Item 9A. Controls and Procedures
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer, we carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as defined 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, 2025, such disclosure controls and procedures were effective.
Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods 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.
Limitations on the Effectiveness of Internal Controls
Readers are cautioned that our management does not expect that our disclosure controls and procedures or our internal control over financial reporting will necessarily prevent all fraud and material error. An internal control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our control have been detected. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any control design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting that occurred during the quarter ended December 31, 202 5 , that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Management’s Report on Internal Control Over Financial Reporting
As 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. GAAP. Our internal control over financial reporting includes those policies and procedures that:
(1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of our company;
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(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of consolidated financial statements in accordance with accounting principles generally accepted in the United States of America, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and
(3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the consolidated financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect errors or misstatements in our consolidated financial statements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree or compliance with the policies or procedures may deteriorate. Management assessed the effectiveness of our internal control over financial reporting at December 31, 202 5 . In making these assessments, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (2013 Framework). Based on our assessments and those criteria, management determined that we maintained effective internal control over financial reporting on December 31, 2025.
Item 9B. Other Information
N o n e .
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.
PART III
Item 10. Directors, Executive Officers and Corporate Governance
The following sets forth information regarding our executive officers and the members of our Board of Directors as of the date of this Annual Report. All directors hold office for one-year terms until the election and qualification of their successors. Officers are appointed by our Board of Directors and serve at the discretion of our Board of Directors, subject to applicable employment agreements.
Name
Age
Position(s)
Erez Raphael
52
Chief Executive Officer and Director
Chen Franco-Yehuda
42
Chief Financial Officer, Treasurer and Secretary
Steven Nelson
53
Chief Commercial Officer
Yoav Shaked
54
Chairman of the Board of Directors
Dennis Matheis
65
Director
Hila Karah
57
Director
Dennis M. McGrath
69
Director
Lawrence Leisure
75
Director
Adam Stern
61
Director
Erez Raphael has served as our Chief Executive Officer since August 9, 2013. Mr. 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. Mr. 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. Mr. Raphael holds a B.A. in economics and business
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management from Haifa University. 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.
Chen Franco-Yehuda has served as the Company’s Chief Financial Officer, Treasurer and Secretary, since May 15, 2025. Prior to joining our company, Ms. Franco-Yehuda served as Chief Financial Officer, Treasurer and Secretary of Pluri Inc. (Nasdaq, TASE: PLUR), from March 2019 to October 2024. Prior to that, Ms. Franco-Yehuda served as Pluri’s Head of Accounting and Financial Reporting since July 2016, and Pluri’s Corporate Controller since May 2013. Before joining Pluri, from October 2008 to April 2013, Ms. Franco-Yehuda served as a manager of audit groups relating to public and private companies in various industries at PricewaterhouseCoopers (PwC) and also as a lecturer of accounting classes at the Open University of Israel from 2009 to 2014. Ms. Franco-Yehuda also served as a board member and a member of the audit and compensation committee at Brenmiller Energy Ltd. (Nasdaq: BRNG) between August 2022 to August 2025. Ms. Franco-Yehuda holds a Bachelor’s degree in economics and accounting with high honors from Haifa University and is a certified public accountant in Israel.
Steven C. Nelson has served as our Chief Commercial Officer since June 5, 2024, and as our President since July 10, 2025. From October 2018 to September 2023, Mr. Nelson served as President and Chief Executive Officer of Contigo Health, a Premier Inc. subsidiary, where he previously served as Chief Operating Officer from 2017 to 2018, Vice President of Strategy, Planning, & Innovation from 2015 to 2016 and Chief of Staff in 2016. From 2007 to 2014, he served as Senior Vice President of Strategy, Product, & Marketing at Highmark Inc., a healthcare company. Prior to Highmark, from 2012 to 2014, he served as the Senior Vice President of Executive Oversight at Allegheny Health Network, a healthcare company. Earlier in his career, Mr. Nelson was a Senior Vice President for GNC Holdings, LLC, General Manager of Brand Marketing and Promotions for MET-Rx Nutrition Inc., Vice President of International Marketing for 141 Communicator, and Director of Marketing & Omnicom Integration for GMR Marketing LLC. Mr. Nelson holds a Bachelor of Science in education from the University of Pittsburgh at Johnstown and a Master of Arts in Business Administration from Ohio University.
Yoav 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. from May 2004 until its sale to C.R. Bard, Inc. in November 2009. 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 diseases. Mr. Shaked currently serves on the board of directors of several biotechnology companies, including Endospan Ltd., Vibrant Ltd., G&G Biotechnology Ltd., and Orasis Pharmaceuticals, Ltd., the latter of which he serves as Chairman of the board. Mr. Shaked has a B.A. in biology from The Hebrew University of Jerusalem. 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.
Dennis Matheis has been a director of our company since July 2, 2020. Mr. Matheis spent nearly 30 years in various senior leadership roles in health insurance and healthcare. Since September 2022 he serves as the President and Chief Executive Officer of Sentara Healthcare, Inc. Prior to that, he served for 5 years as the President of Optima Health, Inc. and 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. Mr. 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. Mr. Matheis has a B.S. in accounting from the University of Kentucky and practiced as a Certified Public Accountant before entering the healthcare industry. We believe that Mr. Matheis is qualified to serve on our Board of Directors because of his experience in the healthcare business.
Hila Karah has been a director of our company since November 23, 2014. Ms. Karah has extensive experience in business consulting and as an investor in high-tech, biotech, and internet companies. Ms. Karah serves as a managing partner at Pitango HealthTech VC. 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 Life Sciences Ltd., a New York-based hedge fund. Prior to that, Ms. Karah served as research analyst at Oracle Partners Ltd., a health care-focused hedge fund. Ms. Karah has served as a director in several private and public companies including Intec Pharma, since 2009 and Cyren Ltd since 2008. Ms. 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. We
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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.
Dennis M. McGrath has been a director of our company since November 12, 2013. Mr. McGrath is a seasoned medical device, diagnostic, and pharma 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. (Nasdaq: PHMD), he joined PAVmed, Inc (Nasdaq: PAVM, PAVMZ), a multi-product, commercial stage, medical technology company in 2017 and presently serves as its President and Chief Financial Officer. Additionally, upon the IPO of PAVmed’s majority owned subsidiary, Lucid Diagnostics, Inc. (Nasdaq: LUCD) he was appointed its Chief Financial Officer. Previously, from 2000 to 2017 Mr. McGrath served in several senior level positions of PhotoMedex, Inc. (Nasdaq: 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 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. 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. Mr. McGrath presently serves as a director and audit chair of several healthcare companies, including Citius Pharmaceuticals (Nasdaq: CTXR), Citius Oncology, Inc. (Nasdaq: CTOR), LivProcess, Inc., and as a founding member and director from its inception in 2014 until 2024 of Cagent Vascular, Inc. Formerly, from 2007 to 2009, Mr. McGrath served as a director of Embrella Cardiovascular, Inc. (sold to Edwards Lifesciences Corporation, NYSE: EW). He also serves as the Chairman emeritus of the Board of Trustees for Manor College. We believe Mr. McGrath is qualified to serve on our Board of Directors because of his financial and accounting expertise and his experiences serving as an officer and director of public and private companies, particularly in the healthcare industry.
Lawrence Leisure has been a director of our company since February 25, 2025. Mr. Leisure has extensive business experience consulting and advising in the senior living, provider services, value based care and technology enabled services sectors. Since 2014, Mr. Leisure has served as the Co-Founder and Co-Managing Partner of Chicago Pacific Founders, a private equity firm focused on digital and AI-enabled businesses, and those serving the senior population. Mr. Leisure is serving on the board of directors and the compensation committee of P3 Health Partners Inc. (Nasdaq: PIII), a publicly traded health management company. Mr. Leisure has also served on the board of directors of several private companies backed by Chicago Pacific Founders as well as several venture capital backed companies. Prior to Chicago Pacific Partners, Mr. Leisure held senior management roles at Accenture, PricewaterhouseCoopers, Towers Perrin, Kaiser Foundation Health Plans and UnitedHealth Group. Mr. Leisure was also employed by the venture capital firm, Kleiner Perkins, as an Operating Partner within the Life Sciences & Digital Health Practice. Mr. Leisure is a Senior Advisor at the Mussalem Center for BIODESIGN at Stanford University. Mr. Leisure holds a B.A. from Stanford University and an MBA from the University of California-Los Angeles Anderson School of Management. We believe Mr. Leisure 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.
Adam Stern has been a director of our company since March 1, 2020 and previously served on our board of directors between October 2011 and May 2014. Mr. Stern serves as the Head of Private Equity, Merchant & Venture Banking at ThinkEquity LLC, specializing in providing principal investment capital and strategic advisory services to high-growth private companies across technology, life sciences, and emerging growth sectors. Prior to that, Mr. Stern was the Head Private Equity Banking at Aegis Capital Corp. and CEO of SternAegis Ventures since 2012 . Prior to Aegis, from 1997 to November 2012, he was with Spencer Trask Ventures, Inc., as a Senior Managing Director, where he managed the structured finance group focusing primarily on the technology and life science sectors. Mr. 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. Mr. Stern holds Series 7, 8, 9, 10, 24, 63, and 79 licenses and received a Bachelor of Arts degree with honors from The University of South Florida in 1997. 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.
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Board Composition
Our business is managed under the direction of our Board of Directors. Our Board of Directors currently consists of seven members and one observer.
Pursuant to the Callodine Loan Facility, the Callodine Lenders have appointed one representative to attend all meetings of the Board of Directors (the “ Board Observer ”) in a non-voting capacity during the term of the Callodine Credit Agreement. The Board Observer is required to keep all information provided by the Company confidential, and we reserve the right to exclude the Board Observer from accessing any materials, meetings, or portions thereof if (a) the Board of Directors, based upon advice from counsel, believes that exclusion is necessary to protect attorney-client privilege or confidential information, or (b) the Board of Directors reasonably believes that such access could significantly impact the Board of Directors’ consideration of a specific matter.
Pursuant to the terms of the placement agency agreement between us and Aegis Capital Corp. (“Aegis”), 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.
Except for the foregoing, there are no arrangements between our directors and any other person pursuant to which our directors were nominated or elected for their positions.
Except as set forth herein, none of our directors or executive officers have been involved, in the past ten years and in a manner material to an evaluation of such director’s or officer’s ability or integrity to serve as a director or executive officer, in any of those “Certain Legal Proceedings” more fully detailed in Item 401(f) of Regulation S-K, which include but are not limited to, bankruptcies, criminal convictions and an adjudication finding that an individual violated federal or state securities laws. Additionally, none of our directors or executive officers have been involved in any material proceedings to which such director or executive officer was a party adverse to us or any of our subsidiaries or has a material interest adverse to us or any of our subsidiaries.
Meetings of the Board
Our Board of Directors met in person or telephonically seven times during the fiscal year ended December 31, 2025 and acted by unanimous written consent on eleven occasions. Each member of our then current Board of Directors was present for at least 86% or more of the Board of Directors meetings held.
Board Committees
Our Board of Directors has three standing committees: an Audit Committee, a Compensation Committee and a Nominating and Corporate Governance Committee.
Audit Committee
Our Audit Committee is comprised of Messrs. Shaked, McGrath and Matheis, each of whom is an independent director. Mr. McGrath is the Chairman of the Audit Committee. Mr. McGrath is an “audit committee financial expert” as defined in Item 407(d)(5)(ii) of Regulation S-K.
Our Audit Committee oversees our corporate accounting, financial reporting practices and the audits of financial statements. For this purpose, the Audit Committee has a charter (which is reviewed annually) and performs several functions. The Audit Committee charter is available on our website at www.dariohealth.investorroom.com under the “For Investors--Corporate Governance” section. The Audit Committee:
● evaluates the independence and performance of, and assesses the qualifications of, our independent auditor and engage such independent auditor;
● approves the plan and fees for the annual audit, quarterly reviews, tax and other audit-related services and approve in advance any non-audit service to be provided by our independent auditor;
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● monitors the independence of our independent auditor and the rotation of partners of the independent auditor on our engagement team as required by law;
● 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; and
● oversees all aspects our systems of internal accounting control and corporate governance functions on behalf of the Board of Directors.
The Audit Committee met telephonically on five occasions during the fiscal year ended December 31, 2025 and acted by unanimous written consent on four occasions. Each of the members of the Audit Committee attended 100% of the meetings held by the Audit Committee during the time each director served as a member of the committee.
Compensation Committee
Our Compensation Committee is comprised of Messrs. Shaked, McGrath and Ms. Karah. Mr. McGrath is the Chairman of the Compensation Committee.
The Compensation Committee reviews or recommends the compensation arrangements for our management and employees and also assists our Board of Directors in reviewing and approving matters such as company benefit and insurance plans, including monitoring the performance thereof. The Compensation Committee has a charter (which is reviewed annually) and performs several functions. The Compensation Committee charter is available on our website at www.dariohealth.investorroom.com under the “For Investors--Corporate Governance” section.
The Compensation Committee has the authority to directly engage, at our expense, any compensation to 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.
The Compensation Committee met in person on one occasion during the fiscal year ended December 31, 2025 and acted by unanimous written consent on twelve occasions. Each of the members of the Compensation Committee attended 100% of the meetings held by the Compensation Committee during the time each director served as a member of the committee.
Nominating and Corporate Governance Committee
Our Nominating and Corporate Governance Committee is currently comprised of Messers. Matheis and Shaked. Mr. Matheis is the Chairman of the Nominating and Corporate Governance Committee.
The Nominating and Corporate Governance Committee is charged with the responsibility of reviewing our corporate governance policies and with proposing potential director nominees to the Board of Directors for consideration. This committee also has the authority to oversee the hiring of potential executive positions in our company. The Nominating and Corporate Governance Committee operates under a written charter, which is reviewed and evaluated at least annually.
The Nominating and Corporate Governance Committee acted by unanimous written consent on five occasions during the fiscal year ended December 31, 2025.
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 that, Messrs. Shaked, Matheis and McGrath, and Ms. Karah are “independent directors” as defined in the Nasdaq Listing Rules and Rule 10A-3 promulgated under the Exchange Act.
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Code of Ethics
On May 15, 2022, our Board of Directors adopted our updated Code of Conduct which is available on our website at https://dariohealth.investorroom.com/CorporateGovernance.
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 Conduct by posting such information on the website address specified above.
Insider Trading Policy
We have adopted an insider trading policy, governing the purchase, sale and other transactions in our securities that applies to our directors, executive officers, employees, and other covered persons, including immediate family members and entities controlled by any of the foregoing persons, as well as by the Company itself.
The insider trading policy prohibits, among other things, insider trading and certain speculative transactions in our securities (including short sales, buying put and selling call options and other hedging or derivative transactions in our securities) and establishes a regular blackout period schedule during which directors, executive officers, employees, and other covered persons may not trade in the Company’s securities, as well as certain pre-clearance procedures that directors and executive officers must observe prior to effecting any transaction in our securities.
We believe that the insider trading policy is reasonably designed to promote compliance with insider trading laws, rules and regulations, and listing standards applicable to us. A copy of the insider trading policy is filed as Exhibit 19.1 to this Form 10-K.
Limitation of Directors Liability and Indemnification
The Delaware General Corporation Law authorizes corporations to limit or eliminate, subject to certain conditions, the personal liability of directors to corporations and their stockholders for monetary damages for breach of their fiduciary duties. Our certificate of incorporation limits the liability of our directors to the fullest extent permitted by Delaware law.
We have director and officer liability insurance to cover liabilities our directors and officers may incur in connection with their services to us, including matters arising under the Securities Act. Our certificate of incorporation and bylaws also provide that we will indemnify our directors and officers who, by reason of the fact that he or she is one of our officers or directors, is involved in a legal 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.
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Item 11. Executive Compensation
The following table summarizes compensation of our named executive officers, as of December 31, 2025 and 2024.
Summary Compensation Table
Option
Non-equity
Non-qualified
All Other
Name and
Awards
incentive plan
incentive plan
Compensation
Total
Principal Position
Year
Salary ($)*
Bonus ($)
Stock Awards
($)**
compensation
compensation
($)
($)
Erez Raphael
2025
$
483,366
(1)
$
249,860
(2)
$
425,400
(3)
$
—
—
—
$
191,512
(4)
$
1,350,138
(Chief Executive Officer)
2024
$
448,293
(1)
$
—
(2)
$
1,344,000
(3)
$
—
—
—
$
169,791
(4)
$
1,962,084
Chen Franco Yehuda
2025
$
201,449
(5)
—
$
362,950
(6)
$
—
—
—
$
53,922
(7)
$
618,321
(Chief Financial Officer)
2024
$
—
(5)
—
$
—
(6)
$
—
—
—
$
—
(7)
$
—
Zvi Ben David
2025
$
274,259
(8)
—
$
—
(9)
$
—
—
—
$
76,581
(10)
$
350,840
(Former Chief Financial Officer)
2024
$
327,311
(8)
—
$
672,000
(9)
$
—
—
—
$
87,144
(10)
$
1,086,455
Steven Nelson
2025
$
400,004
(11)
$
—
$
212,700
$
—
(12)
—
—
$
78,203
(13)
$
690,907
(Chief Commercial Officer) (20)
2024
$
212,308
(11)
$
—
$
—
$
532,500
(12)
—
—
$
44,564
(13)
$
789,372
*
Certain compensation paid by the company is denominated in NIS. Such compensation is calculated for purposes of this table based on the annual average currency exchange for such period.
**
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 years ended December 31, 2025, and December 31, 2024, computed in accordance with the provisions of ASC 718 “Compensation-Stock Compensation” (“ASC 718”). Assumptions used in accordance with ASC 718 are included in Note 16 to our consolidated financial statements included in this Annual Report.
(1) In accordance with his second amendment to the employment agreement with our company effective August 11, 2013, Mr. Raphael was initially entitled to a monthly salary of NIS 44,000. Since August 2013, the Compensation Committee has approved several increases to Mr. Raphael’s monthly salary, most recently on April 1, 2021, when his monthly salary was increased to NIS 137,466 (approximately $37,078 per month).
(2) In January 2025, Mr. Raphael was paid a bonus of $249,860 for his performance during 2024.
(3) On September 11, 2025, Mr. Raphael was granted 60,000 restricted shares of our common stock under our 2020 Equity Incentive Plan. On March 6, 2024, Mr. Raphael was granted 40,000 restricted shares of our common stock under our 2020 Equity Incentive Plan.
