysis. Among the companies developing noninvasive glucose testing devices are Echo Therapeutics, Inc., GlucoLight, C8 and Grove Instruments. Cygnus, a company subsequently acquired by Johnson & Johnson, obtained FDA approval and a CE Mark in 2001 for a noninvasive trend analysis device that was marketed under the name GlucoWatch, however, the device is no longer commercially available. Other companies developing continuous measurement devices, based on minimally invasive methods, such as implants or subdermal needles include Medtronic, Inc., Abbot Laboratories and Dexcom, Inc.

Some of our competitors are either publicly traded or are divisions of publicly-traded companies, and they enjoy several competitive advantages, including:

significantly greater name recognition;

established relations with healthcare professionals, customers and third-party payors;

established distribution networks;

additional lines of products, and the ability to offer rebates or bundle products to offer higher discounts or incentives to gain a competitive advantage;

greater experience in conducting research and development, manufacturing, clinical trials, obtaining regulatory approval for products and marketing approved products; and

greater financial and human resources for product development, sales and marketing, and patent litigation.

Some of our other competitors also enjoy these competitive advantages. As a result, we cannot assure that we will be able to compete effectively against these companies or their products.

To our knowledge, a summary of potential competitors with non-invasive products in development is set forth below:

Figure J

Company

Product

Technology

Calibration

Type of

Measurement

Technology Description

Echo Therapeutics

(MA, USA)

Symphony

UltraSound

Daily calibration

Continuous

Needle-free skin permeation and non-invasive, continuous transdermal glucose biosensor (device attached to skin).

Freedom Meditech

(MA, USA)

Optical Polarimetry (in front of the eye)

Spot; Screening

Non-invase direct measurement of glucose levels in front of the eye via optical polarimetry.

C-8 MediSensors

(CA, USA)

HG1-c

Raman spectroscopy

"No calibration"

Continuous

Through a device strapped to a patient’s abdomen, continuously measures glucose levels by measuring the “Raman” effect of the permeation of light through glucose cells in the body.

GlucoLight

(PA, USA)

Optical Coherence Tomography (OCT)

Continuous

Hospital-based monitor monitors blood glucose level using Optical Coherence Tomography, a form of imaging technology which uses a disposable patch affixed to the patient ’ s skin to measure the presence of glucose.

AiMedics

(Australia)

HypoMon

Skin Bio-Sensors

Continuous

Uses skin sensors strapped to a patient’s chest to continuously measure the patient’s glucose levels as they sleep. Used for Type 1 patients aged 10 to 25 years.

Cybiocare

(Quebec, Canada)

OHD

Optical

Continuous

Through a device strapped to a patient’s arm, continuously measures glucose levels by using infrared light to detect hypoglycemia in the patient.

Employees

As of September 30, 2011, we had twelve full-time employees and ten part-time employees. None of our employees are represented by a collective bargaining agreement.

Property

We currently lease approximately 3,100 square feet of office space in Ashkelon, Israel for our principal offices and prototype laboratory on a month-to-month basis at a cost of 11,500 NIS ($3,368 based on the exchange rate on June 30, 2011) plus VAT per month. We believe that we could easily find similar space at comparable rent if necessary.

Legal Proceedings

We are not presently a party to any material litigation, other than Integrity Israel’s matters with Dimri discussed under “Certain Relationships and Related Transactions - Agreement with Y. H. Dimri Ltd.” We may, however, become involved in other litigation from time to time relating to claims arising in the ordinary course of our business. These claims, even if not meritorious, could result in the expenditure of significant financial and managerial resources.

PRINCIPAL AND SELLING STOCKHOLDERS

The following table sets forth certain information known to us regarding beneficial ownership of our common stock as of August 19, 2011 by our executive officers and directors (individually and as a group) and each person who is known by us to beneficially own more than five percent of our common stock. In addition, the following table sets forth the name of each selling stockholder and the number of shares of common stock that each selling stockholder may offer pursuant to this prospectus. Except as otherwise indicated, we believe that each of the beneficial owners and selling stockholders listed below has sole voting and investment power with respect to such shares, subject to community property laws, where applicable. Unless otherwise noted, the address of each stockholder is c/o Integrity Applications, Inc., P.O. Box 432, Ashkelon 78100, Israel.

None of the selling stockholders has had a material relationship with us other than as a stockholder at any time within the past three years or has ever been one of our officers or directors.

Beneficial ownership is determined in accordance with the rules of the SEC, and includes any shares of common stock as to which a person has sole or shared voting power or investment power and any shares of common stock which the person has the right to acquire within 60 days through the exercise of any option, warrant or right, through conversion of any security or pursuant to the automatic termination of a power of attorney or revocation of a trust, discretionary account or similar arrangement.

	Shares Owned Prior to the Offering					Number of Shares Being Offered		Shares Owned After the Offering
Name of Beneficial Owner	Number 1		Percent 2			Shares		Number 1		Percent 2
Executive Officers and Directors :
Jacob Bar-Shalom		0		—					0		—
Zvi Cohen		361,702		6.8	%		—		361,702		6.8	%
Dr. Robert Fischell		48,000		*			—		48,000		*
Avner Gal		410,151		7.8	%		—		410,151		7.8	%
Joel Gold 3		318,432		6.0	%		—		318,432		6.0	%
David Malka		185,166		3.5	%		—		185,166		3.5	%
All Executive Officers and Directors As A Group (6 Persons)		1,323,451		25.0	%		—		1,323,451		25.0	%
Principal Stockholders:
Amos and Daughters Investments and Properties Ltd. 4		393,714		7.4	%		—		393,714		7.4	%
Vayikra Capital, LLC 5		398,467		7.5	%		—		398,467		7.5	%

*	Less than one percent.

In determining beneficial ownership, a beneficial owner of a security includes any person who, directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise has or shares (1) voting power which includes the power to vote, or to direct the voting of, such securities and/or (2) investment power which includes the power to dispose, or to direct the disposition, of such security. In addition, for the purposes of this chart, a person is deemed to be the beneficial owner of a security if that person has the right to acquire beneficial ownership of such security within 60 days, including, but not limited to, any right to acquire: (a) through exercise of an option, warrant or right; (b) through the conversion of security; (c) pursuant to the power to revoke a trust, discretionary account or similar arrangement; or (d) pursuant to the automatic termination of a trust, discretionary account or similar arrangement.

2	Based upon 5,295,543 shares of common stock issued and outstanding as of August 19, 2011.

3	Includes 218,280 shares held by relatives and affiliates of Mr. Gold.

4	The address of Amos and Daughters Investments and Properties Ltd. is Shekel House, 111 Arlozorov St. Tel-Aviv 61216 Israel. Eri Steimatzky has voting and investment control over the shares held by Amos and Daughters Investments and Properties Ltd..

5	The address of Vayikra Capital, LLC is 1 Farmstead Road, Short Hills 07078 NJ, USA. Philip M. Darivoff has voting and investment control over the shares held by Vayikra Capital, LLC.

	Shares Owned Prior to the Offering					Number of Shares Being Offered		Shares Owned After the Offering
Name of Beneficial Owner	Number 1		Percent 2			Shares		Number 1		Percent 2
Y.H. Dimri Holdings 6		719,998		13.6	%		—		719,998		13.6	%
Selling Stockholders:
Accredited Members Inc. 7		6,855		*			6,855		—		—
Charles Abramovitz 8		24,173		*			24,173		—		—
H Applebaum Family Trust U/A DTD 07/17/92 9		24,000		*			24,000		—		—
Alan Armbrust		8,000		*			8,000		—		—
Ronald C. Astrup		16,000		*			16,000		—		—
Scott E. Bennett		4,000		*			4,000		—		—
Howard Berg 10		80,000		1.51	%		80,000		—		—
Kimberly L. Blake-Dotson		4,000		*			4,000		—		—
Adam Boris DDS		4,000		*			4,000		—		—
Rodney and Lorie Bourne JT TEN/WROS		1,600		*			1,600		—		—
RBC Capital Markets LLC Custodian FBO Rodney Bourne Roth IRA		2,400		*			2,400		—		—
Sam Buck Jr.		8,000		*			8,000		—		—
Daniel C. Cadle		4,768		*			4,768		—		—
Dave Carson		16,000		*			16,000		—		—
Bryan W. Chetelat 11		8,000		*			8,000		—		—
Ernest J. Chornyei		16,000		*			16,000		—		—
Chung Family Trust DTD 07/11/1999 12		16,000		*			16,000		—		—
John W. Clingman		16,000		*			16,000		—		—
William Conklin		16,000		*			16,000		—		—
Brian Dahl		16,000		*			16,000		—		—
Mark S. Devan		64,000		1.21	%		64,000		—		—
Michael H. Diamant		4,000		*			4,000		—		—
Gary J. Faden		3,520		*			3,520		—		—
Seth Farbman		2,400		*			2,400		—		—
Dr Robert and Susan Fischell JT TEN/WROS		40,000		*			40,000		—		—

6	The address of Y.H. Dimri Holdings is 1 Jerusalem St. Netivot, 87710 Israel. Y.H. Dimri is entitled to these subject to the fulfillment of certain requirements. Yigal Dimri has voting and investment control over the shares held by Y.H. Dimri Holdings.

