DarioHealth Corp. 10-K

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, 2023, 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, 2023, 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; 98 Table of Contents (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, 2023. 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 at December 31, 2023. ​ ​ 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 50 Chief Executive Officer and Director Zvi Ben David 63 Chief Financial Officer, Treasurer and Secretary Richard Anderson 54 President Tomer Ben-Kiki ​ 53 ​ Chief Operating Officer Yoav Shaked 52 Chairman of the Board of Directors Dennis Matheis 63 Director Hila Karah 55 Director Dennis M. McGrath 67 Director Jon Kaplan ​ 56 ​ Director Adam Stern 59 Director ​ Erez Raphael has served as our Chief Executive Officer since August 9, 2013 and as a director of our company since December 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 99 Table of Contents 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 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. Zvi Ben David has served as our Chief Financial Officer, Treasurer and Secretary since January 7, 2015. Mr. Ben David has over 25 years of experience in corporate and international financial management, including at both publicly-listed and private companies. Since 2012, he has acted as an independent entrepreneur with, and investor in, various medical device ventures. From 2005 to 2012, Mr. Ben David served as the Chief Financial Officer of UltraShape Medical Ltd., a developer, manufacturer and marketer of innovative non-invasive technologies for fat cell destruction and body sculpting. While with UltraShape, he helped lead the company through $35 million in private financing, followed by the company’s merger with a Tel Aviv Stock Exchange company and ultimately the company’s sale to Syneron Medical Ltd. From 2000 to 2005, he served as Vice President and Chief Financial Officer of Given Imaging Ltd., where he was part of the management team that led that company’s 2001 initial public offering and 2004 follow-on offering, and served as a director of that company from its establishment in 1998 to 2000. From 1995 to June 2000, Mr. Ben David served as Vice President and Chief Financial Officer of RDC Rafael Development Corporation, one of Given Imaging Ltd.’s principal shareholders. From 1994 to 1995, Mr. Ben David served as manager of the finance division of Electrochemical Industries (Frutarom) Ltd., an Israeli company traded on the Tel-Aviv Stock Exchange and the American Stock Exchange, and from 1989 to 1993, Mr. Ben David served as the manager of that company’s economy and control department. From 1984 to 1988, Mr. Ben David worked at Avigosh & Kerbs, an accounting firm in Haifa, Israel. Mr. Ben David is a certified public accountant in Israel and holds a B.A. in economics and accounting from Haifa University. Richard Anderson has served as our President since August 10 2022, and was previously our President and General Manager of North America from January 7, 2020 until August 10, 2022. From November 2003 to December 2019, Mr. Anderson worked for Catasys, Inc. (Nasdaq: CATS), where he served as President and Chief Operating Officer from July 2008 to December 2019, and as a member of its board of directors from November 2003 to July 2019. Prior to Catasys, Inc., Mr. Anderson served as Senior Executive Vice President of Hythiam, Inc., a predecessor company of Catasys, Inc., from 2005 to 2008. From 1999 to 2005, he also served as Chief Financial Officer and Secretary of Clearant, Inc., a biotechnology company. Prior to Clearant, from 1999 to 2001, he served as the Chief Financial Officer and Managing Director of Intellect Capital Group, a venture consulting firm. Earlier in his career, Mr. Anderson was a Senior Manager/Director for PricewaterhouseCoopers. Mr. Anderson holds a B.A. in Business Economics from the University of California at Santa Barbara. Tomer Ben-Kiki has served as our Chief Operating Officer since February 15, 2024. Since October 2011, Mr. Ben-Kiki served as Co-Founder and Chief Executive Officer of Twill. From January 2003 through October 2010, he served as owner of Oberon Media, Inc. Mr. Ben-Kiki holds a Bachelor of Science from Tel-Aviv 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 through November 2009, until its sale to C.R. Bard, Inc. After the sale of Y-Med Inc., Mr. Shaked served as the director of research at ThermopeutiX, a developer of innovative products for strokes and peripheral artery disease. Mr. Shaked currently serves on the board of directors of several biotechnology companies, including Endospan, Vibrant Gastro, B-Lite (G&G Biotechnology) and Orasis Pharmaceuticals, the latter of which he serves as Chairman of the Board. 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 100 Table of Contents 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 is an independent business consultant and an investor in several high-tech, biotech and internet companies. From 2006 to 2013, she served as a partner and Chief Investment Officer of Eurotrust Ltd., a family office. From 2002 to 2005, she served as a research analyst at Perceptive 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 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 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 recently joined PAVmed, Inc (Nasdaq: PAVM, PAVMW) as its Executive Vice President and 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. He has extensive experience in mergers and acquisitions, both domestically and internationally, and particularly involving public company acquisitions, including Surgical Laser Technologies, Inc, (formerly, Nasdaq: SLTI), ProCyte Corporation (formerly, Nasdaq: PRCY), LCA Vision, Inc. (formerly, Nasdaq: LCAV) and Think New Ideas, Inc. (formerly, Nasdaq: THNK). Prior to PhotoMedex, he served in several senior level positions of AnswerThink Consulting Group, Inc. (then, Nasdaq: ANSR, now, The Hackett Group, Nasdaq: HCKT), a business consulting and technology integration company, including from 1999 to 2000 as Chief Operating Officer of the Internet Practice, the largest division of AnswerThink Consulting Group, Inc., while concurrently during the merger of the companies, serving as the acting Chief Financial Officer of Think New Ideas, Inc. (then, Nasdaq: THNK, now, Nasdaq: HCKT), an interactive marketing services and business solutions company. Mr. McGrath also served from 1996 until 1999 as Chief Financial Officer, Executive Vice President and director of TriSpan, Inc., an internet commerce solutions and technology consulting company, which was acquired by AnswerThink Consulting Group, Inc. in 1999. 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. In addition to serving as a director of PhotoMedex, he serves as the audit chair and a director of several medical device companies, including Noninvasive Medical Technologies, Inc. and Cagent Vascular, LLC, and as an advisor to the board of an orphan drug company, Palvella Therapeutics, LLC. Formerly from 2007 to 2009, Mr. McGrath served as a director of Embrella Cardiovascular, Inc. (sold to Edwards Lifesciences Corporation, NYSE: EW). He also serves on the Board of Trustees for Manor College and the Board of Visitors for Taylor University. We believe Mr. McGrath is qualified to serve on our Board of Directors because of his accounting expertise and his experiences serving as an officer and director of public and private companies. Jon Kaplan has been a director of our company since February 2023. Mr. 101 Table of Contents Kaplan, has extensive business experience consulting and advising healthcare companies. From September 2018 until July 2020, Mr. Kaplan served on the Board of Directors, and the audit committee, of Quorum Health Corporation. Since 2007, he has served as a Senior Partner and Managing Director of the Boston Consulting Group, Inc., or BCG, a privately-held company focused on providing management consulting services, where he recently served on BCG’s global leadership council and as the practice leader of BCG’s healthcare services. Mr. Kaplan, previously served in advisory board roles at digital health leaders Livongo, Transcarent, Circulation, and Picwell. Prior to BCG, Mr. Kaplan held senior roles at Accenture, Pricewaterhousecooper and Ernst & Young. Mr. Kaplan received a M.B.A. from the Kellogg Graduate School of Management at Northwestern University, a Masters of Public Health from the University of Pittsburgh and a B.A. in Economics from Cornell University. Mr. Kaplan is qualified to serve on our Board of Directors because of his experience in consulting and advising healthcare companies. Adam Stern has been a director of our company since March 1, 2020. Mr. Stern, has been the head Private Equity Banking at Aegis Capital Corp. and CEO of SternAegis Ventures since 2012 and was a member of our board of directors between October 2011 and May 2014. Prior to Aegis, from 1997 to November 2012, he was with Spencer Trask Ventures, Inc., most recently as a Senior Managing Director, where he managed the structured finance group focusing primarily on the technology and life science sectors. 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 is a director of Aerami Therapeutics Holdings (formerly Dance Biopharm, Inc.), Matinas BioPharma Holdings, Inc. Adgero Biopharmaceuticals Holdings and Hydrofarm Holdings Group, Inc. Mr. Stern is a former director of InVivo Therapeutics Holdings Corp. (OTCQB: NVIV), Organovo Holdings, Inc. (NYSE MKT: ONVO) and PROLOR Biotech Ltd., which was sold to Opko Health, Inc. (NYSE: OPK) for approximately $600 million in 2013. Mr. Stern holds a Bachelor of Arts degree with honors from The University of South Florida in Tampa. We believe Mr. Stern is qualified to serve on our Board of Directors because of his experience in the capital markets, his experiences serving as a director of public and private companies and his experience with life sciences companies. Scientific Advisory Board We have established a Scientific Advisory Board (SAB), whose members will be available to us to advise on our scientific and business plans and operational strategies. Below is the biography of our current SAB member. Dr. David Horwitz – Advisory Board Member , is presently a Senior Consultant with Numerof & Associates and also President of DLH Biomedical Consulting. He previously served as the Global Chief Medical Officer of the Johnson and Johnson Diabetes Institute. Prior to this, he was Vice President, Worldwide Clinical Affairs & Evidence-Based Medicine at LifeScan, Inc., a Johnson & Johnson company. During his time at LifeScan, Dr. Horwitz had, at various times, been responsible for Clinical Research, Medical Affairs, Regulatory Affairs, and Advocacy & Professional Affairs. Dr. Horwitz has previously held faculty positions in the medical schools at the University of Chicago and the University of Illinois, where he was a clinical professor of medicine. He is a Board-Certified internist and endocrinologist, and a Fellow of the American College of Physicians. He has published over 100 articles in scientific and clinical journals, primarily in the areas of diabetes and metabolism. He has completed a term as an industry representative on the Clinical Chemistry and Toxicology advisory panel of the U.S. Food and Drug Administration. He is presently serving as a volunteer physician for a charity-supported clinic. Dr. Marilyn Ritholz –Advisory Board Member , is a Senior Psychologist at the Joslin Diabetes Center and treats both adults and adolescents with diabetes. In addition, she is on the faculty at Beth Israel Deaconess Medical Center (BIDMC) and is an Assistant Professor of Psychology at Harvard Medical School. Dr. Ritholz is an experienced qualitative researcher. In collaboration with colleagues, she has explored qualitative aspects of healthcare regarding the patient-provider relationship, provider communication about diabetes complications, and psychosocial factors associated with diabetes technology, including continuous glucose monitoring. She has published more than 20 qualitative articles on these topics. Arnaud Robert – Advisory Board Member, is an accomplished international executive with 25 years of experience in creating new strategies, transforming companies, and driving business outcomes by leveraging digital, AI, and technology. His journey through the realms of Disney, Nike, Viking Cruises, Shaw Communications, and most recently at Sanofi as the EVP & Chief Digital Officer, has been marked by thoughtful leadership and deep digital transformations across business, operations, technology, people, and culture. He also launched several best-in-class experiences, including the Nike Apple watch running app and Disney Movies Anywhere (precursor to Disney+), both used by millions of consumers and widely profiled in the media. Currently, Arnaud is managing director of an advisory firm that helps CEOs, Private Equity Partners, and a large consultancy achieve their strategic objectives through M&A, operational excellence, and digital / AI / GenAI solutions. Arnaud was voted Business Transformation Top 150 (2022), Top 100 Global CDOs (2022 & 2023), and is a former member of the World Economic Forum Media Council. He holds a PhD in Computer Science from the Swiss Institute of Technology and has filed 50 patents. ​ 102 Table of Contents Board Composition Our business is managed under the direction of our Board of Directors. Our Board of Directors currently consists of seven members. Pursuant to the terms of the placement agency agreement between us and Aegis Capital Corp., dated October 22, 2019, we granted Aegis the right to nominate an individual to the Board of Directors for a period of three years, which resulted in the appointment of Mr. Stern to serve on our Board of Directors. There are no arrangements between our directors and any other person pursuant to which our directors were nominated or elected for their positions. 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 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; ● 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. 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 dariohealth.investorroom.com under the “For Investors / Corporate Governance” section. 103 Table of Contents 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. 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 will be reviewed and evaluated at least annually. 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 McGrath and Kaplan, and Ms. Karah are “independent directors” as defined in the Nasdaq Listing Rules and Rule 10A-3 promulgated under the Exchange Act. Code of Ethics On March 5, 2013, our Board of Directors adopted a Code of Business Conduct and Ethics and Insider Trading Policy which applies to all insiders including our principal executive officer, principal financial officer, and principal accounting officer. Our Code of Business Conduct and Ethics is available on our website at www.mydario.com under the Investors/Governance section. The information on our website is not incorporated by reference into this Report. We intend to satisfy the disclosure requirement under Item 5.05 of Form 8-K regarding amendment to, or waiver from, a provision of our Code of Ethics by posting such information on the website address specified above. 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. ​ 104 Table of Contents Item 11. Executive Compensation The following table summarizes compensation of our named executive officers, as of December 31, 2023 and 2022. 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 ​ 2023 ​ $ 446,307 (1) ​ 101,939 (2) $ — (3) $ — ​ — ​ — ​ $ 173,941 (4) $ 722,187 (Chief Executive Officer) ​ 2022 ​ $ 489,848 (1) $ 306,263 (2) $ 1,977,250 (3) $ — ​ — ​ — ​ $ 182,651 (4) $ 2,956,012 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Zvi Ben David 2023 ​ $ 243,419 (5) ​ 31,479 (6) $ — (7) $ — ​ — ​ — ​ $ 67,686 (8) $ 342,584 (Chief Financial Officer) 2022 ​ $ 268,022 (5) ​ 87,504 ​ $ 683,050 (7) $ — ​ — ​ — ​ $ 73,522 (8) $ 1,112,098 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Richard Anderson 2023 ​ $ 400,000 (9) ​ 80,000 (10) $ — ​ $ — (11) — ​ — ​ $ 56,648 (12) $ 536,648 (President) 2022 ​ $ 689,955 (9) ​ 250,000 (10) $ — ​ $ 732,510 (11) — ​ — ​ $ 58,467 (12) $ 1,730,932 * Certain compensation paid by the company is denominated in New Israeli Shekel (or the 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, 202 3 , and December 31, 202 2 , 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 9 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 entitled to a monthly salary of NIS 44,000, commencing April 1, 2016, his monthly salary was increased to NIS 80,000 (approximately $21,578 per month). On June 1, 2018, his monthly salary was increased to NIS 134,167 (approximately $36,188) and on April 1, 2021, his monthly salary was increased to NIS 137,466 (approximately $37,078 per month). (2) In March 2022, Mr. Raphael was paid a bonus of $306,263 for his performance during 2021. On March 2023, Mr. Raphael was paid a bonus of $101,939 for his performance during 2022. (3) On May 18, 2022, Mr. Raphael was granted 275,000 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 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, commencing April 1, 2016, his monthly salary was updated to NIS 60,000 (approximately $16,183). Commencing June 1, 2018, his monthly salary was updated to NIS 67,200 (approximately $18,125), and commencing April 1, 2021, his monthly salary was updated to NIS 74,620 (approximately $20,127). (6) In March 2022, Mr. Ben David was paid a bonus of $87,504 for his performance during 2021. In March 2023, Mr. Ben David was paid a bonus of $31,479 for his performance during 2022. (7) On May 18, 2022, Mr. Ben David was granted 95,000 restricted shares of our common stock under our 2020 Equity Incentive Plan. 105 Table of Contents (8) In addition to his salary, Mr. Ben David is entitled to receive a mobile phone during his employment as well as reimbursements for expenses accrued. These benefits, as well as other social benefits under Israeli law, are included as part of his “All Other Compensation.” (9) In accordance with his employment agreement, effective in January 2020, Mr. Anderson was entitled to a monthly salary of $27,916.67. As of April 2022, Mr. Anderson is entitled to a monthly salary of $33,333.33. (10) In April 2022, Mr. Anderson was paid a bonus of $250,000 for his performance during 2021. In April 2023, Mr. Anderson was paid a bonus of $80,000 for his performance during 2022. (11) On May 18, 2022, Mr. Anderson was granted 135,000 options to purchase shares of our common stock under our 2020 Equity Incentive Plan, at an exercise price of $7.19 per share. (12) In addition to his salary, Mr. Anderson is entitled to participate in any and other benefit plans and programs that the Company may offer to its employees from time to time according to the terms of such plans and the Company’s practices and policies as well as reimbursements for expenses accrued. These benefits are included as part of his “All Other Compensation.” 