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Item 7. Management’s Discussion and Analysis

2026-03-19 compared with 2025-03-10 · 211 added, 158 removed, 159 unchanged (70% of the section changed)

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See “Cautionary Note Regarding Forward-Looking Statements”.

You should review the “Risk Factors” section of this Annual Report for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.

We are a leading global DTx company revolutionizing the way people manage their health across the chronic condition spectrum to live a better and healthier life.

Our mission is to transform how affected individuals manage their health and chronic conditions by empowering our customers to easily manage their conditions and take steps to improve their overall health.

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

We believe that changing these behaviors can dramatically improve our customers’ overall health and substantially reduce unnecessary health spending.

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

Our digital therapeutics endeavor to produce lasting behavior changes in our customers by applying a novel combination of AI-driven dynamic personalization and behavioral science at scale.

This allows us to engage and support our customers, and offer them a complete virtual care solution, ideally resulting in improved health outcomes and reduced total cost of care.

You should review the “Risk Factors” section of this Annual Report for a discussion of important factors

that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.

We are a vertically integrated health intelligence platform with a mission to power the behavior changes that drive better health.

Unlike software-only digital health platforms, Dario owns the complete chain of value in chronic care management - connected FDA-cleared hardware devices that generate continuous physiological data, AI built on that proprietary data, and a behavior change and coaching layer validated through over 100 peer-reviewed clinical studies.

We are committed to transforming healthcare by delivering a comprehensive and highly engaging whole-person health platform, which enables us to create a future where healthy change is effortless and accessible to all.

At the core of our mission and vision is engagement.

We believe that most existing digital health solutions in the market fail to deliver improved health outcomes because users are not engaged due to a lack relevance, personalization, consumerization, and longitudinal data and information.

We, and our acquired companies, first commercialized our digital behavioral health products in the D2C marketplace, and we continue to use the D2C marketplace as a sandbox and laboratory to innovation.

These consumers pay for these digital health products out of their own pockets and are therefore the most value driven among all healthcare consumers.

These consumers demanded that we deliver highly engaging user experiences that deliver strong clinical health outcomes for which consumers will pay.

The bottom line is that if users are not engaged in digital solutions over a long period of time, they cannot change their behavior and they cannot get healthier – we first deliver engagement followed by sustained behavior change that then leads to measurable health outcomes and improvement.

We believe that our D2C marketplace roots and continued focus delivers better user experiences, longer sustained engagement, stronger clinical outcomes, at the most affordable prices, that then delivers the highest ROI in the industry.

Our principal operating subsidiary, LabStyle Innovation Ltd., is an Israeli company (“LabStyle”) with its headquarters in Caesarea, Israel.

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how to engage users and support behavior change to improve clinical outcomes in diabetes.

Our most developed AI tools leverage the direct-to-consumer experience

from over 150,000 members to drive superior engagement and outcomes.

Our most developed AI tools leverage direct-to-consumer experience from over 150,000 members to drive superior engagement and outcomes.

In early 2020, we broadened our solutions to include other medical conditions in addition to diabetes, and to serve business customers who seek to improve the health of their stakeholders.

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(“Merger Sub”), Twill and Bilal Khan, solely in his capacity as the representatives of Twill’s stockholders and other equity holders, entered into an Agreement and Plan of Merger (the “Merger Agreement”), dated February 15, 2024 (the “Closing Date”).

Pursuant to the provisions of the Merger Agreement, on the Closing Date, (i) Merger Sub was merged with and into Twill (the “Merger”), the separate corporate existence of Merger Sub ceased and Twill continued as the surviving company and a wholly owned subsidiary of the Company, (ii) we paid to Twill’s debt holders and equity holders aggregate consideration (“Merger Consideration”) of (A) $10.0 million in cash, (B) pre-funded warrants (the “Pre-Funded Warrants”) to purchase up to 10,000,400 shares (the “Warrant Shares”) of our common stock issuable to a trust (the “Trust”) formed for the benefit of certain equity and debt holders of Twill, issuable in 4 equal tranches, (C) stock options to purchase up to 2,963,459 shares of common stock issued to employees of Twill as an inducement to their employment with us, issued outside of our equity compensation plans, pursuant to Nasdaq Rule 5635(c)(4), with an exercise price of $2.55 per share, and (D) a combination of warrants and restricted stock units (“RSUs”) to acquire up to 1,766,508 shares of common stock issued to certain outgoing board members, consultants and outgoing officers of Twill (all of such RSUs and warrants being subject to the approval of the Company’s stockholders, pursuant to Nasdaq Rule 5635), and (iii) the parties to the Merger Agreement consummated the transactions contemplated thereby.

Pursuant to the provisions of the Merger Agreement, on the Closing Date, (i) Merger Sub was merged with and into Twill (the “Merger”), the separate corporate existence of Merger Sub ceased and Twill continued as the surviving company and a wholly owned subsidiary of the Company, (ii) we paid to Twill’s debt holders and equity holders aggregate consideration (“Merger Consideration”) of (A) $10.0 million in cash, (B) pre-funded warrants (the “Pre-Funded Warrants”) to purchase up to 500,020 shares (the “Warrant Shares”) of our common stock issuable to a trust (the “Trust”) formed for the benefit of certain equity and debt holders of Twill, issuable in 4 equal tranches, (C) stock options to purchase up to 148,173 shares of common stock issued to employees of Twill as an inducement to their employment with us, issued outside of our equity compensation plans, pursuant to Nasdaq Rule 5635(c)(4), with an exercise price of $51.00 per share, and (D) a combination of warrants and RSUs to acquire up to 88,326 shares of common stock issued to certain outgoing board members, consultants and outgoing officers of Twill (all of such RSUs and warrants being subject to the approval of the Company’s stockholders, pursuant to Nasdaq Rule 5635), and (iii) the parties to the Merger Agreement consummated the transactions contemplated thereby.

The Merger Agreement contains various customary representations, warranties and covenants.

As a result of the Merger, Twill will operate as our wholly owned subsidiary.

The Pre-Funded Warrants are subject to a non-waivable 19.99% ownership blocker and the issuance of any shares of common stock underlying such warrants that are in excess of such amount shall be subject to the approval of our stockholders.

The Pre-Funded Warrants were subject to a non-waivable 19.99% ownership blocker and the issuance of any shares of common stock underlying such warrants that are in excess of such amount shall be subject to the approval of our stockholders.

In addition, the Company, the Trust and WhiteHawk Capital Partner LP (the “Beneficiary”), have executed a Lock Up/Leak Out Agreement (the “Leak Out Agreement”), pursuant to which until such time as the Trust receives $10,600,000 in aggregate net proceeds (the “Leak Out Period”), (i) the Trust shall only be allowed to sell such Warrant Shares at a rate of up to 10% of the average daily trading volume of the common stock in a manner which will not negatively affect the share price, (ii) all such sales shall be conducted pursuant to Rule 144 and (iii) that the Beneficiary shall not cause the Trust to engage in any short selling of such Warrant Shares during the Leak-Out Period.

The Company has agreed to seek stockholder approval within 135 days following the closing of the Merger to permit the full exercise of the Pre-Funded Warrants (the “Warrant Vote”).

In addition, we entered into voting agreements with certain existing stockholders to vote in favor of the Warrant Vote.

We have agreed to call a stockholder meeting each fiscal quarter thereafter to the extent the Warrant Vote is not approved by the Company’s stockholders.

On January 29, 2026, we held our Annual Meeting of Stockholders pursuant to which our stockholders voted to approve the issuance of shares of common stock issuable upon exercise of the Pre-Funded Warrants, among other agenda items.

As of February 11, 2026 all of the Pre-Funded Warrants related to Merger were issued to the trustee.

Pursuant to the terms of the Merger Agreement, we also agreed to appoint a new member to our board of directors, nominated by Twill equity holders and subject to such nominee being acceptable to us, within 90 days following the closing of the Merger.

Such appointment right shall continue until the earlier of 540 days following the closing of the Merger, or the date which the Trust exercises its third tranche of Pre-Funded Warrants.

