What changed in this filing

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Item 1A. Risk Factors

2023-03-09 compared with 2022-03-22 · 39 added, 83 removed, 615 unchanged (17% of the section changed)

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In that event, the trading price of our common stock and warrants may decline, and you could lose all or part of your investment.

Summary of Risk Factors

Our business is subject to a number of risks, including risks that may adversely affect our business, financial condition and results of operations.

These risks are discussed more fully below and include, but are not limited to, risks related to:

Risks Related to Our Financial Position and Capital Requirements

● Risks associated with our relatively new business;

● our future capital needs and their potential impact on our existing stockholders;

● our history of losses and stockholder’s inability to rely upon our historical operating performance;

Risks Related to Our Business

● the acceptance of our products in the market and our exposure to market trends;

● the impact of COVID-19 on our operations;

● our risks of basing our business on the sale of our principal technology;

● our reliance on manufacturers and distributors;

● the impact of a failure of our digital marketing efforts;

● our reliance on the Apple App Store and Google’s Android platform;

● the risks associated with conducting business internationally;

● potential errors in our business processes and product offerings;

● our reliance on the performance of key members of our management team and our need to attract highly skilled personnel;

● the integration of Upright and PsyInnovations into our business;

Risks Related to Product Development and Regulatory Approval

● the expense and time required to obtain regulatory clearance of our products;

● our limited clinical studies and the susceptibility to varying interpretations of such studies;

● our ability to complete clinical trials;

● the failure to comply with the FDA’s Quality System Regulation or any applicable state equivalent;

● our reliance on third parties to conduct clinical trial work;

● the impact of legislation and federal, state and foreign laws on our business, including protecting the confidentiality of patient health information;

● the potential impact of product liability suits;

Risks Related to Our Intellectual Property

● the risks relating to obtaining or maintaining our intellectual property;

● potential litigation relating to the protection of our intellectual property;

● our limited foreign intellectual property rights;

● Our reliance on confidentiality agreements and the difficulty in enforcing such agreements;

Risks Related to Our Industry

● the intense competition we face in the markets we operate;

● our need to respond quickly to technological developments;

● the risks relating to obtaining or maintaining our intellectual property;

● the risks relating to third-party payors not providing for adequate coverage and reimbursement for our products;

Risks Related to Our Operations in Israel

● the risks relating to the political, economic and military instability that may exist in Israel;

● the potential for operations to be disrupted as a result of obligations of Israeli citizens to perform military service;

● the difficulty in enforcing judgements against us or certain of our executive officers and directors;

Risks Related to the Ownership of Our Common Stock and Warrants

● the ability for our officers, directors and founding stockholders to exert influence over our affairs;

● the potential lack of liquidity, or volatility, of our common stock and warrants;

● the impact of analysts not publishing research or reports about us;

● the expense relating to our requirements as a U.S.

public company;

● the potential failure to maintain effective internal controls over financial reporting;

● the existence of anti-takeover provisions in our charter documents and Delaware law;

● that we do not intend to pay dividends on our common stock.

Risks Related to Our Financial Position and Capital Requirements

We were formed in August 2011 and are thus subject to the risks associated with new businesses.

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Moreover, the regulatory compliance arising out of being a publicly registered company has dramatically increased our costs.

We do not currently have any arrangements or credit facilities in place as a source of funds, and there can be no assurance that we will be able to raise sufficient additional capital on acceptable terms, or at all.

We currently have a credit facility in place with OrbiMed Royalty and Credit Opportunities III, LP , of which $25 million was made available in June 2022.

However, there can be no assurance that we will be able to raise sufficient additional capital on acceptable terms, or at all.

If such financing is not available on satisfactory terms, or is not available at all, we may be required to delay, scale back or eliminate the development of business opportunities and our operations and financial condition may be materially adversely affected.

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We do not know whether or when we will become profitable.

Our ability to generate revenue and achieve profitability depends upon

our ability, alone or with others, to launch Dario in additional European countries, and elsewhere and manufacture, market and sell Dario where approved.

Our ability to generate revenue and achieve profitability depends upon our ability, alone or with others, to launch Dario in additional European countries, and elsewhere and manufacture, market and sell Dario where approved.

We may be unable to achieve any or all of these goals.

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A regional or global health pandemic, depending upon its duration and severity, could have a material adverse effect on our business.

For example, the COVID-19 pandemic has had numerous effects on the global economy and governmental authorities around the world have implemented measures to reduce the spread of COVID-19.