(4) 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.”
(5) In accordance with her employment agreement with our Company effective May 15, 2025, Ms. Franco is entitled to a monthly salary and additional compensation (excluding social benefits under applicable Israeli law) of NIS 82,000 (approximately $26,000).
(6) On April 18, 2025, the Board of Directors appointed Ms. Chen Franco-Yehuda to serve as the Company’s Chief Financial Officer, Treasurer and Secretary, effective as of May 15, 2025. In connection with her appointment, the Company agreed to issue Ms. Franco-Yehuda 25 ,000 restricted shares of the Company’s common stock, pursuant to the Company’s Amended and Restated 2020 Equity Incentive Plan, as amended. On September 11, 2025, Ms. Franco was granted 5,000 restricted shares of our common stock under our 2020 Equity Incentive Plan.
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(7) In addition to her salary, Ms. Chen Franco-Yehuda is entitled to receive a mobile phone during her employment as well as reimbursements for expenses accrued. These benefits, as well as other social benefits under Israeli law, are included as part of her “All Other Compensation.”
(8) 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 $8,415) 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 $10,519 per month. Since March 2015, the Compensation Committee has approved several increases to Mr. Ben David’s salary, on March 1, 2024, when his monthly salary was updated to NIS 105,000 (approximately $28,471). On April 18, 2025, the Company, through its wholly owned subsidiary Labstyle Innovation Ltd., executed a Termination of Employment and Separation Agreement with Mr. Ben David, pursuant to which Mr. Ben David’s position as Chief Financial Officer, Secretary and Treasurer, terminated effective May 15, 2025. We also agreed to pay Mr. Ben-David, in lieu of his notice period and accrued vacation, a reduced monthly payment of 52,500 NIS (approximately $14,266) for the period from July 1, 2025 through December 31, 2025, and 47,775 NIS (approximately $12,982) for the period January 1, 2026 through October 31, 2027. The amounts payable to Mr. Ben David pursuant to the Termination of Employment and Separation Agreement are reflected in the compensation amounts reported in the table above.
(9) On March 6, 2024, Mr. Ben David was granted 20 ,000 restricted shares of our common stock under our 2020 Equity Incentive Plan.
(10) In addition to his salary, Mr. Ben David was 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.”
(11) In accordance with his employment agreement, effective in June 2024, Mr. Nelson was entitled to a monthly salary of $33,333.33.
(12) On June 5, 2024, Mr. Nelson was granted 25 ,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 $ 27.00 per share.
(13) In addition to his salary, Mr. Nelson is entitled to participate in any and other benefit plans and programs that we may offer to our 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.”
All compensation awarded to our executive officers was independently reviewed by our Compensation Committee.
Employment and Related Agreements
Except as set forth below, we currently have no other written employment agreements with any of our officers and directors. The following is a description of our current executive employment agreements:
Erez Raphael , Chief Executive Officer and a Member of the Board of Directors – On August 30, 2013, LabStyle 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. Raphael is entitled to a monthly salary of NIS 137,466 (approximately $ 37 , 275 ) and a target bonus equal to 75% of his annual base salary.
On July 25, 2017, we, through our Israeli subsidiary, LabStyle Innovation Ltd., executed an Amended and Restated Employment Agreement with Mr. Raphael. 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. In the event Mr. Raphael’s 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 shall be entitled to receive 24 months base salary and severance payment pursuant to applicable Israeli severance law, provided, however, that in the event such termination occurs during the final year of the term, or
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within the last 6 months of a renewal period of the term, Mr. Raphael shall be entitled to receive 12 months base salary and severance payment pursuant to applicable Israeli severance law. 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. Mr. Raphael’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 agreement, Mr. Raphael 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. On February 12, 2020, we extended Mr. Raphael’s employment term to expire on December 31, 2022. The employment agreement has since renewed automatically, continuing for additional one-year terms. According to the agreement, if we and Mr. Raphael do not mutually agree to extend or terminate the agreement before the end of any set term, as is the current situation, the employment agreement will automatically renew and continue for additional one-year terms following the expiration date.
Chen Franco-Yehuda, Chief Financial Officer, Treasurer and Secretary — On April 18, 2025, the Board appointed Ms. Franco-Yehuda, as our Chief Financial Officer, Treasurer and Secretary effective May 15, 2025. In connection with her appointment, we, through our wholly owned subsidiary Labstyle Innovation Ltd., entered into an employment agreement and a standard indemnification agreement with Ms. Franco-Yehuda. Pursuant to the terms of her Employment Agreement, we agreed to pay Ms. Franco-Yehuda a monthly salary of NIS 82,000 (approximately $26,000), as well as a target bonus equal to a gross amount of up to six times her base salary, subject to meeting certain milestones as annually approved by the Compensation Committee and/or the Board.
Ms. Franco-Yehuda’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. In the event the employment agreement is terminated by us or by her at will, Ms. Franco-Yehuda shall be entitled to receive a minimum of 90 days of severance plus any required severance payment pursuant to applicable Israeli severance law, including an adjustment period where she will continue to receive severance (whereby Ms. Franco will accrue one month of an adjustment period for each year of her employment, commencing as of April 27, 2025, but in no event will the adjustment period exceed six (6) months in the aggregate). In the event the employment agreement is terminated by the Company for cause, Ms. Franco-Yehuda will only be entitled to a severance pay under applicable Israeli severance law. In the event of a change of control of the Company, Ms. Franco-Yehuda will be entitled to a six (6) month adjustment period and a full acceleration of any unvested awards. The Employment Agreement also includes a twelve-month non-competition and non-solicitation provision, certain confidentiality covenants and assignment of any of her company-related inventions to the company. Under the terms of the Employment Agreement, Ms. Franco-Yehuda 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.
In addition, we issued to Ms. Franco-Yehuda 25,000 restricted shares of Common Stock, pursuant to our Amended and Restated 2020 Equity Incentive Plan, as amended. The restricted shares vest over three years, with one third of such shares vesting on April 27, 2026, and the remaining shares vesting in equal quarterly amounts.
On September 11, 2025, we issued 5,000 restricted shares Common Stock to Ms. Chen Franco-Yehuda, pursuant to our Amended and Restated 2020 Equity Incentive Plan. The restricted shares vest in two equal installments on the last day of each successive annual anniversary after the grant date over a two-year period.
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Steven Nelson, Chief Commercial Officer and President – On June 5, 2024, we appointed Mr. Nelson as our Chief Commercial Officer. In connection with Mr. Nelson’s appointment, we agreed to pay Mr. Nelson an annual base salary of $400,000. Mr. Nelson 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. Mr. Nelson will also be entitled to certain expense reimbursements and other standard benefits, including vacation and sick leave. In addition, Mr. Nelson will be entitled to receive an annual incentive bonus of up to $400,000, subject to certain milestones and performance targets. In conjunction with his appointment as Chief Commercial Officer, we agreed to issue Mr. Nelson a stock option to purchase up to 25,000 shares of common stock, with such shares vesting over three years, with one third of such shares vesting on June 1, 2025, and the remaining shares vesting in equal quarterly amounts. In addition, we agreed to issue Mr. Nelson a stock option to purchase 20,000 shares of common stock, of which 7,500 shares commence vest upon our achieving 92% of a targeted revenue amount for the year ended December 31, 2024, and the remaining balance of 12,500 shares if the annual revenue is 100% or more of a targeted amount, provided, however that such options shall be canceled if the annual revenue does not reach at least 92% of the targeted amount. We also agreed to issue Mr. Nelson a stock option to purchase 22,500 shares of common stock, for each of the years ending December 31, 2025, December 31, 2026 and December 2027, of which 7,500 shares commence vesting if the Company’s annual revenue is at least 92% of a targeted amount, 7,500 shares commence vesting if the Company’s annual revenue is 100% or more of the targeted amount and an additional 7,500 shares will commence vesting upon reaching certain annual goals as determined by the Company’s Board of Directors for such fiscal year, provided, however that such options shall be canceled if the annual revenue does not reach at least 92% of the targeted amount. Each of the performance options vests over a three-year period commencing on the first day of the following fiscal year to which such option relates, at the rate of 8.33% per quarter, at the last day of the relevant fiscal quarter. All options were granted as an inducement material to Mr. Nelson becoming an employee of the Company, in accordance with Nasdaq Listing Rule 5635(c)(4). On September 11, 2025, we issued 30,000 restricted shares of Common Stock to Mr. Nelson, pursuant to our Amended and Restated 2020 Equity Incentive Plan. The restricted share vest on the last day of the second-year anniversary after the grant date.
Zvi Ben David , Former Chief Financial Officer, Treasurer and Secretary – On January 8, 2015, LabStyle Innovation Ltd., our Israeli subsidiary, entered into a Personal Employment Agreement with Mr. Ben David. Pursuant to the terms of his employment agreement, as amended, Mr. Ben David is entitled to a monthly salary of NIS 105,000 (approximately $28,471) and a target bonus equal to 40% of his base salary.
The employment agreement also included 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 was 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 April 18, 2025, the Company, through its wholly owned subsidiary Labstyle Innovation Ltd., executed a Termination of Employment and Separation Agreement with Mr. Ben David, pursuant to which Mr. Ben David’s position as Chief Financial Officer, Secretary and Treasurer, terminated effective May 15, 2025. We also agreed to pay Mr. Ben-David, in lieu of his notice period and accrued vacation, a reduced monthly payment of 52,500 NIS (approximately $14,266) for the period from July 1, 2025 through December 31, 2025, and 47,775 NIS (approximately $12,982) for the period January 1, 2026 through October 31, 2027.
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Outstanding Equity Awards on December 31, 2025
Option Awards
Stock Awards
Equity
incentive
plan awards:
Number of
Number of
Number of
Market
securities
securities
securities
value
underlying
underlying
underlying
Number of
of shares
unexercised
unexercised
unexercised
Option
Option
shares that
that
options (#)
options (#)
unearned
exercise
expiration
have not
have not
Name
exercisable
unexercisable
options (#)
price ($)
date
vested (#)
vested ($)
Erez Raphael
—
—
—
$
—
—
60,000
(1)
$425,400
(Chief Executive Officer)
Chen Franco Yehuda
—
—
—
—
—
25,000
(2)
$327,500
(Chief Financial Officer, Secretary and Treasurer)
—
—
—
—
—
5,000
(3)
$35,450
Zvi Ben David
1,391
—
—
$
154.72
February 12, 2026
—
—
(Former Chief Financial Officer, Secretary and Treasurer)
Steven Nelson
12,500
12,500
(4)
—
$
27.00
June 5, 2034
30,000
(5)
$212,700
(Chief Commercial Officer and President)
Total Option Shares
13,891
12,500
120,000
(1) 60,000 stock awards shall vest in two equal installments of 30,000 on the last day of each successive annual anniversary after the grant date over a two-year period.
(2) 25,000 stock awards vest as follows: (a) 8,334 RSUs vest on April 27, 2026; and (b) 16,666 RSUs vest in eight equal quarterly installments of 2,083 on July 27, 2026, and every three months thereafter.
(3) 5,000 stock awards shall vest in two equal installments of 2,500 on the last day of each successive annual anniversary after the grant date over a two-year period.
(4) 12,500 vests in 6 equal quarterly amounts over the following two years.
(5) 30,000 stock awards shall vest on the last day of the second-year anniversary after the grant date.
We do not have any formal policy that requires us to grant, or avoid granting, equity-based compensation at certain times. We do not grant equity awards in anticipation of the release of material nonpublic information that is likely to result in changes to the price of our common stock, and do not time the public release of such information based on award grant dates. The timing of any equity grants to executive officers or directors in connection with new hires, promotions, or other non-routine grants is tied to the event giving rise to the award (such as an executive officer’s commencement of employment or promotion effective date).
During the year ended December 31, 2025, there were no equity grants made to our executive officers during any period beginning four business days before the filing of a periodic report or current report disclosing material non-public information and ending one business day after the filing or furnishing of such report with the Securities and Exchange Commission that were likely to result in changes to the price of our common stock, and do not time the public release of such information based on award grant dates.
Non-Employee Director Remuneration Policy
In March 2013, our Board of Directors adopted the following non-employee director remuneration policy:
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Cash Payments
Our non-employee directors (currently Messrs. Shaked, Matheis, McGrath, Leisure, Stern and Ms. Karah) will receive the following cash payments for each fiscal year: (i) $50,000 per year, to be paid quarterly in arrears and (ii) $20,000 for Board committee service, to be paid quarterly in arrears. Commencing the second quarter of 2024 Messrs Shaked, Mathies, Leisure, Stern and Ms. Karah have waived their cash compensation.
Stock and Option Awards
On February 24, 2025, our Compensation Committee of our Board of Directors, (i) approved to accelerate the vesting of 1 ,750 restricted shares of our Common Stock; (ii) approved the grant of 1,500 restricted shares of Common Stock to Mr. Kaplan.
On September 11, 2025, the Compensation Committee approved the following issuances, pursuant to our Amended and Restated 2020 Equity Incentive Plan: (i) 20,000 restricted shares of our Common Stock to each of Mr. Shaked, and Ms. Karah. The restricted shares vest in two equal installments on the last day of each successive annual anniversary after the grant date over a two-year period; and (ii) 20,000 restricted shares of our Common Stock to each of Mr. Matheis, Mr. McGrath, Mr. Stern and Mr. Leisure. The restricted share vest on the last day of the second-year anniversary after the grant date. All such grants include a change in control section that accelerates the vesting day in case of change in control event.
Compensation Committee Review
The Compensation Committee shall, if it deems necessary or prudent in its discretion, reevaluate and approve each 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.
The Compensation Committee shall also have the power and discretion to determine in the future whether non-employee directors should receive annual or other grants of options to purchase shares of common stock or other equity incentive awards in such amounts and pursuant to such policies as the Compensation Committee may determine utilizing such market standard metrics as it deems appropriate, including, without limitation, an analysis of equity awards granted to independent directors of our peer group.
Participation of Employee Directors; New Directors
Unless separately and specifically approved by the Compensation Committee in its discretion, no employee director of our company shall be entitled to receive any remuneration for service as a director (other than expense reimbursement as per prevailing policy).
New directors joining our Board of Directors shall be entitled to a pro-rated portion (based on months to be served in the fiscal year in which they join) of cash and stock option or other equity incentive awards (if applicable) for the applicable fiscal year at the time they join the board.
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Summary Director Compensation Table
The following table summarizes the annual compensation paid to our non-employee directors for the fiscal year ended December 31, 202 5 :
Fees Paid
Non-
or
Non-equity
qualified
Name and
Earned in
Option
incentive
deferred
All other
Principal
Cash
Stock
Awards
plan
compensation
compensation
Position
Year
($)
Awards
($)*
compensation
earnings
($)
Total ($)
Dennis McGrath
2025
$
70,000
$
141,800
(1)
$
—
$
—
$
—
$
—
$
211,800
Jon Kaplan (9)
2025
$
—
$
20,784
(2)
$
—
$
—
$
—
$
—
$
20,784
Dennis Matheis
2025
$
—
$
141,800
(3)
$
—
(4)
$
—
$
—
$
—
$
141,800
Hila Karah
2025
$
—
$
141,800
(5)
$
—
$
—
$
—
$
—
$
141,800
Yoav Shaked
2025
$
—
$
141,800
(6)
$
—
$
—
$
—
$
—
$
141,800
Adam Stern
2025
$
—
$
141,800
(7)
$
—
$
—
$
—
$
—
$
141,800
Lawrence Leisure
2025
$
—
$
141,800
(8)
$
—
$
—
$
—
$
—
$
141,800
(1) 7,738 stock awards are outstanding as of December 31, 2025.
(2) 5,579 stock awards are outstanding as of December 31, 202 5 .
(3) 6,881 stock awards are outstanding as of December 31, 2025 .
(4) 2,750 option awards are outstanding as of December 31, 2025 .
(5) 10,965 stock awards are outstanding as of December 31, 2025 .
(6) 13,665 stock awards are outstanding as of December 31, 2025 .
(7) 8,918 stock awards are outstanding as of December 31, 2025 .
(8) 12,900 stock awards are outstanding as of December 31, 2025 .
(9) Mr. Kaplan resigned from the Board of Directors on February 23, 2025.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The following table sets forth information regarding the beneficial ownership of our common stock as of March 11, 2026 by:
each person known by us to be the beneficial owner of more than 5% of our outstanding shares of common stock;
● each of our named executive officers and directors; and
● all our executive officers and directors as a group.
Beneficial ownership is determined in accordance with the rules of the SEC and includes voting or investment power with respect to the securities. Except as otherwise indicated, each person or entity named in the table has sole voting
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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 and percentage of shares beneficially owned by a person, shares that may be acquired by such person within 60 days of the date of this Annual Report are counted as outstanding, while these shares are not counted as outstanding for computing the percentage ownership of any other person. Unless otherwise indicated, the address of each person listed below is c/o DarioHealth Corp., 322 W. 57th St. #33B, New York, New York 10019.
Percent of
Shares of
Common
Common
Stock
Beneficially
Beneficially
Name of Beneficial Owner
Stock Owned
Owned (1)
Officers and Directors
Erez Raphael (2)
99,326
1.5
%
Chen Franco-Yehuda (3)
8,334
*
%
Steven C. Nelson (4)
19,334
*
%
Dennis M. McGrath
7,738
*
%
Lawrence Leisure
17,900
*
%
Hila Karah
10,965
*
%
Yoav Shaked
13,665
*
%
Adam Stern (5)
61,440
*
%
Dennis Mathies (6)
11,346
*
%
All Executive Officers and Directors as a group (9 persons) **
250,048
3.4
%
5% Stockholders
Nantahala Capital Management, LLC. (7)
729,311
9.9
%
Tasso Partners, LLC. (8)
729,311
9.9
%
Craig Kallman 2015 Living Trust (9)
729,311
9.9
%
*
less than 1%.
(1) Percentage ownership is based on 7, 300 , 406 shares of our common stock outstanding as of March 11, 2026 and, for each person or entity listed above, warrants or options to purchase shares of our common stock which exercisable within 60 days of such date.
(2) Includes 1,894 shares of our common stock, held by Dicilyon Consulting and Investment Ltd. Erez Raphael is the natural person with voting and dispositive power over our securities held by Dicilyon Consulting and Investment Ltd. The address of Dicilyon Consulting and Investment Ltd. is 10 Nataf St., Ramat Hasharon 4704063, Israel.