As of December 31, 2025, the Trust had exercised its third tranche of Pre-Funded Warrants, and accordingly, the related board appointment right has terminated and is no longer in effect.

In addition, we executed certain consulting agreements (the "Consulting Agreements") with Ofer Leidner and Bilal Khan, each former officers of Twill.

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Leidner and Khan for a period of at least 14 months and 6 months respectively, in exchange for monthly consulting fees of $35,416 and $35,417, respectively.

In addition, the Company agreed to issue to Mr.

Leidner warrants to purchase up to 1,032,946 shares of common stock, of which 717,946 are subject to time vesting and 315,000 are subject to certain performance-based metrics, and to issue to Mr.

Khan 350,000 fully vested RSUs which shall be vest subject to stockholder approval.

Readers are cautioned that, according to our management’s estimates, based on our budget and the initial launch of our commercial sales, we believe that we will have sufficient resources to continue our activity through 2025 without raising additional capital.

This includes an amount of anticipated inflows from sales of Dario through direct sales in the United States and through distribution partners.

If we are unable to scale up our commercial launch of Dario or meet our commercial sales targets (or if we are unable to ramp up revenues), and if we are unable to obtain additional capital resources in the near term, we may be unable to continue activities, absent material alterations in our business plans, and our business might fail.

As of December 31, 2025, both Consulting Agreements have been concluded.

In addition, we agreed to issue to Mr.

Leidner warrants to purchase up to 51,648 shares of common stock, of which 35,898 are subject to time vesting and 15,750 are subject to certain performance-based metrics.

As of December 31, 2025, all 35,898 time-vesting warrants have vested.

The 15,750 performance-based warrants expired upon conclusion of the Consulting Agreement.

We also agreed to issue to Mr.

Khan 17,500 fully vested RSUs

In addition, in August 2024 we agreed to issue to Mr.

Leidner warrants to purchase up to 25,000 warrants subject to time vesting, 15,625 vested upon conclusion of the consulting services and 9,375 remain unvested.

We also agreed to issue to Mr.

Leidner performance-based warrants to purchase up to 40,000.

The performance-based warrants expired upon conclusion of the Consulting Agreement.

Critical Accounting Policies

Our consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States (“U.S.

Our fiscal year ends December 31.

Our fiscal year ends on December 31.

This Management’s Discussion and Analysis of Financial Condition and Results of Operations discuss our consolidated financial statements, which have been prepared in accordance with U.S.

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Revenue Recognition

Revenue is recognized under the five-step methodology in accordance with Accounting Standards Codification (“ASC”) 606, “Revenue from contracts with customers,” (“ASC 606”), which requires us to identify the contract with the customer, identify the performance obligations in the contract, determine the transaction price, allocate the transaction price to the performance obligations identified, and recognize revenue when (or as) each performance obligation is satisfied.

We recognize revenue in accordance with ASC 606, when (or as) it satisfies performance obligations by transferring promised hardware or services to its customers in an amount that reflects the consideration we expect to receive.

We apply 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.

If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation.

For contracts that contain multiple performance obligations, we allocate the transaction price to each performance obligation based on the relative standalone selling price (“SSP”) for each performance obligation.

We use judgment in determining the SSP for its performance obligations.

To determine SSP, we maximize the use of observable standalone sales and observable data, where available.

In instances where performance obligations do not have observable standalone sales, we may use alternative methods to estimate the standalone selling price, such as cost plus margin approach.

Our payment terms are generally 45 days or less.

In instances where the timing of revenue recognition differs from the timing of invoicing, we determine our contracts generally do not include a significant financing component since our selling prices are not subject to billing terms nor is our purpose to receive financing from our customers or to provide customers with financing.

In addition, we elected to apply the practical expedient not to adjust the promised amount of consideration for the effects of a significant financing component if the Company expects, at the inception of a contract, that the period between when we will transfer a promised good or service to a customer and when the customer will pay for that good or service will be one year or less.

Revenue is recognized net of any taxes collected from customers which are subsequently remitted to governmental entities.

We elected to account for shipping and handling activities as fulfillment activities.

Shipping and handling activities are classified as part of cost of revenues.

We derive our revenue principally from:

Consumers revenue

We consider customer and distributers purchase orders to be the contracts with a customer.

For each contract, we consider the promise to transfer tangible products and/or services, each of which are distinct, to be the identified performance obligations.

In determining the transaction price, we evaluate whether the price is subject to rebates and

adjustments to determine the net consideration to which we expect to receive.

As our standard payment terms are less than one year, the contracts have no significant financing component.

We allocate the transaction price to each distinct performance obligation based on their relative standalone selling price.

Revenue from tangible products is recognized when control of the product is transferred to the customer (i.e., when our performance obligation is satisfied), which typically occurs at shipment.

The revenues from fixed-price services are recognized ratably over the contract period and the costs associated with these contracts are recognized as incurred.

We consider customer and distributor purchase orders to be contracts with customers.

For each contract, the Company considers the promise to transfer tangible hardware and/or services, each of which are distinct, and accounted for as separate performance obligations.

In determining the transaction price we evaluate whether the price is subject to rebates and adjustments to determine the net consideration to which we expect to receive.

Revenue from tangible hardware is recognized when control of the hardware is transferred to the customer (i.e., when our performance obligation is satisfied), which typically occurs at shipment.

The revenues from fixed-price service arrangements are recognized over time based on the pattern of transfer of services to the customer.

Commercial revenue - B2B2C

We provide mobile and web-based digital therapeutics health management programs to employers and health plans for their employees or covered individuals including live clinical coaching, content, automated journeys, hardware, and life-style coaching, currently supporting diabetes, prediabetes and obesity, hypertension, behavioral health (BH) and musculoskeletal health (MSK).

At contract inception, we assess the type of services being provided and assess the performance obligations in the contract.

Revenue is recognized either on a per engaged member per month (PEMPM) or a per employee per month (PEPM) basis.

Our contracts consist of a fixed price that is based on the monthly number of members and clinical programs consumed by each member.

The price is determined during contract negotiations with customers.

Certain of our contracts include client performance guarantees and a portion of the fees in those contracts are subject to performance-based metrics such as clinical outcomes or minimum member utilization rate.

We include in the transaction price some or all of an amount of variable consideration only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved.

Refund to a customer that results from performance levels that were not met by the end of the measurement period are adjusted to the transaction price, and therefore estimated at the outset of the arrangement.

We provide a mobile and web-based digital therapeutics health management programs to employers and health plans for their employees or covered individuals.

Such programs include live clinical coaching, content, automated journeys, hardware, and lifestyle coaching, currently supporting diabetes, prediabetes and obesity, hypertension, behavioral health (BH) and MSK.

At contract inception, we assess the type of services being provided and assesses the performance obligations in the contract.

These solutions integrate access to our web-based platform, and clinical and data services to provide an overall health management solution.

The promises to transfer these goods and services are not separately identifiable and are considered a single continuous service comprised of a series of distinct services recognized over time that are substantially the same and have the same pattern of transfer (i.e., distinct days of service).

Revenues related to the Twill platform are recognized over time, since the customer simultaneously receives and consumes the benefits provided by our performance.

Revenues related to health management programs and to the Twill platform are recognized using a time-elapsed measure of progress, since those services have a consistent continuous pattern of transfer to the customer.

To the extent the transaction price includes variable consideration, revenue is recognized using the variable consideration allocation exception, or, if the allocation exception is not met, the Company recognizes revenue ratably based on estimates of the variable consideration to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved.

When the variable consideration allocation exception is met, we recognize revenue each month using either on a PEMPM or a PEPM basis.

We generally recognize revenues for professional services using an input method, based on labor hours consumed, which the Company believes best depicts the transfer of the services to the customer.

The Company includes in the transaction price some or all of an amount of variable consideration only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved.

Refunds to a customer that result from performance levels that were not met by the end of the measurement period are adjusted to the transaction price and therefore estimated at the outset of the arrangement.

We follow the guidance provided in ASC 606 for determining whether it is a principal (i.e., report revenues on a gross basis) or an agent (i.e., report revenues on a net basis) in arrangements with customers that involve another party that contributes to providing specified services to a customer, based on whether we control the specified good or service.

In the 2025 fiscal year, our B2B2C channel included 85 new employers and health plan clients, which brought our total client base to 1 67 .

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If there were to be a sudden and significant decrease in demand for our products or if there were a higher incidence of inventory obsolescence because of rapidly changing technology and customer requirements, we could be required to increase our inventory write-downs and our gross margin could be adversely affected.

Inventory and supply chain management remain areas of focus as we balance the need to maintain supply chain flexibility, to help ensure competitive lead times with the risk of inventory obsolescence.

Inventory and supply chain

management remain areas of focus as we balance the need to maintain supply chain flexibility, to help ensure competitive lead times with the risk of inventory obsolescence.

During the year ended December 31, 2025, total inventory write-downs expenses amounted to $3 20 .

Production Lines

Capitalization of Costs .

We capitalize direct incremental costs of third-party manufacturers related to the equipment in our production lines.

We cease construction cost capitalization relating to our production lines once they are ready for its intended use and held available for occupancy.

All renovations and betterments that extend the economic useful lives of assets and/or improve the performance of the production lines are capitalized.

Useful Lives of Assets .

We are required to make subjective assessments as to the useful lives of our production lines for purposes of determining the amount of depreciation to record on an annual basis with respect to our construction of the production lines.

These assessments have a direct impact on our net income (loss).

Production lines are usually depreciated on a straight-line basis over a period of up to seven years, except any renovations and betterments which are depreciated over the remaining life of the production lines.

Impairment of production lines.

We are required to review our production lines 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.

Business combination and asset acquisitions.

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Revenues for the year ended December 31, 2025, amounted to $22,359 compared to $27,040 during the year ended December 31, 2024.

The increase in revenues for the year ended December 31, 2024, compared to the year ended December 31, 2023, resulted from an increase in our revenues from our commercial channel.

The revenues also include the consolidation of Twill’s revenues, as a result of its acquisition during the first quarter of 2024.

The pro forma revenues for the year ended December 31, 2024, if the closing of the acquisition of Twill would have taken place on the first day of the year would have amounted to $29,003.

The decrease in revenues for the year ended December 31, 2025, compared to the year ended December 31, 2024, resulted primarily from a non-renewal of one customer acquired through the Twill acquisition.

Revenues generated during the year ended December 31, 2025, were derived from the sale of services to our commercial customers and consumers located mainly in the United States.

Cost of Revenues

During the years ended December 31, 2024 and 2023, we recorded costs related to revenues in the amount of $13,7 73 and $14,368, respectively.

The decrease in cost of revenues was mainly due to a reduction in payroll related expenses included in the cost of revenues and stock-based compensation during the period, partially offset by an increase in amortization of technology related to the acquisition of Twill, and hosting costs.

Cost of revenues for the years ended December 31, 2025 and 2024 was $9,694 and $13,773, respectively.

The decrease was primarily driven by lower amortization of technology, hardware and consumables, reduced payroll-related expenses allocated to cost of revenues, and lower hosting and server expenses.

Cost of revenues consist mainly of cost of device production, employees’ salaries and related overhead costs, stock-based compensation, depreciation of production lines and related cost of equipment used in production, amortization of technologies, hosting costs, shipping and handling costs and inventory write-downs.

Gross profit for the year ended December 31, 2024, amounted to $13,267 ( 49 .

1 % of revenues) compared to $5,984 (29.4% of revenues) for the year ended December 31, 2023

The increase in gross profit as a percentage of revenue for the year ended December 31, 2024, compared to the year ended December 31, 2023, resulted mainly from the increase in the revenues from the commercial channel, mainly related to the acquisition of Twill.

Gross profit for the year ended December 31, 2025, amounted to $12,665 (56.6% of revenues) compared to $13,267 (49.1% of revenues) for the year ended December 31, 2024.

The increase in gross profit as a percentage of revenue for the year ended December 31, 2025, compared to the year ended December 31, 2024, resulted mainly from lower amortization of technology, hardware and consumables and reduced hosting costs.

Gross profit for the year ended December 31, 2025, excluding amortization of acquired technology, depreciation and stock-based compensation was $14,404 (64.4% of revenues) compared to $18,366 (67.9% of revenues) during the year ended December 31, 2024.

Research and Development Expenses

Our research and development expenses increased by $3,931 to $ 24 , 1 79 for the year ended December 31, 2024, compared to $20,248 for the year ended December 31, 2023.

This increase was mainly a result of higher payroll related expenses, software licenses and an increase in subcontractor and consulting expenses due to the consolidation of Twill during the year ended December 31, 2024, partially offset by stock-based compensation and bonus payments.

Our research and development expenses, excluding stock-based compensation and depreciation, for the year ended December 31, 2024, were $ 20 , 6 45 compared to $16,367 for the year ended December 31, 2023, an increase of $ 4 ,278.

This increase was mainly a result of higher payroll related expenses, software licenses, and an increase in subcontractor and consulting expenses due to the consolidation of Twill.

Our research and development expenses decreased by $10,388 to $13,791 for the year ended December 31, 2025, compared to $24,179 for the year ended December 31, 2024.

The decrease in research and development expenses was mainly due to efficiency and post-merger integration activities resulting in a decrease in payroll expenses, subcontractors and consulting and stock-based compensation expenses.

Our research and development expenses, excluding stock-based compensation and depreciation, for the year ended December 31, 2025, were $12,033 compared to $20,645 for the year

ended December 31, 2024, a decrease of $8,612.

This decrease was mainly due to efficiency and post-merger integration activities resulting in a decrease in payroll, and subcontractors and consulting expenses.

Research and development expenses consist mainly of employees’ salaries and related overhead costs involved in research and development activities, expenses related to:

(i) our solutions including our Dario Smart Diabetes Management Solution, Dario Move solution and our digital behavioral health solution, (ii) labor, stock-based compensation contractors and engineering expenses, (iii) depreciation and maintenance fees related to equipment and software tools used in research and development, (iv) clinical trials performed in the United States to satisfy the FDA approval requirements and (v) facilities expenses associated with and allocated to research and development activities.

(i) our solutions including our Diabetes Management, MSK and our digital behavioral health solutions, (ii) labor, stock-based compensation contractors and engineering expenses, (iii) depreciation and maintenance fees related to equipment and software tools used in research and development and (iv) facilities expenses associated with and allocated to research and development activities.

Sales and Marketing

Our sales and marketing expenses increased by $ 2 ,5 65 to $ 26 , 350 for the year ended December 31, 2024, compared to $23,785 for the year ended December 31, 2023.

This increase was mainly a result of higher payroll related expenses, amortization of customer relationship, software licenses and an increase in subcontractor and consulting expenses due to the consolidation of Twill, partially offset by a decrease in bonus payments and stock-based compensation expenses during the year ended December 31, 2024.

Our sales and marketing expenses, excluding stock-based compensation, depreciation and amortization, for the year ended December 31, 2024, were $20, 27 7 compared to $17,146 for the year ended December 31, 2023, an increase of $3,1 3 1.

This increase was mainly due to an increase in payroll expenses, subcontractor and consulting services and software licenses resulting from the consolidation of Twill during the year ended December 31, 2024.

Sales and marketing expenses consist mainly of employees’ salaries and related overhead costs, stock-based compensation, online marketing campaigns of our service offering, trade show expenses and marketing consultants, marketing expenses and subcontractors.

Our sales and marketing expenses decreased by $6,012 to $20,338 for the year ended December 31, 2025, compared to $26,350 for the year ended December 31, 2024.

This decrease was mainly a result of lower payroll related expenses, lower stock-based compensation expenses, partially offset by an increase in subcontractors and consulting expenses and digital marketing expenses.

Our sales and marketing expenses, excluding stock-based compensation, depreciation and amortization, for the year ended December 31, 2025, were $16,851 compared to $20,277 for the year ended December 31, 2024, a decrease of $3,426.

This decrease was mainly due to a reduction in payroll expenses resulting from post-merger integration activities and a reduction in headcount.

partially offset by an increase in subcontractors and consulting expenses and digital marketing expenses.

Sales and marketing expenses consist mainly of employees’ salaries and related overhead costs, stock-based compensation, depreciation of customer relationship intangible asset, online marketing campaigns of our service offering, trade show expenses and marketing consultants and subcontractors.

General and Administrative Expenses

Our general and administrative expenses increased by $2, 342 to $20, 482 for the year ended December 31, 2024, compared to $18,140 for the year ended December 31, 2023.

The increase was mainly due to higher payroll related expenses and acquisition costs related to the consolidation of Twill during the year ended December 31, 2024, partially offset by a decrease in stock-based compensation.

Our general and administrative expenses, excluding stock-based compensation, acquisition costs and depreciation, for the year ended December 31, 2024, were $1 1 , 236 compared to $8, 663 for the year ended December 31, 2023, an increase of $2, 573 .

This increase was mainly due to higher payroll related expenses and acquisition costs related to the consolidation of Twill.

Our general and administrative expenses consist mainly of employees’ salaries and related overhead costs, stock-based compensation, directors’ fees, legal and accounting fees, patent registration, expenses related to investor relations, as well as our office rent and related expenses.

Our general and administrative expenses decreased by $5,291 to $15,191 for the year ended December 31, 2025, compared to $20,482 for the year ended December 31, 2024.

The decrease was mainly due to lower stock-based compensation expenses, lower accounting and legal fees and reduced acquisition costs that were related to the acquisition of Twill on February 15, 2024.

Our general and administrative expenses, excluding stock-based compensation, share-based payments, acquisition costs and depreciation, for the year ended December 31, 2025, were $9,667 compared to $11,236 for the year ended December 31, 2024, a decrease of $1,569, and was mainly due to lower accounting and legal fees, reduced subcontractor and consulting expenses.

Our general and administrative expenses consist mainly of employees’ salaries and related overhead costs, stock-based compensation, insurance costs, legal and accounting fees, acquisition related costs, expenses related to investor relations.

Finance income (expenses), net

Our finance income, net, increased by $16,319 to $13,145 for the year ended December 31, 2024, compared to $3,174 financing expenses for the year ended December 31, 2023.

The increase in the finance income, net for the year ended December 31, 2024, compared to the year ended December 31, 2023, was due to income from revaluation of the pre-funded warrants issued as part of the consideration for the acquisition of Twill, as these warrants are classified as a liability under U.S.

Financial expenses, net primarily consist of credit facility interest expense, interest income from cash balances, revaluation of warrants, revaluation of short-term investments, bank charges, lease liability and foreign currency translation differences.

Income from tax was $1,852 for the year ended December 31, 2024, representing an increase of $1,916 as compared to $64 of income tax expenses for the year ended December 31, 2023.

The increase in our income from tax was due to a change in the valuation allowance for deferred tax liability that resulted from the acquisition of Twill.

Our finance expenses, net, were $4,954 for the year ended December 31, 2025, compared to $13,145 of finance income, net, for the year ended December 31, 2024, a change of $18,100.

The change from finance income to finance expenses was primarily due to the decrease in income from revaluation of the pre-funded warrants (income of $1,580 in 2025 compared to income of $16,435 in 2024) issued in the first quarter of 2024, which are subject to re-measurement at each balance sheet date until exercised, and any change in fair value is recognized in our statement of comprehensive loss.

Financial expenses, net, primarily consist of credit facility interest expense, interest income from cash balances, revaluation of warrants and pre-funded warrants, revaluation of a long-term loan, bank charges, lease liability and foreign currency translation differences.

Income tax expense was $105 for the year ended December 31, 2025, compared to income from tax of $1,852 for the year ended December 31, 2024.

The change was primarily due to a reduction in the valuation allowance for deferred tax liability that resulted from the acquisition of Twill in 2024.

Net loss for the year ended December 31, 2025 was $41,714.

Net loss for the year ended December 31, 2024, was $42, 747 .

The decrease from 2023 was mainly due to the increase in our financial income.

The decrease from 2024 was mainly due to the decrease in our operating expenses.

The factors described above resulted in net loss attributable to common stockholders of $61,735 and $40,982 for the year ended December 31, 2025 and 2024, respectively.

Net operating loss carryforwards

As of December 31, 2025, we, WayForward and Twill had a U.S.

federal net operating loss carryforward of approximately $ 192 , 404 , of which $27,270 were generated from tax years 2011-2017 and can be carried forward and offset against taxable income, which expires during the years 2031 to 2037.

federal net operating loss carryforward of approximately $47,055, $5,803, and $156,686 of which $7,120, $371 and $18,832 respectively, were generated from tax years 2011-2017 and can be carried forward and offset against taxable income and that expires during the years 2031 to 2037.

On December 22, 2017, the U.S.

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To supplement our consolidated financial statements presented in accordance with U.S.

GAAP within this Annual Report on Form 10-K, management provides certain non-GAAP financial measures (“NGFM”) of the Company’s financial results, including such amounts captioned:

“net loss before interest, taxes, depreciation, and amortization” or “EBITDA,” and “Non-GAAP Adjusted Loss,” as presented herein below.

Importantly, we note the NGFM measures captioned

“EBITDA” and “Non-GAAP Adjusted Loss” are not recognized terms under U.S.

GAAP within this Annual Report on Form 10-K, management provides certain non-GAAP financial measures (“NGFM”) of our financial results, including such amounts captioned:

“Non-GAAP Adjusted Loss,” as presented herein below.

Importantly, we note the NGFM measures captioned “Non-GAAP Adjusted Loss” are not recognized terms under U.S.

GAAP, and as such, they are not a substitute for, considered superior to, considered separately from, nor as an alternative to, U.S.

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We believe the NGFM provide useful information by isolating certain expenses, gains, and losses, which are not necessarily indicative of our operating financial results and business outlook.

In this regard, the presentation of the NGFM herein below, is to help the reader of our consolidated financial statements to understand the effects of the non-cash impact on our (U.S.

GAAP) audited statement of operations of the revaluation of the warrants and the expense related to stock-based compensation, each as discussed herein above.

In this regard, the presentation of the NGFM herein below, is to help the reader of our consolidated financial statements to understand the effects of the non-cash impact

GAAP) audited statement of operations such as the revaluation of the warrants and the expense related to stock-based compensation, each as discussed herein above.

A reconciliation to the most directly comparable U.S.

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Depreciation and impairment expense

Amortization of acquired technology, brand and customer relationship

Other financial (income) expenses, net

Amortization of acquired technology and brand

Financial (income) expenses, net

Acquisition costs

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Liquidity and Capital Resources (amounts in thousands except for share and share amounts)

We have incurred net losses since its inception.

As of December 31, 2024, we had incurred recurring losses and negative cash flows since inception and has an accumulated deficit of $390,343 as of December 31, 2024.

For the year ended December 31, 2024, we used approximately $38,562 of cash in operations.

We expect to incur future net losses and our transition to profitability is dependent upon, among other things, the successful development and commercialization of our products and the achievement of a level of revenues adequate to support the cost structure.

Until we achieve profitability or generate positive cash flows, we will continue to be dependent on raising additional funds.

We intend to fund our future operations through cash on hand, additional private and/or public offerings of debt or equity securities or a combination of the foregoing.

There are no assurances, however, that we will be able to obtain an adequate level of financial resources that are required for the long-term development and commercialization of our product offerings.

As of December 31, 2024, we had approximately $27,7 64 in cash and cash equivalents compared to $36,797 at December 31, 2023.

As of December 31, 2025, we has incurred recurring losses and negative cash flows from operations since inception and has an accumulated deficit of $452,078 as of December 31, 2025.

For the year ended December 31, 2025, we incurred approximately $25,941 of negative cash flows in operations.

Management believes we have sufficient funds to support its operation for at least a period of twelve months from the date of the issuance of these consolidated financial statements.

Our current operating budget includes various assumptions concerning the level and timing of cash receipts and cash outlays for operating expenses and capital expenditures.

We expect to incur future net losses and its transition to profitability is dependent upon, among other things, the successful commercialization of our products and the achievement of a level of revenues adequate to support the cost structure.

Until we achieve profitability or generates positive cash flows, it will continue to be dependent on raising additional funds to fund its operations.

We intend to fund our future operations including meeting its covenants related to loan facility, through cash on hand, additional private and/or public offerings of debt or equity securities, cost-saving plan intended to reduce operating expenses and extend its cash runway, or a combination of the foregoing.

As of December 31, 2025, we had approximately $26,017 in cash and cash equivalents and short-term bank deposits compared to $28,461 at December 31, 2024.

We have experienced cumulative losses of $ 452 , 078 from inception (August 11, 2011) through December 31, 2025 and have a stockholders’ equity of $ 67 , 922 at December 31, 2025.

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Since inception, we have financed our operations primarily through private placements and public offerings of our common stock and warrants to purchase shares of our common stock, receiving aggregate net proceeds totaling $307,133 and a credit facility of $25,795 as of December 31, 2025.

On January 26, 2021, we 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, for aggregate gross proceeds of $70,000.

The closing of the offering was consummated on February 1, 2021.

The purchase price per share represents the “Minimum Price” of the Company’s Common Stock pursuant to Nasdaq Rule 5635(d) as of the date of execution of each respective securities purchase agreement.

We and the investors participating in the offering also executed a registration rights agreement pursuant to which we agreed to file a registration statement covering the resale of the shares within sixty (60) days following the final closing of the offering.

On October 22, 2021, we entered into a Sales Agreement (“Sales Agreement”) with Cowen and Company, LLC (“Cowen”), pursuant to which we may issue and sell shares of our common stock having an aggregate offering price of up to $50,000 from time to time through Cowen.

Upon entering into the Sales Agreement, we filed a new shelf registration statement on Form S-3, which was declared effective by the SEC on November 12, 2021.

During the year ended December 31, 2023, we sold 408,043 shares of our common stock under the Sales Agreement for aggregate net proceeds of approximately $1,614, The Sales Agreement has since expired.

On February 28, 2022, we entered into securities purchase agreements with institutional accredited investors relating to a registered direct offering with respect to the sale of an aggregate of 4,674,454 shares of our common stock and pre-funded warrants to purchase an aggregate of 667,559 shares of our common stock, at a purchase price of $7.49 per share.

The aggregate gross proceeds were approximately $40,000.

On June 9, 2022, we entered into a Credit Agreement (the “Credit Agreement”), with OrbiMed Royalty and Credit Opportunities III, LP (“Orbimed”), as the lender for a five-year senior secured credit facility in an aggregate principal amount of up to $50 million (the “Loan Facility”), of which $25 million was made available on the closing date and up to $25 million was to be made available on or prior to June 30, 2023, subject to certain revenue requirements.

On June 9, 2022, we entered into a Credit Agreement (the “OrbiMed Credit Agreement”), with OrbiMed Royalty and Credit Opportunities III, LP (“Orbimed”), as the lender for a five-year senior secured credit facility in an aggregate principal amount of up to $50 million, of which $25 million was made available on the closing date and up to $25 million was to be made available on or prior to June 30, 2023, subject to certain revenue requirements.

On May 1, 2023, we entered into a Loan and Security Agreement, and Supplement thereto (the “LSA”), with our subsidiary, PsyInnovations, collectively as the borrowers (the “Borrowers”) and Avenue Venture Opportunities Fund II, L.P.

and Avenue Venture Opportunities Fund, L.P., collectively as the lenders (the “Avenue Lenders”).

The LSA provides for a four-year secured credit facility in an aggregate principal amount of up to $40,000 (the “Loan Facility”), of which $30,000 was made available on the closing date (the “Initial Tranche”) and up to $10,000 (the “Discretionary Tranche”) may be made available on the later of July 1, 2023, or the date the Lender approves the issuance of the Discretionary Tranche.

The LSA provides for a four-year secured credit facility in an aggregate principal amount of up to $40,000 (the “Avenue Loan Facility”), of which $30,000 was made available on the closing date (the “Initial Tranche”) and up to $10,000 (the “Discretionary Tranche”) may be made available on the later of July 1, 2023, or the date the Avenue Lenders approve the issuance of the Discretionary Tranche.

On May 1, 2023, the Borrowers closed on the Initial Tranche, less certain fees and expenses payable to or on behalf of the Avenue Lenders.

As a result of the execution of the LSA and the funding of the Initial Tranche, we satisfied our prior Credit Agreement we previously executed with OrbiMed, on June 9, 2022, and terminated the Credit Agreement with Orbimed.

As a result of the execution of the LSA and the funding of the Initial Tranche, we satisfied our prior OrbiMed Credit Agreement we previously executed with OrbiMed, on June 9, 2022, and terminated the OrbiMed Credit Agreement with Orbimed.

All obligations under the LSA are guaranteed by our wholly owned subsidiary, Labstyle.

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If the Borrowers fail to meet the milestones set forth in the LSA, the Borrowers shall make monthly principal installments in advance in an amount sufficient to fully amortize the Loan.

The Borrowers shall repay amounts outstanding under the Loan Facility in full immediately upon an acceleration as a result of an event of default as set forth in the LSA.

During the term of the Loan Facility, interest payable in cash by the Borrowers shall accrue on any outstanding balance due under the Loan Facility at a rate per annum equal to the higher of (x) the sum of four one-half percent (4.50%)

plus the prime rate as published in the Wall Street Journal and (y) twelve and one-half percent (12.50%).

During an event of default, any outstanding amount under the Loan Facility will bear interest at a rate of 5.00% in excess of the otherwise applicable rate of interest.

The Borrowers will pay certain fees with respect to the Loan Facility, including an upfront commitment fee, an administration fee and a prepayment premium, as well as certain other fees and expenses of the Avenue Lenders.

The Borrowers shall repay amounts outstanding under the Avenue Loan Facility in full immediately upon an acceleration as a result of an event of default as set forth in the LSA.

During the term of the Avenue Loan Facility, interest payable in cash by the Borrowers shall accrue on any outstanding balance due under the Avenue Loan Facility at a rate per annum equal to the higher of (x) the sum of four one-half percent (4.50%) plus the prime rate as published in the Wall Street Journal and (y) twelve and one-half percent (12.50%).

During an event of default, any outstanding amount under the Avenue Loan Facility will bear interest at a rate of 5.00% in excess of the otherwise applicable rate of interest.

The Borrowers will pay certain fees with respect to the Avenue Loan Facility, including an upfront commitment fee, an administration fee and a prepayment premium, as well as certain other fees and expenses of the Avenue Lenders.

On February 15, 2024, we entered into the First Amendment to Loan and Security Agreement and Supplement (the “Avenue Amendment”) with the Avenue Lenders.

Pursuant to the Avenue Amendment, the parties agreed to include the Merger Sub and Twill as parties to our existing loan facility with the Avenue Lenders.

Pursuant to the Avenue Amendment, the parties agreed to include the Merger Sub and Twill as parties to our existing Avenue Loan Facility with Avenue Lenders.

In addition, the Avenue Amendment provides (i) that we will seek stockholder approval to reprice the warrants issued to the lenders on May 1, 2023 to permit an amendment to the exercise price of such warrants to the “minimum price” as defined by Nasdaq rules as of the closing of the Twill Agreement and (ii) permit the Avenue Lenders, subject to Nasdaq rules, to convert up to two million of the principal amount of its loan to us at a conversion price of $80.02 per share.

On December 16, 2024, we entered into the Third Amendment to Loan and Security Agreement and Supplement (the “Third Avenue Amendment”) with Avenue Lenders.

Pursuant to the Third Avenue Amendment, the parties agreed to (i) amend the potential interest only period under the loan facility such that the existing interest only period ending on April 30, 2024 was extended by a period of six months provided that we net certain proceeds from an equity financing on or before March 31, 2025 in the aggregate;

Pursuant to the Third Avenue Amendment, the parties agreed to (i) amend the potential interest only period under the Avenue Loan Facility such that the existing interest only period ending on April 30, 2024 was extended by a period of six months provided that we net certain proceeds from an equity financing on or before March 31, 2025 in the aggregate;

(ii) an additional sixth month interest only extension period was added, which is conditioned on our achieving a multi-million dollar net revenue milestone, with cash burn not to exceed a certain multi-million dollar level, for the trailing six month period ending September 30, 2025;

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In addition, the Third Avenue Amendment provides (i) that we will seek stockholder approval to reprice the warrants issued to the Avenue Lenders on May 1, 2023 to permit an amendment to the exercise price of such warrants to the “minimum price” as defined by Nasdaq rules as of the closing of the Avenue Amendment (or $14.416 per share) and (ii) permit the Avenue Lenders, subject to Nasdaq rules, to convert up to two million of the principal amount of its loan to us at a conversion price of $17.30 per share.

As of December 31, 2024, we have not yet obtained stockholder approval for the warrant repricing.

On April 28, 2025, we held a special meeting of stockholders in which the stockholders approved the following:

(i) reduce the exercise price of certain warrants to purchase 29,246 shares of Common Stock issued to Avenue Venture Opportunities Fund II, L.P.

and Avenue Venture Opportunities Fund, L.P.

(collectively “Avenue”) to $14.42 per share, and (ii) to permit the conversion of up to two million dollars of the principal amount of the loan issued by Avenue to us at a conversion price of $17.30 per share.

In consideration for the Third Avenue Amendment, we agreed to pay a certain amendment fee at closing, and the exit payment due under the loan was increased by a certain amount, in addition to accrued interest and then outstanding principal.

On May 1, 2023, we entered into securities purchase agreements (each, a “Series B Purchase Agreement”) with accredited investors relating to an offering and the sale of an aggregate of 6,200 shares of newly designated Series B Preferred Stock (the “Series B Preferred Stock”), an aggregate of 7,946 shares of Series B-1 Preferred Stock (the “Series B-1 Preferred Stock”), and an aggregate of 150 shares of Series B-2 Preferred Stock (the “Series B-2 Preferred Stock”) at a purchase price of $1,000 for each share of preferred stock.

Certain of our executive officers and directors purchased shares of Series B-2 Preferred Stock in the Offering.

On May 5, 2023, we entered into purchase agreements (the “Series B-3 Purchase Agreement” and together with the Series B Purchase Agreement, the “Purchase Agreement”) with accredited investors, relating to the Offering, to an offering and the sale of an aggregate of 1,106 shares of newly designated Series B-3 Preferred Stock (the “Series B-3 Preferred Stock”), at a purchase price of $1,000 for each share of preferred stock.

As a result of the sale of the preferred stock, the aggregate gross proceeds to us from the Offering are approximately $15.4 million.

The closing of the Series B Preferred Stock, Series B-1 Preferred Stock and Series B-2 Preferred Stock occurred on May 4, 2023, and the closing of the Series B-3 Preferred Stock occurred on May 9, 2023.

On April 30, 2025, the Avenue Loan Facility pursuant to the LSA was repaid in full.

On May 1, 2023, we executed an agreement (the “Preferred Agreement”) with existing holders of our Series A-1 Convertible Preferred Stock (the “Series A-1 Preferred Stock”).

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Such shares of common stock are issuable on the following dates, assuming the Series A-1 Preferred Stock has not yet been converted:

(i) up to an aggregate of

63,675 shares of Common Stock before July 1, 2023, if not converted for at least one quarter, (ii) up to an aggregate of 127,350 shares of Common Stock before October 1, 2023, if not converted for at least two quarters, (iii) up to an aggregate of 191,026 shares of Common Stock before January 1, 2024, if not converted for at least three quarters, (iv) up to an aggregate of 254,700 shares of Common Stock before April 1, 2024, if not converted for at least four quarters, and (v) up to an aggregate of 382,050 shares of Common Stock before July 1, 2024, if not converted for at least five quarters.

(i) up to an aggregate of 3,184 shares of Common Stock before July 1, 2023, if not converted for at least one quarter, (ii) up to an aggregate of 6,368 shares of Common Stock before October 1, 2023, if not converted for at least two quarters, (iii) up to an aggregate of 9,551 shares of Common Stock before January 1, 2024, if not converted for at least three quarters, (iv) up to an aggregate of 12,735 shares of Common Stock before April 1, 2024, if not converted for at least four quarters, and (v) up to an aggregate of 19,103 shares of Common Stock before July 1, 2024, if not converted for at least five quarters.

The holders of Series A-1 Preferred Stock will not be entitled to receive any such shares if the issuance of such shares will exceed a non-waivable 19.99% ownership blocker.

On February 15, 2024, we entered into securities purchase agreements (each, a “Series C Purchase Agreement”) with accredited investors relating to an offering (the “Series C Offering”) and the sale of an aggregate of (i) 17,307 shares of newly designated Series C Preferred Stock (the “Series C Preferred Stock”), and (ii) 4,000 shares of Series C-1 Preferred Stock (the “Series C-1 Preferred Stock”), at a purchase price of $1,000 for each share of preferred stock.

In addition, on February 16, 2024, we entered into Series C Purchase Agreements with accredited investors relating to the Offering and the sale of an aggregate of 1,115 shares of Series C-2 Preferred Stock (the “Series C-2 Preferred Stock” and together with the Series C Preferred Stock and the Series C-1 Preferred Stock, the “Series C Preferred Stock”), at a purchase price of $1,000 for each share of preferred stock.

As a result of the sale of the preferred stock, the aggregate gross proceeds to us from the Series C Offering were approximately $22,422.

In addition, on February 16, 2024, we entered into Series C Purchase Agreements with accredited investors relating to the Series C Offering and the sale of an aggregate of 1,115 shares of Series C-2 Preferred Stock (the “Series C-2 Preferred Stock” and together with the Series C Preferred Stock and the Series C-1 Preferred Stock, the “Series C Preferred Stock”), at a purchase price of $1,000 for each share of preferred stock.

We received aggregate gross proceeds of approximately $22,422 from the offering of preferred stock.

The closing of the Series C Preferred Stock, Series C-1 Preferred Stock and Series C-2 Preferred Stock occurred on February 21, 2024.

On December 16, 2024, we entered into securities purchase agreements with accredited investors relating to an offering and the sale of an aggregate of (i) 7,055 shares of newly designated Series D Preferred Stock, and (ii) 11,750 shares of Series D-1 Preferred Stock, at a purchase price of $1,000 for each share of preferred stock.

As a result of the sale of the preferred stock, the aggregate gross proceeds to us from the offering were approximately $18,805.

We received aggregate gross proceeds of approximately $18,805 from the offering of preferred stock.

The closing of the offering occurred on December 18, 2024.

On January 7, 2025, we entered into securities purchase agreements with accredited investors relating to an offering and the sale of an aggregate of (i) 4,950 shares of newly designated Series D-2 Preferred Stock, and (ii) 1,850 shares of Series D-3 Preferred Stock, at a purchase price of $1,000 for each share of preferred stock.

As a result of the sale of the preferred stock, the aggregate gross proceeds to us from the offering were approximately $6,800.

The closing of the offering occurred on January 14, 2025.

On December 16, 2024, we and certain purchasers that were holders of our Series B and C Preferred Stock executed lock up agreements (the “Lock Up Agreement”), pursuant to which we agreed to issue, subject to stockholder approval, up to forty percent (40%) of the shares of common stock issuable upon conversion of the preferred stock held by such purchaser, including dividend shares of common stock due upon conversion of these shares into shares of common stock , over the course of twelve (12) months (the “Additional Shares”).

Each holder shall be entitled to receive 10% of the Additional Shares for each three (3) month period each holder agrees not to transfer or otherwise sell (subject to certain limitations) the shares of common stock issuable upon conversion of the Series B Preferred Stock and Series C Preferred Stock and the dividend shares of common stock due upon conversion.

Between May 23, 2025 and May 28, 2025, the Company and holders that previously entered into Lock-Up Agreements, entered into an Amended and Restated Lock-Up Agreement (the “A&R Lock-Up Agreement”) pursuant to which the holders agreed to extend the restrictive period previously provided in the Lock-Up Agreements until February 21, 2026 (the “Lock Up Period”) for the right to receive an additional 10% of the common stock underlying the Series B Preferred Stock and the Series C Preferred Stock held by the holders.

On October 20, 2025, we and holders that previously entered into the Lock-Up Agreement and the A&R Lock-Up Agreement entered into a Second Amended and Restated Lock-Up Agreement (the “Second A&R Lock-Up Agreement”) pursuant to which the Lock-Up Period shall automatically terminate, and all share consideration shall be accelerated and immediately be issued by us in full (to the extent not already issued) upon (A) any merger or consolidation of our with or into another individual, entity, corporation, partnership, association, limited liability company, limited liability partnership, joint-stock company, trust or unincorporated organization, (B) any sale of all or substantially all of our assets in one transaction or a series of related transactions, or (C) any reclassification of the Common Stock or any

compulsory share exchange pursuant to which the common stock is effectively converted into or exchanged for other securities, cash or property.

On February 21, 2026, all lockup shares were issued to the holders in the form of common stock and pre-funded warrants.

On January 7, 2025, we entered into securities purchase agreements (each, a “Series D Purchase Agreement”) with accredited investors relating to an offering (the “Series D Offering”) and the sale of an aggregate of (i) 4,950 shares of newly designated Series D-2 Preferred Stock (the “Series D-2 Preferred Stock”), and (ii) 1,850 shares of Series D-3 Preferred Stock (the “Series D-3 Preferred Stock”), at a purchase price of $1,000 for each share of preferred stock.

As a result of the sale of the preferred stock, the aggregate gross proceeds we received from the Series D Offering are approximately $6,800.

The closing of the Series D-2 Preferred Stock, and Series D-3 Preferred Stock occurred on January 14, 2025.

The conversion of the preferred stock was subject to stockholder approval.

In addition, the preferred stock will automatically convert into shares of common stock, subject to certain beneficial ownership limitations, on the 12-month anniversary of the issuance date.

The holders of preferred stock will also be entitled to dividends equal to 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 preferred stock then held by such holder for each full quarter anniversary of holding for a total of four quarters from the Closing Date, all issuable upon conversion of the preferred stock.

On April 28, 2025, we held a special meeting of stockholders in which the stockholders approved among other agenda items the (A) the issuance of shares of our common stock, in excess of 20% of our issued and outstanding shares of common stock, upon:

(i) the conversion of 25,605 shares of our Series D, D-1, D-2 and D-3 Preferred Stock into an aggregate of 1,697,677 shares of common stock, which were issued pursuant to private placement transactions that closed on December 18, 2024 and January 14, 2025 (the “Private Placements”), (ii) the issuance of up to 679,085 shares of common stock issuable as dividends to the Series D, D-1, D-2 and D-3 Preferred Stock;

and (iii) the issuance of up to 208,754 shares of common stock issuable as share consideration provided under the Lock Up Agreements.

On May 20, 2025, we filed an Amended and Restated Certificate of Designation of Preferences, Rights and Limitations of the Company’s Series C Preferred Stock (the “Series C Certificate of Designation”), an Amended and Restated Certificate of Designation of Preferences, Rights and Limitations of the Company’s Series C-1 Preferred Stock (the “Series C-1 Certificate of Designation”), and an Amended and Restated Certificate of Designation of Preferences, Rights and Limitations of the Company’s Series C-2 Preferred Stock (the “Series C-2 Certificate of Designation”, collectively with the Series C Certificate of Designation and the Series C-1 Certificate of Designation, the “Series C Certificates of Designation”), all with the Secretary of State of the State of Delaware.

The Series C Certificates of Designation were amended to extend the mandatory conversion period from fifteen (15) to twenty-four (24) months from the original issue date.

We will issue a dividend equal to fifteen percent (15%) of the number of shares of Common Stock issuable upon conversion of the Series C Preferred Stock, Series C-1 Preferred Stock and/or Series C-2 Preferred Stock then held by such holder for each full quarter anniversary of holding following the filing of the Series C Certificates of Designation with the Secretary of State of the State of Delaware.

On September 18, 2025, upon obtaining the vote of a majority of the holders of the relevant classes of preferred stock and the approval of our board of directors, we filed an Amended and Restated Series A-1 Certificate of Designation, an Amended and Restated Series C Certificates of Designation, an Amended and Restated Series D Certificates of Designation, all with the Secretary of State of the State of Delaware.

The Series C Certificates of Designation and Series D Certificates of Designation were amended to accelerate the mandatory conversion period of all outstanding shares of each such series into shares of the Company’s common stock, or at each holder’s election in pre-funded warrants, effective as of September 18, 2025.

The Series A-1 Certificate of Designation was amended to provide holders with the option to receive pre-funded warrants in lieu of common stock.

On September 25, 2025, upon obtaining the vote of a majority of the holders of the relevant classes of preferred stock and the approval of our board of directors, we filed an Amended and Restated Series C-1 Certificate of Designation with the Secretary of State of the State of Delaware.

The Series C-1 Certificate of Designation was amended to accelerate the mandatory conversion period of all outstanding shares of such series into shares of the Company’s common stock, or at each holder’s election in pre-funded warrants, effective as of September 25, 2025.

In connection with such mandatory conversion, each holder of preferred stock also received all accrued and unpaid dividends, including any dividend shares or payment-in-kind shares, in addition to the conversion shares issuable upon conversion, subject to certain beneficial ownership blockers.

The filings of the Series A-1 Certificate of Designation, the Series C Certificates of Designation and the Series D Certificates of Designation were intended to amend and restate the terms mentioned above, and no additional securities were issued or sold as a result.

In September 2025, all outstanding shares of Series C, C-1 and C-2 Preferred Stock, totaling 20,957 shares, were converted into 982,845 shares of common stock, and as of September 30, 2025, no Series C, C-1 and C-2 Preferred Stock remains outstanding.

In September 2025, all outstanding shares of Series D, D-1, D-2 and D-3 Preferred Stock, totaling 25,605 shares, were converted into 1,600,043 and 776,719 shares of common stock and pre-funded warrants, respectively, and as of September 30, 2025, no shares of Series D, D-1, D-2 and D-3 Preferred Stock remains outstanding.

In September 2025, all outstanding shares of Series A-1 Preferred Stock and B-1 Preferred Stock, totaling 1,882 and 4,946 shares, were converted into 43,803 and 114,974 shares of common stock, respectively, and as of September 30, 2025, no shares of Series A-1 Preferred Stock and B-1 Preferred Stock remains outstanding.

On April 30, 2025, we entered into a debt financing facility for up to $50 million (the “Callodine Loan Facility”) provided by Callodine (the “Callodine Lenders”).

The capital refinances our existing credit facility, providing additional operational flexibility and supporting the commercial execution of our B2B2C strategy across pharmaceutical companies, self-insured employers and payer channels.

Under the terms of the credit agreement (the "Callodine Credit Agreement"), we borrowed $32.5 million at closing.

In addition, an aggregate of up to an additional $17.5 million is available to be drawn down at our option, based on the achievement of certain revenue thresholds.

The Callodine Credit Agreement has a five-year term that matures in April 2030.

In connection with the funding of the closing amount, we also issued a warrant to purchase 105,707 shares of our common stock, with an exercise price of $16.556.

In addition, up to $2.5 million of the loaned amount can be converted into shares of our common stock at a price of $19.866 per share.

With the refinancing and current cash on hand, we believe that deferring the debt amortization from the end of 2025 to 2028 will allow the time to generate funds from operations to support our cash flow.

On August 15, 2025, we did not meet one of the financial covenants under the Callodine Credit Agreement.

Upon an Event of Default (as defined in the Callodine Credit Agreement) under the Callodine Credit Agreement, interest shall accrue to at a rate per annum equal to the lesser of (i) three percent (3%) over the Contract Rate (as defined in the Callodine Credit Agreement), or (ii) the maximum rate of interest permitted to be charged by applicable laws or regulations, until paid.

The Company notified Callodine of its intention to utilize an Equity Cure (as defined in the Callodine Credit Agreement) to address the event of default.

On November 5, 2025, we entered into an amendment (the “Callodine Credit Agreement Amendment”) to its existing Callodine Loan Facility, with the Callodine Lenders.

Among other things, the Callodine Credit Agreement Amendment provides for (i) a reset of financial covenants and waives financial-covenant testing for the second and third quarters of 2025;

(ii) the replacement of the existing minimum cash covenant to a $10,000,000 minimum consolidated unencumbered liquid assets covenant;

(iii) a monthly 13-week cash-flow reporting requirement when liquidity is below $11,000,000 (subject to a certain EBITDA exception);

(iv) a clarification that an additional funding of $2,500,000 by the Callodine Lenders is uncommitted and at the Callodine Lenders’ discretion;

and (v) an increase in the exit fee by an additional $150,000 (which may be waived if a change-of-control prepayment fee is triggered).

The Company paid an amendment fee of $150,000 to Callodine.

In connection with the Callodine Credit Agreement Amendment, we also amended and restated the warrants issued to the Lenders upon the execution of the Callodine Loan Facility, to reduce the exercise price of the Callodine Lender Warrants from $16.556 (post reverse stock split) to $15.3495 per share as well as to reduce the conversion price of up to $2,500,000 of the Callodine Loan Facility from $19.866 (post reverse stock split) to $15.3495.

On September 22, 2025, we entered into securities purchase agreements with accredited investors relating to the offering and the sale of an aggregate of 1,154,420 shares of common stock and pre-funded warrants to purchase up to 1,558,760 shares of common stock, at a purchase price of $6.45 per share.

We received aggregate gross proceeds of approximately $17,500 from the offering of common stock and pre-funded warrants.

The closing of the offering occurred on September 23, 2025.

Readers are advised that available resources may be consumed more rapidly than currently anticipated, resulting in the need for additional funding sooner than expected.

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Net cash used in operating activities was $25,941 for the year ended December 31, 2025, compared to $38,562 used in operations for the year ended December 31, 2024.

Cash used in operations increased mainly due to the increase in our operating expenses and an increase in our working capital.

Cash used in operations decreased mainly due to the decrease in our operating expenses and a decrease in our working capital, specifically due to efficiencies and post-merger activities.

Net cash used in investing activities

Net cash used for investing activities was $4,342 for the year ended December 31, 2025, compared to cash used in investing activities of $8,934 for the year ended December 31, 2024.

The increase is mainly due to the acquisition of Twill in the year ended December 31, 2024, compared to the year ended December 31, 2023.

The decrease is mainly due to the acquisition of Twill in the year ended December 31, 2024, compared to the year ended December 31, 2025.

Net cash provided by financing activities

Net cash provided by financing activities was $24,313 for the year ended December 31, 2025, compared to $38,531 for the year ended December 31, 2024.

During the year ended December 31, 2024, we raised net proceeds in an amount of approximately $38,531 through our February and December 2024 private placements.

Contractual Obligations

Set forth below is a summary of our current obligations as of December 31, 2024, to make future payments due by the period indicated below, excluding payables and accruals.

We expect to be able to meet our obligations in the ordinary course.

Operating lease obligations are for motor vehicle and real property leases which we use in our business.

Purchasing obligations consists of outstanding purchase orders for materials and services from our vendors.

Payments due by period

dollars thousands)

Contractual Obligations

Less than 1 year

Operating Lease Obligations

Purchasing Obligations

Total contractual cash obligations

During the year ended December 31, 2025, we raised net proceeds in an amount of approximately $24,128 through our January and September 2025 offerings and net proceeds in an amount of approximately $185 through the refinance with the Callodine Loan Facility Lenders.

Contingencies

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Recently Issued and Adopted Accounting Pronouncements

In November 2023, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280), Improvements to Reportable Segment Disclosures, which expands annual and interim disclosure requirements for reportable segments, primarily through enhanced disclosures about significant segment expenses.

In addition, it provides new segment disclosure requirements for entities with a single reportable segment.

The guidance will be effective for us for annual periods beginning January 1, 2024, and for interim periods beginning January 1, 2025.

Early adoption is permitted.

We adopted the fiscal year standard for the period beginning January 1, 2024 on a retrospective basis which resulted in updated segment disclosures.

For more information on the updated segment disclosures, refer to Note 18 of our consolidated financial statements.

In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-09, Income Taxes (Topic 740) - Improvements to Income Tax Disclosures.

The ASU requires that an entity disclose specific categories in the effective tax rate reconciliation as well as provide additional information for reconciling items that meet a quantitative threshold.

Further, the ASU requires certain disclosures of state versus federal income tax expense and taxes paid.

The amendments in this ASU are required to be adopted for fiscal years beginning after December 15, 2024.

The Company implemented the new income tax disclosures prospectively.

The implementation of ASU 2023-09 affected disclosures only and had no impact on the Company’s financial condition or results of operations (See Note 15 Taxes on Income).

Recently issued accounting pronouncements, not yet adopted:

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740), Improvements to Income Tax Disclosures, which requires disaggregated information about the effective tax rate reconciliation as well as information on income taxes paid.

The guidance will be effective for us for annual periods beginning January 1, 2025, with early adoption permitted.

We are currently evaluating the impact on its financial statement disclosures.

In November 2024, the FASB issued ASU 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40) - Disaggregation of Income Statement Expenses.

The ASU requires, among other items, additional disaggregated disclosures in the notes to financial statements for certain categories of expenses that are included on the Statements of Operations.

ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and for interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted.

We are currently evaluating the effect of adopting the ASU on our disclosures.

ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and for interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted, and may be applied either prospectively or retrospectively.

The Company is currently evaluating the effect of adopting the ASU on its disclosures.

In July 2025, the FASB issued ASU 2025-05, Financial Instruments – Credit Losses (Topic 326):

Measurement of Credit Losses for Accounts Receivable and Contract Assets (“ASU 2025-05”).

ASU 2025-05 provides a practical expedient that all entities can use when estimating expected credit losses for current accounts receivable and current contract assets arising from transactions accounted for under ASC 606, Revenue from Contracts with Customers.

Under this practical expedient, an entity is allowed to assume that the current conditions it has applied in determining credit loss allowances for current accounts receivable and current contract assets remain unchanged for the remaining life of those assets.

ASU 2025-05 is effective for fiscal years beginning after December 15, 2025, and interim reporting periods in those years.

Entities that elect the practical expedient and, if applicable, make the accounting policy election are required to apply the amendments prospectively.

ASU 2025-05 is not expected to have a material impact on the Company’s consolidated financial statements.

In September 2025, the FASB issued Accounting Standards Update 2025-06, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40):

Targeted Improvements to the Accounting for Internal-Use Software (“ASU 2025-06”).

ASU 2025-06 provides targeted improvements to the accounting for internal-use software costs by replacing the existing project-stage model with a principles-based approach to determine when capitalization of costs should begin.

ASU 2025-06 is effective for all entities for annual reporting periods beginning after December 15, 2027 on a prospective basis, with early adoption permitted.

The Company is currently evaluating the potential impact that ASU 2025-06 will have on its consolidated financial statements.

In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270):

Narrow-Scope Improvements (“ASU 2025-11”).

ASU 2025-11 provides clarifications intended to improve the consistency and usability of interim disclosure requirements, including a comprehensive listing of required interim disclosures and a new disclosure principle for reporting material events occurring after the most recent annual period.

The amendments do not change the underlying objectives of interim reporting but are designed to enhance clarity in application.

The guidance is effective for fiscal years beginning after December 15, 2027, including interim periods within those fiscal years.

Quantitative and Qualitative Disclosure About Market Risk

Not applicable.

Financial Statements and Supplementary Data

Our consolidated financial statements and notes thereto, are set forth on pages F-5 through F-56 of this Annual Report.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Not applicable.

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 7. Management’s Discussion and Analysis