7	J.W. Roth has voting and investment control over the shares held by Accredited Members Inc.

8	Includes 11,603 shares held by RBC Capital Markets LLC Custodian FBO Charles Abramovitz CPA SEP-IRA.

9	Howard Applebaum has voting and investment control over the shares held by the H Applebaum Family Trust U/A Dtd 07/17/92.

10	Includes 35,984 shares held by the Specialists In Otolaryngology Defined Benefit Plan U/A Dtd 01/01/2009 of which Howard Berg has voting and investment control.

11	Includes 5,120 shares held by RBC Capital Markets LLC Custodian FBO Bryan W. Chetelat SEP-IRA.

12	Aubrey Chung Jr. has voting and investment control over the shares held by the Chung Family Trust Dtd 07/11/1999.

	Shares Owned Prior to the Offering				Number of Shares Being Offered		Shares Owned After the Offering
Name of Beneficial Owner	Number 1		Percent 2		Shares		Number 1		Percent 2
Peter Flannary		24,000		*		24,000		—		—
Morris E. Franklin Jr. Trust DTD 04/24/1988 13		8,000		*		8,000		—		—
RBC Capital Markets LLC Custodian FBO Aaron Fricke IRA		17,137		*		17,137		—		—
RBC Capital Markets LLC Custodian FBO Kenneth John Fricke IRA		8,569		*		8,569		—		—
Gary A. Gelbfish		24,058		*		24,058		—		—
Gh Downie Holdings LLC 14		16,000		*		16,000		—		—
RBC Capital Markets LLC Custodian FBO Jerry L. Gilmore IRA		21,137		*		21,137		—		—
Alfred Gollomp		2,000		*		2,000		—		—
Aron Green		3,200		*		3,200		—		—
Estate of Harry Gruszecki 15		4,800		*		4,800		—		—
Subhash and Harbans Gulati JT TEN/WROS		3,428		*		3,428		—		—
Dan R. and Marianne Hamby JT TEN/WROS		4,000		*		4,000		—		—
RBC Capital Markets LLC Custodian FBO William E. Harnish		7,200		*		7,200		—		—
RBC Capital Markets LLC Custodian FBO John Harrison IRA		4,000		*		4,000		—		—
Chad Heimsoth		8,000		*		8,000		—		—
Michael Herman		19,737		*		19,737		—		—
RBC Capital Markets LLC Custodian FBO Patricia C. Holmes IRA		4,000		*		4,000		—		—
JAG Multi Investments LLC 16		34,273		*		34,273		—		—
JAM 123 LLC 17		4,000		*		4,000		—		—
JAM Capital Associates LLC 18		8,569		*		8,569		—		—
Sylvia S. Johe Revocable Trust U/A DTD 11/07/2008 19		7,800		*		7,800		—		—

13	Morris Franklin has voting and investment control over the shares held by the Morris E. Franklin Jr. Trust DTD 04/24/1988.

14	Gordon Downie has voting and investment control over the shares held by GH Downie Holdings LLC.

15	Tobi D’Andrea, executor, has voting and investment control over the shares held by The Estate of Harry Gruszeki.

16	Alexander M. Goren and James G. Goren have voting and investment control over the shares held by JAG Multi Investments LLC.

17	Leonard Pearlman has voting and investment control over the shares held by Jam 123 LLC.

18	Leonard Pearlman has voting and investment control over the shares held by Jam Capital Associates LLC.

19	Sylvia S Johe has Voting and Investment Control Over the shares held by the Sylvia S Johe Revocable Trust U/A DTD 11/07/2008.

	Shares Owned Prior to the Offering				Number of Shares Being Offered		Shares Owned After the Offering
Name of Beneficial Owner	Number 1		Percent 2		Shares		Number 1		Percent 2
Larry Kaibel		16,000		*		16,000		—		—
Robert G. Kammann		8,000		*		8,000		—		—
Rami Kanzen-Longbeach		8,000		*		8,000		—		—
James Karanfilian		4,000		*		4,000		—		—
Michael Katz		8,000		*		8,000		—		—
RBC Capital Markets LLC Custodian FBO Nadine Kirk IA		2,400		*		2,400		—		—
Helen M Kreisler Revoc Trust U/A DTD 06/01/2001 20		8,569		*		8,569		—		—
Jimmy and Loyce Kulbeth JT TEN/WROS		16,000		*		16,000		—		—
Dennis K. Larson		32,000		*		32,000		—		—
Jan J. and Sofia M. Laskowski JT TEN/WROS		8,569		*		8,569		—		—
Ira F. Levy		8,000		*		8,000		—		—
RBC Capital Markets LLC Custodian FBO Emily Mays IRA		2,400		*		2,400		—		—
Dr. Daniel Mccollum		16,000		*		16,000		—		—
Joseph C. Mcnay		8,000		*		8,000		—		—
George Melas-Kyriazi		24,000		*		24,000		—		—
Francine D. Merenghi Liv Trust U/A Td 07/30/1999 21		4,000		*		4,000		—		—
RBC Capital Markets LLC Custodian FBO E. Ward Merrell Segregated Rollover IRA		17,569		*		17,569		—		—
RBC Capital Markets LLC Custodian FBO Jonathan Meyers IRA		8,000		*		8,000		—		—
Eileen Minte		8,000		*		8,000		—		—
RBC Capital Markets LLC Custodian FBO James Mitchell IRA		3,428		*		3,428		—		—
Christine A.. Mittman		16,569		*		16,569		—		—
Seaview Orthopaedics 401k U/A DTD 06/30/1986 Self Directed Account FBO Roy D. Mittman 22		19,315		*		19,315		—		—

20	Helen M. Kreisler has voting and investment control over the shares held by the Helen M. Kreisler Revoc Trust U/A DTD 06/01/2001.

21	Francine D. Merenghi has voting and investment control over the shares held by the Francine D. Merenghi Liv Trust U/A Td 07/30/1999.

22	Harry Wolfmuller and Arthur Vasen have voting and investment control over the shares held by the Seaview Orthopaedics 401k U/A DTD 06/30/1986 FBO Roy D. Mittman.

	Shares Owned Prior to the Offering				Number of Shares Being Offered		Shares Owned After the Offering
Name of Beneficial Owner	Number 1		Percent 2		Shares		Number 1		Percent 2
RBC Capital Markets LLC Custodian FBO Steven Morgan IRA		4,000		*		4,000		—		—
Damon Mungo		6,446		*		6,446		—		—
RBC Capital Markets LLC Custodian FBO George Mungo IRA		2,571		*		2,571		—		—
Anthony Musto		8,000		*		8,000		—		—
Gregory B. Pepus 23		32,000		*		32,000		—		—
Roger D. Plackemeier		4,000		*		4,000		—		—
Profit Sharing Plan and Trust Of Pruitt&Pruitt Att At Law DTD 2/5/2002 24		4,000		*		4,000		—		—
The Royal W Ranney Rev Trust U/A DTD 03/22/1999 25		8,569		*		8,569		—		—
Robert S. Rau		8,000		*		8,000		—		—
Howard Rhine		2,000		*		2,000		—		—
Michael C. Robert and Patricia R. Ochoa JT TEN/WROS		32,000		*		32,000		—		—
Larry Roher		8,000		*		8,000		—		—
Alvin Rush		2,000		*		2,000		—		—
Jonathan Sack 26		20,000		*		20,000		—		—
Albert M. Scholten		5,000		*		5,000		—		—
John T. Sheridan 27		16,000		*		16,000		—		—
Steven and Judy Slaybaugh JT TEN/WROS		16,000		*		16,000		—		—
Thomas Smith		8,569		*		8,569		—		—
Jay R. Solan 28		16,000		*		16,000		—		—

23	Includes 21,440 shares held by RBC Capital Markets LLC Custodian FBO Gregory B. Pepus IRA.

24	J Calhoun Pruitt Jr. has voting and investment control over the shares held by The Profit Sharing Plan and Trust Of Pruitt&Pruitt Att At Law DTD 2/5/2002.

25	Royal W. Ranney and Merle Jean Ranney have voting and investment control over the shares held by The Royal W. Ranney Rev Trust U/A DTD 03/22/1999.

26	Includes 3,900 shares held by RBC Capital Markets LLC Custodian FBO Jonathan S. Sack SEP IRA and 14,100 shares held by RBC Capital Markets LLC Custodian FBO Jonathan Sack PSP over which the selling stockholder has voting or investment control.

Includes 8,000 shares held in a joint account with the selling stockholder's spouse, 2,880 shares held by RBC Capital Markets LLC Custodian FBO John T. Sheridan IRA over which the selling stockholder has voting or investment control, and 5,120 shares held by RBC Capital Markets LLC Custodian FBO John T. Sheridan SEP-IRA over which the selling stockholder has voting or investment control.

28	Includes 8,000 Shares held in a joint account with the selling stockholder's spouse.

	Shares Owned Prior to the Offering				Number of Shares Being Offered		Shares Owned After the Offering
Name of Beneficial Owner	Number 1		Percent 2		Shares		Number 1		Percent 2
Southern Investment Trust DTD 4/10/08 29		16,000		*		16,000		—		—
Karen Wendy Spence		25,137		*		25,137		—		—
Robert M. Sterling		4,800		*		4,800		—		—
Theodore Stortz		17,137		*		17,137		—		—
Alan R. Sycoff		30,846		*		30,846		—		—
JMS Diversified Holdings LLC 30		6,855		*		6,855		—		—
RBC Capital Markets LLC Custodian FBO Joyce M. Sycoff IRA		10,282		*		10,282		—		—
Tom D. Todd		16,000		*		16,000		—		—
Anthony Towell		4,000		*		4,000		—		—
Steven M .Wagner 31		16,000		*		16,000		—		—
RBC Capital Markets LLC Custodian FBO C. Glen Wensley IRA		8,000		*		8,000		—		—
Seaview Orthopedics 401(k) U/A dated 6/30/86 Self Directed Account FBO Harry Wolfmuller 32		2,880		*		2,880		—		—
Thomas Wollschlager		32,000		*		32,000		—		—
Donald E. Womeldorph Jr.		8,000		*		8,000		—		—
Zoion Inc. 33		8,000		*		8,000		—		—

29	Gary Southern has voting and investment control over the shares held by The Southern Investment Trust DTD 4/10/08.

30	Joyce M. Sycoff has voting and investment control over the shares held by JMS Diversified Holdings LLC.

31	Includes 8,000 shares held by RBC Capital Markets LLC Custodian FBO Steven Wagner IRA.

32	Harry Wolfmuller and Arthur Vasen have voting and investment control over the shares held by The Seaview Orthopedics 401(K) Uad 6/30/86 Self Directed Account FBO Harry Wolfmuller.

33	James Hughes and Sofia Gitis have voting and investment control over the shares held by Zoion Inc.

MANAGEMENT

The following is a list of the names, ages and positions of our directors and executive officers as well as one significant employee, Eugene Naidis. The directors hold office for one year terms and until their successors have been elected and qualified. The executive officers hold office for one year terms or until their successors are elected by the board of directors. The executive officers and directors of Integrity Israel are the same as our executive officers and directors, except that Elazar Sonnenschein, a designee of Dimri pursuant to the Investment Agreement with Dimri, serves as a director of Integrity Israel.

Name	Age	Position with Integrity
Avner Gal	57	Chairman of the Board and Chief Executive Officer
Zvi Cohen	57	Director
Dr. Robert Fischell	81	Director
Joel L. Gold	69	Director
David Malka	46	Director and Vice President of Operations
Jacob Bar-Shalom	45	Chief Financial Officer
Eugene Naidis	43	Project Manager

Directors and Executive Officers

Avner Gal has served as our Chairman of the Board and Chief Executive Officer since our founding in 2001. Prior to founding us, Mr. Gal served as a managing director of Solid Systems, an Israeli start-up company engaged in the development of radar and ultra-sound technologies, from 2000 to 2001. From 1999 to 2000, Mr. Gal served as an engineering department manager with Comverse Network Systems. From 1996 to 1999, Mr. Gal was a section head at MTI Engineering Ltd., a consulting company and electronic systems provider in the communications, aerospace and military industries. Prior to entering the private sector, Mr. Gal served for twenty-three years in various field and headquarters positions in the Israeli Navy and retired as Naval Commander. Mr. Gal received a Bachelor of Science degree in electrical engineering from the Technion - Israeli Institute of Technology in Haifa, Israel, a Master of Science degree in electrical engineering from the Naval Postgraduate School in Monterey, California and a Master of Business Administration in marketing management from the University of Derby, Israeli Branch, Ramat-Efaal, Israel. As an Israeli Naval Officer, Avner spent the majority of his duty as a development engineer. Among other projects, he initiated, characterized and managed the development of a full Electronic Warfare, which we refer to as EW, suite (interception and deception), which is still operational on board all missile patrol boats of the Israeli Navy. Another EW system which Avner was in charge of developing is operational on board Israeli submarines. Avner was also the head of the Israeli Navy’s technical intelligence branch and served as the managing integrator for the electronic combat suite on board Dolphin submarines. During the last 25 years Avner has been the primary instructor in the Naval Projects’ Officers Course. Mr. Gal’s scientific and business education and experience, as well as his knowledge of the Company and its product candidate gained through his role as the Company’s chief executive officer, are all factors that led to the conclusion that he should serve as a member of our board of directors.

Zvi Cohen has served as one of our directors since our founding in 2001. Mr. Cohen founded Zicon Ltd., an Israeli company engaged in the businesses of assembling, manufacturing and engineering electronic components, in 1985 and served as a managing director of the company from 1985 until February 2001, and as President from February 2011 until September 2011. Zicon focuses on full turnkey projects, such as personal computer board assemblies, harnesses, wiring, system assembly and integration, ICT and functional testing, for commercial, military and medical devices. Zicon has been in the medical device business for approximately ten years and is one of the leading manufacturers of medical devices (particularly MRI and ultrasound machines) in Israel and qualifies for ISO 13485 and with the FDA. On September 19, 2011, in connection with insolvency proceedings initiated by Zicon in respect of a proposed restructuring of Zicon, the District Court of HaMerkaz District in Petah Tikva, Israel, sitting in its capacity as a bankruptcy court (PRK 24929-09-11), appointed Adv. Israel Bachar and Mr. Uriel Alfasi, CPA as joint trustees for Zicon, and ordered that all proceedings initiated against Zicon will be stayed until October 31, 2011. Prior to founding Zicon, Mr. Cohen served in various operations capacities with Electrical Industries Manufacturing. Mr. Cohen received a Bachelor of Science degree in industrial management and a Master of Business Administration degree, both from Tel-Aviv University, Tel-Aviv, Israel. Mr. Cohen’s experience in the medical device industry, including as founder and managing director of Zicon, are all factors that led to the conclusion that he should serve as a member of our board of directors.

Dr. Robert Fischell has served as one of our directors since 2010. Dr. Fischell is an inventor and serial entrepreneur with over 130 issued U.S. patents. Dr. Fischell spent 36 years with the Johns Hopkins University Applied Physics Laboratory, which resulted in 53 patents in both aerospace and biomedical technology. His interests at Johns Hopkins then turned to the invention of new medical devices such as pacemakers and implantable heart defibrillators. Starting in 1969, Dr. Fischell began the formation of 14 private companies that licensed his patents on medical devices. These companies include Pacesetter Systems, Inc. (purchased by Siemens and St. Jude Medical), IsoStent, Inc. (merged with Cordis Company, a Johnson and Johnson Company), NeuroPace, Inc., Neuralieve, Inc., Angel Medical Systems, Inc, and Svelte Medical Systems, Inc. As it relates to diabetes management devices, he was the inventor of the first implantable insulin pump (which became Minimed, which sold to Medtronic). Dr. Fischell’s honors include Inventor of the Year for the USA in 1984, election to the National Academy of Engineering in 1989, the Distinguished Physics Alumnus Award of the University of Maryland, and several medals for distinguished accomplishments in science, engineering and innovation. In 2004, Discover magazine gave Dr. Fischell their annual Technology for Humanity award. In 2008, Dr. Fischell received the honorary degree of Doctor of Humane Letters from the Johns Hopkins University in recognition of his many life saving inventions. Dr. Fischell received his BSME degree from Duke University and MS and Sc.D. degrees from the University of Maryland. Dr. Fischell’s extensive experience in the medical device industry, including inventing and commercializing numerous medical devices, are all factors that led to the conclusion that he should serve as a member of our board of directors.

Joel L. Gold has served as one of our directors since 2005. Mr. Gold is an Investment Banker at Buckman Buckman & Reid, Inc, an investment-banking firm located in New Jersey. From November 2004 until June 2010, he was an investment banker at Andrew Garrett, Inc., the placement agent for our recently completed private placement. From January 1999 until December 1999, he was an Executive Vice President of Solid Capital Markets, an investment-banking firm also located in New York City. From September 1997 to January 1999, he served as a Senior Managing Director of Interbank Capital Group, LLC, an investment banking firm also located in New York City. From April 1996 to September 1997, Mr. Gold was an Executive Vice President of LT Lawrence & Co., and from March 1995 to April 1996, Managing Director of Fechtor Detwiler & Co., Inc. Mr. Gold was a Managing Director of Furman Selz Incorporated from January 1992 until March 1995. From April 1990 until January 1992, Mr. Gold was a Managing Director of Bear Stearns and Co., Inc. For approximately 20 years before he became affiliated with Bear Stearns, he held various positions with Drexel Burnham Lambert, Inc. He is currently a director of Food Innovations, a specialty food company, and Best Energy Services. From 1995 until the company’s sale in April 2011, Mr. Gold served as a director of Emerging Vision, a formerly publicly held retail eye care company. Mr. Gold also served as a director of BlastGard International, a publicly held developer of blast mitigation materials, until his resignation from the board on February 2010. Mr. Gold has a B.S. in accounting from Brooklyn College, an M.B.A. from Columbia Graduate School of Business, and a Juris Doctorate from New York University Law School. Mr. Gold is the President and Founder of Just One Life, a charitable organization that assists women with difficult childbirth conditions. Mr. Gold’s extensive knowledge and experience in the area of finance, as well as his experience as a director of a publicly held company, are all factors that led to the conclusion that he should serve as a member of our board of directors.