(3) Includes 8,334 restricted shares which vest within 60 days.
(4) Includes 14,584 vested options to purchase common stock and 4,750 shares of common stock purchased privately as reported on Form 4.
(5) Includes warrants exercisable into 25,383 shares of common stock. subject to a contractual beneficial ownership limitation of 4.99%.
(6) Includes 2,750 vested options to purchase common stock.
(7) Based on information contained in Form 13G/A filed with the SEC on February 13, 20256, and data provided by the holder. (i) 610,691 shares of Common Stock and (ii) 1,140,444 pre-funded warrants to purchase Common Stock, subject to a contractual beneficial ownership limitation of 9.99%.
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(8) Based on information contained in Form 13G/A filed with the SEC on November 12, 2025. Consists of (i) 7 12 , 871 shares of common stock and (ii) pre-funded warrants exercisable into 1,113,078 shares of common stock, which contain a contractually stipulated 9.99% ownership restriction and which are beneficially owned by Dana Carrera, which is the trustee of GCL Family Trust, and included pursuant to Rule 13d-3(d)(1)(i) of the Securities Exchange Act of 1934, as amended.
(9) Based on information contained in Form 13G filed with the SEC on December 16, 2025, and data provided by the holder. Includes (i) 604,803 shares of common stock held by the Reporting Person, and (ii) pre-funded warrants exercisable into 124,031 shares of common stock, which contain a contractually stipulated 9.99% ownership restriction (and which are beneficially owned by Craig Kallman, who is the trustee of the Trust), and included pursuant to Rule 13d-3(d)(1)(i) of the Securities Exchange Act of 1934, as amended.
Item 13. Certain Relationships and Related Party Transactions
Executive Officers and Directors
We have entered into employment and consulting agreements and granted stock awards to our executive officers and directors as more fully described in “Executive Compensation” above.
Executive Officers and Directors
We have entered into employment agreements and granted stock awards to our executive officers as more fully described in “Executive Compensation” above.
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.
On December 28, 2023, we entered into a placement agency agreement with Aegis, as amended on January 31, 2024, with respect to the offering of the Series C Preferred Stock. Pursuant to the terms of the placement agency agreement, in connection with each closing of the offering, we agreed to pay Aegis an aggregate cash fee representing 10% of aggregate proceeds raised in the offering (and fees representing 5% and 1.5% for certain company introduced investors), non-accountable expense allowance representing 3% of aggregate proceeds raised in the offering (and fees representing 1.5% and none for certain Company introduced investors). In addition, we will issue to Aegis or its designees warrants to purchase shares of common stock representing 14.5% of the equivalent shares of Common Stock issuable upon initial conversion of the Series C Preferred Stock at an exercise price equal to the consolidated bid price of the common stock as of the date of such closing. The placement agent warrant provides for a cashless exercise feature and are exercisable for a period of five years from the date of closing. We also granted the Aegis the right of first refusal, for a twelve (12) month period after the final closing of the offering, to serve as the Company’s lead or co-placement agent for any proposed private placement of our securities (equity or debt) that is proposed to be consummated to investors in the United States with the assistance of a registered broker dealer.
Adam Stern, a member of our Board of Directors, has an interest, and received fees due to Aegis.
On April 3, 2020, we entered into a financial advisory agreement with Aegis Capital Corp., pursuant to which we agreed to pay Aegis certain a fee of up to 3% of any proceeds from sales derived by us through commercial transactions entered into with parties introduced by Aegis. 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)
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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.
On September 3, 2021, we entered into to a consulting agreement, as amended (the “Consulting Agreement”), with NearWater Growth LCC (“NearWater”). As remuneration for such services, we agreed to pay NearWater a monthly cash retainer upon the successful completion of an equity financing resulting in gross proceeds in excess of $25 million and we further agreed to issue NearWater shares of our common stock as equity compensation if certain milestones are met such as NearWater introducing entities to us for acquisition or partnership purposes, provided certain revenue milestones are met. Further, the Consulting Agreement provides for the payment to NearWater of 7,500 shares of our common stock which shall vest quarterly over a four-year period. To date, NearWater has received approximately 12,900 shares of our common stock and common stock purchase warrants to purchase up to 5,000 shares of common stock. On February 24, 2025, we and NearWater entered into a Second Amendment to the Consulting Agreement pursuant to which we agreed to pay NearWater a monthly retainer of $5,000 beginning on September 1, 2024, increasing to $10,000 per month on January 1, 2025.
In September 2025, the Compensation Committee approved the grant of 20,000 restricted shares subject to time vesting to the director. The time-vesting restricted shares shall vest on the last day of the second-year anniversary commencing on the respective grant date. The restricted shares were issued under Amended and Restated 2020 Equity Incentive Plan.
Lawrence Leisure, a member of our Board of Directors, is a Member of NearWater. Mr. Leisure has an interest in, and will receive, compensation due to NearWater.
To the best of our knowledge, other than as set forth above, there were no material transactions, or series of similar transactions, or any currently proposed transactions, or series of similar transactions, to which we were or are to be a party, in which the amount involved exceeds the lesser of $120,000 or 1% of the average of our total assets at year-end for the last two completed fiscal years, and in which any director or executive officer, or any security holder who is known by us to own of record or beneficially more than 5% of any class of our common stock, or any member of the immediate family of any of the foregoing persons, has an interest (other than compensation to our officers and directors in the ordinary course of business).
Item 14. Principal Accounting Fees and Services
The fees for services provided by our independent registered public accounting firm to the Company and paid in the last two fiscal years were as follows:
(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; and (iv) all other fees for services rendered.
December 31, 2025
December 31, 2024
Audit Fees
$
340,000
$
487,573
Tax Fees (1)
$
17,700
$
82,535
All Other Fees (2)
$
2,000
$
273,150
Total
$
359,700
$
843,258
(1) Consists of fees relating to our tax compliance and tax planning.
(2) Consists of fees relating to our private placements.
Audit Committee Policies
The Audit Committee of our Board of Directors is solely responsible for the approval in advance of all audit and permitted non-audit services to be provided by the independent auditors (including the fees and other terms thereof),
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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.
On March 12, 2025, our Audit Committee dismissed Kost Forer Gabbay & Kasierer, a member of Ernst & Young Global, as our independent registered public accounting firm. In addition, on March 12, 2025, our Audit Committee appointed Kesselman & Kesselman, Certified Public Accountants (Isr.), a member firm of PricewaterhouseCoopers International Limited, or PwC, as our independent registered public accounting firm for the fiscal year ending December 31, 2025, whose appointment took place upon the dismissal of our former auditors.
As of December 31, 2025, we have accrued approximately $265,000 for the annual audit fees and tax fees for the fiscal year ending December 31, 2025, which we expect to pay PwC during fiscal year 2026.
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PART IV
Item 15. Exhibits, Financial Statement Schedules.
The following exhibits are filed with this Annual Report.
Exhibit No.
Description
3.1
Amended and Restated Certificate of Incorporation, as amended on February 2, 2026 (incorporated by reference to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 2, 2026).
3.2
Bylaws (incorporated by reference to the Company’s Current Report on Form 8-K filed with the Commission on April 19, 2024).
4.1
Form of Pre-Funded Warrant ( incorporated by reference to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on May 22, 2019).
4.2
Amendment No. 1 To Pre-Funded Warrant ( incorporated by reference to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on July 9, 2019).
4.3*
Description of Securities.
4.4
Form of 2022 Pre-Funded Warrant ( incorporated by reference to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on March 2, 2022).
4.5
Form of Warrant to be issued to OrbiMed Royalty and Credit Opportunities III, LP ( incorporated by reference to the Company’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on August 15, 2022).
4.6
Form of Warrant Amendment Agreement, dated June 14, 2023 ( incorporated by reference to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on June 20, 2023).
4.7
Form of Pre-Funded Warrant ( incorporated by reference to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 21, 2024).
4.8
Form of Placement Agent Warrant ( incorporated by reference to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 21, 2024).
4.9
Form of Warrant (incorporated by reference to Exhibit 4.1 filed with the Company’s Current Report on Form 8-K filed on May 6, 2025).
10.1+
Personal Employment Agreement, dated January 8, 2015, between the Company and Zvi Ben David (incorporated by reference to the Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on January 9, 2015).
10.2+
Termination of Employment and Separation Agreement, dated April 18, 2025, between DarioHealth Corp. and Zvi Ben-David (incorporated by reference to Exhibit 10.2 filed with the Company’s Current Report on Form 8-K filed on April 21, 2025).
10.3+
Amendment to the Amended and Restated 2012 Equity Incentive Plan of the Company (incorporated by reference to the Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on November 6, 2019).
10.4+
Amended and Restated 2020 Equity Incentive Plan of the Company ( incorporated by reference to Annex A of the Company’s Definitive Prospectus on Form DEF 14A filed with the Securities and Exchange Commission on December 22, 2025).
10.5+
Amended and Restated Employment Agreement, dated as of July 25, 2017, between Erez Raphael and LabStyle Innovation Ltd. (incorporated by reference to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on July 26, 2017).
10.6+
Amendment No. 1 to Amended and Restated Employment Agreement, dated as of February 12, 2020, between Erez Raphael and LabStyle Innovation Ltd. (incorporated by reference to the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 17, 2020).
10.7+
Representative Form of Indemnification Agreements between DarioHealth Corp. and each of its directors and officers (incorporated by reference to the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 17, 2020).
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10.8
Agreement and Plan of Merger dated February 15, 2024, by and among DarioHealth Corp., Twill Merger Sub, Inc., Twill, Inc. and Bilal Khan solely in his capacity as holders’ representative ( incorporated by reference to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 21, 2024).
10.9
Lock Up/Leak Out Agreement dated February 15, 2024, by and among DarioHealth Corp., Titan Trust 2024 I, a Delaware statutory trust, and WhiteHawk Capital Partners LP, a Delaware limited partnership ( incorporated by reference to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 21, 2024).
10 .10
Offer Letter dated May 29, 2024, by and between DarioHealth Corp. and Steven Nelson (incorporated by reference to Exhibit 10.1 filed with the Company’s Current Report on Form 8-K filed on June 5, 2024).
10.11+ ˄
Amendment to Offer Letter dated May 29, 2024, by and between DarioHealth Corp. and Steven Nelson (incorporated by reference to the Company’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on May 14, 2025).
10 .12
Form of Lock-Up Agreement (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K filed with the SEC on December 18, 2024).
10.13
Credit Agreement, dated April 30, 2025, by and among the Company, as borrower, Callodine Commercial Finance, LLC, as agent and lender, and the financial institutions party thereto from time to time as lenders (incorporated by reference to Exhibit 10.1 filed with the Company’s Current Report on Form 8-K filed on May 6, 2025).
10.14+
Personal Employment Agreement, dated April 18, 2025, between DarioHealth Corp. and Chen Franco-Yehuda (incorporated by reference to Exhibit 10.1 filed with the Company’s Current Report on Form 8-K filed on April 21, 2025).
10.15
Form of Amended and Restated Lock-Up Agreement (incorporated by reference to Exhibit 10.1 filed with the Company’s Current Report on Form 8-K filed on May 29, 2025)
10.16
Form of Pre-Funded Warrant (incorporated by reference to Exhibit 4.1 filed with the Company’s Current Report on Form 8-K filed on September 25, 2025).
10.17 ˄
Form of Warrant Amendment (incorporated by reference to Exhibit 4.1 filed with the Company’s Current Report on Form 8-K filed on November 10 , 2025).
10.18
Form of Securities Purchase Agreement (incorporated by reference to Exhibit 10.1 filed with the Company’s Current Report on Form 8-K filed on September 25, 2025).
10.19
Form of Second Amended and Restated Lock-Up Agreement (incorporated by reference to the Company’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on November 13, 2025).
10.20 ˄
First Amendment to Credit Agreement, dated November 5, 2025, by and among the Company, as borrower, Callodine Commercial Finance, LLC, as agent and lender, and the financial institutions party thereto from time to time as lenders (incorporated by reference to Exhibit 10.1 filed with the Company’s Current Report on Form 8-K filed on November 10 , 2025).
19.1*
Insider Trading Policy .
21.1*
List of Subsidiaries of the Company .
23.1*
Consent of Kost Forer Gabbay and Kaiserer .
23.2*
Consent of Kesselman & Kesselman .
31.1*
Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934.
31.2*
Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934.
32.1**
Certification of the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. 1350.
97.1
Clawback Policy ( incorporated by reference to the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 28, 2024).
101*
The following financial statements from the Company’s annual report on Form 10-K for the year ended December 31, 2025, formatted in Inline XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Comprehensive Loss, (iii) Statements of Changes in Stockholders’ Equity, (iv) Consolidated Statements of Cash Flows and (v) the Notes to Consolidated Financial Statements, tagged as blocks of text and in detail.
104
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
95
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+
Management contract or compensatory plan or arrangement
*
Filed herewith
**
Furnished herewith
˄
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
Item 16. Form 10-K Summary.
None.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: March 19, 2026
DARIOHEALTH CORP.
By:
/s/ Erez Raphael
Name:
Erez Raphael
Title:
Chief Executive Officer
By:
/s/ Chen Franco-Yehuda
Name:
Chen Franco-Yehuda
Title:
Chief Financial Officer, Secretary and Treasurer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Person
Capacity
Date
/s/ Erez Raphael
Chief Executive Officer and
March 19, 2026
Erez Raphael
Director (Principal Executive Officer)
/s/ Chen Franco Yehuda
Chief Financial Officer, Secretary and
March 19, 2026
Chen Franco Yehuda
Treasurer (Principal Financial and Accounting Officer)
/s/ Yoav Shaked
Chairman of the Board
March 19, 2026
Yoav Shaked
/s/ Dennis Matheis
Director
March 19, 2026
Dennis Matheis
/s/ Hila Karah
Director
March 19, 2026
Hila Karah
/s/ Dennis M. McGrath
Director
March 19, 2026
Dennis M. McGrath
/s/ Lawrence Leisure
Director
March 19, 2026
Lawrence Leisure
/s/ Adam Stern
Director
March 19, 2026
Adam Stern
96
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DARIOHEALTH CORP. AND ITS SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2025
INDEX
Page
Reports of Independent Registered Public Accounting Firm (PCAOB - Firms ID: 1309 , 1281)
F- 2 – F- 4
Consolidated Balance Sheets
F- 5 – F- 6
Consolidated Statements of Comprehensive Loss
F- 7
Statements of Changes in Stockholders’ Equity
F- 8
Consolidated Statements of Cash Flows
F- 9
Notes to Consolidated Financial Statements
F- 10 – F- 56
- - - - - - - - - - - - - - -
Table of Contents
Report of Independent Registered Public Accounting Firm
To the board of directors and stockholders of DarioHealth Corp.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheet of DarioHealth Corp. and its subsidiaries (the “Company”) as of December 31, 2025, and the related consolidated statements of comprehensive loss, changes in stockholders' equity and cash flows for the year ended December 31, 2025, including 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 as of December 31, 2025, and the results of its operations and its cash flows for the year ended December 31, 2025 in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit of these consolidated financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit 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 opinion.
Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audit provides a reasonable basis for our opinion.
F-2
Table of Contents
Critical 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.
Liquidity assessment
As discussed in Note 1f to the consolidated financial statements, management believes that its cash and cash equivalents and short-term bank deposits, are sufficient funds to support its operation for at least the next 12 months. The Company expects to incur future net losses and the transition to profitability is dependent upon, among other things, the successful commercialization of the Company’s products and the achievement of a level of revenues adequate to support the cost structure.
The principal considerations for our determination that performing procedures related to liquidity assessment is a critical audit matter are the estimation and execution uncertainty regarding the Company’s future cash flows and management’s judgments and assumptions in estimating these cash flows to conclude the Company would have sufficient liquidity to fund its operations for at least the next 12 months. This in turn led to a high degree of auditor subjectivity and judgment to evaluate the audit evidence supporting the liquidity conclusions.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with our overall opinion on the consolidated financial statements. Our audit procedures included, among others, testing the reasonableness of the forecasted revenue, operating expenses, and uses and sources of cash used in management’s assessment of whether the Company has sufficient liquidity to fund its operations for at least the next 12 months. We assessed the appropriateness of the forecast assumptions by comparing prior period forecasts to actual results, comparing forecasted revenue to recent historical financial information, inquiring of management regarding the mitigating actions to reduce costs and manage cash flows and assessing whether the mitigating actions were within the Company's control, testing the relevant underlying data generated to prepare the forecast scenarios and determining whether there was adequate support for the assumptions underlying the forecast, considering the terms of the Company's existing loan facility , and evaluating management's analysis of the impact of the above assumptions on the forecasted cash flows.
/s/ Kesselman & Kesselman
Certified Public Accountants (Isr.)
A member firm of PricewaterhouseCoopers International Limited
Tel Aviv, Israel
March 1 9 , 2026
We have served as the Company's auditor since 2025.
F-3
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Ernst & Young (Israel) Ltd
144 Menachem Begin Road, Building A
Tel-Aviv 6492102, Israel
Tel: +972-3-6232525
ey.com
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and the Board of Directors of
DARIOHEALTH CORP.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of DarioHealth Corp. and its subsidiaries (the Company) as of December 31, 2024, the related consolidated statements of comprehensive loss, changes in stockholders’ equity and cash flows for the year ended December 31, 2024, 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, 2024, and the results of its operations and its cash flows for the year ended December 31, 2024, in conformity with U.S. generally accepted accounting principles.
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 statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of 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 opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/ KOST FORER GABBAY & KASIERER
A Member of Ernst & Young Global
We have served as the Company’s auditor from 2012 to 2025.
Tel-Aviv, Israel
March 10, 2025
A member firm of Ernst & Young Global Limited
F-4
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DARIOHEALTH CORP. AND ITS SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands
December 31,
December 31,
2025
2024
ASSETS
CURRENT ASSETS:
Cash and cash equivalents
$
21,803
$
27,764
Short-term bank deposits
4,214
697
Short-term restricted bank deposits
229
175
Trade receivables, net
2,144
4,804
Inventories
4,316
4,753
Other accounts receivable and prepaid expenses
2,361
2,336
Total current assets
35,067
40,529
NON-CURRENT ASSETS:
Deposits
80
79
Operating lease right of use assets
717
1,065
Long-term assets
304
313
Property and equipment, net
549
709
Intangible assets, net
15,931
18,762
Goodwill
57,427
57,427
Total non-current assets
75,008
78,355
Total assets
$
110,075
$
118,884
The accompanying notes are an integral part of the consolidated financial statements.
F-5
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DARIOHEALTH CORP. AND ITS SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands (except stock and per share data)
December 31,
December 31,
2025
2024
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Trade payables
$
2,928
$
3,045
Deferred revenues
714
1,583
Operating lease liabilities
430
504
Other accounts payable and accrued expenses
5,251
6,052
Current maturity of long-term loan
—
5,451
Total current liabilities
9,323
16,635
NON-CURRENT LIABILITIES
Operating lease liabilities
571
765
Long-term loan
30,747
23,472
Warrant liability
1,466
5,968
Other long-term liabilities
46
25
Total non-current liabilities
32,830
30,230
STOCKHOLDERS’ EQUITY **
Common stock of $ 0.0001 par value - authorized: 400,000,000 shares; issued and outstanding : 6,905,948 and 1,919,420 shares on December 31, 2025 and December 31, 2024, respectively
4
4
Preferred stock of $ 0.0001 par value - authorized: 5,000,000 shares; issued and outstanding : 0 and 49,585 shares on December 31, 2025 and December 31, 2024, respectively
—
*) -
Additional paid-in capital
519,996
462,358
Accumulated deficit
( 452,078 )
( 390,343 )
Total stockholders’ equity
67,922
72,019
Total liabilities and stockholders’ equity
$
110,075
$
118,884
*) Represents an amount lower than $1.
(**) See note 1e regarding reverse share split
The accompanying notes are an integral part of the consolidated financial statements.
F-6
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DARIOHEALTH CORP. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
U.S. dollars in thousands (except stock and per share data)
Year ended
December 31,
2025
2024
Revenues:
Services
$
14,929
$
20,197
Consumer hardware
7,430
6,843
Total revenues
22,359
27,040
Cost of revenues:
Services
2,900
3,606
Consumer hardware
5,124
5,139
Amortization of acquired intangible assets
1,670
5,028
Total cost of revenues
9,694
13,773
Gross profit
12,665
13,267
Operating expenses:
Research and development
$
13,791
$
24,179
Sales and marketing
20,338
26,350
General and administrative
15,191
20,482
Total operating expenses
49,320
71,011
Operating loss
36,655
57,744
Interest expenses
3,020
—
Other financial expenses (income), net
1,934
( 13,145 )
Total financial expenses (income), net
4,954
( 13,145 )
Loss before taxes
41,609
44,599
Income taxes (benefit)
105
( 1,852 )
Net loss
$
41,714
$
42,747
Deemed dividend (contribution)
$
20,021
$
( 1,765 )
Net loss attributable to common shareholders
$
61,735
$
40,982
Net loss per share:
Basic and diluted loss per share of common stock
$
10.12
$
12.27
Weighted average number of common stock used in computing basic and diluted net loss per share**
3,982,956
2,451,971
(**) See note 1e regarding reverse share split.
The accompanying notes are an integral part of the consolidated financial statements.
F-7
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DARIOHEALTH CORP. AND ITS SUBSIDIARIES
STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
U.S. dollars in thousands (except stock and per share data)
Additional
Total
Common Stock
Preferred Stock
paid-in
Accumulated
stockholders’
Number**
Amount
Number
Amount
capital
deficit
equity
Balance as of January 1, 2024
1,359,592
$
3
18,959
$
*) -
$
407,502
$
( 349,361 )
$
58,144
Exercise of options
536
*) -
—
—
*) -
—
*) -
Exercise of pre-funded warrant to common stock
159,355
*) -
—
—
2,225
—
2,225
Extinguishment of preferred stock in connection with preferred stock modification
—
—
—
—
( 12,194 )
12,194
—
Deemed dividend related to issuance of preferred stock
—
—
—
—
10,429
( 10,429 )
—
Conversion of preferred stock to common stock
240,374
*) -
( 10,601 )
*) -
—
—
*) -
Issuance of warrants to service providers
—
—
—
—
2,704
—
2,704
Stock-based compensation
159,563
*) -
—
—
13,092
—
13,092
Issuance of preferred stock, net of issuance cost
—
1
41,227
*) -
38,530
—
38,531
Modification of warrants
—
—
—
—
70
—
70
Net loss
—
—
—
—
—
( 42,747 )
( 42,747 )
Balance as of December 31, 2024
1,919,420
$
4
49,585
$
*) -
$
462,358
$
( 390,343 )
$
72,019
Round-up of shares due to reverse share split effectuated on August 28, 2025
53,518
*) -
—
—
—
—
—
Exercise of pre-funded warrant to common stock
299,681
*) -
—
—
2,821
—
2,821
Issuance of common stock and prefunded warrant, net of issuance cost
1,154,420
*) -
—
—
17,374
—
17,374
Modification of preferred stock
—
—
—
1,604
( 1,604 )
—
Deemed dividend related to issuance of preferred stock
—
—
—
—
18,417
( 18,417 )
—
Conversion of preferred stock to common stock and prefunded warrant
2,826,861
*) -
( 56,385 )
*) -
—
*) -
Stock-based compensation
652,048
*) -
—
—
9,365
—
9,365
Issuance of preferred stock, net of issuance cost
—
—
6,800
*) -
6,815
—
6,815
Issuance of warrants in connection with Callodine Loan Facility, net of issuance cost
—
—
—
—
1,140
—
1,140
Modification of Avenue warrants
—
—
—
—
102
—
102
Net loss
—
—
—
—
—
( 41,714 )
( 41,714 )
Balance as of December 31, 2025
6,905,948
$
4
—
$
—
$
519,996
$
( 452,078 )
$
67,922
*) Represents an amount lower than $1.
(**) See note 1e regarding reverse share split.
The accompanying notes are an integral part of the consolidated financial statements.
F-8
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DARIOHEALTH CORP. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
U.S. dollars in thousands
Year ended
December 31,
2025
2024
Cash flows from operating activities:
Net loss
$
( 41,714 )
$
( 42,747 )
Adjustments required to reconcile net loss to net cash used in operating activities:
Stock-based compensation
9,365
15,796
Change in operating lease right of use assets
421
907
Amortization of acquired intangible assets
2,831
6,100
Depreciation and impairment
307
1,327
Change in fair value of warrant liability
( 1,681 )
( 16,504 )
Accrued interest on short term bank deposits
( 14 )
—
Non-cash financial expenses
2,933
516
Changes in operating assets and liabilities, net of effects of businesses acquired:
Decrease in trade receivables, net
2,660
1,680
Increase in other accounts receivable, prepaid expense and long-term assets
( 16 )
( 80 )
Decrease in inventories
437
308
Decrease in trade payables
( 122 )
( 496 )
Decrease in other accounts payable and accrued expenses
( 780 )
( 3,483 )
Decrease in deferred revenues
( 869 )
( 156 )
Change in operating lease liabilities
( 341 )
( 1,150 )
Other
642
( 580 )
Net cash used in operating activities
( 25,941 )
( 38,562 )
Cash flows from investing activities:
Purchase of property and equipment, net
( 142 )
( 138 )
Investments in short-term bank deposits
( 4,200 )
—
Payments for business acquisitions, net of cash acquired
—
( 8,796 )
Net cash used in investing activities
( 4,342 )
( 8,934 )
Cash flows from financing activities:
Proceeds from issuance of common stock and prefunded warrants, net of issuance costs
17,374
—
Proceeds from issuance of preferred stock, net of issuance costs
6,754
38,531
Proceeds from borrowings on credit agreement, Net of issuance cost
31,700
—
Repayment of long-term loan
( 31,515 )
—
Net cash provided by financing activities
24,313
38,531
Increase (decrease) in cash, cash equivalents and restricted cash and cash equivalents
( 5,970 )
( 8,965 )
Effect of exchange rate differences on cash, cash equivalents and restricted cash and cash equivalents
9
( 68 )
Cash, cash equivalents and restricted cash and cash equivalents at beginning of period
27,764
36,797
Cash, cash equivalents and restricted cash and cash equivalents at end of period
$
21,803
$
27,764
Supplemental disclosure of cash flow information:
Cash paid during the period for interest on long-term loan
$
3,493
$
3,927
Non-cash activities:
Right-of-use assets obtained in exchange for lease liabilities
$
73
$
428
Purchase of property and equipment on credit
5
—
Exercise of pre-funded warrants to common stock upon acquisition
$
2,821
$
2,225
F-9
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DARIOHEALTH CORP. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands
NOTE 1:- GENERAL
a. DarioHealth Corp. (the “Company” or “DarioHealth”) was incorporated in the State of Delaware and commenced operations on August 11, 2011.
DarioHealth is a global digital therapeutics (DTx) company delivering personalized evidence-based interventions that are driven by precision data analytics, software, and personalized coaching, DarioHealth has developed an approach with the intent to empower individuals to adjust their lifestyle in 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 platform and suite of solutions deliver personalized and dynamic interventions driven by data analytics and one-on-one coaching for diabetes, hypertension, weight management, musculoskeletal pain, and behavioral health.
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 design.
The Company has one reporting unit and one operating segment.
b. The Company has a wholly owned subsidiary, LabStyle Innovation Ltd. (“LabStyle”), which 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 general and administrative business activities.
c. On February 15, 2024, the Company acquired Twill, pursuant to the terms of an Agreement and Plan of Merger (the “Twill Agreement”). Pursuant to the provisions of the Twill Agreement, Twill Merger Sub, Inc. (“Merger Sub”) was merged with and into Twill, the separate corporate existence of Merger Sub ceased and Twill continued as the surviving company and a wholly owned subsidiary of the Company. Twill is a clinical grade technology company working to shorten the distance between need and care by configuring personalized digital therapeutics and care solutions at scale for the modern healthcare cloud. Twill’s Intelligent Healing Platform(tm): integrates artificial intelligence (AI) with empathy, making healing more personal, precise, and connected for the entire care journey. Twill deploys a full spectrum of science-backed care solutions-including digital therapeutics, coaching, community, and well-being products for pharma, health plans, enterprises, and individuals everywhere.
d. The Company has, through its wholly owned subsidiary, PsyInnovations Inc., a company located in India, DarioHealth Services, which serves as the Company’s primary research and development center. DarioHealth Services is engaged in software development and other research and development activities in support of the Company’s operations.
e. Effective as of August 28, 2025, the Company effected a reverse stock split of its outstanding shares of Common Stock at a ratio of twenty -for- one (the “Reverse Stock Split”). The Reverse Stock Split, which was approved by the Company’s board of directors under authority granted by the Company's stockholders at the Company’s 2025 Annual Meeting of Stockholders held on July 23, 2025, was consummated pursuant to a Certificate of Amendment filed with the Secretary of State of Delaware on August 25, 2025 (the “Certificate of Amendment”). All issued and outstanding share and per share amounts included in the accompanying consolidated financial statements have been adjusted to reflect the Reverse Stock Split for all periods presented. An additional 53,518 shares of Common Stock were included in the Company’s issued and outstanding shares as a result of rounding-up fractional shares into whole shares as a result of the Reverse Stock Split.
F-10
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DARIOHEALTH CORP. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands
NOTE 1:- GENERAL (Cont.)
f. 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. 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 its product offerings.
g. The Company’s common stock (the “Common Stock”) is listed on the Nasdaq Capital Market under the symbol “DRIO”.
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES
The consolidated financial statements are prepared according to United States generally accepted accounting principles (“U.S. GAAP”).
a.
Use of estimates:
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 material.
These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements including other accounts receivable and prepaid expenses and other accounts payable and accrued expenses, and the reported amounts of revenue, cost of revenues and operational expenses during the reporting period. Actual results could differ from those estimates.
b.
Financial statements in U.S. dollars (“$,” “dollar” or “dollars”):
The functional currency of the Company and its subsidiaries is the U.S dollar.
The Company’s revenues and financing activities are incurred in U.S. dollars. Although a portion of the Company’s expenses is denominated in New Israeli Shekels (“NIS”), 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 subsidiaries operate is the dollar; thus, the dollar is the functional currency of the Company. Transactions and balances denominated in dollars are presented at their original amounts. Monetary accounts denominated in currencies other than the dollar are re-measured into dollars in accordance with Accounting Standards Codification (“ASC”) 830, “Foreign Currency Matters”.
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DARIOHEALTH CORP. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)
All transaction gains and losses of the re-measurement of monetary balance sheet items are reflected in the consolidated statements of comprehensive loss as financial income or expenses, as appropriate.
c.
Principles of consolidation:
The consolidated financial statements include the accounts of the Company and its subsidiaries. Intercompany accounts and transactions have been eliminated upon consolidation.
d.
Segment information:
Operating segments are defined as components of an enterprise about which separate financial information is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and assessing performance. The Company identified its Chief Executive Officer as the Chief Operating Decision Maker (CODM). The Company’s Chief Executive Officer reviews the financial information presented on consolidated basis for purposes of allocating resources and evaluating its financial performance.
e.
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.
f.
Short-term bank deposits:
Short-term bank deposits are non-tradable deposits with maturities of more than three months but less than one year. Non-tradable deposits are presented at their cost, including accrued interest.
g.
Short-term restricted bank deposits:
Short-term restricted bank deposits are restricted deposits with maturities of up to one year and are pledged in favor of the bank as a security for the bank guarantees issued to the landlords of the Company’s offices and credit card payments. The short-term restricted bank deposits are denominated in NIS and Indian Rupee and bear interest at an average rate of 2.49 % and 4.56 % as of December 31, 2025 and 2024, respectively. The short-term restricted bank deposits are presented at their cost, including accrued interest.
As of December 31, 2025, and 2024, the Company had a short-term restricted bank deposit which is used as collateral for rent in the amount of $ 229 and $ 175 , respectively.
h.
Trade receivables, net:
The Company records trade receivables when an enforceable right to payment exists, net of allowance for credit losses. The Company’s expected credit loss allowance methodology for trade receivables is based upon its assessment of various factors, including historical experience, the age of the trade receivable balances, credit quality of its customers, current economic conditions, reasonable and supportable forecasts of future economic conditions, and other factors that may affect its ability to collect from customers. The estimated credit loss allowance is recorded as general and administrative expenses on the Company's Consolidated Statements of Comprehensive Loss. As of December 31, 2025, and 2024, the credit loss allowance was $ 158 and $ 169 , respectively.
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DARIOHEALTH CORP. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)
i.
Inventories:
Inventories are stated at the lower of cost or net realized value. 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 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.
j.
Property and equipment:
Property and equipment are stated at cost, net of accumulated depreciation. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets at the following annual rates:
%
Computers, and peripheral equipment
15 - 33
Office furniture and equipment
6 - 15
Production lines
14 - 20
Leasehold improvements
Over the shorter of the lease term or
useful economic life
k.
Impairment of long-lived assets:
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 (or asset group) may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset (or asset group) to the future undiscounted cash flows expected to be generated by the assets. If such assets (or asset group) 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 (or asset group). For the years ended December 31, 2025, and 2024, the Company recorded an impairment loss of $ 0 and $ 860 , respectively.
l.
Revenue recognition
The Company recognizes 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 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.
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, the Company allocates the transaction price to each performance obligation based on the relative standalone selling price (“SSP”) for each performance obligation. The Company uses judgment in determining the SSP for its performance obligations.
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DARIOHEALTH CORP. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)
To determine SSP, the Company maximizes the use of observable standalone sales and observable data, where available. In instances where performance obligations do not have observable standalone sales, the Company may use alternative methods to estimate the standalone selling price, such as cost plus margin approach.
The Company’s payment terms are generally 45 days or less. In instances where the timing of revenue recognition differs from the timing of invoicing, the Company determines its contracts generally do not include a significant financing component since the Company's selling prices are not subject to billing terms nor is the Company’s purpose to receive financing from its customers or to provide customers with financing. In addition, the Company 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 the Company 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. The Company elected to account for shipping and handling activities as fulfillment activities. Shipping and handling activities are classified as part of cost of revenues.
Consumers revenue
The Company considers 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, the Company evaluates whether the price is subject to rebates and adjustments to determine the net consideration to which the Company expects to receive. Revenue from tangible hardware is recognized when control of the hardware 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 service arrangements are recognized over time based on the pattern of transfer of services to the customer.
Commercial revenue – B2B2C
The Company provides 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 musculoskeletal health (MSK). At contract inception, the Company assesses the type of services being provided and assesses the performance obligations in the contract , as well as the relevant contractual terms in contracts. These solutions integrate access to the Company’s 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 the Company’s 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, the Company recognizes revenue each month using either on a per engaged member per month (PEMPM) or a per member per month (PMPM) basis.
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DARIOHEALTH CORP. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)
The Company generally recognizes 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.
Certain of the Company’s 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 rates. 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.
The Company follows 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 the Company controls the specified good or service.
Commercial revenue - Strategic partnerships
We have also entered into contracts with a preferred partner and a health plan provider in which we provide data license, development and implementation services.
m.
Cost of revenues:
Cost of revenues is comprised of the cost of production, data center costs, shipping and handling inventory, hosting services, personnel and related overhead costs, depreciation of production line and related equipment costs, amortization of costs to fulfill a contract and inventory write-downs.
n.
Concentrations of credit risk:
Financial instruments that potentially subject the Company to credit risk primarily consist of cash and cash equivalents, short-term deposits, restricted deposits, and trade receivables. For cash and cash equivalents, the Company is exposed to credit risks in the event of default by the financial institutions to the extent that amounts recorded on the accompanying consolidated balance sheets exceed federally insured limits. The Company places its cash and cash equivalents and short-term deposits with financial institutions with high-quality credit ratings and has not experienced any losses in such accounts.
For trade receivables, the Company is exposed to credit risk in the event of non-payment by customers to the extent of the amounts recorded on the accompanying consolidated balance sheets.
Balance at
Balance at
beginning of period
Additions
Deduction
end of period
Year ended December 31, 2025
Allowance for credit losses
$
169
$
46
$
( 57 )
$
158
Year ended December 31, 2024
Allowance for credit losses
$
163
$
268
$
( 262 )
$
169
The Company has no off-balance-sheet concentration of credit risk.
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DARIOHEALTH CORP. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)
As of December 31, 2025, and December 31, 2024, the Company's major customers accounted for 30.5 % and 41.6 %, respectively, of the Company's accounts receivable balance. For the year ended December 31, 2025, the Company had no major customer, of the Company's revenue in the period. For the year ended December 31, 2024, the Company's major customers accounted for 24.6 %, of the Company's revenue in the period.
o.
Income taxes:
The Company accounts for income taxes in accordance with ASC 740, “Income Taxes” (“ASC 740”). This guidance prescribes the use of the liability method whereby deferred tax asset and liability account balances are determined based on differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company provides a valuation allowance, if necessary, to reduce deferred tax assets to amounts that are more likely than not to be realized.
ASC 740 contains a two-step approach to recognizing and measuring a liability for uncertain tax positions. The first step is to evaluate the tax position taken or expected to be taken in a tax return by determining if the weight of available evidence indicates that it is more likely than not that, on an evaluation of the technical merits, the tax position will be sustained on audit, including resolution of any related appeals or litigation processes. The second step is to measure the tax benefit as the largest amount that is more than 50% likely to be realized upon ultimate settlement. As of December 31, 2025, and 2024, no liability for unrecognized tax benefits was recorded.
p.
Research and development costs:
Research and development costs are charged to the consolidated statements of comprehensive loss, as incurred.
q.
Accounting for stock-based compensation:
The Company accounts for stock-based 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. The value 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 expenses for the value of its awards granted based on the straight-line method over the requisite service period of each of the awards, net of estimated forfeitures. ASC 718 requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.
The Company estimates the fair value of stock options granted using the Black-Scholes-Merton option-pricing model. The option-pricing model requires a number of assumptions, of which the most significant are the expected stock price volatility and the expected option term. Expected volatility 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 data will support using expected life assumptions. The risk-free interest rate is based on the yield from U.S. treasury bonds with an equivalent term. The Company has historically not paid dividends and has no foreseeable plans to pay dividends.
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DARIOHEALTH CORP. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)
r.
Fair value of financial instruments:
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.
In determining fair value, the Company uses various valuation approaches. ASC 820 establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability developed based 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 available in the circumstances.
The hierarchy is broken down into three levels based on the inputs as follows:
Level 1 -
Valuations based on quoted prices in active markets for identical assets that the Company has the ability to access. 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.
Level 2 -
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.
Level 3 -
Valuations based on inputs that are unobservable and significant to the overall fair value measurement.
The availability of observable inputs can vary from instrument to instrument and is affected by a wide variety of factors, including, for example, the type of investment, the liquidity of markets and other characteristics particular to the transaction. To the extent that valuation is based on models or inputs that are unobservable in the market, the determination of fair value requires more judgment, and the fair value are categorized as Level 3.
The carrying amounts of cash and cash equivalents, short-term restricted bank deposits, trade receivables, other accounts receivable and prepaid expenses, trade payables and other accounts payable and accrued expenses approximate their fair value due to the short-term maturity of such instruments. The Company's Avenue Loan Facility, and warrants liability were measured at fair value using Level 3 unobservable inputs (see note 8). The Callodine Loan Facility was initially measured at fair value using Level 3 unobservable inputs and has been subsequently measured at amortized cost (see note 7).
s.
Warrants:
The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance. The assessment considers whether the warrants are freestanding financial instruments, meet the definition of a liability under ASC 480, and meet all of the requirements for equity classification, including whether the warrants are indexed to the Company’s own common stock and whether the warrant holders could potentially require “net cash settlement” in a circumstance outside of the Company’s control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent reporting period end date while the warrants are outstanding. Warrants that meet all the criteria for equity classification, are required to be recorded as a component of additional paid-in capital.
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DARIOHEALTH CORP. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)
Warrants that do not meet all the criteria for equity classification, are required to be recorded as liabilities at their initial fair value on the date of issuance and remeasured to fair value at each balance sheet date thereafter. The liability-classified warrants are recorded under current and non-current liabilities. Changes in the estimated fair value of the warrants are recognized in “Other financial expenses (income), net” in the consolidated statements of comprehensive loss.
t.
Basic and diluted net loss per share:
The Company computes net loss per share using the two-class method required for participating securities. The two-class method requires income available to common stockholders for the period to be allocated between shares of Common Stock and participating securities based upon their respective rights to receive dividends as if all income for the period had been distributed.
The Company’s basic net loss per share is calculated by dividing net loss attributable to common stockholders by the weighted-average number of shares, pre-funded warrants and vested restricted stock without consideration of potentially dilutive securities. The diluted net loss per share is calculated by giving effect to all potentially dilutive securities outstanding for the period using the treasury share method or the if-converted method based on the nature of such securities. Diluted net loss per share is the same as basic net loss per share in periods when the effects of potentially dilutive shares of Common Stock are anti-dilutive.
u.
Severance pay:
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. Payments in accordance with Section 14 release Ltd. from any future severance payments in respect of those employees. Payments under Section 14 are not recorded as an asset in the Company’s balance sheet.
Severance pay expense for the year ended December 31, 2025 and 2024 amounted to $ 780 and $ 935 , respectively.
The Company has a 401(k) defined contribution plan covering certain employees in the U.S. All eligible employees may elect to contribute up to $ 23.50 per year (for certain employees over 50 years of age the maximum contribution is $ 31.00 per year), of their annual compensation to the plan through salary deferrals, subject to Internal Revenue Service limits.
v.
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, 202 5 , and 202 4 , 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.
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DARIOHEALTH CORP. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)
w.
Leases:
Lessee accounting:
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 not to 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 not to 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 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 the lease payments over the lease term. The implicit 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. See also Note 9.
x.
Business combination and asset acquisitions:
The Company applies the provisions of ASC 805, “Business Combination” and allocates the fair value of purchase consideration to the tangible assets acquired, liabilities assumed, and intangible assets acquired based on their estimated fair values. The excess of the fair value of purchase consideration over the fair values of these identifiable assets and liabilities is recorded as goodwill. When determining the fair values of assets acquired and liabilities assumed, management makes significant estimates and assumptions, especially with respect to intangible assets.
Acquisition-related expenses are recognized separately from the business combination and are expensed as incurred.
The Company accounts for a transaction as an asset acquisition when substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets, or otherwise does not meet the definition of a business. Asset acquisition-related direct costs are capitalized as part of the asset or assets acquired.
y.
Intangible Assets:
Acquired identifiable finite-lived intangible assets are amortized on a straight-line basis over the estimated useful lives of the assets. The basis of amortization approximates the pattern in which the assets are utilized, over their estimated useful lives. The Company routinely reviews the remaining estimated useful lives of finite-lived intangible assets. In case the Company reduces the estimated useful life for any asset, the remaining unamortized balance is amortized over the revised estimated useful life (see Note 11).
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DARIOHEALTH CORP. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)
z.
Goodwill:
Goodwill represents the excess of the purchase price in a business combination over the fair value of the net identifiable tangible and intangible asset acquired. Under ASC 350, "Intangible - Goodwill and Other" ("ASC 350"), goodwill is not amortized, but rather is subject to an annual impairment test.
ASC 350 allows an entity to first assess qualitative factors to determine whether it is necessary to perform the quantitative goodwill impairment test. If the qualitative assessment does not result in a more likely than not indication of impairment, no further impairment testing is required. If the Company elects not to use this option, or if the Company determines that it is more likely than not that the fair value of a reporting unit is less than its carrying value, then the Company prepares a quantitative analysis to determine whether the carrying value of a reporting unit exceeds its estimated fair value. If the carrying value of a reporting unit would exceed its estimated fair value, the Company would have recognized an impairment of goodwill for the amount of this excess.
On December 31, 2025, the Company performed a quantitative assessment for goodwill impairment. The assessment utilizes the Company’s market capitalization plus an appropriate control premium.
There was no impairment of goodwill recorded for the years ended December 31, 2025 and 2024 as the fair value exceeded the carrying amount of the reporting unit for each of these years.
aa. CARES Act
The Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), enacted in March 2020 in response to the COVID-19 pandemic, provided refundable employee retention credits, which could be used to offset payroll tax liabilities. In March 2021, the American Rescue Plan Act (“ARPA”) was enacted. ARPA includes several provisions, such as measures that extend and expand the employee retention credit, previously enacted under the CARES Act, through September 30, 2021.
Measures not related to income-based taxes within the CARES Act include (1) allowing an employer to defer payment of its share of Social Security payroll taxes that would otherwise be due from the date of enactment through December 31, 2020 over the following two years and (2) allowing eligible employers subject to a significant decline in gross receipts due to the COVID-19 pandemic to receive a credit on qualified wages against their employment taxes each quarter, with any excess credits eligible for refunds.
The Company’s subsidiary, Twill qualified for the employee retention credit based on a significant decline in gross receipts of approximately 62 % in the third quarter of 2020 as compared to the third quarter of 2019, which occurred prior to the Company’s acquisition of Twill, and eligibility continued through the fourth quarter of 2020. Twill also qualified for the third quarter of 2021 based on a significant decline in gross receipts compared to the corresponding 2019 period. During 2025, the Company received approximately $ 334 of employee retention credit refunds from the Internal Revenue Service related to the third and fourth quarters of 2020. In addition, the Company has filed for an additional employee retention credit refund related to the third quarter of 2021, which remains subject to the United States Internal Revenue Service review and approval.
The employee retention credit received was recorded as a reduction of research and development expenses, sales and marketing expenses and general and administrative expenses in the manner in which the qualified wages and related costs were classified.
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DARIOHEALTH CORP. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)
ab.
Recently Adopted Accounting Pronouncements
(i)
In December 2023, the FASB issued 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).
ac.
Recently issued accounting pronouncements, not yet adopted:
(i) 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, and may be applied either prospectively or retrospectively. The Company is currently evaluating the effect of adopting the ASU on its disclosures.
(ii) In July 2025, the FASB issued Accounting Standards Update 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.
(iii) 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.
(iv) 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.
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DARIOHEALTH CORP. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands
NOTE 3:- OTHER ACCOUNTS RECEIVABLE AND PREPAID EXPENSES
December 31,
2025
2024
Prepaid expenses
$
1,576
$
1,788
Costs to fulfill a contract
258
259
Government authorities
527
289
$
2,361
$
2,336
NOTE 4:- ACQUISITIONS
Acquisition of Twill
On February 15, 2024, the Company completed the merger and the associated acquisition of all issued and outstanding shares of Twill for an aggregate consideration of (A) $ 10.0 million in cash, and (B) pre-funded warrants (the “Pre-Funded Warrants”) to purchase up to 500,020 shares of the Company’s Common Stock. In addition, the Company issued stock options to purchase up to 148,173 shares of Common Stock and a combination of warrants and restricted stock units (“RSUs”) to acquire up to 88,326 shares of Common Stock to certain employees and officers of Twill. of which 17,500 shares were exercised into shares of Common Stock in May 2025.
The acquisition of Twill advances the Company’s strategy to evolve from a point solution to a comprehensive multi condition platform. With the integration of Twill, the Company believes it can achieve multiple advantages as well as synergies in multiple fronts like its product offering, commercial channels, improved clients and member experience.
Purchase price allocation:
Pursuant to ASC 805, the total purchase price was allocated to Twill’s net tangible and intangible assets based on their estimated fair values as set forth below. The excess of the purchase price over the net tangible and identifiable intangible assets was recorded as goodwill. A portion of the acquisition price was recorded as goodwill due to the synergies with Twill and is not expected to be deductible for tax purposes.
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DARIOHEALTH CORP. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands
NOTE 4:- ACQUISITIONS (Cont.)
The allocation of the purchase price to the assets acquired and liabilities assumed based on management’s estimate of fair values at the date of acquisition as follows:
Cash and cash equivalents
$
531
Short-term restricted bank deposits
673
Trade receivables
3,329
Other accounts receivable and prepaid expenses
475
Property and equipment, net
580
Operating lease right of use assets
995
Acquisition-related intangibles
19,435
Other assets
23
Total assets acquired
26,041
Trade payables
2,411
Other accounts payable and accrued expenses
1,223
Deferred revenues
742
Operating lease liabilities
995
Deferred tax liability
2,001
Liabilities assumed
7,372
Fair value of net assets acquired
18,669
Goodwill
15,787
Total purchase consideration
$
34,456
Amortization
Fair value
period (Years)
Technology (1)
$
5,644
7.9
Customer relationship healthcare (2)
13,791
11.9
Total identified intangible assets acquired
$
19,435
(1) The technology has been calculated through the Income Approach, in particular the Relief from Royalty method.
(2) The fair value of Twill’s customer relationships has been calculated using the Multi-Period excess earnings method (“MPEEM method”).
Amount
Number of shares of common stock issuable upon the exercise of the consideration warrants.
500,020
Value of each warrant issued
$
48.91
Total consideration warrant shares
24,456
Cash consideration
10,000
Total purchase price
$
34,456
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DARIOHEALTH CORP. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands
NOTE 4:- ACQUISITIONS (Cont.)
The consolidated statement of comprehensive loss includes the following revenue and net loss attributable to Twill in 2024:
Year Ended
December 31, 2024
Revenues
$
12,931
Net loss
$
5,645
In 2024, the Company recognized $ 2,001 of a deferred tax liability which relates to the purchase price allocation fair value adjustments, other than goodwill. The Company filing a consolidated tax return in the U.S. together with Twill and utilize the benefit of the Company's loss carryforwards against the future taxable income of Twill and consequently decreased its valuation allowance in an amount equal to the deferred tax liability recognized in the business combination.
Supplemental Unaudited Pro Forma Information
The following table sets forth a summary of the unaudited pro forma results of the Company as if the acquisition of Twill, which closed in February 2024, had taken place had Twill been acquired as of January 1, 2023.
Year Ended
December 31, 2024
Total revenues
$
29,003
Net loss
$
55,985
The unaudited pro forma financial information presented is for informational purposes only and is not necessarily indicative of the results of operations that would have been achieved if the Twill acquisition was completed at the beginning of 2024 and are not indicative of the future operating results of the combined company. The pro forma results include adjustments related primarily to purchase accounting, and amortization of acquisition-related intangible assets. The pro forma results also include 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. GAAP.
NOTE 5:- INVENTORIES
Inventory consists of the following:
December 31,
December 31,
2025
2024
Raw materials
$
751
$
563
Finished products
3,565
4,190
$
4,316
$
4,753
Total write-downs during the years ended December 31, 2025, and 2024 amounted to $ 320 and $ 301 , respectively.
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DARIOHEALTH CORP. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands
NOTE 6: - REVENUE
The Company is operating a multi-condition healthcare business, empowering individuals to manage their chronic conditions and take steps to improve their overall health. The Company generates revenues from contracts with enterprise business market groups to provide digital therapeutics solutions for individuals to receive access to services through the Company’s commercial arrangements Business-to-Business-to-Consumer (“B2B2C”). The Company also generates revenue directly from individuals through a la carte offering and membership plans.
Revenue Source:
The following table represent the Company total revenues for the year ended December 31, 202 5 and 202 4 disaggregated by revenue source:
Year ended
December 31,
2025
2024
Commercial - B2B2C
$
14,281
$
20,023
Commercial - Strategic partnerships
—
( 514 )
Consumers
8,078
7,531
$
22,359
$
27,040
Deferred Revenue
The Company recognizes contract liabilities, or deferred revenues, when it receives advance payments from customers prior to the satisfaction of the Company's performance obligations. The balance of deferred revenues approximates the aggregate amount of the transaction price allocated to the unsatisfied performance obligations at the end of the reporting period. The Company expects to recognize approximately $ 714 over the next 12 months and the remainder thereafter.
The Company elected to not disclose information about remaining performance obligations for which the variable consideration is allocated to a wholly unsatisfied promise to transfer a distinct good or service that is subject to the variable consideration allocation exception.
The following table presents the significant changes in the deferred revenue balance during the year ended December 31, 202 5 :
Balance, beginning of the period
$
1,583
New performance obligations
3,153
Reclassification to revenue as a result of satisfying performance obligations
( 4,017 )
Balance, end of the period
$
719
Costs to fulfill a contract
The Company defers costs incurred to fulfill contracts that: (1) relate directly to the contract; (2) are expected to generate resources that will be used to satisfy the Company’s performance obligations under the contract; and (3) are expected to be recovered through revenue generated under the contract. Contract fulfillment costs are expensed as the Company satisfies its performance obligations and recorded into cost of revenue.
Costs to fulfill a contract are recorded in other accounts receivable and prepaid expenses and long-term assets.
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DARIOHEALTH CORP. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands
NOTE 6: - REVENUE (Cont.)
Costs to fulfill a contract consist of (1) deferred consumer hardware costs incurred in connection with the delivery of services that are deferred, and (2) deferred costs incurred, related to future performance obligations which are capitalized.
Costs to fulfill a contract as of December 31, 202 5 , and December 202 4 , consisted of the following:
December 31,
December 31,
2025
2024
Costs to fulfill a contract, current
$
258
$
259
Costs to fulfill a contract, noncurrent
176
65
Total costs to fulfill a contract
$
434
$
324
Costs to fulfill a contract were as follows:
Costs to
fulfill a contract
Beginning balance as of December 31, 2024
$
324
Additions
509
Cost of revenue recognized
( 399 )
Ending balance as of December 31, 2025
434
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DARIOHEALTH CORP. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands
NOTE 7:- DEBT
Loan Facility
On April 30, 2025, the Company refinanced its existing $ 30,000 credit facility with a new $ 32,500 credit agreement (the “Credit Agreement”), by and among the Company as borrower, the financial institutions party thereto from time to time as lenders, and Callodine Commercial Finance, LLC (in its capacity as agent for all lenders, “Agent”, and collectively with other lenders, “Lenders” and each a “Lender”) (the “Callodine Loan Facility”). Under the terms of the Credit Agreement, each Lender agreed to make a multi-draw term loan (each a “Term Loan”) in which the Company borrowed $ 32,500 at the time of closing on April 30, 2025. In addition, the Company may at its option draw an aggregate of up to an additional $ 17,500 . $ 2,500 of such additional Term Loan is subject to the achievement of certain revenue and gross margin thresholds and the sole discretion of the Agent and the Lenders. $ 15,000 of such additional Term Loan is subject to the discretion of the Agent and the Lenders. The Credit Agreement has a five-year term that matures in April 2030. Principal repayments on the Term Loan are not due until May 2028, at which point the Company is required to make equal quarterly principal installments in the amount of $ 1,367 , with all remaining outstanding principal due on the Term Loan Maturity Date of April 30, 2030.
The outstanding principal balance under the loan shall bear interest at a per annum rate of interest equal to (i) the Secured Overnight Financing Rate (“SOFR”), (as defined in the Credit Agreement) plus (ii) seven and three-quarters of one percent ( 7.75 %). Upon maturity and/or upon an event of default (or upon any acceleration), interest shall automatically accrue without notice to the Company at a rate per annum equal to the lesser or (i) three percent ( 3 %) over the Contract Rate (as defined in the Credit Agreement), or (ii) the maximum rate of interest permitted to be charged by applicable laws or regulations until paid. The Company paid certain fees with respect to the Term Loan, including a closing fee and an agent fee. Voluntary prepayments of the Term Loan prior to the third anniversary of the closing are also subject to certain pre-payment penalties.
In connection with the funding of the closing amount, the Company agreed to issue the Lenders a warrant to purchase an aggregate of 105,707 shares of our Common Stock, with an exercise price of $ 16.56 , which shall have a term of seven years from the issuance date. In addition, up to $ 2,500 of the loaned amount can be converted into shares of our Common Stock at a price of $ 19.87 per share.
The Company concluded that the Callodine Loan Facility and the Warrant are freestanding financial instruments since these instruments are legally detachable and separately exercisable. The Company has concluded that the Warrant meets all the conditions to be classified as equity pursuant to ASC 480 and ASC 815-40. In addition, the Callodine Loan Facility is measured at amortized cost.
With respect to the Initial Commitment Amount only, the fair value of the Callodine Loan Facility is recognized in connection with the Company’s Credit Agreement. The fair value of the Callodine Loan Facility was determined based on significant inputs not observable in the market, which represents a Level 3 measurement within the fair value hierarchy. The fair value of the Callodine Loan Facility, which is reported within non-current liabilities (Maturity Date - April 30, 2030) on the consolidated balance sheets, was estimated by the Company as of April 30, 2025 such that the value of the instruments granted by the Company under the Callodine Loan Facility equals the net principal amount (net of origination fees).
The Callodine Loan Facility incorporates comparisons to instruments with similar covenants, collateral, and risk profiles and was obtained using a discounted cash flow technique. On the date of Callodine Loan Facility origination, or April 30, 2025, the discount rate was arrived at by calibrating the loan amount of $ 32,500 with the fair value of the warrants of $ 1,234 and the loan terms interest rate equal to the greater of (i) The SOFR, and(ii) 4.0 % plus a margin of 7.75 %. The implied internal rate of return of the loan resulted with B rating U.S. dollar zero coupon discount curve plus a 11.473 % credit curve. Interest expense related to the Callodine Loan Facility that measured at amortized cost were recorded within “Interest expense” in the consolidated statements of comprehensive loss.
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DARIOHEALTH CORP. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands
NOTE 7:- DEBT (Cont.)
On August 15, 2025, the Company did not meet one of the financial covenants under the Credit Agreement. Upon an Event of Default (as defined in the Credit Agreement) under the 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 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 Credit Agreement) to address the event of default.
On November 5 , 2025, the Company entered into an Amendment to the Credit Agreement with the Lenders. Among other things, the amendment (i) resets financial covenants and waives financial-covenant testing for the second and third quarters of 2025; (ii) replaces the minimum cash covenant with a $ 10,000 minimum consolidated unencumbered liquid assets covenant; (iii) adds monthly 13 -week cash-flow reporting when liquidity is below certain amount (subject to an EBITDA exception); (iv) clarifies that Tranche B is uncommitted and at lender discretion; and (v) increases the exit fee by $ 150 (waived if a change-of-control prepayment fee is triggered). In connection therewith, the Company repriced the Warrant to purchase up to 105,707 shares of Common Stock issued to the lenders on April 30, 2025, at an exercise price $ 16.56 per share, to permit an amendment to the exercise price of such Warrants to $ 15.35 . In addition, conversion right of the lender in the amount of $ 2,500 was amended to a conversion price of $ 15.35 per share.
During the year ended December 31, 2025, the Company recorded interest expenses related to the Callodine Loan Facility in the amount of $ 3,020 .
Avenue Loan Facility (Repaid)
On April 30, 2025, the Company Extinguished and repaid in full its $ 30,000 Avenue Loan Facility, which was originally entered into on May 1, 2023, in connection with the closing of the new Callodine Loan Facility. The Avenue Loan Facility was a four-year secured credit facility by and between the Company and its subsidiary PsyInnovations Inc., collectively as 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 Company concluded that Avenue Loan Facility and the Warrant are freestanding financial instruments since these instruments are legally detachable and separately exercisable. The Company has concluded that the Warrant meets all the conditions to be classified as equity pursuant to ASC 480 and ASC 815-40. In addition, the Company elected to account for the Avenue Loan Facility under the fair value option in accordance with ASC 825, “Financial Instruments.” Under the fair value option, changes in fair value are recorded in earnings except for fair value adjustments related to instrument specific credit risk, which are recorded as other comprehensive income or loss. As such, the proceeds were first allocated to the Avenue Loan Facility at fair value in the amount of $ 28,215 and the remaining amount of $ 1,389 was allocated to the Warrant.
The Company remeasurement expenses related to the Avenue Loan for the year ended December 31, 2025 were $ 1,077 , compared to $ 378 of remeasurement income for the year ended December 31, 2024, which were included as part of the Other financial expenses (income), net in the Company's statements comprehensive loss. During the years ended December 31, 2025, and December 31, 2024, the Company did not recognize any instrument specific credit risk fair value adjustment.
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DARIOHEALTH CORP. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands
NOTE 7: - DEBT (Cont.)
Orbimed Warrants
On June 9, 2022 the Company entered into a 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 (the “Orbimed Loan”).
On June 9, 2022 (the closing date of the Orbimed Loan, which was repaid in May 2023), the Company agreed to issue Orbimed a warrant (the “Orbimed Warrant”) to purchase up to 11,330 shares of the Company’s Common Stock, at an exercise price of $ 132.40 per share, which shall have a term of 7 years from the issuance date. The Orbimed Warrant contains customary share adjustment provisions, as well as weighted average price protection in certain circumstances but in no event will the exercise price of the Warrant be adjusted to a price less than $ 80.00 per share. Following the issuance and sale of the Company’s Series C Preferred Stock in February 2024, and as a result of a certain price protection provision in the Orbimed Warrant, the exercise price of the Orbimed Warrant was adjusted to a price per share of $ 80.00 .
The Company has concluded that the Orbimed Warrant is not indexed to the Company's own stock and should be recorded as a liability measured at fair value with changes in fair value recognized in earnings. The Company remeasurement income related to the Orbimed Warrant for the year ended December 31, 2025, were $ 29 , compared to $ 168 for the year ended December 31, 2024.
Pre-funded warrants
On February 15, 2024, as part of the acquisition of Twill (See note 4) the Company issued Pre-Funded Warrants to purchase up to 500,020 shares of Company Common Stock, issuable to a trust (the “Trust”) formed for the benefit of certain equity and debt holders of Twill.
The Company has classified the Pre-Funded Warrants as liability pursuant to ASC 815-40 since the Pre-Funded Warrants do not meet all the equity classification conditions. Accordingly, the Company measured the Pre-Funded Warrants at their fair value. The warrants liability is 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.
In November 2024, a total of 125,005 Pre-Funded Warrants were cashlessly exercised into 124,991 shares of Common Stock.
In February 2025, a total of 125,005 Pre-Funded Warrants were cashlessly exercised into 124,985 shares of Common Stock.
In August 2025, a total of 125,005 Pre-Funded Warrants were cashlessly exercised into 124,981 shares of Common Stock.
During the year ended December 31, 2025 and December 31, 2024, the Company recognized $ 1,652 and $ 16,336 , respectively, of remeasurement income related to the Pre-Funded Warrants. The estimated fair value of the Pre-Funded Warrants liabilities is determined using observable market inputs, primarily the quoted market price of the Company’s common stock, and is classified within Level 2.
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DARIOHEALTH CORP. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands
NOTE 8:- FAIR VALUE MEASUREMENTS
Under U.S. GAAP, fair value is defined as the amount that would be received for selling an asset or paid to transfer a liability in an orderly transaction between market participants and requires that assets and liabilities carried at fair value are classified and disclosed in the following three categories:
Level 1 -
Valuations based on quoted prices in active markets for identical assets that the Company has the ability to access. 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.
Level 2 -
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.
Level 3 -
Valuations based on inputs that are unobservable and significant to the overall fair value measurement.
The availability of observable inputs can vary from instrument to instrument and is affected by a wide variety of factors, including, for example, the type of investment, the liquidity of markets and other characteristics particular to the transaction. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment, and the investments are categorized as Level 3.
The carrying amounts of cash and cash equivalents, short-term restricted bank deposits, trade receivables, other accounts receivable and prepaid expenses, trade payables and other accounts payable and accrued expenses approximate their fair value due to the short-term maturity of such instruments. In addition, the Callodine Loan Facility approximates its fair value. The Orbimed Warrant liability was measured at fair value using Level 3 unobservable inputs. On May 1, 2023, the Company refinanced its former $ 25,000 credit facility with a new $ 30,000 credit facility (the “Avenue Loan Facility”) by and between the Company and its subsidiary PsyInnovations Inc., collectively as 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 Avenue Loan Facility was also measured at fair value using level 3 inputs unobservable inputs until the payoff date of April 30, 2025.
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DARIOHEALTH CORP. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands
NOTE 8:- FAIR VALUE MEASUREMENTS (Cont.)
The following tables present information about the Company’s financial liabilities measured at fair value on a recurring basis and indicate the level of the fair value hierarchy used to determine such fair values:
December 31, 2025
Fair Value
Level 1
Level 2
Level 3
Financial assets:
Cash and cash equivalents:
U.S. treasury notes
$
12,761
$
—
$
12,761
$
—
Total financial assets
$
12,761
$
—
$
12,761
$
—
Financial liabilities:
Orbimed Warrant liability
43
—
—
43
Pre-Funded Warrant liability
1,423
—
1,423
—
Total financial liabilities
$
1,466
$
—
$
1,423
$
43
December 31, 2024
Fair Value
Level 1
Level 2
Level 3
Financial assets:
Cash and cash equivalents:
U.S. treasury notes
$
7,305
$
—
$
7,305
$
—
Total financial assets
$
7,305
$
—
$
7,305
$
—
Financial liabilities:
Long-term loan
$
28,923
$
—
$
—
$
28,923
Orbimed Warrant liability
72
—
—
72
Pre-Funded Warrant liability
5,896
—
5,896
—
Total financial liabilities
$
34,891
$
—
$
5,896
$
28,995
Orbimed Warrant Liability
The fair value of the Orbimed Warrant liability was determined based on significant inputs not observable in the market, which represents a Level 3 measurement within the fair value hierarchy. The fair value of the Orbimed Warrant liability is estimated by the Company based on the Monte-Carlo simulation valuation technique, in order to predict the probability of different outcomes that rely on repeated random variables.
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DARIOHEALTH CORP. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands
NOTE 8:- FAIR VALUE MEASUREMENTS (Cont.)
The following inputs were used to estimate the fair value of the Orbimed Warrant liability:
December 31,
December 31,
2025
2024
Stock price
$
11.38
$
15.80
Exercise price
80.00
80.00
Expected term (in years)
3.44
4.44
Volatility
103.7 %
91.2 %
Dividend rate
—
—
Risk-free interest rate
3.56 %
4.53 %
Loan Facilities - Avenue Loan Facility
The fair value of the Avenue Loan Facility was determined based on significant inputs not observable in the market, which represents a Level 3 measurement within the fair value hierarchy. The Avenue Loan Facility fair value estimate incorporates comparisons to instruments with similar covenants, collateral, and risk profiles and was obtained using a discounted cash flow technique. The fair value of the Avenue Loan Facility, as of April 30, 2025, was estimated using a discount rate of 19 % which reflects the internal rate of return of the Avenue Loan Facility at closing, as of May 1, 2023. For the years ended December 31, 2025 and, 2024, the change in the fair value of the loan was recorded in earnings since the Company concluded that the change in fair value was not related to instrument-specific credit risk. On April 30, 2025, the Company refinanced the Avenue Loan Facility with a new credit agreement, and the Avenue Loan Facility was repaid in full (see Note 7).
The following tables present the summary of the changes in the fair value of our financial instruments:
Avenue Loan Facility
Orbimed Warrant Liability
Pre-funded Warrant Liability
Balance as of January 1, 2025
$
28,923
$
72
$
5,896
Exercise
—
—
( 2,821 )
Principal repayments on long-term loan
( 31,515 )
—
—
Change in fair value
2,592
( 29 )
( 1,652 )
Balance as of December 31, 2025
$
—
$
43
$
1,423
Avenue Loan Facility
Orbimed Warrant Liability
Pre-funded Warrant Liability
Balance as of January 1, 2024
$
28,545
$
240
$
—
Exercise
—
—
24,457
Issuance
—
—
( 2,225 )
Change in fair value
378
( 168 )
( 16,336 )
Balance as of December 31, 2024
$
28,923
$
72
$
5,896
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DARIOHEALTH CORP. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands
NOTE 9:- LEASES
The Company has entered into various non-cancelable operating lease agreements for certain of its offices and car leases. The Company's leases have original lease periods expiring between 2025 and 2028. Many leases include one or more options to renew. The Company does not assume renewals in determination of the lease term unless the renewals are deemed to be reasonably certain at lease commencement. The Company's lease agreements do not contain any material residual value guarantees or material restrictive covenants.
The components of lease costs, lease term and discount rate are as follows:
Year ended
December 31,
2025
2024
Lease cost
Operating lease cost
$
361
$
1,050
Sublease rent income
—
( 371 )
Short term lease cost
63
133
Variable lease cost
9
13
Total lease cost
$
433
$
825
Weighted Average Remaining Lease Term
Operating leases
2.41
3.14
Weighted Average Discount Rate
Operating leases
9.35 %
9.35 %
The following is a schedule, by years, of maturities of lease liabilities as of December 31, 2025:
Operating
Leases
2026
$
434
2027
361
2028
328
Total undiscounted cash flows
1,123
Less imputed interest
( 122 )
Present value of lease liabilities
$
1,001
Supplemental cash flow information related to leases are as follows:
Year ended
December 31,
2025
2024
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases
$
528
$
1,289
Lease liabilities arising from obtaining right-of-use assets:
Operating leases
$
73
$
428
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DARIOHEALTH CORP. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands
NOTE 10:- PROPERTY AND EQUIPMENT, NET
Composition of assets, grouped by major classification, is as follows:
December 31,
2025
2024
Cost:
Computers and peripheral equipment
$
937
$
1,122
Office furniture and equipment
133
132
Production lines
136
1,030
Leasehold improvement
350
336
1,556
2,620
Accumulated depreciation:
Computers and peripheral equipment
702
835
Office furniture and equipment
57
48
Production lines
81
930
Leasehold improvement
167
98
1,007
1,911
Property and equipment, net
$
549
$
709
Depreciation expenses for the year ended December 31, 2025, and 2024 amounted to $ 307 and $ 466 , respectively.
NOTE 11:- OTHER INTANGIBLE ASSETS , NET
a. Finite-lived intangible assets:
December 31,
December 31,
Weighted Average
2025
2024
Remaining Life
As of December 31, 2025
Original amounts:
Technology
$
22,580
$
22,580
6.0
Brand
376
376
—
Customer Relationship Healthcare
13,791
13,791
10.0
Domains
23
23
36,770
36,770
Accumulated amortization:
Technology
18,279
16,611
Brand
376
376
Customer Relationship Healthcare
2,178
1,018
Domains
6
3
20,839
18,008
Intangible assets, net
$
15,931
$
18,762
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DARIOHEALTH CORP. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands
NOTE 11:- OTHER INTANGIBLE ASSETS , NET (Cont.)
b. Estimated amortization expense:
For the year ended December 31,
2026
1,875
2027
1,875
2028
1,880
2029
1,877
Thereafter
8,424
$
15,931
c. Amortization expenses for the years ended December 31, 2025 and December 31, 2024 amounted to $ 2,831 and $ 6,100 , respectively.
NOTE 12:-GOODWILL
The following table set forth the changes in the carrying amount of the Company’s goodwill during the year ended December 31, 2025 and the year ended December 31, 2024 (in thousands):
December 31,
2025
As of December 31, 2023
$
41,640
Additions
15,787
As of December 31, 2024
57,427
Additions
—
As of December 31, 2025
$
57,427
NOTE 13:- OTHER ACCOUNTS PAYABLE AND ACCRUED EXPENSES
December 31,
2025
2024
Employees and payroll accruals
$
2,849
$
4,112
Accrued expenses
2,402
1,940
$
5,251
$
6,052
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DARIOHEALTH CORP. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands
NOTE 14:- COMMITMENTS AND CONTINGENT LIABILITIES
From time to time, the Company is involved in claims and legal proceedings. The Company reviews the status of each matter and assesses its potential financial exposure. If the potential loss from any claim or legal proceeding is considered probable and the amount can be reasonably estimated, the Company accrues a liability for the estimated loss.
Royalties
The Company has a liability to pay future royalties to the Israeli Innovation Authority (the “IIA”) for participation in programs sponsored by the Israeli government for the support of research and development activities. The Company is obligated to pay royalties to the IIA, amounting to 3 % of the sales of the products and other related revenues (based on the U.S. dollar) generated from such projects, up to 100 % of the grants received. Royalty payment obligations also bear interest at the LIBOR rate. The obligation to pay these royalties is contingent on actual sales of the products and in the absence of such sales, no payment is required.
In connection with specific research and development activities, Physimax Technology (“Physimax”), prior to its acquisition by the Company, received $ 1,012 of participation payments from the IIA. The Company’s total commitment for royalties payable with respect to future sales, based on IIA participations received, net of royalties accrued or paid, totaled $ 976 as of December 31, 2025.
During the year ended December 31,2025 and the year ended December 31, 2024 the company recorded IIA royalties related to the acquisition of Physimax Technology in amount of $ 1 and $ 2 , respectively.
NOTE 15:- TAXES ON INCOME
The Company and its subsidiaries are separately taxed under the domestic tax laws of the country of incorporation of each entity.
Tax rates applicable to Labstyle:
The Corporate tax rate in Israel in 2025 and 2024 was 23 %.
One Big Beautiful Bill Act
On July 4, 2025, the One Big Beautiful Bill Act was signed into law in the United States. The Act contains certain provisions related to the extent of deductibility for U.S. federal tax purposes of interest expense, R&D costs and other depreciable property, as well as changes to U.S. taxation of foreign subsidiaries’ earnings, and other U.S. corporate tax law changes. Pursuant to ASC 740, changes in tax rates and tax law are required to be recognized in the period in which the legislation is enacted. Dario evaluated the impact of this Act on its annual consolidated financial statements and related disclosures and concluded the Act does not have a material impact on its 2025 consolidated financial statements.
Net operating loss carryforward:
Labstyle has accumulated net operating losses for Israeli income tax purposes as of December 31, 2025, in the amount of approximately $ 273,548 . The net operating losses may be carried forward and offset against taxable income from business in the future for an indefinite period.
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DARIOHEALTH CORP. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands
NOTE 15:- TAXES ON INCOME (Cont.)
As of December 31, 2025, the Company, WayForward and Twill had respective U.S. federal net operating loss carryforwards of approximately $ 47,055 , $ 5,803 , and $ 156,686 of which $ 7,120 , $ 371 and $ 18,832 were generated from tax years 2011-2017. The 2011-2017 losses can be carried forward and used to fully offset taxable income, and expire during the years 2031 to 2037. However, under IRC_Sections 382 and 383, 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. A "change in ownership" occurred during 2024 when Twill was acquired by Dario, resulting in a limitation of $ 2,316 per year.
The remaining NOLs of the Company, WayForward and Twill are approximately $ 39,935 , $ 5,432 and $ 137,854 , and were generated in years 2018-2025. Such losses can only be used to offset 80% of taxable income, but are carried forward indefinitely (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 any additional ownership change.
The annual limitation may result in the expiration of certain net operating losses and credits before utilization. In the event the Company has an additional change of ownership, utilization of the carryforwards could be further restricted.
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DARIOHEALTH CORP. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands
NOTE 15:- TAXES ON INCOME (Cont.)
Deferred income taxes:
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets are as follows:
December 31,
2025
2024
Deferred tax assets:
Net operating loss and capital losses carry forward
$
80,738
$
63,016
Research and development expenses
2,496
3,163
Accrued employees costs
328
432
Credit losses
6
36
Deferred revenue
14
41
Debt issuance costs
81
139
Stock-based compensation
6,262
3,441
R&D Capitalization under section 174
10,315
10,245
Accrued expenses
73
—
Director Fees and Payments in Shares
55
—
Depreciation
80
72
Loan
—
226
Intangible Assets
222
240
Lease
236
312
Deferred tax assets:
100,906
81,363
Less: Valuation allowance
( 96,343 )
( 77,189 )
Deferred tax assets
4,563
4,174
Deferred tax liability:
Intangible Assets
( 4,048 )
( 3,909 )
Loan
( 282 )
—
ROU assets
( 233 )
( 265 )
Deferred tax liability:
( 4,563 )
( 4,174 )
Net deferred tax asset
$
—
$
—
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DARIOHEALTH CORP. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands
NOTE 15:- TAXES ON INCOME (Cont.)
The deferred tax balances included in the consolidated financial statements as of December 31, 2025, and December 31, 2024, 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 changes in the tax rate.
The net change in the total valuation allowance for the year ended December 31, 2025, and December 31, 2024, was an increase of $ 19,154 and $ 18,886 , respectively 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 all of its deferred tax assets and accordingly recorded a valuation allowance to offset the deferred tax assets.
Loss before taxes on income consists of the following:
Year ended
December 31,
2025
2024
Domestic
$
17,708
$
17,863
Foreign
23,901
26,736
$
41,609
$
44,599
Income tax expense (benefit) was as follows:
Year ended
December 31,
2025
2024
Current:
Federal
$
—
$
—
State
83
—
Foreign
22
149
Total current income tax expense
105
149
Deferred:
Federal
—
( 2,001 )
State
—
—
Foreign
—
—
Total deferred income tax expense (benefit)
—
( 2,001 )
Income tax
$
105
$
( 1,852 )
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DARIOHEALTH CORP. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands
NOTE 15:- TAXES ON INCOME (Cont.)
Reconciliation of Statutory Federal Income Tax Rate to the Effective Income Tax Rate:
Year Ended December 31, 2025
Amount
Percent
U.S. federal statutory income tax (Benefit)
( 8,738 )
21.00 %
State and local income taxes, net of federal benefit:
State and local income taxes, net of federal benefit (a)
60
( 0.15 )%
Foreign tax effects:
Israel:
Statutory tax rate difference
( 484 )
1.16 %
Tax impact of foreign exchange differences
( 7,824 )
18.80 %
Changes in valuation allowances
13,385
( 32.17 )%
Other adjustments
116
( 0.28 )%
Other foreign jurisdiction
22
( 0.05 )%
Changes in valuation allowances
2,548
( 6.12 )%
Non-taxable or non-deductible items:
Share based compensation
1,402
( 3.37 )%
Other adjustments
( 382 )
0.92 %
Total effects
8,843
( 21.25 )%
Income tax expenses
105
( 0.25 )%
(a) State and local taxes in South Carolina, New York and Texas comprise the majority of this category
For the year 2024, 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.
Income Taxes Paid:
2025
US Federal
$
—
US state and local:
South Carolina
21
Other
45
Foreign:
India
186
Israel
36
288
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DARIOHEALTH CORP. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except stock and stock data)
NOTE 16:- STOCKHOLDERS’ EQUITY
a. Common Stock
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 July 23, 2025, the Company’s stockholders voted to approve an amendment to the Certificate of Incorporation of the Company to increase the number of authorized Common Stock from one hundred sixty million ( 160,000,000 ) shares, $ 0.0001 par value per share, to four hundred million ( 400,000,000 ) shares, $ 0.0001 par value per share.
b. Common Stock and Pre-Funded Warrant Offerings
On September 22, 2025, the Company entered into securities purchase agreements with accredited investors relating to an 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 and $ 6.45 per pre-funded warrant. As a result of the purchase agreements, the aggregate gross proceeds to the Company are approximately $ 17,500 . The closing of the offering was completed on September 23, 2025. The pre-funded warrants are exercisable immediately upon issuance and remain exercisable until exercised in full. The pre-funded warrants were indexed to the Company’s own stock and are classified as equity instruments upon issuance.
Pre-Funded Warrant Exercises
During fiscal year 2025, a total of 49,781 pre-funded warrants were exercised on a cashless basis into 49,714 shares of Common Stock. During fiscal year 2024, a total of 34,365 pre-funded warrants, originally issued in July 2020, were exercised on a cashless basis into 34,363 shares of Common Stock.
Preferred Stock
Series A and B Preferred Stock
On June 25, 2024, following the approval of the necessary preferred holders, the Company modified the terms of the Series B and B-1 preferred stock to (i) extend the mandatory conversion period from fifteen ( 15 ) to eighteen
( 18 ) months from the original issue date and (ii) increase the percentage of dividends the holders of the preferred stock will be entitled to receive by including a dividend of ten percent ( 10 %) for the fifth full quarter from the closing date and a dividend of twenty five percent ( 25 %) for the sixth quarter from the closing date.
On September 11, 2024, following the approval of the necessary preferred holders, the Company modified the terms of the Series B-3 preferred stock to (i) extend the mandatory conversion period from fifteen ( 15 ) to eighteen ( 18 ) months from the original issue date and (ii) increase the percentage of dividends the holders of the preferred stock will be entitled to receive by including a dividend of ten percent ( 10 %) for the fifth full quarter from the closing date and a dividend of twenty five percent ( 25 %) for the sixth quarter from the closing date.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except stock and stock data)
NOTE 16:- STOCKHOLDERS’ EQUITY (Cont.)
The Company concluded that the Series B, B-1 and B-3 preferred shares modification should be accounted for as an extinguishment transaction. As such, the Company recorded the modified preferred shares at their fair value and derecognized the carrying amount of the previous unmodified shares, resulting in a deemed contribution of $ 12,194 .
In November, on the 18-month anniversary of the Series B, B-1 and B-3 Effective Date, 5,950 Series B, 3,000 B-1 and 406 B-3 Preferred Stock converted into 138,311 , 69,737 and 9,277 shares of Common Stock.
During the year ended December 31, 2024, the Company accounted for the dividend shares of common stock upon the deferred conversion of the Series B, B-1, B-2, and B-3 Convertible Preferred Stock as a deemed dividend in a total amount of $ 2,953 .
In April and June 2024, a total of 700 and 250 of certain Series B Convertible Preferred Stock were converted into 11,867 and 4,500 shares of Common Stock, respectively, including the issuance of dividend shares. In addition, during the year ended December 31, 2024, the Company recorded deemed dividend in the amount of $ 616 with respect to the Series B convertible Preferred Stock.
In August 2024, 150 Series B-2 Preferred Stock automatically converted into 2,894 shares of Common Stock after the completion of the fifteen ( 15 )-month anniversary of the Series B-2 Preferred Stock. The conversion included accumulative dividends payable upon conversion of Series B-2 Preferred Stock.
On May 20, 2025, the Company, upon obtaining the vote of a majority of the holders of the relevant classes of preferred stock, filed an Amended and Restated Certificate of Designation of Preferences, Rights and Limitations of the Company’s Series A-1 Preferred Stock (the “Series A-1 Certificate of Designation”) and a Third Amended and Restated Certificate of Designation of Preferences, Rights and Limitations of the Company’s Series B-1 Preferred Stock (the “Series B-1 Certificate of Designation”, collectively, with the Series A-1 Certificate of Designation, the “Certificates of Designation”), all with the Secretary of State of the State of Delaware. The Series A-1 Certificate of Designation and Series B-1 Certificate of Designation were amended to provide the holders of such shares of preferred stock to request certain dividends and distributions to be made in the form of pre-funded Common Stock purchase warrants rather than shares of the Company’s Common Stock.
In March 2025, a total of 1,675 shares of certain Series A-1 Convertible Preferred Stock were converted into 38,980 shares of Common Stock.
On September 18, 2025, the Company upon obtaining the vote of a majority of the holders of the relevant classes of preferred stock and the approval of the Company’s Board of Directors, filed an Amended and Restated Certificate of Designation of Preferences, Rights and Limitations of the Company’s Series A-1 Preferred Stock with the Secretary of State of the State of Delaware. 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.
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 Series A-1 Preferred Stock and B-1 Preferred Stock remains outstanding .
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DARIOHEALTH CORP. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except stock and stock data)
NOTE 16:- STOCKHOLDERS’ EQUITY (Cont.)
Series C, C-1 and C-2 Preferred Stock
In February 2024, the Company issued 17,307 , 4,000 and 1,115 Series C, C-1 and C-2 preferred shares, respectively, at a purchase price of $ 1,000 per preferred share. The Series C and C-1 Preferred Stock are convertible into Common Stock at $ 40.40 per Common Stock. The Series C-2 Preferred Stock is convertible into Common Stock at $ 42.80 per Common Stock. As a result of the issuance of the preferred stock, the aggregate gross proceeds to the Company from the offering were approximately $ 22,422 .
On May 20, 2025, the Company, upon obtaining the vote of a majority of the holders of the relevant classes of preferred stock, 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. The Company 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.
The Company concluded that the Series C, C-1 and C-2 preferred shares modification should be accounted for as a modification transaction. For the year ended December 31, 2025, the Company recorded the increase in fair value as a deemed dividend in the amounts of $ 734 respectively.
On September 18, 2025, the Company upon obtaining the vote of a majority of the holders of the relevant classes of preferred stock and the approval of the Company’s Board of Directors, filed an Amended and Restated Certificate of Designation of Preferences, Rights and Limitations of the Company’s Series C Preferred Stock, an Amended and Restated Certificate of Designation of Preferences, Rights and Limitations of the Company’s Series C-2 Preferred Stock, an Amended and Restated Certificate of Designation of Preferences, all with the Secretary of State of the State of Delaware.
The Series C 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. On September 25, 2025, the Company, upon obtaining the vote of a majority of the holders of the relevant classes of preferred stock and the approval of the Company’s Board of Directors, filed an Amended and Restated Certificate of Designation of Preferences, Rights and Limitations of the Company’s Series C-1 Preferred Stock 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 will also receive 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 the certificates of designations were intended to amend and restate the terms mentioned above, and no additional securities were issued or sold as a result.
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DARIOHEALTH CORP. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except stock and stock data)
NOTE 16:- STOCKHOLDERS’ EQUITY (Cont.)
Conversion activity:
In May, September and November 2024, a total of 100 , 25 and 20 shares of certain Series C Convertible Preferred Stock were converted into 2,475 , 711 and 606 shares of Common Stock, respectively.
In February, April, May and June 2025, a total of 1,270 shares of certain Series C Convertible Preferred Stock were converted into 44,422 , shares of Common Stock, respectively.
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.
During the year ended December 31, 2025, the Company accounted for the dividend shares of Common Stock upon the dividend shares earned by Series C, C-1 and C-2 Preferred Stock as a deemed dividend in a total amount of $ 6,001 . For the year ended December 31, 2024, the Company accounted for the dividend shares as a deemed dividend in a total amount of $ 6,542 , respectively.
Series D, D-1, D-2 and D-3 Preferred Stock
In December 2024, the Company issued 7,055 and 11,750 Series D and D-1 preferred shares, respectively, at a purchase price of $ 1,000 per preferred share. The Series D and D -1 Preferred Stock were convertible into Common Stock at $ 14.60 per Common Stock. As a result of the sale of the preferred stock, the aggregate gross proceeds to the Company from the offering were approximately $ 18,805 .
According to the original certificates of designation, the preferred stock will automatically convert into shares of Common Stock, subject to certain beneficial ownership limitations, including a non-waivable 19.99 % ownership blocker, 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 ( 4 ) quarters from the Closing Date, all issuable upon conversion of the preferred stock.
On January 7, 2025, the Company 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 to the Company from the Series D Offering were 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, according to the original certificates of designation, 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.
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DARIOHEALTH CORP. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except stock and stock data)
NOTE 16:- STOCKHOLDERS’ EQUITY (Cont.)
On April 28, 2025, the Company held a special meeting of stockholders in which the stockholders approved the (A) the issuance of shares of Common Stock, in excess of 20 % of the 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, (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; and (B) (i) reduce the exercise price of certain warrants to purchase 29,246 shares of Common Stock issued to the Avenue Lenders 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 the Avenue Lenders to us at a conversion price of $ 17.30 per share. The Avenue loan facility was repaid in full (see Note 7).
On September 18, 2025, the Company upon obtaining the vote of a majority of the holders of the relevant classes of preferred stock and the approval of the Company’s Board of Directors, filed an Amended and Restated Certificate of Designation of Preferences, Rights and Limitations of the Company’s Series D Preferred Stock, Amended and Restated Certificate of Designation of Preferences, Rights and Limitations of the Company’s Series D-1 Preferred Stock, an Amended and Restated Certificate of Designation of Preferences, Rights and Limitations of the Company’s Series D-2 Preferred Stock, and an Amended and Restated Certificate of Designation of Preferences, Rights and Limitations of the Company’s Series D-3 Preferred Stock, all with the Secretary of State of the State of Delaware. The 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.
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.
During the year ended December 31, 2025, the Company accounted for the dividend shares of Common Stock upon the dividend shares earned by Series D and D-1 Preferred Stock as a deemed dividend for an amount of $ 10,154 .
During the year ended December 31, 2024, the Company accounted for the dividend shares of Common Stock upon the dividend shares earned by Series D and D-1 Preferred Stock as a deemed dividend in a total amount of $ 318 .
During the year ended December 31, 2025, the Company accounted for the dividend shares of Common Stock upon the dividend shares earned by Series D-2 and D-3 Preferred Stock as a deemed dividend for an amount of $ 2,261 .
c. Lock-Up Agreements
In December 2024, the Company and certain purchasers in the offering that are holders of the Company's Series B and C Preferred Stock executed lock up agreements (the “Lock Up Agreement”), pursuant to which the Company agreed to issue, subject to stockholder approval, up to forty percent ( 40 %)of the shares of Common Stock conversion shares 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.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except stock and stock data)
NOTE 16:- STOCKHOLDERS’ EQUITY (Cont.)
Between May 23, 2025 and May 28, 2025, the Company and holders that previously entered into the Lock-Up Agreement, 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.
The Company concluded that the A&R Lock-Up Agreement modification should be accounted for as a modification transaction. For the year ended December 31, 2025, the Company recorded the increase in fair value as a deemed dividend in the amount of $ 870 respectively.
On October 20, 2025, the Company and holders that previously entered into the 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 the Company in full (to the extent not already issued) upon (A) any merger or consolidation of the Company 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 the Company’s 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.
d. Stock Plans
On October 14, 2020, the Company’s stockholders approved the 2020 Plan. 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.
In January 2024, 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 124,688 shares, from 293,143 to 417,831 .
In June 2024, 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 150,000 shares, from 417,831 to 567,831 .
In January 2025, 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 327,052 shares, from 567,832 to 894,883 .
On July 23, 2025, the Company’s stockholders resolved to amend and restate the Company’s 2020 Plan, to (i) provide that for each of the calendar years ending on December 31, 2026, December 31, 2027, December 31, 2028, December 31, 2029 and December 31, 2030, the number of shares available under the 2020 Plan shall be increased by an additional number of shares of the Company’s Common Stock, equal to six percent ( 6 %) of the number of shares of Common Stock issued and outstanding on a fully diluted basis on the immediately preceding December 31; and (ii) authorize the grant of restricted stock units as a permissible form of award under the 2020 Plan.
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DARIOHEALTH CORP. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except stock and stock data)
NOTE 16:- STOCKHOLDERS’ EQUITY (Cont.)
e. Stock Option, Restricted Stock and Warrant Grants
2025 Grants
Employees, Directors & Officers, and Consultants: During 2025, the Compensation Committee of the Company’s Board of Directors (the “Compensation Committee”) approved grants of an aggregate of 364,951 restricted shares of Common Stock (including 4,000 performance-based restricted shares) to employees, consultants, officers and directors of the Company, and approved grants of options to purchase an aggregate of 86,224 shares of Common Stock (including 8,750 performance-based options) to employees and consultants of the Company, at exercise prices ranging from $ 9.31 to $ 15.69 per share. The time-vesting restricted shares and stock options vest over various periods ranging from two to three years commencing on the respective grant dates, and the options have a ten-year contractual term. All such restricted shares and options were issued pursuant to the Company’s Amended and Restated 2020 Equity Incentive Plan, as amended (the “2020 Plan”). In addition, during 2025, the Compensation Committee approved an amendment to certain previously issued restricted stock awards to accelerate the vesting of 1,750 previously unvested restricted shares.
Service Providers: During 2025, the Compensation Committee approved grants of an aggregate of 291,500 restricted shares of Common Stock to certain service providers. Such restricted shares vest over various periods, including up to six months .
2024 Grants
Employees, Officers, Consultants & Directors: During 2024, the Compensation Committee of the Company’s Board of Directors (the “Compensation Committee”) approved grants of an aggregate of 155,344 restricted shares of Common Stock subject to time-based vesting to employees, officers and directors of the Company, and approved grants of options to purchase an aggregate of 235,431 shares of Common Stock (including 31,000 performance-based options) to employees, officers and consultants of the Company, at exercise prices ranging from $ 16.00 to $ 42.80 per share. The time-vesting restricted shares and stock options vest over various periods ranging from one to three years commencing on the respective grant dates, and the options have a ten-year contractual term. All such restricted shares and options were issued pursuant to the Company’s Amended and Restated 2020 Equity Incentive Plan, as amended (the “2020 Plan”).
In May 2024, the Compensation Committee approved the grant of a non-qualified stock option to purchase up to 112,500 shares of Common Stock as an inducement grant to the new Chief Commercial Officer. Out of the 112,500 shares of Common Stock, 25,000 shares will vest over three years , with one third of such shares vesting on June 1, 2025 , and the remaining shares vesting in equal quarterly amounts during the following two years . 87,500 of the options are performance-based and will commence vesting upon reaching certain performance goals during the fiscal years between 2024 and 2027. Each performance option will vest over a three-year period commencing on the first day of the following fiscal year to which such option relates, in eight equal quarterly instalments. As of December 31, 2025, performance conditions related to 42,500 of the performance-based options had not been achieved and, accordingly, such options had not vested. No stock-based compensation expense had been recognized for the performance-based options, as management concluded that the applicable performance conditions were not considered probable as of that date.
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DARIOHEALTH CORP. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except stock and stock data)
NOTE 16:- STOCKHOLDERS’ EQUITY (Cont.)
f. Warrant Grants and Modifications
2025 Warrant Activity
In February 2025, the Compensation Committee approved the grant of warrants to purchase up to 52,500 shares of Common Stock, with exercise prices of $ 12.80 per share, to certain consultants. The warrants are exercisable into shares of Common Stock on or before February 10, 2028.
In April 2025, the Compensation Committee approved a reduction in the exercise price of warrants to purchase up to 17,813 shares of Common Stock issued to certain consultants in the past at exercise prices between $ 28.60 to $ 40.00 per share, to an exercise price of $ 15.60 per share. The warrants are exercisable into shares of Common Stock on or before February 12, 2026 and December 31, 2027.
On April 28, 2025, prior to the repayment of the Avenue Loan Facility, the Company's stockholders approved a reduction to the exercise price of warrants to purchase 29,246 shares of Common Stock issued to the Avenue Lenders from $ 40.40 to $ 14.42 per share. The Company recognized the incremental fair value resulting from the modification in the amount of $ 102 . The Avenue loan facility was repaid in full (see Note 7).
In June 2025, the Compensation Committee approved the grant of warrants to purchase up to 22,500 shares of Common Stock, with exercise prices of $ 13.40 per share, to certain consultants. The warrants are exercisable into shares of Common Stock on or before June 1, 2028.
2024 Warrant Activity
In April 2024, the Compensation Committee approved the grant of warrants to purchase up to 73,563 shares of Common Stock, with exercise prices between $ 28.60 to $ 40.00 per share, to certain consultants. The warrants are exercisable into shares of Common Stock on or before December 31, 2026. In addition, the Compensation Committee approved a reduction in the exercise price of warrants to purchase up to 35,000 shares of Common Stock issued to certain consultants in the past at exercise prices between $ 104.00 to $ 129.00 per share, to an exercise price of $ 32.00 per share. During the year ended December 31, 2024, the Company recorded stock-based compensation expenses related to those repriced warrants at the amount of $ 332 .
In August 2024, the Compensation Committee approved the grant of warrants to purchase up to 30,000 shares of Common Stock subject to time vesting of one to two years , with exercise prices of $ 18.60 per share to certain consultants. Out of the warrants to purchase 30,000 shares of Common Stock, 5,000 shares are exercisable into Common Stock on or before December 31, 2027, and 25,000 shares are exercisable into Common Stock on or before August 31, 2029. In addition, the Compensation Committee approved the grant of performance-based warrants to purchase up to 40,000 shares of Common Stock, with exercise prices of $ 18.60 per share to a certain consultant. The warrants are exercisable into Common Stock on or before August 31, 2029. Management's assumption is that it is not probable that the condition will be met. During the year ended December 31, 2024, the Company recorded stock-based compensation expenses related to the warrants at the amount of $ 67 .
In November 2024, the Compensation Committee approved the grant of warrants to purchase up to 23,483 shares of Common Stock, with an exercise price of $ 18.95 per share to a certain consultant. The warrants are exercisable into Common Stock on or before the five years anniversary of the grant date. During the year ended December 31, 2024, the Company recorded stock-based compensation expenses related to the warrants at the amount of $ 46 .
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DARIOHEALTH CORP. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except stock and stock data)
NOTE 16:- STOCKHOLDERS’ EQUITY (Cont.)
In December 2024, the Compensation Committee approved a reduction in the exercise price of warrants to purchase up to 44,063 shares of Common Stock issued to certain consultants in the past at exercise prices between $ 32.00 to $ 240.00 per share, to an exercise price of $ 14.00 per share. During the year ended December 31, 2024, the Company recorded stock-based compensation expenses related to those repriced warrants at the amount of $ 164 .
g. Consulting Agreements and Service Providers
On February 15, 2024, the Company executed a consulting agreement with a former officer of Twill. Pursuant to the terms of the consulting agreement, the Company agreed to issue to the former officer of Twill 17,500 fully vested RSUs.
On June 25, 2024, the stockholders of the Company approved the issuance of certain restricted shares of Common Stock and warrants of the Company, under certain consulting agreements with former officers and directors of Twill. Pursuant to the terms of the consulting agreements, the Company agreed to issue to those former officers of Twill warrants to purchase up to 51,648 shares of the Company’s Common Stock, of which 35,898 are subject to time vesting and 15,750 are subject to certain performance-based metrics, with an exercise price of $ 51 and 19,179 fully vested RSUs. The 15,750 performance-based warrants expired upon conclusion of the Consulting Agreement.
During the years ended December 31, 2025 and 2024, the Company recorded share-based compensation expense related to these service providers in the amounts of $ 53 and $ 3,196 , respectively. For the years ended December 31, 2025 and 2024, no share-based compensation expense was recorded related to the performance-based warrants.
h. Restricted Share Acceleration
On November 4, 2024, the Compensation Committee approved amendments to certain previously issued awards of restricted Common Stock in the aggregate amount of 3,438 and 12,500 , respectively, granted to Mr. Erez Raphael, our Chief Executive Officer, and Mr. Zvi Ben David, our former Chief Financial Officer, in the aggregate amount of 1,188 and 6,250 , respectively, on May 18, 2022 and March 6, 2024 (collectively, the "Prior Awards") to permit an immediate acceleration of the unvested portion of the Prior Awards in the event of change in control of the Company.
In December 2024, the Compensation Committee approved amendments to certain previously issued awards of restricted Common Stock in the aggregate amount of 8,800 , granted to certain employees, to permit an immediate acceleration of the unvested portion of the Prior Awards. 7,600 of the accelerated shares will be subject to a lockup until December 31, 2025. During the year ended December 31, 2024, the Company recorded stock-based compensation expenses related to the acceleration of the unvested portion of the Prior Awards at the amount of $ 75 .
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DARIOHEALTH CORP. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except stock and stock data)
NOTE 16:- STOCKHOLDERS’ EQUITY (Cont.)
i. Outstanding Warrants
The table below summarizes the outstanding warrants as of December 31, 202 5 :
Warrants
outstanding as of
Exercise
December 31, 2025
price $
Expiration date
Consultants
14,250
32.00
December 31, 2026
Consultants
2,000
69.20
December 31, 2026
Consultants
6,500
32.00
December 31, 2026
Consultants
2,813
16.00
December 31, 2026
Consultants
25,000
32.00
December 31, 2026
Consultants
1,500
40.00
December 31, 2026
Consultants
15,000
28.60
December 31, 2026
Consultants
5,000
32.00
December 31, 2026
Consultants
5,000
18.59
August 24, 2027
Consultants
43,375
14.00
December 31, 2027
Consultants
52,500
12.80
February 10, 2028
Lender of loan facility
14,623
14.42
May 1, 2028
Lender of loan facility
14,623
14.42
May 1, 2028
Consultants
22,500
14.20
June 1, 2028
Agent warrants C Feb. 21, 2024
53,443
40.40
February 21, 2029
Agent warrants C-2 Feb. 21, 2024
3,543
42.80
February 21, 2029
Consultants
688
14.00
August 1, 2029
Consultants
25,000
18.59
August 25, 2029
Consultants
5,328
18.95
November 4, 2029
Lender of loan facility
268,579
15.35
April 30, 2032
Consultants
35,898
51.00
February 15, 2034
617,163
The fair value of the warrants is calculated using the black-Sholes model with the same assumptions applied to the stock options, as reflected in the stock option activity table below.
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DARIOHEALTH CORP. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except stock and stock data)
NOTE 16:- STOCKHOLDERS’ EQUITY (Cont.)
j. Stock Option Activity
Transactions related to the grant of options to employees, directors and non-employees under the above plans and non-plan options during the year ended December 31, 2025 were as follows:
Weighted
Weighted
average
average
remaining
Aggregate
exercise
contractual
Intrinsic
Number of
price
life
value
options**
$
Years
$
Options outstanding at beginning of period
511,138
55.61
8.55
9
Options granted
86,224
15.38
—
—
Options exercised
—
—
—
—
Options expired
( 127,386 )
81.94
—
—
Options forfeited
( 133,208 )
28.13
—
—
Options outstanding at end of period
336,768
46.21
8.16
4
Options vested and expected to vest at end of period
255,827
44.01
8.14
3
Exercisable at end of period
142,433
77.05
7.24
3
(**) See note 1e regarding reverse share split.
Weighted average grant date fair value of options granted during the year ended December 31, 2025, and 2024 is $ 8.83 and $ 15.11 , respectively.
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 2025 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, 2025. This amount is impacted by the changes in the fair market value of the Common Stock. The average intrinsic value of the options exercised in 2025 and 2024 were $ 0 and $ 24 , respectively.
The Company estimates the fair value of stock options granted using the Black-Scholes option-pricing model.
The assumptions used are determined as follows:
Volatility. The expected volatility was derived from the historical volatilities of the Company’s stock price over a period equivalent to the expected term of the stock option grants.
Expected Term. The expected term represents the period that the stock-based awards are expected to be outstanding. When establishing the expected term assumption, the Company utilizes the simplified method.
Risk-Free Interest Rate. The risk-free interest rate is based on U.S. Treasury zero-coupon issues with terms similar to the expected term on the options.
Dividend Yield. The Company has never declared or paid any cash dividends and does not plan to pay cash dividends in the foreseeable future, and therefore, it used an expected dividend yield of zero.
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DARIOHEALTH CORP. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except stock and stock data)
NOTE 16:- STOCKHOLDERS’ EQUITY (Cont.)
The following table presents the assumptions used to estimate the fair values of the options granted to employees, non-employees and directors in the period presented:
Year ended
December 31,
2025
2024
Volatility
96.72 - 102.47
%
94.75 - 97.97
%
Risk-free interest rate
3.82 - 4.23
%
3.67 - 4.72
%
Dividend yield
0
%
0
%
Expected life (years)
5.00 - 5.87
5.00 - 5.87
As of December 31, 2025, the total unrecognized estimated compensation cost related to non-vested stock options and restricted shares granted prior to that date was $ 5,471 , which is expected to be recognized over a weighted average period of approximately 1.10 years.
k. Stock Activity
Transactions related to the movement of restricted shares of Common Stock to employees, directors, and non-employees under the above plans during the year ended December 31, 2025 were as follows:
Number of
Restricted shares**
Restricted shares outstanding at beginning of year
270,420
Restricted shares granted
364,950
Restricted shares forfeited
( 21,905 )
Restricted shares outstanding at end of period (***)
613,465
(**) See note 1e regarding reverse share split.
(***) Including vested restricted shares.
Number of restricted shares vested during 2025 amounts to 58,158 .
The fair value of the restricted shares granted during 2025 amounts to $ 3,177 .
The total compensation cost related to all the Company’s equity-based awards, recognized during year ended December 31, 2025 and 2024 were comprised as follows:
Year ended
December 31,
2025
2024
Cost of revenues
$
25
$
13
Research and development
1,626
3,296
Sales and marketing
2,253
4,890
General and administrative
5,461
7,597
Total stock-based compensation expenses
$
9,365
$
15,796
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DARIOHEALTH CORP. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except stock and stock data)
NOTE 17:- SELECTED STATEMENTS OF OPERATIONS DATA
Other Financial expenses (income), net:
Year ended
December 31,
2025
2024
Bank charges
$
131
$
96
Foreign currency adjustments expenses, net
276
4
Interest income
( 943 )
( 1,116 )
Remeasurement of long-term loan
3,842
4,305
Remeasurement of warrant liability
( 1,682 )
( 16,504 )
Modification of warrants
102
70
Other Financial Expenses
208
—
Other financial expenses (income), net
$
1,934
$
( 13,145 )
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DARIOHEALTH CORP. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except stock and stock data)
NOTE 1 8 :- SEGMENT REPORTING
The Company identifies operating segments in accordance with ASC Topic 280, “Segment Reporting,” as components of an entity for which discrete financial information is available and is regularly reviewed by the chief operating decision maker, or decision-making group, in making decisions regarding resource allocation and evaluating financial performance.
The Company operates as one operating segment. Operating segments are defined as components of an enterprise for which separate financial information is regularly evaluated by the CODM, which is the Company’s chief executive officer, in deciding how to allocate resources and assess performance. The Company’s CODM evaluates the Company’s financial information and resources and assesses the performance of these resources on a consolidated basis. There is no expense or asset information that are supplemental to those disclosed in these consolidated financial statements, that are regularly provided to the CODM. The allocation of resources and assessment of performance of the operating segment is based on consolidated net loss as shown in our consolidated statement of comprehensive loss. The CODM considers net loss in the annual forecasting process and reviews actual results when making decisions about allocating resources. Since the Company operates as one operating segment, financial segment information, including profit or loss and asset information, can be found in the consolidated financial statements.
Geographic Information
• As of December 31, 2025, the majority of the Company’s long live assets are located in Israel and India, in the amounts of $ 1,066 and $ 171 , respectively.
• As of December 31, 2025, the majority of the Company's revenue is generated in the U.S.
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DARIOHEALTH CORP. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except stock and stock data)
NOTE 1 9 : - BASIC AND DILUTED NET LOSS PER COMMON STOCK
The Company computes net loss per share of common and preferred stock using the two-class method. Basic and diluted net earnings or loss per share is computed using the weighted-average number of shares outstanding during the period. This calculation includes the total weighted average number of the Common Stock, which includes prefunded warrants.
The total number of potential common shares related to the outstanding options, warrant and preferred shares excluded from the calculations of diluted net loss per share due to their anti-dilutive effect was 3,089,371 for the year ended December 31, 2025, and for the year ended December 31, 2024, was 1,783,543 .
The following table sets forth the computation of the Company’s basic net earnings (loss) per common stock:
Year ended
December 31,
2025
2024
Net loss
$
41,714,000
$
42,746,771
Deemed dividend (contribution)
20,021,247
( 1,764,421 )
Less: loss attributable to participating preferred stock
21,425,670
10,893,373
Net loss attributable to common stock shareholders used in computing basic net loss per share
$
40,309,577
$
30,088,977
Weighted average number of common stock used in computing basic loss per share
3,982,956
2,451,971
Basic and diluted net loss per common stock
$
10.12
$
12.27
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DARIOHEALTH CORP. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except stock and stock data)
NOTE 20: - RELATED PARTIES TRANSACTIONS
In February 2025, the Company appointed a new non-executive director to its Board. The director is a member of a consulting firm that has provided investment and business consulting services to the Company since 2021 under a consulting agreement. Pursuant to the consulting agreement, the Company agreed to pay the consultant a monthly cash retainer upon the successful completion of certain milestones. In addition, the Company agreed to issue 7,500 restricted shares of Common Stock to the consulting firm, vesting quarterly over a four-year period. As of December 31, 2025, the consulting firm received approximately 12,900 shares of Common Stock and warrants to purchase up to 5,000 shares of Common Stock. In addition, in February 2025, the Company entered into a second amendment to the consulting agreement, pursuant to which it agreed to pay the consulting firm a fixed monthly cash retainer of $ 10 . During the year ended December 31, 2025, the Company recorded share-based compensation expenses related to this service provider in the amounts of $ 168 .
In September 2025, the Compensation Committee approved the grant of 20,000 restricted shares subject to time vesting to the director. The time-vesting restricted shares shall vest on the last day of the second-year anniversary commencing on the respective grant date. The restricted shares were issued under Amended and Restated 2020 Equity Incentive Plan, as amended (the “2020 Plan”).
NOTE 21:- SUBSEQUENT EVENTS
a. On January 29, 2026 the Company’s stockholders resolved to amend the Company’s 2020 Plan, to increase the number of shares authorized for issuance under the 2020 Equity Incentive Plan by 500,000 shares.
b. In February 2026, a total of 125,005 Pre-Funded Warrants were exercised into 124,982 shares of Common Stock.
c. On February 5, 2026, out of the pre-funded warrants that were issued in September 2025, 62,016 were exercised on a cashless basis into 62,016 shares of Common Stock. As of this date, the Company’s total outstanding prefunded warrants were exercisable into 2,377,553 shares of Common Stock.
d. In February, 2026, pursuant to the A&R Lock-Up Agreements, the Company issued an aggregate of 204,851 shares of Common Stock and 104,090 pre-funded warrants upon conversion of the lock-up consideration.
- - - - - - - - - - - - - - -
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