What changed in this filing

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Item 7. Management’s Discussion and Analysis

2023-03-09 compared with 2022-03-22 · 86 added, 60 removed, 197 unchanged (43% of the section changed)

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We began our sales in the direct-to-consumer space, solving first for what we deemed the most difficult problems:

how to engage users and support behavior

change to improve clinical outcomes in diabetes.

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

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

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

Presently, we have deployed solutions for diabetes, hypertension, and pre-diabetes, and through our acquisition of Upright, we now offer solutions for musculoskeletal (“MSK”) conditions.

We intend to deploy behavioral health and other condition solutions in 2021, which conditions will also be powered by our AI-driven behavior change platform.

We are currently delivering B2B2C solutions for providers, employers, and pharmaceutical companies.

Presently, we have deployed solutions for diabetes, hypertension, and pre-diabetes, musculoskeletal (“MSK”) and behavioral health, which conditions will also be powered by our AI-driven behavior change platform.

We are currently delivering our solutions to providers, employers, health plans and pharmaceutical companies.

We commenced a commercial launch of our free application in the United Kingdom in late 2013 and commenced an initial soft launch of the full Dario solution (including the app and the Dario Blood Glucose Monitoring System) in selected jurisdictions in March 2014.

We continued to scale up launch during 2014 in the United Kingdom, the Netherlands and New Zealand, and during 2015 in Australia, Israel and Canada, with the goal of collecting customer feedback to refine our longer-term roll-out strategy.

our longer-term roll-out strategy.

We are consistently adding new additional features and functionality in making Dario the new standard of care in diabetes data management.

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● ramp up of mass production, marketing and distribution and sales efforts related to the Dario Smart Diabetes Management Solution and the DarioEngage platform;

● develop our customer support and telemarketing services in order to support the expect growth of our revenues and the increase of user, and service provider who will use our platform to better serve people with diabetes and improve their clinical outcome;

● continued product and software development, and related activities (including costs associated with application development and data storage capabilities as well as any necessary design modifications to the various elements of the Dario Smart Diabetes Management Solution, the DarioEngage platform and the Dario Loop tools and capabilities);

● continued work on registration of our patents worldwide;

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In addition, the shares issued are subject to the terms of a lock-up agreement, pursuant to which the Selling Shareholders (subject to certain exceptions) have agreed to restrict their ability to transfer their shares as follows:

(i) shares representing 20% of their respective

Consideration Shares will be restricted from transfer for a period of one hundred and eighty (180) days from the date of the closing of the acquisition (the “Closing Date”), (ii) shares representing 30% of their respective Consideration Shares will be restricted from transfer for a period of two hundred and seventy (270) days from the Closing Date, (iii) shares representing 30% of their respective Consideration Shares will be restricted from transfer for a period of three hundred and sixty (360) days from the Closing Date and (iv) shares representing 20% of their respective Consideration Shares will be restricted from transfer for a period of four hundred and fifty (450) days from the Closing Date.

(i) shares representing 20% of their respective Consideration Shares will be restricted from transfer for a period of one hundred and eighty (180) days from the date of the closing of the acquisition (the “Closing Date”), (ii) shares representing 30% of their respective Consideration Shares will be restricted from transfer for a period of two hundred and seventy (270) days from the Closing Date, (iii) shares representing 30% of their respective Consideration Shares will be restricted from transfer for a period of three hundred and sixty (360) days from the Closing Date and (iv) shares representing 20% of their respective Consideration Shares will be restricted from transfer for a period of four hundred and fifty (450) days from the Closing Date.

The Company has also agreed to file a registration statement covering the resale of the shares within ninety (90) days following the Closing Date.

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Cohen’s duties, he will be entitled to (a) a monthly salary of NIS 63,000, (b) an annual bonus of up to four times his monthly salary, and (c) up to 220,980 shares of restricted stock of the Company, subject to meeting certain key performance metrics.

See “Management – Employment Agreements.”

See “Management – Employment Agreements.” On November 25, 2021, Mr.

Oded Cohen was relieved from his role as General Manager of MSK and he was reassigned to serve as Senior Vice President of Strategy M&A and MSK of the Company .

Readers are cautioned that, according to our management’s estimates, based on our budget and the initial launch of our commercial sales, we believe that we will have sufficient resources to continue our activity only into June 2021 without raising additional capital.

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Revenue Recognition

We derive our revenue principally from:

● sale of our products, device-specific disposables test strip cartridges, lancets and our Dario Blood Glucose Monitoring System through distributors or directly to end users;

● revenue from providing Remote Patient Monitoring services to healthcare providers through the DarioEngage platform;

● revenue from ongoing membership programs, providing our users personalized diabetes management programs, including lifestyle changes, healthy eating, advanced tracking and live coaching.

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

Revenue from product sales is recognized in the period in which the products are provided to customers.

Revenues are recognized when control of the promised products is transferred to customers, in an amount that reflects the consideration to which we expect to receive from patients.

Revenues from ongoing membership programs and Remote Patient Monitoring services are recognized for each individual performance obligation when delivery has occurred, by fulfillment of product and service to the customer.

Our revenues are recognized in the period in which services and related products are provided to customers and are recorded either at a point in time for the sale of products, or over the fixed service period for membership.

The fee paid in upfront, fixed or determinable, the allocation of the transaction price to each performance obligations product and service based on the best estimate of selling price which is established considering several internal factors including, but not limited to, historical sales, pricing practices and geographies in which we offer our products.

We derive our revenue principally from:

Consumers revenue

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

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

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

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

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

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

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

Commercial revenue

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

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

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

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

The price is determined during contract negotiations with customers.

Contracts typically have a duration of more than one year.

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

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

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

Inventory write-down is measured as the difference between the cost of the inventory and net realized value based upon assumptions about future demand, and is charged to the cost of sales.

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Revenues for the year ended December 31, 2022 amounted to $27,656, 000 compared to $ 20,513 , 000 during the year ended December 31, 2021.

Revenues generated during the year ended December 31, 2021 were derived mainly from the sales of the hardware and services, through direct sales to consumers located mainly in the United States through our on-line store and through distributors, and from the offering of our membership services to our customers located mainly in the United States.

The increase in revenues for the year ended December 31, 2022, compared to the year ended December 31, 2021, is due to an increase in revenues from sales through our commercial channel .

Revenues generated during the year ended December 31, 2022 were derived mainly from the sale of services to our strategic partners and commercial customers located in the United States.

Cost of Revenues

During the years ended December 31, 2022 and 2021, we recorded costs related to revenues in the amount of $18,001,000 and $16,550,000, respectively.

The increase in cost of revenues was mainly due to higher costs related to shipping of inventory, and amortization of inventory step up and acquired technology in the amount of $4,106,000 as a result of the acquisition of Upright and WayForward.

The increase in cost of revenues was in part due to higher costs related to amortization of acquired technology in the amount of $4,357,000 and $4,106,000 as a result of the acquisitions during 2021 and 2022.

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

Gross profit for the year ended December 31, 2022, amounted to $9,655,000 (34.9% of revenues) compared to $3,963,000 ( 1 9.3% of revenues) for the year ended December 31, 2021.

The decrease in gross profit as a percentage of revenue for the year ended December 31, 2021, compared to the year ended December 31, 2020, is mainly as a result of amortization of inventory step up and acquired technology following the acquisition of Upright and WayForward amounting to $4,106,000, decrease in profitability generated from products and higher shipping costs of inventory.

Gross profit excluding these amortizations was $8,069,000 (39.3% of revenues).

The increase in gross profit as a percentage of revenue for the year ended December 31, 2022, compared to the year ended December 31, 2021, is due to the increase in revenues derived from sales through our commercial channels.

Gross profit for the year ended December 31, 2022, excluding amortization of acquired technology were $14,012 (50.7% of revenues) compared to $8,069 (39.3% of revenues) during the year ended December 31, 2021.

Research and Development Expenses

Our research and development expenses increased by $2,430,000 to $19,649,000 for the year ended December 31, 2022 compared to $ 17,219,000 for the year ended December 31, 2021.

This increase was mainly due to the increase in our activities during the year ended December 31, 2021.

This increase was mainly due to the increase in our research and development activities during the year ended December 31, 2022.

Our research and development expenses, excluding stock-based compensation and depreciation, for the year ended December 31, 2022, were $15,995,000 compared to $13,272,000 for the year ended December 31, 2021, an increase of $2,723,000.

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Sales and Marketing

Our sales and marketing expenses increased by $ 24,479,000 to $ 39,706,000 for the year ended December 31, 2021 compared to $15,227,000 for the year ended December 31, 2020.

This increase was mainly due to the increases in our digital marketing, payroll related expenses, stock-based compensation during the year ended December 31, 2021 .

Our sales and marketing expenses, excluding stock-based compensation, depreciation and amortization, for the year ended December 31, 2021 were $33,55 5

,000 compared to $12,452,000 for the year ended December 31, 2020, an increase of $21,10 3 ,000.

This increase was due to an increase in our digital marketing, and payroll related expenses, as a result of hiring our sales and marketing team in the U.S.

to lead the penetration into the B2B2C market.

Sales and marketing expenses consist mainly of payroll expenses, online marketing campaigns of our service offering, trade show expenses, customer support expenses and marketing consultants and subcontractors .

Our sales and marketing expenses decreased by $9,383,000 to $30,323,000 for the year ended December 31, 2022 compared to $39,706,000 for the year ended December 31, 2021.

This decrease was mainly due to the decreases in our digital marketing and payroll related expenses during the year ended December 31, 2022.

Our sales and marketing expenses, excluding stock-based compensation, depreciation and amortization, for the year ended December 31, 2022 were $23,880,000 compared to $33,555,000 for the year ended December 31, 2021, a decrease of $9,675,000.

This decrease was due to a decrease in our digital marketing, and payroll related expenses.

General and Administrative Expenses

Our general and administrative expenses increased by $10,776,000 to $23,532,000 for the year ended December 31, 2021 compared to $12,756,000 for the year ended December 31, 2020.

The increase was mainly due to an increase in our stock-based compensation, investor relations, insurance expenses and the costs related with the acquisitions performed during the year ended December 31, 2021 .

Our general and administrative expenses decreased by $7,039,000 to $16,493,000 for the year ended December 31, 2022 compared to $23,532,000 for the year ended December 31, 2021.

The decrease was mainly due to a decrease in our stock-based compensation, investor relations and the costs related with the acquisitions performed during the year ended December 31, 2021.

Our general and administrative expenses, excluding stock-based compensation, acquisition costs and depreciation, for the year ended December 31, 2022 were $9,803,000 compared to $8,150,000 for the year ended December 31, 2021, an increase of $1,653,000.

This increase was due to an increase in insurance, consulting services, legal expenses and investor relations expenses.

This increase was due to an increase in payroll, insurance, consulting services, legal and accounting expenses and investor relations expenses.

Our general and administrative expenses consist mainly of payroll and stock-based compensation expenses for management, employees, directors and consultants, legal and accounting fees, patent registration, expenses related to investor relations, as well as our office rent and related expenses.

Finance income (expenses), net

Our finance expenses, net, increased by $69 3 ,000 to $23 5 ,000 for the year ended December 31, 2021 compared to $458,000 financing income for the year ended December 31, 2020.

The changes in our financial expenses were mainly due to foreign currency translation differences.

Financial (income) expenses, net mainly include bank charges, interest income, lease liability and foreign currency translation differences.

Income tax expenses were $32,000 for the year ended December 31, 2021.

as compared to none for the year ended December 31, 2020.

Our finance expenses, net, increased by $5,144,000 to $5,379,000 for the year ended December 31, 2022 compared to $235,000 financing expenses for the year ended December 31, 2021.

The changes in our financial expenses were mainly due to the long-term loan we have received.

Financial expenses, net mainly include bank charges, interest expenses, lease liability and foreign currency translation differences .

Income tax expenses were $4,000 for the year ended December 31, 2022 as compared to $32,000 for the year ended December 31, 2021.

Net loss for the year ended December 31, 2022 was $62,193,000.

Net loss for the year ended December 31, 2021 was $76,761,000.

The increase from 2020 was mainly due to the increase in our operating expenses.

The decrease from 2021 was mainly due to the increase in our gross profit and the decrease in our operating expenses.

Net operating loss carryforwards

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During 2018 - 2022, we generated additional $46,020,000 of net operating losses carryforwards which are not subject to the annual limitation described above.

Our Israeli subsidiaries, Labstyle and Upright, have accumulated net operating losses for Israeli income tax purposes as of December 31, 2021 in the amount of approximately $133,960,000.

Our Israeli subsidiary, Labstyle, have accumulated net operating losses for Israeli income tax purposes as of December 31, 2022 in the amount of approximately $15 0 , 228 ,000.

The net operating losses may be carried forward and offset against taxable income in the future for an indefinite period.

In accordance with U.S.

GAAP, it is required that a deferred tax asset be reduced by a valuation allowance if, based on the weight of available evidence it is more likely than not (a likelihood of more than 50 percent) that some portion or all of the deferred tax assets will not be realized.

or all of the deferred tax assets will not be realized.

The valuation allowance should be sufficient to reduce the deferred tax asset to the amount which is more likely than not to be realized.

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Inventory step up amortization

Amortization of acquired technology

Other financial expenses (income), net

Amortization of acquired technology and brand

Other financial expenses, net

Acquisition costs

Revaluation of earn-out

Earn-out remeasurement

Stock-based compensation expenses

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Liquidity and Capital Resources

Our primary source of liquidity is cash generated from equity offerings, implanting a debt facility and from cash flows from our operations.

We believe our current level of cash and short-term financing capabilities along with future cash flows from operations are sufficient to meet the needs of the business.

Under ASC Subtopic 205-40, Presentation of Financial Statements—Going Concern (“ASC 205-40”), we have the responsibility to evaluate whether conditions and/or events raise substantial doubt about our ability to meet our future financial obligations as they become due within one year after the date that the financial statements are issued.

The following conditions raised substantial doubt about our ability to continue as a going concern:

a history of net losses, net operating cash outflows, significant cash payments for interest on our loan facility and a requirement in our loan facility that we must maintain a minimum of $10 million in liquidity at all times to not be in default of the loan facility.

We have approved a plan, to improve our available cash balances, liquidity and cash flows generated from operations.

In that regard, we are prepared to implement the following actions as required by business and market conditions:

reducing non-essential expenses to conserve cash and improve our liquidity position, deferral and reprioritization of certain research and development programs that would involve reduced program spend and total compensation reductions for senior executives to strengthen liquidity and to preserve key research and development, commercial and functional roles.

We believe that these plans alleviate the substantial doubt about the entity’s ability to continue as a going concern for at least twelve months from the date that the accompanying financial statements included elsewhere in this annual report were issued.

Going concern matters are more fully discussed in Note 1e, Basis of Presentation and Summary of Significant Accounting Policies.

As of December 31, 2022, we had approximately $49,357,000 in cash and cash equivalents compared to $35,808,000 at December 31, 2021.

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In addition, we have not completed our efforts to establish a stable recurring source of revenues sufficient to cover our operating costs and expect to continue to generate losses for the foreseeable future.

Since inception, we have financed our operations primarily through private placements and public offerings of our common stock and warrants to purchase shares of our common stock, receiving aggregate net proceeds totaling $189,685,000 as of December 31, 2021.

On February 28, 2018 and March 6, 2018, we closed two concurrent private placements offerings consisting of 113,110 shares of our common stock at $28.00 per share, 61,704 shares of our Series C Convertible Preferred Stock at $56.00 per share and warrants to purchase up to 189,218 shares of common stock for aggregate gross proceeds of approximately $6,623,000.

On September 13, 2018 and September 26, 2018, we closed two concurrent private placements offerings consisting of 213,340 shares our common stock at $18.00 per share, 94,513 shares of our Series D Convertible Preferred Stock at $72.00 per share and warrants to purchase up to 473,114 shares of common stock, for aggregate gross proceeds of approximately $10,645,000.

On December 13, 2018 and December 27, 2018, we closed a private placement offering of 152,504 shares of our common stock at a purchase price of $20.00 per share and warrants to purchase up to 152,500 shares of our common stock at $25.00 per share for aggregate gross proceeds of approximately $3,050,000.

On November 27, 2019, we entered into subscription agreements with accredited investors relating to an offering with respect to the sale of an aggregate of 8,361 shares of newly designated Series A Convertible Preferred Stock and an aggregate of 5,200 shares of newly designated Series A-1 Convertible Preferred Stock, at a purchase price of $1,000 for each share of Series A Preferred Stock and Series A-1 Preferred Stock, for aggregate gross proceeds to the Company of $13,560,000.

The initial closing of the offering took place on November 27, 2019.

On December 3, 2019, we entered into subscription agreements with accredited investors relating to an offering and the sale of an aggregate of 1,915 shares of newly designated Series A-2 Preferred Stock, at a purchase price of $1,000 per share, for aggregate gross proceeds to the Company of $1,915,000.

On December 4, 2019, we into subscription agreements with accredited investors relating to an offering and the sale of an aggregate of 3,808 shares of newly designated Series A-3 Preferred Stock, at a purchase price of $1,000 per share, for aggregate gross proceeds to the Company of $3,808,000.

On December 5, 2019, we entered into subscription agreements with accredited investors relating to an offering and the sale of an aggregate of 745 shares of newly designated Series A-4 Preferred Stock, at a purchase price of $1,000 per share, for aggregate gross proceeds to the Company of $745,000.

On December 19, 2019, we entered into subscription agreements with accredited investors relating to an offering and the sale of an aggregate of 1,346 shares of newly designated Series A-3 Preferred Stock, at a purchase price of $1,000 per share, for aggregate gross proceeds to the Company of $1,346,000.

The total aggregate gross proceeds of the offering described above, together with gross proceeds from the closing of the offering of Series A Preferred Stock, Series A-1 Preferred Stock, Series A-2 Preferred Stock, Series A-3 Preferred Stock and Series A-4 Preferred Stock was $21,375,000.

On July 28, 2020, we entered into subscription agreements with accredited investors relating to an offering with respect to the sale of an aggregate of (i) 2,969,266 shares of our common stock, at a purchase price of $7.47 per share, and (ii) pre-funded warrants to purchase 824,689 shares of common stock, at a purchase price of $7.4699 per pre-funded warrant.

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

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

to $50,000,000 from time to time through Cowen.

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

During the year ended December 31, 2022, we sold 73,037 shares of our common stock under the Sales Agreement for aggregate net proceeds of approximately $260,000.

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

The aggregate gross proceeds were approximately $40,000,000.

On June 9, 2022, we entered into a Credit Agreement (the “Credit Agreement”), with OrbiMed Royalty and Credit Opportunities III, LP, as the lender (the “Lender”).

The Credit Agreement provides for a five-year senior secured credit facility in an aggregate principal amount of up to $50 million (the “Loan Facility”), of which $25 million was made available on the closing date (the “Initial Commitment Amount”) and up to $25 million will be made available on or prior to June 30, 2023, subject to certain revenue requirements (the “Delayed Draw Commitment Amount”).

On June 9, 2022, we closed on the Initial Commitment Amount, less certain fees and expenses payable to or on behalf of the Lender.

All obligations under the Credit Agreement are guaranteed by all of our wholly owned subsidiaries other than Dario Health Services Private Limited.

All obligations under the Credit Agreement, and the guarantees of those obligations, are secured by substantially all of our and each guarantor's assets.

If, until the maturity date of the Loan Facility, our net revenue does not equal or exceed the applicable amount for such period as set forth in the Credit Agreement, then we shall repay in equal monthly installments the outstanding principal amount of the Loan Facility, together with a repayment premium and other fees.

We shall repay amounts outstanding under the Loan Facility in full immediately upon an acceleration as a result of an event of default as set forth in the Credit Agreement, together with a repayment premium and other fees.

During the term of the Loan Facility, interest payable in cash by us shall accrue on any outstanding balance due under the Loan Facility at a rate per annum equal to the higher of (x) the adjusted SOFR rate (which is the forward-looking term rate for a one-month tenor based on the secured overnight financing rate administered by the CME Group Benchmark Administration Limited) and (y) 0.50% plus, in either case, 9.50%.

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

We agreed to pay certain fees with respect to the Loan Facility, including an upfront fee, an unused fee on the undrawn portion of the Loan Facility, an administration fee, a repayment premium and an exit fee, as well as certain other fees and expenses of the Lender.

We also agreed to issue the Lender, with respect to the Initial Commitment Amount only, a warrant (to purchase up to 226,586 shares of our common stock, at an exercise price of $6.62 per share, which shall have a term of 7 years from the issuance date.

The 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 $4.00 per share.

In the event we are eligible to draw the Delayed Draw Commitment Amount, we agreed to issue the Lender an additional warrant, with a term of 7 years from the issuance date, to purchase up to 6% of the Delayed Draw Commitment Amount based on a 10 day volume weighted average price of our common stock (the “Volume Weighted Average Price”) with an exercise price equal to the Volume Weighted Average Price.

Pursuant to the terms of the Credit Agreement, and based on our net revenues for the fiscal year ended December 31, 2022, we started repayment of the outstanding principal amount of the Initial Commitment Amount of $25 million issued as part of the Loan Facility, together with a repayment premium and other fees in monthly installments of up to $518,500 beginning as of January 31, 2023, and continuing through the maturity date, or June 9, 2027.

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

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Net cash used in operating activities was $47,8 45 ,000 for the year ended December 31, 2022 compared to $50,409,000 used in operations for the same period in 2021.

Cash used in operations increased mainly due to the increase in our marketing activities and the consolidation of each of Upright and WayForward, which we acquired in 2021.

Cash used in operations increased mainly due to the decrease in our marketing activities.

Net cash used in investing activities

Net cash used for investing activities was $5 73 ,000 for the year ended December 31, 2022 compared to cash used in investing activities of $8,134,000 for the year ended December 31, 2021.

Cash used in investing activities increased mainly due to the repayment of a loan we made to Upright, the acquisition of WayForward and cash acquired as part of the acquisition of each of Upright and WayForward.

Cash used in investing activities decreased mainly due to the lack of acquisition related cash required in 2022 compared to 2021.

Net cash provided by financing activities

Net cash provided by financing activities was $61,940,000 for the year ended December 31, 2022 compared to $65,766,000 for the year ended December 31, 2021.

During the year ended December 31, 2021, we raised net proceeds in an amount of approximately $65,766,000 mainly through our January 2021 offering.

During the year ended December 31, 2022, we raised net proceeds in an amount of approximately $38,288,000 through our March 2022 offering and a net proceeds in an amount of approximately $23,786,000 through our June 2022 Credit Agreement.

Contractual Obligations

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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 7. Management’s Discussion and Analysis