David Malka has served as one of our directors and our Vice President of Operations since 2003. Prior to joining us, Mr. Malka served as a vice president of operations for Solid Systems from 2000 to 2003. From 1994 to 2000, Mr. Malka served as a manager of production and purchasing at Kollmorgen-Servotronix, an Israeli company specializing in the design, development and manufacture of digital servo control systems. From 1991 to 1993, Mr. Malka was a production design and inspection worker at TFL Time & Frequency Systems Ltd. Mr. Malka has a degree in practical engineering - industrial management from the Institute of Work & Production Productivity, Tel-Aviv and a B.A. in management from the Open University in Israel. Mr. Malka’s extensive executive experience in the medical device industry led to the conclusion that he should serve as a member of our board of directors.

Jacob Bar-Shalom has served as our Chief Financial Officer since January 2011. Since December 2008, Mr. Bar-Shalom has served as a principal of XplanIT Financial Consulting and Outsourcing, a company that provides financial services to private and publicly-held high-tech companies. In this capacity, he also currently serves as the Chief Financial Officer of ForexManage Ltd. Prior to joining XplanIT, Mr. Bar-Shalom served as the Group Chief Financial Officer of Veolia Israel, a subsidiary of Veolia Environment (NYSE: VE), a worldwide provider of environmental services from February 2007 to November 2008. From January 2006 to January 2007, Mr. Bar-Shalom served as the outsourced Chief Financial Officer of Acro, Inc. (OTCBB: ACRI), a provider of detection devices for the homeland security market. Mr. Bar-Shalom also previously served as the Chief Financial Officer of Digital Fuel Technologies, an international software company, from 2002 until 2005, and as a Senior Manager at the accounting firms BDO Seidman and Ernst & Young. Mr. Bar-Shalom holds a Masters of Business Administration from the Hebrew University in Jerusalem and is a Certified Public Accountant in the U.S. Mr. Bar-Shalom serves as Chairman of the Board of MicroFinance Israel, a non-governmental organization that he founded.

Significant Employee

Eugene Naidis joined us in 2002 as a software engineer and since 2005 has served as the project manager. Prior to joining us, Mr. Naidis served as a software team manager at Solid Systems from 1996 to 2002. From 1999 to 2002, Mr. Naidis also served as a software engineer at INESA East, an Israeli company engaged in the development, design and manufacturing of specialty measurement devices. Prior to joining Solid Systems, Mr. Naidis served as a programmer at Luck-Scan, a technological incubator in Ashkelon, Israel and at Magnitogorsk Iron & Steel Works, Magnitogorsk, Russian Federation. Mr. Naidis received a Bachelor of Science degree in metallurgy engineering and a Master of Science degree in metallurgy and computer engineering from the Metallurgical Institute, Magnitogorsk, Russian Federation, and an authorization in systems programming from the Institute for Labor and Productivity, Tel Aviv, Israel.

Advisory Board

Our Advisory Board is set forth below. None of the members of our Advisory Board has entered into any written agreements with us other than MedicSense, the company of which Mr. Adi Ickowicz is a principal. MedicSense is assisting us in obtaining its FDA clearance and CE mark in consideration for being paid a monthly fee and options in our company.

Dr. Ilana Harman-Boehm, M.D. heads the Department of Internal Medicine and is the Director of the Diabetes Unit at Soroka University Medical Center in Beer-Sheba, Israel. Dr. Harman served as deputy Chairman for the Israeli Diabetes Association and serves as Director of Educational Programs.

Professor Yariv Malimovka, M.D. is a leading expert in vascular surgery. He currently serves as a senior scientific advisor to major medical centers (such as Clinica Tara Tenerife España) in Spain, as well as in Eastern Europe. In addition, Professor Malimovka also manages Internacional Clinic Arterial Disease, an institute for research and treatment of arteriosclerosis in Madrid, Spain.

Mr. Adi Ickowicz, Bsc. ME serves as Director of MedicSense, a consulting firm which specializes in helping companies navigating the international regulatory maze. With more than 20 years of experience, Mr. Ickowicz has helped many companies meet regulatory demands for their products, guiding them through specific technological requirements and best practices for the collection of clinical data.

Director Compensation

Directors and members of the Advisory Board receive no compensation from us other than their compensation as our employees, for those that are employees, which compensation is described below under Executive Compensation.

Executive Compensation

Summary Compensation Table

The following table sets forth the 2010 and 2009 compensation for our Mr. Gal, our principal executive officer, and Mr. Malka, our other executive officer for the years ended December 31, 2010 and 2009. Mr. Bar-Shalom was not appointed as an officer of ours until 2011.

Name and Principal Position	Year		Salary		All Other Compensation			Total Compensation
Avner Gal	2010	(1)	$	106,542	$	27,012	(2)	$	133,554
Chief Executive Officer	2009	(3)	$	103,334	$	25,451	(4)	$	128,785
David Malka	2010	(1)	$	55,674	$	20,092	(5)	$	75,766
Vice President of Operations	2009	(3)	$	54,573	$	18,568	(6)	$	73,141

(1)	Calculated based on the average exchange rate for the year of New Israeli Shekels for U.S. Dollars of NIS 3.72 = U.S. $1.00.

(2)

Includes $21,586 in automobile expenses paid by us, including leasing costs, insurance premiums, gasoline and/or repairs incurred in connection with the executive’s automobile and $5,155 in cellular communications expenses paid by us, representing the estimated costs of our cellular communications expenses attributable to the executive.

(3)	Calculated based on the average exchange rate for the year of New Israeli Shekels for U.S. Dollars of NIS 3.92 = U.S. $1.00.

(4)

Includes $19,924 in automobile expenses paid by us, including leasing costs, insurance premiums, gasoline and/or repairs incurred in connection with the executive’s automobile and $5,527 in cellular communications expenses paid by us, representing the estimated costs of our cellular communications expenses attributable to the executive.

(5)

Includes $17,514 in automobile expenses paid by us, including leasing costs, insurance premiums, gasoline and/or repairs incurred in connection with the executive’s automobile and $2,578 in cellular communications expenses paid by us, representing the estimated costs of our cellular communications expenses attributable to the executive.

(6)

Includes $15,804 in automobile expenses paid by us, including leasing costs, insurance premiums, gasoline and/or repairs incurred in connection with the executive’s automobile and $2,764 in cellular communications expenses paid by us, representing the estimated costs of our cellular communications expenses attributable to the executive.

Outstanding Equity Awards At Fiscal Year End

We did not have any outstanding equity awards held by any of our named executive officers as of December 31, 2010.

Avner Gal

Avner Gal entered into an employment agreement with Integrity Israel in July 2010 pursuant to which Mr. Gal agreed to continue to serve as the chief executive officer and managing director of Integrity Israel. Mr. Gal’s employment agreement provides for an annual salary of NIS 480,000, or $140,566 based on the exchange rate on June 30, 2011, an annual bonus to be determined by the board of directors, an additional sum payable in the event that Mr. Gal meets certain milestones approved by the board, as well as the payment of certain social and insurance benefits and the use of a company car. The agreement also provides for a renegotiation of Mr. Gal’s annual salary on the one-year anniversary thereof and the renegotiation of Mr. Gal’s bonus formula once Integrity Israel has begun commercialization of its products. The agreement is terminable by either party on 180 days notice, immediately by Integrity Israel with the payment of an amount equal to 180 days of annual salary, or immediately by Integrity Israel for cause (as defined in the agreement) without the payment of severance. Mr. Gal received options to purchase 264,778 shares of our common stock, which represents 5% of the shares of our common stock outstanding following the private placement. The options will be exercisable at $6.25 per share and will vest in one-third increments upon (i) submission of clinical trials’ results to the Notified Body; (ii) CE mark approval; (iii) FDA approval, subject to immediate vesting in the event of a change of control. Mr. Gal is subject to non-compete and a confidentiality agreement during the term of the agreement and for one year thereafter.

Jacob Bar-Shalom

On January 1, 2011, we appointed Jacob Bar-Shalom as Chief Financial Officer. Mr. Bar-Shalom is providing services to us pursuant to an agreement between us and XplanIT Ltd., of which Mr. Bar-Shalom serves as a principal. Pursuant to its agreement with XplanIT, we will pay XplanIT a monthly retainer of NIS 11,000 plus VAT for the preparation of our annual and three quarterly reports in accordance with US GAAP and general accounting and financial reporting services, with additional work, if any, to be performed at a rate of NIS 400 per hour plus VAT, as well as reimbursement of business expenses commensurate with our expense reimbursement policies. Presently, Mr. Bar-Shalom provides services to us on a part-time basis.

David Malka

David Malka entered into an employment agreement with Integrity Israel in July 2010 pursuant to which Mr. Malka agreed to continue to serve as the vice president of operations of Integrity Israel. Mr. Malka’s employment agreement provides for an annual salary of NIS 240,000, or $70,278 based on the exchange rate on June 30, 2011, and an annual bonus to be determined by the board of directors and an additional sum provided that Mr. Malka reaches certain milestones approved by the board, as well as the payment of certain social and insurance benefits and the use of a company car. The agreement also provides for a renegotiation of Mr. Malka’s annual salary on the one-year anniversary thereof and the renegotiation of Mr. Malka’s bonus formula once Integrity Israel has begun commercialization of its products. The agreement is terminable by either party on 90 days notice, immediately by Integrity Israel with the payment of an amount equal to 90 days of annual salary, or immediately by Integrity Israel for cause (as defined in the agreement) without the payment of severance. Mr. Malka received options to purchase 79,434 shares of our common stock, which represents 1.5% of the shares of our common stock outstanding following the private placement. The options will be exercisable at $6.25 per share and will vest in one-third increments upon (i) submission of clinical trials’ results to the Notified Body; (ii) CE mark approval; and (iii) FDA approval, subject to immediate vesting in the event of a change of control. Mr. Malka is subject to non-compete and confidentiality agreement during the term of the agreement and for one year thereafter.

Eugene Naidis

We entered into an employment agreement with Eugene Naidis on December 1, 2004. Pursuant to this agreement, Mr. Naidis is engaged by us as a project manager and software engineer pursuant to the following terms and conditions: (i) Mr. Naidis is entitled to paid annual leave of 1.5 days for every full month of employment by us and to a standard pension plan; (ii) as we consider Mr. Naidis’ position to be one that requires a special degree of personal trust, Mr. Naidis is not entitled to compensation for working overtime; and (iii) Mr. Naidis is subject to non-competition and non-solicitation restrictions during the term of his employment and for six months thereafter and to standard non-disclosure obligations and protection of our intellectual property rights. If it is determined that Mr. Naidis’ position is not one that requires a special degree of personal trust, he would be entitled to overtime. Mr. Naidis also receives a cellular phone from us.

Compensation Committee Interlocks and Insider Participation

No member of our board of directors during 2010 had any relationship that would be considered a compensation committee interlock.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Agreement with Y. H. Dimri Ltd.

Integrity Israel is party to a loan and investment agreement dated February 18, 2003 with Dimri pursuant to which Dimri loaned us a principal amount of NIS 1,440,000, subject to linkage differences in Israel ($421,669 based on an exchange rate of $3.415 NIS/dollar as of June 30, 2011), which we refer to as the first phase loan. Upon completion of the development of the prototype of Integrity Israel’s monitoring device, Dimri could have advanced an additional loan to Integrity Israel in the amount of NIS 1,248,000 ($365,446 based on the same exchange rate), which we refer to as the second phase loan. In connection with the first phase loan, Dimri received shares of common stock representing 25% of Integrity Israel’s ordinary shares at such time. Under the Dimri agreement, certain rights in Integrity Israel were granted to Dimri, including an anti-dilution provision that provided that Dimri’s holdings in Integrity Israel would not be diluted below 18% of Integrity Israel’s issued capital shares as a result of any investment in Integrity Israel subject to the fulfillment of certain requirements. On the date of the reorganization, Dimri owned 18% of Integrity Israel’s ordinary shares and, therefore, upon the completion of the reorganization, Dimri was entitled to receive 18% of the shares of common stock of the Company outstanding on such date in exchange for his shares in Integrity Israel, subject to the fulfillment of certain requirements . We believe, based on the advice of Israeli counsel, that, given Dimri no longer owns shares in Integrity Israel as a result of the reorganization, rights attached to the shares in Integrity Israel no longer exist in Integrity Israel and do not and have never existed in us. However, Dimri has refused to acknowledge or agree to the termination of these rights and has challenged our position.

As a condition to the private placement, our founders entered into an Irrevocable Undertaking of Indemnification with us pursuant to which, among other things, the founders agreed to indemnify us and hold us harmless from any adverse consequences (excluding the fees and costs of defending us) that result from Dimri’s, or Dimri’s successors’ or assigns’, enforcement of the anti-dilution rights granted to Dimri as described above. The founders’ obligations under the Irrevocable Undertaking of Indemnification only obligate each founder to transfer up to such number of shares of our common stock that he or she owned as of July 26, 2010 to Dimri or to us. The term of the Irrevocable Undertaking of Indemnification is three years (subject to extension if there is a pending action), provided that after two years, any founder may sell or transfer up to twenty percent (20%) of his or her shares of common stock covered by the Irrevocable Undertaking of Indemnification so long as no action is pending by Dimri against us at the time of such sale and the sale price of the common stock is at least $6.25 per share. No assurances can be made that the Irrevocable Undertaking of Indemnification will fully protect us or our stockholders from any adverse consequences of an action by Dimri to enforce its anti-dilution rights. In addition, Dimri may assert other rights that it had under the Investment Agreement, for which we are not indemnified.

All of the individuals who are a party to the Irrevocable Undertaking of Indemnification have agreed to refrain from any competition with us and our activities during the term in which they own any shares of common stock and for a period of ten years thereafter.

Finally, each of such individuals had a right of first refusal (i) with respect to any transfer of Integrity Israel’s shares; and (ii) to participate in any future capital raise by Integrity Israel.

Following the commencement of the private placement, Mr. Dimri’s former representative on the board of directors of Integrity Israel, Zeev Mintus, resigned, and Mr. Dimri replaced him with Elazar Sonnenschein. In connection with his resignation, on September 11, 2010, Mr. Mintus also claimed in an email sent to Mr. Gal and placement agent representatives that “Dimri’s rights can only be waived with its written consent, and Dimri has made it absolutely clear that it does not give consent.” He also claimed that the previous day and other times in the past, Mr. Gal had told him that Mr. Dimri’s rights would continue in full with respect to the new corporate parent and would not be adversely affected by the reorganization. Finally, he alleged that the fact that Integrity Israel and its shareholders would consider evading their contractual obligations “—let alone work to effect a scheme to defraud both Dimri and investors in a planned IPO is untenable.” We deny these allegations and consider them to be defamatory. Mr. Gal responded indicating, among other things, that although we have continually indicated that we are willing to constructively discuss existing matters with Mr. Dimri, we disagreed with Mr. Mintus’ assertions relating to Mr. Dimri’s rights and contested Mr. Mintus’ allegations about statements allegedly made by Mr. Gal.

Integrity Israel and Andrew Garrett, Inc. subsequently received an email from separate counsel to Mr. Dimri alleging that Integrity Israel and Mr. Gal breached the agreement with Mr. Dimri, demanding that the “IPO process” cease until the matter is resolved and indicating that Mr. Dimri was prepared to seek injunctive relief to stop “the IPO” from proceeding and that he was prepared to seek all other legal recourse that he deemed appropriate. Such counsel also indicated that Mr. Dimri has been willing to discuss a proposal to compensate him for the elimination of his rights.

Counsel to Integrity Israel responded on October 5, 2010 rejecting and denying Mr. Dimri’s demands, arguments, positions and allegations and indicating that Integrity Israel would be willing to meet and discuss a reasonable and amicable solution, indicating that the private placement would continue, explaining that the reorganization had received all required approvals, including by the government, and had not been opposed by anyone, including Mr. Dimri, that as a result, no one had a right to shares in Integrity Israel, but only in us, and that Mr. Dimri has no more rights in us than any other stockholder. This response also indicated that the rights attached to the Integrity Israel shares do not continue in us and that we would fight any challenge to our position, which we intend to do. Integrity Israel’s counsel warned against interfering with the private placement process and warned against future defamatory remarks against us or our officers and directors.

On November 9, 2010, Integrity Israel and the founders received a letter from other counsel representing Mr. Dimri in his claims against Integrity Israel and the founders. The letter (i) reiterated the aforesaid arguments in greater detail, alleging, amongst other things, that Integrity Israel and the founders breached the agreement with Mr. Dimri and failed to act in good faith; (ii) added a claim that Mr. Dimri’s rights followed the transfer of the founders’ shares to us pursuant to the reorganization and that Mr. Dimri’s rights of first refusal should have been triggered by such transfer; (iii) demanded that Integrity Israel, the founders and us ensure that Mr. Dimri will be issued anti-dilution shares in our company so that he will maintain a stockholding of 18%; and (iv) requested that Mr. Dimri’s rights be committed to written agreements. The letter from Mr. Dimri’s counsel also suggested that Mr. Dimri is willing to seek a solution with Integrity Israel, us and the founders.

Counsel to Integrity Israel responded on February 6, 2011, rejecting and denying Mr. Dimri’s demands, arguments and allegations and indicating that Integrity Israel would be willing to meet to discuss an amicable solution. Integrity Israel’s counsel and founders’ counsel have met with Mr. Dimri’s counsel twice since then to discuss these issues, but no solution has been agreed to.

On May 11, 2011, Mr. Dimri’s counsel sent a letter requesting the appointment of an arbitrator pursuant to Mr. Dimri’s Loan and Investment Agreement, suggesting that one of three lawyers will be appointed as an arbitrator. On June 9, 2011, Integrity Israel’s counsel responded rejecting the names offered by Mr. Dimri’s counsel and suggesting three other lawyers.

On June 23, 2011, Mr. Dimri appealed to the District Court of HaMerkaz District in Petah Tikva, Israel, requesting the court to appoint an arbitrator to decide the dispute between Integrity Israel, the founders and Dimri (HPB 40754-06-11). On September 25, 2011, Integrity Israel's counsel filed an answer with the Court, disputing the facts and allegation raised in Dimri's motion and suggesting choosing an arbitrator with certain capacities, experience and skills. A hearing has been scheduled for October 11, 2011 for the purpose of appointing an arbitrator. In accordance with Israeli law, Mr. Dimri was not required to, and he did not, specify in his request for the appointment of an arbitrator the relief to be sought by him in such arbitration. As a result, we do not yet know the relief to be sought by Mr. Dimri at the hearing scheduled for October 11, 2011. We anticipate that Mr. Dimri will specify the relief sought after an arbitrator is appointed.

We do not know what other actions Mr. Dimri will ultimately bring, if any, and against whom they will be brought. Nevertheless, we, our counsel and Integrity Israel’s counsel believe that we have substantial defenses to any such claims and appropriate claims and counterclaims of our own and we intend to strongly defend against any such action by Mr. Dimri and to assert our own claims and counterclaims as we deem necessary.

Other Loans to Us

Messrs. Avner Gal and Zvika Cohen collectively loaned us $48,735 in May 2002. Messrs. Nir Tarlovski, Yitzhak Fisher and Asher Kugler loaned us $75,000 on March 16, 2004. These loans, in addition to the loan from Dimri mentioned above, are not to be repaid until the first year in which we realize profits in our annual income statement (accounting profit). At such time, the loans are to be repaid based on an indexation to the Consumer Price Index from the date of the loan and/or part thereof up to the date of each actual repayment of the loans or parts thereof. Repayment of the stockholders’ loans is to be made from sales, such that 10% of our total sales after deduction of VAT in every quarter, from the quarter following the first year in which we realize profits in our annual income statement, shall be transferred to each lender or group of lenders, until full repayment of the loans. However, notwithstanding the abovementioned mechanism, the Company will not be required to repay the loans during any time when such repayment would cause a deficit in the Company's working capital. The Gal and Cohen loan has priority over the Dimri loan. The terms of the repayment provisions of the foregoing loans can be modified by our board of directors, if such modification is applied equally to all loans. Our board of directors is entitled to modify the repayment terms of these loans, so long as such modification does not discriminate against any particular lender, and provided that all payments must be allocated among the lenders on a pro-rata basis.

DESCRIPTION OF SECURITIES

General

The following description of our capital stock and provisions of our certificate of incorporation and bylaws are summaries and are qualified by reference to our certificate of incorporation, bylaws and, with respect to the anti-dilution provision described under “—Common Stock”, the form of subscription agreement between us and the investors in the private placement.

Reorganization

On July 15, 2010, Integrity U.S., Integrity Israel, and Integrity Acquisition completed a reorganization, pursuant to which Integrity Acquisition merged with and into Integrity Israel and all of the stockholders and option holders of Integrity Israel became entitled to receive shares and options in us in exchange for their shares and options in Integrity Israel. Following the reorganization, the former equity holders of Integrity Israel received the same proportional ownership in us as they had in Integrity Israel prior to the reorganization. As a result of the reorganization, Integrity Israel became our wholly-owned subsidiary.

Common Stock

Holders of our common stock who acquired shares in our recently completed private placement have anti-dilution protection with respect to such shares until September 1, 2012 for certain issuances of common stock by us for less than $6.25 per share, subject to certain exceptions described below. As a result, in the event that we issue shares for less than $6.25 per share prior to September 1, 2012, each investor in the private placement will be entitled to purchase a number of additional shares of common stock equal to: (a) the total purchase price paid by such purchaser in the private placement divided by the per share purchase price offered by the Company in the dilutive issuance less (b) the number of shares of common stock acquired by such purchaser in the private placement. Such anti-dilution protections are not transferable, and will be subject to a pro rata reduction to the extent the investor sells any common stock prior to the dilutive issuance. For example, if (i) an investor purchased 16,000 shares of common stock for $100,000, and (ii) we later issue shares at a price of $5.00 per share in a transaction that triggers the anti-dilution protection provisions (and such investor has not sold any common stock since the closing of the offering), then such investor would be entitled to receive an additional 4,000 shares of common stock as a result of such dilutive issuance. The foregoing anti-dilution protections do not apply to: (i) issuances made to our employees, consultants, officers and/or directors in return for their services to us, provided that, in the case of an issuance of shares of common stock, such issuance is not made at a price less than the market price on the date of issuance, and in the case of an issuance of common stock equivalents, the exercise or conversion price thereof is not less than the market price on the date of issuance, (ii) issuance of shares pursuant to such anti-dilution provision, (iii) issuances made upon the conversion or exercise of any of our securities outstanding as of the date each respective subscription was entered into, (iv) issuances made pursuant to a bona fide firm commitment underwritten public offering, (v) issuances made in connection with any strategic acquisition, merger, business combination or similar transaction, the primary purpose of which is not to raise equity capital, and (vi) issuances made to former stockholders of Integrity Israel pursuant to (A) any obligation or commitment arising under applicable law or under any contract, agreement, or settlement to which we or Integrity Israel are bound, or (B) any injunction or other binding order of any court or other tribunal having jurisdiction over us or any of our subsidiaries.

As of August 19, 2011, 40,000,000 shares of common stock were authorized and 5,295,543 shares of common stock were issued and outstanding, held of record by 174 stockholders.

The holders of common stock are entitled to one vote for each share held on all matters submitted to a vote of the stockholders and do not have any cumulative voting rights. Holders of common stock are entitled to receive proportionally any dividends declared by the board of directors out of funds legally available therefor, subject to any preferential dividend or other rights of any then outstanding preferred stock.

In the event of our liquidation or dissolution, holders of common stock are entitled to share ratably in all assets remaining after payment of all debts and other liabilities, subject to the prior rights of any then outstanding preferred stock. Holders of common stock have no preemptive, subscription, redemption or conversion rights. All outstanding shares of common stock are validly issued, fully paid and nonassessable.

Delaware	3841	98-0668934
(State or Other Jurisdiction of Incorporation	(Primary Standard Industrial Classification	(I.R.S. Employer Identification
or Organization)	Code Number)	Number)

¨ Large accelerated filer	¨ Accelerated filer
¨ Non-accelerated filer (Do not check if a smaller reporting company)	x Smaller reporting company

Title of Each Class of Securities To Be Registered		Amount To Be Registered(1)				Proposed Maximum Offering Price Per Share				Proposed Maximum Aggregate Offering Price				Amount Of Registration Fee
Common Stock, par value $0.001 per share			1,295,545			$	6.25	(2)		$	8,097,156.25			$	940.08	(3)

Common stock offered by the selling stockholders:	1,295,545 shares

Common stock outstanding:	5,295,543 shares as of August 19, 2011, excluding shares of common stock issuable upon exercise of outstanding warrants and stock options.

Trading market:	There is currently no market for our common stock and we can offer no assurances that a market for our shares of common stock will develop in the future. We intend to seek a qualification for our common stock to be quoted on the OTCBB; however, no assurance can be given as to our success in qualifying for quotation on the OTCBB.

Price per share:	The selling stockholders may sell their shares of our common stock at a fixed price of $6.25 per share (the offering price per share of common stock in our most recent private placement completed in July 2011) until our common stock is quoted on the OTCBB, or listed for trading or quoted on any other public market, and thereafter at prevailing market prices or privately negotiated prices.

Use of proceeds:	We will not receive any of the proceeds from the sale or other disposition of the shares of common stock offered hereby.

Risk factors:	We are subject to a number of risks that you should be aware of before you decide to purchase our common stock. These risks are discussed more fully in the section captioned “Risk Factors,” beginning on page 7 of this prospectus.

	As of June 30, 2011 (unaudited) Actual Adjusted			Pro Forma
Debt
Credit Facility		-			-
Long-Term Loans from Stockholder		(641,428	)		(641,428	)
Total Debt		(641,428	)		(641,428	)

Stockholders’ Equity
Common Stock		(5,026	)		(5,296	)
Additional Paid-In Capital		(11,886,895	)		(13,351,180	)
Accumulated Other Comprehensive Income		16,394			16,394
Deficit Accumulated during the Development Stage		11,210,101			11,210,101
Total Stockholders’ Equity		(665,426	)		(2,129,980	)

Total Capitalization		(1,306,854	)		(2,771,408	)

	Page

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS		1

SUMMARY		2

RISK FACTORS		7

USE OF PROCEEDS		25

DIVIDEND POLICY		25

DETERMINATION OF OFFERING PRICE		25

DILUTION		25

CAPITALIZATION		26

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		27

BUSINESS		33

PRINCIPAL AND SELLING STOCKHOLDERS		55

MANAGEMENT		61

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS		66

DESCRIPTION OF SECURITIES		68

FEDERAL INCOME TAX CONSEQUENCES		72

PLAN OF DISTRIBUTION		76

LEGAL MATTERS		77

EXPERTS		77

WHERE YOU CAN FIND MORE INFORMATION		78

INDEX TO FINANCIAL STATEMENTS		F-1

	Number of securities to be issued upon exercise of outstanding options, warrants and rights		Weighted-average exercise price of outstanding options, warrants and rights		Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
	(a)		(b)		(c)
Equity compensation plans approved by security holders(1)		454,354	$	5.55		75,201
Equity compensation plans not approved by security holders		—		—		—
Total		454,354	$	5.55		75,201

	Page

Report of Independent Registered Public Accounting Firm	F-3

Consolidated Financial Statements

Balance Sheets	F-4

Statements of Operations	F-5

Statements of Changes in Stockholders’ Equity (Deficit)	F-6 – F-10

Statements of Cash Flows	F-11 – F-12

Notes to Consolidated Financial Statements	F-13 – F-34

	US dollars (except share data)
	June 30,			December 31,
	2011			2010			2009 (*)
	(unaudited)			(audited)
ASSETS
Current Assets
Cash and cash equivalents		1,501,275			1,494,248			62,032
Other current assets (Note 3)		61,409			85,704			34,530
Total current assets		1,562,684			1,579,952			96,562

Property and Equipment, Net (Note 4)		98,146			57,350			68,065

Funds in Respect of Employee Rights Upon Retirement		150,639			133,335			100,249
Total assets		1,811,469			1,770,637			264,876
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current Liabilities
Credit from banking institutions		-			18,843			92,715
Accounts payable (Note 5)		43,616			10,666			23,990
Other current liabilities (Note 6)		182,476			258,586			123,226
Total current liabilities		226,092			288,095			239,931

Long-Term Loans from Stockholders (Note 8)		641,428			625,881			573,746

Liability for Employee Rights Upon Retirement		278,523			258,522			226,941
Total liabilities		1,146,043			1,172,498			1,040,618

Commitments and Contingent Liabilities (Note 9)
Stockholders’ Equity (Deficit) (Note 10)
Common Stock of US$ 0.001 par value ("Common Stock"):
40,000,000 shares authorized as of June 30, 2011, December 31, 2010 and 2009; issued and outstanding 5,025,863; 4,844,575; 3,999,998 shares as of June 30, 2011, December 31, 2010 and 2009, respectively		5,026			4,845			4,000
Additional paid in capital		11,886,895			10,762,892			6,482,391
Accumulated other comprehensive income (loss)		(16,394	)		(16,418	)		102,601
Accumulated deficit		(11,210,101	)		(10,153,180	)		(7,364,734	)
Total stockholders' equity (deficit)		665,426			598,139			(775,742	)

Total liabilities and stockholders’ equity (deficit)		1,811,469			1,770,637			264,876

	US dollars (except share data)
	Three month period ended June 30,				Six month period ended June 30,				Year ended December 31,							Cumulative period from September 30, 2001 (date of inception) through June 30,
	2011		2010 (*)		2011		2010 (*)		2010 (*)			2009 (*)		2008 (*)		2011 (*)
	(unaudited)				(unaudited)				(audited)							(unaudited)

Research and development expenses, net (Note 11)		407,631		272,483		781,114		489,096		934,056			1,005,108		1,242,410		7,547,527
General and administrative expenses (Note 12)		89,098		83,293		254,736		226,352		457,495			165,156		156,632		1,872,325
Other income		-		-		-		-		(912	)		-		-		(912	)
Operating loss		496,729		355,776		1,035,850		715,448		1,390,639			1,170,264		1,399,042		9,418,940
Financing expenses, net (Note 13)		19,928		753,670		21,071		757,003		1,397,807			32,032		129,939		1,791,161
Loss for the period		516,657		1,109,446		1,056,921		1,472,451		2,788,446			1,202,296		1,528,981		11,210,101

Loss per share (basic and diluted) (Note 15)		0.10		0.28		0.22		0.37		0.70			0.30		0.40

Weighted average number of shares outstanding (basic and diluted) (Note 15)		4,989,720		3,999,998		4,922,582		3,999,998		4,034,706			3,995,805		3,816,314

	US Dollars (except share data)
	Common Stock						Accumulated other						Total
	Number of shares		Amount		Additional paid in capital		comprehensive loss			Accumulated deficit			stockholders ’ equity (deficit)
September 30, 2001 (date of inception)
2,136,307 Common Stock of US$ 0.001 per share issued for cash		2,136,307		2,136		38,306		-			-			40,442

Loss for the period		-		-		-		-			(63,293	)		(63,293	)
Loss on translation of subsidiary's financial statements from its functional currency to the reporting currency		-		-		-		(5	)		-			(5	)
Comprehensive loss														(63,298	)
Balance as of December 31, 2002		2,136,307		2,136		38,306		(5	)		(63,293	)		(22,856	)
Loss for the year		-		-		-		-			(350,290	)		(350,290	)
Loss on translation of subsidiary's financial statements from its functional currency to the reporting currency		-		-		-		(15,035	)		-			(15,035	)
Comprehensive loss														(365,325	)
Balance as of December 31, 2003		2,136,307		2,136		38,306		(15,040	)		(413,583	)		(388,181	)
Loss for the year		-		-		-		-			(288,233	)		(288,233	)
Loss on translation of subsidiary's financial statements from its functional currency to the reporting currency		-		-		-		(15,069	)		-			(15,069	)
Comprehensive loss														(303,302	)
Issuance of 42,727 Common Stock for cash of US$ 1.76 per share on March 16, 2004		42,727		43		74,957		-			-			75,000
Issuance of 72,773 Common Stock for cash of US$ 1.72 per share on November 25, 2004		72,773		73		128,783		-			-			128,856
Balance as of December 31, 2004		2,251,807		2,252		242,046		(30,109	)		(701,816	)		(487,627	)

		%
Computers		33
Furniture and office equipment		7-15
Leasehold improvements		Shorter of lease term and 10 years

	US dollars
	June 30,		December 31,
	2011		2010		2009
	(unaudited)		(audited)
Related parties		12,033		11,578		13,343
Prepaid expenses		14,566		14,391		9,343
Government Institution (*)		33,832		53,363		11,844
Other		978		6,372		-
		61,409		85,704		34,530

	Number			Weighted average exercise price (US$)
Six month period ended June 30, 2011 (unaudited)
Balance outstanding at beginning of period		428,367			5.49
Granted (*)		29,315			6.25
Exercised		-			-
Forfeited		(3,328	)		3.84
Balance outstanding at end of the period		454,354			5.55
Balance exercisable at the end of the period		110,142			3.27

	Number		Weighted average exercise price (US$)
Year ended December 31, 2010
Balance outstanding at beginning of year		109,197		3.27
Granted (*)		314,897		6.25
Granted		4,273		6.02
Exercised		-		-
Forfeited		-		-
Balance outstanding at end of the year		428,367		5.49
Balance exercisable at the end of the year		109,197		3.27

	Number		Weighted average exercise price (US$)
Year ended December 31, 2009
Balance outstanding at beginning of year		106,213		2.76
Granted		2,984		5.52
Exercised		-		-
Forfeited		-		-
Balance outstanding at end of the year		109,197		3.27
Balance exercisable at the end of the year		106,213		2.76

	Number		Weighted average exercise price (US$)
Year ended December 31, 2008
Balance outstanding at beginning of year		106,213		2.76
Granted		-		-
Exercised		-		-
Forfeited		-		-
Balance outstanding at end of the year		106,213		2.76
Balance exercisable at the end of the year		82,239		2.71

Exercise prices	Outstanding at June 30, 2011			Weighted average remaining contractual life years		Weighted average exercise price		Exercisable at June 30, 2011		Weighted average exercise price
US$
1.72		46,004			6.1		1.72		46,004		1.72
3.27		30,966			4.4		3.27		30,966		3.27
3.48		4,486			4.4		3.48		4,486		3.48
3.63		4,849			6.1		3.63		4,849		3.63
3.84		16,580			5.5		3.84		16,580		3.84
5.52		2,984			8.1		5.52		2,984		5.52
6.02		4,273			5.62		6.02		4,273		6.02
6.25		344,212	(*)		9.5		-		-		-
		454,354							110,142

Exercise prices	Outstanding at December 31, 2010			Weighted average remaining contractual life years		Weighted average exercise price		Exercisable at December 31, 2010		Weighted average exercise price
US$
1.72		46,004			6.6		1.72		46,004		1.72
3.27		30,966			4.9		3.27		30,966		3.27
3.48		4,486			4.9		3.48		4,486		3.48
3.63		4,849			6.6		3.63		4,849		3.63
3.84		19,908			6.0		3.84		19,908		3.84
5.52		2,984			8.6		5.52		1,493		5.52
6.02		4,273			6.12		6.02		1,491		6.02
6.25		314,897	(*)		10.0		-		-		-
		428,367							109,197

	Number of shares
	Three month period ended June 30,				Six month period ended June 30,				Year ended December 31,
	2011		2010		2011		2010		2010		2009		2008
	(unaudited)				(unaudited)				(audited)

Weighted average number of shares used in the computation of basic and diluted earnings per share		4,989,720		3,999,998		4,922,582		3,999,998		4,034,706		3,995,805		3,816,314
Total weighted average number of ordinary shares related to outstanding options and warrants excluded from the calculations of diluted loss per share (*)		555,764		113,470		555,764		113,470		511,648		109,197		106,213

SEC Registration and Filing Fee	$	1,000
Legal Fees and Expenses	$
Accounting Fees and Expenses	$	15,000
Printing Fees and Expenses	$	5,000
Miscellaneous	$	5,000
TOTAL	$

Exhibit Number		Description
2.1		Merger Agreement and Plan of Reorganization, dated as of May 25, 2010, by and among Integrity Applications, Inc., Integrity Acquisition Ltd. and A.D. Integrity Applications Ltd. *
3.1		Certificate of Incorporation of Integrity Applications, Inc. *
3.2		Certificate of Amendment to Certificate of Incorporation of Integrity Applications, Inc. *
3.3		Bylaws of Integrity Applications, Inc. *
4.1		Specimen Certificate Evidencing Shares of Common Stock *
4.2		Form of Common Stock Purchase Warrant *
5.1		Opinion of Greenberg Traurig, LLP
10.1		Integrity Applications, Inc. 2010 Incentive Compensation Plan *
10.2		Form of Subscription Agreement between Integrity Applications, Inc. and the investor signatory thereto *
10.3		Registration Rights Agreement, dated December 16, 2010, by and among Integrity Applications, Inc., Andrew Garrett, Inc. and each investor signatory thereto *
10.4		Form of Director and Officer Indemnification Agreement *
10.5		Exclusive Placement Agent Agreement, dated as of September 1, 2009, by and between Andrew Garrett, Inc. and A.D. Integrity Applications Ltd. *
10.6		Amendment No. 1 to Exclusive Placement Agent Agreement, effective as of December 16th, 2010, by and between Andrew Garrett, Inc., Integrity Applications, Inc. and A.D. Integrity Applications Ltd. *
10.7		Personal Employment Agreement, dated as of July 22, 2009, between A.D. Integrity Applications Ltd. and Avner Gal *
10.8		Personal Employment Agreement, dated as of July 22, 2010, between A.D. Integrity Applications Ltd. and David Malka *
10.9		Letter Agreement, dated November 10, 2010, by and among Integrity Applications Inc., Integrity Applications Ltd. and Xplanit Ltd. *
10.10		Irrevocable Undertaking of Indemnification, dated as of July 26, 2010, by and among Integrity Applications, Inc., Avner Gal, Zvi Cohen, Ilana Freger, David Malka and Alexander Raykhman *
10.11		Investment Agreement, dated February 18, 2003, between A.D. Integrity Applications Ltd., Avner Gal, Zvi Cohen, David Freger and David Malka and Yigal Dimri *
10.12		Agreement, dated as of November 1, 2005 by and between A.D. Integrity Applications Ltd. and Diabeasy Diabeasy cc .
10.13		Agreement, dated as of October 2, 2005, by and between Technology Transfer Group and Integrity Applications Ltd. *
10.14		Form of Stock Option Agreement *
10.15		Form of Stock Option Agreement (ESOP) *
10.16		Letter of Approval, addressed to Integrity Applications Ltd. from the Ministry of Industry, Trade and Employment of the State of Israel
10.17		Letter of Undertaking, addressed to the Ministry of Industry, Trade and Employment of the State of Israel - Office of the Chief Scientist from Integrity Applications Ltd.
10.18		Investment Agreement, dated March 16, 2004, by and among A.D. Integrity Applications Ltd., Yitzhak Fisher, Asher Kugler and Nir Tarlovsky.
21.1		Subsidiaries of Integrity Applications, Inc. *

23.1		Consent of Fahn Kanne & Co.
23.2		Consent of Greenberg Traurig, LLP (included in Exhibit 5.1)
24.1		Power of Attorney *

INTEGRITY APPLICATIONS, INC.
(Registrant)

By:	/s/ AVNER GAL
Name:	Avner Gal
Title:	Chief Executive Officer

Signature	Title	Date

/s/ AVNER GAL	Chairman of the Board and Chief Executive Officer	October 7, 2011
Avner Gal	(Principal Executive Officer)

/s/ JACOB BAR-SHALOM	Chief Financial Officer (Principal Financial Officer	October 7, 2011
Jacob Bar-Shalom	and Principal Accounting Officer)

*	Director	October 7, 2011
Zvi Cohen

*	Director	October 7, 2011
Dr. Robert Fischell

*	Director	October 7, 2011
Joel L. Gold

/s/ David Malka	Director and Vice President of Operations	October 7, 2011
David Malka

Whereas	The Reseller wishes to distribute a certain product that was developed by the Company, and is manufactured and be distributed under the name GlucoTrack (TM); and
Whereas	The Reseller wishes to examine the said product in order to see if it complies with the specifications set forth by the Company in connection therewith, and if so, become the reseller thereof in South Africa; and
Whereas	The parties hereto wish to set forth the terms and conditions in connection with the aforesaid;


A.D. Integrity Applications Ltd .	Diabeasy cc

By: Avner Gal	By: Dr. Lawrence A. Distiller	Dr. Avron G. Urison
Title: Managing Director, CEO	Title: Associate	Associate

Feature	Specifications	Remarks
Operation Modes	Spot (Continuous mode in Next generation)	By user choice
Users	Up to 3 users	Individual Ear Clip Unit for each user
Range	40-500 mg/dL (2.2-27.8 mmol/Liter)
Ear Clip Unit	Ergonomic, Externally plugged, Each individual Ear Clip Unit Automatically recognized by the device and display user’s name	Color grip for easy handling and identification
Indications / Operation	‘On’ LED indicator, ‘Alarm’ LED indicator, Buzzer, Alphanumeric Keypad, Navigator
Display	Time, Date, Glucose Level (mG/dL or mmol/Liter – by User choice), Glucose High/ Low/ Normal indication, Battery Level, Low Battery indication, Replacement of Ear Clip Unit request, Re-Calibration request, last measurement reading upon device turn on, User name, Memory use status	Dot Matrix Display Light blue Backlight
Controls	Turn On/Off Push button, Navigator, "Select" Push button, Fast menu enter, Key pad	Auto turn off after 3 minutes Backlight turns off after 30 seconds
Memory	Up to 300 last points per user (including level, date, time)
Warnings	Glucose High / Low level, Low battery, Replace Ear Clip Unit, Re-Calibration Request, Ear Clip Unit not in place	LED + Audible, Levels are preset by each user
Interface	IR, USB for Data Downloading
Calibration	Automatic process user's instructions
General	Auto turn off after 3 minutes of non operation. Latency compensation algorithm in Continuous Mode	In Spot Mode only.
Battery	Li-Ion Rechargeable	Operation inhibited during recharge period
Working temperature	+5ºC to +45ºC
Storage temperature	-5ºC to +55ºC
Relative humidity	95%
Dimensions	Universal Main Unit: 116 X 55 X 26 mm Personal Ear Clip: 41 X 24 X 19 mm
Weight	TBD

Description		Price
Complete device (including Universal Main Unit, one Personal Ear Clip, embedded built in battery, Charger, Self Test Aid Strip, Manual in English, Carrying bag* and Case)		US$ 835.-

Personal Ear Clip (including color grip and Self Test Aid Strip)		US$ TBD

		Jerusalem, 4.3.04

		Letter of Approval no. 32793
Attn.		(Budget Regulation 38020101)
Integrity Applications Ltd.		Group 13
P.O.B. 432
Ashkelom 78100

Attn.
Industrial Research and Development Administration	Date: 21.9.03
Office of the Chief Scientist	Company:4010
Ministry of Industry, Trade and Employment
4 Mavo Hamatmid. P.O.B. 2197
Jerusalem