What changed in this filing

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Item 9A. Controls and Procedures

2021-03-09 compared with 2020-03-17 · 1624 added, 1679 removed, 1133 unchanged (74% of the section changed)

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in Rules 13a-15(e) and 15d-15(e) under the Exchange Act.

Based on that evaluation, our Chief Executive Officer and our Chief

Financial Officer have concluded that, at December 31, 2019, such disclosure controls and procedures were effective.

Based on that evaluation, our Chief Executive Officer and

our Chief Financial Officer have concluded that, at December 31, 2020, such disclosure controls and procedures were effective.

controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed

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specified in the SEC’s rules and forms.

Disclosure controls and procedures include, without limitation, controls and procedures

designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is accumulated

and communicated to management, including our Chief Executive Officer and Chief Financial Officer, or persons performing similar

functions, as appropriate, to allow timely decisions regarding required disclosure.

Disclosure controls and procedures include, without limitation, controls and

procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act

is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, or persons performing

similar functions, as appropriate, to allow timely decisions regarding required disclosure.

Limitations on the Effectiveness of

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degree of compliance with the policies or procedures may deteriorate.

Changes in Internal Control over Financial Reporting

Changes in Internal Control over Financial

were no changes in our internal control over financial reporting that occurred during the quarter ended December 31, 2020

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Control Over Financial Reporting

required by the SEC rules and regulations, our management is responsible for establishing and maintaining adequate internal control

over financial reporting.

Our internal control over financial reporting is designed to provide reasonable assurance regarding the

reliability of financial reporting and the preparation of our consolidated financial statements for external reporting purposes

required by the SEC rules and regulations, our management is responsible for establishing and maintaining adequate internal

control over financial reporting.

Our internal control over financial reporting is designed to provide reasonable assurance regarding

the reliability of financial reporting and the preparation of our consolidated financial statements for external reporting purposes

in accordance with U.S.

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Other Information

On March 4, 2021, the

Compensation Committee of the Board of Directors approved annual bonuses to the Company’s management team for the achievement

of certain milestones in the 2020 fiscal year.

In that regard, Mr.

Erez Raphael was awarded a cash bonus of $350,000, Mr.

Anderson was awarded a cash bonus of $212,500, and each of Mr.

Zvi Ben-David and Mr.

Dror Bacher were awarded cash bonuses of $120,000.In

addition, the Compensation Committee of the Board of Directors approved a one-time bonus to the Mr.

Yoav Shaked, Chairman of the

Board of Directors, of $100,000.

Employment Agreement

On March 4, 2021, the Company, through Upright, executed an

Employment Agreement with Oded Cohen (the “Employment Agreement”) pursuant to which he will serve as General Manager

of Musculoskeletal (MSK), effective as of February 1, 2021.

The Employment Agreement supersedes the agreement entered into by and

between the Company, through LabStyle Innovation Ltd., and Mr.

Cohen dated February 1, 2021.

Pursuant to the Employment Agreement,

Cohen will earn a monthly salary of NIS 63,000 and shall be eligible for an annual bonus equal to up to four times his monthly

The Employment Agreement is an at-will employment arrangement, with a four month notice period, unless it is terminated

In addition, Mr.

Cohen will be entitled to severance payment pursuant to applicable Israeli severance law.

the Employment Agreement is terminated by us for cause, Mr.

Cohen will only be entitled to a severance pay under applicable Israeli

severance law.

Cohen’s Employment Agreement also includes a one-year non-competition and non-solicitation provision,

certain confidentiality covenants and assignment of any of his company-related inventions.

Under the terms of the Employment Agreement,

Cohen is entitled to certain expense reimbursements and other standard benefits, including vacation, sick leave, contributions

to a manager’s insurance policy and study fund and car and mobile phone allowances.

In addition, Mr.

Cohen will be entitled

to receive a restricted stock unit award to receive up to 73,660 shares of the Company’s common stock and, subject to the

meeting of certain milestones, subject to the meeting of certain milestones an additional restricted stock unit award to receive

up to 73,660 shares of the Company’s common stock on March 1, 2022, and subject to the meeting of certain milestones an additional

restricted stock unit award to receive up to 73,660 shares of the Company’s common stock on March 1, 2023.

Directors, Executive Officers and Corporate Governance

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President and General Manager of North America

General Manager of MSK

Chairman of the Board of Directors

Yadin Shemmer

Raphael has served as our Chief Executive Officer since August 9, 2013 and as a director of our company since

December 2013.

Raphael served as Chairman of the Board of Directors from November 2014 to July 2018, and as a director from

November 2014 to the present.

He previously and until October 2012 served as our Vice President of Research and Development.

Raphael has over 17 years of industry experience, having been responsible in his career for product delivery, technology and business

Dennis Matheis

Raphael has served as our Chief Executive Officer since August 9, 2013 and as a director of our company

since December 2013.

Raphael served as Chairman of the Board of Directors from November 2014 to July 2018,

and as a director from November 2014 to the present.

He previously and until October 2012 served as our Vice President

of Research and Development.

Raphael has over 17 years of industry experience, having been responsible in his career for

product delivery, technology and business development.

Prior to joining us, from 2010 to 2012, Mr.

Raphael served as Head of Business Operations for Nokia Siemens Networks,

where he was responsible for establishing and implementing a new portfolio business unit directed towards marketing and sales of

complimentary products.

Prior to that, from 1998 to 2010, he held increasingly senior positions at Amdocs Limited (Nasdaq:DOX)

where he was ultimately responsible for advising the Chief Technology Officer and implementing matters of overall business strategy.

Raphael served as Head

of Business Operations for Nokia Siemens Networks, where he was responsible for establishing and implementing a new portfolio business

unit directed towards marketing and sales of complimentary products.

Prior to that, from 1998 to 2010, he held increasingly senior

positions at Amdocs Limited (Nasdaq:DOX) where he was ultimately responsible for advising the Chief Technology Officer and implementing

matters of overall business strategy.

Raphael holds a B.A.

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We believe Mr.

Raphael is qualified to serve

on our Board of Directors because of his extensive experience with technology companies and in sales and marketing.

Raphael is qualified to serve on our Board of Directors because of his extensive experience with technology

companies and in sales and marketing.

Ben David has served as our Chief Financial Officer, Treasurer and Secretary since January 7, 2015.

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From 1995 to June 2000, Mr.

Ben David served as Vice President and Chief Financial Officer of RDC Rafael Development

Corporation, one of Given Imaging Ltd.’s principal shareholders.

Ben David served as Vice President and Chief Financial Officer of RDC Rafael

Development Corporation, one of Given Imaging Ltd.’s principal shareholders.

From 1994 to 1995, Mr.

Ben David served as manager of the

finance division of Electrochemical Industries (Frutarom) Ltd., an Israeli company traded on the Tel-Aviv Stock Exchange and the

American Stock Exchange, and from 1989 to 1993, Mr.

Ben David served as the manager of that company’s economy and control

Ben David served

as manager of the finance division of Electrochemical Industries (Frutarom) Ltd., an Israeli company traded on the Tel-Aviv Stock

Exchange and the American Stock Exchange, and from 1989 to 1993, Mr.

Ben David served as the manager of that company’s

economy and control department.

From 1984 to 1988, Mr.

Ben David worked at Avigosh & Kerbs, an accounting firm in Haifa, Israel.

is a certified public accountant in Israel and holds a B.A.

in economics and accounting from Haifa University.

Dror Bacher has

served as our Chief Operating Officer since July 25, 2017.

Bacher previously served as our Vice President of Research and Development

as well as Vice President of Operations since 2013 where he worked on product development as well as building a scalable supply

Bacher has over 18 years of experience in various technological companies and his expertise includes product management,

product development and business operations in multi disciplinary environments.

Ben David worked at Avigosh & Kerbs, an accounting firm in

Haifa, Israel.

Ben David is a certified public accountant in Israel and holds a B.A.

in economics and accounting

from Haifa University.

Bacher has served as our Chief Operating Officer since July 25, 2017.

Bacher previously served

as our Vice President of Research and Development as well as Vice President of Operations since 2013 where he worked on product

development as well as building a scalable supply chain.

Bacher has over 18 years of experience in various technological

companies and his expertise includes product management, product development and business operations in multi disciplinary environments.

Between 2008 and 2013, Mr.

Bacher Served in several

leadership roles at Amdocs Limited (Nasdaq:DOX), including working as a part of the Chief Technology Office, managing enterprise

development programs for a variety of software products associated with service delivery, as well as serving as head of process

Prior to Amdocs, Mr.

Bacher served in a senior role at Tower Semiconductor (Nasdaq:TSEM), the global specialty foundry leader for

IC manufacturing, where he was responsible for business operations and commercialization expansion.

Bacher Served in several leadership roles at Amdocs Limited (Nasdaq:DOX), including working as

a part of the Chief Technology Office, managing enterprise development programs for a variety of software products associated with

service delivery, as well as serving as head of process Prior to Amdocs, Mr.

Bacher served in a senior role at Tower Semiconductor

(Nasdaq:TSEM), the global specialty foundry leader for IC manufacturing, where he was responsible for business operations and commercialization

Bacher holds a B.Sc.

computer science and an MBA degree from Haifa University.

in computer science and an MBA degree from Haifa University.

Anderson has served as our President and General Manager of North America since January 7, 2020..

Jarry has served

on our Advisory Board and as a Strategic Advisory consultant since 2017.

From November 2003 to December 2019, Mr.

Anderson worked

for Catasys, Inc.

CATS), where he served as President and Chief Operating Officer from July 2008 to December 2019, and

as a member of its board of directors from November 2003 to July 2019.

From November 2003

to December 2019, Mr.

Anderson worked for Catasys, Inc.

CATS), where he served as President and Chief Operating

Officer from July 2008 to December 2019, and as a member of its board of directors from November 2003 to July 2019.

Prior to Catasys, Inc., Mr.

Anderson served as Senior Executive

Vice President of Hythiam, Inc., a predecessor company of Catasys, Inc., from 2005 to 2008.

From 1999 to 2005, he also served as

Chief Financial Officer and Secretary of Clearant, Inc., a biotechnology company.

Prior to Clearant, from 1999 to 2001, he served

as the Chief Financial Officer and Managing Director of Intellect Capital Group, a venture consulting firm.

Earlier in his career,

Anderson was a Senior Manager/Director for Price Waterhouse Cooper.

Anderson served as Senior Executive Vice President of Hythiam, Inc., a predecessor company

of Catasys, Inc., from 2005 to 2008.

From 1999 to 2005, he also served as Chief Financial Officer and Secretary of Clearant, Inc.,

a biotechnology company.

Prior to Clearant, from 1999 to 2001, he served as the Chief Financial Officer and Managing Director of

Intellect Capital Group, a venture consulting firm.

Earlier in his career, Mr.

Anderson was a Senior Manager/Director for

PricewaterhouseCoopers.

Anderson holds a B.A.

in Business Economics from the

University of California at Santa Barbara.

in Business Economics from the University of California at Santa Barbara.

Cohen has served as our General Manager of MSK since February 1, 2021.

From May 2012 to February 2021,

Cohen served as the founder and CEO of Upright and was Managing Director of Hire Pacific International from

May 2006 to December 2014.

Prior to HPI, Mr.

Cohen served as Sales Director at Comverse from April 2001 to

February 2006, and as Accelerator Manager from January 2000 to March 2001.

Prior to the Accelerator, Mr.

served as an Avionics Engineer at Elbit Systems.

Cohen holds a B.A.

in Political Science and Government from the

Haifa University, and an EMBA degree from Tel Aviv University.

Shaked has served as the Chairman of our Board of Directors since July 5, 2018.

Since 2011, Mr.

Shaked has served

as a partner at Sequoia Capital, a leading global venture capital firm.

In 2005, he co-founded Medpoint Ltd., a private medical

device distribution company offering a wide range of medical products.

Previously, he founded and served as Chief Executive Officer

of Y-Med Inc.

has served as a partner at Sequoia Capital, a leading global venture capital firm.

In 2005, he co-founded Medpoint Ltd., a private

medical device distribution company offering a wide range of medical products.

Previously, he founded and served as Chief Executive

Officer of Y-Med Inc.

from May 2004 through November 2009, until its sale to C.R.

After the sale of Y-Med Inc., Mr.

Shaked served

as the director of research at ThermopeutiX, a developer of innovative products for strokes and peripheral artery disease.

Shaked currently serves on the board of directors of several biotechnology companies, including Endospan, Vibrant Gastro, B-Lite

(G&G Biotechnology) and Orasis Pharmaceuticals, the latter of which he serves as Chairman of the Board.

After the sale of Y-Med

Shaked served as the director of research at ThermopeutiX, a developer of innovative products for strokes and peripheral

artery disease.

Shaked currently serves on the board of directors of several biotechnology companies, including Endospan,

Vibrant Gastro, B-Lite (G&G Biotechnology) and Orasis Pharmaceuticals, the latter of which he serves as Chairman of the Board.

Shaked has a B.A.

in biology from The Hebrew University of Jerusalem.

The Company believes that Mr.

Shaked is qualified to serve as Chairman of the

Board because of his extensive experience both in biotechnology companies and in the venture capital realm.

Farhi has been a director of our company since May 31, 2016.

Since 1998, Mr.

Farhi, a Colonel in the Israeli

Defense Forces (reserves), has served as a motivational lecturer and educator at Bnei-David Institutions, a pre-army and post-army

educational program in Israel.

From 1998 to January 2016, Mr.

Farhi worked as an administrative manager for El-Ami, a non-governmental

organization in Israel.

Previously, from 1988 to 1992, Mr.

Farhi served as a private security consultant to several security companies

In addition, for the past thirty years, Mr.

Farhi has been the owner of a private gardening and land development services

company based in Israel.

Farhi received a degree in Education Studies and holds a Teaching Certificate from the Moreshet Yaacov

College in Jerusalem.

We believe Mr.

Farhi is qualified to serve on our Board of Directors because of his business expertise and

Kamer has been a director of our company since February 28, 2017.

Since September 2016, Mr.

Kamer serves as a managing

partner at OurCrowd, a digital health fund.

From January 2014 until June 2016, Mr.

Kamer served as Chief Commercial Officer, or

CCO, of Optum Analytics, a division within Optum, Inc., United Healthcare’s health services unit.

Optum Analytics was focused

on converting health information to health intelligence and delivering solutions that improve care delivery, quality and cost-effectiveness.

As the CCO, Mr.

Kamer led the group’s commercialization efforts of analytics software products and solutions, including the

award-winning Optum OneTM, to U.S.

provider and payer organizations.

In July 2008, Mr.

Kamer was co-founder of the Humedica Inc.,

which was acquired by United Healthcare in January 2013.

As co-founder, Mr.

Kamer helped lead efforts to raise capital, hire the

management team, and launch the business.

Kamer led Corporate Development & Marketing at Humedica, Inc., and was responsible

for formulating and managing the company’s strategic partnerships, all marketing & branding activities, and new business

opportunities.

Kamer has a B.A.

from Brandeis University.

We believe Mr.

Kamer is qualified to serve on our Board of Directors

because of his business expertise and experience with life sciences companies.

We believe that Mr.

Shaked is qualified to

serve as Chairman of the Board because of his extensive experience both in biotechnology companies and in the venture capital realm.

Matheis has been a director of our company since July 2, 2020.

Matheis spent nearly 30 years in various

senior leadership roles in health insurance and healthcare.

Since October 2017, he has served as the President and Chief Executive

Officer of Optima Health, Inc.

and the Executive Vice President of Sentara Healthcare Plans, Inc.

Prior to that, he spent

13 years in leadership roles at Anthem, Inc., serving as President of Central Region and Exchanges encompassing six states

and representing $12 billion in annual revenue.

Matheis also served in senior leadership roles at Anthem Blue Cross and

Blue Shield of Missouri, CIGNA Healthcare and Humana Health Plan, as well as Advocate Health Care in Chicago.

in Accounting from the University of Kentucky and practiced as a Certified Public Accountant before entering the healthcare

We believe that Mr.

Matheis is qualified to serve on our Board of Directors because of his experience in the healthcare

Karah has been a director of our company since November 23, 2014.

Karah is an independent business consultant

and an investor in several high-tech, biotech and internet companies.

From 2006 to 2013, she served as a partner and Chief

Investment Officer of Eurotrust Ltd., a family office.

Karah is an independent business

consultant and an investor in several high-tech, biotech and internet companies.

From 2006 to 2013, she served as a partner

and Chief Investment Officer of Eurotrust Ltd., a family office.

From 2002 to 2005, she served as a research analyst at Perceptive

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Prior to that, Ms.

Karah served as research analyst at Oracle Partners Ltd.,

a health care-focused hedge fund.

Karah has served as a director in several private and public companies including Intec

Pharma, since 2009 and Cyren Ltd since 2008.

We believe Ms.

Karah is qualified to serve on our Board of Directors because of her

experience as an investor in and advisor to high-tech, biotech and internet companies.

Karah served as research analyst at Oracle Partners

Ltd., a health care-focused hedge fund.

Karah has served as a director in several private and public companies including

Intec Pharma, since 2009 and Cyren Ltd since 2008.

Karah holds a B.A.

in Molecular and

Cell Biology from the University of California, Berkeley, and studied at the University of California, Berkeley-University of California,

San Francisco Joint Medical Program.

in Molecular and Cell Biology from the University

of California, Berkeley, and studied at the University of California, Berkeley-University of California, San Francisco Joint Medical

We believe Ms.

Karah is qualified to serve on our Board of Directors because of her experience as an investor

in and advisor to high-tech, biotech and internet companies.

McGrath has been a director of our company since November 12, 2013.

McGrath is a seasoned medical device

industry executive with extensive public company leadership experience possessing a broad range of skills in corporate finance,

business development, corporate strategy, operations and administration.

McGrath is a seasoned

medical device industry executive with extensive public company leadership experience possessing a broad range of skills in corporate

finance, business development, corporate strategy, operations and administration.

After an 18 year career at PhotoMedex, Inc.

he recently joined PAVmed, Inc (Nasdaq:

PAVM, PAVMW) as the its Executive Vice President and Chief Financial Officer.

from 2000 to 2017 Mr.

PHMD), he recently joined PAVmed, Inc (Nasdaq:

PAVM, PAVMW) as the its Executive Vice President and Chief Financial

Previously, from 2000 to 2017 Mr.

McGrath served in several senior level positions of PhotoMedex, Inc.

PHMD), a global manufacturer

and distributor of medical device equipment and services, including from 2011 to 2017 as director, President, and Chief Financial

PHMD), a global manufacturer and distributor of medical device equipment and services, including from 2011 to 2017 as director,

President, and Chief Financial Officer.

Prior to PhotoMedex’s reverse merger with Radiancy, Inc.

in December 2011, he also served as Chief Executive Officer

from 2009 to 2011 and served as Vice President of Finance and Chief Financial Officer from 2000 to 2009.

He received honors as

(Philadelphia Alliance for Capital and Technology) finalist for the 2011 Investment Deal of the Year, award winner for

the SmartCEO Magazine 2012 CEO of the Year for Turnaround Company, and finalist for the Ernst & Young 2013 Entrepreneur of

He has extensive experience in mergers and acquisitions, both domestically and internationally, and particularly involving

public company acquisitions, including Surgical Laser Technologies, Inc, (formerly, Nasdaq:

SLTI), ProCyte Corporation (formerly,

in December 2011,

he also served as Chief Executive Officer from 2009 to 2011 and served as Vice President of Finance and Chief Financial Officer

from 2000 to 2009.

He received honors as a P.A.C.T.

(Philadelphia Alliance for Capital and Technology) finalist for the 2011 Investment

Deal of the Year, award winner for the SmartCEO Magazine 2012 CEO of the Year for Turnaround Company, and finalist for the Ernst &

Young 2013 Entrepreneur of the Year.

He has extensive experience in mergers and acquisitions, both domestically and internationally,

and particularly involving public company acquisitions, including Surgical Laser Technologies, Inc, (formerly, Nasdaq:

ProCyte Corporation (formerly, Nasdaq:

PRCY), LCA Vision, Inc.

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LCAV) and Think New Ideas, Inc.

(formerly, Nasdaq:

Prior to PhotoMedex,

he served in several senior level positions of AnswerThink Consulting Group, Inc.

(then, Nasdaq:

ANSR, now, The Hackett Group,

HCKT), a business consulting and technology integration company, including from 1999 to 2000 as Chief Operating Officer

of the Internet Practice, the largest division of AnswerThink Consulting Group, Inc., while concurrently during the merger of the

companies, serving as the acting Chief Financial Officer of Think New Ideas, Inc.

(then, Nasdaq:

Prior to PhotoMedex, he served in several senior level positions of AnswerThink Consulting Group, Inc.

ANSR, now, The Hackett Group, Nasdaq:

HCKT), a business consulting and technology integration company, including from 1999

to 2000 as Chief Operating Officer of the Internet Practice, the largest division of AnswerThink Consulting Group, Inc., while

concurrently during the merger of the companies, serving as the acting Chief Financial Officer of Think New Ideas, Inc.

THNK, now, Nasdaq:

HCKT), an interactive

marketing services and business solutions company.

McGrath also served from 1996 until 1999 as Chief Financial Officer, Executive

Vice President and director of TriSpan, Inc., an internet commerce solutions and technology consulting company, which was acquired

by AnswerThink Consulting Group, Inc.

During his tenure at Arthur Andersen & Co., where he began his career, he became

a Certified Public Accountant in 1981 and he holds a B.S., maxima cum laude, in accounting from LaSalle University.

to serving as a director of PhotoMedex, he serves as the audit chair and a director of several medical device companies, including

Noninvasive Medical Technologies, Inc.

and Cagent Vascular, LLC, and as an advisor to the board of an orphan drug company, Palvella

Therapeutics, LLC.

Formerly from 2007 to 2009, Mr.

HCKT), an interactive marketing services and business solutions company.

McGrath also served

from 1996 until 1999 as Chief Financial Officer, Executive Vice President and director of TriSpan, Inc., an internet commerce

solutions and technology consulting company, which was acquired by AnswerThink Consulting Group, Inc.

tenure at Arthur Andersen & Co., where he began his career, he became a Certified Public Accountant in 1981 and he holds

a B.S., maxima cum laude, in accounting from LaSalle University.

In addition to serving as a director of PhotoMedex, he serves

as the audit chair and a director of several medical device companies, including Noninvasive Medical Technologies, Inc.

Cagent Vascular, LLC, and as an advisor to the board of an orphan drug company, Palvella Therapeutics, LLC.

Formerly from 2007

McGrath served as a director of Embrella Cardiovascular, Inc.

(sold to Edwards

Lifesciences Corporation, NYSE:

He also serves on the Board of Trustees for Manor College and the Board of Visitors for Taylor

We believe Mr.

McGrath is qualified to serve on our Board of Directors because of his accounting expertise and his

experiences serving as an officer and director of public and private companies.

Shemmer has been a director of our company since March 1, 2020.

Shemmer, age 44, has served in several senior

operating roles across the digital health industry.

From 2017 until 2019, Mr.

Shemmer served as Chief Executive Officer of Mango

Health, a mobile platform for medication management and patient support.

Prior to Mango Health, Mr.

Shemmer was President of the

consumer business at Everyday Health (NYSE:

EVDY), a leading provider of digital health and wellness solutions.

Previously, Yadin

co-founded Better2Know, a digital platform enabling access to diagnostic services in the United Kingdom.

Shemmer began his

career at Broadview International, a boutique investment bank serving the information technology industry.

He holds an M.B.A

from London Business School and a B.A from the University of Pennsylvania.

We believe Mr.

Shemmer is qualified to serve

on our Board of Directors because of his experiences serving as an officer of companies in the digital health space.

(sold to Edwards Lifesciences Corporation,

He also serves on the Board of Trustees for Manor College and the Board of Visitors for Taylor University.

McGrath is qualified to serve on our Board of Directors because of his accounting expertise and his experiences serving

as an officer and director of public and private companies.

Stern has been a director of our company since March 1, 2020.

Stern, age 55, has been the head Private Equity

Banking at Aegis Capital Corp.

and CEO of SternAegis Ventures since 2012 and was a member of our board of directors between October

2011 and May 2014.

Prior to Aegis, from 1997 to November 2012, he was with Spencer Trask Ventures, Inc., most recently as a Senior

Managing Director, where he managed the structured finance group focusing primarily on the technology and life science sectors.

Stern held increasingly responsible positions from 1989 to 1997 with Josephthal & Co., Inc., members of the New York Stock

Exchange, where he served as Senior Vice President and Managing Director of Private Equity Marketing.

He has been a FINRA licensed

securities broker since 1987 and a General Securities Principal since 1991.

Stern is a director of Aerami Therapeutics Holdings

(formerly Dance Biopharm, Inc.), Matinas BioPharma Holdings, Inc.

Adgero Biopharmaceuticals Holdings and Hydrofarm Holdings Group,

Stern, age 55, has been the head Private

Equity Banking at Aegis Capital Corp.

and CEO of SternAegis Ventures since 2012 and was a member of our board of directors between

October 2011 and May 2014.

Prior to Aegis, from 1997 to November 2012, he was with Spencer Trask Ventures, Inc.,

most recently as a Senior Managing Director, where he managed the structured finance group focusing primarily on the technology

and life science sectors.

Stern held increasingly responsible positions from 1989 to 1997 with Josephthal & Co., Inc.,

members of the New York Stock Exchange, where he served as Senior Vice President and Managing Director of Private Equity Marketing.

He has been a FINRA licensed securities broker since 1987 and a General Securities Principal since 1991.

Stern is a director

of Aerami Therapeutics Holdings (formerly Dance Biopharm, Inc.), Matinas BioPharma Holdings, Inc.

Adgero Biopharmaceuticals

Holdings and Hydrofarm Holdings Group, Inc.

Stern is a former director of InVivo Therapeutics Holdings Corp.

NVIV), Organovo Holdings, Inc.

and PROLOR Biotech Ltd., which was sold to Opko Health, Inc.

OPK) for approximately $600 million in 2013.

a Bachelor of Arts degree with honors from The University of South Florida in Tampa.

ONVO) and PROLOR Biotech Ltd., which was sold to Opko Health, Inc.

for approximately $600 million in 2013.