For example, the COVID-19 pandemic has had numerous effects on the

global economy and governmental authorities around the world have implemented measures to reduce the spread of COVID-19.

In addition, the COVID-19 pandemic has negatively impacted the global economy, disrupted consumer spending and global supply chains, and created significant volatility of financial markets.

The COVID-19 pandemic continues may also impact our supply chain partners, including third-party manufacturers, logistics providers and other vendors.

The COVID-19 pandemic may also impact our supply chain partners, including third-party manufacturers, logistics providers and other vendors.

Current vessel, container and other transportation shortages, labor shortages and port congestion globally have delayed and may continue to delay inventory orders and, in turn, it may delay the delivery of our products to customers.

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Even after the COVID-19 global pandemic has subsided, we may continue to experience adverse impacts to our business as a result of any economic recession that has occurred or may occur in the future.

As a result of the COVID-19 pandemic, many of our personnel previously worked remotely, and if we return to a remote working environment, is possible that this could have a negative impact on the execution of our business plans and operations.

Following the COVID-19 pandemic, many of our personnel continue to work remotely, it is possible that this could have a negative impact on the execution of our business plans and operations.

If a natural disaster, power outage, connectivity issue, or other event occurred that impacted our employees’ ability to work remotely, it may be difficult or, in certain cases, impossible, for us to continue our business for a substantial period of time.

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We may not be able to quickly establish additional or alternative suppliers if necessary, in part because we may need to undertake additional activities to establish such suppliers as required by the regulatory approval process.

Any interruption or delay in obtaining products from our third-party suppliers, or our inability to obtain products from qualified alternate sources at acceptable prices in a timely manner, could impair our ability to meet the demand of our customers and cause them to switch to competing products.

interruption or delay in obtaining products from our third-party suppliers, or our inability to obtain products from qualified alternate sources at acceptable prices in a timely manner, could impair our ability to meet the demand of our customers and cause them to switch to competing products.

Given our reliance on certain single-source suppliers, we are especially susceptible to supply shortages because we do not have alternate suppliers currently available.

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If the EU experiences economic and political instability as a result of these current tensions, our business, including revenue, profitability and cash flows, and operations could be adversely affected.

In addition, doing business

with foreign customers subjects us to additional risks that we do not generally face in the United States.

In addition, doing business with foreign customers subjects us to additional risks that we do not generally face in the United States.

These risks and uncertainties include:

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Dollar strengthens against foreign currencies, the translation of these foreign currencies denominated transactions will result in decreased revenue, operating expenses and net income.

rates vary, sales and other operating results, when translated, may differ materially from our or the capital market’s expectations.

As exchange rates vary, sales and other operating results, when translated, may differ materially from our or the capital market’s expectations.

governments often impose strict price controls, which may adversely affect our future profitability.

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Our future performance will depend on the continued engagement of key members of our management team.

Our future performance depends to a large extent on the continued services of members of our current management including, in particular, Erez Raphael, our Chief Executive Officer and a member of our Board of Directors and Zvi Ben David, our Chief Financial Officer, Treasurer and Secretary, Dror Bacher, our Chief Operating Officer, and Richard Anderson, our President and General Manager for North America.

Our future performance depends to a large extent on the continued services of members of our current management including, in particular, Erez Raphael, our Chief Executive Officer and a member of our Board of Directors and Zvi Ben David, our Chief Financial Officer, Treasurer and Secretary, and Richard Anderson, our President and General Manager for North America.

In the event that we lose the continued services of such key personnel for any reason, this could have a material adverse effect on our business, operations, and prospects.

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Our failure to hire and retain such personnel could impair our ability to develop new products and manage our business effectively.

We may not generate the expected benefits of our recent acquisition of Upright and PsyInnovations, and the integration of these businesses could disrupt our ongoing business, distract our management and increase our expenses.

We may not generate the expected benefits of our acquisition of Upright and PsyInnovations, and the integration of these businesses could disrupt our ongoing business, distract our management and increase our expenses.

Through our acquisitions of Upright and PsyInnovations, we expanded our product offering to include solutions for MSK as well as behavioral conditions.

We believe that the successful integration of Upright and PsyInnovations

businesses into our operations is important for our future financial performance.

We believe that the successful integration of Upright and PsyInnovations businesses into our operations is important for our future financial performance.

This will require that we integrate more closely the companies’ product offerings and research and development capabilities, retain key employees, assimilate diverse corporate cultures, further integrate management information systems and consolidate the acquired operations, each of which could pose significant challenges.

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The diversion of the attention of management created by the integration process, any disruptions or other difficulties encountered in the integration process, and unforeseen liabilities or unanticipated problems with the acquired businesses could have a material adverse effect on our business, operating results and financial condition.

There can be no assurance that these acquisitions will provide the benefits we expect or that we will be able to integrate and develop the operations of Upright and PsyInnovations successfully.

There can be no assurance that these acquisitions will provide the

benefits we expect or that we will be able to integrate and develop the operations of Upright and PsyInnovations successfully.

Any failure to do so could have a material adverse effect on our business, operating results and financial condition.

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These investigators and contract research organizations will not be our employees and we will not be able to control, other than by contract, the number of resources, including the time that they devote to products that we develop.

If independent investigators fail to devote sufficient resources to our clinical trials, or if their performance is substandard, it will delay the approval or clearance and commercialization of any products that we develop.

If independent investigators fail to devote sufficient resources to our clinical

trials, or if their performance is substandard, it will delay the approval or clearance and commercialization of any products that we develop.

Further, the FDA and other regulatory bodies around the world require that we comply with standards, commonly referred to as good clinical practice, for conducting, recording and reporting clinical trials to assure that data and reported results are credible and accurate and that the rights, integrity, and confidentiality of trial subjects are protected.

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In December 2014, Congress passed an omnibus funding bill (the Consolidated and Further Continuing Appropriations Act, 2015) and a tax extenders bill, both of which may negatively impact coverage and reimbursement of healthcare items and services.

We expect that additional state and federal healthcare reform measures will be adopted in the future, any of which could limit the amounts that federal and state governments will pay for healthcare products and services, which could result in reduced

demand for our products or additional pricing pressure.

For example, former U.S.

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Hospitals are also seeking to reduce costs through a variety of mechanisms, which may increase price sensitivity among customers for our products, and adversely affect sales, pricing, and utilization of our products.

Some third-party payors must also approve coverage for new or innovative devices or therapies before they will reimburse health care providers who use medical devices or therapies.

Some third-party payors must also approve coverage for new or innovative devices or therapies before they will reimburse health care

providers who use medical devices or therapies.

We cannot predict the potential impact of cost-containment trends on future operating results.

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Department of Health and Human Services promulgated patient privacy rules under the Health Insurance Portability and Accountability Act of 1996 (which we refer to as HIPAA).

These privacy rules protect medical records and other personal health information by

limiting their use and disclosure, giving individuals the right to access, amend and seek accounting of their own health information and limiting most use and disclosures of health information to the minimum amount reasonably necessary to accomplish the intended purpose.

These privacy rules protect medical records and other personal health information by limiting their use and disclosure, giving individuals the right to access, amend and seek accounting of their own health information and limiting most use and disclosures of health information to the minimum amount reasonably necessary to accomplish the intended purpose.

We may face difficulties in holding such information in compliance with applicable law.

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provisional applications submitted in the preceding year.

The PCT covers the specific processes related to blood glucose level measurement as well as more general methods of rapid tests of body fluids and has subsequently been converted into several national phase patent applications.

The PCT covers the specific processes

related to blood glucose level measurement as well as more general methods of rapid tests of body fluids and has subsequently been converted into several national phase patent applications.

We have also filed patent applications for other aspects of the Dario Blood Glucose Monitoring Solution.

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Our ability to enforce our patent protection could be limited by our financial resources and may be subject to lengthy delays.

A third party may claim that we are using inventions claimed by their patents and may go to court to stop us from engaging in our normal operations and activities, such as research, development and the sale of any future products.

A third party may

claim that we are using inventions claimed by their patents and may go to court to stop us from engaging in our normal operations and activities, such as research, development and the sale of any future products.

Such lawsuits are expensive and would consume significant time and other resources.

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and international government health administrative authorities, private health insurers and other organizations adequately cover and reimburse customers for the cost of our products and services.

organizations, to cover all or a portion of the costs and fees associated with our products and services and bill patients for any applicable deductibles or co-payments.

In the United States, we expect to derive nearly all our sales from sales directly to consumers as well as retail pharmacy and DME distributors who typically bill various third-party payors, including Medicare, Medicaid, private commercial insurance companies, health maintenance organizations, health plans and other healthcare-related organizations, to cover all or a portion of the costs and fees associated with our products and services and bill patients for any applicable deductibles or co-payments.

Access to adequate coverage and reimbursement for Center for Medicare and Medicaid Services (CMS) procedures using our products and services (and our other products and services in development) by third-party payors is essential to the acceptance of our products by our customers.

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In addition, the political and security situation in Israel may result in parties with whom we have agreements involving performance in Israel claiming that they are not obligated to perform their commitments under those agreements pursuant to force majeure provisions in such agreements.

Further, in the past,

the State of Israel and Israeli companies have been subjected to economic boycotts.

Further, in the past, the State of Israel and Israeli companies have been subjected to economic boycotts.

Several countries still restrict business with the State of Israel and with Israeli companies.

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These restrictive laws and policies may have an adverse impact on our operating results, financial condition or the expansion of our business.

Furthermore, the Israeli government is currently pursuing extensive changes to Israel’s judicial system.

In response to the foregoing developments, individuals, organizations and institutions, both within and outside of Israel, have voiced concerns that the proposed changes may negatively impact the business environment in Israel including due to reluctance of foreign investors to invest or conduct business in Israel, as well as to increased currency fluctuations, downgrades in credit rating, increased interest rates, increased volatility in securities markets, and other changes in macroeconomic conditions.

Such proposed changes may also adversely affect the labor market in Israel or lead to political instability or civil unrest.

To the extent that any of these negative developments do occur, they may have an adverse effect on our business, our results of operations and our ability to raise additional funds, if deemed necessary by our management and board of directors.

Our operations may be disrupted as a result of the obligation of Israeli citizens to perform military service.

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As a result, such individuals will have the ability, acting together, to control the election of our directors and the outcome of corporate actions requiring stockholder approval, such as:

(i) a merger or a sale of our company, (ii) a sale of all or substantially all of our assets, and (iii) amendments to our certificate of

incorporation and bylaws.

(i) a merger or a sale of our company, (ii) a sale of all or substantially all of our assets, and (iii) amendments to our certificate of incorporation and bylaws.

This concentration of voting power and control could have a significant effect in delaying, deferring or preventing an action that might otherwise be beneficial to our other stockholders and be disadvantageous to our stockholders with interests different from those individuals.

Certain of these individuals also have significant control over our business, policies and affairs as officers or directors of our company.

Certain of these individuals also have significant control

over our business, policies and affairs as officers or directors of our company.

Therefore, you should not invest in reliance on your ability to have any control over our company.

Our common stock has less liquidity than many other stocks listed on the Nasdaq Capital Market.

Historically, the trading volume of our common stock has been relatively low when compared to larger companies listed on the Nasdaq Capital Market or other stock exchanges.

While we have experienced increased liquidity in our stock during the year ended December 31, 2021, we cannot say with certainty that a more active and liquid trading market for our common stock will continue to develop.

Because of this, it may be more difficult for shareholders to sell a substantial number of shares for the same price at which shareholders could sell a smaller number of shares.

If securities or industry analysts do not publish or cease publishing research or reports about us, our business or our market, or if they change their recommendations regarding our common stock adversely, the price of our common stock and trading volume could decline.

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● provide that our Board of Directors or a super-majority of our stockholders (66 2/3%) may amend our bylaws.

We are a smaller reporting company and the reduced reporting requirements applicable to smaller reporting companies may make our common stock less attractive to investors.

We are a smaller reporting company (“SRC”) and a non-accelerated filer, which allows us to take advantage of exemptions from various reporting requirements that are applicable to other public companies that are not SRCs or non-accelerated filers, including not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, as amended, reduced disclosure obligations regarding executive compensation in our Annual Report and our periodic reports and proxy statements and providing only two years of audited financial statements in our Annual Report and our periodic reports.

We will remain an SRC until (a) the aggregate market value of our outstanding common stock held by non-affiliates as of the last business day our most recently completed second fiscal quarter exceeds $250 million or (b) (1) we have over $100 million in annual revenues and (2) the aggregate market value of our outstanding common stock held by non-affiliates as of the last business day our most recently completed second fiscal quarter exceeds $700 million.

We cannot predict whether investors will find our common stock less attractive if we rely on certain or all of these exemptions.

If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile and may decline.

We do not currently intend to pay dividends on our common stock in the foreseeable future, and consequently, your ability to achieve a return on your investment will depend on appreciation in the price of our common stock.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors