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Item 1. Business

2021-03-09 compared with 2020-03-17 · 540 added, 935 removed, 461 unchanged (76% of the section changed)

We are a leading global

Digital Therapeutics, or DTx, company revolutionizing the way people manage their health across the chronic condition spectrum

to live a better and healthier life.

By delivering personalized evidence-based interventions that are driven by data, high-quality

software, easy-to-use medical devices and coaching, we empower individuals to make healthy adjustments to their daily lifestyle

choices in a personalized way and improve their overall health.

Our cross-functional team operates at the intersection of life

sciences, behavioral science and software technology to deliver highly engaging therapeutic interventions.

Blood Sugar Monitor is among the most downloaded healthcare apps, with 4.9/5.0 stars from 9,000+ reviews on the Apple App Store

as of March 2020.

We are rapidly moving into new chronic conditions such as hypertension, using a performance-based approach to

improve the health of users managing chronic disease.

We attempt to drive

behavioral change by creating highly personalized, closed-loop interactions that support our customers, who become members of our

services, via connected FDA cleared monitoring devices, just-in-time health information and real-time coaching.

This highly scalable

infrastructure results in members with significant improvement in their health conditions at a modest price-point.

The Dario solution

is intended to stretch across various health conditions and ailments.

We currently focus our efforts on diabetes and hypertension,

and we plan to expand our focus into additional chronic conditions during 2020, including hypertension.

Our solution goes beyond

being simply a device.

We are a modular platform that allows for customized implementations by segment and within each segment.

Core components of our solution include:

Dario Smart Tools –

member-facing devices and integrated smartphone application.

DarioEngage Platform –

population management tool that enables scalable engagement and clinical support by coaches

and clinicians, remotely and in real-time.

Dario Journey Engine –

a software-based platform that enables cross-channel communication of highly personalized

and deeply customized/configurable journeys for each user starting from member enrollment process and continuing through on-going

engagement leading to successful maintenance of health gains.

We make our services

available direct to consumers via online marketplaces including Amazon, Walmart, Best Buy and the Google and Apple app stores.

In 2020, we plan to focus on expanding our offering to include providers, payers and employers.

We believe that these represent

significant growth opportunities for our business.

have designed our DTx platform with a ‘user-first’

strategy, focusing on user’s needs first and foremost, along

with user experience and satisfaction.

User satisfaction drives all company processes, including our technology design.

This approach,

which disrupts the traditional approach among healthcare companies, has taken us to a place where MyDario TM is

loved by customers in the diabetes arena.

In order to obtain firsthand data and feedback from our users, we decided to launch our

product directly to our customers, and initially commenced sales in the United States in March 2016.

This user-focused approach

led us into a continuous process of product upgrades and improvements in an agile, interactive way to achieve finetuned user satisfaction.

Our success is reinforced by the fact that most of our users choose to purchase our solution out of pocket.

We have designed our

DTx platform as an open platform that allows us to enable our partners to offer their customers a customized, evidence-based digital

therapy solution, which takes advantage of the real-time connectivity of our platform with its users.

We believe that our data-evidenced

proof of the medical outcomes resulting from the use of our DTx platform represents an attractive return on investment model to

healthcare providers in the United States and other geographic regions.

According to a Business

Insider Intelligence report published in October 2019, DTx are a new class of treatments disrupting the entire healthcare value

chain with their promise to tackle chronic diseases, and which, according to estimates by Business Insider, represents up to $3.3

trillion on chronic disease expenditure in 2018 in the United States alone.

Digital therapeutics deliver evidence-based therapies

for an array of chronic conditions via software, like mobile health (mHealth) apps and can either replace or complement existing

drug treatments.

According to a report released by the Rand Corporation, Sixty percent of the United States population suffers

from at least one chronic condition, and these diseases come with a hefty price tag, as exemplified by the Business Insider report.

DTx companies have shown early evidence of their treatments’

efficacy and ability to slash the costs associated with chronic

disease care, which is fueling the global DTx market to become a $9 billion opportunity by 2025 according to the Business Insider

Intelligence report.

Our principal operating

subsidiary, LabStyle Innovation Ltd., is an Israeli company with its headquarters in Caesarea, Israel.

We were formed on August

11, 2011, as a Delaware corporation with the name LabStyle Innovations Corp.

On July 28, 2016, we changed our name to DarioHealth

Chronic Conditions Prevalence

to the Partnership to Fight Chronic Disease, chronic diseases are the leading cause of death and disability in the United States.

133 million Americans –

45% of the population –

have at least one chronic disease.

Chronic diseases are responsible

for seven out of every 10 deaths in the United States, killing more than 1.7 million Americans every year.

Chronic diseases can

be disabling and reduce a person’s quality of life, especially if left undiagnosed or untreated.

For example, every 30 seconds

a lower limb is amputated as a consequence of diabetes.

People with chronic conditions are the most frequent users of health

care in the United States, as they account for 81% of hospital admissions, 91% of all prescriptions filled, and 76% of all physician

Chronic diseases also account for the vast majority of health spending.

In the United States, total spending on public

and private health care amounted to approximately $2 trillion during 2005 and, of that amount, more than 75% went towards the treatment

of chronic disease.

Such amount is the equivalent to $5,000 worth of spending per person on treatment of chronic diseases and more

than double what the average American spends on gasoline in a year.

In publicly funded health programs, spending on chronic disease

represents an even greater proportion of total spending:

more than 99% in Medicare and 83% in Medicaid.

The Partnership to

Fight Chronic Disease, chronic diseases reports that U.S.

employers and employees currently pay for the high costs of chronic disease

through increases in health costs associated with greater demand for, and use of, health care services.

Health care premiums for

employer-sponsored family coverage have increased by 87% since 2000.

Health care coverage costs for people with a chronic condition

average $6,032 annually –

five times higher than for those without such a condition.

The total cost of obesity to U.S.

is estimated at $13 billion annually.

This includes the “extra”

cost of health insurance ($8 billion), sick leave ($2.4

billion), life insurance ($1.8 billion), and disability insurance ($1 billion) associated with obesity.

While today’s situation

is grave, the chronic disease crisis looms even larger tomorrow.

By 2025, chronic diseases will affect an estimated 164 million

Americans –

nearly half (49%) of the population.

According to a CDC report published in October 2019, obesity affects almost

1 in 5 children and 1 in 3 adults, putting people at risk for chronic diseases such as diabetes, heart disease, and some cancers.

Over a quarter of all Americans, 17 to 24 years, are too heavy to join the military.

Obesity costs the U.S.

health care system

$147 billion a year.

The latest publication

by the Centers for Disease Control and Prevention (CDC) from October 2019 states that 90% of the annual care expenditures are for

people with chronic and mental health conditions.

Nothing kills more

Americans than heart disease and stroke.

According to the CDC, more than 859,000 Americans die of heart disease or stroke every

year—representing one-third of all deaths.

These diseases take an economic toll and cost the U.S.

health care system $199

billion per year and cause $131 billion in lost productivity on the job.

More than 30 million

Americans have diabetes, and another 84 million adults in the United States have a condition called prediabetes, which puts them

at risk for type 2 diabetes.

Diabetes can cause heart disease, kidney failure, and blindness, and costs the U.S.

health care system

and employers $237 billion every year.

Diabetes is a disease

where insufficient levels, or a total absence, of the hormone insulin, or if the individual has insulin resistance, produces high

levels of glucose in the bloodstream, which can lead to long term adverse effects on a patient’s blood vessels, which in

turn can lead to heart attack, stroke, high blood pressure, blindness, kidney disease, and nerve damage.

As part of controlling

blood sugar, many patients must self-monitor their blood glucose levels using home testing kits (called glucose meters) and treat

high and low blood sugar episodes accordingly to avoid complications from the disease.

We believe that allowing patients to properly

monitor the disease, provide actionable insights in real-time and create an online link to healthcare providers will ultimately

improve patient outcomes and reduce healthcare costs - both critical advantages for the healthcare industry.

Importantly, one out

of three American adults with prediabetes can reverse the condition if they take action, and the health of people with diabetes

can be improved through measurement adherence and medication.

Furthermore, studies have shown that a 1% reduction in the concentration

of glycated hemoglobin (also known as HbA1c or A1c) in human blood goes beyond better diabetes control.

That reduction may translate

into a 15% to 20% decrease in heart attack and stroke risk and a 25% to 40% lower risk of diabetes-related eye or kidney disease.

Better diabetes management may result in substantial savings in the costs related to diabetes and healthcare in general, through

the avoidance of health complications and related expense savings.

A 2013 NCBI study found that improved A1c levels are associated

with healthcare savings.

Based on data we have

extracted from our user database, using the Dario Smart Diabetes Management Solution leads to an improvement in the glucose level

of the users and lowers their A1c levels over time.

This data also indicated that higher engagement of users with the Dario Smart

Diabetes Management Solution increased the level of A1c improvement.

Specifically, we found A1c improvements during a period of

3 months, 6 months, and 9-months for people who began the study with A1c levels of more than 8%, 9%, and 10%.

The key finding was

that, on average, every segment of the users showed an improvement compared to their A1c level when they started to use the Dario

Smart Diabetes Management Solution, while 75% of participants which started to use the Dario Smart Diabetes Management Solution

with A1c levels higher than 9% were able to lower their A1cC levels during that period with as little as 3 glucose level measurements

Although we are initially

targeting only the large and growing Blood Glucose Monitoring System, or BGMS, market, we believe our invention has the potential

to cover dozens of laboratory tests of bodily fluids (including blood, urine, and saliva) that could potentially be undertaken

using a smart mobile device, including blood coagulation, cholesterol, HIV and others.

Our goal is to develop additional interfaces

for other chronic illnesses and health conditions, thereby empowering people around the globe to put themselves in control of managing

their medical conditions while leveraging our platform.

By doing so, we believe that we will be positioned to make a dramatic impact

on the lives of millions of people that face daily lifestyle and medical challenges.

Our technology provides

a body-fluid testing apparatus for performing metered measurement of samples utilizing:

(i) a lancing device to obtain a test sample

(blood in the case of the Dario Blood Glucose Monitoring System);

and (ii) an adaptor specifically designed to connect a strip

devised to absorb the sample, which then produces an electric signal indicating the level of the substance tested for in the sample.

The adaptor is then connected to a smart mobile device, which allows the test signal to be transmitted to the smart mobile device,

which will then utilize our software application to obtain and display the test result on the device.

This is coupled with a set

of software features available via a smart mobile device application as well as cloud-based services, in real-time.

We are presently

pursuing patent applications in multiple jurisdictions covering the specific processes related to blood glucose level measurement

as well as more general methods of rapid tests of body fluids using mobile devices and cloud-based services.

On August 5, 2014,

we were issued a U.S.

8,797,180) relating to how the Dario Blood Glucose Monitoring System draws power from and transmits

data to a smartphone via the audio jack port, on September 8, 2015, we were issued a U.S.

9,125,549) that broadens

our registered patent No.

8,797,180 to include testing of other bodily fluids through an audio jack connection, and on November

11, 2017, we were issued a U.S.

9,832,301) that enhances the way the Dario Blood Glucose Monitoring System communicates

with users’

smartphone devices.

We believe these represent critical intellectual property recognition and a significant initial

validation of our intellectual property efforts.

According to a 2014

publication of the American Heart Association, about 77.9 million adults have high blood pressure in the United States.

percentage of men than women have high blood pressure until age 45.

From ages 45–54 and 55–64, the percentage of men

and women is similar;

after that, a much higher percentage of women than men have high blood pressure.

About 69% of people who

have a first heart attack, 77% who have a first stroke, and 74% who have congestive heart failure have blood pressure higher than

140/90 mm Hg.

High blood pressure was listed as a primary or contributing cause of death in about 348,102 of the more than 2.4

deaths in 2009.

Blood pressure categories

The five blood pressure ranges as recognized

by the American Heart Association are:

Normal - blood pressure numbers of less than 120/80 mm Hg are considered within the normal range.

Elevated blood pressure - is when readings consistently range from 120-129 systolic and less than 80 mm Hg diastolic.

People with elevated blood pressure are likely to develop high blood pressure unless steps are taken to control the condition.

Hypertension Stage 1 - is when blood pressure consistently ranges from 130-139 systolic or 80-89 mm Hg diastolic.

this stage of high blood pressure, doctors are likely to prescribe lifestyle changes and may consider adding blood pressure medication

based on your risk of atherosclerotic cardiovascular disease (ASCVD), such as heart attack or stroke.

Hypertension Stage 2 - is when blood pressure consistently ranges at 140/90 mm Hg or higher.

At this stage of high blood

pressure, doctors are likely to prescribe a combination of blood pressure medications and lifestyle changes.

Hypertensive Crisis - this stage of high blood pressure requires medical attention.

If blood pressure readings suddenly

exceed 180/120 mm Hg, it may evidence that a person is experiencing a hypertensive crisis.

According to the 2014

AHA publication, Hypertension is recognized as a tremendous threat to medical and financial health.

National medical costs associated

with hypertension account for about $131 billion, or over 3% of the national healthcare expenditure.

While the incremental cost

associated with hypertension for US adults has remained steady at around $2000 per year, it is promising that expenditures seem

to be shifting from inpatient to outpatient settings.

This may reflect the expansion of preventative care services for millions

of Americans under the Affordable Care Act.

As overall U.S.

healthcare costs continue to rise, it is imperative to identify effective

strategies to improve control of chronic diseases that are associated with high annual expenditures.

For hypertension, these efforts

may focus on expanded access to preventative care services and continued innovation for non-office based care delivery such as

telemonitoring of home measurements and 24-hour ambulatory blood pressure monitoring.

Our business strategy

is to generate proven and repeatable clinical and financial outcomes across four market channels -- direct to consumer, providers,

payers, and employers.

We plan to do this by offering a highly clinically and cost-effective solution with proven engagement and

We have developed a flexible product that gives us the freedom to offer modular packages to the different needs across

our channels.

Key elements of our business strategy include:

Educating about the dramatic shift that is occurring in terms of efficacy and feasibility of providing remote care for individuals

with chronic conditions.

Demonstrating the potential for such care to generate revenue to providers and reduce expenses for payers and employers.

Providing the elements of our Dario Solution in a modular offering with pricing models that go beyond Per Employee Per Month

(PEPM) / Per Member Per Month (PMPM).

Educating payers about billable remote monitoring codes and working with payers to expand the reach of those codes.

Generating outcomes data and cost per unit of improvement to demonstrate the cost-effectiveness of our solution relative to

other products.

Maintaining best-in-class consumer satisfaction.

Key elements of our growth strategy include:

Providing in-house enrollment marketing and recruitment to facilitate uptake.

Increasing conditions covered by our platform.

Maintaining a price point that enables shared revenue generation for providers.

Keeping our data-driven development process which has resulted in high satisfaction rates, so we believe that we can repeat

equally high satisfaction rates from corporate customers.

DarioHealth’s Solutions

Our DTx products are

centered around our users and include the Dario Blood Glucose Monitoring System, the Dario Smart Diabetes Management Solution (provided

to our users in the form of a smartphone application that enables the delivery of valuable content and periodical evidence-based

reports that are intended to be utilized by our users to better control and improve their diabetes), the DarioEngage platform (which

provides support and two-way real-time connectivity between our users and their caregivers) and Dario Intelligence (which utilizes

user data and is intended to be an analytics tool that can assist healthcare providers in the treatments and predictability of

Dario Smart Diabetes Management Solution

The Dario Blood Glucose

Monitoring System, our flagship product, is an all-in-one smart glucose meter.

It syncs with the Dario Smart Diabetes Management

app to measure, record, and track blood glucose levels.

In addition, the app records carbohydrate intake, insulin medication, and

physical activity.

In addition, in 2019 we expanded our platform to provide for the ability to sync a blood pressure meter that

connects to our application via blue-tooth connection and allows recording blood pressure measurement in addition to glucose measurements.

The flagship brand

of DarioHealth, the Dario Smart Diabetes Management Solution, was initially launched in the United Kingdom in the first quarter

of 2015 and has since expanded to Canada, Australia, the United States, and Germany.

We earn a majority of our revenues in the

United States.

We manufacture our products using subcontractors and distribute our proprietary device ourselves.

We believe this

control over the end to end production allows us to maintain high standards of quality control.

To that end, we are the owner of

several patents relating to our technology and processes.

We use our patented

technology to enhance the way our Dario Blood Glucose Monitoring System communicates with users’

smartphone devices.

market, the Dario Blood Glucose Monitoring System connects to a smartphone via a sugar-cube dongle that does not require a

battery for operation;

rather, it relies on the smartphone’s battery as its power source.

In the effort to reduce battery-dependence

and ensure 100% real-time data capture, the application is able to monitor and adjust power levels on smartphones accordingly to

enable sufficient output with minimal reliance.

The benefits and features

of our product include:

Form factor - Sleek, pocket-sized all-in-one

smart glucose meter simplifies diabetes management, Blood pressure cuff is comfortable to use and easy to pair to the app.

Record - Automatically records every blood

glucose measurement without ever having to sync your meter.

One app, multiple conditions - Our app integrates data from across devices to the same core experience allowing users

and clinicians to see the border picture.

Share - Easily share results with loved ones

and your healthcare team takes diabetes management to a new level.

Emergency Hypo Alerts - Built-in, emergency

hypo alert feature with GPS location adds an extra safety measure.

Track - Tracking activity and counting carbs

are made easy with a scanner feature that syncs with a database of over 1 million verified items across more than 50 unique countries.

Just in time learning - With less than 1 in 5 diabetes apps providing just-in-time education,

Dario’s personalized messaging driven by our Journey Engine stands out.

Likewise, practical tips for getting to in-range

blood pressure will also be planned to be integrated in the future.

Available worldwide

in the Apple App Store and Google Play Store, our user-friendly Dario Smart Diabetes Management mobile app is known for its accuracy

and ease-of-use.

The Dario Smart Diabetes Management Solution is accessible with affordable pricing models, including subscription

Our pricing is often in line with current co-payments, and sometimes it may even be less than current out of pocket costs.

In addition, many of our customers in the United States get coverage through their flexible spending accounts or FSA.

savings accounts, or HSA, or with our third-party healthcare integrations.

Our revenues are derived

from sales of Dario’s components, including the Dario Blood Glucose Monitoring

System itself, and principally from the recurring sale of our disposable cartridges of test strips and other consumables.

customers receive access to the Dario Smart Diabetes Management application, which incorporates tools to help people with diabetes

manage their condition.

Importantly, our revenue model is driven by the fact that only our test strips, purchased through

our partners and us, can be utilized with the Dario Blood Glucose Monitoring System and software, so we expect that we

will be the sole source for Dario Blood Glucose Monitoring System compatible test strips.

During the second

half of 2018, we have begun to offer our U.S.

users the opportunity to register for our membership programs by purchasing 3 month

and 1-year membership plans.

In addition to our products, these plans include an unlimited supply of test strips, subject to the

user’s active measurement of his glucose level, and a weekly digital progress report about the user’s measurements,

in order to help users to understand the progress made in their diabetes management.

Our members are also provided with personalized

diabetes programs –

including lifestyle changes, healthy eating, and advanced tracking, and live coaching seminars.

in 2019 we expanded our platform to provide for the ability to sync a blood pressure meter that connects to our application via

blue-tooth connection and allows recording blood pressure measurement in addition to glucose measurements.

In addition, we anticipate

generating revenues in the future from our second revenue pillar that we call the DarioEngage platform, our software platform for

health coaches.

We plan to offer this software platform to healthcare providers such as insurers, self-insured employers, diabetes

clinics, certified diabetes educators and other third-party providers of coaching and remote-monitoring services for people with

diabetes and hypertension, for a monthly service fee.

Our third revenue pillar, which we are planning to introduce at a later stage,

is the Dario Intelligence platform.

The Dario Intelligence platform will take advantage of a large amount of data that will be

collected through our servers through the use of our Dario Smart Diabetes Management Solution and the DarioEngage platform, in

order to develop predictive models and artificial intelligence algorithms as detailed below.

We believe the following

features of our Dario Smart Diabetes Management Solution and the manner in which we plan to market and distribute the product

will help position Dario to gain users and drive revenue growth:

● Look and Feel .

While utilizing the same state

of the art electrochemical, blood-based measurement techniques as standard glucose monitors offer familiar usability, and the

Dario Blood Glucose Monitoring System is easily integrated with the patient’s own smart mobile device that offers a distinctive

look and feel.

Furthermore, unlike the market standards, the Dario Blood

Glucose Monitoring System has an integrated lancing device and a disposable strip cartridge.

This eliminates

the need for a separate glucose monitor, lancing device and strip vial and, we believe, makes the Dario Blood Glucose Monitoring

System among the smallest footprint in the market.

Furthermore, Dario has novel applications incorporating

software tools to help diabetic patients manage their disease.

● Large Market of Potential Users .

on diabetics within the massive smart mobile device market gives us an established potential user-base.

According to a February

2019 published Mobile Fact Sheet by Pew Research Center, or PRC, 81% of Americans own a smartphone, up just 35% in PRC’s

first survey of smartphone ownership conducted in 2011.

Between the ages of 18 to 34, 95% have a smartphone, and between the age

of 34 to 49, 92% own a smartphone.

We believe that it is reasonable to assume that the percentage of smart mobile device users

with diabetes mirrors that of the general population.

● Marketing and Distribution .

and Australia,

we have our own direct to consumer marketing channel to support our sales efforts.

we also plan to contract with partners

to provide coaching services to employers and health care providers.

In the United Kingdom and Canada, we use distribution partners

to market and sell the Dario Blood Glucose Monitoring System.

This approach enables a direct communication channel with the market

and the diabetic community.

This approach is also designed to effectively create brand awareness with a significantly reduced

use of our capital resources versus the amounts required via the traditional, offline retail channels.

● “Expanding the Pie.”

Our goal is to

obtain significant market share using technological innovations and by expanding into additional chronic conditions such as hypertension,

pre-diabetes and obesity.

● Competitive Cost of Goods Sold.

Based on our market

research and discussions with our test strip manufacturer, we believe that our anticipated outsourced manufacturing cost of the

test strips is similar to our estimate of our competitors’

cost for existing single-use disposable strips.

we believe the manufacturing costs of our Dario Blood Glucose Monitoring System are competitive with those of the leading glucose

● Opportunities for Commercialization Partnerships.

Healthcare and pharmaceutical company entrants into the DTx market are licensing and/or acquiring technologies, seeking differentiation,

thereby providing us with opportunities for more rapid commercialization through partnerships.

We believe that our connected platform

can assist other companies in providing an effective data-evidenced and personalized solutions to their patients Therefore, we

plan to explore the possibility of entering into commercialization agreements, including upfront payment, a supply agreement,

and royalty payments, with strategic partners.

DarioEngage represents

our customer remote engagement and management software platform, which enables our team as well as external healthcare providers

in all aspects of user engagement, including enrollment, coaching and ongoing communications with the end-users based on user consent.

DarioEngage was developed in order to allow for a one-stop scalable management tool to improve the efficacy and outcomes of caregivers.

We believe that DarioEngage will assist healthcare providers and payers by offering them an open platform, which allows customers

to implement their own clinical and population health expertise in a digital, user-centric and efficient way.

We believe this approach

can address two key issues:

improving the quality of health for individuals, which in turn will lower healthcare costs across the

The DarioEngage platform empowers health

providers offering diabetes services with:

Monitoring - 100% data capture, access to users’

real-time clinical and behavioral data.

Engagement - Personalized coaching in response to

habits and needs, response to user events, and enhanced communication and support.

Management - Clinical program integration, automated

processes, scheduling tools, and reporting.

The DarioEngage platform

provides caregivers with real-time access to data collected by a user such as glucose level, carb counting, physical activity,

weight tracking, blood pressure, and other parameters.

Such access allows caregivers to prioritize user intervention based on real-time

data and alerts and allows for multi-channel digital interaction with the user (chat, in-app messages, email and text).

is a cloud-based SaaS solution that also includes open APIs for platform integration.

We believe that the

DarioEngage platform is a user-centric, data-driven health solution which allows people with diabetes to get the right care, at

the right time, and allows for the effective monitoring, coaching, and management of their chronic conditions, such as type 1 and

2 diabetes, gestational diabetes, and prediabetes.

Dario Intelligence

The last pillar in

our planned suite of product offerings is Dario Intelligence.

We are planning to offer Dario Intelligence, which utilizes the large

amount of data that will be collected on our servers through the use of our Dario Smart Diabetes Management Solution and the DarioEngage

platform, to develop predictive models and artificial intelligence algorithms to meet the potential demand of intelligence-driven

analytics that healthcare providers will be looking to improve their services.

We believe the future

development of Dario Intelligence will present an opportunity in the chronic disease management field and will help us leverage

our data capturing platform, to be used for big data analytics, research, EMRs (Electronic Medical Record) / EHRs (Electronic Health

Records), and the development of real-time and predictive-based health management solutions.

Data Collection - Real-time data collections and aggregation

Analytics - Dario big data analytics solution

Discovery - Data discovery and analysis

Insights - Predictive models and AI-driven insights

Through Dario Intelligence,

we believe we may be able to develop innovative artificial intelligence and machine learning approaches that will enable us to

transform big data into individual and specific predictive models to meet the demands of both consumers and the health care providers.

We believe that by coupling data and algorithmic development, Dario Intelligence may offer in the future the way to detect, predict

and intervene most effectively for each individual using our platform.

Our Vision for Dario Intelligence

We intend to offer

solutions built from a foundation of rich and robust data, ultimately transforming our revenue model from simple product volume

to the product value.

We believe that the current ineffective care of diabetes and other chronic conditions reflects a need for

more intelligent and nuanced approaches relating to predictive behaviors and real-time care.

We believe that financial incentives

tied to patient outcomes have the potential to generate sizeable revenue growth for us and position us as a leader in transforming

the management of diabetes.

Achieving the strategic vision of Dario Intelligence requires multiple steps and evolutions in order

to harness the power from the data generated by a connected community, and subsequently impact individual behavior.

Phase 1 –

Collect & Analyze

As the Dario Smart

Diabetes Management Solution user-base has grown, we have collected a significant amount of user data and information.

efforts in Phase 1 are centered around an understanding of our user-base.

Compiling basic demographic data such as age, gender,

country geography, etc., and establishing links to test strip usage and blood glucose control are critically important.

examining variation amongst population cohorts in both utilization and blood glucose outcomes is fundamental to future targeting

and retention campaigns.

We intend to generate analytical insights on individuals who achieve improvement in blood glucose levels

in order to develop an in-depth understanding of those who maintain such an improvement over time, which we believe will form the

backbone of interventional program development that we intend to generate with our potential partners.

Phase 2 –

Expand Collection of Data Types, Experiment

with Outreach Campaigns

As continued growth

of users accelerates globally, concerted efforts will be undertaken at expanding the collection of highly relevant data types.

In addition, we intend to expand data collection on user data points such as carbohydrate intake, exercise, and physical activity,

medication and medication adherence, GPS location, time stamps, insurance coverage type/status.

When more data elements are gathered,

the intention is for Dario Intelligence to apply its artificial intelligence and machine learning capabilities to enhance understanding

of individuals and detailed profiles that will be generated with comprehensive user information such as the type of advertising

that was used to recruit patients or how frequently an individual interacts with the Dario Smart Diabetes Management app.

is intended to be a cohort-specific predictive model that can be used to develop interventional programs on a wide basis.

Phase 3 –

Monetize De-Identified Data, Learn, Expand

Intervention Programs

We believe that pharmaceutical

companies, device manufacturers, insurers, governments, researchers, advertisers, and start-up companies would be willing to pay

for the de-identified data that we will obtain through our Dario Intelligence platform.

As such, we believe there is an opportunity

to develop a consistent revenue stream from this data.

In addition to data

that reports on the activity and performance of the population as a whole, we believe that we will be able to provide access to

a globally connected community of patients and consumers.

We are planning to monetize access to specific patient cohorts, designing

programs to improve utilization, engagement, and outcomes.

These future programs will be adapted, modified, and enhanced based

on continuous learning and additional data inputs from external third parties that we are planning to engage with in the future.

Pay for performance models will be developed and experimented with, as we will implement next-generation artificial intelligence

and machine learning programs designed to influence user’s behavior.

Background on Diabetes

is a chronic disease that arises when the pancreas does not produce enough (or ceases to produce) insulin, or when the body cannot

effectively use the insulin it produces (insulin resistance).

Insulin is a hormone made by the pancreas that enables cells to take

in glucose from the blood and use it for energy.

Failure to produce insulin, or insulin to act properly, or both, leads to raised

glucose (sugar) levels in the blood (hyperglycemia), which can be detected with a blood test.

Excess glucose in the blood has been

shown to cause damage to blood vessels and is thus associated with long-term damage to the body and failure of various organs and

tissues, including the retina and the kidneys.

There are three main types of diabetes:

1 diabetes , sometimes called insulin-dependent, or juvenile, diabetes, is caused

by an auto-immune reaction where the body’s defense system attacks the insulin-producing cells located in a person’s

The reason why this occurs is not fully understood.

People with Type 1 diabetes produce very little

or no insulin.

The disease can affect people of any age but usually occurs in children or young adults.

with this form of diabetes need injections or infusions of insulin several times a day in order to control the levels of glucose

in their blood.

The use of insulin may lead to excessively low levels of glucose in the blood, also known as hypoglycemia,

leading to other health problems.

Type 1 diabetes patients constitute approximately 10% of the overall number of patients,

but are much more extensive users of BGMS, as these diabetics need to measure their glucose levels 4-10 times a day to avoid both

hyperglycemia and hypoglycemia (versus once or twice a day for most Type 2 non-insulin dependent diabetic patients).

The vast majority

of Type 1 diabetes patients are insulin-dependent.

2 diabetes is sometimes called adult-onset diabetes and accounts for at least

90% of all cases of diabetes.

It is characterized by insulin resistance and relative insulin deficiency, either of which

may be present at the time that diabetes becomes clinically manifest.

The diagnosis of Type 2 diabetes usually occurs after the

age of 40 but can occur earlier, especially in populations with high diabetes incidence.

Type 2 diabetes can remain

undetected for many years, and the diagnosis is often made from associated complications or incidentally through abnormal blood

or urine glucose test.

It is often, but not always, associated with obesity, which may contribute to insulin resistance

and lead to elevated blood glucose levels.

A portion of the Type 2 diabetes patients are insulin-dependent or use insulin

as part of their treatment.

diabetes (GDM) is a form of diabetes consisting of high blood glucose levels

during pregnancy.

It develops in one in 25 pregnancies worldwide and is associated with complications in the time period

immediately before and after birth.

GDM usually disappears after pregnancy, but women with GDM and their offspring are

at an increased risk of developing Type 2 diabetes later in life.

Approximately half of women with a history of GDM

go on to develop Type 2 diabetes within five to ten years after delivery.

The Diabetes and BGMS Markets and the Dario Smart Diabetes

Management Solution

Diabetes is a growing

epidemic for which no cure exists, but for which treatments (including a regimen of frequent blood glucose testing) are available.

The medical journal Lancet has reported that the number of worldwide diabetics has doubled over the past thirty years.

about 70% of the increase has been attributed in the Lancet report to population growth and aging, the balance was linked to changing

diets, rising obesity levels, and less physical activity.

According to the information

published in 2017 by the International Diabetes Foundation (IDF), in its 8 th edition of the “IDF Diabetes Atlas,”

approximately 425 million people worldwide were estimated to have diabetes in 2017 or one in eleven adults worldwide.

numbers are between 40 and 59 years old.

If these trends continue, by 2045, some 629 million people are forecasted by the IDF to

have diabetes.

According to the IDF Diabetes Atlas, in Europe, there were 58 million adults over the age of 20 with diabetes

in 2017 and approximately 30.2 million adults over the age of 20 with diabetes in the U.S.

As of 2017, approximately

187 million adults with diabetes live in China and India, with approximately 12.4 million in Brazil and 8.5 million in Russia.

It is estimated that

the costs of diabetes complications account for between 5% and 10% of total healthcare spending in the world.

In the United States,

the American Diabetes Association, or ADA, estimated that the total cost of diagnosed diabetes has risen from $174 billion in 2007

to $245 billion in 2012.

Early diagnosis of warning signs and ongoing monitoring of diabetes are the keys to the prevention

and treatment of the disease, with blood glucose monitoring being the primary method of diagnosis and disease management, coupled

with matching blood glucose readings with food (i.e., carbohydrate) and insulin or another medication intake.

Since blood glucose

self-monitoring is a key part of managing diabetes, the market for BGMS products required to service these many patients is also

As reported in a press release published by Allied Market Research, the blood glucose self-monitoring market was estimated

to be $7.76 billion in 2017 and is expected to grow to an estimated $10.82 billion by 2025.

The biggest drivers for

growth in the diabetes device market will be the increased prevalence and awareness of diabetes.

is the largest

market, contributing close to 40% of the global market for these devices.

Key factors driving

market growth include an increasing number of people with diabetes, growing patient awareness, technological advancements and the

increasing number of patients adopting blood glucose self-monitoring.

In addition, the affordable cost of blood glucose

test strips, and an increase in daily monitoring, are also expected to contribute to market growth.

As such, BGMS represents

a large market that has grown significantly over the past 30 years and is expected to continue to grow.

also believe we will be able to support patients with pre-diabetes , also called metabolic syndrome.

syndrome is a combination of medical disorders that increase the risk of developing cardiovascular disease and diabetes.

to the American Diabetes Association, in 2015, 84.1 million Americans age 18 and older had pre-diabetes.

This population is typically

prescribed with periodic lab-based glucose level testing (which requires a doctor visit, significantly reducing the compliance

level) and typically does not involve the utilization of self-monitoring glucose devices.

It is important to

note that the diabetic market is the first point of entry for the Dario Smart Diabetes Management Solution and we believe that

our goal of providing mHealth health solutions for a variety of chronic and wellness related conditions based on mobile device

testing will grant us access to a much larger market.

The Dario Smart Diabetes Management Solution is targeted at the digital health

market, which was estimated by Zion Market Research at around $122 billion globally in 2017 and is expected to reach $423 billion

Industry Background and the Dario Smart Diabetes Management

Solution Opportunity

From a competition

perspective, four companies currently dominate the BGMS business, controlling a majority of the market:

Roche Diagnostics (part

of Hoffman-LaRoche), LifeScan (a Johnson & Johnson company), Ascensia (formerly Diabetes care), and Abbott Laboratories.

“big four”

offer a wide variety of BGMS products and have led the market since the late 1990s.

Numerous second-tier

and third-tier competitors, including several in Asia, hold the remaining 10% of the market.

We believe that the BGMS offerings

by all vendors are comparable, with mild differentiation of the main feature sets of the devices.

This is akin to the

differentiation among personal computers (PCs) during the 1990s and 2000s, where most of them had the same key feature set of Microsoft

Windows and Intel Processors.

We believe that the

increasing global adoption of mobile phones has created an opportunity for disruption in the BGMS market.

The Dario Smart

Diabetes Management Solution, which features our compact all-in-one Dario Blood Glucose Monitoring

System device coupled with iOS, Android and web-based apps, is intended to eliminate the need for separate glucose monitors,

carb-calculators and cumbersome dependency on wired, computer-based logging tools.

Our intention is for Dario not

only to deliver the best blood glucose monitoring experience but also use the unique capabilities of mobile smart mobile devices

to deliver better health outcomes.

With respect to the

BGMS market, the principal barriers to entry (all of which we believe the features of the Dario Smart Diabetes Management

Solution can overcome) can be summarized as follows:

● Achieving significant product differentiation in the

eyes of diabetes patients or insurance payers .

We believe that Dario offers a novel design that is compatible

with the usability of the current devices yet offers a modern look and feel when compared to products in the marketplace.

of the product directly to consumers will emphasize the product’s distinguishing attributes, without incurring the significant

product introduction expenses typically incurred for the marketing of a standard glucose meter via traditional retail channels.

We anticipate that low manufacturing

costs for the dongle (the part of the Dario Blood Glucose Monitoring System that attaches to the phone jack or Lightning connector)

and the similarity to our competitors’

estimated cost of manufacturing the strips, when coupled with our direct-to-consumer

marketing, creates the potential for providing us with a meaningful cost advantage versus most vendors of traditional glucose

● Difficulty obtaining shelf space at the pharmacy .

many products on the market, a new entrant has to battle for visibility on the shelf or in e-commerce stores.

Smart Diabetes Management Solution will limit this obstacle by emphasizing internet based direct-to-consumer marketing and sales.

● The challenge of influencing diabetes specialists

to recommend another BGMS product to patients .

We make efforts to introduce and present the Dario Smart Diabetes

Management Solution to the medical community through our participation in academic and professional conferences.

Dario Smart Diabetes Management Solution will continue to be marketed directly to our target users (“Business to Consumer,”

or B2C), who we believe are increasingly becoming the primary decision-makers in choosing their glucose monitoring equipment.

We have also started marketing our products in a “Business-to-Business,”

or B2B, business model, selling to large

organizations that include distributors, retailers, pharmacies and hospitals.

We believe that Dario’s

specific features and trends in the marketplace create a significant opportunity to penetrate the market and effectively compete

with and gain market share against the established players.

Utilization of Mobile Health Applications

Smart mobile device

applications combine easy-to-use interfaces with continuous internet access to create transformational mobile health solutions

(often called mHealth, eHealth or digital health).

Although the potential benefits of mHealth solutions have been widely

discussed for over a decade, the market is now starting to emerge from the trial phase.

The need to reduce long waiting periods

in order to access health care facilities from specialists is the primary driver responsible for the adoption of mHealth.

that Dario is designed to play directly into this market trend.

In addition, the Grand

View Research report states that the availability of applications for consumers is continuing to grow rapidly, especially healthcare

These applications assist users in self-management of wellness, disease and chronic abnormalities.

This has led to the patient

playing an important and active role in staying informed and updated on their own healthcare decisions, contributing to the rise

in the adoption of mHealth apps globally.

Healthcare is gradually

transitioning towards a precision-based model, better known as a “personalized medicine”

mHealth is becoming

a widespread trend due to the introduction of technologies such as EMRs, remote monitoring, and other communication platforms.

mHealth leverages the 4Ps of healthcare delivery:

personalized, predictive, participatory, and preventive, to ensure delivery of

optimal care to its users.

In addition, the growing penetration of smartphones, especially in low- & middle-income countries

and the growing focus on utilizing mobile technology to leverage healthcare delivery and ensure a population health plan is anticipated

to benefit the market.

The Dario Smart

Diabetes Management Solution includes the Dario Blood Glucose Monitoring System and software application for people with diabetes.

currently allows users to easily record, analyze, transmit and store key data points such as glucose level, insulin, and carbohydrate

Moreover, the Dario Smart Diabetes Management application provides knowledge and motivation with the aim of improving health

In addition, we are developing software for health care providers and payers to help better support patients and intelligently

manage large patient populations.

Digital Therapeutics (“DTx”) company revolutionizing the way people manage their health across the chronic condition

spectrum to live a better and healthier life.

Our mission is to transform how affected individuals manage their health and chronic

conditions by empowering our customers to easily manage their conditions and take steps to improve their overall health.

conditions are driven by personal behaviors and the individual actions that are or are not taken.

We believe that changing these

behaviors can dramatically improve our customers’

overall health and substantially reduce unnecessary health spending.

behavioral change and habit formation are difficult, especially in managing chronic disease and related conditions.

therapeutics endeavor to produce lasting behavior changes in our customers by applying a novel combination of artificial intelligence

(“AI”)-driven dynamic personalization and behavioral science at scale.

This allows us to engage and support our customers,

and offer them a complete virtual care solution, ideally resulting in improved health outcomes and reduced total cost of care.

principal operating subsidiary, LabStyle Innovation Ltd., is an Israeli company with its headquarters in

Caesarea, Israel.

We were formed on August 11, 2011, as a Delaware corporation with the name LabStyle Innovations

On July 28, 2016, we changed our name to DarioHealth Corp.

We began our sales in the direct-to-consumer space,

solving first for what we deemed the most difficult problems:

how to engage users and support behavior change to improve

clinical outcomes in diabetes.

Our most developed AI tools leverage the direct-to-consumer experience from over 150,000

members to drive superior engagement and outcomes.

In early 2020, we broadened our solutions to include other medical

conditions in addition to diabetes, and to serve business customers who seek to improve the health of their stakeholders.

Presently, we have deployed solutions for diabetes, hypertension, and pre-diabetes, and through our acquisition of Upright

Technologies Ltd.

(“Upright”), we now offer solutions for musculoskeletal (“MSK”) conditions.

We are currently

delivering B2B2C solutions for providers, employers, and pharmaceutical companies, and we plan to develop a full-risk health

plan business, which we expect will provide our AI driven, remote patient monitoring (“RPM”) and coaching

for a variety of chronic conditions, across a range of customer product lines in 2021.

Upright Technologies

Ltd., which we acquired in February 2021, is a leading digital MSK health company focused on preventing and treating the most

common MSK conditions through behavioral science, biofeedback, coaching, and wearable tech.

Upright has over 90,000 active users

and its clinically validated solution is recommended by more than 500 clinics worldwide.

In-market first-generation

digital health solutions offer static or nominal personalization at best, integrating signals to customize nudges or personalize

communications in a manner that does not significantly adapt to changing user needs over time, while user journey’s, or experiences,

remain fairly static.

First generation solutions generally lack user experience benefit of insight from tens of thousands of direct-to-consumer

engagements over years that adaptively personalize user journeys for high engagement and outcomes.

These solutions are often described

as “fingerprinted,”

but while fingerprints don’t change over time, users do.

As a result, any static or minimally

dynamic approaches are not sufficiently customized to address user needs.

Market intelligence

confirms that enterprise customers are frustrated by existing solutions with static user journeys, limited transparency, inability

to integrate with existing technologies and workflows, low engagement and retention and challenges with flexible deployments.

customers want a single solution for most-major chronic conditions, others wish to deploy piecemeal solutions or may have already

invested in solutions for a portion of their populations.

Health systems and health plans have invested significantly in their

technology and digital strategy and require solutions that interoperate with their existing and planned deployments.

First generation

digital health solutions that have piloted with complex customers such as health plans have been forced to pivot their business

strategies to employers and others owing to enrollment, integration, return on investment and reporting challenges.

Our solutions

are designed from the ground-up for integration, can be deployed for single or multiple conditions, deliver behavioral-science

informed dynamically personalized and integrated user journeys, deliver clear returns on investment in required time horizons and

allow for real-time granulated customer reporting.

Unlike other digital

health solutions, we also personalize user experience beyond nudges.

Healthcare journeys and pathways must be individualized, informed

by behavioral science, and dynamically responsive to drive engagement and outcomes.

Customized, dynamic user journeys are delivered

by our AI-driven journey engine, the “Dario Loop”

(formerly called Dario Intelligence), which personalizes user experience

across a range of factors including timing, tone, channel, content, frequency, and intervention.

We believe that our dynamic personalized

approach ensures superior engagement and retention, reduced costs, and ultimately, improved user health.

This is reflected in our

user experience feedback, with an unparalleled 4.9 out of 5 stars across more than 15 thousand reviews in the Apple App Store,

a best-in-class net promoter score of 76, and industry-leading, published improvements in clinical metrics such as estimated glucose

monitoring (“HbA1c”), hypertension (“HTN”), pain and health-related quality of life.

Our Solutions

We offer a customized,

user-centric, modular platform integrating digital therapeutics, coaching, devices, and care providers.

Our suite of offerings

includes Dario Tools, which are devices that integrate with applications on a user’s smartphone, DarioEngage, a population

health management platform (“DarioEngage”), and the Dario Loop, our AI-driven journey engine.

Our platform is designed

for integration across a range of devices including partner devices.

Our digital architecture and user experience can easily integrate

with partnered devices such as continuous glucose monitor (“CGM”) and other remote patient monitoring devices.

example, we recently partnered with one of the “big 4”

diabetes companies to integrate their meter as well in certain

commercial deployments.

Our native devices include:

All-in-one smart glucose meter

Bluetooth connected blood pressure cuff

Digital Scale

Upright MSK training device

Because of the widespread

and growing use of smartphones and the evolution of user preferences, our primary device is the user’s smartphone.

Our connected

device strategy has been to develop or acquire devices when existing market requirements are not adequately met (for example, our

smart glucometer and Upright’s MSK device), and to partner with best-in-class devices for the remaining applications (including,

for example, our digital scale, blood pressure cuff, and CGM).

Dario targets conditions

for which behaviors drive a significant portion of the outcomes, and which conditions bear a substantial cost burden to our users.

We combine our “Dario Tools”

with our software, by which we offer RPM of their conditions and progress.

Dario divides

its solutions into metabolic and non-metabolic categories:

Metabolic conditions currently deployed include diabetes

(primarily type I and type II), hypertension and obesity/pre-diabetes.

Non-Metabolic conditions currently deployed include MSK

We present our users

with a digital center of excellence - a low friction integrated experience from contracting through onboarding, data exchange,

enrollment, outcomes, and reporting.

Regardless of which conditions or populations our customers select, and independent of whether

they choose to deploy portions of their strategy through other partners, we present a unified application experience that simplifies

deployments, creates market-leading transparency, and accelerates and broadens user engagement.

The Dario Loop

Users vary significantly

in their interests and preferences, and unique user preferences also vary over time, insofar as optimal timing, tone, content,

channel, frequency, and intervention required to produce sustained behavior change.

Users interactions with devices, smartphones,

coaches, providers, and third-party solutions must be personalized along these axes to ensure optimal engagement, retention, and

To engage and sustain user interest and participation, and to drive outcomes, platforms must be dynamically responsive.

Because of a lack of responsiveness to these types of variances, many digital health platforms that achieve high initial engagement

often fail to retain users over time.

Key to our ability

to accommodate user behavioral changes is our mature AI-driven user journey engine, the “Dario Loop.”

While several

in-market solutions now integrate health signals across a range of categories to apply limited, nominal personalization, primarily

in the form of nudges, our solution is informed by years of user experience data from over 150,000 users, enabling us to continually

personalize and adapt user journeys over time.

The Dario Loop journey engine drives our multichannel targeted outreach and enrollment

campaigns, informs specific recommendations around a range of categories such as diet, physical activity, self-care, coaching interventions,

and provider engagement, and evolves in real time in response to the data exhaust from a user’s interaction with the care

The Dario Loop combines

complex behavioral science insights with data from tens of thousands of users over several years to recommend AI-driven initial

and updated care journeys in response to a user’s engagement with the platform.

Most digital health solutions consist primarily

of tracking, content, and nudges.

These are often perceived by users as non-rewarding work, and often do not feel relevant to their

concerns, particularly as they evolve over time.

We believe that current in-market solutions trivialize within person changes over

time and do not appropriately respond to dynamically evolving interests of users.

This results in reduced engagement and impaired

The Dario Loop adapts user journeys’

to drive engagement, retention, and clinical outcomes by optimizing timing,

tone, channel, content, frequency and intervention to deliver dynamically personalized user journeys that are more likely to result

in the behavior changes needed to drive improved outcomes across a range of conditions.

As we partner with solutions in additional

conditions or categories, we “loop them in”

to our solution, enhancing the engagement and efficacy of these partnered

solutions to deliver additional value to our users.

The engine is designed for integration and scale;

as we add populations and

conditions for which behaviors are primary drivers of outcomes, our engine becomes more adept at customizing a user’s preferences

Our Growth Strategies

customers across a range of channels .

Due to our unique ability to deploy flexibly and interoperability, and since we

cover the range of chronic conditions of common concern to health plans, providers and employers, we are experiencing increased

interest in our behavior change platform for chronic diseases.

We have already engaged with several large providers and one fortune

500 company subsidiary, and are in late stage negotiations to enter contracts with several health plans on their fully insured

We anticipate continued growth and demand in these channels as we acquire customers.

Each additional contract not only

increases revenues, but also the likelihood of attracting additional new customers as they recognize our solutions being adopted

and trusted by peers and competitors.

the eligible populations within customers .

Initially, Dario’s solutions were deployed for type I and type II diabetes.

Since that time, we have added HTN, MSK.

Each new condition added increases our ability to cover larger portions of our customers’

populations, thereby reducing the need for our customers to engage multiple vendors, and reducing their costs as compared to the

alternative of partnering with multiple solutions to cover the conditions and categories that we cover on one single platform.

Our business model is predominantly a subscription model, where we charge per user engaged on the platform.

As our AI matures and as we deploy increasingly dynamic and adaptive personalization, we intend to engage a large portion of eligible

populations, potentially driving increased revenue.

A user is considered as an engaged user if (i) the user is measuring high

blood glucose and/or blood pressure using our app and our connected devices, (ii) a user is interacting with our coach via

one of the communication channels such as chat, SMS, email or phone call, or (iii) a user who is performing one of the following

activities on his application such as:

reading messages of articles sent to him over the app, setting or updating goal on his application,

updating his profile, tagging meals, recording intake of drugs and other activities available on our application.

solutions for value .

Our customers primarily engage for 3 key reasons:

(1) the opportunity for cost savings;

competitive advantage in breadth of conditions serviced and our AI technology;

and (3) revenue opportunities from our digital

center of excellence.

Our pricing strategy is designed to deliver return on investment to our customers soon after engagement,

and steadily over time.

As we evolve our solutions to deliver increased value to our users, we can offer customers value-based

pricing models that can lead to greater revenue.

and Partnerships .

In early 2021, as part of our plan to expand our suite of offerings to provide a wider range of solutions

to our potential customers, we acquired Upright, and we are now planning to deploy a comprehensive MSK virtual

clinic in the second half of 2021.

The COVID-19 pandemic has had a major impact on health.

Our members and eligible members were disproportionately

affected as researched showed that chronic condition comorbidities increased the risk of hospitalization and death from COVID-19.

In 2020, telehealth and digital care spiked significantly, as health plans and providers sought to deliver solutions virtually.

Across the industry, telehealth use spiked in 2020 and has since withdrawn some, albeit to still more than 50x pre-pandemic levels.

However, telehealth as delivered today is not appreciably different from how it was delivered 30 years ago, with largely telephone

only visits, and even where video is present, remote monitoring, real-time data and device integration remain mostly absent.

customers and potential customers recognize the tremendous potential of building on the shift to telehealth with the evolution

of more complete virtual care models as they see the limitations of pure telehealth-based care for chronic conditions.

Sales and Marketing

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with Attain Health, Giant Eagle, BestBuy, and Better Living Now (BLN).

In the U.K., the Dario

Blood Glucose Monitoring System is a fully reimbursed product distributed by a distributor since the second quarter of 2016.

The Dario Blood Glucose Monitoring System is now available via all main pharmacies in the U.K.

Our sales and marketing efforts

have been focused on wholesalers, pharmacies, HCP’s (Health Care Professionals), diabetes educators and hospitals via the

This has created awareness and understanding of the value proposition we offer to people with diabetes.

we will be focusing on increasing our presence in the U.K.

market via our direct to consumer strategy, utilizing the countrywide

availability of the strips in pharmacy and clinical awareness of the product via the healthcare providers.

In Canada, the Dario

Blood Glucose Monitoring System is available through major pharmacy chains across Canada that includes brands like London Drugs.

We also offer consumers the ability to buy direct via our online platform or to get their prescriptions serviced online via Bayshore.

Similar to the U.K., in Canada, we work on both promoting and marketing Dario to the medical establishment via our distributor

and expanding its awareness via our direct to consumer strategy which we have been ramping up.

On the marketing side,

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with the medical community to showcase what we expect will be the Dario Smart Diabetes Management Solution’s clinical equivalence

and usability superiority through DarioEngage and Dario Intelligence.

and usability superiority through DarioEngage and Dario Loop.

As part of transforming

our offering from the direct-to-consumer market to the (B2B2C and payors market, in the beginning of 2020, we hired a President

and General Manager for North America who is leading our sales and marketing organization in the United States aimed to offer

our digital solution to health plans, employers, hospital, clinics, and remote patient monitoring centers.

We expect this organization

to grow as we enter into service agreements with such payors.

In that regard, in 2020, we announced a variety of agreements expanding

our sales in the B2B2C market including:

(i) in January 2021, our announcement that we entered into an agreement to

provide its digital therapeutics solution to eligible employees of a subsidiary of a U.S.

based Fortune 500 technology and engineering

company, which was obtained through our partnership with the Vitality Group (“Vitality”);

(ii) in December 2020,

we announced that we entered into an agreement to provide our RPM solution to Presbyterian

Medical Services, one of the largest integrated healthcare systems in the State of New Mexico, effective January 1,

(iii) in November 2020, we announced that we entered into an agreement to provide our digital therapeutics solution

to eligible employees of a U.S.-based Fortune 500 technology company;

(iv) in October 2020, we announced our

inclusion in Vitality’s Gateway Flex offering, allowing our digital therapeutics platform to be marketed to Vitality's vast

employer base that provides benefits solutions to 20 million people, (v) in September 2020, we announced our partnership

with HMC Healthworks, that extends our reach into HMC's vast multi-employer client base through which HMC is currently managing

more than one million members;

(vi) in July 2020, we announced that we entered the U.K.

RPM market through an agreement

with Williams Medical, making our platform available to healthcare professionals throughout the U.K.

June 2020, we announced two RPM agreements in the U.S., allowing healthcare providers to monitor patients between office

visits while utilizing new CMS reimbursement codes, an added source of revenue.

Manufacturing

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manufacture our products ourselves, we have supply agreements with manufacturers for the Dario Blood Glucose Monitoring System,

glucose test strips, lancing devices, and lancets.

We have arrangements in place with commercial-scale manufacturers

for both the Dario Blood Glucose Monitoring System and for our test strips.

As a result of investments, we have made over

the past several years, we own the specialized equipment used to manufacture Dario Blood Glucose Monitoring System.

glucose test strips, lancing devices, lancets, blood pressure monitor and weight scale.

We have arrangements in place

with commercial-scale manufacturers for both the Dario Blood Glucose Monitoring System, for our test strips and the other

As a result of investments, we have made over the past several years, we own the specialized equipment used to manufacture Dario

Blood Glucose Monitoring System.

During 2015, we commenced

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to increase our manufacturing capacity and improve cost savings.

Insurance Reimbursement

In the United States

and in other jurisdictions such as England, we expect that Dario’s test strips should generally be available for full

or partial patient reimbursement by third-party payers.

We expect to work with third-party payers in the countries into which

we expect to market Dario in order to establish coverage for test strips, although we cannot be sure of coverage being obtained.

In April 2014, we announced the receipt of reimbursement coverage for the use of the Dario Blood Glucose Monitoring System in Italy,

making 600,000 Italians eligible for reimbursement coverage.

In June 2014, we were granted

(effective September 1, 2014) reimbursement status in England, Wales, Scotland and Northern Ireland for strips and lancets to be

utilized together with the Dario Blood Glucose Monitoring System.

In May 2015, we launched Dario in Canada and the

majority of Canadian medical plans are now covering test strips for the Dario Blood Glucose Monitoring System with reimbursement.

We expect the balance of Canadian insurance plans to provide reimbursement coverage in the near future.

We are planning to pursue

reimbursement coverage in other jurisdictions.

product offering is primarily subscription based software and services which do not require manufacturing, and which are

developed by us.

Clinical Studies and Outcomes

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Physicians will also employ various strategies to manage diabetes-associated comorbidities.

We believe that patients using a digital diabetes management

platform have the potential to promote behavioral modification and sustain adherence to diabetes management, demonstrating better

glycemic control.

Our sophisticated customer-focused solutions provide significant,

meaningful improvements in the measurable clinical outcomes of our members.

We believe that patients

using a digital diabetes management platform have the potential to promote behavioral modification and sustain adherence to diabetes

management, demonstrating better glycemic control.

Our sophisticated customer-focused solutions provide significant, meaningful

improvements in the measurable clinical outcomes of our members.

Clinical Studies

The system accuracy and user performance of our product has

been evaluated in several studies that we have performed, in over 1,300 diabetic patients from 2015 through 2017, and was found

compliant with the most stringent current requirements of FDA guidelines and international standards then in effect.

Clinical validation of our product was

performed with 350 diabetic patients for each product type, namely the meter with the audio jack and the meter with the lightning

connector, and the results that were achieved were as follows:

The system accuracy and user performance

of our product has been evaluated in several studies that we have performed, in over 1,300 diabetic patients from 2015 through

2017, and was found compliant with the most stringent current requirements of FDA guidelines and international standards then in

Clinical validation

of our product was performed with 350 diabetic patients for each product type, namely the meter with the audio jack and the meter

with the lightning connector, and the results that were achieved were as follows:

Dario BGMS (Android):

For all subject's samples 96.6% within ±15% and 100% within ±20% of the medical laboratory

values at the entire glucose concentrations range

For all subject's samples 96.6% within ±15% and 100% within ±20% of the medical laboratory values at the entire glucose concentrations range

Dario LC BGMS (iPhone, Lightning connector):

For all subject’s samples 96.3% within ±15% and 99.4% within ±20%

of the medical laboratory values at the entire glucose concentrations range.

For all subject’s samples 96.3% within ±15% and 99.4% within ±20% of the medical laboratory values at the entire glucose concentrations range.

Published Clinical Data

Since 2017, we have conducted numerous real-world-data

studies through analyzing the clinical data of our user’s utilizing the rapidly increasing database that is stores on our

Since 2017, we have

conducted numerous real-world-data studies through analyzing the clinical data of our user’s utilizing the rapidly increasing

database that is stored on our data cloud.

Several scientific

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three real-world-data analysis studies, as detailed below.

2 Diabetes Users of Dario Digital Diabetes Management System Experience a Shift from Greater than 180 mg/dL to Normal Glucose Levels

with Sustainable Results

Reduction of 19.3% in high glucose readings within

Type 2 Diabetes Users

of Dario Digital Diabetes Management System Experience a Shift from Greater than 180 mg/dL to Normal Glucose Levels with Sustainable

Reduction of 19.3% in high glucose readings within 12 months

Increase of 11.3% in in-range readings within 12 months

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14.3% decrease in high readings (180-400 mg/dL) and 9.2 % increase in In-range (80-120 mg/dL) readings

decrease in High Readings and Severe Hyperglycemic Events for People with T2D over the Full Year of 2017 in Users Monitoring with

Dario Digital Diabetes Management System

A decrease in High Readings

and Severe Hyperglycemic Events for People with T2D over the Full Year of 2017 in Users Monitoring with Dario Digital Diabetes

Management System

Reduction of 20% of High events (180-400 mg/dL) in T2D sustained within 12 months

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(>400 mg/dL) was decreased in 57.8% (from 0.90% to 0.38% of the entire measurements) at the same period.

Reduction of Blood Glucose Average during One Year of Glucose Monitoring Using Dario Digital Monitoring System in a High-Risk Population

Reduction of 14% Blood Glucose average was observed

in T2D within 12 months

76% of the population showed 24% improvement in Blood

glucose average within 12 months

Continuous Reduction of

Blood Glucose Average during One Year of Glucose Monitoring Using Dario Digital Monitoring System in a High-Risk Population

Reduction of 14% Blood Glucose average was observed in T2D within 12 months

76% of the population showed 24% improvement in Blood glucose average within 12 months

An exploratory data analysis study reviewed a population of high risk active type 2 Diabetic users with initial 30 days glucose

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evaluated on the potential improvement in glycemic variability in Type 2 diabetes over six months in patients monitoring with Dario

Diabetes management system.

Dario presented the study results at the Advance Technologies and Treatment for Diabetes (ATTD) conference

in February 2019 in Berlin.

Digital Diabetes Management System.

Dario presented the study results at the Advance Technologies and Treatment for Diabetes (ATTD)

conference in February 2019 in Berlin.

We presented two additional studies outcomes at ADA 2019 conference.

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for T2D over Six Months in Patients Monitoring with Dario Digital Diabetes Management System

Reduction of 14%-18% in measurements variability was

observed in T2D within 6 months

Hypo events (<70 mg/dL) remained <1 event on

Reduction of 14%-18% in measurements variability was observed in T2D within 6 months

Hypo events (<70 mg/dL) remained <1 event on average

A retrospective data evaluation study was performed on the Dario TM database.

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A group of 698 T2D high-risk Dario TM users was selected.

GV was reduced by 10% and 14% from baseline through 3 and 6 months, respectively (SD of 55.7, 58.4 vs.65.0).

GM avg was reduced by 8% and 12% from

baseline through 3 and 6 months, respectively (201.1±25.57, 192.8±54.3 vs.

219.5±38.5) while patient’s

hypoglycemic event (<70mg/dL) was in average, less than one (<1) during this period.

Subgroup analyses (355 patients) revealed

substantial GV improvement among non-Insulin T2D patients.

The GV was reduced by 14% and 18% from baseline through 3 and 6 months,

respectively (SD of 52.8, 50.7 vs.61.7).

GV was reduced by 10% and 14% from baseline through 3 and 6

months, respectively (SD of 55.7, 58.4 vs.65.0).

GM avg was reduced by 8% and 12% from baseline through 3 and 6 months,

respectively (201.1±25.57, 192.8±54.3 vs.

219.5±38.5) while patient’s hypoglycemic event (<70mg/dL)

was in average, less than one (<1) during this period.

Subgroup analyses (355 patients) revealed substantial GV improvement

among non-Insulin T2D patients.

The GV was reduced by 14% and 18% from baseline through 3 and 6 months, respectively (SD of 52.8,

50.7 vs.61.7).

T2D Users of Dario Digital

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Along the 6 months period, hypo events (<50mg/dL) per user per month on average remained stable.

In August 2019 another

study was presented at the AADE 2019 in Atlanta.

The study evaluated the “Impact of Digital Intervention on In-range Glucose

Levels in Users with Diabetes.”

The study results showed 6% improvement in average blood glucose levels over 3 months intervention

program for a group of 162 users.

A 39% increase in the in-range measurements was observed in a subgroup of 101 patients who started

with average blood glucose levels of over 140mg/dL.

February 2020, we presented an additional clinical study at the Advanced Technologies & Treatments for Diabetes (“ATTD”)

In August 2019

another study was presented at the AADE 2019 in Atlanta.

The study evaluated the “Impact of Digital Intervention on In-range

Glucose Levels in Users with Diabetes.”

The study results showed 6% improvement in average blood glucose levels over 3 months

intervention program for a group of 162 users.

A 39% increase in the in-range measurements was observed in a subgroup of 101 patients

who started with average blood glucose levels of over 140mg/dL.

In February 2020,

we presented an additional clinical study at the Advanced Technologies & Treatments for Diabetes (“ATTD”)

conference in Madrid, Spain.

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was observed as well after 2 years.

In November 2020,

we presented additional clinical study data at the Virtual Diabetes Technology Society (DTS) meeting.

The presented data indicated

the potential for a digital diabetes management solution to effect and sustain glycemic control improvements and demonstrated long

term reduction of blood glucose average (eA1c) and glycemic variability in type 2 diabetes over two years.

The system assists users

through a variety of mechanisms including behavior modification in diabetes self-management and in long-term routines for self-care.

The Effect of a Digital Therapeutic Platform on Glycemic Control in Adults above Age 65 with Type 2 Diabetes.

Reduction of 13% blood glucose average in age group ≥65 (N=298) at six months by 13% sustained for 12 months.

Reduction of 38.1% in high readings ratio (>250 mg/dL) in the ≥65 age group at six months and by 41.5% at 12 months.

A retrospective study of high-risk users (BG avg >180 mg/dL equivalent to e A1c 8.0) 2 with type 2 diabetes that measured their

blood glucose using the Dario®

platform database over two consecutive years was performed.

The minimum engagement level for

inclusion was at least two blood glucose measurements per day on average taken in Month 1 and Month 24.

Actual blood glucose readings

were taken by the Dario meter and loaded into the cloud database.

These were evaluated for the blood glucose average (BGavg), estimated

A1c (eA1c)values and glycemic variability (by Standard Deviation;

SD) following 24 months compared to the first month (baseline).

368 high-risk, T2D active and engaged users for at least consecutive 2 years were identified and assessed for their risk-level

and insulin usage.

A group of 148 T2D, non-Insulin users that started with a blood glucose average (BG avg) >180 mg/dl (equivalent

to eA1c>8.0) consistently reduced their BG avg by 18% on average and sustained these values (179±45 vs.

219±56

mg/dL) following 2 years on the Dario platform.

Glycemic variability was reduced over two years by 20% on average (SD:45 vs.

Substantial reductions were observed for higher risk groups (insulin and non-insulin treated).

The subset that started with average

BG levels > 212 mg/dL (eA1c >9.0) and average BG levels >240 mg/dL (eA1c>10) reduced their average BG by 22.5% and

25.7% respectively on average over two years.

The equivalent reductions in eA1c were 1.95% and 2.42%

In August 2020, we

presented an additional clinical study at the Virtual Association of Diabetes Care & Education Specialists (ADCES) conference.

The presented observational study data demonstrated better glycemic and blood pressure control.

Patients using an integrated chronic

disease management digital platform have the potential to improve user activation which may assist to better manage their blood

glucose and blood pressure levels and sustain behavioral change.

Impact of Digital Management on Clinical Outcome in Patients with Chronic Conditions:

Hypertension.

Hypertension:

Increase in normal level % measurements from 6% to 12% while hypertension stage

2 measurements decreased from 53% to 45%.

70% of the users (243 out of 345) improved their blood pressure levels by 8.4 mmHg Systolic

and 6.2 mmHg on average.

Glucose levels:

A reduction of 33% in

high readings (>250 mg/dL) and 67% in severe events (>400 mg/dL) was observed over six months .

A retrospective data evaluation study was performed on the Dario TM cloud database.

A population of active

users that measured both blood pressure and blood glucose for at least 3 months was observed.

Blood pressure and blood glucose

levels were evaluated.

First month measuring on Dario platform was used as study baseline.

Clinical outcomes examined were blood

pressure values, percentage of blood pressure categories, average blood glucose (BGavg) and high blood glucose readings (>250

mg/dL, >400 mg/dL) ratios.

A group of 345 active users started at baseline with Hypertension stage 1, 2 or hypertensive crisis levels and measured

following 3 months was evaluated.

Blood pressure:

o Normal levels increased from 6% to 12% and percentage of users with hypertension stage 2 decreased

from 53% to 45%

o 70% of the users (243 out of 345) improved their blood pressure levels in 8.4 mmHg Systolic and

6.2 mmHg on average (Systolic 134.2±12 vs.142.6±14;

Diastolic 89.9 ±11 vs.83.7 ±8.7)

Blood Glucose:

o A group of 345 users measured with Dario their blood glucose in addition to blood pressure, 89%

are type 2 and pre-diabetes - average age is 60.4.

o For the group of 345 users a reduction of 33% (5.4% vs.8.0%) in high readings ratio (>250 mg/dL)

and 67% (0.3%vs.0.9%) in severe events ratio (>400 mg/dL) was observed following six months on average.

A subset of 114 users

with diabetes in higher risk started with BG average >160 mg/dL improved their average blood glucose by 14% (207±47 vs.177±50

mg/dL) following six months.

In June 2020, we presented

two clinical studies at the ADA Virtual conference.

The presented data from these studies showed:

The use of a digital diabetes platform resulted in a large population are consistent with previous

studies and show the potential to promote behavior modification in users with T2D.

The study demonstrated that digital management

platforms may assist user to better control their blood glucose levels and sustain behavioral change.

This observational data presented

an improvement in high glycemia readings ratios, and an increase in prediabetes fasting blood glucose levels sustained over one

The additional study confirmed the potential of digital diabetes solutions to sustain glycemic

achievements in users with type 2 diabetes over two years.

The system may assist the users to experience an actual behavior modification

in their diabetes self-management as well as in their long-term routine for self-care.

Users with type 2 diabetes using a digital platform experienced

sustained improvement in blood glucose levels.

A retrospective data evaluation (Q1:2018-2019) was performed on the Dario ®

A population of active

users (18 measurements per month with the Dario ®

System on average) with T2D, non-Insulin treated was evaluated

over a full year.

High blood glucose readings (180-400 mg/dL, >250 mg/dL), fasting readings (<126 mg/dL) and post-meal readings

(<180mg/dL) ratios were assessed in their first month of use until the 12 th month.

For 9,200 users with T2D, non-Insulin users, the average ratio of high glycemia events (180-400 mg/dL) from entire set of measurements

was reduced by 26% (18.62% vs.

23.43%) while readings of >250mg/dL were reduced by 33% (4.65% vs.

6.93%) over a year.

measurements analysis revealed an increase of 16% in ratios of readings <126 mg/dL per entire set of fasting measurements (40.59%

34.92%) on average.

Post-meal readings ratio of <180 mg/dL per entire post-meal measurements increased by 5% (73.75% vs.

70.42%) on average over a year.

Estimated A1C Reduction in High-Risk Patients over Two

Years of Using a Digital Diabetes Management Platform

A retrospective data evaluation study was performed on high-risk users with type 2 diabetes that measured their blood glucose using

platform database for two consecutive years.

The study assessed BGavg, estimated A1c (eA1c) values and

glycemic variability following 24 months compared to the first month (baseline).

A group of 148 high-risk users with type 2 diabetes, non-Insulin treated was evaluated.

Their BGavg was of >180mg/dL (eA1c>8.0)

for users taking &sim;

2 blood glucose measurements per day in the

first month and in the 24 th month on average.

Their BGavg was consistently reduced by 18% and sustained (179±45

219±56 mg/dL) and eA1c was reduced by 1.5 percentage points (9.26±1.3 vs.

7.86±1.8).

Glycemic variability

was reduced by 20% (SD:

56) at the end of 2 years.

Additional analysis of 220 users with type 2 diabetes,147 started with

eA1c >9.0% and 73 started with eA1c >10%, revealed substantial eA1c reduction of 2.0 percentage points (10.31 ±

8.36 ±

1.2%) and 2.4 percentage points (11.15 ±

8.73% ±

2.1%) from baseline after 2 years, respectively.

Glycemic variability was reduced by 20% for both (SD:

69 and 59 vs.

74, respectively).

Government Regulation

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is conducted before a device receives clearance for commercial distribution.

Under Section 201(h) of the Food, Drug,

and Cosmetic Act, a medical 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.

Under Section 201(h) of the Food,

Drug, and Cosmetic Act, a medical 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.

Blood Glucose Monitoring System is classified as a medical device and subject to regulation by numerous agencies and legislative

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Specifically, 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 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.

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clearance, or pre-market approval (or PMA) from the FDA.

Clearance Process.

510(k) Clearance

After a device receives 510(k) clearance, any modification that could significantly affect

its safety or effectiveness, or that would constitute a major change in its intended use, requires a new 510(k) clearance or could

even require a premarket application approval.

The FDA requires each manufacturer to make this determination in the

first instance, but the FDA can review any such decision.

If the FDA disagrees with the determination, the agency may

retroactively require the manufacturer to seek 510(k) clearance or premarket application approval.

The FDA also can

require the manufacturer to cease marketing and/or recall the modified device until 510(k) clearance or premarket application approval

its safety or effectiveness, or that would constitute a major change in its intended use, requires a new 510(k) clearance

or could even require a premarket application approval.

The FDA requires each manufacturer to make this determination

in the first instance, but the FDA can review any such decision.

If the FDA disagrees with the determination, the agency

may retroactively require the manufacturer to seek 510(k) clearance or premarket application approval.

also can require the manufacturer to cease marketing and/or recall the modified device until 510(k) clearance or premarket

application approval is obtained.

Novo Classification .

If the FDA denies 510(k) clearance of a device because it is novel and an adequate

predicate device does not exist, the “de novo classification”

procedure can be invoked based upon a reasonable assurance

that the device is safe and effective for its intended use.

This procedure approximates the level of scrutiny in the

510(k) process but may add several months to the clearance process.

If the FDA grants the request, the device is permitted to enter

commercial distribution in the same manner as if 510(k) clearance had been granted.

If the FDA denies 510(k) clearance of a device because it is novel and an

adequate predicate device does not exist, the “de novo classification”

procedure can be invoked based upon a reasonable

assurance that the device is safe and effective for its intended use.

This procedure approximates the level of scrutiny

in the 510(k) process but may add several months to the clearance process.

If the FDA grants the request, the device is permitted

to enter commercial distribution in the same manner as if 510(k) clearance had been granted.

Application Approval Process .

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be marketed and sold in 32 countries across Europe as well as in certain other countries worldwide.

On November 21, 2014, MDSS,

our European Authorized Representative, completed the registration of the Dario Blood Glucose Monitoring System with the German

Authority as required by Article 10 of Directive 98/79/EC on in vitro diagnostic medical devices.

We commenced an initial soft

launch of the product in Europe in 2014, created initial demand for the product and established brand awareness and marketing techniques

to reach our target market with a goal to continue expansion to new markets and territories.

On November 21, 2014,

MDSS, our European Authorized Representative, completed the registration of the Dario Blood Glucose Monitoring System with the

German Authority as required by Article 10 of Directive 98/79/EC on in vitro diagnostic medical devices.

We commenced an initial

soft launch of the product in Europe in 2014, created initial demand for the product and established brand awareness and marketing

techniques to reach our target market with a goal to continue expansion to new markets and territories.

We achieved regulatory

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begun to market Dario include the United States, New Zealand, Canada, and Australia.

In January 2014, we

completed the registration with Medsafe, the New Zealand Medicines and Medical Devices Safety Authority, through their WAND (Web-Assisted

Notification of Devices) system allowing us to sell the Dario in New Zealand.

We also have completed the process of registering

the Dario with the Australian TGA, in the ARTG (Australian Register of Therapeutic Goods), which is required in order to bring

and sell the Dario in Australia and effective March 3, 2015, our product is approved for reimbursement in Australia.

2015, we also gained National Pharmaceutical Product Interface (known as NAPPI) approval and registered the Dario in South Africa.

In May 2015, we also received Health Canada approval to market the Dario blood glucose monitoring system and commenced marketing

We have also received reimbursement status from the majority of insurance plans in Canada.

To the extent that

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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.

Exported devices are subject

to the regulatory requirements of each country to which the device is exported, as well as certain FDA export requirements.

Mobile Medical Applications Guidance

On September 23,

the FDA issued final guidance for developers of mobile medical applications, or apps, which are software programs that run on mobile

communication devices and perform the same functions as traditional medical devices.

The guidance outlines the FDA’s

tailored approach to mobile apps.

The FDA plans to exercise enforcement discretion (meaning it will not enforce requirements

under the Federal Food, Drug & Cosmetic Act) for the majority of mobile apps as they pose minimal risk to consumers.

FDA plans to focus its regulatory oversight on a subset of mobile medical apps that present a greater risk to patients if they

do not work as intended.

2013, the FDA issued final guidance for developers of mobile medical applications, or apps, which are software programs that run

on mobile communication devices and perform the same functions as traditional medical devices.

The guidance outlines

the FDA’s tailored approach to mobile apps.

The FDA plans to exercise enforcement discretion (meaning it will not enforce

requirements under the Federal Food, Drug & Cosmetic Act) for the majority of mobile apps as they pose minimal risk to

The FDA plans to focus its regulatory oversight on a subset of mobile medical apps that present a greater

risk to patients if they do not work as intended.

The FDA is focusing its oversight on mobile medical apps that:

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European Directives dictate the following requirements:

● Vigilance system, which requires the manufacturer to

immediately notify the relevant Competent Authority when a company product has been involved in an incident that led to a death;

Vigilance system, which requires the manufacturer to immediately notify the relevant Competent Authority when a company product has been involved in an incident that led to a death;

led to a serious injury or serious deterioration in the state of health of a patient, user or another person;

or might have led

to death, serious injury or serious deterioration in health;

● Post-market surveillance including a documented procedure

to review experience gained from devices on the market and to implement any necessary corrective action, commensurate with nature

and risks involved with the product.

or might have led to death, serious injury or serious deterioration in health;

Post-market surveillance including a documented procedure to review experience gained from devices on the market and to implement any necessary corrective action, commensurate with nature and risks involved with the product.

Failure to comply with

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of these states require that DME providers maintain an in-state location.

If these rules are determined to be applicable to us

and if we were found to be noncompliant, we could lose our licensure in that state, which could prohibit us from selling our current

or future products to patients in that state.

If these rules are determined to be applicable to

us and if we were found to be noncompliant, we could lose our licensure in that state, which could prohibit us from selling our

current or future products to patients in that state.

Federal Anti-Kickback

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referral of a person;

● furnishing or arranging for the furnishing of items or

services reimbursable under Medicare, Medicaid or other governmental programs;

● purchase, lease, or order of, or the arrangement or recommendation

of the purchasing, leasing, or ordering of any item or service reimbursable under Medicare, Medicaid or other governmental programs.

furnishing or arranging for the furnishing of items or services reimbursable under Medicare, Medicaid or other governmental programs;

purchase, lease, or order of, or the arrangement or recommendation of the purchasing, leasing, or ordering of any item or service reimbursable under Medicare, Medicaid or other governmental programs.

To the extent we are

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Patent applications

On May 8, 2011, certain

of our founders filed a Patent Cooperation Treaty (PCT) Application No.

PCT/IL2011/000369, titled “Fluids Testing Apparatus

and Methods of Use.”

On May 8, 2011,

certain of our founders filed a Patent Cooperation Treaty (PCT) Application No.

PCT/IL2011/000369, titled “Fluids Testing

Apparatus and Methods of Use.”

This PCT claimed priority from two preceding U.S.

provisional applications filed by our founders,

with the earliest priority date being May 9, 2010.

The PCT application was transferred to us by our founders on October 27, 2011.

provisional applications filed

by our founders, with the earliest priority date being May 9, 2010.

The PCT application was transferred to us by our founders

on October 27, 2011.

This application covers

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Japan, China, Australia and Israel.

On May 1, 2014, we

announced the receipt of a U.S.

On May 1, 2014,

we announced the receipt of a U.S.

Notice of Allowance for a key patent relating to how the Dario Blood Glucose Monitoring System

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9,125,549) that broadened our registered patent No.

include testing of other bodily fluids through an audio jack connection.

to include testing of other bodily fluids through an audio jack connection.

We believe these early patents represent critical intellectual

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2569622 for testing of fluids through an audio jack connection.

additional corresponding patent was granted in Israel in April 2016.

An additional corresponding patent was granted in Israel in April 2016.

In February 2016 we were granted U.S.

9,257,038, which is a further Continuation application connected to the U.S.

8,797,180, this new patent enhanced the way the Dario

Blood Glucose Monitoring System communicates with the end user’s smartphone devices.

8,797,180, this new patent

enhanced the way the Dario Blood Glucose Monitoring System communicates with the end user’s smartphone devices.

In November 11,

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smartphone devices.

family includes a corresponding pending application in China.

This family includes a corresponding pending application in China.

Additionally, we recently

received U.S.

10,445,072 that enables optical communication between the Dario Blood Glucose Monitoring System and the

end user’s smartphone devices.

10,445,072 that enables optical communication between the Dario Blood Glucose Monitoring System and

the end user’s smartphone devices.

Additional patent applications

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wordmark is registered as a trademark in the Australia, Canada, China,

Costa Rica, United States, Israel, China, Canada, Hong Kong, South Africa, Japan, Costa Rica, Europe, Israel, Japan, Korea, Mexico,

New Zealand, Panama, Russia, South Africa, and the USA.

Costa Rica, United States, Israel, China, Canada, Hong Kong, South Africa, Japan, Costa Rica, Europe, Israel, Japan,

Korea, Mexico, New Zealand, Panama, Russia, South Africa, and the USA.

The “DARIOHEALTH”

wordmark is registered as a trademark in

the United States, Canada, China and India.

wordmark is registered as

a trademark in the United States, Canada, China and India.

Utility Models

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algorithms are protected as trade secrets using specialized confidentiality protocols.

We face competition

in each segment of our offering (devices, applications, coaching and analytics) and more importantly from competitors integrating

these four components.

Glucose Monitors (BGM).

Our device competes directly and primarily with other BGM suppliers including, but not limited

to, the global market leaders:

Abbott Laboratories, Ascensia (formerly Bayer Diabetes Care), Johnson & Johnson LifeScan, Roche

Diabetes and a large number of low-price private label manufacturers.

An increasing number of these BGM devices connect to smartphones

and tablets, such as, but not limited to, the Sanofi iBGStar, Medisana GlucoDock, Philosys Gmate Smart, One Drop, Intuity POGO

and iHealth Align, or have standalone connected devices like Livongo.

blood Glucose Monitors (CGM) .

Continuous blood glucose monitors have made significant market progression

in the last few years, such as but not limited to, Dexcom, Medtronic or Agamatrix.

More insulin-using patients are using CGM devices

on a continuing basis rather than an intermittent basis (such as every other month).

“Intermittent CGM”

such as Abbott

Libre (that requires the user to voluntarily scan the sensor with the meter) are also gaining popularity as an intermediate option

between BGM and CGM, both appealing to non-insulin users and insulin users.

While the market of

BGM and CGM is highly competitive, we believe that we have important comparative advantages.

- We offer an all-in-one glucose monitoring system, including

a small form factor glucose reader, lancing device and a strip cartridge connected to existing smart mobile devices

- We are targeting non-insulin using patients and therefore

do not compete with CGM.

A large percentage of insulin-using patients continue to prefer testing with a BGM rather than a CGM

- Most importantly, in our opinion, is the fact that our

integrated solution separates us from BGM and CGM competitors, and especially (i) the functions that go beyond blood glucose management

such as, but not limited to, nutrition management and activity management (ii) the remote monitoring capabilities that our platform

provides, the real time alerts to caregivers, remote-coaching capabilities to us and to third party caregivers and educating capabilities

of our users.

management applications.

There are thousands of diabetes management applications available for download on a smart phone

(such as Glucose Buddy, mySugr (now part of Roche Diabetes), Carb Manager, Sugar Sense and Welldoc).

We believe that the large

majority of existing diabetes management applications do not offer a good value which translates into users quickly stopping to

use these applications.

We believe that our

application is differentiated from our competitors by the high level of user engagement which comes from a unique know-how in terms

of user interface (UI), user experience (UX), design of user journeys, agile development technics that allow for frequent update

of the application, as well as the intrinsic nature of our integrated solution.

Pure coaching services such as Cecilia Health, or services delivered by medical distributors or healthcare

providers are often relatively expensive and mostly offered on a limited time basis (e.g.

one month after the discharge of a patient,

or three months for onboarding of a new diabetes drug).

We believe that our coaching services is differentiated as compared to

our competitors in that our coaching services are an essential part of our solution and is maintained throughout a patient’s

use of our application.

health integrated competitors .

Several digital health competitors integrate several, or all of, the four components

of our offering, including but not limited to:

Livongo, Glooko, Omada, OneDrop.

In practice, we believe that the closest competitor

in terms of an integrated offering may be Livongo.

Our differentiation

versus such integrated competitors includes

- Proven and significant results, placing us in the category

of “Digital Therapeutics”

- Open platform (capable of integrating non-proprietary

devices and coaching services);

- Operating in the U.S., Canada, Europe and Australia;

- Small form factor glucose reader whereas most devices

from competitors have the size of another cell phone that the user needs to carry around;

- Instant connection of the reader with the phone, thus

maximizing opportunities to engage with the user;

- Flexibility of our product to integrate with the workflows

of our business partners (e.g.

messages integrated with the health communications generated by a retailer, interventions using

the coaches operating from a diabetes clinic).

We currently have 62

full-time employees and 10 part-time employees.

We have employment agreements with our three executive officers.

In recent years, a

number of digitally supported solutions have emerged to manage diabetes and other chronic conditions.

Competitors are developing

new technologies rapidly and, in some cases, are also expanding to manage other chronic conditions.

In this crowded field, our

success is predicated on our flexibility to adapt to evolving customer requirements in digital health and superior execution in

engagement, retention and clinical outcomes in a manner that delivers clear return on investment in required time-horizons and

in complex, highly regulated business environments.

We expect new entrants in the field and the emergence of novel technologies,

as well as competition from larger technology platform players such as Amazon, Apple and Google.

Dario’s competitors vary

by intervention (devices, applications, coaching and analytics), by channel (health plan, pharma, provider, employer) and by condition

(including, for example, diabetes, MSK, HTN, and others).

Certain of our competitors offer this integrated approach in varying

degrees, including, among others, Hinge Health, Inc., Livongo Health Inc.

(acquired by Teladoc Health Inc.), Omada Health, Inc.,

Vida Health, Inc., Virta Health Corp., Informed Data Systems Inc.

(OneDrop), Glooko, Inc., and OnDuo LLC.

that our competitors are comparatively disadvantaged along several axes:

● Our competitors offer point solutions for a single condition (which model is unattractive to enterprise

customers needing to manage multiple vendor relationships);

● Our competitors fail to share member-level data or granular reporting with partners, which prevents

these partners from leveraging their own assets to support care;

● Competitor applications have limited or minimal levels of personalization, where communications

(or “nudge”) from the application may be somewhat personalized, but actual user experiences are heavily templated,

and not personalized or dynamic;

● Competitor applications are supported only by short term outcome data, as compared to our studies

which cover a 2-year period and offer 7 years of direct-to-consumer data;

● Failure of any one of our competitors to successfully engage and retain a substantial portion of

the base population, as none has the direct-to-consumer experience or data required, resulting in frustrated customers who cannot

realize promised cost savings;

● Customers of our competitors suffer an inadequate user experience, as evidenced by few app store

reviews and low scores in Apple, Google and Amazon stores;

● Our competitors offer medical device-oriented approaches with delayed product update cadences,

rather than our more agile, software-driven approaches that push out new products every few weeks;

● Our competitors have slowed their improvements in the area of clinical metrics (including, for

example, blood pressure, HbA1c, and pain), which decreases the solution’s return on investment;

● Our competitors often utilize cumbersome form factors and alternative connected devices, which

are not easily portable or that otherwise require significant user effort for connectivity.

By contrast, our diabetes solution,

for example, utilizes lancets, strips and a dongle held in a lipstick-sized device that physically connects to a user’s phone

and doesn’t require independent charging.

As another example, our MSK device is small and easily attaches to body parts for

convenient and easy use;

● Our competitors’

applications experience limited interoperability and connectivity, such

that they are unable to integrate with third party devices, electronic health records or partnered solutions;

● Our competitors have higher costs;

our solutions are priced 30-50% lower than current comparable

in-market solutions.

As of March 1, 2021,

we had 127 full-time employees and 12 part-time employees.

We have employment agreements with our five executive officers.

“Management –

1 unchanged sentence

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Item 1. Business