Stern holds a Bachelor of Arts degree with honors from The University of South

Florida in Tampa.

We believe Mr.

Stern is qualified to serve

on our Board of Directors because of his experience in the capital markets, his experiences serving as a director of public and

private companies and his experience with life sciences companies.

Stern is qualified to serve on our Board of Directors because of his experience in the capital

markets, his experiences serving as a director of public and private companies and his experience with life sciences companies.

Stone has been a director of our company since July 7, 2014.

For more than twenty-five years, Prof.

has been active participant in early stage business enterprises as a director or investor, including technology and biotechnology

Stone has been active participant in early stage business enterprises as a director or investor, including technology and biotechnology

He currently serves on the board of directors of multiple technology companies, including Powermat, Espro-Accoustiguide

Group, Wellsense Technologies, NanoX Imaging Plc, Illumigyn Ltd, Cardiologic Innovations, Quality Inflow Ltd., and Check-Cap.

Stone has been a member of the faculty of Columbia Law School, where he held the Wilbur Friedman Chair in Tax Law for

twenty years.

Since 1974, Prof.

Stone has been a member of the faculty of Columbia Law School, where he held the Wilbur Friedman Chair in Tax

Law for twenty years.

In addition to basic and advanced tax courses, Prof.

Stone has taught in the areas of contracts, business planning

and real estate planning.

Stone has taught in the areas of contracts, business

planning and real estate planning.

Among other not-for-profit organizations he has been associated with, from 2011 to 2013, Prof.

served as Chairman of the Conference of Presidents of Major American Jewish Organizations.

Stone began his career in 1967

in private practice in Washington, D.C, and thereafter joined the staff of the Solicitor General of the United States, where from

1969 to 1973 he was Assistant to the Solicitor General.

Stone served as Chairman of the Conference of Presidents of Major American Jewish Organizations.

Stone began his career

in 1967 in private practice in Washington, D.C, and thereafter joined the staff of the Solicitor General of the United States,

where from 1969 to 1973 he was Assistant to the Solicitor General.

He is a graduate of Harvard College and Harvard Law School.

Stone is qualified to serve on our Board of Directors because of his legal expertise and experience with life sciences companies.

We believe Prof.

Stone is qualified to serve on our Board of Directors because of his legal expertise and experience with life

sciences companies.

Scientific Advisory Board

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Below is the biography of our current SAB member.

Itamar Raz is a world renowned expert in diabetes care and research.

He currently services as the head of the

Diabetes Unit of Hadassah Hebrew University Medical Center in Jerusalem, the head of the Israel National Council of Diabetes of

the Israel Ministry of Health (which is responsible for formulating Israeli national policies), the President of D-Cure, a diabetes

not-for-profit organization and the head of the Israel Diabetes Research Group.

He also serves as a member of Advisory

Boards at Novo Nordisk (NYSE:

ADR), Astra Zeneca/Bristol-Myers Squibb (NYSE:

BMY), Sanofi (NYSE:

SNY), Merck Sharp & Dohme

MRK), and Eli Lilly (NYSE:

LLY) and as a consultant for InsuLine Medical Ltd, Andromeda Biotech Ltd and Astra Zeneca/Bristol-Myers

Raz has published over 260 research papers including biennial publications of a Supplement to Diabetes Care summarizing

proceedings of the European Controversies to Consensus in Obesity, Diabetes and Hypertension (CODHy) meeting.

holds editorial positions on a number of medical journals.

Raz’s medical career began in 1985 at Hadassah

University Hospital as Senior Physician, specializing in Internal Medicine.

From 1986 to 1992, Prof.

Raz was head of

Hebrew University Student Services, and in 1988 he was appointed Senior Lecturer at Hadassah University Hospital’s Department

of Internal Medicine.

In 1989, Prof.

Raz was appointed Chief Physician of Internal Medicine, and as head of the Diabetes

Clinic at Hadassah University Hospital in 1992.

In 1995, Prof.

Raz became an Associate Professor at the Department of

Internal Medicine, Hadassah University Hospital.

In 2001, he was appointed Director of the hospital’s Center for

Prevention of Diabetes and its Complications.

Since 2003, Prof.

Raz has served as Professor of Internal Medicine at

the Department of Internal Medicine, Hadassah University Hospital.

Raz graduated from Hebrew University &

Hadassah School of Pharmacy with a Bachelor of Science in 1973.

In 1981, he graduated from Hebrew University & Hadassah

School of Medicine with an M.D.

and completed his residency at Hadassah University Hospital from 1981 to 1985, specializing in

internal medicine.

Miledge - Chairman of our Advisory Board , has worked in the healthcare field for his entire career, with a focus

on pharmaceuticals and medical devices.

With more than 34 years at Johnson & Johnson (JNJ) in roles of increasing responsibility,

he built a vast network of relationships across the healthcare landscape.

As president of Ortho McNeil Pharmaceutical, Eric led

in the licensing and successful introduction of levofloxacin (antibiotic), tramadol (analgesic) and the commercialization of Topamax

(anticonvulsant), building a multi-billion dollar U.S.

pharmaceutical business.

Eric also served as Company Group Chairman for

Johnson & Johnson Healthcare Systems which oversaw the negotiation and management of JNJ’s medical device, diagnostic

and pharmaceutical U.S.

hospital contracts.

Eric also served as Company Group Chairman of LifeScan Inc., the blood glucose division

Under Eric’s leadership, LifeScan Global Diabetes franchise experienced rapid organic and inorganic growth, including

the acquisition of Inverness Medical Technology’s Diabetes Care Products business.

His leadership helped transform LifeScan

into a global organization with thousands of employees and billions in annual revenues.

After retiring from JNJ, Eric served as

chairman for a number of medical device startup companies including chairman of Nfocus Neuromedical, Symetis SA and CeQur SA.

also served as an operating partner for Geneva based Endeavour Vision Growth, a medical device growth fund.

Horwitz –

Advisory Board M ember , is presently a Senior Consultant with Numerof & Associates and also

President of DLH Biomedical Consulting.

He previously served as the Global Chief Medical Officer of the Johnson and Johnson Diabetes

Prior to this, he was Vice President, Worldwide Clinical Affairs & Evidence-Based Medicine at LifeScan, Inc.,

a Johnson & Johnson company.

During his time at LifeScan, Dr.

Horwitz had, at various times, been responsible for

Clinical Research, Medical Affairs, Regulatory Affairs, and Advocacy & Professional Affairs.

Horwitz has previously

held faculty positions in the medical schools at the University of Chicago and the University of Illinois, where he was a clinical

professor of medicine.

He is a Board-Certified internist and endocrinologist, and a Fellow of the American College of Physicians.

He has published over 100 articles in scientific and clinical journals, primarily in the areas of diabetes and metabolism.

completed a term as an industry representative on the Clinical Chemistry and Toxicology advisory panel of the U.S.

Food and Drug

Administration.

He is presently serving as a volunteer physician for a charity-supported clinic.

Ritholz –Advisory Board Member , is a Senior Psychologist at the Joslin Diabetes Center and treats both adults

and adolescents with diabetes.

In addition, she is on the faculty at Beth Israel Deaconess

Medical Center (BIDMC) and is an Assistant Professor of Psychology at Harvard Medical School .

Ritholz is an experienced

qualitative researcher.

In collaboration with colleagues, she has explored qualitative aspects of healthcare regarding the patient-provider

relationship, provider communication about diabetes complications, and psychosocial factors associated with diabetes technology,

including continuous glucose monitoring.

She has published more than 20 qualitative articles on these topics.

Board Composition

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under the direction of our Board of Directors.

Our Board of Directors currently consists of nine members.

Our Board of Directors currently consists of seven members.

Pursuant to the terms

of the placement agency agreement between us and Aegis Capital Corp., dated October 22, 2019, we granted Aegis the right to nominate

an individual to the Board of Directors for a period of three years, which resulted in the appointment of Mr.

Stern to serve on

our Board of Directors.

There are no arrangements between our directors and any other

person pursuant to which our directors were nominated or elected for their positions.

of the placement agency agreement between us and Aegis Capital Corp., dated October 22, 2019, we granted Aegis the right to

nominate an individual to the Board of Directors for a period of three years, which resulted in the appointment of Mr.

to serve on our Board of Directors.

There are no arrangements

between our directors and any other person pursuant to which our directors were nominated or elected for their positions.

Board Committees

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Shaked, McGrath and Stone, each of whom is an independent director.

McGrath is the Chairman of the

Audit Committee.

McGrath is the Chairman

of the Audit Committee.

McGrath is an “audit committee financial expert”

as defined in Item 407(d)(5)(ii) of Regulation

as defined in Item 407(d)(5)(ii) of

Regulation S-K.

Our Audit Committee

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reviews the financial statements to be included in our Annual Report on Form 10-K and Quarterly Reports on Form 10-Q and reviews with management and our independent auditor the results of the annual audit and reviews of our quarterly financial statements;

oversees all aspects our systems of internal accounting control and corporate governance functions on behalf of the board.

oversees all aspects our systems of internal accounting control and corporate governance functions on behalf of the Board of Directors.

Compensation Committee

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The Compensation Committee

has the authority to directly engage, at our expense, any compensation consultants or other advisers as it deems necessary to carry

out its responsibilities in determining the amount and form of employee, executive and director compensation.

has the authority to directly engage, at our expense, any compensation consultants or other advisers as it deems necessary to

carry out its responsibilities in determining the amount and form of employee, executive and director compensation.

Nominating and Corporate Governance Committee

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Corporate Governance Committee is currently comprised of Prof.

Stone and Messrs.

Kamer and Shaked.

Stone is the Chairman

of the Nominating and Corporate Governance Committee.

Stone and Mr.

Stone is the Chairman of the Nominating

and Corporate Governance Committee.

The Nominating and

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Director Independence

Our Board of Directors has reviewed the materiality of any relationship

that each of our directors has with us, either directly or indirectly.

Based on this review, our Board of Directors has determined

Our Board of Directors

has reviewed the materiality of any relationship that each of our directors has with us, either directly or indirectly.

this review, our Board of Directors has determined that Prof.

Stone, Messrs.

Kamer, Shaked, Farhi.

McGrath and Shemmer and Ms.

Karah are “independent directors”

in the Nasdaq Listing Rules and Rule 10A-3 promulgated under the Exchange Act.

Shaked, Matheis and McGrath, and Ms.

are “independent directors”

as defined in the Nasdaq Listing Rules and Rule 10A-3 promulgated under the Exchange

Code of Ethics

On March 5, 2013, our

Board of Directors adopted a Code of Business Conduct and Ethics and Insider Trading Policy.

Our Code of Business Conduct and Ethics

is available on our website at www.mydario.com under the Investors/Governance section.

On March 5, 2013,

our Board of Directors adopted a Code of Business Conduct and Ethics and Insider Trading Policy.

Our Code of Business Conduct and

Ethics is available on our website at www.mydario.com under the Investors/Governance section.

The information on our website

is not incorporated by reference into this Report.

We intend to satisfy the disclosure requirement under Item 5.05 of Form 8-K

regarding amendment to, or waiver from, a provision of our Code of Ethics by posting such information on the website address specified

Limitation of Directors Liability and

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proceeding of any nature.

We have entered into indemnification agreements with our directors and officers pursuant to which we agreed

to indemnify each director and officer for any liability he or she may incur by reason of the fact that he or she serves as our

director or officer, to the maximum extent permitted by law.

There is no pending litigation or proceeding involving any of

our directors, officers, employees or agents in which indemnification will be required or permitted.

We are not aware of any threatened

litigation or proceeding that may result in a claim for such indemnification.

We have entered into

indemnification agreements with our directors and officers pursuant to which we agreed to indemnify each director and officer for

any liability he or she may incur by reason of the fact that he or she serves as our director or officer, to the maximum extent

permitted by law.

There is no pending

litigation or proceeding involving any of our directors, officers, employees or agents in which indemnification will be required

or permitted.

We are not aware of any threatened litigation or proceeding that may result in a claim for such indemnification.

Executive Compensation

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Summary Compensation Table

Principal Position

incentive plan

Non-qualified

incentive plan

Compensation ($)

Principal Position

(Chief Executive Officer)

Zvi Ben David

(Chief Financial Officer)

(Chief Operating Officer)

Olivier Jarry

(President and Chief

Commercial Officer) (12)

(President and

General Manager of North America)

$ 308,098 (14)

$ 163,433 (16)

$ 479,160 (17)

$ 16,328 (18)

Certain compensation paid by the company is denominated in New Israeli Shekel (or the NIS).

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During 2019 and 2020, Mr.

Raphael agreed to a waiver of 45% of his cash salary according to our salary program (see further details in “Employment and Related Agreements”

In June 2018, Mr.

Raphael was paid a bonus of $120,336 for his performance during 2017.

Raphael agreed to a waiver of 45% and 36.4% of his cash salary according to our salary program (see further details in “Employment and Related Agreements”

On June 2019, Mr.

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Raphael was paid a bonus of $251,157 for the successful completion of the December 2019 Private Placement.

On September 2020, Mr.

Raphael was paid a bonus of $251,313 for the successful completion of the July 2020 private placement.

(3) On January 27, 2019, Mr.

Raphael was granted

1,272 shares of our common stock under our 2012 Equity Incentive plan against waiver of cash salary for the period from January

to March 2018.

3,098 shares of our common stock under our 2012 Equity Incentive plan against waiver of cash salary for the period from January to

On July 9, 2019, Mr.

Raphael was granted 10,749 shares of our common stock under our 2012 Equity Incentive

plan against waiver of cash salary for the period from April to September 2019.

On December 23, 2019, Mr.

was granted 15,454 shares of our common stock under our 2012 Equity Incentive plan against waiver of cash salary for the period

from October to December 2019.

On April 29, 2019, Mr.

Raphael was granted 20,379 shares of our common stock

under our 2012 Equity Incentive Plan, and 4,472 shares of our common stock under our 2012 Equity Incentive Plan, as a bonus, in

lieu of cash, for the 2018 achievements of the Company.

On January 28, 2020, Mr.

Raphael was granted 15,602 shares of our common stock

under our 2012 Equity Incentive plan against waiver of cash salary for the period from January to March 2020.

April 3, 2020, Mr.

Raphael was granted 15,146 shares of our common stock under our 2012 Equity Incentive plan

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On July 20, 2020, Mr.

Raphael was granted 2,497 shares of

our common stock under our 2012 Equity Incentive plan against waiver of cash salary for the period from July to September 2018.

granted 15,593 shares of our common stock under our 2012 Equity Incentive plan against waiver of cash salary for the period

from July to September 2020.

On October 16, 2020, Mr.

Raphael was granted 3,221 shares of our common stock under our 2012 Equity Incentive plan against waiver

of cash salary for the period from October to December 2018.

On June 6, 2018, Mr.

Raphael was granted 2,127 shares of our common

stock under our 2012 Equity Incentive Plan, and 2,844 shares of our common stock under our 2012 Equity Incentive Plan, as a bonus,

in lieu of cash, for the 2017 achievements of the Company.

On January 27, 2019, Mr.

Raphael was granted

3,098 shares of our common stock under our 2012 Equity Incentive plan against waiver of cash salary for the period from January

to March 2019.

On July 9, 2019, Mr.

Raphael was granted 10,749 shares of our common stock under our 2012 Equity Incentive plan

against waiver of cash salary for the period from April to September 2019.

On December 23, 2019, Mr.

stock under our 2012 Equity Incentive plan against waiver of cash salary for the period from October to

December 2020, and 5,060 shares of our common stock under our 2012 Equity Incentive plan against an additional cash

waiver during the period April –

On February 12, 2020, Mr.

Raphael was granted 351,546

shares of our common stock under our 2012 Equity Incentive plan against waiver of cash salary for the period from October to December

On April 29, 2019, Mr.

Raphael was granted 20,379 shares of our common stock under our 2012 Equity Incentive Plan, and 4,472

shares of our common stock under our 2012 Equity Incentive Plan, as a bonus, in lieu of cash, for the 2018 achievements of the

In addition to his salary, Mr.

Raphael is entitled to receive a leased automobile and mobile phone during his employment as well as reimbursements for expenses accrued.

These benefits, as well as other social benefits under Israeli law, are included as part of his “All Other Compensation.”

In accordance with his employment agreement with our company effective January 8, 2015, Mr.

Ben David was initially entitled to a monthly salary and additional compensation (excluding social benefits under applicable Israeli law) of NIS 31,200 (approximately $8,774) for providing eighty percent of his working time to our company.

shares of our common stock under our 2012 Equity Incentive Plan.

addition to his salary, Mr.

Raphael is entitled to receive a leased automobile and mobile phone during his employment as

well as reimbursements for expenses accrued.

These benefits, as well as other social benefits under Israeli law, are included

as part of his “All Other Compensation.”

accordance with his employment agreement with our company effective January 8, 2015, Mr.

Ben David was initially entitled

to a monthly salary and additional compensation (excluding social benefits under applicable Israeli law) of NIS 31,200 (approximately

$9,630) for providing eighty percent of his working time to our company.

Beginning on March 1, 2015, Mr.

Ben David began working for us on a full-time basis pursuant to the terms of his employment agreement at which point Mr.

Ben David’s salary was increased to NIS 39,000 (approximately $10,967 per month, commencing April 1, 2016, his monthly salary was updated to NIS 60,000 (approximately $16,873), and commencing June 1, 2018, his monthly salary was updated to NIS 67,200 (approximately $18,898).

Ben David began

working for us on a full-time basis pursuant to the terms of his employment agreement at which point Mr.

Ben David’s

salary was increased to NIS 39,000 (approximately $12,037 per month, commencing April 1, 2016, his monthly salary was updated

to NIS 60,000 (approximately $18,519), and commencing June 1, 2018, his monthly salary was updated to NIS 67,200 (approximately

During 2019 and 2020, Mr.

Ben David agreed to a waiver of 39% and 42% respectively of his cash salary according to our salary program (see further details in “Employment and Related Agreements”

Ben David agreed to a waiver of 42% of his cash salary according to our salary program

(see further details in “Employment and Related Agreements”

(6) On January 27, 2019, Mr.

was granted 742 shares of our common stock under our 2012 Equity Incentive plan against waiver of cash salary for the period from

January to March 2018.

On April 23, 2018, Mr.

Ben David was granted 745 shares of our common stock under our 2012 Equity Incentive

plan against waiver of cash salary for the period from April to June 2018.

Ben David was granted

1,447 shares of our common stock under our 2012 Equity Incentive plan against waiver of cash salary for the period from January to

On July 9, 2019, Mr.

Ben David was granted 1,114 shares

of our common stock under our 2012 Equity Incentive plan against waiver of cash salary for the period from July to September 2018.

On October 3, 2018 Mr.

Ben David was granted 1,504 shares of our common stock under our 2012 Equity Incentive plan against waiver

of cash salary for the period from October to December 2018.

On June 6, 2018, Mr.

Ben David was granted 5,021 shares of our common stock under our 2012 Equity Incentive

plan against waiver of cash salary for the period from April to September 2019.

On December 23, 2019 Mr.

David was granted 7,218 shares of our common stock under our 2012 Equity Incentive plan against waiver of cash salary for the

period from October to December 2019.

On April 29, 2019, Mr.

Ben David was granted 4,889 shares of our common

2 unchanged sentences

On January 28, 2020, Mr.

Ben David was

granted 1,447 shares of our common stock under our 2012 Equity Incentive plan against waiver of cash salary for the period from

January to March 2019.

Ben David was granted 7,287 shares of our common stock

under our 2012 Equity Incentive plan against waiver of cash salary for the period from January to March 2020.

April 3, 2020, Mr.

Ben David was granted 7,074 shares of our common stock under our 2012 Equity Incentive plan

against waiver of cash salary for the period from April to June 2020.

On July 20, 2020, Mr.

Ben David was granted 5,021 shares of our common stock under our 2012 Equity Incentive

plan against waiver of cash salary for the period from April to September 2019.

On December 23, 2019 Mr.

Ben David was

granted 7,283 shares of our common stock under our 2012 Equity Incentive plan against waiver of cash salary for the period

from July to September 2020.

On October 16, 2020 Mr.

Ben David was granted 4,235 shares of our common

stock under our 2012 Equity Incentive plan against waiver of cash salary for the period from October to

December 2020, and 2,006 shares of our common stock under our 2012 Equity Incentive plan against an additional cash

waiver during the period of April through July 2020.

On February 12, 2020, Mr.

Ben David was granted

7,218 shares of our common stock under our 2012 Equity Incentive plan against waiver of cash salary for the period from October

to December 2019.

On April 29, 2019, Mr.

Ben David was granted 4,889 shares of our common stock under our 2012 Equity Incentive

Plan, and 2,074 shares of our common stock under our 2012 Equity Incentive Plan, as a bonus, in lieu of cash, for the 2018 achievements

of the Company.

In addition to his salary, Mr.

Ben David is entitled to receive a mobile phone during his employment as well as reimbursements for expenses accrued.

These benefits, as well as other social benefits under Israeli law, are included as part of his “All Other Compensation.”

45,000 shares of our common stock under our 2012 Equity Incentive Plan.

On September 9, 2020, Mr.

Ben David was

granted 10,000 shares of our common stock under our 2012 Equity Incentive Plan.

February 12, 2020, Mr.

Ben David was granted 27,827 options to purchase shares of our common stock under our 2012 Equity

Incentive Plan, at an exercise price of $7.736 per share.

addition to his salary, Mr.

Ben David is entitled to receive a mobile phone during his employment as well as reimbursements

for expenses accrued.

These benefits, as well as other social benefits under Israeli law, are included as part of his “All

Other Compensation.”

In accordance with his second amendment to the employment agreement with our company effective April 2016, Mr.

3 unchanged sentences

Bacher agreed to a waiver of 26% and 10.6% of his cash salary respectively, according to our salary program (see further details in “Employment and Related Agreements”

In June 2018, Mr.

Bacher was paid a bonus of $26,203 for his performance during 2017.

On June 2019, Mr.

June 2019, Mr.

Bacher was paid a bonus of $28,882 for his performance during 2018.

2 unchanged sentences

918 shares of our common stock under our 2012 Equity Incentive plan against waiver of cash salary for the period from January to

On April 23, 2018, Mr.

Bacher was granted 567 shares of our common stock under our 2012 Equity Incentive plan against

waiver of cash salary for the period from April to June 2018.

On July 9, 2019, Mr.

Bacher was granted 673 shares of our common

stock under our 2012 Equity Incentive plan against waiver of cash salary for the period from July to September 2018.

Bacher was granted 954 shares of our common stock under our 2012 Equity Incentive plan against waiver of cash salary

for the period from October to December 2018.

On June 6, 2018, Mr.

Bacher was granted 7,992 shares of our common stock under our

2012 Equity Incentive Plan, and 309 shares of our common stock under our 2012 Equity Incentive Plan, as a bonus, in lieu of cash,

for the 2017 achievements of the Company, and on April 23, 2018, Mr.

Bacher was granted 1,623 shares of our common stock under

our 2012 Equity Incentive Plan as a bonus in obtaining an FDA clearance for iPhone 7, 8 and X smartphone devices in the U.S.

On January 27, 2019, Mr.

Bacher was granted

918 shares of our common stock under our 2012 Equity Incentive plan against waiver of cash salary for the period from January to

On July 9, 2019, Mr.

Bacher was granted 3,186 shares of our common stock under our 2012 Equity Incentive plan against

waiver of cash salary for the period from April to September 2019.

Bacher was granted 3,186 shares of our common stock under our 2012 Equity Incentive

plan against waiver of cash salary for the period from April to September 2019.

On December 23, 2019, Mr.

Bacher was granted 2,633 shares of

our common stock under our 2012 Equity Incentive plan against waiver of cash salary for the period from October to December 2019.

was granted 2,633 shares of our common stock under our 2012 Equity Incentive plan against waiver of cash salary for the period

from October to December 2019.

On April 29, 2019, Mr.

Bacher was granted 4,102 shares of our common stock under our 2012 Equity Incentive Plan, and 587 shares

of our common stock under our 2012 Equity Incentive Plan, as a bonus, in lieu of cash, for the 2018 achievements of the Company.

In addition to his salary, Mr.

Bacher is entitled to receive a leased automobile and mobile phone during his employment as well as reimbursements for expenses accrued.

These benefits, as well as other social benefits under Israeli law, are included as part of his “All Other Compensation.”

Bacher was granted 4,102 shares of our common stock

under our 2012 Equity Incentive Plan, and 587 shares of our common stock under our 2012 Equity Incentive Plan, as a bonus, in

lieu of cash, for the 2018 achievements of the Company.

On January 28, 2020, Mr.

Jarry was relieved from his duties as President and Chief Commercial Officer of the Corporation to a new role of Senior Vice President of Strategy and Business Development.

In accordance with his employment agreement, effective in September 2018, Mr.

Jarry was entitled to a monthly salary of $11,000.

Jarry agreed to a waiver of 47% of his cash salary, according to our salary program (see further details in “Employment and Related Agreements”

part of his consulting agreement, commencing in March 2017 and expiring in August 2018, Mr.

Jarry received a monthly consulting

fee of $2,500 that was paid to him in shares of common stock.

Bacher was granted 1,677 shares of our common stock under our 2012 Equity Incentive plan against waiver of cash salary for the period from January to March 2020.

On April 3, 2020, Mr.

Jarry was granted 328 shares of our

common stock under our 2012 Equity Incentive Plan against waiver of cash consulting fee for the period from December 2017 to March

Bacher was granted 1,628 shares of our common stock under our 2012 Equity Incentive plan against waiver of cash salary for the period from April to June 2020.

On July 20, 2020, Mr.

Jarry was granted 231 shares of our common stock in restricted shares against waiver of cash consulting

fee for the period from April to June 2018.

On November 22, 2018, Mr.

Jarry was granted 205 shares of our common stock in restricted

shares against waiver of cash consulting fee for the period July to August 2018, together with additional 150 shares granted to

him a signature fee for signing his consulting agreement in 2017.

Bacher was granted 1,676 shares of our common stock under our 2012 Equity Incentive plan against waiver of cash salary for the period from July to September 2020.

On October 16, 2020, Mr.

Jarry was granted 1,962 shares of our

common stock under our 2012 Equity Incentive Plan, against waiver of cash salary for the period from September to December 2018.

On January 27, 2019, Mr.

Jarry was granted

1,500 shares of our common stock under our 2012 Equity Incentive plan against waiver of cash salary for the period from January

to March 2019.

On July 9, 2019, Mr.

Jarry was granted 5,000 shares of our common stock under our 2012 Equity Incentive plan against

waiver of cash salary for the period from April to September 2019.

On December 23, 2019, Mr.

Jarry was granted 6,960 shares of

our common stock under our 2012 Equity Incentive plan against waiver of cash salary for the period from October to December 2019.

On November 22, 2018, Mr.

Jarry was granted 6,000 options to purchase shares of our common stock which will vest over a three-year period from the grant date.

One-third of the options will become fully vested and exercisable on the first anniversary elapsed from the grant date, and the balance will vest in eight equal quarterly installments following the first anniversary of the grant date, subject to Mr.

Jarry’s continued employment by the Company.

We may grant Mr.

Jarry additional options to purchase shares of common stock from time to time at the discretion of our Board of Directors or the Compensation Committee thereof (see further details in “Employment and Related Agreements”

In addition to his salary, Mr.

Jarry is entitled to participate in any and other benefit plans and programs that the Company may offer to its employees from time to time according to the terms of such plans and the Company’s practices and policies as well as reimbursements for expenses accrued.

Bacher was granted 974 shares of our common stock under our 2012 Equity Incentive plan against waiver of cash salary for the period from October to December 2020, and 3,772 shares of our common stock under our 2012 Equity Incentive plan against an additional cash waiver during the period from April through July 2020.

On February 12, 2020, Mr.

Bacher was granted 45,000 shares of our common stock under our 2012 Equity Incentive Plan.

On September 9, 2020, Mr.

Bacher was granted 10,000 shares of our common stock under our 2012 Equity Incentive Plan.

February 12, 2020, Mr.

Bacher was granted 28,664 options to purchase shares of our common stock under our 2012 Equity Incentive

Plan, at an exercise price of $7.736 per share.

addition to his salary, Mr.

Bacher is entitled to receive a leased automobile and mobile phone during his employment as well as

reimbursements for expenses accrued.

These benefits, as well as other social benefits under Israeli law, are included as part

of his “All Other Compensation.”

accordance with his employment agreement, effective in January 2020, Mr.

Anderson was entitled to a monthly salary of

(15) On September 2020, Mr.

Anderson was paid a

bonus of $100,000 for the successful completion of the July 2020 private placement.

On October 16, 2020, Mr.

Anderson was granted 5,182 shares of our common stock under our 2012 Equity Incentive plan against a cash salary waiver during the period from April through July 2020.

On September 9, 2020, Mr.

Anderson was granted 10,000 shares of our common stock under our 2012 Equity Incentive Plan.

January 30, 2020, Mr.

Anderson was granted 90,000 options to purchase shares of our common stock as an inducement grant

pursuant to Nasdaq Listing Rule 5635 (c)(4), at an exercise price of $8.41 per share.

addition to his salary, Mr.

Anderson is entitled to participate in any and other benefit plans and programs that the Company

may offer to its employees from time to time according to the terms of such plans and the Company’s practices and policies

as well as reimbursements for expenses accrued.

These benefits are included as part of his “All Other Compensation.”

9 unchanged sentences

Innovation Ltd., our Israeli subsidiary, entered into an amendment to a Personal Employment Agreement with Mr.

Raphael in connection

with his August 2013 appointment as our President and Chief Executive Officer.

Pursuant to the terms of his employment agreement

as amended, Mr.

connection with his August 2013 appointment as our President and Chief Executive Officer.

Pursuant to the terms of his employment

agreement as amended, Mr.

Raphael is entitled to a monthly salary of NIS 134,167 (approximately $37,730 per month).

During 2018 and 2019,

Raphael agreed to a waiver of 45% of his cash salary according to our salary program pursuant to which Mr.

Raphael received

compensation shares of restricted common stock as consideration for cash salary waived.

On July 25, 2017, we,

through our Israeli subsidiary, LabStyle Innovation Ltd., executed an Amended and Restated Employment Agreement with Mr.

2018 and 2019, Mr.

Raphael agreed to a waiver of 45% of his cash salary according to our salary program pursuant to which

Raphael received compensation shares of restricted common stock as consideration for cash salary waived.

On July 25, 2017,

we, through our Israeli subsidiary, LabStyle Innovation Ltd., executed an Amended and Restated Employment Agreement with Mr.

Pursuant to the agreement, Mr.

Raphael kept his monthly salary and shall be eligible for an annual bonus equal to up to 60% of

his annual base salary.

Raphael kept his monthly salary and shall be eligible for an annual bonus equal to up to 60%

of his annual base salary.

Raphael’s employment agreement expires on December 31, 2020.

2 unchanged sentences

employment agreement is terminated by us at will, by Mr.

Raphael for good reason as provided thereby, or in conjunction with a

change of control, Mr.

Raphael for good reason as provided thereby, or in conjunction with

a change of control, Mr.

Raphael shall be entitled to receive 24 months base salary and severance payment pursuant to applicable

4 unchanged sentences

In the event the employment agreement is terminated by us for cause, Mr.

Raphael will only be entitled to a severance pay under applicable Israeli severance law.

will only be entitled to a severance pay under applicable Israeli severance law.

Raphael’s employment agreement

6 unchanged sentences

On February 12, 2020, we extended the term of Mr.

Raphael’s employment to expire on

December 31, 2022.

Raphael’s employment to

expire on December 31, 2022.

On January 27,

2019, the Compensation Committee of our Board of Directors approved the issuance to Mr.

Raphael of 1,272 shares of our common stock under

our 2012 Equity Incentive Plan.

Such shares were issued in lieu of the waiver of $39,923 salary otherwise payable to Mr.

from January to March 2018.

On April 23, 2018,

Raphael of 3,098 shares of our common

stock under our 2012 Equity Incentive Plan.

Such shares were issued in lieu of the waiver of $61,969 in salary otherwise payable

Raphael from January to March 2019.

On July 9, 2019,

the Compensation Committee of our Board of Directors approved the issuance to Mr.

Raphael of 1,277 shares of our common stock under

our 2012 Equity Incentive Plan.

Such shares were issued in lieu of the waiver of $39,344 salary otherwise payable to Mr.

from April to June 2018.

On July 8, 2018, the

Compensation Committee of our Board of Directors approved the issuance to Mr.

Raphael of 2,497 shares of our common stock under

our 2012 Equity Incentive Plan.

Such shares were issued in lieu of the waiver of $72,725 salary otherwise payable to Mr.

from July to September 2018.

On October 3, 2018,

Raphael of 10,749 shares of our common stock

under our 2012 Equity Incentive Plan.

Such shares were issued in lieu of the waiver of $128,972 of salary otherwise payable to

Raphael from April to September 2019.

On December 23,

2019, the Compensation Committee of our Board of Directors approved the issuance to Mr.

Raphael of 3,221 shares of our common stock under

our 2012 Equity Incentive Plan.

Such shares were issued in lieu of the waiver of $64,003 salary otherwise payable to Mr.

from October to December 2018.

Raphael of 15,454 shares of our common

stock under our 2012 Equity Incentive Plan.

Such shares were issued in lieu of the waiver of $66,610 of salary otherwise payable

Raphael from October to December 2019.

On January 28,

2020, the Compensation Committee of our Board of Directors approved the issuance to Mr.

Raphael of 3,098 shares of our common stock under

our 2012 Equity Incentive Plan.

Such shares were issued in lieu of the waiver of $61,969 salary otherwise payable to Mr.

from January to March 2019.

On July 9, 2019, the

Compensation Committee of our Board of Directors approved the issuance to Mr.

Raphael of 10,749 shares of our common stock under

our 2012 Equity Incentive Plan.

Such shares were issued in lieu of the waiver of $128,972 salary otherwise payable to Mr.

from April to September 2019.

On December 23, 2019,

Raphael of 15,602 shares of our common

stock under our 2012 Equity Incentive Plan.

Such shares were issued in lieu of the waiver of $67,247 of salary otherwise payable

Raphael from January to March 2020.

On April 3, 2020,

the Compensation Committee of our Board of Directors approved the issuance to Mr.

1 unchanged sentence

under our 2012 Equity Incentive Plan.

Such shares were issued in lieu of the waiver of $66,610 salary otherwise payable to Mr.

Raphael from October to December 2019.

Such shares were issued in lieu of the waiver of $65,280 of salary otherwise payable to Mr.

from April to June 2020.

On July 20, 2020,

the Compensation Committee of our Board of Directors approved the issuance to Mr.

Raphael of 15,593 shares of our common stock

under our 2012 Equity Incentive Plan.

Such shares were issued in lieu of the waiver of $67,208 of salary otherwise payable to Mr.

from July to September 2020.

On October 16,

2020, the Compensation Committee of our Board of Directors approved the issuance to Mr.

Raphael of 2,127 shares of our common

stock under our 2012 Equity Incentive Plan.

Such shares were issued in lieu of the waiver of $15,894 of salary otherwise payable

Raphael from October to December 2020, and 5,060 shares of our common stock under our 2012 Equity Incentive

Such shares were issued in lieu of the waiver of $21,809 of salary otherwise payable to Mr.

Raphael from April to

Ben David , Chief Financial Officer, Treasurer and Secretary –

On January 8, 2015, LabStyle Innovation Ltd.,

our Israeli subsidiary, entered into a Personal Employment Agreement with Mr.

Pursuant to his employment agreement,

Ben David was initially entitled to a monthly salary and additional compensation (excluding social benefits under applicable

Israeli law) of NIS 31,200 (approximately $8,774) for providing eighty percent of his working time to our company.

March 1, 2015, Mr.

Ben David began working for us on a full-time basis pursuant to the terms of his employment agreement at which

On January 8, 2015, LabStyle Innovation

Ltd., our Israeli subsidiary, entered into a Personal Employment Agreement with Mr.

Pursuant to his employment

agreement, Mr.

Ben David was initially entitled to a monthly salary and additional compensation (excluding social benefits

under applicable Israeli law) of NIS 31,200 (approximately $8,774) for providing eighty percent of his working time to our company.

Beginning on March 1, 2015, Mr.

Ben David began working for us on a full-time basis pursuant to the terms of his employment

agreement at which point Mr.

Ben David’s salary was increased to NIS 39,000 (approximately $10,967).

Commencing April 1, 2016, Mr.

Ben David’s

Salary was updated to NIS 60,000 (approximately $16,873) per month and commencing June 1, 2018, his monthly salary was updated

to NIS 67,200 (approximately $18,898).

Commencing April 1,

Ben David’s Salary was updated to NIS 60,000 (approximately $16,873) per month and commencing June 1,

2018, his monthly salary was updated to NIS 67,200 (approximately $18,898).

During 2018 and 2019, Mr.

Ben David agreed to a waiver of 39% and 42% respectively of his

cash salary according to our salary program pursuant to which Mr.

Ben David received compensation shares of restricted common stock

as consideration for cash salary waived.

Ben David's employment

agreement may be terminated by either party at will upon 90 days prior written notice or terminated by us for cause, as defined

under the employment agreement.

Ben David agreed to

a waiver of 39% and 42% respectively of his cash salary according to our salary program pursuant to which Mr.

Ben David received

compensation shares of restricted common stock as consideration for cash salary waived.

employment agreement may be terminated by either party at will upon 90 days prior written notice or terminated by us for cause,

as defined under the employment agreement.

In the event the employment agreement is terminated by us at will, Mr.

Ben David shall be

entitled to receive 90 days of severance plus any required severance payment pursuant to applicable Israeli severance law.

event the employment agreement is terminated by us for cause, Mr.

Ben David will only be entitled to a severance pay under

applicable Israeli severance law.

The employment agreement also includes a twelve-month non-competition and non-solicitation provision,

certain confidentiality covenants and assignment of any of his company-related inventions to the company.

Under the terms of the

employment agreement, Mr.

Ben David is entitled to certain expense reimbursements and other standard benefits, including vacation,

sick leave, contributions to a manager’s insurance policy and study fund and mobile phone allowances.

David shall be entitled to receive 90 days of severance plus any required severance payment pursuant to applicable Israeli severance

In the event the employment agreement is terminated by us for cause, Mr.

Ben David will only be entitled to a severance

pay under applicable Israeli severance law.

The employment agreement also includes a twelve-month non-competition and non-solicitation

provision, certain confidentiality covenants and assignment of any of his company-related inventions to the company.

terms of the employment agreement, Mr.

Ben David is entitled to certain expense reimbursements and other standard benefits,

including vacation, sick leave, contributions to a manager’s insurance policy and study fund and mobile phone allowances.

On January 27,

2019, the Compensation Committee of our Board of Directors approved the issuance to Mr.

Ben David of 742 shares of our common stock

under our 2012 Equity Incentive Plan.

Such shares were issued in lieu of the waiver of $23,288 salary otherwise payable to Mr.

Ben David of 1,447 shares of our common

stock under our 2012 Equity Incentive Plan.

Such shares were issued in lieu of the waiver of $28,944 of salary otherwise payable

Ben David from January to March 2019.

On April 23, 2018,

On July 9, 2019,

the Compensation Committee of our Board of Directors approved the issuance to Mr.

Ben David of 745 shares of our common stock under

our 2012 Equity Incentive Plan.

Such shares were issued in lieu of the waiver of $ $22,951 salary otherwise payable to Mr.

David from April to June 2018.

On July 8, 2018, the

Compensation Committee of our Board of Directors approved the issuance to Mr.

Ben David of 1.114 shares of our common stock under

our 2012 Equity Incentive Plan.

Such shares were issued in lieu of the waiver of $32,442 salary otherwise payable to Mr.

from July to September 2018.

On October 3, 2018,

Ben David of 5,021 shares of our common

stock under our 2012 Equity Incentive Plan.

Such shares were issued in lieu of the waiver of $60,238 of salary otherwise payable

Ben David from April to September 2019.

On December 23,

2019, the Compensation Committee of our Board of Directors approved the issuance to Mr.

Ben David of 1,504 shares of our common stock

under our 2012 Equity Incentive Plan.

Such shares were issued in lieu of the waiver of $29,893 salary otherwise payable to Mr.

Ben David of 7,218 shares of our common

stock under our 2012 Equity Incentive Plan.

Such shares were issued in lieu of the waiver of $31,111 of salary otherwise payable

Ben David from October to December 2019.

1 unchanged sentence

2020, the Compensation Committee of our Board of Directors approved the issuance to Mr.

Ben David of 1,447 shares of our common stock

under our 2012 Equity Incentive Plan.

Such shares were issued in lieu of the waiver of $28,944 salary otherwise payable to Mr.

Ben David of 7,287 shares of our common

stock under our 2012 Equity Incentive Plan.

Such shares were issued in lieu of the waiver of $31,409 of salary otherwise payable

Ben David from January to March 2020.

On July 9, 2019, the

Compensation Committee of our Board of Directors approved the issuance to Mr.

Ben David of 5,021 shares of our common stock under

our 2012 Equity Incentive Plan.

Such shares were issued in lieu of the waiver of $60,238 salary otherwise payable to Mr.

from April to September 2019.

On December 23, 2019,

On April 3, 2020,

the Compensation Committee of our Board of Directors approved the issuance to Mr.

Ben David of 7,218 shares of our common stock

under our 2012 Equity Incentive Plan.

Such shares were issued in lieu of the waiver of $31,111 salary otherwise payable to Mr.

Ben David from October to December 2019.

Ben David of 7,074 shares of our common

stock under our 2012 Equity Incentive Plan.

Such shares were issued in lieu of the waiver of $30,490 of salary otherwise payable

Ben David from April to June 2020.

On July 20, 2020,

the Compensation Committee of our Board of Directors approved the issuance to Mr.

Ben David of 7,283 shares of our common

stock under our 2012 Equity Incentive Plan.

Such shares were issued in lieu of the waiver of $31,391 of salary otherwise payable

Ben David from July to September 2020.

On October 16,

2020, the Compensation Committee of our Board of Directors approved the issuance to Mr.

Ben David of 4,235 shares of our common

stock under our 2012 Equity Incentive Plan.

Such shares were issued in lieu of the waiver of $31,638 of salary otherwise payable

Ben David from October to December 2020, and 2,006 shares of our common stock under our 2012 Equity Incentive

Such shares were issued in lieu of the waiver of $8,645 of salary otherwise payable to Mr.

Ben David from April to

Bacher, Chief Operating Officer –

2 unchanged sentences

Bacher, pursuant to which Mr.

Bacher receives an annual base salary of NIS 55,000 (approximately

$15,467), effective as of July 2017, and commencing June 1, 2018 his monthly salary was increased to NIS 61,490 (approximately

$17,292 per month).

Bacher receives an annual base salary of NIS 55,000

(approximately $15,467), effective as of July 2017, and commencing June 1, 2018 his monthly salary was increased to NIS

61,490 (approximately $17,292 per month).

Pursuant to Mr.

Bacher’s existing personal employment agreement as amended, either Mr.

Bacher or we may

terminate his employment agreement upon four months’

notice, provided, however, that in the event of a termination for cause,

Bacher’s existing personal employment agreement as amended,

Bacher or we may terminate his employment agreement upon four months’

notice, provided, however, that in

the event of a termination for cause, Mr.

Bacher’s employment may be terminated immediately.

Bacher’s employment agreement also includes a twelve (12)

month non-competition and non-solicitation provision, certain confidentiality covenants and assignment of any of his company-related

Bacher’s

employment agreement also includes a twelve (12) month non-competition and non-solicitation provision, certain confidentiality

covenants and assignment of any of his company-related inventions.

Under the terms of Mr.

Bacher’s employment agreement, Mr.

Bacher is entitled to certain expense reimbursements

and other standard benefits, including vacation, sick leave, life, and disability insurance and car and mobile phone allowances.

In addition, in conjunction with his appointment as Chief Operating Officer, we issued Mr.

Bacher 500 shares of common stock, and

500 options that will vest in 12 equal quarterly installments over a three-year period with an exercise price of $49.20 per share,

all issued pursuant to the Registrant’s Amended and Restated 2012 Equity Incentive Plan.

During the years 2018

and 2019, Mr.

Bacher agreed to waive approximately 29% and 26% of his cash salary, respectively, pursuant to our shares for salary

program and its 2012 Equity Incentive Plan, and as a result Mr.

Bacher received shares of common stock in lieu of a portion of

his annual cash salary.

Bacher’s employment agreement,

Bacher is entitled to certain expense reimbursements and other standard benefits, including vacation, sick leave, life,

and disability insurance and car and mobile phone allowances.

In addition, in conjunction with his appointment as Chief Operating

Officer, we issued Mr.

Bacher 500 shares of common stock, and 500 options that will vest in 12 equal quarterly installments

over a three-year period with an exercise price of $49.20 per share, all issued pursuant to the Registrant’s Amended and

Restated 2012 Equity Incentive Plan.

On January 27,

2019, the Compensation Committee of our Board of Directors approved the issuance to Mr.

Bacher of 565 shares of our common stock under

our 2012 Equity Incentive Plan.

Such shares were issued in lieu of the waiver of $17,744 salary otherwise payable to Mr.

from January to March 2018.

Bacher of 918 shares of our common

stock under our 2012 Equity Incentive Plan.

Such shares were issued in lieu of the waiver of $18,362 of salary otherwise payable

Bacher from January to March 2019.

On July 9, 2019,

the Compensation Committee of our Board of Directors approved the issuance to Mr.

Bacher of 3,186 shares of our common stock

under our 2012 Equity Incentive Plan.

Such shares were issued in lieu of the waiver of $38,215 of salary otherwise payable to Mr.

from April to September 2019.

On December 23,

2019, the Compensation Committee of our Board of Directors approved the issuance to Mr.

Bacher of 2,633 shares of our common

stock under our 2012 Equity Incentive Plan.

Such shares were issued in lieu of the waiver of $11,352 of salary otherwise payable

Bacher from October to December 2019.

On January 28,

2020, the Compensation Committee of our Board of Directors approved the issuance to Mr.

Bacher of 1,677 shares of our common

stock under our 2012 Equity Incentive Plan.

Such shares were issued in lieu of the waiver of $7,228 of salary otherwise payable

Bacher from January to March 2020.

On April 3, 2020,

the Compensation Committee of our Board of Directors approved the issuance to Mr.

Bacher of 567 shares of our common stock under

our 2012 Equity Incentive Plan.

Such shares were issued in lieu of the waiver of $ $17,486 salary otherwise payable to Mr.

Bacher of 1,628 shares of our common stock

under our 2012 Equity Incentive Plan.

Such shares were issued in lieu of the waiver of $7,017 of salary otherwise payable to Mr.

from April to June 2020.

On April 23, 2018,

On July 20, 2020,

the Compensation Committee of our Board of Directors approved the issuance to Mr.

Bacher of 1,623 shares of our common stock under

our 2012 Equity Incentive Plan.

Such shares were issued in lieu of the waiver of $50,000 of a cash bonus otherwise payable to Mr.

Bacher for his efforts in obtaining FDA clearance for iPhone 7, 8 and X smartphone devices in the U.S.

On July 8, 2018, the

Compensation Committee of our Board of Directors approved the issuance to Mr.

Bacher of 673 shares of our common stock under our

2012 Equity Incentive Plan.

Such shares were issued in lieu of the waiver of $19,606 salary otherwise payable to Mr.

July to September 2018.

Bacher of 1,676 shares of our common stock

under our 2012 Equity Incentive Plan.

Such shares were issued in lieu of the waiver of $7,224 of salary otherwise payable to Mr.

from July to September 2020.

On October 16,

2020, the Compensation Committee of our Board of Directors approved the issuance to Mr.

Bacher of 954 shares of our common stock under

our 2012 Equity Incentive Plan.

Such shares were issued in lieu of the waiver of $18,964 salary otherwise payable to Mr.

from October to December 2018.

Bacher of 974 shares of our common

stock under our 2012 Equity Incentive Plan.

Such shares were issued in lieu of the waiver of $7,281 of salary otherwise payable

Bacher from October to December 2020, and 3,772 shares of our common stock under our 2012 Equity Incentive

Such shares were issued in lieu of the waiver of $16,256 of salary otherwise payable to Mr.

Bacher from April to

Anderson, President and General Manager of North America –

On January 7,

the Compensation Committee of our Board of Directors approved the issuance to Mr.

Bacher of 918 shares of our common stock under

our 2012 Equity Incentive Plan.

Such shares were issued in lieu of the waiver of $18,362 salary otherwise payable to Mr.

from January to March 2019.

On July 9, 2019, the

Compensation Committee of our Board of Directors approved the issuance to Mr.

Bacher of 3,186 shares of our common stock under

our 2012 Equity Incentive Plan.

Such shares were issued in lieu of the waiver of $38,215 salary otherwise payable to Mr.

from April to September 2019.

On December 23, 2019,

the Compensation Committee of our Board of Directors approved the issuance to Mr.

Bacher of 2,633 shares of our common stock under

our 2012 Equity Incentive Plan.

Such shares were issued in lieu of the waiver of $11,352 salary otherwise payable to Mr.

from October to December 2019.

Richard Anderson,

President and General Manager of North America –

On January 7, 2020, we

appointed Mr.

2020, we appointed Mr.

Anderson as our President and General Manager of North America.

In connection with Mr.

Anderson’s appointment,

the Company agreed to pay Mr.

Anderson’s

appointment, the Company agreed to pay Mr.

Anderson an annual base salary of $335,000.

Anderson shall also be subject to a six-month non-competition

and one-year non-solicitation provision, certain confidentiality covenants and assignment of any of his company-related inventions.

Anderson will also be entitled to certain expense reimbursements and other standard benefits, including vacation and sick

Anderson shall also be subject

to a six-month non-competition and one-year non-solicitation provision, certain confidentiality covenants and assignment of any

of his company-related inventions.

Anderson will also be entitled to certain expense reimbursements and other standard

benefits, including vacation and sick leave.

In addition, Mr.

Anderson will be entitled to receive an annual incentive bonus of up to $250,000, subject to certain milestones

and performance targets.

In addition, and in conjunction with his appointment as President and General Manager of North America,

the Company agreed to issue Mr.

Anderson a stock option to purchase up to 90,000 shares of common stock at an exercise price of

$8.41 per share, subject to vesting.

Anderson was also issued a stock option to purchase up to 90,000 shares of common stock

at an exercise price of $8.41 per share, subject to vesting and the achievement of certain business revenue targets.

In that regard,

Anderson will be entitled to receive an annual incentive bonus

of up to $250,000, subject to certain milestones and performance targets.

In addition, and in conjunction with his appointment

as President and General Manager of North America, the Company agreed to issue Mr.

Anderson a stock option to purchase up

to 90,000 shares of common stock at an exercise price of $8.41 per share, subject to vesting.

Anderson was also issued

a stock option to purchase up to 90,000 shares of common stock at an exercise price of $8.41 per share, subject to vesting and

the achievement of certain business revenue targets.

In that regard, Mr.

Anderson’s option will vest as follows:

(i) 22,500 shares shall vest following fiscal year 2020 if our business-to-business

shares shall vest following fiscal year 2020 if our business-to-business revenues reach or exceed $6 million in the aggregate,

or a pro-rated amount equal to the percentage achievement of such target, assuming the Company’s GAAP revenues in 2020 will

reach at least $11 million in the aggregate;

(ii) 22,500 shares shall vest following fiscal year 2021 if our business-to-business

revenues reach or exceed $15 million in the aggregate, or a pro-rated amount equal to the percentage achievement of such target,

assuming the Company’s GAAP revenues in 2021 will reach at least $19.5 million in the aggregate;

(ii) 22,500 shares shall

vest following fiscal year 2021 if our business-to-business revenues reach or exceed $15 million in the aggregate, or a pro-rated

(iii) 22,500 shares

shall vest following fiscal year 2022 if our business-to-business revenues reach or exceed $40 million in the aggregate, or a pro-rated

amount equal to the percentage achievement of such target, assuming the Company’s GAAP revenues in 2022 will reach at least

$38 million in the aggregate;

(iii) 22,500 shares shall vest following fiscal year 2022 if our business-to-business revenues

and (iv) 22,500 shares shall vest following fiscal year 2023 if our business-to-business revenues

reach or exceed $80 million in the aggregate, or a pro-rated amount equal to the percentage achievement of such target, assuming

the Company’s GAAP revenues in 2023 will reach at least $62 million in the aggregate.

and (iv) 22,500 shares shall vest

following fiscal year 2023 if our business-to-business revenues reach or exceed $80 million in the aggregate, or a pro-rated amount

equal to the percentage achievement of such target, assuming the Company’s GAAP revenues in 2023 will reach at least $62

million in the aggregate.