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 , 078 per month). 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. Mr. Raphael’s employment agreement expires on December 31, 2020. 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 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 the term of Mr. Raphael’s employment to expire on December 31, 2022. On April 7, 2021, the Compensation Committee of our Board of Directors approved an increase to Mr. Raphael’s target bonus to 75% of his annual base salary. Zvi Ben David , Chief Financial Officer, Treasurer and Secretary – On January 8, 2015, LabStyle Innovation Ltd., our Israeli subsidiary, entered into a Personal Employment Agreement with Mr. Ben David. Pursuant to his employment agreement, Mr. Ben David was initially entitled to a monthly salary and additional compensation (excluding social benefits under applicable Israeli law) of NIS 31,200 (approximately $8,415) 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 106 Table of Contents of his employment agreement at which point Mr. Ben David’s salary was increased to NIS 39,000 (approximately $10,519). Commencing April 1, 2016, Mr. Ben David’s Salary was updated to NIS 60,000 (approximately $16,183) per month. Commencing June 1, 2018, his monthly salary was updated to NIS 67,200 (approximately $18.215), and commencing April 1, 2021, his monthly salary was updated to NIS 74,620 (approximately $20.127). Mr. Ben David's employment agreement may be terminated by either party at will upon 90 days prior written notice or terminated by us for cause, as defined under the employment agreement. In the event the employment agreement is terminated by us at will, Mr. Ben David shall be entitled to receive 90 days of severance plus any required severance payment pursuant to applicable Israeli severance law. In the event the employment agreement is terminated by us for cause, Mr. Ben David will only be entitled to a severance pay under applicable Israeli severance law. The employment agreement also includes a twelve-month non-competition and non-solicitation provision, certain confidentiality covenants and assignment of any of his company-related inventions to the company. Under the terms of the employment agreement, Mr. Ben David is entitled to certain expense reimbursements and other standard benefits, including vacation, sick leave, contributions to a manager’s insurance policy and study fund and mobile phone allowances. On April 7, 2021, the Compensation Committee of our Board of Directors approved an increase of Mr. Ben-David’s annual salary by $27,000 in the aggregate and increased his target bonus to 40% of his annual base salary. Richard Anderson, President and General Manager of North America – On January 7, 2020, we appointed Mr. Anderson as our President and General Manager of North America. In connection with Mr. Anderson’s appointment, the Company agreed to pay Mr. Anderson an annual base salary of $335,000. Mr. Anderson shall also be subject to a six-month non-competition and one-year non-solicitation provision, certain confidentiality covenants and assignment of any of his company-related inventions. Mr. Anderson will also be entitled to certain expense reimbursements and other standard benefits, including vacation and sick leave. On April 1, 2022 Mr. Anderson’s base salary was increased to $400,000. In addition, Mr. Anderson will be entitled to receive an annual incentive bonus of up to $250,000, subject to certain milestones and performance targets. In addition, and in conjunction with his appointment as President and General Manager of North America, the Company agreed to issue Mr. Anderson a stock option to purchase up to 90,000 shares of common stock at an exercise price of $8.41 per share, subject to vesting. Mr. Anderson was also issued a stock option to purchase up to 90,000 shares of common stock at an exercise price of $8.41 per share, subject to vesting and the achievement of certain business revenue targets. In that regard, Mr. Anderson’s option will vest as follows: (i) 22,500 shares shall vest following fiscal year 2020 if our business-to-business revenues reach or exceed $6 million in the aggregate, or a pro-rated amount equal to the percentage achievement of such target, assuming the Company’s GAAP revenues in 2020 will reach at least $11 million in the aggregate; (ii) 22,500 shares shall vest following fiscal year 2021 if our business-to-business revenues reach or exceed $15 million in the aggregate, or a pro-rated amount equal to the percentage achievement of such target, assuming the Company’s GAAP revenues in 2021 will reach at least $19.5 million in the aggregate; (iii) 22,500 shares shall vest following fiscal year 2022 if our business-to-business revenues reach or exceed $40 million in the aggregate, or a pro-rated amount equal to the percentage achievement of such target, assuming the Company’s GAAP revenues in 2022 will reach at least $38 million in the aggregate; and (iv) 22,500 shares shall vest following fiscal year 2023 if our business-to-business revenues reach or exceed $80 million in the aggregate, or a pro-rated amount equal to the percentage achievement of such target, assuming the Company’s GAAP revenues in 2023 will reach at least $62 million in the aggregate. The performance options for 2020, 2021,2022 and 2023 did not vest and have expired. On October 16, 2020, the Compensation Committee of our Board of Directors approved the issuance to Mr. Anderson of 5,182 shares of our Common Stock under our 2012 Equity Incentive Plan. Such shares were issued in lieu of the waiver of $23,333 of salary otherwise payable to Mr. Anderson from April to July 2020. On June 8, 2022, the Compensation Committee authorized the Company to redeem 17,957 shares of restricted stock held by Mr. Anderson, in compliance with Rule 16b-3 promulgated by the SEC. The redemption is part of previously granted 91,652 and 20,000 shares of restricted stock granted in January and July 2021, in exchange for the aggregate redemption price equal to the withholding tax obligation in the amount of $170,000. ​ Tomer Ben-Kiki, Chief Operating Officer . On February 15, 2024, we appointed Mr. Ben-Kiki as Chief Operating Officer. In connection with his appointment as Chief Operating Officer, we entered into an employment agreement with Mr. Ben-Kiki. Mr. Ben-Kiki will earn an annual salary of $ 212 ,000 for his work in the United States, and 65 ,000 NIS per 107 Table of Contents month for his work in Israel. Mr. Ben-Kiki will be entitled to a bonus of up to 20% of his base salary, subject to certain performance objectives as defined by the Board of Directors. In addition, he will be entitled to receive a stock option to purchase up to 1,017,947 shares of Common Stock, at an exercise price of $2.55 per share, which were granted as an inducement material to Mr. Ben-Kiki becoming an employee of the company, in accordance with Nasdaq Listing Rule 5635(c)(4). Time-based options to purchase up to 717,947 shares of common stock shall vest as follows: 291,742 shares shall vest immediately, and the remaining 426,205 shares will vest over two years in eight equal quarterly amounts, subject to Mr. Ben-Kiki’s continued employment by the Company on the applicable vesting date. The performance-based option to purchase up to 300,000 shares of Common Stock will vest immediately upon achieving certain milestones relating to the achievement of revenues (on a U.S. generally accepted account principals basis) relating to Twill products for the year ending December 31, 2024, the achievement of certain operating expense targets for the years ending December 31, 2024 and December 31, 2025, the ability to generate software value from funds invested and meet product roadmap and the retention of key employees post transaction, subject in each case to Mr. Ben-Kiki's continued employment by us on the applicable vesting date. Mr. Ben-Kiki will be employed at-will with a 90 days’ notice period, unless it is terminated for cause. ​ Outstanding Equity Awards at December 31, 2023 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Equity ​ ​ ​ ​ ​ ​ ​ ​ incentive ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ plan awards: ​ ​ ​ ​ ​ ​ ​ Number of ​ Number of ​ Number of ​ ​ ​ ​ ​ ​ ​ securities ​ securities ​ securities ​ ​ ​ ​ ​ ​ ​ underlying ​ underlying ​ underlying ​ ​ ​ ​ ​ ​ ​ unexercised ​ unexercised ​ unexercised ​ Option ​ Option ​ ​ options (#) ​ options (#) ​ unearned ​ exercise ​ expiration Name exercisable unexercisable options (#) price ($) date Erez Raphael ​ 45 ​ — ​ — ​ $ 3,330 ​ January 6, 2024 (Chief Executive Officer) ​ 234 ​ — ​ — ​ $ 1,764 ​ July 6, 2024 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Zvi Ben David 27,827 ​ — (1) ​ ​ $ 7.736 ​ February 12, 2026 (Chief Financial Officer, Secretary and Treasurer) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Richard Anderson ​ 90,000 — (2) — ​ $ 8.41 ​ January 30, 2026 (President and General Manager of North America) 84,018 7,634 (1) — ​ $ 17.89 ​ January 19, 2031 ​ 67,500 67,500 (1) — ​ $ 7.19 ​ May 18, 2032 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Option Shares 269,624 75,134 ​ ​ ​ $ ​ ​ ​ (1) Vests in 12 equal quarterly installments over a three-year period. (2) Vests in 3 equal annual installments over a three-year period. Non-Employee Director Remuneration Policy In March 2013, our Board of Directors adopted the following non-employee director remuneration policy: Cash Awards Our non-employee directors (currently Messrs. Shaked, Matheis, McGrath, Prof. Stone (till his pass away on May 30, 2022) 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. 108 Table of Contents Stock and Option Awards On May 18, 2022, the Compensation Committee of our Board of Directors approved the following issuances, each was done under our 2020 Equity Incentive Plan: (i) 60,000 restricted shares of our common stock to Mr. Shaked; (ii) 80,000 restricted shares of our common stock to Ms. Karah; (iii) 17,620 restricted shares of our common stock to Mr. Matheis; (iv) 55,000 restricted shares of our common stock to each of Mr. Stern and Mr. McGrath; and (v) 35,000 options to purchase shares of our common stock with an exercise price of $7.19 per share, to each of Prof. Stone and Mr. Matheis. Compensation Committee Review The Compensation Committee shall, if it deems necessary or prudent in its discretion, reevaluate and approve in January of each such year (or in any event prior to the first board meeting of such fiscal year) the cash and equity awards (amount and manner or method of payment) to be made to non-employee directors for such fiscal year. In making this determination, the Compensation Committee shall utilize such market standard metrics as it deems appropriate, including, without limitation, an analysis of cash compensation paid to independent 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. Summary Director Compensation Table The following table summarizes the annual compensation paid to our non-employee directors for the fiscal year ended December 31, 2022: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 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 2023 ​ $ 70,000 ​ $ — (1) $ — (2) $ — ​ $ — ​ $ — ​ $ 70,000 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Jon Kaplan 2023 ​ $ 42,778 ​ $ — (3) $ — (4) $ — ​ $ — ​ $ — ​ $ 42,778 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Dennis Matheis ​ 2023 ​ $ 70,000 ​ $ — (5) $ — (6) $ — ​ $ — ​ $ — ​ $ 70,000 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Hila Karah 2023 ​ $ 70,000 ​ $ — (7) $ — (8) $ — ​ $ — ​ $ — ​ $ 70,000 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Yoav Shaked 2023 ​ $ 70,000 ​ $ — (9) $ — (10) $ — ​ $ — ​ $ — ​ $ 70,000 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Adam Stern ​ 2023 ​ $ 50,000 ​ $ — (11) $ — (12) $ — ​ $ — ​ $ — ​ $ 50,000 * Amount shown does not reflect dollar amount actually received. Instead, this amount reflects the aggregate grant date fair value of each stock option granted in the fiscal year ended December 31, 2023, computed in accordance with the 109 Table of Contents provisions of ASC 718. Assumptions used in accordance with ASC 718 are included in Note 9 to our consolidated financial statements included in this Annual Report. (1) 74,744 stock awards are outstanding as of December 31, 2023. (2) 98 option awards are outstanding as of December 31, 2023. (3) No stock awards are outstanding as of December 31, 2023. (4) No option awards are outstanding as of December 31, 2023. (5) 32,620 stock awards are outstanding as of December 31, 2023. (6) 55,000 option awards are outstanding as of December 31, 2023. (7) 148,751 stock awards are outstanding as of December 31, 2023. (8) No option awards are outstanding as of December 31, 2023. (9) 163,896 stock awards are outstanding as of December 31, 2023. (10) No option awards are outstanding as of December 31, 2023. (11) 108,341 stock awards are outstanding as of December 31, 2023. (12) No option awards are outstanding as of December 31, 2023. ​ 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 22, 2024 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 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 110 Table of Contents 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., 18 W. 18th St., New York, New York 10011. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Percent of ​ ​ Shares of ​ Common ​ ​ Common ​ Stock ​ ​ Beneficially ​ Beneficially Name of Beneficial Owner Stock Owned Owned (1) Officers and Directors ​ Erez Raphael (2) 1,517,458 5.2 % Zvi Ben David (3) 568,982 1.9 % Richard Anderson (4) 740,530 2.5 % Tomer Ben Kiki (5) ​ 345,018 ​ 1.2 % Dennis M. McGrath (6) 96,509 * % Jon Kaplan (7) ​ 43,910 ​ — % Hila Karah (8) 161,999 * % Yoav Shaked (9) 208,981 * % Adam Stern (10) 797,452 2.7 % Dennis Mathies (11) 175,804 * % All Executive Officers and Directors as a group (10 persons) ** 4,656,643 15.7 % ​ ​ ​ ​ ​ ​ 5% Stockholders ​ Nantahala Capital Management, LLC. (12) 2,934,375 9.9 % * less than 1%. (1) Percentage ownership is based on 29,442,532 shares of our common stock outstanding as of March 22, 2024 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 234 vested options to purchase common stock and 1,046,492 vested restricted shares. Also includes 37,876 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 27,827 vested options to purchase common stock and 399,562 vested restricted shares. Includes 1,786 shares owned by his spouse, for which Mr. Ben David disclaims beneficial ownership except to the extent of his pecuniary interest therein. (4) Includes 646,652 vested options to purchase common stock and 78,696 vested restricted shares. Excludes 740,000 options which are not vested. (5) Includes 345,018 vested options to purchase common stock. Excludes 672,929 options which are not vested. (6) Includes 98 vested options to purchase common stock and 96,411 vested restricted shares. (7) Includes 35,000 vested restricted shares. (8) Includes 112,856 vested restricted shares. (9) Includes 107,234 vested restricted shares. Includes 1,667 shares owned by his spouse, for which Mr. Shaked disclaims beneficial ownership except to the extent of his pecuniary interest therein. (10) Includes 115,517 vested restricted shares. Includes warrants exercisable into 409,535 shares of common stock, subject to a contractual beneficial ownership limitation of 4.99%. 111 Table of Contents (11) Includes 43,334 vested options to purchase common stock and 52,620 vested restricted shares. Excludes 11,666 options which have not vested. (12) Based solely on information contained in Form 13G/A filed with the SEC on February 14, 2024, and data provided by the holder. Includes 197,622 pre-funded warrants to purchase common stock issued in May 2019, subject to a contractual beneficial ownership limitation of 9.99% and excludes preferred shares convertible into 4,737,198 shares of common stock, 79,924 pre-funded warrants issued on May 24, 2019, 386,129 pre-funded warrants issued on July 31, 2020, and 619,117 pre-funded warrants issued on February 28, 2022. ​ 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 (the “Placement Agency Agreement”) with Aegis Capital Corp. (“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 (the “Placement Agent Warrant”) 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 Placement Agent 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 will receive 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 Capital Corp. (“Aegis”) certain a fee of up to 3% of any proceeds from sales derived by us through commercial transactions entered into with parties introduced 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) 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. 112 Table of Contents 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 following table sets forth fees billed to us by Kost Forer Gabbay & Kasierer, a member of Ernst & Young Global, our independent registered public accounting firm, during the fiscal years ended December 31, 2022 and December 31, 2022 for: (i) services rendered for the audit of our annual financial statements and the review of our quarterly financial statements; (ii) services by our independent registered public accounting firms that are reasonably related to the performance of the audit or review of our financial statements and that are not reported as audit fees; (iii) services rendered in connection with tax compliance, tax advice and tax planning; and (iv) all other fees for services rendered. ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2023 December 31, 2022 Audit Fees ​ $ 303,296 ​ $ 236,443 Audited Related Fees ​ $ — ​ $ — Tax Fees (1) ​ $ 16,686 ​ $ 55,980 All Other Fees (2) ​ $ 102,250 ​ $ 16,750 Total ​ $ 422,232 ​ $ 309,173 (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), 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. ​ 113 Table of Contents PART IV Item 15. Exhibits, Financial Statement Schedules. The following exhibits are filed with this Annual Report. ​ Exhibit No. Description 3.1 Composite copy of Certificate of Incorporation, as amended (incorporated by reference to the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 17, 2020). 3.2 Bylaws (incorporated by reference to the Company’s Quarterly Report on Form 10-Q filed with the Commission on August 16, 2021). 3.3 Certificate of Designation of Preferences, Rights and Limitations of Series A-1 Convertible Preferred Stock of the Company ( incorporated by reference to the Company’s Current Report on Form 8-K/A filed with the Securities and Exchange Commission on December 3, 2019). 3.4 ​ Amended and Restated Certificate of Designation of Preferences, Rights and Limitations of Series B Preferred Stock ( incorporated by reference to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on June 20, 2023). 3.5 ​ Amended and Restated Certificate of Designation of Preferences, Rights and Limitations of Series B-1 Preferred Stock ( incorporated by reference to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on June 20, 2023). 3.6 ​ Amended and Restated Certificate of Designation of Preferences, Rights and Limitations of Series B-2 Preferred Stock ( incorporated by reference to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on June 20, 2023). 3.7 ​ Amended and Restated Certificate of Designation of Preferences, Rights and Limitations of Series B-3 Preferred Stock ( incorporated by reference to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on June 20, 2023). 3.8 ​ Certificate of Designation of Preferences, Rights and Limitations of Series C Preferred Stock ( incorporated by reference to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 21, 2024). 3.9 ​ Certificate of Designation of Preferences, Rights and Limitations of Series C-1 Preferred Stock ( incorporated by reference to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 21, 2024). 3.10 ​ Certificate of Designation of Preferences, Rights and Limitations of Series C-2 Preferred Stock ( incorporated by reference to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 21, 2024). 4.1 Form of Representatives’ Warrant ( incorporated by reference to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on March 9, 2016). 4.2 Form of Warrant (incorporated by reference to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on December 18, 2018). 4.3 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). 4.4 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). 4.5 Description of Securities (incorporated by reference to the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 17, 2020). 4.6 Form of Placement Agent Warrant (incorporated by reference to the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 17, 2020). 4.7 ​ 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). 4.8 ​ 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). 114 Table of Contents 4.9 ​ Form of Warrant issued to Avenue Venture Opportunities Fund L.P. ( incorporated by reference to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on May 5, 2023). 4.10 ​ 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). 4.11 ​ 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). 4.12 ​ 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). 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+ Amended and Restated 2012 Equity Incentive Plan of the Company ( incorporated by reference to the Company’s Definitive Proxy Statement filed with the Securities and Exchange Commission on October 19, 2016). 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+ 2020 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 October 14, 2020). 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+ Employment Agreement, dated as of September 22, 2013, and as amended on August 1, 2014, April 27, 2015 and May 1, 2016, between Dror Bacher and Labstyle Innovation Ltd. (incorporated by reference to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on July 26, 2017). 10.7+ 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). 10.8+ Stock Option Agreement between DarioHealth Corp. and Richard Anderson (incorporated by reference to the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 17, 2020). 10.9+ ​ Conditional Stock Option Agreement between DarioHealth Corp. and Richard Anderson (incorporated by reference to the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 17, 2020). 10.10+ ​ 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). 10.11 ​ Share Purchase Agreement by and among DarioHealth Corp., LabStyle Innovation Ltd., Upright Technologies Ltd., Vertex C (C.I.) Fund L.P., as holder representative and certain holders of Upright’s outstanding securities, dated January 26, 2021 (incorporated by reference to the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 7, 2021). 10.12+ First Amendment to the 2020 Equity Incentive Plan (incorporated by reference to Annex A to the Company’s Proxy Statement on Schedule 14A filed with the Securities and Exchange Commission on April 26, 2021). 10.13˄ ​ Form of 2022 Securities Purchase Agreement ( incorporated by reference to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on March 2, 2022). 10.14 ​ Termination of Employment and Separation Agreement dated January 23, 2023, by and between Dror Bacher 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 January 27, 2023). 115 Table of Contents 10.15+ ​ Amendment to the Company’s Amended and Restated 2020 Equity Incentive Plan (incorporated by reference to the Company’s Definitive Proxy Statement filed with the Securities and Exchange Commission on October 14, 2022). 10.16 ​ Agreement and Plan of Merger by and among DarioHealth Corp., WF Merger Sub, Inc., PsyInnovations, Inc., and certain representatives of the former equity holders of PsyInnovations, Inc., dated May 15, 2021 ( incorporated by reference to the Company’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on August 15, 2022). 10.17 ​ Amendment to Agreement and Plan of Merger by and between the Company and certain representatives of the former equity holders of PsyInnovations, Inc., dated July 7, 2022 ( incorporated by reference to the Company’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on August 15, 2022). 10.18˄ ​ Credit Agreement, dated June 9, 2022, by and among the Company, as borrower, and OrbiMed Royalty and Credit Opportunities III, LP, as lender ( incorporated by reference to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on June 13, 2022). 10.19 ​ Pledge and Security Agreement, dated June 9, 2022, by and among the Company, Labstyle Innovation Ltd, Upright Technologies, Inc., Psyinnovations, Inc., and OrbiMed Royalty and Credit Opportunities III, LP ( incorporated by reference to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on June 13, 2022). 10.20 ​ Registration Rights Agreement, dated June 9, 2022, by and between the Company and OrbiMed Royalty and Credit Opportunities III, LP ( incorporated by reference to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on June 13, 2022). 10.21˄ ​ Exclusive Preferred Partner, Co-Promotion, Development Collaboration and License Agreement by and between Sanofi US Services, Inc. and DarioHealth Corp., dated February 28, 2022 ( incorporated by reference to the Company’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on May 11, 2022). 10.22 ​ Technology Purchase Agreement by and among Physimax Technologies Ltd., Labstyle Innovation Ltd. and DarioHealth Corp., dated January 18, 2022 ( incorporated by reference to the Company’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on May 11, 2022). 10.23 ​ Redemption Agreement by and between DarioHealth Corp. and Richard Allan Anderson dated June 9, 2022. 10.24 ​ Form of Preferred Exchange Agreement by and between DarioHealth Corp. and certain holders of Series A-1 Preferred Stock, dated September 20, 2022. 10.25 ​ Form of Securities Purchase Agreement for Series B, Series B-1, and Series B-2 Preferred Stock ( incorporated by reference to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on May 5, 2023). 10.26 ​ Loan and Security Agreement, dated May 1, 2023, by and among the Company, as borrower, and Avenue Venture Opportunities Fund II, L.P., as lender ( incorporated by reference to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on May 5, 2023). 10.27 ​ Form of Preferred Agreement with Series A-1 Convertible Preferred Stockholders ( incorporated by reference to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on May 5, 2023). 10.28 ​ Amended and Restated Exclusive Preferred Partner, Co-Promotion, Development Collaboration and License Agreement by and between Sanofi US Services, Inc. and DarioHealth Corp., dated July 10, 2023 ( incorporated by reference to the Company’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on August 10, 2023). 10.29 ​ 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). 10.30 ​ 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). 116 Table of Contents 10.31 ​ Series C Securities Purchase Agreement ( incorporated by reference to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 21, 2024). 10.32 ​ Amendment No. 1 to Placement Agency Agreement dated January 31, 2024 ( incorporated by reference to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 21, 2024). 10.33 ​ First Amendment to Loan and Security Agreement and Supplement, dated February 15, 2024, by and among DarioHealth Corp., PsyInnovations, Inc., LabStyle Innovation Ltd., Avenue Venture Opportunities Fund II, L.P. and Avenue Venture Opportunities Fund, L.P. ( incorporated by reference to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 21, 2024). 10.34*+ ​ Personal Employment Agreement, dated February 16, 2024, between DarioHealth Corp. and Tomer Ben-Kiki 10.35*+ ​ Personal Employment Agreement, dated February 16, 2024, between LabStyle Innovation Ltd. and Tomer Ben-Kiki 21.1* List of Subsidiaries of the Company 23.1* Consent of Kost Forer Gabbay and Kaiserer 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. 101* The following financial statements from the Company’s annual report on Form 10-K for the year ended December 31, 2023, 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). + 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. ​ ​ 117 Table of Contents 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 28, 2024 DARIOHEALTH CORP. By: /s/ Erez Raphael Name: Erez Raphael Title: Chief Executive Officer By: /s/ Zvi Ben David Name: Zvi Ben David 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 28, 2024 Erez Raphael Director (Principal Executive Officer) /s/ Zvi Ben David Chief Financial Officer, Secretary and March 28, 2024 Zvi Ben David Treasurer (Principal Financial and Accounting Officer) /s/ Yoav Shaked Chairman of the Board March 28, 2024 Yoav Shaked /s/ Dennis Matheis Director March 28, 2024 Dennis Matheis /s/ Hila Karah Director March 28, 2024 Hila Karah /s/ Dennis M. McGrath Director March 28, 2024 Dennis M. McGrath /s/ Jon Kaplan Director March 28, 2024 Jon Kaplan ​ ​ ​ ​ ​ /s/ Adam Stern Director March 28, 2024 Adam Stern ​ ​ ​ 118 Table of Contents DARIOHEALTH CORP. AND ITS SUBSIDIARIES CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2023 INDEX ​ Page Report of Independent Registered Public Accounting Firm (PCAOB - Firm ID: 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- 49 ​ - - - - - - - - - - - - - - - ​ ​ ​ ​ Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ Kost Forer Gabbay & Kasierer 144 Menachem Begin Road, Building A, Tel-Aviv 6492102, Israel ​ ​ Tel: +972-3-6232525 Fax: +972-3-5622555 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, 2023 and 2022, the related consolidated statements of comprehensive loss, changes in stockholders’ equity and cash flows for each of the two years in the period ended December 31, 2023, 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, 2023 and 2022, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2023, 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. Critical Audit Matters The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (i) relate 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 matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. ​ F - 2 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ Kost Forer Gabbay & Kasierer 144 Menachem Begin Road, Building A, Tel-Aviv 6492102, Israel ​ ​ Tel: +972-3-6232525 Fax: +972-3-5622555 ey.com ​ Revenue Recognition ​ ​ ​ Description of the Matter As described in Note 2 and Note 6 to the consolidated financial statements, a significant portion of the Company's revenue is derived from agreements with enterprise business market groups to provide a mobile and web-based digital therapeutics health management programs, data license and related development and implementation services. The Company contracts with customers often include promises to transfer multiple promises to provide goods and services, which are accounted for separately if they are distinct performance obligations. In such contracts, the transaction price is then allocated to the distinct performance obligations on a relative standalone selling price basis and revenue is recognized when control of the distinct performance obligation is transferred. ​ The accounting for contracts with multiple promises requires the company to exercise significant judgment in determining revenue recognition for these contracts and includes: (a) identification and determination of whether products and services are considered distinct performance obligations that should be accounted for separately based on the terms and conditions of the relevant agreements, (b) determination of stand-alone selling prices for each distinct performance obligation that are not sold separately. (c) the pattern of transferring control (i.e., timing of when revenue is recognized) for each distinct performance obligation. Given these factors, the related audit effort in evaluating management’s judgments in determining revenue recognition for these customer contracts was extensive and required a high degree of auditor judgment. ​ ​ ​ How We Addressed the Matter in Our Audit ​ For a sample of customers, we: (1) obtained and read contract source documents, including master agreements, and other documents that were part of the agreement and evaluating management's identification of the contract and the distinct performance obligations based on the terms of the arrangements and the company's accounting policies, (2) tested management’s identification of significant terms for completeness, including the identification and determination of distinct performance obligations, (3) evaluating the methodology and reasonableness of management’s assumptions used for the estimate of stand-alone selling prices on a sample basis for products and services that are not sold separately (4) tested management’s calculations of revenue and the associated timing of revenue recognition. In addition, We have also evaluated the Company’s disclosures in relation to this matter. ​ ​ ​ F - 3 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ Kost Forer Gabbay & Kasierer 144 Menachem Begin Road, Building A, Tel-Aviv 6492102, Israel ​ ​ Tel: +972-3-6232525 Fax: +972-3-5622555 ey.com ​ ​ ​ ​ ​ Going concern assessment ​ ​ Description of the Matter As discussed in Note 1 to the consolidated financial statements, the Company has incurred operating losses and negative cash-flow from operations since inception. The Company’s operations are dependent on its ability to raise additional funds. This dependency will continue until the Company will be able to completely finance its operations by generating revenue from its products and services. Management has concluded that, based on its current projections and plans, the Company will be able to satisfy its liquidity requirements for at least one year from the date these financial statements were issued. We identified the assessment of liquidity and the Company’s ability to continue as a going concern as a critical audit matter due to the subjective judgments required of management to conclude the Company would have sufficient liquidity to sustain itself for at least a year beyond the date of the issuance of the consolidated financial statements. This in turn led to a high degree of auditor subjectivity and judgment to evaluate the audit evidence supporting the liquidity conclusions. ​ ​ ​ How We Addressed the Matter in Our Audit ​ In addressing the matter, our audit procedures included, among others, assessing the reasonableness of forecasted revenue, operating expenses and sources of cash used in management’s assessment to determine whether the company has sufficient liquidity to fund operations for at least one year from the consolidated financial statement issuance date. This testing included inquiries with management, comparison of prior period forecasts to actual results and consideration of positive and negative evidence impacting management’s forecasts and liquidity. We also performed sensitivity analyses to assess the impact of changes in the key assumptions included in management's liquidity forecast models. In addition, we assessed the adequacy of the company’s going concern disclosures included in note 1 to the consolidated financial statements. ​ ​ /s/ KOST FORER GABBAY & KASIERER A Member of Ernst & Young Global ​ We have served as the Company’s auditor since 2012. Tel-Aviv, Israel March 28, 2024 ​ ​ ​ F - 4 Table of Contents ​ DARIOHEALTH CORP. AND ITS SUBSIDIARIES CONSOLIDATED BALANCE SHEETS U.S. dollars in thousands ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ ​ 2023 2022 ​ ​ ​ ​ ​ ASSETS ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ CURRENT ASSETS: ​ ​ ​ Cash and cash equivalents ​ $ 36,797 ​ $ 49,357 Short-term restricted bank deposits ​ 292 ​ 165 Trade receivables, net ​ 3,155 ​ 6,416 Inventories ​ 5,062 ​ 7,956 Other accounts receivable and prepaid expenses ​ 2,024 ​ 1,630 ​ ​ ​ ​ ​ ​ ​ Total current assets ​ 47,330 ​ 65,524 ​ ​ ​ ​ ​ ​ ​ NON-CURRENT ASSETS: ​ ​ ​ ​ Deposits ​ ​ 6 ​ ​ 6 Operating lease right of use assets ​ 967 ​ 1,206 Long-term assets ​ ​ 143 ​ ​ 111 Property and equipment, net ​ ​ 899 ​ ​ 788 Intangible assets, net ​ ​ 5,404 ​ ​ 9,916 Goodwill ​ ​ 41,640 ​ ​ 41,640 ​ ​ ​ ​ ​ ​ ​ Total non-current assets ​ ​ 49,059 ​ ​ 53,667 ​ ​ ​ ​ ​ ​ ​ Total assets ​ $ 96,389 ​ $ 119,191 ​ The accompanying notes are an integral part of the consolidated financial statements. ​ F-5 Table of Contents DARIOHEALTH CORP. AND ITS SUBSIDIARIES CONSOLIDATED BALANCE SHEETS U.S. dollars in thousands (except stock and stock data) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ ​ 2023 2022 ​ ​ ​ ​ ​ ​ ​ LIABILITIES AND STOCKHOLDERS’ EQUITY ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ CURRENT LIABILITIES: ​ ​ ​ Trade payables ​ $ 1,131 ​ $ 2,322 Deferred revenues ​ 997 ​ 1,320 Operating lease liabilities ​ ​ 111 ​ ​ 293 Other accounts payable and accrued expenses ​ 6,300 ​ 6,592 Current maturity of long term loan ​ ​ 3,954 ​ ​ 8,823 ​ ​ ​ ​ ​ ​ ​ Total current liabilities ​ 12,493 ​ 19,350 ​ ​ ​ ​ ​ ​ ​ NON-CURRENT LIABILITIES ​ ​ ​ ​ ​ ​ Operating lease liabilities ​ 885 ​ 827 Long-term loan ​ ​ 24,591 ​ ​ 18,105 Warrant liability ​ 240 ​ 910 Other long-term liabilities ​ 36 ​ — ​ ​ ​ ​ ​ ​ ​ Total non-current liabilities ​ ​ 25,752 ​ ​ 19,842 ​ ​ ​ ​ ​ ​ ​ STOCKHOLDERS’ EQUITY ​ ​ ​ ​ Common stock of $ 0.0001 par value - authorized: 160,000,000 shares; issued and outstanding : 27,191,849 and 25,724,470 shares on December 31, 2023 and December 31, 2022, respectively ​ 3 ​ 3 Preferred stock of $ 0.0001 par value - authorized: 5,000,000 shares; issued and outstanding : 18,959 and 3,567 shares on December 31, 2023 and December 31, 2022, respectively ​ *) - ​ *) - Additional paid-in capital ​ 407,502 ​ 365,846 Accumulated deficit ​ ( 349,361 ) ​ ( 285,850 ) ​ ​ ​ ​ ​ ​ ​ Total stockholders’ equity ​ 58,144 ​ 79,999 ​ ​ ​ ​ ​ ​ ​ Total liabilities and stockholders’ equity ​ $ 96,389 ​ $ 119,191 ​ The accompanying notes are an integral part of the consolidated financial statements. *) Represents an amount lower than $1. ​ F-6 Table of Contents DARIOHEALTH CORP. AND ITS SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS U.S. dollars in thousands (except stock and stock data) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended ​ ​ December 31, ​ ​ 2023 2022 ​ ​ ​ ​ ​ ​ ​ Revenues: ​ ​ ​ ​ ​ ​ Services ​ $ 13,084 ​ $ 17,859 Consumer hardware ​ ​ 7,268 ​ ​ 9,797 Total revenues ​ ​ 20,352 ​ ​ 27,656 ​ ​ ​ ​ ​ ​ ​ Cost of revenues: ​ ​ ​ ​ ​ ​ Services ​ ​ 4,679 ​ ​ 5,324 Consumer hardware ​ ​ 5,303 ​ ​ 8,320 Amortization of acquired intangible assets ​ ​ 4,386 ​ ​ 4,357 Total cost of revenues ​ 14,368 ​ 18,001 ​ ​ ​ ​ ​ ​ ​ Gross profit ​ 5,984 ​ 9,655 ​ ​ ​ ​ ​ ​ ​ Operating expenses: ​ ​ ​ ​ Research and development ​ $ 20,248 ​ $ 19,649 Sales and marketing ​ 23,785 ​ 30,323 General and administrative ​ 18,140 ​ 16,493 ​ ​ ​ ​ ​ ​ ​ Total operating expenses ​ 62,173 ​ 66,465 ​ ​ ​ ​ ​ ​ ​ Operating loss ​ 56,189 ​ 56,810 ​ ​ ​ ​ ​ ​ ​ Total financial expenses, net ​ 3,174 ​ 5,379 ​ ​ ​ ​ ​ ​ ​ Loss before taxes ​ ​ 59,363 ​ ​ 62,189 ​ ​ ​ ​ ​ ​ ​ Income Tax ​ ​ 64 ​ ​ 4 ​ ​ ​ ​ ​ ​ ​ Net loss ​ $ 59,427 ​ $ 62,193 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Deemed dividend ​ $ 4,084 ​ $ 1,643 ​ ​ ​ ​ ​ ​ ​ Net loss attributable to shareholders ​ $ 63,511 ​ $ 63,836 ​ ​ ​ ​ ​ ​ ​ Net loss per share: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Basic and diluted loss per share of common stock ​ $ 1.93 ​ $ 2.54 Weighted average number of common stock used in computing basic and diluted net loss per share ​ 28,371,979 ​ 23,635,038 ​ The accompanying notes are an integral part of the consolidated financial statements. ​ ​ F-7 Table of Contents ​ DARIOHEALTH CORP. AND ITS SUBSIDIARIES STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY U.S. dollars in thousands (except stock and stock data) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Additional ​ ​ ​ ​ Total ​ ​ Common Stock ​ Preferred Stock ​ paid-in ​ Accumulated ​ stockholders’ ​ Number ​ Amount ​ Number ​ Amount ​ capital ​ deficit ​ equity Balance as of January 1, 2022 16,573,420 ​ $ 2 ​ 11,927 ​ $ *) - ​ $ 307,561 ​ $ ( 222,014 ) ​ $ 85,549 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Exercise of warrants 81,221 ​ ​ *) - ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — Issuance of common stock to consultants and service provider 62,926 ​ ​ *) - ​ — ​ ​ — ​ ​ 377 ​ ​ — ​ ​ 377 Issuance of common stock to directors and employees 29,755 ​ ​ *) - ​ — ​ ​ — ​ ​ 190 ​ ​ — ​ ​ 190 Deemed dividend related to issuance of Preferred Stock — ​ ​ — ​ — ​ ​ — ​ ​ 1,643 ​ ​ ( 1,643 ) ​ ​ — Conversion of preferred stock to common stock 2,778,450 ​ ​ *) - ​ ( 8,360 ) ​ ​ *) - ​ ​ — ​ ​ — ​ ​ *) - Issuance of warrants to service providers ​ — ​ ​ — ​ — ​ ​ — ​ ​ 3,105 ​ ​ — ​ ​ 3,105 Issuance of common stock, net of issuance cost ​ 4,747,761 ​ ​ 1 ​ — ​ ​ — ​ ​ 38,287 ​ ​ — ​ ​ 38,288 Issuance of Common Stock, net of issuance cost upon Acquisitions ​ 378,492 ​ ​ *) - ​ — ​ ​ — ​ ​ 1,186 ​ ​ — ​ ​ 1,186 Earnout resolution ​ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 328 ​ ​ ​ ​ ​ 328 Repurchase and retirement of common stock ​ ( 58,657 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ( 134 ) ​ ​ ​ ​ ​ ( 134 ) Stock-based compensation 1,131,102 ​ ​ — ​ — ​ ​ — ​ ​ 13,303 ​ ​ — ​ ​ 13,303 Net loss — ​ ​ — ​ — ​ ​ — ​ ​ — ​ ​ ( 62,193 ) ​ ​ ( 62,193 ) Balance as of December 31, 2022 25,724,470 ​ $ 3 ​ 3,567 ​ $ *) - ​ $ 365,846 ​ $ ( 285,850 ) ​ $ 79,999 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Exercise of Options ​ 4,800 ​ ​ *) - ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — Exercise of warrants ​ 86,983 ​ ​ *) - ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — Extinguishment of preferred stock in connection with preferred stock modification ​ — ​ ​ ​ ​ — ​ ​ ​ ​ ​ 984 ​ ​ ( 984 ) ​ ​ ​ Deemed dividend related to Preferred Stock — ​ ​ — ​ — ​ ​ — ​ ​ 3,100 ​ ​ ( 3,100 ) ​ ​ — Conversion of preferred stock to common stock 3,582 ​ ​ *) - ​ ( 10 ) ​ ​ *) - ​ ​ — ​ ​ — ​ ​ *) - Issuance of warrants to service providers ​ — ​ ​ — ​ — ​ ​ — ​ ​ 3,516 ​ ​ — ​ ​ 3,516 Issuance of common and preferred stock, net of issuance cost ​ 408,043 ​ ​ — ​ 15,402 ​ ​ — ​ ​ 16,482 ​ ​ — ​ ​ 16,482 Issuance of warrants related to loan agreement, net of issuance cost ​ — ​ ​ — ​ — ​ ​ — ​ ​ 1,389 ​ ​ — ​ ​ 1,389 Common stock related to earnout consideration ​ 76,637 ​ ​ *) - ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — Stock-based compensation 887,334 ​ ​ *) - ​ — ​ ​ — ​ ​ 16,185 ​ ​ — ​ ​ 16,185 Net loss — ​ ​ — ​ — ​ ​ — ​ ​ — ​ ​ ( 59,427 ) ​ ​ ( 59,427 ) Balance as of December 31, 2023 27,191,849 ​ $ 3 ​ 18,959 ​ $ *) - ​ $ 407,502 ​ $ ( 349,361 ) ​ $ 58,144 *) Represents an amount lower than $1. The accompanying notes are an integral part of the consolidated financial statements. ​ F-8 Table of Contents ​ DARIOHEALTH CORP. AND ITS SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS U.S. dollars in thousands ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended ​ ​ December 31, ​ ​ 2023 2022 ​ ​ ​ Cash flows from operating activities: ​ ​ ​ ​ ​ ​ Net loss ​ $ ( 59,427 ) ​ $ ( 62,193 ) Adjustments required to reconcile net loss to net cash used in operating activities: ​ ​ ​ ​ Stock-based compensation, common stock, and payment in stock to directors, employees, consultants, and service providers ​ 19,701 ​ 16,975 Depreciation ​ 473 ​ 356 Change in operating lease right of use assets ​ 239 ​ ( 919 ) Amortization of acquired intangible assets ​ 4,512 ​ 4,361 Decrease (increase) in trade receivables ​ 3,261 ​ ( 5,106 ) Increase in other accounts receivable, prepaid expense and long-term assets ​ ( 426 ) ​ ( 3 ) Decrease (increase) in inventories ​ 2,894 ​ ( 1,728 ) Decrease in trade payables ​ ( 1,191 ) ​ ( 2,787 ) Decrease in other accounts payable and accrued expenses ​ ( 256 ) ​ ( 1,314 ) Increase (Decrease) in deferred revenues ​ ( 323 ) ​ 125 Change in operating lease liabilities ​ ( 124 ) ​ 833 Remeasurement of earn-out ​ - ​ ( 497 ) Non cash financial expenses ​ 528 ​ 4,052 Other ​ ( 240 ) ​ — ​ ​ ​ ​ ​ ​ ​ Net cash used in operating activities ​ ( 30,379 ) ​ ( 47,845 ) ​ ​ ​ ​ ​ ​ ​ Cash flows from investing activities: ​ ​ Purchase of property and equipment ​ ​ ( 584 ) ​ ​ ( 442 ) Purchase of short-term investments ​ ​ ( 4,996 ) ​ ​ - Proceeds from redemption of short-term investments ​ ​ 5,033 ​ ​ - Purchase of intangible assets ​ ​ - ​ ​ ( 131 ) ​ ​ ​ ​ ​ ​ ​ Net cash used in investing activities ​ ( 547 ) ​ ( 573 ) ​ ​ ​ ​ ​ ​ ​ Cash flows from financing activities: ​ ​ ​ ​ Proceeds from issuance of common stock and prefunded warrants, net of issuance costs ​ 1,614 ​ 38,288 Proceeds from issuance of preferred stock, net of issuance costs ​ ​ 14,868 ​ ​ - Proceeds from borrowings on Loan agreement ​ ​ 29,604 ​ ​ 23,786 Repayment of long-term loan ​ ​ ( 27,833 ) ​ ​ — Repurchase and retirement of common stock ​ ​ — ​ ​ ( 134 ) ​ ​ ​ ​ ​ ​ ​ Net cash provided by financing activities ​ 18,253 ​ 61,940 ​ ​ ​ ​ ​ ​ ​ Increase in cash, cash equivalents and restricted cash and cash equivalents ​ ( 12,673 ) ​ 13,522 Cash, cash equivalents and restricted cash and cash equivalents at beginning of period ​ 49,470 ​ 35,948 Cash, cash equivalents and restricted cash and cash equivalents at end of period ​ ​ 36,797 ​ ​ 49,470 Supplemental disclosure of cash flow information: ​ ​ ​ ​ ​ ​ Cash paid during the period for interest on long-term loan ​ ​ 4,031 ​ ​ 1,876 Non-cash activities: ​ ​ ​ ​ ​ Right-of-use assets obtained in exchange for lease liabilities ​ ​ 136 ​ ​ 1,269 Earn-out extinguishment as part of WayForward acquisition ​ ​ - ​ ​ 328 ​ ​ ​ F-9 Table of Contents 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 business activities. c. The Company has incurred net losses since its inception. As of December 31, 2023, The Company has incurred recurring losses and negative cash flows since inception and has an accumulated deficit of $ 349,361 as of December 31, 2023. For the year ended December 31, 2023, the Company used approximately $ 30,379 of cash in operations. Management believes the Company has 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. The Company expect to incur future net losses and our transition to profitability is dependent upon, among other things, the successful development and commercialization of the Company’s products and the achievement of a level of revenues adequate to support the cost structure. Until the Company achieves profitability or generates positive cash flows, it will continue to be dependent on raising additional funds. The Company intends to fund its future operations through cash on hand, additional private and/or public offerings of debt or equity securities or a combination of the foregoing. There are no assurances, however, that the Company will be able to obtain an adequate level of financial resources that are required for the long-term development and commercialization of its product offerings. d. The Company’s Common Stock is listed on the Nasdaq Capital Market under the symbol “DRIO”. ​ F-10 Table of Contents DARIOHEALTH CORP. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS U.S. dollars in thousands 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 LabStyle expenses is denominated in New Israeli Shekels (“NIS”) (mainly cost of personnel), a substantial portion of its expenses is denominated in dollars. Accordingly, the Company’s management believes that the currency of the primary economic environment in which the Company and its 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 ASC 830, “Foreign Currency Matters”. 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 defines the term “chief operating decision maker” to be its Chief Executive Officer. The Company’s Chief Executive Officer reviews the financial information presented on consolidated basis for purposes of allocating resources and evaluating its financial performance. Accordingly, the Company has determined that it operates as a single reportable segment. 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-11 Table of Contents DARIOHEALTH CORP. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS U.S. dollars in thousands NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.) f. 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 guaranties issued to the landlords of the Company’s offices and credit card payments. The short-term restricted bank deposits are denominated in NIS and USD and bear interest at an average rate of 5.2 % and 0.61 % as of December 31, 2023 and 2022, respectively. The short-term restricted bank deposits are presented at their cost, including accrued interest. As of December 31, 2023, and 2022, the Company had a short-term restricted bank deposit which are used as collateral for rent and gratuity in the amount of $ 229 and $ 113 , respectively. As of December 31, 2023, and 2022, the Company had short-term restricted bank deposits which are used as collateral for credit payments in amounts of $ 63 and $ 52 , respectively. The following table provides a reconciliation of the cash balances reported on the balance sheets and the cash, cash equivalents and short-term restricted bank deposits balances reported in the statements of cash flows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ ​ 2023 2022 ​ ​ ​ ​ ​ ​ ​ Cash, and cash equivalents as reported on the balance sheets ​ $ 36,797 $ 49,357 Short-term restricted bank deposits ​ $ — $ 113 ​ ​ ​ ​ ​ ​ ​ Cash, restricted cash, cash equivalents, and restricted cash and cash equivalents as reported in the statements of cash flows ​ $ 36,797 $ 49,470 ​ g. Trade receivables, net: The Company records trade receivables for amounts invoiced and yet unbilled invoices. The Company’s expected 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, 2023, and 2022, credit loss allowance was immaterial. h. 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. Total write-downs during the years ended December 31, 2023, and 2022 amounted to $ 121 and $ 88 , respectively. F-12 Table of Contents DARIOHEALTH CORP. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS U.S. dollars in thousands NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.) i. 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 ​ j. 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 may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted cash flows expected to be generated by the assets. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. For the years ended December 31, 2023, and 2022, no impairment was recorded. k. Revenue recognition The Company recognizes revenue in accordance with ASC 606, “Revenue from contracts with customers,” when (or as) it satisfies performance obligations by transferring promised products or services to its customers in an amount that reflects the consideration the Company expects to receive. The Company applies the following five steps: (1) identify the contract with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract, and (5) recognize revenue when a performance obligation is satisfied. The Company applied the practical expedient in ASC 606 and did not evaluate payment terms of one year or less for the existence of a significant financing component. 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 hardware and services. 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. ​ F-13 Table of Contents DARIOHEALTH CORP. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS U.S. dollars in thousands NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.) Consumers revenue The Company considers customer and distributor purchase orders to be contracts with a customer. For each contract, the Company considers 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, 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 products is recognized when control of the product is transferred to the customer (i.e., when the Company’s performance obligation is satisfied), which typically occurs at shipment. The revenues from fixed-price services are recognized ratably over the contract period. Commercial revenue – B2B2C The Company provides mobile and web-based digital therapeutics health management programs to employers and health plans for their employees or covered individuals. Such programs include among others, 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. 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 is considered a single continuous service comprised of a series of distinct services that are substantially the same and have the same pattern of transfer (i.e., distinct days of service). These services are consumed as they are received, and the Company recognizes revenue each month using the variable consideration allocation exception. Revenue is recognized either on a per engaged member per month (PEMPM) or a per employee per month (PEPM) basis. 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. Commercial revenue - Strategic partnerships The Company has also entered into contracts (Note 6 ) with a preferred partner and a health plan provider in which the Company provides data license, development and implementation services. l. 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. ​ F-14 Table of Contents DARIOHEALTH CORP. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS U.S. dollars in thousands NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.) m. 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. As of December 31, 2023, the Company's major customer accounted for 66.5 % of the Company's accounts receivable balance. For the year ended December 31, 2023 and December 31, 2022, the Company's major customer accounted for 29.9 % and 39.8 %, respectively, of the Company's revenue in the period. n. 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, 2023, and 2022, no liability for unrecognized tax benefits was recorded. o. Research and development costs: Research and development costs are charged to the consolidated statements of comprehensive loss, as incurred. ​ F-15 Table of Contents DARIOHEALTH CORP. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS U.S. dollars in thousands NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.) p. 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. q. 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. ​ F-16 Table of Contents DARIOHEALTH CORP. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS U.S. dollars in thousands NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.) 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 Loan Facility, and warrants liability were measured at fair value using Level 3 unobservable inputs (see note 8). r. 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. 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 non-current liabilities. Changes in the estimated fair value of the warrants are recognized in “Financial expenses, net” in the consolidated statements of operations. s. 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 Convertible Preferred shares would be entitled to dividends that would be distributed to the holders of Common Stock, based on the conversion ratio, assuming conversion of all Convertible Preferred shares into shares of Common Stock. The Company’s basic net loss per share is calculated by dividing net loss attributable to common and preferred stockholders by the weighted-average number of shares, 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. ​ F-17 Table of Contents DARIOHEALTH CORP. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS U.S. dollars in thousands NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.) t. 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, 2023 and 2022 amounted to $ 947 and $ 1,136 , 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 $ 22.5 per year (for certain employees over 50 years of age the maximum contribution is $ 30 per year), of their annual compensation to the plan through salary deferrals, subject to Internal Revenue Service limits. u. 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, 2023, and 2022, 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. v. 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 to not recognize a lease liability or right-of-use (“ROU”) asset for leases with a term of twelve months or less. The Company also elected the practical expedient to not separate lease and non-lease components for its leases. ROU assets represent the right to use an underlying asset for the lease term and lease liabilities represent the obligation to make 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. ​ F-18 Table of Contents DARIOHEALTH CORP. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS U.S. dollars in thousands NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.) 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. w. 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. x. Goodwill: Goodwill represents the excess of the purchase price in a business combination over the fair value of the net tangible and intangible assets 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. For the years ended December 31, 2023 and 2022, no impairment of goodwill has been recorded. ​ F-19 Table of Contents DARIOHEALTH CORP. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS U.S. dollars in thousands NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.) y. Recently Adopted Accounting Pronouncements (i) In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). ASU 2016-13 amends the impairment model to utilize an expected loss methodology in place of the currently used incurred loss methodology, which will result in the timelier recognition of losses, with an effective date for the first quarter of fiscal year 2020. In November 2019, the FASB issued ASU No. 2019-10 which delayed the effective date of ASU 2016-13 for smaller reporting companies (as defined by the SEC) and other non- Securities and Exchange Commission (“SEC”) reporting entities to fiscal years beginning after December 15, 2022, including interim periods within those fiscal periods. The Company adopted the standard effective as of January 1, 2023, and the adoption of this standard did not have material impact on the Company's consolidated financial statements. (ii) In August 2020, the FASB issued ASU 2020-06, “Debt - Debt with Conversion and Other Options (subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (subtopic 815-40)” (“ASC470-20”). The new standard reduces the number of accounting models in ASC 470-20 that require separate accounting for non-bifurcated embedded conversion features. As a result, convertible instruments will no longer be subject to the cash conversion features model or to the beneficial conversion features model and be accounted for as a single unit of account as long as no other features require bifurcation and recognition as derivatives, The Company adopted ASU 2020-06, effective January 1, 2023, using the modified retrospective method. The prior period consolidated financial statements have not been retrospectively adjusted and continue to be reported under the accounting standards in effect for those periods. The adoption of this standard did not have a material impact on the Company's consolidated financial statements. (iii) In October 2021, the FASB issued ASU 2021-08, which requires companies to apply ASC 606 to recognize and measure contract assets and contract liabilities from contracts with customers acquired in a business combination. This creates an exception to the general recognition and measurement principle in ASC 805. requires companies to apply ASC 606 to recognize and measure contract assets and contract liabilities from contracts with customers acquired in a business combination. For the Company, the guidance is effective for fiscal years beginning after 15 December 2022 and interim periods within those fiscal years. The Company completed its evaluation of ASU 2021-08, which we adopted on January 1, 2023. The adoption of ASU 2021-08 did not have a material impact on the Company’s consolidated financial statements and related disclosures. z. Recently issued accounting pronouncements, not yet adopted: (i) In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280), Improvements to Reportable Segment Disclosures, which expands annual and interim disclosure requirements for reportable segments, primarily through enhanced disclosures about significant segment expenses. In addition, it provides new segment disclosure requirements for entities with a single reportable segment. The guidance will be effective for the Company for annual periods beginning January 1, 2024 and for interim periods beginning January 1, 2025. Early adoption is permitted. The Company is currently evaluating the impact on its financial statement disclosures. (ii) In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740), Improvements to Income Tax Disclosures, which requires disaggregated information about the effective tax rate reconciliation as well as information on income taxes paid. The guidance will be effective for the Company for annual periods beginning January 1, 2025, with early adoption permitted. The Company is currently evaluating the impact on its financial statement disclosures. F-20 Table of Contents 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, ​ 2023 2022 ​ ​ ​ ​ ​ ​ ​ Prepaid expenses ​ $ 1,536 ​ $ 908 Costs to fulfill a contract ​ ​ 238 ​ ​ 483 Government authorities ​ 250 ​ 239 ​ ​ ​ ​ ​ ​ ​ ​ ​ $ 2,024 ​ $ 1,630 ​ ​ ​ ​ ​ NOTE 4:- ACQUISITIONS ​ Technology Purchase of Physimax Technologies Ltd. On March 31, 2022 (the “Acquisition Date”), the Company completed the acquisition, through its subsidiary LabStyle, of a technology from Physimax Technologies Ltd (“Physimax Technology”). The Company considered this transaction as an asset acquisition . The consideration transferred included the issuance of 256,660 shares of its common stock subjected to certain terms of lock-up periods valued at $ 1,186 , a cash payment of $ 500 , of which $ 400 was paid during the fourth quarter of 2021, and the remaining during the second quarter of 2022, The total consideration transferred in the acquisition of Physimax Technology was $ 1,686 . In addition, the Company incurred acquisition-related costs in an amount of $ 131 . ​ F-21 Table of Contents DARIOHEALTH CORP. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS U.S. dollars in thousands NOTE 4:- ACQUISITIONS (Cont.) ​ Purchase price allocation: Under asset acquisition accounting principles, the total purchase price was allocated to Physimax Technology as set forth below. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Amortization ​ ​ ​ ​ period (Years) ​ ​ ​ ​ ​ ​ ​ Technology ​ $ 1,817 ​ ​ 3 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ NOTE 5:- INVENTORIES ​ Inventory consists of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ ​ 2023 ​ 2022 ​ ​ ​ ​ ​ ​ ​ Raw materials ​ $ 1,015 $ 1,346 Finished products ​ 4,047 ​ 6,610 ​ ​ ​ ​ ​ ​ ​ ​ ​ $ 5,062 ​ $ 7,956 ​ ​ 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 revenue directly from individuals through a la carte offering and membership plans. The Company also contracts with enterprise business market groups to provide digital therapeutics solutions for individuals to receive access to services through the Company’s commercial arrangements. Agreement with Preferred Partner On February 28, 2022, the Company entered into an exclusive preferred partner, co-promotion, development and license agreement for a term of five (5) years (the “Exclusive Agreement”). Pursuant to the Exclusive Agreement, the Company will provide a license to access and use certain Company data. In addition, the Company may provide development services for new products of the other party. The aggregate consideration under the contract is up to $ 30 million over the initial term of the Exclusive Agreement, consisting of (i) an upfront payment, (ii) payments for development services per development plan to be agreed upon annually and (iii) certain contingent milestone payments upon meeting certain net sales and enrollment rate milestones at any time during the term of the Exclusive Agreement. ​ F-22 Table of Contents DARIOHEALTH CORP. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS U.S. dollars in thousands NOTE 6: - REVENUES (Cont.) Since the contract consideration includes variable consideration, as of December 31, 2023, the Company excluded the variable payments from the transaction price since it is not probable that a significant reversal in the amount of cumulative revenue recognized will occur when the uncertainty associated with the variable consideration is resolved. In 2022, the first development plan was approved and completed. The Company concluded that the first development plan should be accounted for as a separate contract. As such, for the year ended December 31, 2022, the Company recognized $ 4,000 in revenues for the completion of the first development plan. On December 13, 2022, the second development plan was approved by the parties. The Company concluded that the second development plan should be accounted for as a separate contract which includes development services performance obligations, satisfied over time, based on labor hours. As such, for the year ended December 31, 2022, the Company recognized $ 1,506 in revenues, and for the year ended December 31, 2023, the Company recognized $ 2,494 in revenues for the completion of the second development plan . On June 15, 2023, the third development plan (initiated in April 2023), was approved by the parties. The Company concluded that the third development plan should be accounted for as a separate contract which includes development services performance obligations, satisfied over time , based on labor hours. The Company determined that this method under ASC 606 best measures progress towards satisfying the performance obligation and faithfully depicts the transfer of goods and services. For the year ended December 31, 2023, the Company recognized $ 2,098 in revenues, with additional revenues from the third development plan of $ 602 expected to be recognized by the end of June 2024. In July 2023, the Company entered into an amended and restated strategic agreement with the preferred partner. Pursuant to the amendment, the parties adjusted certain pre-agreed economic parameters, including revenue share adjustments and to allow to expedite certain development milestones agreed upon in the parties’ initial agreement. Agreement with National Health Plan On October 1, 2021, the Company entered into a Master Service Agreement (“MSA”) and into a SOW ("October SOW") with a national health plan (“Health Plan”). Pursuant to the October SOW, the Company will provide the Health Plan access to web and app-based platform, for behavioral health. The Company has concluded that the Contract contained a single performance obligation – to provide access to the Company's platform. The consideration in the Contract was based entirely on customer usage. On August 2022, the Company entered into an additional SOW (“August SOW”) with the Health Plan according to which, the Company will provide implementation service and shall develop additional features to be included in the platform. The Company concluded that the August SOW should be accounted for as a separate contract. The Company has concluded that the August SOW contained two performance obligations as follows: (i) Digital Behavioral Health Navigation Platform Implementation. This performance obligation includes configuration and implementation of the platform. (ii) Enhancements to the Digital Behavioral Health Navigation Platform. This performance obligation includes adding additional features and capabilities to the Platform. ​ F-23 Table of Contents DARIOHEALTH CORP. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS U.S. dollars in thousands NOTE 6: - REVENUE (Cont.) The August SOW includes a fixed consideration in the amount of $ 2,650 . The Company allocated the consideration between the two performance obligations based on standalone selling prices. The Company determined the standalone selling prices based on the expected cost plus a margin approach. On February 21, 2023, the Company entered into a change order with the Health Plan according to which the Company will provide additional implementation services and shall develop additional features to be included in the platform. The change order includes a fixed consideration in the amount of $ 90 . For the years ended December 31, 2023, and December 31, 2022 the Company recognized revenues of $ 962 and $ 1,778 respectively for the completion of the August SOW. Revenue Source: The following tables represent the Company total revenues for the year ended December 31, 202 3 and 202 2 disaggregated by revenue source: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ ​ 2023 2022 ​ ​ ​ ​ ​ ​ ​ Commercial - Business-to-Business-to-Consumer (“B2B2C”) ​ $ 5,005 $ 3,593 Commercial - Strategic partnerships ​ ​ 7,054 ​ ​ 12,784 Consumers ​ ​ 8,293 ​ ​ 11,279 ​ ​ ​ ​ ​ ​ ​ ​ ​ $ 20,352 $ 27,656 ​ 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 all remaining performance obligations to be satisfied in less than a year. The following table presents the significant changes in the deferred revenue balance during the year ended December 31, 202 3 : ​ ​ ​ ​ Balance, beginning of the period $ 1,320 New performance obligations ​ ​ 5,353 Reclassification to revenue as a result of satisfying performance obligations ​ ​ ( 5,676 ) ​ ​ ​ ​ Balance, end of the period $ 997 ​ 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. F-24 Table of Contents 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 3 , consisted of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ December 31, ​ ​ 2023 ​ 2022 Costs to fulfill a contract, current ​ $ 238 $ 483 Costs to fulfill a contract, noncurrent ​ 59 ​ 41 ​ ​ ​ ​ ​ ​ ​ Total costs to fulfill a contract ​ $ 297 ​ $ 524 ​ Costs to fulfill a contract were as follows: ​ ​ ​ ​ ​ ​ ​ Costs to ​ ​ ​ fulfill a contract ​ ​ ​ ​ Beginning balance as of December 31, 2022 ​ $ 524 Additions ​ ​ 474 Cost of revenue recognized ​ ​ ( 701 ) ​ ​ ​ ​ Ending balance as of December 31, 2023 ​ ​ 297 ​ ​ F-25 Table of Contents DARIOHEALTH CORP. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS U.S. dollars in thousands ​ ​ ​ ​ NOTE 7:- DEBT Loan Facility ​ On May 1, 2023, the Company refinanced its existing $ 25,000 credit facility with a new $ 30,000 credit facility in the LSA by and between Borrowers and the Avenue Lenders. The LSA provides for a four-year secured credit facility in an aggregate principal amount of up to $ 40,000 , of which $ 30,000 was made available on the closing date and up to $ 10,000 may be made available on the later of July 1, 2023, or the date the Avenue Lenders approve the issuance of the Discretionary Tranche. On May 1, 2023, the Borrowers closed on the Initial Tranche, less certain fees and expenses payable to or on behalf of the Avenue Lenders. ​ During the term of the Avenue Loan Facility, interest payable in cash by the Borrowers shall accrue on any outstanding balance due under the Avenue Loan Facility at a rate per annum equal to the higher of (x) the sum of four one-half percent ( 4.50 %) plus the prime rate as published in the Wall Street Journal and (y) twelve and one-half percent ( 12.50 %). During an event of default, any outstanding amount under the Avenue Loan Facility will bear interest at a rate of 5.00 % in excess of the otherwise applicable rate of interest. The Borrowers will pay certain fees with respect to the Avenue Loan Facility, including an upfront commitment fee, an administration fee, and a prepayment premium, as well as certain other fees and expenses of the Avenue Lenders. On the closing date, and with respect to the Initial Tranche only, the Company agreed to issue for each Avenue Lender a warrant (the “Warrant”) to purchase up to 292,442 shares of the Company’s common stock, at an exercise price of $ 3.334 per share (also see note 20f), which shall have a term of five years from the issuance date. The Warrant contains customary share adjustment provisions, as well as adjustments to the number of shares issuable upon exercise of the Warrant and the exercise price in the event of a bona fide equity raise prior to September 30, 2023, at a price less than the then current exercise price. As of December 31, 2023, the customary share adjustment provisions and adjustments related to a bona fide equity raise prior to September 30, 2023, remain unchanged. ​ The Avenue Lenders have the right, at any time while the Avenue Loan Facility is outstanding, to convert an amount of up to $ 2,000 of the principal amount of the outstanding Avenue Loan Facility into Borrower’s unrestricted shares of the Company’s common stock at a price per share equal to 120 % of the then effective exercise price of the Avenue Warrant(Also see note 20f). On the closing date, and with respect to the Initial Tranche only, the Company agreed to issue each Avenue Lender the Avenue Warrant to purchase up to 292,442 shares of the Company’s common stock, at an exercise price of $ 3.334 per share, which shall have a term of five years from the issuance date. ​ The Company concluded that Avenue Loan and the Avenue Warrants are freestanding financial instruments since these instruments are legally detachable and separately exercisable. The Company has concluded that the warrants meet 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 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 Loan at fair value in the amount of $ 28,215 and the remaining amount of $ 1,389 was allocated to the warrants. ​ During the year ended December 31, 2023 and 2022, the Company recognized $ 187 of remeasurement income related to the Initial Commitment Amount, which was included as part of financial expenses in the Company's statements comprehensive loss. During the year ended December 31, 2023, the Company did not recognize any instrument specific credit risk fair value adjustment. ​ F-26 Table of Contents DARIOHEALTH CORP. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS U.S. dollars in thousands NOTE 7: - DEBT (Cont.) Warrant Liability ​ On June 9, 2022 (the closing date of the Orbimed Loan), the Company agreed to issue Orbimed a warrant (the “Orbimed Warrant”) to purchase up to 226,586 shares of the Company’s common stock, at an exercise price of $ 5.79 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 $ 4.00 per share. ​ The Company has concluded that the warrants are 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. ​ ​ ​ ​ ​ F-27 Table of Contents DARIOHEALTH CORP. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS U.S. dollars in thousands NOTE 8:- FAIR VALUE MEASUREMENTS ​ 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 (as defined herein), and warrant liability were measured at fair value using Level 3 unobservable inputs until the payoff date of May 1, 2023. Subsequently, a new loan agreement (Note 7) was obtained, and both the new loan and the warrant liability were measured at fair value. ​ 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, 2023 ​ Fair Value ​ Level 1 ​ Level 2 ​ Level 3 ​ ​ ​ (in thousands) ​ ​ Financial liabilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Current maturity of long term loan $ 3,954 ​ $ — ​ $ — ​ $ 3,954 Long term loan ​ ​ 24,591 ​ ​ — ​ ​ — ​ ​ 24,591 Warrant liability ​ ​ 240 ​ ​ — ​ ​ — ​ ​ 240 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total financial liabilities ​ $ 28,785 ​ ​ $ — ​ $ — ​ $ 28,785 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2022 ​ ​ Fair Value ​ Level 1 ​ Level 2 ​ Level 3 ​ ​ ​ ​ (in thousands) ​ ​ Financial liabilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Current maturity of long term loan ​ ​ 8,823 ​ ​ — ​ ​ — ​ ​ 8,823 Long term loan ​ ​ 18,105 ​ ​ — ​ ​ — ​ ​ 18,105 Warrant liability $ 910 ​ ​ — ​ ​ — ​ ​ 910 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total financial liabilities $ 27,838 ​ $ — ​ $ — ​ $ 27,838 ​ ​ Loan Facilities On June 9, 2022, the Company entered into a Credit Agreement (the “Credit Agreement”), by and between the Company, as borrower, and OrbiMed Royalty and Credit Opportunities III, LP, as the lender (the “Orbimed Lender”). The Credit Agreement provides for a five-year senior secured credit facility in an aggregate principal amount of up to $ 50,000 (the “Orbimed Loan”), of which $ 25,000 was made available on the closing date (the “Initial Commitment Amount”) and up to $ 25,000 was available on or prior to June 30, 2023, subject to certain revenue requirements (the “Delayed Draw Commitment Amount”). On June 9, 2022, the Company closed on the Initial Commitment Amount, less certain fees and expenses payable to or on behalf of the Orbimed Lender. The company did not draw the Delayed Draw Commitment Amount. ​ F-28 Table of Contents DARIOHEALTH CORP. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS U.S. dollars in thousands NOTE 8:- FAIR VALUE MEASUREMENTS (Cont.) On May 1, 2023, the Company entered into a Loan and Security Agreement, and Supplement thereto (the “LSA”), by and between the Company and its subsidiary PsyInnovations Inc. (“PsyInnovations”), collectively as the borrowers (the “Borrowers”) and Avenue Venture Opportunities Fund II, L.P. and Avenue Venture Opportunities Fund, L.P., collectively as the lenders (the “Avenue Lenders”) (Note 6). Upon the initial closing of the LSA, the Company repaid the Orbimed Loan to the Orbimed Lender. The LSA provides for a four-year secured credit facility in an aggregate principal amount of up to $ 40,000 (the “Avenue Loan Facility”), of which $ 30,000 was made available on the closing date (the “Initial Tranche”) and up to $ 10,000 (the “Discretionary Tranche”) may be made available on the later of July 1, 2023, or the date the Avenue Lenders approve the issuance of the Discretionary Tranche. On May 1, 2023, the Borrowers closed on the Initial Tranche, less certain fees and expenses payable to or on behalf of the Avenue Lenders ​ The fair value of the Avenue Loan Facility is recognized in connection with the Company’s LSA with respect to the Initial Commitment Amount only (Note 7). 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 fair value of the Avenue Loan Facility, which is reported within non-current liabilities (Maturity Date - May 1, 2027) on the consolidated balance sheets, is estimated by the Company at each reporting date based on significant inputs that are generally determined based on relative value analyses. ​ The Avenue 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 Avenue Loan Facility origination, or May 1, 2023, the discount rate was arrived at by calibrating the loan amount of $ 30 million with the fair value of the warrants of $ 1,413 and the loan terms interest rate equal to the greater of (i) the sum of four and one-half percent ( 4.50 %) plus the Prime Rate, and (ii) twelve and one-half percent ( 12.50 %). During an event of default, any outstanding amount under the Avenue Loan Facility will bear interest at a rate of 5.00% in excess of the otherwise applicable rate of interest. The fair value of the Avenue Loan Facility, as of December 31, 2023, 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 year ended December 31, 2023, the change in the fair value of the loan was recorded in earnings since the Company concluded that those were not related to instrument-specific credit risk was required. ​ Warrant Liability The fair value of the warrant liability is recognized in connection with the Company’s Credit Agreement with the Orbimed Lender and with respect to the Initial Commitment Amount only (Note 8). The fair value of the 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 warrant liability, which is reported within non-current liabilities on the consolidated balance sheets, 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. ​ The fair value of the warrant liability was estimated using a Monte-Carlo simulation valuation technique, with the following significant unobservable inputs (Level 3): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ ​ December 31, ​ ​ ​ 2023 ​ ​ 2022 Stock price ​ $ 1.72 ​ $ 7.45 ​ Exercise price ​ ​ 5.79 ​ ​ ​ 6.62 ​ Expected term (in years) ​ ​ 5.44 ​ ​ ​ 7.00 ​ Volatility ​ ​ 96.8 % ​ ​ ​ 148.8 % ​ Dividend rate ​ ​ — ​ ​ ​ — ​ Risk-free interest rate ​ ​ 3.88 % ​ ​ ​ 3.13 % ​ F-29 Table of Contents 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 the summary of the changes in the fair value of our Level 3 financial instruments: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2023 ​ ​ ​ Long-Term Loan ​ ​ Warrant Liability Balance as of January 1, 2023 ​ $ 26,928 ​ $ 910 Issuance ​ ​ 28,587 ​ ​ — Principal repayments on long-term loan ​ ​ ( 27,833 ) ​ ​ — Change in fair value ​ ​ 863 ​ ​ ( 670 ) ​ ​ ​ ​ ​ ​ ​ Balance as of December 31, 2023 ​ $ 28,545 ​ $ 240 ​ ​ ​ 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 2024 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 Company elected to not recognize a lease liability and a ROU asset for lease with a term of twelve months or less. The components of lease costs, lease term and discount rate are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended ​ ​ ​ December 31, ​ ​ ​ 2023 ​ ​ ​ ​ ​ Operating lease cost $ 392 ​ Short term lease cost ​ 278 ​ Variable lease cost ​ ​ 10 ​ Total lease cost ​ $ 680 ​ ​ ​ ​ Weighted Average Remaining Lease Term ​ ​ Operating leases ​ 4.37 years ​ ​ ​ ​ ​ Weighted Average Discount Rate ​ ​ Operating leases ​ 9.38 % ​ ​ F-30 Table of Contents DARIOHEALTH CORP. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS U.S. dollars in thousands NOTE 9:- LEASES The following is a schedule, by years, of maturities of lease liabilities as of December 31, 2023: ​ ​ ​ ​ ​ ​ Operating ​ ​ Leases ​ ​ ​ ​ 2024 $ 124 2025 ​ ​ 305 2026 ​ ​ 279 2027 ​ ​ 279 2028 ​ ​ 284 Total undiscounted cash flows ​ ​ 1,271 Less imputed interest ​ ​ ( 275 ) Present value of lease liabilities ​ $ 996 ​ Supplemental cash flow information related to leases are as follows: ​ ​ ​ ​ ​ ​ Year ended ​ ​ December 31, ​ 2023 ​ ​ ​ ​ Cash payments related to operating lease $ 328 ​ ​ ​ ​ New right-of-use assets obtained in exchange for operating lease obligations $ 136 ​ ​ ​ NOTE 10:- PROPERTY AND EQUIPMENT, NET Composition of assets, grouped by major classification, is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ 2023 2022 Cost: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Computers and peripheral equipment ​ $ 937 ​ $ 944 Office furniture and equipment ​ 137 ​ 154 Production lines ​ 988 ​ 988 Leasehold improvement ​ 326 ​ 141 ​ ​ ​ ​ ​ ​ ​ ​ ​ 2,388 ​ 2,227 Accumulated depreciation: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Computers and peripheral equipment ​ 542 ​ 534 Office furniture and equipment ​ 43 ​ 60 Production lines ​ 874 ​ 773 Leasehold improvement ​ 30 ​ 72 ​ ​ ​ ​ ​ ​ ​ ​ ​ 1,489 ​ 1,439 ​ ​ ​ ​ ​ ​ ​ Property and equipment, net ​ $ 899 ​ $ 788 ​ ​ F-31 Table of Contents DARIOHEALTH CORP. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS U.S. dollars in thousands NOTE 10:- PROPERTY AND EQUIPMENT, NET Depreciation expenses for the year ended December 31, 2023 and 2022 amounted to $ 392 and $ 356 , respectively. During 2023 the Company recorded a reduction of $ 81 to the cost and accumulated depreciation of fully depreciated computers equipment no longer in use. ​ NOTE 11:- OTHER INTANGIBLE ASSETS , NET ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ a. Finite-lived other intangible assets: ​ ​ ​ ​ ​ ​ ​ Weighted ​ ​ December 31, ​ December 31, ​ Average ​ ​ 2023 ​ 2022 ​ Remaining Life Original amounts: ​ ​ ​ ​ ​ ​ ​ ​ Technology ​ $ 16,936 ​ $ 16,936 ​ 1.2 Brand ​ 376 ​ 376 ​ 0.4 ​ ​ 17,312 ​ 17,312 ​ ​ Accumulated amortization: ​ ​ ​ ​ ​ ​ ​ ​ Technology ​ 11,586 ​ 7,199 ​ ​ Brand ​ 322 ​ 197 ​ ​ ​ ​ 11,908 ​ 7,396 ​ ​ Other intangible assets, net ​ $ 5,404 ​ $ 9,916 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ b. Amortization expenses for the years ended December 31, 2023 and December 31, 2022 amounted to $ 4,512 and $ 4,361 , respectively. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ c. Estimated amortization expense: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the year ended December 31, ​ ​ ​ ​ ​ ​ ​ ​ 2024 ​ ​ 4,452 ​ ​ ​ ​ 2025 ​ ​ 952 ​ ​ ​ ​ ​ ​ ​ $ 5,404 ​ ​ ​ ​ ​ ​ ​ ​ ​ NOTE 12:- OTHER ACCOUNTS PAYABLE AND ACCRUED EXPENSES ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ 2023 2022 Employees and payroll accruals ​ $ 4,073 ​ $ 4,407 Accrued expenses ​ 2,227 ​ 2,185 ​ ​ ​ ​ ​ ​ ​ ​ ​ $ 6,300 ​ $ 6,592 ​ ​ F-32 Table of Contents DARIOHEALTH CORP. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS U.S. dollars in thousands NOTE 13:- 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 participated 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 US 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, prior to its acquisition by the Company, received $ 1,011 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 $ 932 as of December 31, 2023. During the Year ended December 31,2023 and December 31, 2022 the company recorded IIA royalties related to the acquisition of Physimax Technology in amount of $ 1 and $ 120 , respectively. ​ NOTE 14:- LONG-LIVED ASSETS As of December 31, 2023, substantially all of the Company long live assets are located in Israel. 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 Reform On December 22, 2017, the U.S. Tax Cuts and Jobs Act of 2017 (the “TCJA”) was signed into law. The TCJA makes broad and complex changes to the Internal Revenue Code of 1986 (the “Code”) that may impact the Company’s provision for income taxes. The changes include, but are not limited to: ● Decreasing the corporate income tax rate from 35 % to 21 % effective for tax years beginning after December 31, 2017 (“Rate Reduction”); ● The Deemed Repatriation Transition Tax; and ● Taxation of Global Intangible Low-Taxed Income (“GILTI”) earned by foreign subsidiaries beginning after December 31, 2017. The GILTI tax imposes a tax on foreign income in excess of a deemed return on tangible assets of foreign corporations. Net Operating Losses- Before the TCJA, taxable losses generated in the U.S. were able to be carried back for two years or carried forward for 20 years to offset prior/future year taxable income. TCJA changes the rule, and allows losses generated after 2017 (i.e. starting in 2018) to be carried forward indefinitely, but only to offset 80% of future year income. Carryback losses are no longer allowed. F-33 Table of Contents DARIOHEALTH CORP. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS U.S. dollars in thousands NOTE 15:- TAXES ON INCOME (Cont.) In response to the COVID-19 pandemic, the U.S. passed the Coronavirus Aid, Relief, and Economic Security Act (CARES) in March 2020. The CARES Act changed the treatment of net operating losses (“NOLS”) generated in tax years 2018, 2019 and 2020. Losses generated in these years are able to be carried backward for 5 years, and carried forward indefinitely, without the 80% limitation. Tax rates applicable to Labstyle and Upright: The Corporate tax rate in Israel in 2022 and 2023 was 23 %. Net operating loss carryforward: Labstyle has accumulated net operating losses for Israeli income tax purposes as of December 31, 2023, in the amount of approximately $ 189,653 . The net operating losses may be carried forward and offset against taxable income in the future for an indefinite period. As of December 31, 2023, the Company and WayForward had a U.S. federal net operating loss carryforward of approximately $ 36,786 and $ 8,084 , of which $ 7,120 and $ 371 , respectively, were generated from tax years 2011-2017 and can be carried forward and offset against taxable income and that expires during the years 2031 to 2037 . Under Sections 382 and 383 of the IRC, utilization of the U.S. loss carryforward may be subject to substantial annual limitation due to the “change in ownership” provisions of the Code and similar state provisions. The annual limitations may result in the expiration of losses before utilization. Since the Company has not yet utilized the losses to offset income, no study has been performed to assess the potential limitations, but when relevant, a study will be performed. The remaining NOLs of the Company and WayForward are approximately $ 29,666 and $ 7,713 , were generated in years 2018-2022, and are subject to the TCJA, which modified the rules regarding utilization of NOLs. NOLs generated after December 31, 2017, can only be used to offset 80 % of taxable income with an indefinite carryforward period for unused carryforwards (i.e., they should not expire). Utilization of the federal and state net operating losses and credits may be subject to a substantial annual limitation due to an additional ownership change. The annual limitation may result in the expiration of net operating losses and credits before utilization and in the event, the Company has a change of ownership, utilization of the carryforwards could be restricted. As discussed above, under the CARES Act, the losses from 2018-2023 are excluded from the limitation and can be carried forward indefinitely to offset 100 % of future net income. ​ F-34 Table of Contents 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, ​ 2023 2022 Deferred tax assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net operating loss and capital losses carry forward ​ $ 51,533 ​ $ 45,790 Temporary differences - Research and development expenses ​ ​ 3,815 ​ ​ 4,058 Temporary differences - Accrued employees costs ​ 370 ​ 366 Temporary differences - Stock-based compensation ​ 4,328 ​ 3,734 Temporary differences - Credit Facility ​ — ​ 723 Temporary differences - Loan ​ 306 ​ — Temporary differences - Intangible Assets ​ ​ 152 ​ ​ 65 Temporary differences - Lease Liability ​ 229 ​ 253 ​ ​ ​ ​ ​ ​ ​ Deferred tax assets: ​ ​ 60,733 ​ ​ 54,989 Less: Valuation allowance ​ ​ ( 58,303 ) ​ ​ ( 52,504 ) ​ ​ ​ ​ ​ ​ ​ Deferred tax assets ​ ​ 2,430 ​ ​ 2,485 ​ ​ ​ ​ ​ ​ ​ Deferred tax liability: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Temporary differences - Intangible Assets ​ ​ ( 2,208 ) ​ ​ ( 2,208 ) Temporary differences - Lease Right of Use Assets ​ ​ ( 222 ) ​ ​ ( 277 ) ​ ​ ​ ​ ​ ​ ​ Deferred tax liability ​ ​ ( 2,430 ) ​ ​ ( 2,485 ) ​ ​ ​ ​ ​ ​ ​ Net deferred tax asset ​ $ — ​ $ — ​ The deferred tax balances included in the consolidated financial statements as of December 31, 2023, 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, 2023, was an increase of $ 5,798 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. F-35 Table of Contents DARIOHEALTH CORP. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS U.S. dollars in thousands NOTE 15:- TAXES ON INCOME (Cont.) a. Loss before taxes on income consists of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended ​ ​ December 31, ​ 2023 2022 Domestic ​ $ 23,477 ​ $ 22,902 Foreign ​ 35,886 ​ 39,287 ​ ​ ​ ​ ​ ​ ​ ​ ​ $ 59,363 ​ $ 62,189 ​ b. 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. ​ ​ F-36 Table of Contents 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. 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. b. On January 4, 2022, out of the pre-funded warrants that were issued in May 2019 private placement, 81,233 were exercised on a cashless basis into 81,221 shares of the Company’s common stock. As of December 31, 2022, the Company’s total outstanding prefunded warrants were exercisable into 1,769,794 shares of common stock. On July 11, 2023, out of the pre-funded warrants that were issued in July 2020 and February 2022, 86,985 were exercised on a cashless basis into 86,983 shares of common stock. c. I n April 2023, the Company issued 76,637 shares of common stock to settle an earn-out payment owed in connection with the acquisition of PsyInnovations, Inc. (dba wayForward). d. In November and December, 2019, the Company entered into subscription agreements (the “Series A, A-1, A-2, A-3 and A-4 Subscription Agreement”) for a sale of an aggregate of 21,375 shares of newly designated Series A, A-1, A-2, A-3 and A-4 Preferred Stock (the “Series A Preferred Stock”), at a purchase price of $ 1,000 per share (the “Stated Value”), for aggregate gross proceeds, of approximately $ 21,375 ( $ 18,689 net of issuance expenses). The initial conversion price for the Series A, A-1, A-2, A-3 and A-4 Preferred Stock was $ 4.05 , $ 4.05 , $ 4.28 , $ 4.98 and $ 5.90 , respectively, subject to adjustment in the event of stock splits, stock dividends, and similar transactions). As such, the Company recorded a deemed dividend during 2019 in the amount of $ 2,860 for the benefit created to the series A-2, A-3 and A-4 holders. ​ F-37 Table of Contents 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 Series A Preferred Stock automatically converted into shares of Common Stock, on the 36-month anniversary of the Series A Effective Date. During the year ended December 31, 2022, the Company accounted for the dividend as a deemed dividend in a total amount of $ 1,580 . Pursuant to the Placement Agency Agreement (the “Placement Agency Agreement”) executed by and between the Company and the registered broker dealer retained to act as the Company’s exclusive placement agent (the “Placement Agent”) for the offering of the Series A Preferred Stock, the Company paid the Placement Agent an aggregate cash fee of $ 1,788 , non-accountable expense allowance of $ 641 and was required to issue to the Placement Agent or its designees warrants to purchase 719,243 shares of Common Stock at an exercise price ranging from $ 4.05 to $ 5.90 per share (the “Placement Agent Warrants”). The Placement Agent Warrants are exercisable for a period of five years from the date of the final closing of the Series A Preferred Stock Offering. As of December 31, 2023, out of the Placement Agent Warrants that were issued in December 2019 and July 2020, 451,226 were exercised into 333,077 shares of Common Stock. On September 20, 2022, the Board of Directors authorized the Company to enter into an exchange agreement with a certain preferred stockholder to exchange 885 shares of the Company’s Series A-1 Preferred Stock for 308,711 shares of the Company’s common stock. During the year ended 31, 2022, the investor exchanged those certain shares. The Company has accounted for the exchange as a modification and recorded the increase in fair value as a deemed dividend in the amount of $ 62 . During the year ended December 31, 2022 a total of 1,130 of certain Series A Convertible Preferred Stock, were converted into 339,417 shares of Common Stock, including issuance of dividend shares. In November, to December 2022 and January 2023, 6,355 Series A Preferred Stock automatically converted into 2,133,904 shares of Common Stock after completing 36-month anniversary of each the Series A Preferred Stock. The conversion included accumulative dividends payable available upon conversion of each Series A Preferred Stock. On May 1, 2023, the Company entered into agreements with certain holders of 3,557 of the Company’s Series A-1 Preferred Stock pursuant to a subscription agreement dated November 27, 2019, which are convertible to 1,273,498 shares of common stock. In consideration for deferring the conversion of the Series A-1 Convertible Preferred Stock, the Company agreed to issue additional shares of common stock upon the deferred conversion of the Series A-1 Convertible Preferred Stock as follows: 63,676 shares, in the aggregate, if not converted for at least one quarter, 127,350 shares, in the aggregate, if not converted for at least two quarters, 191,026 shares, in the aggregate, if not converted for at least three quarters, 254,700 shares, in the aggregate, if not converted for at least four quarters and 382,050 shares, in the aggregate, if not converted for at least five quarters. ​ F-38 Table of Contents 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 Company has concluded that the Series A-1 preferred shares modification should be accounted for as an extinguishment transaction and recorded the increase in fair value as a deemed dividend in the amount of $ 984 . During the year ended December 31, 2023, the Company accounted for the dividend shares of common stock upon the deferred conversion of the Series A-1 Convertible Preferred Stock as a deemed dividend in a total amount of $ 618 . e. During the year ended December 31, 2023, options were exercised into 4,800 shares of Common Stock. f. On October 22, 2021, the Company entered into an At-The-Market Equity Offering Sales Agreement (the “ATM”), allowing the Company to sell its common stock for aggregate sales proceeds of up to $ 50,000 from time to time and at various prices, subject to the conditions and limitations set forth in the sales agreement. If shares of the Company’s common stock are sold, there is a three percent (3%) fee paid to the sales agent. During the year ended December 31, 2023 and 2022, the Company received net proceeds of $ 1,614 and $ 260 from the sale of 408,043 and 73,037 shares of the Company’s common stock, respectively. As of December 31, 2023, there were $ 47,971 remaining funds available under the ATM. g. On February 28, 2022, the Company entered into securities purchase agreements with institutional accredited investors relating to an offering with respect to the sale of an aggregate of 4,674,454 shares of the Company’s common stock, and pre-funded warrants to purchase an aggregate of 667,559 shares of the Company’s common stock at an exercise price of $ 0.0001 per share, at a purchase price of $ 7.49 per share (or share equivalent). The aggregate gross proceeds were approximately $ 40,000 ( $ 38,023 , net of issuance expenses). h. On May 1, 2023, the Company entered into securities purchase agreements with accredited investors relating to an offering and the sale of an aggregate of 6,200 shares of newly designated Series B Preferred Stock (the “Series B Preferred Stock”), an aggregate of 7,946 shares of Series B-1 Preferred Stock (the “Series B-1 Preferred Stock”), and an aggregate of 150 shares of Series B-2 Preferred Stock (the “Series B-2 Preferred Stock”) at a purchase price of $ 1,000 for each share of preferred stock. Certain of our executive officers and directors purchased shares of Series B-2 Preferred Stock in the offering. On May 5, 2023, the Company entered into purchase agreements with accredited investors, relating to the offering of 1,106 shares of newly designated Series B-3 Preferred Stock (the “Series B-3 Preferred Stock” and, collectively with the Series B Preferred Stock, the Series B-1 Preferred Stock, and the Series B-2 Preferred Stock, the “Preferred Stock”), at a purchase price of $ 1,000 for each share of Preferred Stock. The initial conversion price for the Series B, B-1, B-2, and B-3 Preferred Stock was $ 3.334 , $ 3.334 , $ 3.370 and $ 3.392 , respectively, subject to adjustment in the event of stock splits, stock dividends, and similar transactions. As a result of the sale of the Preferred Stock, the aggregate gross proceeds to the Company from the offerings were approximately $ 15,402 ($ 14,868 net of issuance expenses). The Preferred Stock will automatically convert into shares of common stock, on the 15 -month anniversary of the issuance date. The holders of Preferred Stock will also be entitled dividends payable as follows: (i) a number of shares of common stock equal to five percent ( 5.0 %) 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, and (ii) 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 on the fifth full quarter from the closing. The Series B-2 Preferred Stock dividend is subject to receipt of the approval of the Company’s shareholders. The Preferred Stock has been accounted for as an equity instrument. During the year ended December 31, 2023, the Company accounted for the dividend shares of common stock upon the dividend shares earned by Series B Preferred Stock as a deemed dividend in a total amount of $ 2,482 . ​ F-39 Table of Contents 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. Stock-based compensation: On January 23, 2012, the Company’s 2012 Plan was adopted by the Board of Directors of the Company and approved by a majority of the Company’s stockholders, under which options to purchase shares of Common Stock have been reserved. Under the 2012 Plan, options to purchase shares of Common Stock may be granted to employees and non-employees of the Company or any affiliate, each option granted can be exercised to one share of Common Stock. On February 5, 2020, the Company’s stockholders approved an amendment to the 2012 Plan to increase the number of shares authorized for issuance under the 2012 Plan by 1,350,000 shares, from 618,650 to 1,968,650 . On October 14, 2020, the Company’s stockholders approved the 2020 Equity incentive Plan (the “2020 Plan”) and the immediate reservation of 900,000 shares under this Plan for the remainder of the 2020 fiscal year. Under the 2020 Plan, options to purchase shares of Common Stock may be granted to employees and non-employees of the Company or any affiliate, each option granted can be exercised to one share of Common Stock. During 2021 , pursuant to the terms of the 2020 Plan as approved by the Company’s stockholders, the number of shares authorized for issuance under the 2020 Plan increased by 1,628,890 shares, from 900,000 to 2,528,890 . In January 2022, 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 1,339,624 shares, from 2,528,890 to 3,868,514 . In January 2023, 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 1,994,346 shares, from 3,868,514 to 5,862,860 . ​ On May 1, 2023, the Company repaid its existing $ 25,000 credit facility to the Orbimed Lender with a new $ 30,000 credit facility in the LSA, by and between the Company and the Avenue Lenders. On the closing date, and with respect to the Initial Tranche only, the Company agreed to issue each Avenue Lender the Avenue Warrant to purchase up to 292,442 shares of the Company’s common stock, at an exercise price of $ 3.334 per share, which shall have a term of five years from the issuance date. The Company accounted the Avenue Warrants as equity instruments and recorded it in fair value as of May 1, 2023, using the relative fair value method in the amount of $ 1,389 . (See also note 20f ( ​ F-40 Table of Contents 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 2021, the Compensation Committee authorized the Company to issue warrants to purchase up to 8,000 shares of Common Stock, to certain consultants of the Company, at a purchase price of $ 13.60 . As such, during the year ended December 31, 2023 and 2022 the Company recorded compensation expense for service providers in the amount of $ 28 and $ 29 , respectively. In May 2022 and June 2022, the Compensation Committee authorized the Company to grant warrants to purchase up to 70,000 , and 175,000 shares (of which warrants to purchase 87,500 shares have expired) of the Company’s common stock which shall vest over 12 months and 24-month periods, respectively, to certain consultants of the Company, with an exercise price of $ 6.45 and $ 7.20 , respectively. As such, during the year ended December 31, 2023 and 2022 the Company recorded compensation expense for service providers in the amount of $ 263 and $ 375 , respectively In December 2022, the Compensation Committee authorized the Company to issue warrants to purchase up to 500,000 , shares of Common Stock, to a certain consultant of the Company, at a purchase price of $ 5.00 . In November 2023, the Compensation Committee approved a reduction in the exercise price of said warrants to an exercise price of $ 1.08 per share, subject to the performance of additional services. The Company has accounted for the change as a modification and recorded increase in warrants fair value. As such, during the year ended December 31, 2023 and 2022 the Company recorded compensation expense for a certain consultant in the amount of $ 1,502 and $ 29 , respectively. In January 2023, the Compensation Committee approved the grant of warrants to purchase up to 280,000 shares of common stock, with an exercise price of $ 5.20 , per share to certain consultants. The warrants are exercisable into common stock on or before December 31, 2026. During the year ended December 31, 2023, the Company recorded compensation expenses for certain consultants in the amount of $ 650 . In January 2023, the Compensation Committee approved a reduction in the exercise price of warrants to purchase up to 350,000 shares of common stock issued to certain consultants in the past at exercise prices between $ 7.50 to $ 30.00 per share, to an exercise price of $ 5.20 per share, subject to the performance of additional services. The Company has accounted for the change as a modification and recorded the increase in fair value as compensation expense for those certain consultants in the amount of $ 960 . On July 25, 2023, the Compensation Committee approved the grant of warrants to purchase up to 40,000 shares of common stock, with an exercise price of $ 3.46 , per share to a certain consultant, the stock options vests over a three-year period. The warrants are exercisable into common stock on or before December 31, 2026. During the year ended December 31, 2023, the Company recorded compensation expenses for this certain consultant in the amount of $ 29 . ​ F-41 Table of Contents 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 table below summarizes the outstanding warrants as of December 31, 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ Warrants ​ ​ ​ ​ outstanding as of ​ Exercise ​ ​ ​ ​ December 31, 2023 ​ price $ ​ Expiration date Consultants 400,000 25.00 ​ February 16, 2024 Consultants 10,000 5.20 ​ April 6, 2024 Consultants 12,500 18.57 ​ April 13, 2024 Consultants ​ 10,000 ​ 5.20 ​ June 17, 2024 Consultants ​ 10,000 ​ 5.20 ​ September 9, 2024 Consultants ​ 20,000 ​ 5.20 ​ November 9, 2024 Consultants ​ 35,000 ​ 16.06 ​ December 1, 2024 Consultants ​ 3,000 ​ 16.06 ​ December 1, 2024 Agent warrants A-1 December 2019 ​ 233,347 ​ 4.05 ​ December 19, 2024 Agent warrants A-2 December 2019 ​ 25,034 ​ 4.28 ​ December 19, 2024 Agent warrants A-3 December 2019 ​ 47,527 ​ 4.98 ​ December 19, 2024 Agent warrants A-4 December 2019 ​ 5,839 ​ 5.90 ​ December 19, 2024 Consultants ​ 60,000 ​ 6.39 ​ February 12, 2025 Consultants ​ 30,000 ​ 5.20 ​ April 1, 2025 Consultants ​ 87,500 ​ 7.20 ​ June 8, 2025 Consultants ​ 30,000 ​ 5.20 ​ July 1, 2025 Agent warrants B-1 July 31 2020 ​ 150,070 ​ 7.47 ​ July 31, 2025 Agent warrants B-1 July 31 2020 ​ 2,393 ​ 7.94 ​ July 31, 2025 Consultants ​ 25,000 ​ 13.88 ​ September 26, 2025 Consultants ​ 40,000 ​ 5.20 ​ October 1, 2025 Consultants ​ 500,000 ​ 1.08 ​ December 16, 2025 Consultants ​ 100,000 ​ 5.20 ​ December 31, 2025 Consultants ​ 8,000 ​ 13.60 ​ December 31, 2025 Consultants ​ 70,000 ​ 6.45 ​ May 19, 2026 Consultants ​ 250,000 ​ 5.20 ​ December 31, 2026 Consultants ​ 40,000 ​ 3.46 ​ December 31, 2026 Consultants ​ 100,000 ​ 5.20 ​ December 31, 2026 Consultants ​ 30,000 ​ 5.20 ​ December 31, 2026 Lender of loan facility ​ 292,442 ​ 3.33 ​ May 1, 2028 Lender of loan facility ​ 292,442 ​ 3.33 ​ May 1, 2028 Lender of loan facility ​ 226,586 ​ 5.79 ​ June 9, 2029 Consultants ​ 13,750 ​ 12.00 ​ August 1, 2029 ​ ​ ​ ​ ​ ​ ​ Total outstanding 3,160,430 ​ ​ ​ ​ ​ F-42 Table of Contents 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 April 2020, the Compensation Committee of the Board of Directors approved a monthly grant of shares of the Company’s Common Stock equal to $ 18.00 of restricted shares to certain service providers per month, to be granted monthly during the period that the certain consulting agreement remains in effect. During the years ended December 31, 2023 and 2022, a total of 69,180 and 32,926 restricted unregistered shares of Common Stock, respectively, were issued to certain service provider under this approval the Company recorded compensation expense in the amount of $ 181 and $ 172 , respectively ​ On April 23, 2022, the Company released 56,788 holdback shares of the Company’s common stock to a certain employee of the Company. The holdback release was part of a separation agreement with the employee, pursuant to which the Company waived the lock-up period. On June 8, 2022, the Compensation Committee authorized the Company to redeem 17,957 shares of restricted stock held by a certain officer, in compliance with Rule 16b-3 promulgated by the SEC, the redemption is part of previously granted 91,652 and 20,000 shares of restricted stock granted in January and July 2021, in exchange for the aggregate redemption price equal to the withholding tax obligation in the amount of $ 170 . On December 15, 2022, the Compensation Committee authorized the Company to issue 30,000 shares, to a certain consultant of the Company. As such, during the year ended December 31, 2022 the Company recorded compensation expense for service providers in the amount of $ 106 . During the year ended December 31, 2022, the Company’s Compensation Committee of the Board of Directors approved the grant of 29,755 shares of the Company’s common stock to employees of the Company, and the grant of 1,268,050 restricted shares of the Company’s common stock to employees and consultants. The shares vest over a period of three years commencing on the respective grant dates. The Compensation Committee also approved the grant of options to purchase up to 1,009,550 shares of the Company’s common stock to employees and a consultant of the Company, at exercise prices between $ 4.30 and $ 8.10 per share. The stock options vest over a three-year period commencing on the respective grant dates. The options have a ten-year term and were issued under the 2020 Equity Incentive Plan, as amended (the “2020 Plan”). In January 2023 and March 2023, the Compensation Committee approved the grant of a non-qualified stock option awards to purchase 200,000 shares of the Company’s common stock, as well as an additional non-qualified performance-based stock option award to purchase an additional 180,000 shares of the Company’s common stock outside of the Company’s 2020 Plan, pursuant to Nasdaq Listing Rule 5635(c)(4), in connection with the employment of its Senior Vice President of Growth and its Chief Product Officer. In January 2023 and April 2023, the Board of Directors approved the acceleration of the unvested portion of 42,500 restricted shares of the Company’s common stock to a certain employee of the Company. The share acceleration was part of a separation agreement with the employee. The Company has accounted for the acceleration as a type-3 modification and recorded compensation expenses in the amount of $ 153 . During the year ended December 31, 2023, the Company’s Compensation Committee approved the grant of 927,100 restricted shares of the Company’s common stock to employees and consultants of which 537,100 are under the Company’s 2020 Equity Incentive Plan, as amended (“2020 Plan”). Out of the restricted shares granted, 235,000 restricted shares will vest immediately, 30,000 restricted shares will vest over a period of six months , and the remaining 662,100 restricted shares will vest over a period between two to four years commencing on the respective grant dates. The Compensation Committee also approved the grant of options to purchase up to 833,900 shares of common stock for employees and consultants of the Company, at exercise prices between $ 3.69 and $ 4.48 per share. Stock options to purchase 528,900 shares of common stock vest over a three-year period commencing on the respective grant dates, and options to purchase 305,000 shares of common stock are performance-based. The options have a ten-year term and were issued under the 2020 Plan. F-43 Table of Contents 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.) 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, 2023 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 2,124,302 ​ 13.38 ​ 6.98 ​ 121 Options granted 1,213,900 ​ 4.33 ​ — ​ — Options exercised ( 6,821 ) ​ — ​ — ​ — Options expired ( 221,313 ) ​ 30.51 ​ — ​ — Options forfeited ( 559,239 ) ​ 5.86 ​ — ​ — ​ ​ ​ ​ ​ ​ ​ ​ ​ Options outstanding at end of period 2,550,829 ​ 9.27 ​ 7.02 ​ 36 ​ ​ ​ ​ ​ ​ ​ ​ ​ Options vested and expected to vest at end of period 2,089,935 ​ 9.61 ​ 6.88 ​ 36 ​ ​ ​ ​ ​ ​ ​ ​ ​ Exercisable at end of period 1,326,486 ​ 12.45 ​ 5.39 ​ 36 Weighted average grant date fair value of options granted during the year ended December 31, 2023 and 2022 is $ 2.14 and $ 4.43 , 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 2023 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, 2023. This amount is impacted by the changes in the fair market value of the Common Stock Transactions related to restricted shares granted\forfeited during the year ended December 31, 2023 were as follows ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Number of ​ ​ ​ ​ ​ ​ ​ ​ Restricted shares ​ ​ ​ ​ ​ ​ ​ ​ ​ Restricted shares outstanding at beginning of the period ​ ​ ​ ​ ​ ​ 2,207,772 Restricted shares granted ​ ​ ​ ​ ​ ​ 572,100 Restricted shares forfeited ​ ​ ​ ​ ​ ​ ( 143,946 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ Restricted shares outstanding at end of period ​ ​ ​ ​ ​ ​ 2,635,926 ​ ​ F-44 Table of Contents 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 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 historical data. 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. 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, ​ 2023 ​ 2022 Volatility 90.90 - 92.62 % 91.11 - 92.60 % Risk-free interest rate 3.45 - 4.13 % 1.89 - 3.62 % Dividend yield 0 % 0 % Expected life (years) 5.81 - 5.88 ​ 5.81 - 6.00 ​ ​ As of December 31, 2023, the total unrecognized estimated compensation cost related to non-vested stock options and restricted shares granted prior to that date was $ 9,407 , which is expected to be recognized over a weighted average period of approximately 0.82 year. The total compensation cost related to all the Company’s equity-based awards, recognized during year ended December 31, 2023 and 2022 were comprised as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended ​ ​ December 31, ​ 2023 2022 ​ ​ ​ ​ ​ ​ ​ Cost of revenues ​ $ 327 ​ $ 66 Research and development ​ 3,803 ​ 3,608 Sales and marketing ​ 6,468 ​ 6,042 General and administrative ​ 9,103 ​ 7,259 ​ ​ ​ ​ ​ ​ ​ Total stock-based compensation expenses ​ $ 19,701 ​ $ 16,975 ​ F-45 Table of Contents 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 Financial losses, net: ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended ​ ​ December 31, ​ 2023 2022 ​ ​ ​ ​ ​ ​ ​ Bank charges ​ $ 112 ​ $ 83 Foreign currency adjustments expenses, net ​ 210 ​ ( 243 ) Interest income ​ ​ ( 1,868 ) ​ ​ ( 506 ) Revaluation of short-term investments ​ ​ ( 37 ) ​ ​ — Loan Interest Expenses ​ ​ — ​ ​ 1,876 Remeasurement of long-term loan ​ ​ 4,894 ​ ​ 3,858 Remeasurement of warrant liability ​ ​ ( 670 ) ​ ​ ( 1,020 ) Debt issuance cost ​ ​ 533 ​ ​ 724 Remeasurement of financial commitment asset ​ ​ — ​ ​ 607 ​ ​ ​ ​ ​ ​ ​ Total Financial expenses, net ​ $ 3,174 ​ $ 5,379 ​ ​ ​ ​ F-46 Table of Contents DARIOHEALTH CORP. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS U.S. dollars in thousands (except stock and stock data) NOTE 18: - BASIC AND DILUTED NET LOSS PER COMMON STOCK ​ We compute 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 12,188,189 and 5,744,428 for the year ended December 31, 2023 and 2022, respectively. ​ The following table sets forth the computation of the Company’s basic net loss per common and preferred stock: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended ​ ​ December 31, ​ 2023 ​ ​ Common Stock ​ Preferred A-1 ​ Preferred B ​ Preferred B-1 ​ Preferred B-2 ​ Preferred B-3 Basic and diluted loss per share ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Numerator: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Allocation of undistributed loss ​ $ 54,860,245 ​ $ 2,528,086 ​ $ 2,476,171 ​ $ 3,173,493 ​ $ 59,308 ​ $ 413,441 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Denominator: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Number of shares used in per share computation ​ ​ 28,371,979 ​ ​ 3,557 ​ ​ 4,094 ​ ​ 5,247 ​ ​ 99 ​ ​ 697 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Basic earnings (loss) per share amounts: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Distributed earnings - deemed dividends ​ ​ — ​ ​ 450.47 ​ ​ 244.63 ​ ​ 244.63 ​ ​ 242.18 ​ ​ 248.52 Undistributed loss - allocated ​ ​ ( 1.93 ) ​ ​ ( 710.74 ) ​ ​ ( 604.87 ) ​ ​ ( 604.87 ) ​ ​ ( 598.83 ) ​ ​ ( 593.23 ) Basic and diluted loss per share ​ $ ( 1.93 ) ​ $ ( 260.26 ) ​ $ ( 360.24 ) ​ $ ( 360.24 ) ​ $ ( 356.64 ) ​ $ ( 344.71 ) ​ ​ ​ ​ ​ ​ ​ Year ended ​ ​ December 31, ​ 2022 ​ ​ Common Stock Basic and diluted loss per share ​ ​ ​ Numerator: ​ ​ ​ Allocation of undistributed loss ​ $ 59,957,966 ​ ​ ​ ​ Denominator: ​ ​ ​ Number of shares used in per share computation ​ ​ 23,635,038 ​ ​ ​ ​ Basic loss per share amounts: ​ ​ ​ Distributed earnings - deemed dividends ​ ​ — Undistributed loss - allocated ​ ​ ( 2.54 ) Basic and diluted loss per share ​ $ ( 2.54 ) ​ For the year ended December 31, 2022 the basic and diluted net loss per share of Preferred A , A-1 , A-2 , A-3 and A-4 was 590.97 , 599.21 , 524.32 , 381.15 and 286.94 respectively. ​ ​ ​ F-47 Table of Contents DARIOHEALTH CORP. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS U.S. dollars in thousands (except stock and stock data) ​ NOTE 19:- SUBSEQUENT EVENTS a. 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 2,493,764 shares, from 5,862,860 to 8,356,624 . b. In January and March 2024, the Compensation Committee of the Board of Directors approved the grant of 1,941,500 restricted shares subject to time vesting to directors, officers and employees of the Company and approved the grant of 1,100,400 options to purchase Common Stock, and 320,000 performance-based options to purchase Common Stock to officers, employees and consultants of the Company, at exercise prices between $ 1.68 and $ 2.14 per share. The time vesting restricted shares and stock options vest over various periods between two to three years commencing on the respective grant dates. The options have a ten-year term. The restricted shares and the options were issued under the 2020 Plan. c. On January 30, 2024, out of the pre-funded warrants that were issued in July 2020, 400,017 were exercised on a cashless basis into 400,000 shares of common stock. d. On February 15, 2024 (the “Closing Date”), The Company, TWILL Merger Sub, Inc. (“Merger Sub”), Twill, Inc. (“Twill”) and Bilal Khan, solely in his capacity as the representatives of Twill’s stockholders and other equity holders, entered into an Agreement and Plan of Merger (the “Merger Agreement”), Pursuant to the provisions of the Merger Agreement, on the Closing Date, (i) Merger Sub was merged with and into Twill (the “Merger”), the separate corporate existence of Merger Sub ceased and Twill continued as the surviving company and a wholly owned subsidiary of the Company, (ii) the Company paid to Twill’s debt holders and equity holders aggregate consideration (“Merger Consideration”) of (A) $ 10.0 million in cash, (B) pre-funded warrants (the “Pre-Funded Warrants”) to purchase up to 10,000,400 shares (the “Warrant Shares”) of Company common stock, par value $ 0.0001 per share (the “Common Stock”), issuable to a trust (the “Trust”) formed for the benefit of certain equity and debt holders of Twill, issuable in 4 equal tranches, (C) stock options to purchase up to 2,963,459 shares of Common Stock issued to employees of Twill as an inducement to their employment with the Company, issued outside of the Company’s equity compensation plans, pursuant to Nasdaq Rule 5635(c)(4), with an exercise price of $ 2.55 per share, and (D) a combination of warrants and restricted stock units (“RSUs”) to acquire up to 1,766,508 shares of Common Stock issued to certain outgoing board members, consultants and outgoing officers of Twill (all of such RSUs and warrants being subject to the approval of the Company’s stockholders, pursuant to Nasdaq Rule 5635), and (iii) the parties to the Merger Agreement consummated the transactions contemplated thereby. The Merger Agreement contains various customary representations, warranties and covenants. As a result of the Merger, Twill will operate as a wholly owned subsidiary of the Company. In addition, the Company executed certain consulting agreements (the “Consulting Agreements”) with Ofer Leidner and Bilal Khan, each former officers of Twill. Pursuant to the terms of the Consulting Agreements, the Company agreed to retain their services. Leidner and Khan for a period of at least 14 months and 6 months respectively, in exchange for monthly consulting fees of $ 35,416 and $ 35,417 , respectively. In addition, the Company agreed to issue to Mr. Leidner warrants to purchase up to 1,032,946 shares of Common Stock, of which 717,946 are subject to time vesting and 315,000 are subject to certain performance-based metrics, and to issue to Mr. Khan 350,000 fully vested RSUs which shall be vest subject to stockholder approval. ​ F-48 Table of Contents DARIOHEALTH CORP. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS U.S. dollars in thousands (except stock and stock data) NOTE 19:- SUBSEQUENT EVENTS (Cont.) e. On February 15, 2024, the Company entered into securities purchase agreements (each, a “Series C Purchase Agreement”) with accredited investors relating to an offering (the “Offering”) and the sale of an aggregate of (i) 17,307 shares of newly designated Series C Preferred Stock (the “Series C Preferred Stock”), and (ii) 4,000 shares of Series C-1 Preferred Stock (the “Series C-1 Preferred Stock”), at a purchase price of $ 1,000 for each share of Preferred Stock. In addition, on February 16, 2024, the Company entered into Series C Purchase Agreements with accredited investors relating to the Offering and the sale of an aggregate of 1,115 shares of Series C-2 Preferred Stock (the “Series C-2 Preferred Stock” and together with the Series C Preferred Stock and the Series C-1 Preferred Stock, the “Preferred Stock”), at a purchase price of $ 1,000 for each share of Preferred Stock. The Series C and C-1 Preferred Stock are convertible into Common Stock at $ 2.02 per Common Stock. The Series C-2 Preferred Stock is convertible into Common Stock at $ 2.14 per Common Stock. As a result of the sale of the Preferred Stock, the aggregate gross proceeds to the Company from the Offering are approximately $ 22,422 thousands. The closing of the Series C Preferred Stock, Series C-1 Preferred Stock and Series C-2 Preferred Stock occurred on February 21, 2024. f. On February 15, 2024, the Company and its subsidiaries, PsyInnovations, Inc. and LabStyle Innovation Ltd., entered into the First Amendment to Loan and Security Agreement and Supplement (the “Avenue Amendment”) with Avenue Venture Opportunities Fund II, L.P. and Avenue Venture Opportunities Fund, L.P., as lenders. Pursuant to the Avenue Amendment, the parties agreed to include the Merger Sub and Twill as parties to the Company’s existing loan facility with the lenders. In addition, the Avenue Amendment provides (i) that the Company will seek stockholder approval to reprice the warrants issued to the lenders on May 1, 2023 to permit an amendment to the exercise price of such warrants to the “minimum price” as defined by Nasdaq rules as of the closing of the Twill Agreement and (ii) permit the lenders, subject to Nasdaq rules, to convert up to two million of the principal amount of its loan to the Company at a conversion price of $ 4.0001 per share. - - - - - - - - - - - - - - - ​ ​ ​ F-49