Jarry, Former President and Chief Commercial Officer –

On August 30, 2018, we appointed Mr.

Jarry as our President

and Chief Commercial Officer.

In connection with Mr.

Jarry’s appointment, we agreed to pay Mr.

Jarry an annual base salary

of $252,000 out of which $132,000 is paid in cash and the balance is paid in our shares of common stock.

Jarry’s employment

is subject to a one (1) year non-competition and non-solicitation provision, certain confidentiality covenants and assignment of

any of his company-related inventions.

Jarry is also entitled to certain expense reimbursements and other standard benefits,

including vacation and sick leave.

In addition, Mr.

Jarry is entitled to receive an annual incentive bonus of up to 1,750 shares

of common stock and an annual over performance bonus of up to 1,000 shares of common stock, with each such bonus subject to certain

milestones and performance targets to be determined by our Board of Directors.

In addition, and in conjunction with Mr.

Jarry’s

appointment as President and Chief Commercial Officer, we agreed to issue Mr.

Jarry a stock option to purchase up to 6,000 shares

of common stock at a future date and at the discretion of our Board of Directors.

On January 7, 2020, Mr.

Jarry was relieved from

his duties as President and Chief Commercial Officer of the Corporation to a new role of Senior Vice President of Strategy and

Business Development.

During the fiscal years

ended December 31, 2018 and December 31, 2019, Mr.

Jarry agreed to waive approximately 47% of his cash salary pursuant to our shares

for salary program and its 2012 Equity Incentive Plan, and as a result, Mr.

Jarry received shares of common stock in lieu of a

portion of his annual cash salary.

On October 16,

2020, the Compensation Committee of our Board of Directors approved the issuance to Mr.

Jarry of 1,962 shares of our common stock under

our 2012 Equity Incentive Plan.

Such shares were issued in lieu of the waiver of $39,000 salary otherwise payable to Mr.

from September to December 2018.

On January 27, 2019,

the Compensation Committee of our Board of Directors approved the issuance to Mr.

Jarry of 1,500 shares of our common stock under

our 2012 Equity Incentive Plan.

Such shares were issued in lieu of the waiver of $30,000 salary otherwise payable to Mr.

from January to March 2019.

On July 9, 2019, the

Compensation Committee of our Board of Directors approved the issuance to Mr.

Jarry of 5,000 shares of our common stock under our

2012 Equity Incentive Plan.

Such shares were issued in lieu of the waiver of $60,000 salary otherwise payable to Mr.

April to September 2019.

On December 23, 2019,

the Compensation Committee of our Board of Directors approved the issuance to Mr.

Jarry of 6,960 shares of our common stock under

our 2012 Equity Incentive Plan.

Such shares were issued in lieu of the waiver of $30,000 salary otherwise payable to Mr.

from October to December 2019.

Anderson of 5,182 shares of our common

stock under our 2012 Equity Incentive Plan.

Such shares were issued in lieu of the waiver of $23,333 of salary otherwise payable

Anderson from April to July 2020.

Cohen, General Manager of MSK –

Effective February 1, 2021, Upright entered into an employment

agreement with Mr.

Cohen, pursuant to which Mr.

Cohen will earn a monthly salary of NIS 63,000 and is eligible for

an annual bonus equal to up to four times his monthly salary.

The employment agreement is an at-will employment arrangement,

with a four months’

notice period, unless it is terminated for cause.

In addition, Mr.

Cohen will be entitled to

severance payment pursuant to applicable Israeli severance law.

In the event the employment agreement is terminated by us for

Cohen will only be entitled to a severance pay under applicable Israeli severance law.

Cohen’s

employment agreement also includes a one-year non-competition and non-solicitation provision, certain confidentiality

covenants and assignment of any of his company-related inventions.

Under the terms of the employment agreement,

Cohen is entitled to certain expense reimbursements and other standard benefits, including vacation, sick leave,

contributions to a manager’s insurance policy and study fund and car and mobile phone allowances.

Cohen will be entitled to receive, subject to the approval of the Board of Directors, a restricted stock unit award

to receive, subject to vesting, up to 73,660 shares of the Company’s common stock and, subject to the meeting of

certain milestones an additional restricted stock unit award to receive up to 73,660 shares of the Company’s common

stock on March 1, 2022, and subject to the meeting of certain milestones an additional restricted stock unit award to

receive up to 73,660 shares of the Company’s common stock on March 1, 2023.

All the restricted stock units will be

subject to a three-year vesting period.

Outstanding Equity Awards at December 31,

10 unchanged sentences

January 30, 2023

February 12, 2026

January 6, 2024

4 unchanged sentences

July 25, 2023

Olivier Jarry

November 22, 2024

(President and Chief Commercial Officer)

February 12, 2026

Richard Anderson

January 30, 2026

(President and General Manager of North America)

Total Option Shares

1 unchanged sentence

Non-Employee Director Remuneration Policy

In March 2013, our Board of Directors adopted

the following non-employee director remuneration policy:

In March 2013, our Board of Directors

adopted the following non-employee director remuneration policy:

Our non-employee directors

(currently Messrs.

Shaked, Farhi, Kamer, McGrath, Prof.

Shaked, Matheis, McGrath, Prof.

Stone and Ms.

Karah) will receive the following cash payments for each

(i) $25,000 per year, to be paid quarterly in arrears and (ii) $16,000 for Board committee service, to be paid quarterly

provided, however, that such quarterly payments and committee meeting fees shall accrue and shall be payable

upon the approval of Mr.

Raphael at such time when our company is adequately capitalized in his reasonable discretion.

Karah) will receive the following cash payments for

each fiscal year:

(i) $25,000 per year, to be paid quarterly in arrears and (ii) $16,000 for Board committee service,

to be paid quarterly in arrears.

Stock and Option Awards

1 unchanged sentence

2019, the Compensation Committee of our Board of Directors approved the issuance to each of Prof.

Hoenlein, Mr.

Karah and Mr.

Yehudiha of 327 shares of our common stock under our 2012 Equity Incentive Plan.

Such shares were issued in lieu

of $10,250 in fees otherwise payable to each of Prof.

Hoenlein, Mr.

Karah and Mr.

Yehudiha for the period

from October 1, 2017, to December 31, 2017.

In addition, the Compensation Committee of our Board of Directors approved the issuance

to each of Mr.

Kamer and Mr.

Bahagon of 199 shares of our common stock under the 2012 Equity Incentive Plan.

were issued in lieu of $6,250 in fees otherwise payable to Mr.

Kamer and Mr.

Bahagon for the period October 1, 2017,

to December 31, 2017.

On April 23, 2018,

the Compensation Committee of our Board of Directors approved the issuance to each of Prof.

Hoenlein, Mr.

Karah and Mr.

Yehudiha of 333 shares of our common stock under our 2012 Equity Incentive Plan.

Such shares were issued in lieu

of $10,250 in fees otherwise payable to each of Prof.

Hoenlein, Mr.

Karah and Mr.

Yehudiha for the period

from January 1, 2018, to March 31, 2018.

In addition, the Compensation Committee of our Board of Directors approved the issuance

to each of Mr.

Farhi and Mr.

Kamer of 203 shares of our common stock under the 2012 Equity Incentive Plan.

Such shares were issued

in lieu of $6,250 in fees otherwise payable to Mr.

Farhi and Mr.

Kamer for the period January 1, 2018, to March 31, 2018.

the Compensation Committee of our Board of Directors approved the issuance to Mr.

Bahagon 3,335 shares of our common stock under

the 2012 Equity Incentive Plan.

Such shares were issued in lieu of $5,139 in fees otherwise payable to Mr.

Bahagon for the period

January 1, 2018, to March 15, 2018.

On July 9, 2018, the

Compensation Committee of our Board of Directors approved the issuance to each of Prof.

Hoenlein, Mr.

McGrath and Ms.

Karah of 513 shares of our common stock under our 2012 Equity Incentive Plan.

Such shares were issued in lieu of $10,250 in fees

otherwise payable to each of Prof.

Hoenlein, Mr.

McGrath and Ms.

Karah for the period from April 1, 2018, to June 30,

In addition, the Compensation Committee of our Board of Directors approved the issuance to each of Mr.

Yehudiha and Mr.

Zanco of 215 shares of our common stock under the 2012 Equity Incentive Plan.

Such shares were issued in lieu

of $6,250 in fees otherwise payable to Mr.

Yehudiha and Mr.

Zanco for the period April 1, 2018, to June 30,

On October 3, 2018,

the Compensation Committee of our Board of Directors approved the issuance to each of Prof.

Karah of 516 shares of our common stock under our 2012 Equity Incentive Plan.

Such shares were issued in lieu of $10,250 in

fees otherwise payable to each of Prof.

McGrath, and Ms.

Karah for the period from July 1, 2018, to September

In addition, the Compensation Committee of our Board of Directors approved the issuance to each of Mr.

Yehudiha and Mr.

Zanco of 315 shares of our common stock under the 2012 Equity Incentive Plan.

Such shares were issued in lieu

of $6,250 in fees otherwise payable to Mr.

Yehudiha and Mr.

Zanco for the period July 1, 2018, to September

On January 27, 2019,

the Compensation Committee of our Board of Directors approved the issuance to each of Prof.

Karah of 513 shares of our common stock under our 2012 Equity Incentive Plan.

Such shares were issued in lieu of $10,250 in

fees otherwise payable to each of Prof.

Such shares were issued in lieu of $10,250

in fees otherwise payable to each of Prof.

McGrath, and Ms.

Karah for the period from October 1, 2018, to December

Karah for the period from October 1,

2018, to December 31, 2018.

The Compensation Committee of our Board of Directors also approved the issuance to each of Mr.

Farhi, a former member of our Board of Directors, and Mr.

Allen Kamer, a former member of our Board of Directors, of 313 shares

of our common stock under the 2012 Equity Incentive Plan.

Such shares were issued in lieu of $6,250 in fees otherwise payable to

Farhi and Mr.

Kamer for the period October 1, 2018, to December 31, 2018.

In addition, the Compensation

Committee of our Board of Directors approved the issuance to Mr.

Glen Moller, a former member of our Board of Directors, of

262 shares of our common stock under the 2012 Equity Incentive Plan.

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payable to Mr.

Farhi and Mr.

Kamer for the period October 1, 2018, to December 31, 2018.

In addition, the Compensation Committee

of our Board of Directors approved the issuance to Mr.

Moller 262 shares of our common stock under the 2012 Equity Incentive Plan.

Such shares were issued in lieu of $5,231 in fees otherwise payable to Mr.

Moller for the period October 16, 2018, to December 31, 2018.

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the Compensation Committee of our Board of Directors approved a grant of 1,475 options to Mr.

These options have an exercise

price of $15.40 per share.

One third of the options will become fully vested and exercisable on the first anniversary elapsed from

the grant date, and the balance will vest in eight equal quarterly installments following the first anniversary of the grant date,

subject to Mr.

These options have an

exercise price of $15.40 per share.

One third of the options will become fully vested and exercisable on the first anniversary

elapsed from the grant date, and the balance will vest in eight equal quarterly installments following the first anniversary of

the grant date, subject to Mr.

Moller’s continued membership on the Company’s Board of Directors.

In January 2020 Mr.

Moller resigned

from the Board of Directors and his options were forfeited.

In January 2020

Moller resigned from the Board of Directors and his options were forfeited.

On April 29, 2019,

the Compensation Committee of our Board of Directors approved the following issuances, each was done under our 2012 Equity Incentive

(i) 15,038 shares of our common stock to Mr.

the Compensation Committee of our Board of Directors approved the following issuances under our 2012 Equity Incentive Plan:

shares of our common stock to Mr.

(ii) 1,255 shares of our common stock to Ms.

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(iv) 753 shares of our common stock to Mr.

(v) 862 shares of our common stock to Prof.

(v) 862 shares of our common

stock to Prof.

and (vi) 1,649 shares of our common stock to Mr.

On July 9, 2019, the Compensation Committee of our Board of

Directors approved the issuance to each of Prof.

McGrath, and Ms.

Karah of 854 shares of our common stock

under our 2012 Equity Incentive Plan.

Such shares were issued in lieu of $10,250 in fees otherwise payable to each of Prof.

McGrath, and Ms.

Karah for the period from January 1, 2019, to March 31, 2019.

The Compensation Committee of our

Board of Directors also approved the issuance to each of Prof.

On July 9, 2019,

the Compensation Committee of our Board of Directors approved the issuance to each of Prof.

Karah of 854 shares of our common stock under our 2012 Equity Incentive Plan.

Such shares were issued in lieu of $10,250

in fees otherwise payable to each of Prof.

McGrath, and Ms.

Karah of 854 shares of our

common stock under our 2012 Equity Incentive Plan.

Such shares were issued in lieu of $10,250 in fees otherwise payable to each

Karah for the period from January 1,

2019, to March 31, 2019.

The Compensation Committee of our Board of Directors also approved the issuance to each of Prof.

McGrath, and Ms.

Karah of 854 shares of our common stock under our 2012 Equity Incentive

Such shares were issued in lieu of $10,250 in fees otherwise payable to each of Prof.

Karah for the period from April 1, 2019, to June 30, 2019.

The Compensation Committee

of our Board of Directors also approved the issuance to each of Mr.

The Compensation Committee of our Board of Directors

also approved the issuance to each of Mr.

Kamer and Mr.

Moller of 521 shares of our common

stock under the 2012 Equity Incentive Plan.

Such shares were issued in lieu of $6,250 in fees otherwise payable to Mr.

Moller of 521 shares of our common stock under

the 2012 Equity Incentive Plan.

Such shares were issued in lieu of $6,250 in fees otherwise payable to each of Mr.

Kamer and Mr.

Moller for the period January 1, 2019, to March 31, 2019.

In addition, the Compensation Committee of our Board of

Directors approved the issuance to each of Mr.

In addition, the Compensation Committee

of our Board of Directors approved the issuance to each of Mr.

Kamer and Mr.

Moller of 521 shares of our common stock under the 2012

Equity Incentive Plan.

Such shares were issued in lieu of $6,250 in fees otherwise payable to Mr.

Moller of 521 shares of

our common stock under the 2012 Equity Incentive Plan.

Such shares were issued in lieu of $6,250 in fees otherwise payable to each

Kamer and Mr.

for the period April 1, 2019, to June 30, 2019.

Moller for the period April 1, 2019, to June 30, 2019.

On December 23,

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McGrath, and Ms.

Karah for the period from July 1, 2019, to September

The Compensation Committee of our Board of Directors also approved the issuance to each of Mr.

Karah for the period

from July 1, 2019, to September 30, 2019.

The Compensation Committee of our Board of Directors also approved the issuance

to each of Mr.

Farhi and Mr.

Kamer of 1,450 shares of our common stock under the 2012 Equity Incentive Plan.

were issued in lieu of $6,250 in fees otherwise payable to Mr.

Farhi and Mr.

Kamer for the period July 1, 2019,

to September 30, 2019.

On January 28,

2020, the Compensation Committee of our Board of Directors approved the issuance to each of Prof.

Karah of 2,378 shares of our common stock under our 2012 Equity Incentive Plan.

Such shares were issued in lieu of

$10,250 in fees otherwise payable to each of Prof.

McGrath, and Ms.

Karah for the period

from October 1, 2019, to December 31, 2019.

The Compensation Committee of our Board of Directors also approved the issuance

to each of Mr.

Moller and Mr.

Kamer of 1,450 shares of our common stock under the 2012 Equity Incentive

Such shares were issued in lieu of $6,250 in fees otherwise payable to each of Mr.

Moller and Mr.

for the period October 1, 2019, to December 31, 2019.

In addition, the Compensation Committee of our Board of Directors

approved the issuance to Mr.

Moller 396 shares of our common stock under the 2012 Equity Incentive Plan.

Such shares were

issued to Mr.

Moller upon his resignation from the Board of Directors.

On February 12,

2020, the Compensation Committee of our Board of Directors approved the following issuances, each was done under our 2012 Equity

Incentive Plan:

(i) 60,000 shares of our common stock to Mr.

(ii) 30,000 shares of our common stock to Ms.

(iii) 7,000 shares of our common stock to Mr.

(iv) 7,000 shares of our common stock to Mr.

shares of our common stock to Prof.

and (vi) 50,000 shares of our common stock to Mr.

On April 3, 2020,

the Compensation Committee of our Board of Directors approved the issuance to each of Prof.

Karah of 2,378 shares of our common stock under our 2012 Equity Incentive Plan.

Such shares were issued in lieu of

$10,250 in fees otherwise payable to each of Prof.

McGrath, and Ms.

Karah for the period

from January 1, 2020, to March 31, 2020.

The Compensation Committee of our Board of Directors also approved the issuance

to each of Mr.

Farhi and Mr.

Kamer of 1,450 shares of our common stock under the 2012 Equity Incentive Plan.

were issued in lieu of $6,250 in fees otherwise payable to Mr.

Farhi and Mr.

Kamer for the period January 1, 2020,

to March 31, 2020.

In addition, the Compensation Committee of our Board of Directors approved the issuance to Mr.

493 shares of our common stock under the 2012 Equity Incentive Plan.

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payable to Mr.

Stern for March 2020.

In addition, the Compensation Committee of our Board of Directors approved the issuance

Farhi 4,638 shares of our common stock under the 2012 Equity Incentive Plan.

Such shares were issued to Mr.

upon his voluntary resignation from the Board of Directors in April 2020.

On July 20, 2020,

the Compensation Committee of our Board of Directors approved the issuance to each of Prof.

Karah of 2,378 shares of our common stock under our 2012 Equity Incentive Plan.

Such shares were issued in lieu of

$10,250 in fees otherwise payable to each of Prof.

McGrath, and Ms.

Karah for the period

from April 1, 2020, to June 30, 2020.

The Compensation Committee of our Board of Directors also approved the issuance

to each of Mr.

Stern and Mr.

Kamer of 1,450 shares of our common stock under the 2012 Equity Incentive Plan.

were issued in lieu of $6,250 in fees otherwise payable to Mr.

Farhi and Mr.

Kamer for the period July 1, 2019, to September 30, 2019.

Kamer for the period April 1, 2020,

to June 30, 2020.

On August 18,

2020, the Compensation Committee of our Board of Directors approved the issuance to Mr.

Matheis 15,000 shares of our common

stock under our 2012 Equity Incentive Plan, and the grant of 20,000 options.

These options have an exercise price of $18.68 per

One third of the options will become fully vested and exercisable on the first anniversary of the grant date, and the balance

will vest in eight equal quarterly installments following the first anniversary of the grant date, subject to Mr.

Matheis’s

continued membership on the Company’s Board of Directors.

On October 9,

2020, the Compensation Committee of our Board of Directors approved the issuance to Mr.

Kamer of 10,000 shares of our common

stock under the 2012 Equity Incentive Plan.

Such shares were issued to Mr.

Kamer upon his withdrawal from the Board of Directors

in October 2020.

On October 16,

2020, the Compensation Committee of our Board of Directors approved the issuance to Ms.

Karah of 1,372 shares of our common

stock under our 2012 Equity Incentive Plan.

Such shares were issued in lieu of $10,250 in fees otherwise payable to Ms.

for the period from July 1, 2020, to September 30, 2020.

On April 3, 2020,

the Audit and Compensation Committees of the Board of Directors approved the monthly grant of 1,500 shares of the Company’s

Common Stock, to be granted monthly over a 12 month period pursuant to a certain consulting agreement with said service providers.

During the fiscal year ended December 31, 2020, a total of 5,691 shares of the Company’s common stock were issued under

the said approval to Mr.

Adam Stern, a member of our Board.

Compensation Committee Review

The Compensation Committee

shall, if it deems necessary or prudent in its discretion, reevaluate and approve in January of each such year (or in any event

prior to the first board meeting of such fiscal year) the cash and equity awards (amount and manner or method of payment) to be

made to non-employee directors for such fiscal year.

In making this determination, the Compensation Committee shall utilize such

market standard metrics as it deems appropriate, including, without limitation, an analysis of cash compensation paid to independent

shall, if it deems necessary or prudent in its discretion, reevaluate and approve in January of each such year (or in any

event prior to the first board meeting of such fiscal year) the cash and equity awards (amount and manner or method of payment)

to be made to non-employee directors for such fiscal year.

In making this determination, the Compensation Committee shall utilize

such market standard metrics as it deems appropriate, including, without limitation, an analysis of cash compensation paid to independent

directors of our peer group.

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summarizes the annual compensation paid to our non-employee directors for the fiscal year ended December 31, 2020:

Dennis McGrath

Amount shown does not reflect dollar amount actually received.

Instead, this amount reflects the aggregate grant date fair value of each stock option granted in the fiscal year ended December 31, 2019, computed in accordance with the provisions of ASC 718.

Assumptions used in accordance with ASC 718 are included in Note 9 to our consolidated financial statements included in this Annual Report.

stock awards are outstanding as of December 31, 2019.

option awards are outstanding as of December 31, 2019.

stock awards are outstanding as of December 31, 2019.

option awards are outstanding as of December 31, 2019.

stock awards are outstanding as of December 31, 2019.

option awards are outstanding as of December 31, 2019.

stock awards are outstanding as of December 31, 2019.

option awards are outstanding as of December 31, 2019.

stock awards are outstanding as of December 31, 2019.

option awards are outstanding as of December 31, 2019.

Amount shown does

not reflect dollar amount actually received.

Instead, this amount reflects the aggregate grant date fair value of each stock

option granted in the fiscal year ended December 31, 2020, computed in accordance with the provisions of ASC 718.

Assumptions used in accordance with ASC 718 are included in Note 9 to our consolidated financial statements included in this

Annual Report.

(1) 67,787 stock awards

are outstanding as of December 31, 2020.

option stock awards are outstanding as of December 31, 2019.

(2) 1,659 option awards

are outstanding as of December 31, 2020.

(3) 29,999 stock awards

are outstanding as of December 31, 2020.

(4) 1,645 option awards

are outstanding as of December 31, 2020.

(5) 15,000 stock awards

are outstanding as of December 31, 2020.

(6) 20,000 option awards

are outstanding as of December 31, 2020.

(7) 48,604 stock awards

are outstanding as of December 31, 2020.

(8) 1,561 option awards

are outstanding as of December 31, 2020.

(9) 27,464 stock awards

are outstanding as of December 31, 2020.

(10) No option awards

are outstanding as of December 31, 2020.

(11) 87,287 stock awards

are outstanding as of December 31, 2020.

(12) No option awards

are outstanding as of December 31, 2020.

stock awards are outstanding as of December 31, 2020.

option stock awards are outstanding as of December 31, 2019.

option awards are outstanding as of December 31, 2020.

(15) No stock awards

are outstanding as of December 31, 2020.

(16) No option stock

awards are outstanding as of December 31, 2020.

(17) No stock awards

are outstanding as of December 31, 2020.

(18) 90,000 option

awards are outstanding as of December 31, 2020.

Kamer was not

re-nominated to serve on the Board at the 2020 Annual Stockholder’s Meeting.

(20) On April 7,

Farhi resigned from the Board.

was not re-nominated to serve on the Board at the 2020 Annual Stockholder’s Meeting.

January 22, 2020, Mr.

Moller resigned from the Board.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

6 unchanged sentences

is determined in accordance with the rules of the SEC and includes voting or investment power with respect to the securities.

as otherwise indicated, each person or entity named in the table has sole voting and investment power with respect to all shares

of our capital shown as beneficially owned, subject to applicable community property laws.

Except as otherwise indicated, each person or entity named in the table has sole voting and investment power with respect to all

shares of our capital shown as beneficially owned, subject to applicable community property laws.

In computing the number

3 unchanged sentences

Unless otherwise indicated, the address of each person listed below is c/o DarioHealth Corp., 142

HaTokhen Street, Caesarea North Industrial Park, 3088900, Israel.

57th St., 8 th Floor, New York, New York 10019.

Name of Beneficial Owner

3 unchanged sentences

Dror Bacher (4)

Olivier Jarry (5)

Richard Anderson (5)

Oded Cohen (6)

Hila Karah (9)

Yalon Farhi (9)

Allen Kamer (10)

Yoav Shaked (10)

Glen Moller (11)

Adam Stern (11)

Yadin Shemmer

Dennis Mathies (12)

All Executive Officers and Directors as a group (11 persons)**

1 unchanged sentence

Nantahala Capital Partners SI, LP (13)

Nantahala Capital Partners II Limited Partnership (15)

Nantahala Capital Management, LLC (14)

* less than 1%.

** Glenn Moller is no longer a member of our Board of Directors.

Stern and Shemmer joined

our Board of Directors on March 1, 2020.

Percentage ownership is based on 3,101,410 shares of our common stock outstanding as of March 13, 2020 and, for each person or entity listed above, warrants or options to purchase shares of our common stock which exercisable within 60 days of the such date.

Includes 16,158 vested options.

ownership is based on 15,273,389 shares of our common stock outstanding as of March 5, 2020 and, for each person or entity

listed above, warrants or options to purchase shares of our common stock which exercisable within 60 days of the such

Includes 16,164 vested options to purchase common stock and 34,430 vested restricted shares.

Also includes 37,876 shares of our common stock, held by Dicilyon Consulting and Investment Ltd.

2 unchanged sentences

is 10 Nataf St., Ramat Hasharon 4704063, Israel.

Includes 6,064 vested options to

purchase common stock.

Includes 13,022 vested options to purchase common stock and 9,269 vested restricted shares.

Excludes 18,551 options which are not vested.

Includes 5,556 warrants to purchase common

Includes 1,786 shares owned by his spouse, for which Mr.

Ben David disclaims beneficial ownership except to

the extent of his pecuniary interest therein.

Includes 6,103 vested options to purchase common stock.

Ben David disclaims beneficial ownership except to the extent of his pecuniary interest therein.

Includes 13,311 vested options to purchase common stock and 8,382 vested restricted shares.

Excludes 19,109 options which are not vested.

Includes 2,500 vested options to purchase common stock.

Includes 45,138 vested options to purchase common stock and 7,638 vested restricted shares.

Excludes 91,376 options which are not vested.

On January 7, 2020, Mr.

Jarry was relieved from his duties as President and Chief Commercial Officer of the Corporation to a new role of Senior Vice President of Strategy and Business Development.

Includes 1,657 vested options to purchase common stock.

Includes 1,250 warrants to purchase common stock, and 1,643 vested options to purchase common stock.

Includes 1,560 vested options to purchase common stock.

Kamer is a Managing Partner of OurCrowd Digital Health L.P.

and therefore the securities held by OurCrowd Digital Health L.P.

may be deemed to be beneficially owned by Mr.

Kamer disclaims beneficial ownership of the securities owned by OurCrowd Digital Health L.P.

except to the extent of his pecuniary interest therein.

Includes 0 vested options to purchase common stock.

Moller resigned from our Board of Directors effective as of January 24, 2020.

Includes 6,139 vested restricted shares.

Includes 1,659 vested options to purchase common stock and 2,468 vested restricted shares.

Includes 1,645 vested options to purchase common stock and 1,667 vested restricted shares.

Includes 1,561 vested options to purchase common stock and 1,679 vested restricted shares.

Includes 1,385 vested restricted shares.

Includes 1,667 shares, and 1,334 warrants owned by his spouse, for which Mr.

Shaked disclaims beneficial ownership except to the extent of his pecuniary interest therein.

Includes 300 preferred A shares on an as converted basis of 74,100 common stock.

Includes warrants exercisable into 70,895 shares of common stock, subject to a contractual beneficial ownership limitation of 4.99% and excludes warrants exercisable into 220,303 shares of common stock.

Based solely on information contained in Form S-3 filed with the SEC on January 15, 2019 and data provided by the holder adjusted to the November 18, 2019 reverse split.

Includes warrants to purchase 82,677 shares of common stock, pre-funded warrants to purchase 125,102 shares of common stock and preferred shares convertible into 12,491 shares of common stock, subject to a contractual beneficial ownership limitation of 9.9% and excludes preferred shares convertible into 639,836 shares of common stock.

Based solely on information contained in Form S-3 filed with the SEC on January 15, 2019 and data provided by the holder.

Includes warrants to purchase 21,613 shares of common stock, pre-funded warrants to purchase 81,233 shares of common stock and preferred shares convertible into 199,441 shares of common stock, subject to a contractual beneficial ownership limitation of 9.9% and excludes preferred shares convertible into 19,154 shares of common stock.

Based solely on information contained in Form 13G filed with the SEC on February 14, 2019, and data provided by the holder.

Includes warrants to purchase 103,161 shares of common stock and excludes warrants to purchase 46,843 shares of common stock, pre-funded warrants to purchase 358,779 shares of common stock, which are subject to a contractual beneficial ownership limitation of 9.9% and excludes preferred shares convertible into 1,284,400 shares of common stock.

Includes 3,655 vested restricted shares and 300 Series A Preferred Shares convertible into 74,100 shares of common stock.

Includes warrants exercisable into 409,535 shares of common stock, subject to a contractual beneficial ownership limitation of 4.99%.

Includes 1,469 vested restricted shares.

Excludes 20,000 options which have not vested.

Based solely on information contained in Form S-3 filed with the SEC on September 8, 2020 and data provided by the holder Includes warrants to purchase 82,677 shares of common stock, pre-funded warrants to purchase 125,102 shares of common stock issued in May, 2019, preferred shares convertible into 652,327 shares of common stock, and additional 150,926 pre-funded warrants issued on July 21, 2020, subject to a contractual beneficial ownership limitation of 9.9% and excludes 579,275 pre-funded warrants issued on July 31, 2020.

Based solely on information contained in Form 13G/A filed with the SEC on February 16, 2021, and data provided by the holder.

Includes warrants to purchase 150,004 shares of common stock, 358,779 pre-funded warrants to purchase common stock issued in May 2019 and preferred shares convertible into 198,002 shares of common stock, subject to a contractual beneficial ownership limitation of 9.9% and excludes preferred shares convertible into 1,086,398 shares of common stock and 824,689 pre-funded warrants issued on July 31, 2020.

Certain Relationships and Related Party Transactions

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employment agreements and granted stock awards to our executive officers as more fully described in “Executive Compensation”

September 2014 Private Placement

On September 23, 2014,

we entered into and closed the transactions contemplated by a definitive Securities Purchase Agreement.

The lead investor in the

financing memorialized in such agreement was Dicilyon Consulting and Investment Ltd.

(“Dicilyon”), an affiliate of

Israeli investor David Edery who invested $3,000,000 in the private placement purchasing 1,667 shares of our Series A Convertible

Preferred Stock (which converted into 525,564 shares of our Common Stock on March 8, 2016 in conjunction with a closing of our

public offering) and 231,248 warrants to purchase Common Stock following the entry into a warrant replacement agreement with Dicilyon

whereby Dicilyon replaced 210,226 warrants issued in 2014 which contained a net settlement cash feature and liquidated damages

penalties with 231,248 warrants which contain a standard anti-dilution clause, both groups of warrants with an exercise price of

$8.559 per share and exercisable until September 23, 2018.

Pursuant to the Securities Purchase Agreement, Mr.

Edery and his controlled

affiliates were granted certain special rights, including, among other things, (i) a two year pre-emptive right to participate

in our future financings, subject to certain exceptions, in an amount which would allow Mr.

Edery to maintain his fully-diluted

percentage ownership of the Company, and (ii) a right that, for so long as Mr.

Edery holds 25%, 15% and 10% of the outstanding

shares of Common Stock, Mr.

Edery shall have the right to appoint, respectively, three, two or one member of our seven-person Board

of Directors.

The preemptive rights were waived in connection with the March 2016 public offering, and Mr.

Edery has waived his

director nomination rights effective February 28, 2016.

In connection with the closing of the transactions contemplated by the

Securities Purchase Agreement, Mr.

Edery’s company appointed Rami Yehudiha to serve as a member of the Board of Directors

and on November 18, 2014, Mr.

Edery’s company exercised its right to appoint two members to the Board of Directors by requesting

Oren Fuerst and Dr.

Kaplan resign from the Board of Directors.

Accordingly, Dr.

Kaplan resigned from the Board

of Directors effective as of November 21, 2014, and Dr.

Fuerst resigned from the Board of Directors effective as of November 23,

On November 23, 2014, the remaining members of the Board of Directors acted by unanimous written consent to name two appointees

Edery’s company, Dr.

Hila Karah, as members of the Board of Directors.

On February 25, 2015,

Kash resigned from his position as a member of the Board of Directors for personal reasons.

On June 15, 2015, both

Yehudiha and Ms.

Karah were elected to our Board of Directors by our shareholders.

On March 1, 2016, Dicilyon irrevocably granted

voting and dispositive power over our shares held by it to Erez Raphael, our Chairman, and Chief Executive Officer.

Statement of Policy

All transactions (if

any) between us and our officers, directors or five percent stockholders, and respective affiliates will be on terms no less favorable

than could be obtained from unaffiliated third parties and will be approved by a majority of our independent directors who do not

have an interest in the transactions and who had access, at our expense, to our legal counsel or independent legal counsel.

transactions (if any) between us and our officers, directors or five percent stockholders, and respective affiliates will

be on terms no less favorable than could be obtained from unaffiliated third parties and will be approved by a majority of our

independent directors who do not have an interest in the transactions and who had access, at our expense, to our legal counsel

or independent legal counsel.

On April 3, 2020, we

entered into a financial advisory agreement with Aegis Capital Corp., pursuant to which we agreed to pay Aegis Capital Corp.

(“Aegis”)

certain a fee of up to 3% of any proceeds from sales derived by us through commercial transactions entered into with parties introduced

In addition, on April 3, 2020, we entered into a Sales Fee Agreement with Aegis, pursuant to which we agreed to pay Aegis

a fee of up 4.5% of consideration we may receive in a business development transaction (including, any joint-venture, partnership,

strategic collaboration or investment, licensing transaction, co-promotion or distribution agreement or other profit or revenue

sharing, or similar business arrangement) from parties introduced by Aegis.

To date, we have not paid Aegis any fees as a result

of these agreements.

Adam Stern, a member of our Board, has an interest, and will receive fees due to, Aegis.

To the best of our

7 unchanged sentences

The following table

sets forth fees billed to us by Kost Forer Gabbay & Kasierer, a member of Ernst & Young Global, our independent registered

public accounting firm, during the fiscal years ended December 31, 2019 and December 31, 2018 for:

(i) services rendered for the

audit of our annual financial statements and the review of our quarterly financial statements;

(ii) services by our independent

registered public accounting firms that are reasonably related to the performance of the audit or review of our financial statements

and that are not reported as audit fees;

(iii) services rendered in connection with tax compliance, tax advice and tax planning;

sets forth fees billed to us by Kost Forer Gabbay & Kasierer, a member of Ernst & Young Global, our independent

registered public accounting firm, during the fiscal years ended December 31, 2020 and December 31, 2019 for:

rendered for the audit of our annual financial statements and the review of our quarterly financial statements;

(ii) services

by our independent registered public accounting firms that are reasonably related to the performance of the audit or review of

our financial statements and that are not reported as audit fees;

(iii) services rendered in connection with tax compliance,

tax advice and tax planning;

and (iv) all other fees for services rendered.

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provided by the independent auditors (including the fees and other terms thereof), subject to the de minimus exceptions for non-audit

services provided by Section 10A(i)(1)(B) of the Exchange Act, which services are subsequently approved by the Board of Directors

prior to the completion of the audit.

None of the fees listed above are for services rendered pursuant to such de minimus exceptions.

services provided by Section 10A(i)(1)(B) of the Exchange Act, which services are subsequently approved by the Board

of Directors prior to the completion of the audit.

None of the fees listed above are for services rendered pursuant to such de

minimus exceptions.

Exhibits, Financial Statement Schedules.

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Form of Placement Agent Warrant (1)

Form of Warrant Exchange Agreement (17)

Employment Agreement, dated October 11, 2012, between LabStyle Israel and Erez Raphael+ (11)

4 unchanged sentences

Amendment to the Amended and Restated 2012 Equity Incentive Plan of the Company+(14)

Second Amendment to the Amended and Restated 2012 Equity Incentive Plan of the Company+(2)

2020 Equity Incentive Plan of the Company+(16)

Amended and Restated Employment Agreement, dated as of July 25, 2017, between Erez Raphael and LabStyle Innovation Ltd.

Employment Agreement, dated as of September 22, 2013, and as amended on August 1, 2014, April 27, 2015 and May 1, 2016, between Dror Bacher and Labstyle Innovation Ltd.

Employment Agreement, effective as of February 1, 2021, between Oded Cohen and Upright

Technologies Ltd.

Form of Subscription Agreement for Series A, Series A-1, Series A-2, Series A-3 and Series A-4 Preferred Stock (1)

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and each of its directors and officers+ (1)

January 2020 Form of Securities Purchase Agreement (18)

January 2020 Form of Registration Rights Agreement (18)

Share Purchase Agreement by and among DarioHealth Corp., LabStyle Innovation Ltd., Upright Technologies Ltd., Vertex C (C.I.) Fund L.P., as holder representative and certain holders of Upright’s outstanding securities, dated January 26, 2021.* ^

List of Subsidiaries of the Company*

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Furnished herewith

Incorporated by reference to the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 17, 2020.

Incorporated by reference to the Company’s Registration Statement on Form S-1, filed with the Securities and Exchange Commission on January 16, 2013.

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Incorporated by reference to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on July 26, 2017.

Incorporated by reference to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on October 14, 2020.

Incorporated by reference to the Company’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on August 11, 2020.

Incorporated by reference to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on January 28, 2021.

Certain identified information in the exhibit has been excluded from the exhibit because it is both (i) not material and (ii) would likely cause competitive harm to DarioHealth Corp.

if publicly disclosed

Form 10-K Summary.

accordance with Section 13 or 15(d) of the Exchange Act, the registrant has duly caused this report to be signed on its behalf

by the undersigned, thereunto duly authorized.

March 16, 2020

accordance with Section 13 or 15(d) of the Exchange Act, the registrant has duly caused this report to be signed on its

behalf by the undersigned, thereunto duly authorized.

DARIOHEALTH CORP.

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Chief Executive Officer and

March 16, 2020

Director (Principal Executive Officer)

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Chief Financial Officer, Secretary and

March 16, 2020

Zvi Ben David

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Chairman of the Board

March 16, 2020

/s/ Yalon Farhi

March 16, 2020

/s/ Allen Kamer

March 16, 2020

/s/ Dennis Matheis

Dennis Matheis

/s/ Hila Karah

March 16, 2020

/s/ Dennis M.

March 16, 2020

/s/ Yadin Shemmer

March 16, 2020

Yadin Shemmer

/s/ Adam Stern

March 16, 2020

/s/ Richard B.

March 16, 2020

DARIOHEALTH CORP.

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- - - - - - - - - - - - - - -

Kost Forer Gabbay & Kasierer

144 Menachem Begin Road.

Tel-Aviv 6492102, Israel

Forer Gabbay & Kasierer

Menachem Begin Road, Building A,

6492102, Israel

+972-3-6232525

+972-3-5622555

www.ey.com/il

REPORT OF INDEPENDENT REGISTERED PUBLIC

ACCOUNTING FIRM

OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and Board of Directors of DarioHealth

Opinion on the Financial Statements

We have audited the

accompanying consolidated balance sheets of DarioHealth Corp.

and its subsidiary (the “Company”) as of December 31,

2019 and 2018, the related consolidated statements of comprehensive loss, changes in stockholders’ equity and cash flows

for each of the two years in the period ended December 31, 2019, and the related notes (collectively referred to as the “consolidated

financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the

financial position of the Company at December 31, 2019 and 2018, and the results of its operations and its cash flows for

each of the two years in the period ended December 31, 2019, in conformity with U.S.

have audited the accompanying consolidated balance sheets of DarioHealth Corp.

and its subsidiary (the “Company”)

as of December 31, 2020 and 2019, the related consolidated statements of comprehensive loss, changes in stockholders’

equity and cash flows for each of the two years in the period ended December 31, 2020, and the related notes

(collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial

statements present fairly, in all material respects, the financial position of the Company at December 31, 2020 and

2019, and the results of its operations and its cash flows for each of the two years in the period ended December 31,

2020, in conformity with U.S.

generally accepted accounting principles.

The Company’s Ability to Continue

as a Going Concern

The accompanying

consolidated financial statements have been prepared assuming that the Company will continue as a going concern.

As discussed in

Note 1c to the financial statements, the Company has suffered recurring losses from operations and has stated that substantial

doubt exists about the Company’s ability to continue as a going concern.

Management’s evaluation of the events and

conditions and management’s plans regarding these matters are also described in Note 1c.

The consolidated financial statements

do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the

amounts and classification of liabilities that may result from the outcome of this uncertainty.

Basis for Opinion

These financial statements

are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s financial

are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s financial

statements based on our audits.

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our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing

an opinion on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such

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that our audits provide a reasonable basis for our opinion.

Forer Gabbay & Kasierer

Menachem Begin Road, Building A,

6492102, Israel

+972-3-6232525

+972-3-5622555

Audit Matters

The critical audit

matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated

or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the

consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments.

The communication

of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and

we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the

accounts or disclosures to which it relates.

Description of the Matter

As discussed in Note 2 to the consolidated financial statements, a significant portion of the Company's revenue is derived from the offering of a membership package which contains multiple goods and services that are accounted for as separate performance obligations.

Such agreements require the Company to allocate the transaction price to the separate performance obligations based on their relative standalone selling price.

The Company does not offer the services included in the membership package on a standalone basis, and estimates the standalone selling price of the performance obligations based on, among others, comparable companies' offerings, customer type and price lists, pricing practices, government backed reimbursement programs, and market standard prices.

Auditing the Company's estimates of the standalone selling prices for the performance obligations included in the membership package was challenging and required complex auditor judgment due to the significant judgment required by management in determining the relevant comparable data used, the extent of required adjustments to the data, the effects of market conditions and customer demographics.

How We Addressed the

Matter in Our Audit

To test management’s

estimate of standalone selling prices our audit procedures included, among others, understanding the methodology applied and testing

the accuracy and completeness of the underlying data used in the Company’s estimate.

We obtained and evaluated management’s

analysis of comparable companies and services by assessing the comparability of the comparable companies, reviewing the list of

the Company’s services and prices and comparing that list with the services and prices of comparable companies.

the government backed reimbursement programs and market standards used in the Company's assessment, including the review of the

aforementioned programs and their relation to the Company’s services.

We also performed inquiry of key personnel and inspected

supporting documentation to evaluate the adjustments made to the comparable data, including effects of market conditions and customer

demographics.

/s/ KOST FORER GABBAY & KASIERER

A Member of Ernst & Young Global

We have served as the Company’s auditor

Tel-Aviv, Israel

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part of the consolidated financial statements.

*) Reclassified

DARIOHEALTH CORP.

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Issued and Outstanding:

21,375 at December 31, 2019

15,823 and 21,375 shares at December 31, 2020 and 2019, respectively

Additional paid-in capital

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Total liabilities and stockholders’

The accompanying notes are an integral

part of the consolidated financial statements.

**) Represents an amount lower than $1.

***) On November 18, 2019, the company affected a 1-for 20

reverse stock split (the “Reverse Stock Split), see note 1f.

The accompanying

notes are an integral part of the consolidated financial statements.

*) Represents an

amount lower than $1.

DARIOHEALTH CORP.

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Operating loss

Revaluation of warrants

Financial expense, net

Total financial expenses, net

Total financial (income) expenses, net

Deemed dividend

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part of the consolidated financial statements.

***) On November 18, 2019, the company

affected the Reverse Stock Split, see note 1f.

The accompanying notes are an integral

part of the consolidated financial statements.

DARIOHEALTH CORP.

AND ITS SUBSIDIARY

STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

STATEMENTS OF CHANGES IN STOCKHOLDERS’

dollars in thousands (except stock

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Payment for executives and directors under stock for salary program

Exercise of options

Issuance of common stock to directors and employees

Issuance of common stock to consultants and service provider

Issuance of Common stock in May 2018 warrant exchange agreement

Issuance of Common Stock in 2018 private placements, net of issuance cost

Issuance of common stock and pre-funded warrants in 2019 public offering, net of issuance costs

Issuance of preferred stock in 2019 private placement, net of issuance cost

Conversion of Preferred Stock to Common Stock

Deemed dividend related to issue of preferred shares

Stock-based compensation

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Payment for executives and directors under stock for salary program

Exercise of options

Issuance of Common Stock to directors and employees

Exercise of agent warrants

Exercise of repriced warrants

Issuance of common stock to consultants and service provider

Issuance of Common Stock and Pre-funded

warrants in 2019 Public Offering, net of issuance costs

Issuance of Preferred Stock in 2019 private placement, net of issuance cost

Deemed dividend related to issue of preferred shares

Issuance of common stock to directors and employees

Deemed dividend related to warrants exchange

Deemed dividend related to issuance of Preferred Stock

Conversion of preferred stock to common stock

Issuance of warrants to service providers

Issuance of common stock, net of issuance cost

Stock-based compensation

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*) Represents an amount lower than $1.

***) On November 18, 2019, the company

affected the Reverse Stock Split, see note 1f.

The accompanying notes are an integral

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Adjustments required to reconcile net loss to net cash used in operating activities:

Stock-based compensation, common stock and stock for salary to directors, employees, consultants and service provider

Stock-based compensation, common stock, and stock instead of cash compensation to directors, employees, consultants, and service providers

Change in operating lease right of use assets

Decrease (increase) in trade receivables

Decrease in other accounts receivable and prepaid expenses and Long-term assets

Decrease (increase) in other accounts receivable and prepaid expenses and long-term assets

Increase in inventories

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Increase in deferred revenues

Change in the fair value of warrants to purchase shares of Common Stock

Change in operating lease liabilities

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Cash flows from investing activities:

Investment in deposit

Investment in deposits

Purchase of property and equipment

Net cash provided by (used in) investing activities

Loan Receivables

Net cash used in investing activities

Cash flows from financing activities:

Proceeds from issuance of Common Stock in 2019 Public Offering and Preferred Stock in 2019 and 2018 private placement, net of issuance cost

Proceeds from issuance of Common Stock, warrants, warrant exercises and Preferred Stock in 2019 private placement, net of issuance costs

Net cash provided by financing activities

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Cash, cash equivalents and short-term restricted bank deposits at end of year

*) Represents an amount lower than $1.

The accompanying notes are an integral

part of the consolidated financial statements.

The accompanying

notes are an integral part of the consolidated financial statements.

DARIOHEALTH CORP.

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dollars in thousands (expect stock and stock data)

NOTE 1:- GENERAL

DarioHealth Corp.

(the “Company”) was incorporated in Delaware and commenced operations

on August 11, 2011.

In July 2016, the Company’s Board of Directors approved the change of the Company’s name to DarioHealth

Corp., which became effective on July 28, 2016.

The Company is a digital health (mHealth) company that is developing and commercializing

a patented and proprietary technology providing consumers with laboratory-testing capabilities using smart phones and other mobile

The Company’s flagship product, Dario™, also referred to as the Dario™ Smart Diabetes Management

Solution, is a mobile, real-time, cloud-based, diabetes management solution based on an innovative, multi-feature software application

combined with a stylish, ‘all-in-one’, pocket-sized, blood glucose monitoring device, which is called the Dario™

The Company’s wholly owned subsidiary, LabStyle Innovation Ltd.

“Subsidiary”), was incorporated and commenced operations on September 14, 2011 in Israel.

Its principal business

activity is to hold the Company’s intellectual property and to perform research and development, manufacturing,

marketing and other business activities.

has a wholly-owned subsidiary, LabStyle Innovations US LLC, a Delaware limited

liability company, which was established in 2014, however it has not started its operations to

date and was dissolved at the end of 2017.

During the year ended December 31, 2019, the Company incurred recurring operating losses and negative

cash flows from operating activities amounting to $17,705 and $15,725, respectively.

The Company will be required to obtain additional

liquidity resources in the near term in order to support the commercialization of its products and maintain its research and development

The Company is addressing its liquidity needs by seeking additional funding from public and/or private sources and

by ramping up its commercial sales.

There are no assurances, however, that the Company will be able to obtain an adequate level

of financial resources that are required for the short and long-term development and commercialization of its product.

These conditions raise substantial

doubt about the Company’s ability to continue as a going concern.

The accompanying consolidated financial statements do not

include any adjustments to reflect the possible future effects on recoverability and classification of assets or the amounts and

classification of liabilities that may result from the outcome of this uncertainty.

In December 2015, the United States Food and Drug Administration granted the

Subsidiary 510(k) clearance for the Dario Blood Glucose Monitoring System, including its components, the Dario Blood Glucose Meter,

Dario Blood Glucose Test Strips, Dario Glucose Control Solutions and the Dario app on the Apple iOS 6.1 platform and higher.

On March 4, 2016, the Company’s Common Stock, par value $0.0001 per

share (the “Common Stock”) and warrants to purchase shares of Common Stock were approved for listing on the Nasdaq

Capital Market under the symbols “DRIO”

(the “Company”)

was incorporated in Delaware and commenced operations on August 11, 2011.

DarioHealth is a leading Global Digital

Therapeutics (DTx) company changing the way people with chronic conditions manage their health.

By delivering personalized

evidence-based interventions that are driven by precision data analytics, high quality software, and personalized coaching, DarioHealth

has developed a novel approach that empowers individuals to adjust their lifestyle in a unique and holistic way.

DarioHealth’s cross-functional team

operates at the intersection of life sciences, behavioral science, and software technology to deliver seamlessly integrated and

highly engaging digital therapeutics interventions.

Our diabetes solutions, its user-centric approach is used by tens of thousands

of customers around the globe.

DarioHealth is rapidly expanding its solutions for additional chronic conditions such as hypertension

and moving into new geographic markets.

DarioHealth’s digital therapeutic

platform has been designed with a ‘user-first’

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

user experience and satisfaction.

User satisfaction is constantly measured and drives, all company processes, including our technology

DarioHealth has one reporting unit and one segment.

The Company’s wholly owned subsidiary, LabStyle Innovation Ltd.

(the “Subsidiary”), was incorporated and commenced operations on September 14, 2011 in Israel.

Its principal business activity is to hold the Company’s intellectual property and to perform research and development, manufacturing, marketing and other business activities.

During the year ended December 31, 2020, the Company incurred

operating losses and negative cash flows from operating activities amounting to $29,903 and $17,736, respectively.

On December 31,

2020, we had $28,590 in available cash and cash equivalent.

On February 1, 2021, the Company entered into securities purchase agreements

with accredited investors relating to an offering of its common stock, resulting in aggregate gross proceeds of approximately $70,000

($64,880 net of issuance expenses).

Management believes that the proceeds from the recent securities purchase agreements, combined

with our cash on hand are sufficient to meet our obligations as they come due for at least a period of twelve months from the date

of the issuance of these unaudited condensed consolidated financial statements.

There are no assurances, however, that the Company

will be able to obtain an adequate level of financial resources that are required for the long-term development and commercialization

of its product offering.

In December 2015, the United States Food and Drug Administration granted the Subsidiary 510(k) clearance for the Dario Blood Glucose Monitoring System, including its components, the Dario Blood Glucose Meter, Dario Blood Glucose Test Strips, Dario Glucose Control Solutions and the Dario app on the Apple iOS 6.1 platform and higher.

On March 4, 2016, the Company’s Common Stock, par value $0.0001 per share (the

“Common Stock”) and warrants to purchase shares of Common Stock were approved for listing on the Nasdaq Capital

Market under the symbols “DRIO”

and “DRIOW,”

respectively.

On November 18, 2019, the Company affected a 1-for-20 reverse stock split

(referred to herein as the Reverse Stock Split) of its Common Stock.

No fractional shares were issued, and no cash or other consideration

were paid as a result of the Reverse Stock Split.

Instead, the Company issued one additional whole share of the post-Reverse Stock

Split Common Stock to any shareholder who otherwise would have received a fractional share as a result of the Reverse Stock Split.

The Company’s listed warrants are

due to expire and cease being listed on the Nasdaq Capital Market on March 8, 2021.

On November 18, 2019, the Company affected a 1-for-20 reverse stock split (referred to herein as the Reverse Stock Split) of its Common Stock.

No fractional shares were issued, and no cash or other consideration were paid as a result of the Reverse Stock Split.

Instead, the Company issued one additional whole share of the post-Reverse Stock Split Common Stock to any shareholder who otherwise would have received a fractional share as a result of the Reverse Stock Split.

The amount of authorized Common Stock was not affected.

All issued and outstanding share and per share amounts included in the

accompanying consolidated financial statements have been adjusted to reflect this Reverse Stock Split for all periods presented.

All issued and outstanding share and per share amounts included in the accompanying consolidated financial statements have been adjusted to reflect this Reverse Stock Split for all periods presented.

The Company has been carefully monitoring the COVID-19 pandemic

and its impact on its business.

In that regard, the Company has continued to sell its products and services and has not experienced

disruptions in its supply chains.

With respect to the Company’s DTx platform, it has observed that some of its business-to-business

prospective partners have been addressing their business needs as a result of the COVID-19 pandemic, which has resulted in a slowdown

of negotiations and discussions with some of these potential partners.

In addition, the Company has also seen an increase in interest

from other business-to-business prospective partners in its DTx platform, as certain parties are seeking tele-health products.

The Company expects the significance of the COVID-19 pandemic, including the extent of its effect on the Company’s financial

and operational results, to be dictated by, among other things, its duration, the success of efforts to contain it and the impact

of actions taken in response.

While the Company has not experienced any material disruptions to its business and operations as

a result of the COVID-19 pandemic, it is possible such disruptions may occur in the future which may impact its financial and operational

results, and which could be material.

DARIOHEALTH CORP.

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The consolidated financial statements

are prepared according to United States generally accepted accounting principles (“U.S.

GAAP”).

Use of estimates:

The preparation of the consolidated

financial statements and related disclosures in conformity with U.S.

GAAP and requires the Company’s management to make judgments,

assumptions and estimates that affect the amounts reported in its consolidated financial statements and accompanying notes.

bases its estimates on historical experience and on various other assumptions it believes to be reasonable under the circumstances,

the results of which form the basis for making judgments about the carrying values of assets and liabilities.

Actual results may

differ from these estimates, and such differences may be material.

Management believes the Company’s

The preparation of the

consolidated financial statements and related disclosures in conformity with U.S.

GAAP requires the Company’s

management to make judgments, assumptions and estimates that affect the amounts reported in its consolidated financial

statements and accompanying notes.

Management bases its estimates on historical experience and on various other assumptions

it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the

carrying values of assets and liabilities.

Actual results may differ from these estimates, and such differences may be

Management believes the Company’s

critical accounting policies and estimates are reasonable based upon information available at the time they are made.

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or “dollars”):

accompanying consolidated financial statements have been prepared in dollars.

The Company’s revenues and

The accompanying

consolidated financial statements have been prepared in dollars.

The Company’s revenues and

financing activities are incurred in U.S.

Although a portion of the Subsidiary’s expenses is denominated in New

Israeli Shekels (“NIS”) (mainly cost of personnel), a substantial portion of its

Although a portion of the Subsidiary’s expenses is denominated in New

Israeli Shekels (“NIS”) (mainly cost of personnel), a substantial portion of its

expenses is denominated in dollars.

Accordingly, the Company’s management believes that the currency of the primary economic

environment in which the Company and its subsidiary operate is the dollar;

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Monetary accounts denominated in currencies

other than the dollar are re-measured into dollars in accordance with Accounting Standard Codification (“ASC”) 830,

“Foreign Currency Matters”.

other than the dollar are re-measured into dollars in accordance with Accounting Standard Codification (“ASC”) 830,

“Foreign Currency Matters”.

All transaction gains and losses of the re-measurement of monetary balance sheet items

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include the accounts of the Company and its subsidiaries.

Intercompany accounts and transactions have been eliminated.

Intercompany accounts and transactions have been eliminated upon consolidation.

Cash and cash equivalents:

The Company considers all highly

liquid investments, which are readily convertible to cash with a maturity of three months or less at the date of acquisition, to

be cash equivalents.

liquid investments, which are readily convertible to cash with a maturity of three months or less at the date of acquisition,

to be cash equivalents.

Short-term restricted bank deposits:

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The short-term restricted bank deposits are denominated

in NIS and USD and bear interest at an average rate of 0.02% as of December 31, 2019 and 2018.

The short-term restricted bank

deposits are presented at their cost, including accrued interest.

As of December 31, 2019, and 2018, the Company had, a short-term

restricted bank deposits which are used as collateral for rent in the amount of $ 128 and $ 119, respectively.

in NIS and USD and bear interest at an average rate of 0.01% and of 0.02% as of December 31, 2020 and 2019, respectively.

The short-term restricted bank deposits are presented at their cost, including accrued interest.

As of December 31, 2020,

and 2019, the Company had, a short-term restricted bank deposit which are used as collateral for rent in the amount of $ 123 and

$ 128, respectively.

DARIOHEALTH CORP.

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SIGNIFICANT ACCOUNTING POLICIES (Cont.)

As of December

31, 2019, and 2018, the Company had, a short-term restricted bank deposits which are used as collateral for credit payments in

amounts of $ 63 and $ 61, respectively.

The following

table provides a reconciliation of the cash balances reported on the balance sheets and the cash, cash equivalents and short-term

restricted bank deposits balances reported in the statements of cash flows:

As of December 31, 2020, and

2019, the Company had, short-term restricted bank deposits which are used as collateral for credit payments in amounts of $ 64

and $ 63, respectively.

The following table provides a

reconciliation of the cash balances reported on the balance sheets and the cash, cash equivalents and short-term restricted bank

deposits balances reported in the statements of cash flows:

Cash, and cash equivalents as reported on the balance sheets

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of cost or net realized value.

Cost is determined on a “moving average” basis.

Inventory write-down is provided to

cover technological obsolescence, excess inventories and discontinued products.

Inventory write-down represents the difference

between the cost of the inventory and net realizable value.

Inventory write-down is charged to the cost of revenues and ramp up

of manufacturing when a new lower cost basis is established.

Subsequent changes in facts and circumstances do not result in the

restoration or increase in that newly established cost basis.

Cost is determined on a first in first out (“FIFO”) basis.

Inventory write-downs are

provided to cover technological obsolescence, excess inventories and discontinued products.

Inventory write-downs represent the

difference between the cost of the inventory and net realizable value.

Inventory write-downs are charged to the cost of revenues

and ramp up of manufacturing when a new lower cost basis is established.

Subsequent changes in facts and circumstances do not result

in the restoration or increase in that newly established cost basis.

Work-in-process is immaterial,

given the typically short manufacturing cycle, and therefore is disclosed in conjunction with raw materials.

Total write-offs during the years

Total write-downs during the years

ended December 31, 2020 and 2019 amounted to $99 and $62, respectively.

Long-term assets:

Long-term lease deposits during

the years ended December 31, 2019 and 2018 include mainly long-term deposits for the Company’s rent and leased vehicles,

respectively.

Long-term assets during the years

ended December 31, 2020 and 2019 include mainly long-term prepayments for the Company’s cartridges manufacturing.

Property and equipment:

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Leasehold improvements

Over the shorter of the lease term or useful economic life

Over the shorter of

the lease term or

useful economic

DARIOHEALTH CORP.

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Impairment of long-lived assets:

Property and equipment are reviewed

for impairment in accordance with ASC 360, “Property, Plant and Equipment,”

whenever events or changes in circumstances

indicate that the carrying amount of an asset may not be recoverable.

Recoverability of assets to be held and used is measured

by a comparison of the carrying amount of an asset to the future undiscounted cash flows expected to be generated by the assets.

If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount

of the assets exceeds the fair value of the assets.

As of December 31, 2019 and 2018, no impairment was recorded.

The Company’s long lived

assets are reviewed for impairment in accordance with ASC 360, “Property, Plant and Equipment,”

whenever events or

changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

Recoverability of assets to be held

and used is measured by a comparison of the carrying amount of an asset to the future undiscounted cash flows expected to be generated

by the assets.

If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which

the carrying amount of the assets exceeds the fair value of the assets.

As of December 31, 2020, and 2019, no impairment was

Revenue recognition

In May 2014, the Financial Accounting

Standards Board (the “FASB”) issued ASC 606.

The standard replaced the revenue recognition guidance in U.S.

accepted accounting principles under ASC 605, and was required to be applied retrospectively to each prior period presented or

applied using a modified retrospective method with the cumulative effect recognized in the beginning retained earnings during the

period of initial application.

Subsequently, the FASB issued several additional Accounting Standard Updates (each an “ASU”)

related to ASU No.

2014-09, collectively referred to as the “new revenue standards,”

which became effective for the

Company beginning January 1, 2019.

The Company adopted the standard using the modified retrospective method.

The adoption of ASC

606 did not have a significant impact on the Company’s Consolidated Financial Statements.

See Note 5 for further information.

The Company recognizes revenue

when (or as) it satisfies performance obligations by transferring promised products or services to its customers in an amount that

reflects the consideration the Company expects to receive.

The Company recognizes

revenue in accordance with ASC 606, revenue from contracts with customers, when (or as) it satisfies performance obligations

by transferring promised products or services to its customers in an amount that reflects the consideration the Company

expects to receive.

The Company applies the following five steps:

(1) identify the contract

with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the

transaction price to the performance obligations in the contract, and (5) recognize revenue when a performance obligation is satisfied.

(1) identify the contract with a customer,

(2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate

the transaction price to the performance obligations in the contract, and (5) recognize revenue when a performance

obligation is satisfied.

The Company considers customer

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the Company expects to receive.

As the Company’s standard payment terms are less than one year, the contracts have no significant

financing component.

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Revenue from tangible products is recognized when control of the product is transferred to the customer

(i.e., when the Company’s performance obligation is satisfied), which typically occurs at shipment.

The revenues from fixed-price

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Cost of revenues:

Cost of revenues is comprised of

the cost of production, data center costs, shipping and handling inventory, personnel and related overhead costs, depreciation

Cost of revenues is comprised

of the cost of production, data center costs, shipping and handling inventory, personnel and related overhead costs, depreciation

of production line and related equipment costs, amortization of deferred costs and inventory write-downs.

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and are not insured in other jurisdictions.

Generally, cash and cash equivalents and short-term

restricted bank deposits may be redeemed and therefore a minimal credit risk exists with respect to these deposits and investments.

Generally, cash and cash equivalents and short-term restricted bank deposits may be

redeemed and therefore a minimal credit risk exists with respect to these deposits and investments.

DARIOHEALTH CORP.

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SIGNIFICANT ACCOUNTING POLICIES (Cont.)

The Company’s trade receivables

are derived mainly from sales to distributers and to end-users world-wide.

The Company performs ongoing credit evaluations of

its customers.

The Company performs ongoing credit evaluations of its

An allowance for doubtful accounts is determined with respect to those specific amounts that the Company has determined

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The Company accounts for income

taxes in accordance with ASC 740, “Income Taxes” (“ASC 740”).

taxes in accordance with ASC 740, “Income Taxes”

(“ASC 740”).

This guidance prescribes the use of the liability

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are more likely than not to be realized.

As of December 31, 2019, and 2018 a full valuation allowance was provided by the Company.

As of December 31, 2020, and 2019 a full valuation allowance was provided by the

ASC 740 contains a two-step approach

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realized upon ultimate settlement.

As of December 31, 2019, and 2018, no liability for unrecognized tax benefits was recorded as

a result of the implementation of ASC 740.

As of December 31, 2020, and 2019, no liability for unrecognized tax benefits was recorded

as a result of the implementation of ASC 740.

Research and development costs:

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The Company accounts for stock-based

compensation in accordance with ASC 718, “Compensation - Stock Compensation” (“ASC 718”), which requires

compensation in accordance with ASC 718, “Compensation - Stock Compensation”

(“ASC 718”), which requires

companies to estimate the fair value of equity-based payment awards on the date of grant using an option-pricing model.

of the portion of the award that is ultimately expected to vest is recognized as an expense over the requisite service periods

in the Company’s consolidated statement of comprehensive loss.

The Company recognizes compensation

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was calculated based upon historical volatility of the Company.

The expected option term represents the period that the Company’s

stock options are expected to be outstanding and is determined based on the simplified method until sufficient historical exercise

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Fair value of financial instruments:

The Company applies ASC 820, “Fair

Value Measurements and Disclosures” (“ASC 820”).

The Company applies ASC 820, “Fair

Value Measurements and Disclosures”

(“ASC 820”).

Under this standard, fair value is defined as the price that

would be received to sell an asset or paid to transfer a liability (i.e., the “exit price”) in an orderly transaction

between market participants at the measurement date.

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on market data obtained from sources independent from the Company.

Unobservable inputs are inputs that reflect the Company’s

assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information

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Valuations based on quoted prices in active markets for identical assets that the Company has the ability to access.

adjustments and block discounts are not applied to Level 1 instruments.

Since valuations are based on quoted prices that are readily

and regularly available in an active market, valuation of these products does not entail a significant degree of judgment.

Valuations based on one or more quoted prices in markets that are not active or for which all significant inputs are observable,

either directly or indirectly.

Valuation adjustments and block discounts are not applied to Level 1 instruments.

Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these products does not entail a significant degree of judgment.

Valuations based on one or more quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly.

Valuations based on inputs that are unobservable and significant to the overall fair value measurement.

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The Company has no financial assets or liabilities

measured using Level 1, Level 2, or Level 3 inputs.

measured using Level 2, or Level 3 inputs.

Basic and diluted net loss per share:

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based on the weighted average number of shares of Common Stock outstanding during each year, plus dilutive potential Common Stock

considered outstanding during the year, in accordance with ASC 260, “Earnings Per Share”.

The Company follows the two-class

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to dividends declared or accumulated and participation rights in undistributed earnings.

The two-class method requires income available

to common shareholders for the period to be allocated between common shares and participating securities based upon their respective

rights to receive dividends as if all income for the period had been distributed.

The Company’s convertible preferred shares

contractually entitle the holders of such shares to participate in dividends.

The two-class method requires income

available to common shareholders for the period to be allocated between common shares and participating securities based upon

their respective rights to receive dividends as if all income for the period had been distributed.

The Company’s convertible

preferred shares contractually entitle the holders of such shares to participate in dividends.

The total number of shares related

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Since inception date, all Ltd.

employees who are entitled to receive severance pay in accordance with the applicable law in Israel, have been included under

section 14 of the Israeli Severance Compensation Law (“Section 14”).

Under this section, they are entitled only to

monthly deposits, at a rate of 8.33% of their monthly salary, made by the employer on their behalf with insurance companies.

in accordance with Section 14 release Ltd.

employees who are entitled to receive severance pay in accordance with the applicable law in Israel, have been included under section

14 of the Israeli Severance Compensation Law (“Section 14”).

Under this section, they are entitled only to monthly

deposits, at a rate of 8.33% of their monthly salary, made by the employer on their behalf with insurance companies.

accordance with Section 14 release Ltd.

from any future severance payments in respect of those employees.

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are not recorded as an asset in the Company’s balance sheet.

Severance pay expense for the

year ended December 31, 2019 and 2018 amounted to $346 and $259, respectively.

Severance pay expense for the year

ended December 31, 2020 and 2019 amounted to $387 and $346, respectively.

Legal and other contingencies:

The Company accounts for its contingent liabilities in accordance

with ASC 450 “Contingencies”.

A provision is recorded when it is both probable that a liability has been incurred and

the amount of the loss can be reasonably estimated.

With respect to legal matters, provisions are reviewed and adjusted to reflect

the impact of negotiations, estimated settlements, legal rulings, advice of legal counsel and other information and events pertaining

to a particular matter.

As of December 31, 2018 and 2019, the Company is not a party to any litigation that could have a material

adverse effect on the Company’s business, financial position, results of operations or cash flows.

Legal costs incurred in

connection with loss contingencies are expensed as incurred.

Recently adopted accounting pronouncements:

In May 2014, the Financial Accounting

Standards Board (the “FASB”) issued ASC 606.

The standard replaced the revenue recognition guidance in U.S.

accepted accounting principles under ASC 605, and was required to be applied retrospectively to each prior period presented or

applied using a modified retrospective method with the cumulative effect recognized in the beginning retained earnings during the

period of initial application.

Subsequently, the FASB issued several additional Accounting Standard Updates (each an “ASU”)

related to ASU No.

2014-09, collectively referred to as the “new revenue standards”, which became effective for the

Company beginning January 1, 2019.

The Company adopted the standard using the modified retrospective method.

The adoption of ASC

606 did not have a significant impact on the Company’s Consolidated Financial Statements.

In February 2016, the FASB issued

2016-02, “Leases”

(Topic 842) (“ASC 842”).

The standard requires lessees to recognize

almost all leases on the balance sheet as a right-of-use (“ROU”) asset and a lease liability and requires leases to

be classified as either an operating or a finance type lease.

The standard excludes leases of intangible assets or inventory.

The standard became effective for the Company beginning January 1, 2019.

The Company adopted ASC 842 using the modified retrospective

approach, by applying the new standard to all leases existing at the date of initial application.

Results and disclosure requirements

for reporting periods beginning after January 1, 2019 are presented under ASC 842, while prior period amounts have not been adjusted

and continue to be reported in accordance with our historical accounting under ASC 840.

The Company elected the package of practical

expedients permitted under ASC 842, which also allowed the Company to carry forward historical lease classifications.

also elected the practical expedient related to treating lease and non-lease components as a single lease component for all equipment

leases as well as electing a policy exclusion permitting leases with an original lease term of less than one year to be excluded

from the ROU assets and lease liabilities.

As a result of the adoption of

ASC 842 on January 1, 2019, the Company recorded both operating lease ROU assets and operating lease liabilities of $847.

did not impact the Company's beginning retained earnings, or prior year consolidated statements of comprehensive loss and statements

of cash flows.

See Note 6 for further information on leases.

Under ASC 842, the Company determines

if an arrangement is a lease at inception.

ROU assets and liabilities are recognized at the commencement date based on the present

value of remaining lease payments over the lease term.

For this purpose, the Company considers only payments that are fixed and

determinable at the time of commencement, however, certain lease agreements contain variable payments, which are expensed as incurred

and not included in the operating lease assets and liabilities.

These amounts include payments affected by the Consumer Price

As most of the Company's leases do not provide an implicit rate, the Company, with the assistance of a third-party valuation

firm, determined the incremental borrowing rate in determining the present value of lease payments.

The ROU assets also include

any lease payments made prior to commencement and are recorded net of any lease incentives received.

The Company lease terms may

include options to extend or terminate the lease when it is reasonably certain that the Company will exercise such options.

Operating leases are included

in operating lease ROU assets, current and non-current operating lease liabilities, on the Company's consolidated balance sheets.

The Company accounts for its contingent

liabilities in accordance with ASC 450 “Contingencies”.

A provision is recorded when it is both probable that a liability

has been incurred and the amount of the loss can be reasonably estimated.

With respect to legal matters, provisions are reviewed

and adjusted to reflect the impact of negotiations, estimated settlements, legal rulings, advice of legal counsel and other information

and events pertaining to a particular matter.

As of December 31, 2019 and 2020, the Company is not a party to any litigation

that could have a material adverse effect on the Company’s business, financial position, results of operations or cash flows.

Legal costs incurred in connection with loss contingencies are expensed as incurred.

Lessee accounting:

On January 1, 2019, the Company

adopted ASU No.

2016-02, Leases (ASC 842).

The Company determines if an arrangement is a lease and the classification of that

lease at inception based on:

(1) whether the contract involves the use of a distinct identified asset, (2) whether the Company

obtains the right to substantially all the economic benefits from the use of the asset throughout the period, and (3) whether

the Company has a right to direct the use of the asset.

The Company elected to not recognize a lease liability or right-of-use

(“ROU”) asset for leases with a term of twelve months or less.

The Company also elected the practical expedient to

not separate lease and non-lease components for its leases.

ROU assets represent the right

to use an underlying asset for the lease term and lease liabilities represent the obligation to make minimum lease payments arising

from the lease.

ROU assets are initially measured at amounts, which represents the discounted present value of the lease payments

over the lease, plus any initial direct costs incurred.

The ROU assets are reviewed for impairment.

The lease liability is initially

measured at lease commencement date based on the discounted present value of minimum lease payments over the lease term.

rate within the operating leases is generally not determinable;

therefore, the Company uses the Incremental Borrowing Rate (“IBR”)

based on the information available at commencement date in determining the present value of lease payments.

The Company’s

IBR is estimated to approximate the interest rate on similar terms and payments and in economic environments where the leased

asset is located.

Certain leases include options

to extend or terminate the lease.

An option to extend the lease is considered in connection with determining the ROU asset and

lease liability when it is reasonably certain that the Company will exercise that option.

An option to terminate is considered

unless it is reasonably certain that the Company will not exercise the option.

DARIOHEALTH CORP.

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SIGNIFICANT ACCOUNTING POLICIES (Cont.)

In June 2018, the FASB issued

ASU 2018-07, “Compensation—Stock Compensation (Topic 718):

Improvements to Nonemployee Share-Based Payment Accounting.”

This ASU supersedes ASC 505-50, “Equity—Equity Based Payments to Non-Employees,”

and expands the scope of ASC

718, “Compensation—Stock Compensation,”

to include all share-based payment arrangements related to the acquisition

of goods and services from both nonemployees and employees.

The standard became effective for the Company beginning January 1,

The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements.

In November 2016, the FASB issued

2016-18, “Statement of Cash Flows (Topic 230):

Restricted Cash,”

which requires companies to include amounts

generally described as restricted cash and restricted cash equivalents in cash and cash equivalents when reconciling beginning-of-period

and end-of-period total amounts shown on the statement of cash flows.

This guidance is effective from the first quarter of 2019.

Recently issued accounting pronouncements,

not yet adopted:

In August 2018, the FASB issued

2018-13, “Fair Value Measurement (Topic 820) - Disclosure Framework - Changes to the Disclosure Requirements for

Fair Value Measurement,”

(“ASU No.

2018-13”) which is designed to improve the effectiveness of disclosures by

removing, modifying and adding disclosures related to fair value measurements.

2018-13 is effective for fiscal years beginning

after December 15, 2019, including interim periods within those fiscal years;

the ASU allows for early adoption in any interim

period after issuance of the update.

The adoption of this ASU is not expected to have a significant impact on the Company’s

consolidated financial statements.

September 2016, the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326):

Measurement of Credit Losses

on Financial Instruments”

Recently issued accounting pronouncements, not yet adopted:

In September 2016, the Financial

Accounting Standards Board (the “FASB”) issued ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments”

(“ASU 2016-13”).

ASU 2016-13 changes the impairment model for most financial

assets and certain other instruments.

For trade and other receivables, held-to-maturity debt securities, loans, and other instruments,

entities will be required to use a new forward-looking “expected loss”

model that generally will result in the earlier

recognition of allowances for losses.

ASU 2016-13 changes the impairment model

for most financial assets and certain other instruments.

For trade and other receivables, held-to-maturity debt securities, loans,

and other instruments, entities will be required to use a new forward-looking “expected loss”

model that generally

will result in the earlier recognition of allowances for losses.

The guidance also requires increased disclosures.

For the Company, the amendments in the

update were originally effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal

For the Company,

the amendments in the update were originally effective for fiscal years beginning after December 15, 2019, including interim

periods within those fiscal years.

In November 2019, the FASB issued ASU No.

2019-10 which delayed the effective date of ASU 2016-13 for smaller reporting

companies (as defined by the U.S.

Securities and Exchange Commission) and other non-SEC reporting entities to fiscal years beginning

after December 15, 2022, including interim periods within those fiscal periods.

2019-10 which delayed the effective

date of ASU 2016-13 for smaller reporting companies (as defined by the U.S.

Securities and Exchange Commission) and other non-SEC

reporting entities to fiscal years beginning after December 15, 2022, including interim periods within those fiscal periods.

Early adoption is permitted.

The Company is currently

assessing the impact the guidance will have on its consolidated financial statements.

The Company is currently assessing the impact the guidance will have on its consolidated financial

OTHER ACCOUNTS RECEIVABLE AND PREPAID EXPENSES

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Government authorities

*) Reclassified

Loan receivables (*)

*) see note 14.

DARIOHEALTH CORP.

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Finished products

On January 1, 2019, the

Company adopted ASC 606 using the modified retrospective method and applied the standard to those contracts which were not completed

as of January 1, 2019.

Results for reporting periods beginning after January 1, 2019 are presented under ASC 606, while prior

period amounts are not adjusted and continue to be reported in accordance with the historic accounting under ASC 605.

The following tables represent

the Company total revenues for the year ended December 31, 2020 and 2019 by performance obligation type as a result of implementing

ASC 606 (prior period amounts have not been adjusted under the modified retrospective method):

Consolidated revenues by category

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Because all performance obligations

in the Company’s contracts with customers relate to contracts with a duration of less than one year, the Company has elected

to apply the optional exemption and is not required to disclose the aggregate amount of the transaction price allocated to performance

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dollars in thousands

At the beginning of the

Company’s fiscal 2019, the Company adopted ASC 842.

The adoption of ASC 842 did not have a significant impact on the

Company’s consolidated financial statements.

The Company has entered into

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The Company's

lease agreements do not contain any material residual value guarantees or material restrictive covenants.

lease agreements do not contain any material residual value guarantees or material restrictive covenants, the Company elected the practical expedient for short term

The components of lease costs,

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dollars in thousands

NOTE 7:- PROPERTY AND EQUIPMENT, NET

Composition of assets, grouped by major classification,

is as follows:

PROPERTY AND EQUIPMENT, NET

Composition of assets, grouped

by major classification, is as follows:

Computers and peripheral equipment

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Property and equipment, net

Depreciation expenses for the year ended December

31, 2019 and 2018 amounted to $183 and $207, respectively.

NOTE 8:- OTHER ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Depreciation expenses for the

year ended December 31, 2020 and 2019 amounted to $190 and $183, respectively.

OTHER ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Employees and payroll accruals

Accrued expenses

NOTE 9:- COMMITMENTS AND CONTINGENT LIABILITIES

COMMITMENTS AND CONTINGENT LIABILITIES

As of December 31, 2020, Ltd.

had established guarantees

to cover rent agreements and credit cards commitments that amounted to $191.

had established

guarantees to cover rent agreements and credit cards commitments that amounted to $187.

LONG-LIVED ASSETS

As of December 31, 2020, substantially

all of the Company long live assets are located in Israel.

DARIOHEALTH CORP.

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dollars in thousands

NOTE 10:- TAXES ON INCOME

TAXES ON INCOME

The Company and Ltd.

are separately taxed

under the domestic tax laws of the state of incorporation of each entity

On December 22, 2017, the U.S.

Tax Cuts and Jobs Act of 2017 (the “TCJA”) was signed into law.

The TCJA makes broad and complex changes to the Internal

Revenue Code of 1986 (the “Code”) that impact the Company's provision for income taxes.

The changes include, but are

not limited to:

Decreasing the corporate income tax rate from 35% to 21% effective

for tax years beginning after December 31, 2017 (“Rate Reduction”);

under the domestic tax laws of the country of incorporation of each entity.

On December 22, 2017, the

Tax Cuts and Jobs Act of 2017 (the “TCJA”) was signed into law.

The TCJA makes broad and complex changes to the

Internal Revenue Code of 1986 (the “Code”) that may impact the Company's provision for income taxes.

The changes include,

but are not limited to:

Decreasing the corporate income tax rate from 35% to 21% effective for tax years beginning after December 31, 2017 (“Rate Reduction”);

The Deemed Repatriation Transition Tax;

Taxation of Global Intangible Low-Taxed Income (“GILTI”) earned by foreign subsidiaries beginning after December 31, 2017.

The GILTI tax imposes a tax on foreign income in excess of a deemed return on tangible assets of foreign corporations

Accounting for the TCJA

In March 2018, the FASB issued

ASU 2018-05, "Income Taxes Topic (740):

Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No.

("ASU 2018-05"), to address the application of GAAP in situations when a registrant does not have the necessary information

available, prepared or analyzed (including computations), in reasonable detail, to complete the accounting for certain income tax

effects of the TCJA.

The Company completed the accounting

treatment related to the tax effects of the TCJA.

The Company recognizes its accounting for changes in

federal rate and deferred tax impact for the rate change to be complete.

The Company's analysis for the Deemed Repatriation Transition

Tax has been filed with its December 31, 2017 tax return and the Company considered its accounting relating to the TCJA to be

complete as of such date and did not make any measurement-period adjustments related to it.

The Company accounted for the tax impact related to other

areas of the TCJA and believes its analysis to be completed and consistent with the guidance in ASU 2018-05.

In particular, the

Company concluded that for 2019, it should not be subject to any tax on account of GILTI or base erosion and anti-abuse payments

corporations to foreign related parties.

The Company recognizes that the

Internal Revenue Service, the FASB and the Securities and Exchange Commission are continuing to publish and finalize ongoing guidance

with respect to the TCJA which may modify accounting interpretation for the TCJA, the Company will account for these impacts in

the period in which any changes are enacted.

Taxation of Global Intangible Low-Taxed

Income (“GILTI”) earned by foreign subsidiaries beginning after December 31, 2017.

The GILTI tax imposes

a tax on foreign income in excess of a deemed return on tangible assets of foreign corporations.

Net Operating Losses –

TCJA, taxable losses generated in the U.S.

were able to be carried back for two years or carried forward for 20 years to offset

prior/future year taxable income.

TCJA changes the rule, and allows losses generated after 2017 (i.e.

starting in 2018) to be carried

forward indefinitely, but only to offset 80% of future year income.

Carryback losses are no longer allowed.

In response to the COVID-19 pandemic, the U.S.

passed the Coronavirus

Aid, Relief, and Economic Security Act (CARES) in March 2020.

The CARES Act changed the treatment of net operating losses (“NOLS”)

generated in tax years 2018, 2019 and 2020.

Losses generated in these years are able to be carried backward for 5 years, and carried

forward indefinitely, without the 80% limitation.

Tax rates applicable to Ltd.:

Corporate tax rate in Israel

in 2018 and 2019 was 23%.

Corporate tax rate in Israel in

2019 and 2020 was 23%.

Net operating loss carryforward:

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dollars in thousands

NOTE 10:- TAXES ON INCOME (Cont.)

TAXES ON INCOME (Cont.)

As of December 31, 2020, the

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2011-2017 and can be carried forward and offset against taxable income and that expires during the years 2031 to 2037.

loss carryforward may be subject to substantial annual limitation due to the “change in ownership” provisions

of the Code and similar state provisions.

The annual limitations may result in the expiration of losses before utilization.

Under Sections

382 and 383 of the IRC, utilization of the U.S.

loss carryforward may be subject to substantial annual limitation due to the “change

in ownership”

provisions of the Code and similar state provisions.

The annual limitations may result in the expiration of

losses before utilization.

Since the Company has not yet utilized the losses to offset income, no study has been performed to assess

the potential limitations, but when relevant, a study will be performed.

The remaining $9,103 of NOLs were

generated in years 2018 and 2019, and are subject to the TCJA, which modified the rules regarding utilization of net operating

losses (“NOL”).

NOLs generated after December 31 2017 can only be used to offset 80% of taxable income with an

indefinite carryforward period for unused carryforwards (i.e., they should not expire).

Utilization of the federal and state net

operating losses and credits may be subject to a substantial annual limitation due to an additional ownership change.

limitation may result in the expiration of net operating losses and credits before utilization and in the event the Company's has

a change of ownership, utilization of the carryforwards could be restricted.

generated in years 2018-2020, and are subject to the TCJA, which modified the rules regarding utilization of NOLs.

NOLs generated

after December 31, 2017 can only be used to offset 80% of taxable income with an indefinite carryforward period for unused

carryforwards (i.e., they should not expire).

Utilization of the federal and state net operating losses and credits may be subject

to a substantial annual limitation due to an additional ownership change.

The annual limitation may result in the expiration of

net operating losses and credits before utilization and in the event the Company's has a change of ownership, utilization of the

carryforwards could be restricted.

As discussed above, under the CARES Act, the losses from 2018-2020

are excluded from the limitation, and can be carried forward indefinitely to offset 100% of future net income.

Deferred income taxes:

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the amounts used for income tax purposes.

Significant components of the Company’s deferred tax assets are as follows:

Deferred tax assets:

Net operating loss and capital losses carry

Net operating loss and capital losses carry forward

Temporary differences

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Net deferred tax asset

The deferred tax balances included

in the consolidated financial statements as of December 31, 2019 are calculated according to the tax rates that were in effect

as of the reporting date and do take into account the potential effects of the reduction in the tax rate.

The net change in the total

valuation allowance for the year ended December 31, 2019 was an increase of $6,682 and is mainly relates to increase in

deferred taxes on net operating loss for which a full valuation allowance was recorded.

In assessing the realizability of

deferred tax assets, management considers whether it is more likely than not that some or all of the deferred tax assets will

not be realized.

The ultimate realization of deferred tax assets depends on the generation of future taxable income during

the periods in which those temporary differences and tax loss carryforward are deductible.

deferred tax balances included in the consolidated financial statements as of December 31, 2020 are calculated according

to the tax rates that were in effect as of the reporting date and do not take into account the potential effects of the reduction

in the tax rate.

net change in the total valuation allowance for the year ended December 31, 2020 was an increase of $6,668 and is mainly

relates to increase in deferred taxes on net operating loss for which a full valuation allowance was recorded.

In assessing the

realizability of deferred tax assets, management considers whether it is more likely than not that some or all of the deferred

tax assets will not be realized.

The ultimate realization of deferred tax assets depends on the generation of future taxable income

during the periods in which those temporary differences and tax loss carryforward are deductible.

Management considers the projected

taxable income and tax-planning strategies in making this assessment.

In consideration of the Company’s accumulated

losses and the uncertainty of its ability to utilize its deferred tax assets in the future, management currently believes

that it is more likely than not that the Company will not realize its deferred tax assets and accordingly recorded a

valuation allowance to fully offset all the deferred tax assets.

In consideration of the Company’s accumulated losses

and the uncertainty of its ability to utilize its deferred tax assets in the future, management currently believes that it is

more likely than not that the Company will not realize its deferred tax assets and accordingly recorded a valuation allowance

to fully offset all the deferred tax assets.

DARIOHEALTH CORP.

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dollars in thousands (expect stock and stock data)

NOTE 10:- TAXES ON INCOME (Cont.)

TAXES ON INCOME (Cont.)

Loss before taxes on income consists of the following:

Year ended December 31,

The main reconciling item between the statutory tax rate of the Company and the effective tax rate is the recognition of valuation

allowance in respect of deferred taxes relating to accumulated net operating losses carried forward due to the uncertainty of the

realization of such deferred taxes.

NOTE 11:- STOCKHOLDERS’ EQUITY

The holders of Common Stock have the right to one vote for each share of Common Stock held of record

by such holder with respect to all matters on which holders of Common Stock are entitled to vote, to receive dividends as they

may be declared in the discretion of the Company’s Board of Directors and to participate in the balance of the Company’s

assets remaining after liquidation, dissolution or winding up, ratably in proportion to the number of shares of Common Stock held

by them after giving effect to any rights of holders of preferred stock.

Except for contractual rights of certain investors, the

holders of Common Stock have no pre-emptive or similar rights and are not subject to redemption rights and carry no subscription

or conversion rights.

On April 3, 2015, the Company’s Board of Directors approved stock for salary program pursuant

to which the Company will issue compensation shares of restricted Common Stock (“Compensation Shares”) to directors,

officers and employees of the Company as consideration for a reduction in or waiver of cash salary, bonus or fees owed to such

The waiver of cash salary will be done upon the average closing price of the Common Stock for the 30 trading days

prior to the date the Compensation Shares are granted.

During the year ended December 31, 2019 and 2018, the Company issued 104,363 and 38,285, Compensation Shares, respectively, to certain members of the Board of Directors, officers and employees as consideration for a waiver of cash owed to such individuals amounting to $1,011 and $1,055, respectively.

During the year ended December 31, 2018, the Company’s Compensation Committee of the

Board of Directors approved the grant of an aggregate of 18,500 shares of Common Stock in lieu of $504 owed to service

providers and the grant of an option to purchase 10,093 shares of Common Stock in lieu of $298 owed to a service provider of

Of such share of Common Stock issued, 4,225 shares and the options were issued under the 2012 Plan (refer to note 11m).

On February 28, 2018 and March 6, 2018, the Company closed two concurrent private placements

offerings consisting of 113,110 shares of the Company’s Common Stock at $28.00 per share, 61,704 shares of the

Company’s Series C Convertible Preferred Stock (the “Series C Preferred Stock”), for aggregate gross

proceeds of approximately $6,623 ($6,034 net of issuance expenses) at $56.00 per share, and warrants to purchase up to

189,218 shares of Common Stock.

The shares of Series C Preferred Stock were convertible into an aggregate of 123,408 shares

of Common Stock based on a conversion price of $28.00 per share.

Such conversion price was not subject to any future

price-based anti-dilution adjustments except for standard anti-dilution protection.

The shares of Series C Preferred Stock

were not redeemable nor contingently redeemable.

The holders of the Series C Preferred Stock were not be entitled to convert

such preferred stock into shares of the Company’s Common Stock until the Company obtained stockholder approval for such

issuance and upon obtaining such stockholder approval, automatically converted into shares of Common Stock.

The holders of

the Series C Preferred Stock did not possess any voting rights, but the Series C Preferred Stock did carry a liquidation

preference for each holder equal to the investment made by such holder in the Offering.

In addition, the holders of Series C

Preferred Stock were eligible to participate in dividends and other distributions by the Company on an as converted basis.

The warrants issued in the concurrent private placements are exercisable after the six-month anniversary of each respective

closing and will expire on the 18-month anniversary of their issuance.

Following the receipt of stockholder approval in May

2018, the shares of Series C Preferred Stock were converted into shares of Common Stock.

In conjunction with these offerings

the Company issued 1,613 shares of Common Stock to certain finders.

The shares were issued under the 2012 Plan (refer to note 11m).

The main reconciling item between the statutory tax rate of the Company and the effective tax rate is the recognition of valuation allowance in respect of deferred taxes relating to accumulated net operating losses carried forward due to the uncertainty of the realization of such deferred taxes.

STOCKHOLDERS’

The holders of Common Stock have the right to one vote for each share of Common Stock held of record by such holder with respect to all matters on which holders of Common Stock are entitled to vote, to receive dividends as they may be declared at the discretion of the Company’s Board of Directors and to participate in the balance of the Company’s assets remaining after liquidation, dissolution or winding up, ratably in proportion to the number of shares of Common Stock held by them after giving effect to any rights of holders of preferred stock.

Except for contractual rights of certain investors, the holders of Common Stock have no pre-emptive or similar rights and are not subject to redemption rights and carry no subscription or conversion rights.

On April 3, 2015, the Company’s Board of Directors approved stock for salary program pursuant to which the Company will issue compensation shares of restricted Common Stock (“Compensation Shares”) to directors, officers, and employees of the Company as consideration for a reduction in or waiver of cash salary, bonus or fees owed to such individuals.

The waiver of cash salary will be done upon the average closing price of the Common Stock for the 30 trading days prior to the date the Compensation Shares are granted or as otherwise defined by the Compensation Committee of the Board of Directors.

During the year ended December 31, 2019, the Company issued 104,363 Compensation Shares to

certain members of the Board of Directors, officers, and employees as consideration for a waiver of cash owed to such individuals

amounting to $1,011.

On April 29, 2019, the Company’s

Compensation Committee of the Board of Directors approved the grant of an aggregate of 51,613 shares to directors, officers and

employees of the Company.

In September 2019, the Company’s

Compensation Committee of the Board of Directors approved the grant of an aggregate of 5,378 shares of Common Stock to service

providers of which 4,753 shares were issued during the third and fourth quarters of 2019 and the remainder of 625 shares were issued

during the first quarter of 2020.

During the year ended December 31,

2020, the Company issued 164,479 Compensation Shares to certain members of the Board of Directors, officers, and employees as consideration

for a waiver of cash owed to such individuals amounting to $1,001.

In addition, the Company granted 15,034 shares to directors

upon departure from the Board of Directors.

DARIOHEALTH CORP.

2 unchanged sentences

dollars in thousands (expect stock and stock data)

NOTE 11:- STOCKHOLDERS’ EQUITY (Cont.)

In May 2018, the Company entered into exchange agreements (each, an “Exchange Agreement”)

with certain Company warrant holders who were granted warrants to purchase shares of Common Stock in March 2016 and January 2017.

Pursuant to the terms of the Exchange Agreements, the warrant holders agreed to surrender their warrants to purchase an aggregate

of 51,018 shares of Common Stock for cancellation and received, as consideration for such cancellation, an aggregate of 31,838

restricted shares of Common Stock creating a benefit to the warrant holders.

As such the Company recorded a deemed dividend in

the amount of $493.

In June and July 2018, the Company’s Compensation Committee of the Board of Directors approved

the grant of an aggregate of 57,642 shares to directors, officers, employees and consultants of the Company, and the grant of 12,200

and 1,050 options to employees and consultants of the Company, respectively, at an exercise price of $34.58 per share.

options vest over a period of three years commencing on the respective grant dates.

All of the aforementioned options have a six-year

All shares and options were issued under the 2012 Plan (refer to note 11m).

On September 13, 2018 and September 26, 2018, the Company closed concurrent private placements

offerings consisting of 213,340 shares of the Company’s Common Stock at $18.00 per share, 94,513 shares of the Company’s

Series D Convertible Preferred Stock (the “Series D Preferred Stock”) at $72.00 per share, and warrants to purchase

up to 473,131 shares of Common Stock, for aggregate gross proceeds of approximately $10,645 ($9,686 net of issuance expenses).

The shares of Series D Preferred Stock were convertible into an aggregate of 378,052 shares of Common Stock based on a conversion

price of $18.00 per share.

Such conversion price was not subject to any future price-based anti-dilution adjustments except for

standard anti-dilution protection.

The shares of Series D Preferred Stock were not redeemable nor contingently redeemable.

holders of the Series D Preferred Stock were not be entitled to convert such preferred stock into shares of the Company’s

Common Stock until the Company obtained stockholder approval for such issuance and upon obtaining such stockholder approval, automatically

converted into shares of Common Stock.

The holders of the Series D Preferred Stock did not possess any voting rights, but the Series

D Preferred Stock did carry a liquidation preference for each holder equal to the investment made by such holder in the Offering.

In addition, the holders of Series D Preferred Stock were eligible to participate in dividends and other distributions by the Company

on an as converted basis.

The warrants issued in the concurrent private placements are exercisable after the six-month anniversary

of each respective closing and will expire on the 36-month anniversary of their issuance.

Following receipt of stockholder approval

in November 2018, the shares of Series D Preferred Stock were converted into shares of Common Stock.

In conjunction with these offerings

the Company issued 4,167 shares of Common Stock to certain finders.

On December 13, 2018, and December 27, 2018, the Company closed a private placement offering consisting

of 152,504 shares of the Company’s Common Stock at $20.00 per share and warrants to purchase up to 152,504 shares of Common

Stock, for aggregate gross proceeds of approximately $3,050 ($3,023 net of issuance expenses).

The warrants issued in the private

placement are exercisable after the six-month anniversary of each respective closing and will expire on the 36-month anniversary

of their issuance.

STOCKHOLDERS’

EQUITY (Cont.)

During the year ended December 31,

2020, the Board of Directors approved the grant of 170,229 shares of Common Stock to certain consultants of the Company, a portion

of which were made in lieu of cash owed to such consultants.

During the year ended December 31,

2020, the Company’s Compensation Committee of the Board of Directors approved the grant of an aggregate of 707,182 shares

to directors, officers, employees and consultants of the Company.

In January 2020, the Board

of Directors authorized the Company to issue warrants to purchase up to 13,750, and 250,000 shares of Common Stock, respectively,

to certain consultants of the Company, at a purchase price of $12.00 and $6.56, respectively.

As such, the Company recorded a warrant

compensation expense for service providers in the amount of $1,131.

In January and March 2020,

the Compensation Committee of the Board of Directors approved an inducement grant of a non-qualified stock option award to purchase

140,000 shares of the Company’s Common Stock, as well as an additional inducement grant consisting of a non-qualified performance-based

stock option award to purchase an additional 90,000 shares of the Company’s Common Stock outside of the Company’s Amended

and Restated 2012 Equity Incentive Plan, as amended (the “2012”

Plan”), pursuant to Nasdaq Listing Rule 5635(c)(4),

in connection with the employment of its President and General Manager of North America and of its Chief Medical Officer.

In April 2020, the Compensation

Committee of the Board of Directors approved a monthly grant of shares of the Company’s Common Stock equal up to $18 of restricted

shares to certain service providers per month, to be granted monthly during the period that the certain consulting agreement remains

During the year ended December 31, 2020, a total of 16,126 restricted shares of the Company’s Common Stock

were issued to certain service providers under this approval.

In April 2020, the Audit and

Compensation Committee of the Board of Directors approved monthly grants of 1,500 shares of the Company’s Common Stock, of

which 639 shares were issued to a board member under the 2012 Plan, and 861 restricted shares to certain service providers to be

granted monthly during the 12-month period that the certain consulting agreement with said service providers is in effect.

the year ended December 31, 2020, a total of 13,500 shares of the Company’s Common Stock were issued under the said

approval of which 9,195 shares were issued under the plan including 5,691 to a board member and the remaining 4,305 shares were

issued as restricted shares to certain service providers.

In May 2020, the Compensation Committee of the

Board of Directors authorized the Company to issue, in several installments, 45,000 shares and warrants to purchase 110,000 shares

of Common Stock, to certain consultants of the Company, of which warrants to purchase 60,000 shares of Common Stock are vesting

over a 12-month period.

The warrants exercise prices are between $6.39 and $10.00 per share.

During the year ended December 31,

2020, the Company issued all said shares and warrants, and recorded compensation expense for service providers in the amount of

DARIOHEALTH CORP.

2 unchanged sentences

dollars in thousands (expect stock and stock data)

NOTE 11:- STOCKHOLDERS’ EQUITY (Cont.)

On May 24, 2019, the Company closed a public offering (the “2019 Public

Offering”) of (i) 242,768 shares of Common Stock, at a price of $12 per share and (ii) pre-funded warrants (the

“Pre-Funded Warrants”) to purchase up to 358,779 shares of Common Stock, for aggregate consideration of $6,558,

net of issuance expenses.

The Pre-Funded Warrants were sold

at a public offering price of $11.998 per Pre-Funded Warrant, which represents the per share public offering price per Share, less

a $0.0001 per share exercise price for each such Pre-Funded Warrant.

STOCKHOLDERS’

EQUITY (Cont.)

On May 24, 2019, the Company closed

a public offering (the “2019 Public Offering”) of (i) 242,768 shares of Common Stock, at a price of $12 per share

and (ii) pre-funded warrants (the “Pre-Funded Warrants”) to purchase up to 358,779 shares of Common Stock, for

aggregate consideration of $6,558, net of issuance expenses.

The Pre-Funded Warrants were sold at a

public offering price of $11.998 per Pre-Funded Warrant, which represents the per share public offering price per Share, less a

$0.0001 per share exercise price for each such Pre-Funded Warrant.

The shares and Pre-Funded Warrants were offered, issued and

2 unchanged sentences

been accounted for as equity instruments.

The Pre-Funded

Warrants are exercisable at any time after the date of issuance.

A holder of Pre-Funded Warrants may not exercise the warrant if

the holder, together with any group that the holder is a member, would beneficially own more than 4.99% (or, at the election of

the purchaser, 9.99%) of the number of shares of common stock outstanding immediately after giving effect to such exercise.

of Pre-Funded Warrants may terminate, increase or decrease this percentage by providing at least 61 days’ prior notice to

A holder of Pre-Funded Warrants is also subject to a limitation on exercise of the Pre-Funded Warrant if such exercise

would result in such holder, together with any group that the holder is a member, beneficially owning more 19.99% of the number

of shares of common stock outstanding immediately before giving effect to such exercise, unless shareholder approval is obtained.

In November and December, 2019, the Company entered into subscription

agreements (the “Series A, A-1, A-2, A-3 and A-4 Subscription Agreement”) for a sale of an aggregate of 21,375 shares

of newly designated Series A, A-1, A-2, A-3 and A-4 Preferred Stock (the “Series A Preferred Stock”), at a purchase

price of $1,000 per share (the “Stated Value”), for aggregate proceeds, net of issuance expenses to the Company, of

approximately $21,375 ($18,689 net of issuance expenses).

The initial conversion price for the Series A, A-1, A-2, A-3 and A-4

Preferred Stock was $4.05, $4.05, $4.28, $4.98 and $5.90, respectively, subject to adjustment in the event of stock splits, stock

dividends, and similar transactions).

As such, the Company recorded a deemed dividend in the amount of $2,860 for the benefit created

to the series A-2, A-3 and A-4 holders.

of series A Preferred Stock (excluding Series A-1 Preferred Stock, which do not possess any voting rights) shall be entitled to

cast the number of votes equal to the number of whole shares of Common Stock into which the shares of Series A Preferred Stock

held by such holder are convertible as of the record date for determining stockholders entitled to vote on such matter.

as provided by law or by the other provisions of the Certificate of Incorporation, Holders of Series A Preferred Stock shall vote

together with the holders of Common Stock as a single class.

Upon any liquidation, dissolution or winding-up of the Company, after

the satisfaction in full of the debts of the Company and payment of the liquidation preference to the Senior Securities, holders

of Series A Preferred Stock shall be entitled to be paid, on a pari passu basis with the payment of any liquidation preference

afforded to holders of any Parity Securities, the remaining assets of the Company available for distribution to its stockholders.

For these purposes, (i) “Parity Securities” means the Common Stock, Series A Preferred Stock and any other class or

The Pre-Funded Warrants are exercisable

at any time after the date of issuance.

A holder of Pre-Funded Warrants may not exercise the warrant if the holder, together with

any group that the holder is a member, would beneficially own more than 4.99% (or, at the election of the purchaser, 9.99%) of

the number of shares of common stock outstanding immediately after giving effect to such exercise.

A holder of Pre-Funded Warrants

may terminate, increase or decrease this percentage by providing at least 61 days’

prior notice to the Company.

of Pre-Funded Warrants is also subject to a limitation on exercise of the Pre-Funded Warrant if such exercise would result in such

holder, together with any group that the holder is a member, beneficially owning more 19.99% of the number of shares of common

stock outstanding immediately before giving effect to such exercise, unless shareholder approval is obtained.

In November and December, 2019, the Company entered into subscription agreements (the “Series A,

A-1, A-2, A-3 and A-4 Subscription Agreement”) for a sale of an aggregate of 21,375 shares of newly designated Series A,

A-1, A-2, A-3 and A-4 Preferred Stock (the “Series A Preferred Stock”), at a purchase price of $1,000 per share

(the “Stated Value”), for aggregate gross proceeds, of approximately $21,375 ($18,689 net of issuance expenses).

initial conversion price for the Series A, A-1, A-2, A-3 and A-4 Preferred Stock was $4.05, $4.05, $4.28, $4.98 and $5.90,

respectively, subject to adjustment in the event of stock splits, stock dividends, and similar transactions).

As such, the Company

recorded a deemed dividend during 2019 in the amount of $2,860 for the benefit created to the series A-2, A-3 and A-4 holders.

During the year ended December 31,

2020, a total of 5,552 of certain Series A Convertible Preferred Stock were converted into 1,278,695 shares of Common Stock.

The holders of series A Preferred

Stock (excluding Series A-1 Preferred Stock, which do not possess any voting rights) shall be entitled to cast the number

of votes equal to the number of whole shares of Common Stock into which the shares of Series A Preferred Stock held by such

holder are convertible as of the record date for determining stockholders entitled to vote on such matter.

Except as provided by

law or by the other provisions of the Certificate of Incorporation, Holders of Series A Preferred Stock shall vote together

with the holders of Common Stock as a single class.

Upon any liquidation, dissolution or winding-up of the Company, after the satisfaction

in full of the debts of the Company and payment of the liquidation preference to the Senior Securities, holders of Series A

Preferred Stock shall be entitled to be paid, on a pari passu basis with the payment of any liquidation preference afforded to

holders of any Parity Securities, the remaining assets of the Company available for distribution to its stockholders.

purposes, (i) “Parity Securities”

means the Common Stock, Series A Preferred Stock and any other class or

series of capital stock of the Company hereinafter created that expressly ranks pari passu with the Series A Preferred Stock;

(ii) “Senior Securities” shall mean any class or series of capital stock of the Company hereafter created which expressly

ranks senior to the Parity Securities.

of Series A Preferred Stock is convertible at the option of the holder, subject to certain beneficial ownership limitations as

set forth in the Series A Certificate of Designation into such number of shares of Company’s Common

Stock equal to the number of Series A Preferred Shares to be converted, multiplied by the Stated

Value, divided by the conversion price in effect at the time of the conversion.

and (ii) “Senior Securities”

shall mean any class or series of capital stock of the Company hereafter created

which expressly ranks senior to the Parity Securities.

DARIOHEALTH CORP.

2 unchanged sentences

dollars in thousands (expect stock and stock data)

NOTE 11:- STOCKHOLDERS’ EQUITY (Cont.)

A Preferred Stock will automatically convert into shares of Common Stock, subject to certain beneficial ownership limitations,

on the earliest to occur of (i) upon the approval of the holders at least 50.1% of the outstanding shares of Series A Preferred

with respect to the Series A Preferred Stock;

STOCKHOLDERS’

EQUITY (Cont.)

Each share of Series A Preferred

Stock is convertible at the option of the holder, subject to certain beneficial ownership limitations as set forth in the Series A

Certificate of Designation into such number of shares of Company’s Common Stock equal to the number of Series A Preferred

Shares to be converted, multiplied by the Stated Value, divided by the conversion price in effect at the time of the conversion.

The Series A Preferred Stock

will automatically convert into shares of Common Stock, subject to certain beneficial ownership limitations, on the earliest to

occur of (i) upon the approval of the holders at least 50.1% of the outstanding shares of Series A Preferred with respect

to the Series A Preferred Stock;

or (ii) the 36-month anniversary of each of the Series A Effective Date.

of Series A Preferred Stock will also be entitled dividends payable as follows:

(i) a number of shares of Common Stock equal to

ten percent (10%) of the number of shares of Common Stock issuable upon conversion of the Series A Preferred Stock then held by

such holder on the 12-month anniversary of the Series A Effective Date, (ii) a number of shares of Common Stock equal to fifteen

percent (15%) of the number of shares of Common Stock issuable upon conversion of the Series A Preferred then held by such holder

on the 24-month anniversary of the Series A Effective Date, and (iii) a number of shares of Common Stock equal to twenty percent

(20%) of the shares of Common Stock issuable upon conversion of the Series A Preferred Stock then held by such holder on the 36-month

anniversary of the Series A Effective Date.

The Company accounted for the dividend as a deemed dividend in a total amount of $295.

Pursuant to the Placement

Agency Agreement (the “Placement Agency Agreement”) executed by and between the Company and the registered broker

dealer retained to act as the Company’s exclusive placement agent (the “Placement Agent”) for the offering

of the Series A Preferred Stock, the Company paid the Placement Agent an aggregate cash fee of $1,788, non-accountable

expense allowance of $641 and was required to issue to the Placement Agent or its designees warrants to purchase 719,243

shares of Common Stock at an exercise price ranging from $4.05 to $5.90 per share (the “Placement Agent

The Placement Agent Warrants are exercisable for a period of five years from the date of the final

closing of the Series A Preferred Stock Offering.

(i) a number of shares of Common Stock

equal to ten percent (10%) of the number of shares of Common Stock issuable upon conversion of the Series A Preferred Stock

then held by such holder on the 12-month anniversary of the Series A Effective Date, (ii) a number of shares of Common

Stock equal to fifteen percent (15%) of the number of shares of Common Stock issuable upon conversion of the Series A Preferred

then held by such holder on the 24-month anniversary of the Series A Effective Date, and (iii) a number of shares of

Common Stock equal to twenty percent (20%) of the shares of Common Stock issuable upon conversion of the Series A Preferred

Stock then held by such holder on the 36-month anniversary of the Series A Effective Date.

During the year ended December 31,

2020 and 2019, The Company accounted for the dividend as a deemed dividend in a total amount of $3,059 and $295, respectively.

Pursuant to the Placement Agency

Agreement (the “Placement Agency Agreement”) executed by and between the Company and the registered broker dealer retained

to act as the Company’s exclusive placement agent (the “Placement Agent”) for the offering of the Series A

Preferred Stock, the Company paid the Placement Agent an aggregate cash fee of $1,788, non-accountable expense allowance of $641

and was required to issue to the Placement Agent or its designees warrants to purchase 719,243 shares of Common Stock at an exercise

price ranging from $4.05 to $5.90 per share (the “Placement Agent Warrants”).

The Placement Agent Warrants are exercisable

for a period of five years from the date of the final closing of the Series A Preferred Stock Offering.

As of December 31, 2020, out of the Placement Agent

Warrants that were issued in December 2019, 306,801 were exercised into 222,016 shares of Common Stock.

In March 2020, the Board of Directors authorized the Company

to enter into an agreement to issue in the future warrants to purchase up to 500,000 shares of Common Stock to a business partner

of the Company, upon reaching certain performance criteria, at a purchase price of $5.94.

Certain performance criteria with respect

to the first tranche of 125,000 shares were not met and that portion of such warrant expired on December 31, 2020.

DARIOHEALTH CORP.

AND ITS SUBSIDIARY

TO CONSOLIDATED FINANCIAL STATEMENTS

dollars in thousands (expect stock and stock data)

STOCKHOLDERS’

EQUITY (Cont.)

On July 28, 2020, the Company entered into subscription agreements with accredited investors relating to an offering with respect to the sale of an aggregate of (i) 2,969,266 shares of the Company’s Common Stock, at a purchase price of $7.47 per Share, and (ii) pre-funded warrants to purchase 824,689 shares of Common Stock, at a purchase price of $7.4699 per Pre-Funded Warrant.

In addition, on July 30, 2020, the Company entered into a subscription agreement with an accredited investor for the purchase of 31,486 shares of Common Stock at a purchase price per share of $7.94 per Share.

The aggregate gross proceeds were approximately $28,591 ($26,460 net of issuance costs).

The table below summarizes the outstanding warrants as of December 31, 2020:

14 unchanged sentences

September 13, 2021

September 2018 PPM 2 nd closing

September 26, 2021

December 2018 PPM

2 unchanged sentences

December 27, 2021

December 31, 2023

Placement Agent Warrants A-1 December 2019

6 unchanged sentences

December 19, 2024

April 6, 2024

June 17, 2024

September 9, 2024

November 9, 2024

February 12, 2025

August 1, 2029

Agent warrants B-1 July 31 2020

July 31, 2025

Agent warrants B-1 July 31 2020

July 31, 2025

Total outstanding (**)

for which cash has been received by the Company but no securities issued.

(**) The outstanding amount doesn’t include 358,799 prefunded purchase warrants.

No warrants were exercised in

2019 and 2018.

Warrants for which cash has been received by the Company did not issue securities.

No warrants were exercised in 2019, during the year ended December 31, 2020 certain Company warrant holders have exercised and exchanged Company warrants as detailed here below:

In January and July 2020, the Company entered into exchange agreements (each an “Exchange Agreement”) with certain Company warrant holders who were granted warrants to purchase up to an aggregate of 230,452 shares of Common Stock in September 2018.

Pursuant to the terms of the Exchange Agreements, the warrant holders agreed to surrender such warrants for cancellation and received, as consideration for the cancellation of such 2018 warrants, an aggregate of 161,317 restricted shares of Common Stock, thereby creating a benefit to these warrant holders.

As such the Company recorded a deemed dividend in the amount of $599.

In September 2020, the Company entered into an agreement with a certain warrant holder who was granted warrants to purchase up to an aggregate of 88,889 shares of Common Stock in September 2018.

Warrants to purchase 88,889 shares of Common Stock were exercised into shares of Common Stock at an exercise price of $13.00 per share.

The aggregate gross proceeds were approximately $1,156 ($1,088 net of issuance expenses costs).

DARIOHEALTH CORP.

2 unchanged sentences

dollars in thousands (expect stock and stock data)

NOTE 11:- STOCKHOLDERS’ EQUITY (Cont.)

STOCKHOLDERS’

EQUITY (Cont.)

Stock-based compensation:

On January 23, 2012, an equity

incentive plan (the “2012 Plan”) was adopted by the Board of Directors of the Company and approved by a majority of

the Company’s stockholders, under which options to purchase shares of Common Stock have been reserved.

Under the 2012 Plan,

options to purchase shares of Common Stock may be granted to employees and non-employees of the Company or any affiliate, each

option granted can be exercised to one share of Common Stock.

During 2018, the Company’s

stockholders approved an amendment to the 2012 Plan to increase the number of shares authorized for issuance under the 2012 Plan

by 250,000 shares, from 143,650 to 393,650.

During 2019, the Company’s

On January 23, 2012, the Company’s

2012 Plan was adopted by the Board of Directors of the Company and approved by a majority of the Company’s stockholders,

under which options to purchase shares of Common Stock have been reserved.

Under the 2012 Plan, options to purchase shares of Common

Stock may be granted to employees and non-employees of the Company or any affiliate, each option granted can be exercised to one

share of Common Stock.

During 2019, the Company’s stockholders

approved an amendment to the 2012 Plan to increase the number of shares authorized for issuance under the 2012 Plan by 225,000

shares, from 393,650 to 618,650.

On February 5, 2020, the Company’s

stockholders approved an amendment to the 2012 Plan to increase the number of shares authorized for issuance under the 2012 Plan

by 1,350,000 shares, from 618,650 to 1,968,650.

The following options were issued

under the 2012 Plan during 2018 and 2019:

On April 23, 2018, the Company’s

Compensation Committee of the Board of Directors approved the grant of 4,688 options to a consultant of the Company, at an exercise

price of $0.0001 per share.

The option fully vested on the grant date and has a six-year term.

This option was issued in lieu

of a cash waiver of $150 by the consultant.

On July 23, 2018, the Company’s

Compensation Committee of the Board of Directors approved the grant of 3,541 options to consultants of the Company, at an exercise

price of $0.0001 per share.

3,141 options fully vested on the grant date, and 400 will vest in 12 equal monthly installments.

The options have a six-year term.

These options were issued in lieu of a cash waiver of $102 by the consultants.

In June and July 2018, the Company’s

Compensation Committee of the Board of Directors approved the grant of an aggregate of 57,642 shares to directors, officers, employees

and consultants of the Company, and the grant of 12,206 and 1,048 options to employees and consultants of the Company, respectively,

at an exercise price of $34.58 per share.

The stock options shall vest over a period of three years commencing on the respective

All of the aforementioned options have a six-year term.

On November 22, 2018, the Company’s

Compensation Committee of the Board of Directors approved the grant of 6,000 options to its President and Chief Commercial Officer,

at exercise prices of $15.90 per share.

The options will vest over a three years period from the grant date and have a six-year

On November 22, 2018, the Company’s

Compensation Committee of the Board of Directors approved the grant of 1,864 options to consultants of the Company, at an exercise

price of $0.0001 per share.

The options fully vested on the grant date and have a six-year term.

These options were issued

in lieu of a cash waiver of $45 by the consultants.

In addition, the Company’s Compensation Committee of the Board of Directors

approved the grant of 1,313 options to a consultant of the Company at an exercise price of $19.96 per share.

The options will

vest over a three year period from the grant date and have a six-year term.

On December 10, 2018, the Company’s

Compensation Committee of the Board of Directors approved the grant of an aggregate of 2,346 options to employees of the Company,

at an exercise price of $18.54 per share.

The stock options will vest over a three years period commencing on the grant date and

have a six-year term.

On April 29, 2019, the Company’s

Compensation Committee of the Board of Directors approved the grant of an aggregate of 51,613 shares to directors, officers and

employees of the Company, and the grant of 29,236 options to employees, directors and consultants of the Company, respectively,

at exercise prices of $14.40 and $15.40 per share.

The stock options vest over a period of three years commencing on the respective

On October 14, 2020, the

Company’s stockholders approved the 2020 Equity incentive Plan (the “2020 Plan”) and the immediate reservation

of 900,000 shares under this Plan for the remainder of the 2020 fiscal year.

Under the 2020 Plan, options to purchase shares of

Common Stock may be granted to employees and non-employees of the Company or any affiliate, each option granted can be exercised

to one share of Common Stock.

The following options were issued under

the 2012 Plan during 2019 and 2020:

On April 29, 2019, the Company’s

Compensation Committee of the Board of Directors approved the grant of 29,236 options to employees, directors and consultants

of the Company, respectively, at exercise prices of $14.40 and $15.40 per share.

The stock options vest over a period of three

years commencing on the respective grant dates.

All of the aforementioned options have a six-year term.

DARIOHEALTH CORP.

AND ITS SUBSIDIARY

TO CONSOLIDATED FINANCIAL STATEMENTS

dollars in thousands (expect stock and stock data)

NOTE 11:- STOCKHOLDERS’ EQUITY (Cont.)

In September and October 2019,

the Company’s Compensation Committee of the Board of Directors approved the grant of an aggregate of 5,378 shares of Common

Stock to service providers of which 4,753 were issued during the third and fourth quarters, and the grant of 3,939 options to consultants

of the Company, at exercise price of $12.00 per share, and 462 options in lieu of $8 owed in cash to a consultant.

On December 24, 2019, the Company’s

the Company’s Compensation Committee of the Board of Directors approved the grant of 3,939 options to consultants of the

Company, at exercise price of $12.00 per share, and 462 options in lieu of $8 owed in cash to a consultant.

On December 24, 2019, the Company’s

Compensation Committee of the Board of Directors approved the grant of 42,500 options to employees of the Company, at exercise

2 unchanged sentences

All of the aforementioned options have a six-year term.

During the year ended December 31,

2020, the Company’s Compensation Committee of the Board of Directors approved the grant of an aggregate of 623,491 options

to employees, directors and consultants of the Company, at exercise prices between $6.35 and $18.68 per share.

The stock options

vest over a period of three years commencing on the respective grant dates.

The options have a six-year term and were issued under

the 2012 Plan.

In March and May 2020, the Board

of Directors approved the grant of fully vested options to purchase 5,540 shares of Common Stock to certain consultants of the

Company, a portion of which were made in lieu of cash owed to such consultants.

DARIOHEALTH CORP.

AND ITS SUBSIDIARY

TO CONSOLIDATED FINANCIAL STATEMENTS

dollars in thousands (expect stock and stock data)

STOCKHOLDERS’

EQUITY (Cont.)

Transactions related to the grant

of options to employees, directors and non-employees under the above plans during the year ended December 31, 2019 were as follows:

of options to employees, directors and non-employees under the above plans and non-plan options during the year ended December 31,

2020 were as follows:

Options outstanding at beginning of year

6 unchanged sentences

Exercisable at end of year

*) Represents

an amount lower than $1.

**) Reverse Stock Split, see note

*) Including 230,000 non-plan options

issued as inducement for employment, in accordance with Nasdaq Listing Rule 5635(c)(4).

See note 12(d).

Weighted average fair value of

1 unchanged sentence

The aggregate intrinsic value

in the table above represents the total intrinsic value (the difference between the Company’s closing stock price on the

last day of fiscal 2020 and the exercise price, multiplied by the number of in-the-money options) that would have been received

by the option holders had all option holders exercised their options on December 31, 2020.

This amount is impacted by the changes

in the fair market value of the Common Stock.

This amount is impacted by the

changes in the fair market value of the Common Stock.

DARIOHEALTH CORP.

2 unchanged sentences

dollars in thousands (expect stock and stock data)

NOTE 11:- STOCKHOLDERS’ EQUITY (Cont.)

The following table presents

the assumptions used to estimate the fair values of the options granted to employees and directors in the period presented:

84.34%-90.82 %

83.41%-105.38 %

STOCKHOLDERS’

EQUITY (Cont.)

The following table presents the

assumptions used to estimate the fair values of the options granted to employees and directors in the period presented:

Risk-free interest rate

1 unchanged sentence

Expected life (years)

The following table presents

the assumptions used to estimate the fair values of the options granted to non-employees in the period presented:

84.34%-90.82 %

82.61%-107.42 %

The following table presents the

assumptions used to estimate the fair values of the options granted to non-employees in the period presented:

Risk-free interest rate

1 unchanged sentence

Expected life (years)

As of December 31, 2019, the

total unrecognized estimated compensation cost related to non-vested stock options granted prior to that date was $977, which is

expected to be recognized over a weighted average period of approximately 1.41 year.

As of December 31, 2020,

the total unrecognized estimated compensation cost related to non-vested stock options granted prior to that date was $3,772,

which is expected to be recognized over a weighted average period of approximately 1.33 year.

The total compensation cost related

to all of the Company’s equity-based awards, recognized during year ended December 31, 2019 and 2018 were comprised as follows:

to all the Company’s equity-based awards, recognized during year ended December 31, 2020 and 2019 were comprised as

Cost of revenues

7 unchanged sentences

dollars in thousands

NOTE 12:- SELECTED STATEMENTS OF OPERATIONS DATA

Financial expenses (income),

Foreign currency adjustments losses, net

Change in the fair value of warrants

SELECTED STATEMENTS OF OPERATIONS DATA

Financial (income) losses, net:

Foreign currency adjustments (income) losses, net

Interest income

Total Financial income, net

NOTE 13:- SUBSEQUENT EVENTS

In January 2020, 47,074 shares

of Common Stock were issued to certain members of the Board of Directors, officers and employees as consideration for a reduction

in or waiver of cash salary or fees amounting to $201 owed to such individuals and approved the grant of 25,000 options to employees

of the Company, at exercise prices of $8.27 and $8.41 per share.

The stock options vest over a period of three years commencing

on the respective grant dates.

All of the aforementioned options have a six-year term.

The shares and options were issued under

the Company’s 2012 Plan.

In January 2020, the Company

entered into exchange agreements (each an "Exchange Agreement") with certain Company warrant holders who were granted

warrants to purchase up to an aggregate of 139,336 shares of Common Stock in September 2018.

Pursuant to the terms of the Exchange

Agreements, the warrant holders agreed to surrender such warrants for cancellation and received, as consideration for the cancellation

of such 2018 warrants, in the aggregate 97,536 restricted shares of Common Stock, thereby creating a benefit to these warrant holders.

On January 29, 2020, the Board

of Directors authorized the Company to issue warrants to purchase up to 13,750 and 250,000 shares of Common Stock to certain consultants

of the Company, at a purchase price of $12.00 and $6.56, respectively.

In addition, the Board of Directors approved the grant of

50,000 shares of Common Stock to a consultant of the Company.

On January 30, 2020, the Compensation

Committee of the Board of Directors approved the grant of a non-qualified stock option award to purchase 90,000 shares of the Company’s

Common Stock, as well as an additional non-qualified performance-based stock option award to purchase an additional 90,000 shares

of the Company’s Common Stock outside of the Company’s existing equity compensation plans, pursuant to Nasdaq Listing

Rule 5635(c)(4), in connection with the employment of its President and General Manager of North America.

On February 5, 2020, the Company’s

stockholders approved an amendment to the 2012 Plan to increase the number of shares authorized for issuance under the 2012 Plan

by 1,350,000 shares, from 618,650 to 1,968,650.

On February 12, 2020, the Company’s

Compensation Committee of the Board of Directors approved the grant of an aggregate of 654,246 shares to directors, officers, employees

and consultants of the Company, and the grant of 335,991 options to employees and consultants of the Company, at exercise prices

of $7.736 and $9.237 per share.

Total Financial (income) losses, net

SUBSEQUENT EVENTS

In April 2020, the Audit and Compensation Committee of the Board

of Directors approved a monthly grant of 1,500 shares of the Company’s Common Stock to certain consultants.

During the first

quarter of 2021, the Company issued a total of 4,500 shares of the Company’s Common Stock, of which 1,857 shares were issued

to a board member.

The shares were issued under the 2020 Plan.

In April 2020, the Compensation Committee of the Board of Directors

approved a monthly grant of shares of the Company’s Common Stock equal up to $18 of restricted shares to certain service

providers per month, to be granted monthly during the period that the certain consulting agreement remains in effect.

first quarter of 2021, the Company issued a total of 2,777 restricted shares of the Company’s Common Stock to certain service

On January 19, 2021, the Compensation Committee of the Board of Directors approved the grant of 5,579 shares of Common Stock to officers and employees of the Company as consideration for a reduction in or waiver of cash salary or fees owed to such individuals and the grant of 5,000 shares of the Company’s Common Stock to employee.

The shares vest over a period of three years commencing on the respective grant dates.

The shares were issued under the Company’s 2012 Plan.

On January 19, 2021, the Company’s Compensation Committee

of the Board of Directors approved the grant of 70,390 shares to consultants of the Company, the grant of 882,083 restricted shares

of the Company’s Common Stock to directors, officers and employees.

The shares vest over a period of three years commencing

on the January 1, 2021 and approved the grant of 212,058 options to officer, employees and a consultant of the Company, at exercise

prices between $14.14 and $24.99 per share.

The stock options vest over a period of three years commencing on the respective grant

The options have a ten-year term and were issued under the 2020 Plan.

In January 2021, pursuant

to the terms of the 2020 Plan as approved by the Company’s stockholders, the Company increased the number of shares authorized

for issuance under the 2020 Plan by 928,890 shares, from 900,000 to 1,828,890.

DARIOHEALTH CORP.

AND ITS SUBSIDIARY

TO CONSOLIDATED FINANCIAL STATEMENTS

dollars in thousands

SUBSEQUENT EVENTS (Cont.)

February 1, 2021, the Company entered into a share purchase agreement pursuant to which the Company, through the Subsidiary,

acquired all of the outstanding securities of Upright Technologies Ltd.

(“Upright”).

a leading digital MSK health company focused on preventing and treating the most common MSK conditions through behavioral

science, biofeedback, coaching, and wearable tech.

The Company acquired Upright as a wholly

owned subsidiary.

The consideration payable in connection with the share purchase agreement was capped at $31,000 in any event,

subject to certain indemnity provisions, and took into account certain working capital excess generated, among other matters, by

that certain convertible bridge loan in an amount of $1,500 previously disbursed by the Company to Upright, which was converted

into one ordinary share of Upright at the Closing.

The Company agreed to bear certain liabilities of Upright, which shall be reduced

from the aggregate consideration, in an estimated amount of $3,700.

In consideration for all of the outstanding securities of Upright,

the Company agreed to pay the aforementioned consideration by issuing 1,687,612 shares of the Company’s common stock, par

value $0.0001 per share to the Selling Shareholders, and agreed to assume options to purchase up to 100,193 shares of the Company’s

Common Stock to Upright’s personnel issuable pursuant to the Company’s existing 2020 Equity Incentive Plan.

On February 1, 2021, the Company entered into securities purchase

agreements with institutional accredited investors relating to an offering with respect to the sale of an aggregate of 3,278,688

shares of the Company’s Common Stock, at a purchase price of $ 21.35 per share.

The aggregate gross proceeds were approximately

$70,000 ($64,880, net of issuance expenses).

During February 2021, out of the warrants that were issued in

September 2018, 25,407 were exercised into shares of Common Stock at exercise price of $25.00 per share.

The aggregate gross

proceeds were approximately $633.

During February 2021, 250,000 warrants that were issued to a

consultant in January 2020, were exercised on a cashless basis into 194,353 shares of Common Stock.

On February 17, 2021, the Compensation Committee of the Board

of Directors authorized the Company to issue warrants to purchase 400,000 shares of Common Stock, to a certain consultant of the

Company, with the warrants vesting over twelve months period and with an exercise price of $25.00 per share.

On March 4, 2021, the Compensation Committee of the Board of Directors approved the grant of 169,560 shares of common stock and 228,800 options to purchase common stock to officers employees and consultants of the Company at exercise prices between $25.50 and $25.837 per share.

The stock options vest over a period of three years commencing on the respective grant dates.

the aforementioned options have a six-year term.

All options were issued under the 2012 Plan.

On February 27, 2020, the Compensation

Committee of the Board of Directors approved the grant of a non-qualified stock option award to purchase 90,000 shares of the Company’s

common stock to director, at exercise prices of $7.30 per share.

The stock options vest over a period of three years commencing

on the respective grant date.

All options were issued under the 2012 Plan.

On March 2, 2020, the Compensation

Committee of the Board of Directors approved the grant of a non-qualified stock option award to purchase 50,000 shares of the Company’s

Common Stock outside of the Company’s existing equity compensation plans, pursuant to Nasdaq Listing Rule 5635(c)(4) in connection

with the employment of its Chief medical Officer.

In March 2020, 16,280 shares

of Common Stock and 540 options to purchase Common Stock were issued to certain consultants of the Company, a portion of which

were made in lieu of cash owed to such consultants.

All options were issued under the 2012 Plan.

The options have a ten-year term and were issued under the 2020 Plan.

As of March 5, 2021, certain series A Convertible Preferred

Stockholders converted 3,022 shares of various classes of the Company’s A Convertible Preferred Stock into 707,147

shares of Common Stock.

As of March 5, 2021, 112,360 Placement Agent Warrants that were

issued in December 2019 and July 2020 were exercised into 89,722 shares of Common Stock.

As of March 5, 2021, 31,078 options were

exercised into shares of Common Stock, with aggregate gross proceeds of approximately $178

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures