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, 202 4 , 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 102 Table of Contents Officer and Chief Financial Officer, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure. Limitations on the Effectiveness of Internal Controls Readers are cautioned that our management does not expect that our disclosure controls and procedures or our internal control over financial reporting will necessarily prevent all fraud and material error. An internal control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our control have been detected. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any control design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Changes in Internal Control over Financial Reporting There were no changes in our internal control over financial reporting that occurred during the quarter ended December 31, 202 4 , 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; (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, 2024. 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, 2024. ​ Item 9B. Other Information N o n e . Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections Not applicable. 103 Table of Contents 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 51 Chief Executive Officer and Director Zvi Ben David 64 Chief Financial Officer, Treasurer and Secretary Steven Nelson ​ 52 ​ Chief Commercial Officer Yoav Shaked 53 Chairman of the Board of Directors Dennis Matheis 64 Director Hila Karah 56 Director Dennis M. McGrath 68 Director Lawrence Leisure ​ 74 ​ Director Adam Stern 60 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 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. Steven C. Nelson has served as our Chief Commercial Officer since June 5, 2024. From October 2018 to September 2023, Mr. Nelson served as President and Chief Executive Officer of Contigo Health, a Premier Inc. subsidiary, where he previously served as Chief Operating Officer from 2017 to 2018, Vice President of Strategy, Planning, & Innovation from 2015 to 2016 and Chief of Staff in 2016. From 2007 to 2014, he served as Senior Vice President of Strategy, Product, & Marketing at Highmark Inc., a healthcare company. Prior to Highmark, from 2012 to 2014, he served as the Senior Vice President of Executive Oversight at Allegheny Health Network, a healthcare company. Earlier in his 104 Table of Contents career, Mr. Nelson was a Senior Vice President for General Nutrition Centers, General Manager of Brand Marketing & Promotions for MET-Rx &Worldwide Sports Nutrition, Vice President of International Marketing for 141 Communicator, and Director of Marketing & Omnicom Integration for GMR Marketing. Mr. Nelson holds a Bachelor of Science in Education from the University of Pittsburgh at Johnstown and a Master of Arts in Business Administration from Ohio University. Yoav Shaked has served as the Chairman of our Board of Directors since July 5, 2018. Since 2011, Mr. Shaked has served as a partner at Sequoia Capital, a leading global venture capital firm. In 2005, he co-founded Medpoint Ltd., a private medical device distribution company offering a wide range of medical products. Previously, he founded and served as Chief Executive Officer of Y-Med Inc. from May 2004 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 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 105 Table of Contents 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 the audit and compensation committee chair and director of several biopharmaceutical and medical device companies, including our Company, Citius Pharmaceuticals, Inc. (Nasdaq: CTXR), Citius Oncology, Inc (Nasdaq: CTOR), and LIV Process, Inc. formerly BioVector, Inc. Previously from 2014 to 2024 Mr. McGrath served as a director and audit chair of Cagent Vascular, Inc, and from 2007 to 2009 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. Lawrence Leisure has been a director of our company since February 25, 2025. Mr. Leisure has extensive business experience consulting and advising in the senior living, provider services, value based care and technology enabled services sectors. Since 2014, Mr. Leisure has served as the Co-Founder and Co-Managing Partner of Chicago Pacific Founders, a private equity firm focused on senior living, provider services, value based care, and technology enabled services. Mr. Leisure is serving on the Board of Directors, and the compensation committee, of P3 Health Partners Inc. (NASDAQ: PIII), a publicly traded health management company. Mr. Leisure has also served on the boards of directors of several private companies backed by Chicago Pacific Founders as well as several venture capital backed companies. Since 2009, he has served as Co-Founder and Chairman of Healthspottr, a strategic networking and consulting firm focused on health innovation and collaboration in the healthcare industry and he also served as the Co-Founder of the Employer Health Innovation Roundtable since 2015. Prior to Chicago Pacific Partners, Mr. Leisure held senior management roles at Accenture, PricewaterhouseCoopers, Towers Perrin, Kaiser Foundation Health Plans and UnitedHealth Group. Mr. Leisure was also employed by the venture capital firm, Kleiner Perkins, as an Operating Partner within the Life Sciences & Digital Health Practice. Mr. Leisure is Chairman of the UCSF Rosenman Institute, member of the UCLA Anderson School of Management Board of Advisors, and a Senior Advisor at the Mussalem Center for BIODESIGN at Stanford University. Mr. Leisure holds a B.A. from Stanford University and an MBA from the University of California-Los Angeles Anderson School of Management. We believe Mr. Leisure is qualified to serve on our Board of Directors because of his accounting expertise and his experiences serving as an officer and director of public and private companies. Adam Stern has been a director of our company since March 1, 2020. 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 106 Table of Contents 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. ​ 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 107 Table of Contents 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. 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 and McGrath, 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 108 Table of Contents 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. Insider Trading Policy We have adopted an insider trading policy, governing the purchase, sale and other transactions in our securities that applies to our directors, executive officers, employees, and other covered persons, including immediate family members and entities controlled by any of the foregoing persons, as well as by the Company itself. The insider trading policy prohibits, among other things, insider trading and certain speculative transactions in our securities (including short sales, buying put and selling call options and other hedging or derivative transactions in our securities) and establishes a regular blackout period schedule during which directors, executive officers, employees, and other covered persons may not trade in the Company’s securities, as well as certain pre-clearance procedures that directors and executive officers must observe prior to effecting any transaction in our securities. We believe that the insider trading policy is reasonably designed to promote compliance with insider trading laws, rules and regulations, and listing standards applicable to us. A copy of the insider trading policy is filed as Exhibit 19.1 to this Form 10-K. Limitation of Directors Liability and Indemnification The Delaware General Corporation Law authorizes corporations to limit or eliminate, subject to certain conditions, the personal liability of directors to corporations and their stockholders for monetary damages for breach of their fiduciary duties. Our certificate of incorporation limits the liability of our directors to the fullest extent permitted by Delaware law. We have director and officer liability insurance to cover liabilities our directors and officers may incur in connection with their services to us, including matters arising under the Securities Act. Our certificate of incorporation and bylaws also provide that we will indemnify our directors and officers who, by reason of the fact that he or she is one of our officers or directors, is involved in a legal proceeding of any nature. We have entered into indemnification agreements with our directors and officers pursuant to which we agreed to indemnify each director and officer for any liability he or she may incur by reason of the fact that he or she serves as our director or officer, to the maximum extent permitted by law. There is no pending litigation or proceeding involving any of our directors, officers, employees or agents in which indemnification will be required or permitted. We are not aware of any threatened litigation or proceeding that may result in a claim for such indemnification. ​ 109 Table of Contents Item 11. Executive Compensation The following table summarizes compensation of our named executive officers, as of December 31, 2024 and 2023. 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 ​ 2024 ​ $ 448,293 (1) $ — (2) $ 1,344,000 (3) $ — ​ — ​ — ​ $ 169,791 (4) $ 1,962,084 (Chief Executive Officer) ​ 2023 ​ $ 446,307 (1) $ 101,939 (2) $ — (3) $ — ​ — ​ — ​ $ 173,941 (4) $ 722,187 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Zvi Ben David 2024 ​ $ 327,311 (5) ​ — (6) $ 672,000 (7) $ — ​ — ​ — ​ $ 87,144 (8) $ 1,086,455 (Chief Financial Officer) 2023 ​ $ 243,419 (5) ​ 31,479 (6) $ — (7) $ — ​ — ​ — ​ $ 67,686 (8) $ 342,584 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Richard Anderson 2024 ​ $ 345,000 (9) ​ — (10) $ — (11) $ 962,250 (12) — ​ — ​ $ 59,074 (12) $ 1,366,324 (Former President) 2023 ​ $ 400,000 (9) ​ 80,000 (10) $ — (11) $ — (12) — ​ — ​ $ 56,648 (12) $ 536,648 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Steven Nelson 2024 ​ $ 212,308 (13) $ — ​ $ — ​ $ 532,500 (14) — ​ — ​ $ 44,564 (15) $ 789,372 (Chief Commercial Officer) (20) 2023 ​ $ — (13) $ — ​ $ — ​ $ — (14) — ​ — ​ $ — (15) $ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Tomer Ben Kiki 2024 ​ $ 384,041 (16) $ — ​ $ — ​ $ 1,573,421 (17) — ​ — ​ $ 38,690 (18) $ 1,996,152 (Former Chief Operations Officer) (20) 2023 ​ $ — (16) $ — ​ $ — ​ $ — (17) — ​ — ​ $ — (18) $ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ * 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 4 , and December 31, 202 3 , computed in accordance with the provisions of ASC 718 “Compensation-Stock Compensation” (“ASC 718”). Assumptions used in accordance with ASC 718 are included in Note 16 to our consolidated financial statements included in this Annual Report. (1) In accordance with his second amendment to the employment agreement with our company effective August 11, 2013, Mr. Raphael was initially entitled to a monthly salary of NIS 44,000. Since August 2013, the Compensation Committee has approved several increases to Mr. Raphael’s monthly salary, most recently on April 1, 2021, when his monthly salary was increased to NIS 137,466 (approximately $37,078 per month). (2) In March 2023, Mr. Raphael was paid a bonus of $101,939 for his performance during 2022. (3) On March 6, 2024, Mr. Raphael was granted 800,000 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. Since March 2015, the Compensation Committee has approved several increases to Mr. Ben David’s salary, most recently on March 1, 2024, when his monthly salary was updated to NIS 105,000 (approximately $28,471) (6) In March 2023, Mr. Ben David was paid a bonus of $31,479 for his performance during 2022. 110 Table of Contents (7) On March 6, 2024, Mr. Ben David was granted 400,000 restricted shares of our common stock under our 2020 Equity Incentive Plan. (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 was entitled to a monthly salary of $33,333.33. (10) In April 2023, Mr. Anderson was paid a bonus of $80,000 for his performance during 2022. (11) On March 6, 2024, Mr. Anderson was granted 750,000 options to purchase shares of our common stock under our 2020 Equity Incentive Plan, at an exercise price of $1.68 per share. (12) In addition to his salary, Mr. Anderson was entitled to participate in any and other benefit plans and programs that we may offer to our employees from time to time according to the terms of such plans and our practices and policies as well as reimbursements for expenses accrued. These benefits are included as part of his “All Other Compensation.” (13) In accordance with his employment agreement, effective in June 2024, Mr. Nelson was entitled to a monthly salary of $33,333.33. (14) On June 5, 2024, Mr. Nelson was granted 500,000 options to purchase shares of our common stock as an inducement grant pursuant to Nasdaq Listing Rule 5635 (c)(4), at an exercise price of $1.35 per share. (15) In addition to his salary, Mr. Nelson is entitled to participate in any and other benefit plans and programs that we may offer to our employees from time to time according to the terms of such plans and the Company’s practices and policies as well as reimbursements for expenses accrued. These benefits are included as part of his “All Other Compensation.” (16) In accordance with his employment agreement, effective in February 2024, Mr. Ben-Kiki was entitled to a monthly salary of $35,417. (17) On February 15, 2024, Mr. Ben-Kiki was granted 717,946 options to purchase shares of our common stock as an inducement grant pursuant to Nasdaq Listing Rule 5635 (c)(4), at an exercise price of $2.55 per share. On November 4, 2024, Mr. Ben-Kiki was granted a Warrant to purchase 319,653 shares of our common stock at an exercise price of $0.9475 per share. (18) In addition to his salary, Mr. Ben-Kiki was entitled to participate in any and other benefit plans and programs that we may offer to our employees from time to time according to the terms of such plans and our practices and policies as well as reimbursements for expenses accrued. These benefits are included as part of his “All Other Compensation.” All compensation awarded to our executive officers was independently reviewed by our Compensation Committee. Employment and Related Agreements Except as set forth below, we currently have no other written employment agreements with any of our officers and directors. The following is a description of our current executive employment agreements: Erez Raphael , Chief Executive Officer and a Member of the Board of Directors – On August 30, 2013, LabStyle Innovation Ltd., our Israeli subsidiary, entered into an amendment to a Personal Employment Agreement with Mr. Raphael in connection with his August 2013 appointment as our President and Chief Executive Officer. Pursuant to the terms of his employment agreement as amended, Mr. Raphael is entitled to a monthly salary of NIS 137,466 (approximately $ 37 , 275 ) and a target bonus equal to 75% of his annual base salary. 111 Table of Contents 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. 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 the terms of his employment agreement, as amended, Mr. Ben David is entitled to a monthly salary of NIS 105,000 (approximately $28,471) and a target bonus equal to 40% of his base salary. 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. Steven Nelson, Chief Commercial Officer – On June 5, 2024, we appointed Mr. Nelson as our Chief Commercial Officer. In connection with Mr. Nelson’s appointment, we agreed to pay Mr. Nelson an annual base salary of $400,000. Mr. Nelson shall also be subject to a six-month non-competition and one-year non-solicitation provision, certain confidentiality covenants and assignment of any of his company-related inventions. Mr. Nelson will also be entitled to certain expense reimbursements and other standard benefits, including vacation and sick leave. In addition, Mr. Nelson will be entitled to receive an annual incentive bonus of up to $400,000, subject to certain milestones and performance targets. In conjunction with his appointment as Chief Commercial Officer, we agreed to issue Mr. Nelson a stock option to purchase up to 500,000 shares of common stock, with such shares vesting over three years, with one third of such shares vesting on June 1, 2025, and the remaining shares vesting in equal quarterly amounts. In addition, we agreed to issue Mr. Nelson a stock option to purchase 400,000 shares of common stock, of which 150,000 shares commence vest upon our achieving 92% of a targeted revenue amount for the year ended December 31, 2024, and the remaining balance of 250,000 shares if the annual revenue is 100% or more of a targeted amount, provided, however that such options shall be canceled if the annual revenue does not reach at least 92% of the targeted amount. We also agreed to issue Mr. Nelson a stock option to purchase 450,000 shares of common stock, for each of the years ending December 31, 2025, December 31, 2026 and December 2027, of which 150,000 shares commence vesting if the Company’s annual revenue is at least 92% of a targeted amount, 150,000 shares commence vesting if the Company’s annual revenue is 100% or more of the targeted amount and an additional 150,000 shares will commence vesting upon reaching certain annual goals as determined by the Company’s Board of Directors for such fiscal year, provided, however that such options shall be canceled if the annual revenue does not reach at least 92% of the targeted amount. Each of the performance options vests over a three-year period commencing on the first day of the following fiscal year to which such option relates, at the rate of 8.33% per quarter, at the last day of the relevant fiscal quarter. All options were granted as an inducement material to Mr. Nelson becoming an employee of the Company, in accordance with Nasdaq Listing Rule 5635(c)(4). 112 Table of Contents Richard Anderson, Former 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, we agreed to pay Mr. Anderson an annual base salary of $335,000. Mr. Anderson was also 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 was 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, we 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 May 30, 2024, we and Mr. Anderson, mutually agreed that Mr. Anderson would cease serving in his role as President of the Company and would continue as a consultant and member of Advisory Board. ​ Tomer Ben-Kiki, Former Chief Operating Officer . Mr. Ben-Kiki acted as the Company’s Chief Operating Officer between February 15, 2024 and August 7, 2024. Under Mr. Ben-Kiki’s employment agreement he was entitled to earn an annual salary of $212,000 for his work in the United States, and 65,000 NIS per month for his work in Israel. Mr. Ben-Kiki was also 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 was entitled to receive a stock option to purchase up to 1,017,947 shares of Common Stock, at an exercise price of $2.55 per share, which were granted as an inducement material to Mr. Ben-Kiki becoming an employee of the company, in accordance with Nasdaq Listing Rule 5635(c)(4).. On August 7, 2024, we and Tomer Ben-Kiki, mutually agreed that Mr. Ben-Kiki would be relieved from his role as Chief Operating Officer and re-assigned to serve in a non-executive management role as our Chief Technology Officer. In connection with his departure from his role, we made a consulting agreement with Mr. Ben-Kiki. ​ 113 Table of Contents Outstanding Equity Awards at December 31, 2024 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Equity ​ ​ ​ ​ ​ ​ ​ ​ incentive ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ plan awards: ​ ​ ​ ​ ​ ​ ​ Number of ​ Number of ​ Number of ​ ​ ​ ​ ​ ​ ​ securities ​ securities ​ securities ​ ​ ​ ​ ​ ​ ​ underlying ​ underlying ​ underlying ​ ​ ​ ​ ​ ​ ​ unexercised ​ unexercised ​ unexercised ​ Option ​ Option ​ ​ options (#) ​ options (#) ​ unearned ​ exercise ​ expiration Name exercisable unexercisable options (#) price ($) date Zvi Ben David 27,827 — ​ — ​ $ 7.74 ​ February 12, 2026 (Chief Financial Officer, Secretary and Treasurer) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Richard Anderson 90,000 ​ ​ ​ ​ $ 8.410 ​ January 30, 2026 (President and General Manager of North America) 91,652 ​ ​ ​ $ 17.890 ​ January 19, 2031 ​ ​ 112,500 22,500 (1) ​ $ 7.190 ​ May 18, 2032 ​ ​ 515,625 ​ 234,375 (1) ​ ​ $ 1.680 ​ March 6, 2034 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Steven Nelson ​ 500,000 (2) — ​ $ 1.35 ​ June 5, 2034 (Chief Commercial Officer) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Tomer Ben-Kiki 398,293 319,654 (3) ​ ​ $ 2.55 ​ February 15, 2034 (Former Chief Operating Officer) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Option Shares 1,235,897 1,076,529 ​ ​ ​ ​ ​ ​ ​ (1) Vests in 12 equal quarterly installments over a three-year period. (2) One third vests after one year followed by 8 equal quarterly amounts over the following two years. (3) Unvested options were cancelled. We do not have any formal policy that requires us to grant, or avoid granting, equity-based compensation at certain times. We do not grant equity awards in anticipation of the release of material nonpublic information that is likely to result in changes to the price of our common stock, and do not time the public release of such information based on award grant dates. The timing of any equity grants to executive officers or directors in connection with new hires, promotions, or other non-routine grants is tied to the event giving rise to the award (such as an executive officer’s commencement of employment or promotion effective date). ​ During the year ended December 31, 2024, there were no equity grants made to our executive officers during any period beginning four business days before the filing of a periodic report or current report disclosing material non-public information and ending one business day after the filing or furnishing of such report with the Securities and Exchange Commission that were likely to result in changes to the price of our common stock, and do not time the public release of such information based on award grant dates. Non-Employee Director Remuneration Policy In March 2013, our Board of Directors adopted the following non-employee director remuneration policy: Cash Awards Our non-employee directors (currently Messrs. Shaked, Matheis, McGrath, Kaplan, Stern and Ms. Karah) will receive the following cash payments for each fiscal year: (i) $50,000 per year, to be paid quarterly in arrears and (ii) 114 Table of Contents $20,000 for Board committee service, to be paid quarterly in arrears. Commencing the second quarter of 2024 Messrs Shaked, Mathies, Kaplan, Stern and Ms. Karah have waived their cash compensation. Stock and Option Awards On March 6, 2024, the Compensation Committee of our Board of Directors approved the following issuances, each was done under our 2020 Equity Incentive Plan: (i) 90,000 restricted shares of our common stock to Mr. Shaked; (ii) 80,000 restricted shares of our common stock to Mr. McGrath; and (iii) 70,000 restricted shares of our common stock to each of Ms. Karah, Mr. Matheis, Mr. Stern and Mr. Kaplan. On February 24, 2025, our Compensation Committee of our Board of Directors approved to accelerate the vesting of 35,000 restricted shares of our common stock as well as approved the grant of 30,000 restricted shares of Common Stock to Mr. Kaplan. 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. Prior Awards to Management On November 4, 2024, our Compensation Committee approved amendments to certain previously issued awards of restricted shares of common stock in the aggregate amount of 68,750 and 250,000 shares of common stock, respectively, granted to Mr. Erez Raphael, our Chief Executive Officer, and Mr. Zvi Ben David, our Chief Financial Officer, in the aggregate amount of 23,750 and 125,000 shares of common stock, respectively, on May 18, 2022 and March 6, 2024 (collectively, the “Prior Awards”) to permit an immediate acceleration of the unvested portion of the Prior Awards in the event of change in control of the Company. 115 Table of Contents Summary Director Compensation Table The following table summarizes the annual compensation paid to our non-employee directors for the fiscal year ended December 31, 2024: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 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 2024 ​ $ 70,000 ​ $ 134,400 (1) $ — (2) $ — ​ $ — ​ $ — ​ $ 204,400 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Jon Kaplan (13) 2024 ​ $ 12,500 ​ $ 117,600 (3) $ — (4) $ — ​ $ — ​ $ — ​ $ 130,100 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Dennis Matheis ​ 2024 ​ $ 17,500 ​ $ 117,600 (5) $ — (6) $ — ​ $ — ​ $ — ​ $ 135,100 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Hila Karah 2024 ​ $ 17,500 ​ $ 117,600 (7) $ — (8) $ — ​ $ — ​ $ — ​ $ 135,100 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Yoav Shaked 2024 ​ $ 17,500 ​ $ 151,200 (9) $ — (10) $ — ​ $ — ​ $ — ​ $ 168,700 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Adam Stern ​ 2024 ​ $ 12,500 ​ $ 117,600 (11) $ — (12) $ — ​ $ — ​ $ — ​ $ 130,100 * 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, 2024, computed in accordance with the 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) 154,744 stock awards are outstanding as of December 31, 2024. (2) No option awards are outstanding as of December 31, 2024. (3) 70,000 stock awards are outstanding as of December 31, 2024. (4) No option awards are outstanding as of December 31, 2024. (5) 102,620 stock awards are outstanding as of December 31, 2024. (6) 55,000 option awards are outstanding as of December 31, 2024. (7) 218,751 stock awards are outstanding as of December 31, 2024. (8) No option awards are outstanding as of December 31, 2024. (9) 253,896 stock awards are outstanding as of December 31, 2024. (10) No option awards are outstanding as of December 31, 2024. (11) 178,341 stock awards are outstanding as of December 31, 2024. (12) No option awards are outstanding as of December 31, 2024. (13) Mr. Kaplan resigned from the Board of Directors on February 23, 2025. ​ 116 Table of Contents 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 3, 2025 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 counted as outstanding for computing the percentage ownership of any other person. Unless otherwise indicated, the address of each person listed below is c/o DarioHealth Corp., 322 W. 57th St. #33B, New York, New York 10019. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Percent of ​ ​ Shares of ​ Common ​ ​ Common ​ Stock ​ ​ Beneficially ​ Beneficially Name of Beneficial Owner Stock Owned Owned (1) Officers and Directors ​ Erez Raphael (2) 1,813,593 4.4 % Zvi Ben David (3) 692,732 1.7 % Steven C. Nelson (4) 55,000 * % Richard Anderson (5) 976,779 2.3 % Tomer Ben Kiki (6) ​ 504,846 ​ 1.2 ​ Dennis M. McGrath (7) 116,411 * % Lawrence Leisure (8) ​ 287,500 ​ * % Hila Karah (9) 199,499 * % Yoav Shaked (10) 250,032 * % Adam Stern (11) 913,065 2.2 % Dennis Mathies (12) 206,493 * % All Executive Officers and Directors as a group (11 persons) ** 6,015,950 14.4 % ​ ​ ​ ​ ​ ​ 5% Stockholders ​ Nantahala Capital Management, LLC. (13) 4,235,023 9.9 % Solid Financial, LLC. (14) 2,139,642 5.1 % Tasso Partners, LLC. (15) 3,394,043 8.1 % * less than 1%. (1) Percentage ownership is based on 41,567,016 shares of our common stock outstanding as of March 3, 2025 and, for each person or entity listed above, warrants or options to purchase shares of our common stock which exercisable within 60 days of such date. (2) Includes 1,315,242 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. 117 Table of Contents (3) Includes 27,827 vested options to purchase common stock and 523,312 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) Excludes 500,000 options which are not vested. (5) Includes 867,902 vested options to purchase common stock and 93,695 vested restricted shares. Excludes 198,750 options which are not vested. (6) Includes 398,294 vested options to purchase common stock and 106,552 vested warrants to purchase common stock. Excludes 213,101 warrants which are not vested. (7) Includes 116,411 vested restricted shares. (8) Includes 162,500 vested restricted shares and warrants to purchase 125,000 shares of common stock. (9) Includes 150,356 vested restricted shares. (10) Includes 143,350 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. (11) Includes 133,017 vested restricted shares. Includes 250 C preferred shares exercisable into 124,000 shares of common stock. Includes warrants exercisable into 507,648 shares of common stock, subject to a contractual beneficial ownership limitation of 4.99%. (12) Includes 52,084 vested options to purchase common stock and 70,120 vested restricted shares. Excludes 2,916 options which have not been vested. (13) Based solely on information contained in Form 13G/A filed with the SEC on February 14, 2025, and data provided by the holder. Includes 277,546 pre-funded warrants to purchase common stock issued in May 2019 and preferred shares convertible into 933,451 shares of common stock, subject to a contractual beneficial ownership limitation of 9.99% and excludes preferred shares convertible into 3,803,747 shares of common stock, 386,129 pre-funded warrants issued on July 31, 2020, and 331,814 pre-funded warrants issued on February 28, 2022. (14) Based solely on information contained in Form 13G/A filed with the SEC on February 12, 2025. The securities are held in discretionary accounts managed by Solid Financial LLC, where the firm has the power to vote and dispose of such securities on behalf of its clients. (15) Based solely on information contained in Form 13G filed with the SEC on December 13 2024, and data provided by the holder. Includes (i) 1,394,721 shares of Common Stock, (ii) shares of Preferred C Stock convertible into 1,222,772 shares of Common Stock, and (iii) shares of Preferred C-2 Stock convertible into 23,364 shares of Common Stock, 385,000 warrants to purchase common stock which are beneficially owned by Dana Carrera is the trustee of the GCL Family Trust, and included pursuant to Rule 13d-3(d)(1)(i) of the Securities Exchange Act of 1934, as amended. ​ Item 13. Certain Relationships and Related Party Transactions Executive Officers and Directors We have entered into employment and consulting agreements and granted stock awards to our executive officers and directors as more fully described in “Executive Compensation” above. Executive Officers and Directors We have entered into employment agreements and granted stock awards to our executive officers as more fully described in “Executive Compensation” above. 118 Table of Contents 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. On September 3, 2021, we entered into to a consulting agreement, as amended (the “Consulting Agreement”), with NearWater Growth LCC (“NearWater”). As remuneration for such services, we agreed to pay NearWater a monthly cash retainer upon the successful completion of an equity financing resulting in gross proceeds in excess of $25 million and we further agreed to issue NearWater shares of our common stock as equity compensation if certain milestones are met such as NearWater introducing entities to us for acquisition or partnership purposes, provided certain revenue milestones are met. Further, the Consulting Agreement provides for the payment to NearWater of 150,000 shares of our common stock which shall vest quarterly over a four year period. To date, NearWater has received approximately 258,000 shares of our common stock and common stock purchase warrants to purchase up to 125,000 shares of common stock. On February 24, 2025, we and NearWater entered into a Second Amendment to the Consulting Agreement pursuant to which we agreed to pay NearWater a monthly retainer of $5,000 beginning on September 1, 2024, increasing to $10,000 per month on January 1, 2025. Lawrence Leisure, a member of our Board of Directors is a Member of NearWater. Mr. Leisure has in interest in, and will receive, the compensation due to NearWater. To the best of our knowledge, other than as set forth above, there were no material transactions, or series of similar transactions, or any currently proposed transactions, or series of similar transactions, to which we were or are to be a party, in which the amount involved exceeds the lesser of $120,000 or 1% of the average of our total assets at year-end for the last two completed fiscal years, and in which any director or executive officer, or any security holder who is known by us to own of record or beneficially more than 5% of any class of our common stock, or any member of the 119 Table of Contents 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, 2024 and December 31, 2023 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, 2024 December 31, 2023 Audit Fees ​ $ 487,573 ​ $ 303,296 Tax Fees (1) ​ $ 82,535 ​ $ 16,686 All Other Fees (2) ​ $ 273,150 ​ $ 102,250 Total ​ $ 843,258 ​ $ 422,232 (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. ​ 120 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 Current Report on Form 8-K filed with the Commission on April 19, 2024). 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 ​ Second Amended and Restated Certificate of Designation of Preferences, Rights and Limitations of Series B Preferred Stock of DarioHealth Corp. (incorporated by reference to Exhibit 3.1 filed with the Company’s Current Report on Form 8-K filed on June 28, 2024). 3.6 ​ 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). 3.7 ​ 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). 3.8 ​ Second Amended and Restated Certificate of Designation of Preferences, Rights and Limitations of Series B-1 Preferred Stock of DarioHealth Corp. (incorporated by reference to Exhibit 3.2 filed with the Company’s Current Report on Form 8-K filed on June 28, 2024). 3.9 ​ 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). 3.10 ​ Second Amended and Restated Certificate of Designation of Preferences, Rights and Limitations of Series B-3 Preferred Stock of DarioHealth Corp. (incorporated by reference to Exhibit 3.1 filed with the Company’s Current Report on Form 8-K filed on September 13, 2024). 3.11 ​ 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). 3.12 ​ 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). 3.13 ​ 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). 3.14 Certificate of Designation of Preferences, Rights and Limitations of Series D Preferred Stock ( incorporated by reference to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on December 18, 2024). 3.15 ​ Certificate of Designation of Preferences, Rights and Limitations of Series D-1 Preferred Stock ( incorporated by reference to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on December 18, 2024). 3.16 ​ Certificate of Designation of Preferences, Rights and Limitations of Series D-2 Preferred Stock ( incorporated by reference to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on January 10, 2025). 121 Table of Contents 3.17 ​ Certificate of Designation of Preferences, Rights and Limitations of Series D-3 Preferred Stock ( incorporated by reference to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on January 10, 2025). 4.1 Form of Pre-Funded Warrant ( incorporated by reference to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on May 22, 2019). 4.2 Amendment No. 1 To Pre-Funded Warrant ( incorporated by reference to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on July 9, 2019). 4.3* Description of Securities. 4.4 ​ Form of 2022 Pre-Funded Warrant ( incorporated by reference to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on March 2, 2022). 4.5 ​ Form of Warrant to be issued to OrbiMed Royalty and Credit Opportunities III, LP ( incorporated by reference to the Company’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on August 15, 2022). 4.6 ​ Form of Warrant 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). 4.7 ​ 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). 4.8 ​ 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). 4.9 ​ Form of Placement Agent Warrant ( incorporated by reference to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 21, 2024). 4.10 ​ Form of Amendment to Warrant issued to Avenue Venture Opportunities Fund II, L.P. and Avenue Venture Opportunities Fund, L.P. ( incorporated by reference to the Company’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on August 8, 2024). 4.11* ​ Form of Second Amendment to Warrant issued to Avenue Venture Opportunities Fund II, L.P. and Avenue Venture Opportunities Fund, L.P. 4.12* ​ Form of Third Amendment to Warrant issued to Avenue Venture Opportunities Fund II, L.P. and Avenue Venture Opportunities Fund, L.P. 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). 122 Table of Contents 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). 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 (incorporated by reference to the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 9, 2023) 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). 123 Table of Contents 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). 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 (incorporated by reference to the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 28, 2024). 10.35+ ​ Personal Employment Agreement, dated February 16, 2024, between LabStyle Innovation Ltd. and Tomer Ben-Kiki (incorporated by reference to the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 28, 2024). 10.36 ​ Offer Letter dated May 29, 2024, by and between DarioHealth Corp. and Steven Nelson (incorporated by reference to Exhibit 10.1 filed with the Company’s Current Report on Form 8-K filed on June 5, 2024). 10.37 ​ Series D Securities Purchase Agreement (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed with the SEC on December 18, 2024). 10.38 ​ Form of Lock-Up Agreement (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K filed with the SEC on December 18, 2024). 10.39 ​ Third Amendment to Loan and Security Agreement and Supplement, dated December 17, 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 Exhibit 10.3 to the Current Report on Form 8-K filed with the SEC on December 18, 2024). 19.1* ​ Insider Trading Policy. 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. ( incorporated by reference to the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 28, 2024). 124 Table of Contents 101* The following financial statements from the Company’s annual report on Form 10-K for the year ended December 31, 2024, 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. ​ ​ 125 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 10 , 202 5 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 10 , 202 5 Erez Raphael Director (Principal Executive Officer) /s/ Zvi Ben David Chief Financial Officer, Secretary and March 10 , 202 5 Zvi Ben David Treasurer (Principal Financial and Accounting Officer) /s/ Yoav Shaked Chairman of the Board March 10 , 202 5 Yoav Shaked /s/ Dennis Matheis Director March 10 , 202 5 Dennis Matheis /s/ Hila Karah Director March 10 , 202 5 Hila Karah /s/ Dennis M. McGrath Director March 10 , 202 5 Dennis M. McGrath /s/ Lawrence Leisure Director March 10 , 202 5 Lawrence Leisure ​ ​ ​ ​ ​ /s/ Adam Stern Director March 10 , 202 5 Adam Stern ​ ​ ​ 126 Table of Contents DARIOHEALTH CORP. AND ITS SUBSIDIARIES CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2024 INDEX ​ Page Report of Independent Registered Public Accounting Firm (PCAOB - Firm ID: 1281 ) ​ F- 2 – F- 5 ​ Consolidated Balance Sheets ​ F- 6 – F- 7 ​ Consolidated Statements of Comprehensive Loss ​ F- 8 ​ Statements of Changes in Stockholders’ Equity ​ F- 9 ​ Consolidated Statements of Cash Flows ​ F- 10 ​ Notes to Consolidated Financial Statements ​ F- 11 – F- 54 ​ - - - - - - - - - - - - - - - ​ ​ ​ ​ 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, 2024 and 2023, 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, 2024, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2024, in conformity with U.S. generally accepted accounting principles. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matters The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) 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. ​ ​ Business combinations ​ Description of the Matter As described in Note 4 to the consolidated financial statements, On February 15, 2024, the Company acquired 100% of the equity shares of Twill Inc. (Twill"). The fair value of the consideration was estimated to be 34,456 $Twill Acquisition was accounted for as a business combination in accordance with ASC 805 “Business Combinations”. ​ Auditing the Company's accounting for the Twill Acquisition was complex due to the significant estimation uncertainty in determining the fair values of identified intangible assets, which consisted of technology of $ 5.6 million and customer relationships of $13.7 million. ​ The significant estimation uncertainty in determining the fair values of identified intangible assets was primarily due to the sensitivity of the respective fair values to underlying assumptions about the future performance of the acquired business. The significant assumptions used to estimate the fair value of the technology and customer relationships intangible assets included discount rates and certain assumptions that form the basis of the forecasted results, such as revenue growth rates, profitability margins and estimated costs. These significant assumptions are forward-looking and could be affected by future economic and market conditions. F - 4 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 ​ How We Addressed the Matter in Our Audit To test the estimated fair value of the developed technology and customer relationships intangible assets, we performed audit procedures that included, among others, evaluating the Company's selection of the valuation methodology, evaluating the methods and significant assumptions used by the Company, and evaluating the completeness and accuracy of the underlying data supporting the significant assumptions and estimates. For example, we compared the significant assumptions to current industry, market and economic trends and to the Company's budgets and forecasts, and Twill’s historical operating results. We involved our valuation specialists to assist with our evaluation of the methodology used by the Company and significant assumptions included in the fair value estimates. Our valuation specialists’ procedures included, among others, developing a range of independent estimates for the discount rates used in the valuation models and comparing those to the discount rates selected by management. ​ ​ /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 10, 2025 ​ ​ ​ F - 5 Table of Contents ​ DARIOHEALTH CORP. AND ITS SUBSIDIARIES CONSOLIDATED BALANCE SHEETS U.S. dollars in thousands ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ December 31, ​ 2024 2023 ASSETS ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ CURRENT ASSETS: ​ ​ Cash and cash equivalents ​ $ 27,764 ​ $ 36,797 Short-term bank deposits ​ ​ 697 ​ ​ - Short-term restricted bank deposits ​ 175 ​ 292 Trade receivables, net ​ 4,804 ​ 3,155 Inventories ​ 4,753 ​ 5,062 Other accounts receivable and prepaid expenses ​ 2,336 ​ 2,024 ​ ​ ​ ​ ​ ​ ​ Total current assets ​ 40,529 ​ 47,330 ​ ​ ​ ​ ​ ​ ​ NON-CURRENT ASSETS: ​ ​ ​ ​ Deposits ​ ​ 79 ​ ​ 6 Operating lease right of use assets ​ 1,065 ​ 967 Long-term assets ​ ​ 313 ​ ​ 143 Property and equipment, net ​ ​ 709 ​ ​ 899 Intangible assets, net ​ ​ 18,762 ​ ​ 5,404 Goodwill ​ ​ 57,427 ​ ​ 41,640 ​ ​ ​ ​ ​ ​ ​ Total non-current assets ​ ​ 78,355 ​ ​ 49,059 ​ ​ ​ ​ ​ ​ ​ Total assets ​ $ 118,884 ​ $ 96,389 ​ The accompanying notes are an integral part of the consolidated financial statements. ​ F-6 Table of Contents DARIOHEALTH CORP. AND ITS SUBSIDIARIES CONSOLIDATED BALANCE SHEETS U.S. dollars in thousands (except stock and stock data) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ December 31, ​ 2024 2023 LIABILITIES AND STOCKHOLDERS’ EQUITY ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ CURRENT LIABILITIES: ​ ​ Trade payables ​ $ 3,045 ​ $ 1,131 Deferred revenues ​ 1,583 ​ 997 Operating lease liabilities ​ ​ 504 ​ ​ 111 Other accounts payable and accrued expenses ​ 6,052 ​ 6,300 Current maturity of long-term loan ​ ​ 5,451 ​ ​ 3,954 ​ ​ ​ ​ ​ ​ ​ Total current liabilities ​ 16,635 ​ 12,493 ​ ​ ​ ​ ​ ​ ​ NON-CURRENT LIABILITIES ​ ​ ​ ​ ​ ​ Operating lease liabilities ​ 765 ​ 885 Long-term loan ​ 23,472 ​ 24,591 Warrant liability ​ ​ 5,968 ​ ​ 240 Other long-term liabilities ​ 25 ​ 36 ​ ​ ​ ​ ​ ​ ​ Total non-current liabilities ​ ​ 30,230 ​ ​ 25,752 ​ ​ ​ ​ ​ ​ ​ STOCKHOLDERS’ EQUITY ​ ​ ​ ​ Common stock of $ 0.0001 par value - authorized: 160,000,000 shares; issued and outstanding : 38,388,431 and 27,191,849 shares on December 31, 2024 and December 31, 2023, respectively ​ 4 ​ 3 Preferred stock of $ 0.0001 par value - authorized: 5,000,000 shares; issued and outstanding : 49,585 and 18,959 shares on December 31, 2024 and December 31, 2023, respectively ​ *) - ​ *) - Additional paid-in capital ​ 462,358 ​ 407,502 Accumulated deficit ​ ( 390,343 ) ​ ( 349,361 ) ​ ​ ​ ​ ​ ​ ​ Total stockholders’ equity ​ 72,019 ​ 58,144 ​ ​ ​ ​ ​ ​ ​ Total liabilities and stockholders’ equity ​ $ 118,884 ​ $ 96,389 ​ The accompanying notes are an integral part of the consolidated financial statements. *) Represents an amount lower than $1. ​ F-7 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, ​ 2024 2023 Revenues: ​ ​ ​ ​ ​ ​ Services ​ $ 20,197 ​ $ 13,084 Consumer hardware ​ ​ 6,843 ​ ​ 7,268 Total revenues ​ ​ 27,040 ​ ​ 20,352 ​ ​ ​ ​ ​ ​ ​ Cost of revenues: ​ ​ ​ ​ ​ ​ Services ​ ​ 3,606 ​ ​ 4,679 Consumer hardware ​ ​ 5,139 ​ ​ 5,303 Amortization of acquired intangible assets ​ ​ 5,028 ​ ​ 4,386 Total cost of revenues ​ 13,773 ​ 14,368 ​ ​ ​ ​ ​ ​ ​ Gross profit ​ 13,267 ​ 5,984 ​ ​ ​ ​ ​ ​ ​ Operating expenses: ​ ​ ​ ​ Research and development ​ $ 24,179 ​ $ 20,248 Sales and marketing ​ 26,350 ​ 23,785 General and administrative ​ 20,482 ​ 18,140 ​ ​ ​ ​ ​ ​ ​ Total operating expenses ​ 71,011 ​ 62,173 ​ ​ ​ ​ ​ ​ ​ Operating loss ​ 57,744 ​ 56,189 ​ ​ ​ ​ ​ ​ ​ Total financial expenses (income), net ​ ( 13,145 ) ​ 3,174 ​ ​ ​ ​ ​ ​ ​ Loss before taxes ​ ​ 44,599 ​ ​ 59,363 ​ ​ ​ ​ ​ ​ ​ Income Tax ​ ​ ( 1,852 ) ​ ​ 64 ​ ​ ​ ​ ​ ​ ​ Net loss ​ $ 42,747 ​ $ 59,427 ​ ​ ​ ​ ​ ​ ​ Deemed dividend (contribution) ​ $ ( 1,765 ) ​ $ 4,084 ​ ​ ​ ​ ​ ​ ​ Net loss attributable to common shareholders ​ $ 40,982 ​ $ 63,511 ​ ​ ​ ​ ​ ​ ​ Net loss per share: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Basic and diluted loss per share of common stock ​ $ 0.61 ​ $ 1.93 Weighted average number of common stock used in computing basic and diluted net loss per share ​ 49,039,410 ​ 28,371,979 ​ The accompanying notes are an integral part of the consolidated financial statements. ​ ​ F-8 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, 2023 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 issuance of 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 Stock-based compensation ​ 887,334 ​ ​ *) - ​ — ​ ​ — ​ ​ 16,185 ​ ​ — ​ ​ 16,185 Issuance of Common Stock, net of issuance cost ​ 408,043 ​ ​ *) - ​ 15,402 ​ ​ — ​ ​ 16,482 ​ ​ — ​ ​ 16,482 Common stock related to earnout consideration ​ 76,637 ​ ​ *) - ​ — ​ ​ — ​ ​ — ​ ​ ​ ​ ​ *) - Issuance of warrants related to loan agreement, net of issuance cost — ​ ​ — ​ — ​ ​ — ​ ​ 1,389 ​ ​ — ​ ​ 1,389 Net loss — ​ ​ — ​ — ​ ​ — ​ ​ — ​ ​ ( 59,427 ) ​ ​ ( 59,427 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance as of December 31, 2023 27,191,849 ​ $ 3 ​ 18,959 ​ $ *) - ​ $ 407,502 ​ $ ( 349,361 ) ​ $ 58,144 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Exercise of options ​ 10,714 ​ ​ *) - ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ *) - Exercise of pre-funded warrant to common stock 3,187,101 ​ ​ *) - ​ — ​ ​ — ​ ​ 2,225 ​ ​ — ​ ​ 2,225 Extinguishment of preferred stock in connection with preferred stock modification ​ — ​ ​ — ​ — ​ ​ ​ ​ ​ ( 12,194 ) ​ ​ 12,194 ​ ​ — Deemed dividend related to issuance of preferred stock — ​ ​ — ​ — ​ ​ — ​ ​ 10,429 ​ ​ ( 10,429 ) ​ ​ — Conversion of preferred stock to common stock 4,807,489 ​ ​ *) - ​ ( 10,601 ) ​ ​ *) - ​ ​ — ​ ​ — ​ ​ *) - Issuance of warrants to service providers ​ — ​ ​ — ​ — ​ ​ — ​ ​ 2,704 ​ ​ — ​ ​ 2,704 Stock-based compensation ​ 3,191,278 ​ ​ *) - ​ — ​ ​ — ​ ​ 13,092 ​ ​ — ​ ​ 13,092 Issuance of preferred stock, net of issuance cost ​ — ​ ​ 1 ​ 41,227 ​ ​ *) - ​ ​ 38,530 ​ ​ — ​ ​ 38,531 Modification of warrants — ​ ​ — ​ — ​ ​ — ​ ​ 70 ​ ​ — ​ ​ 70 Net loss — ​ ​ — ​ — ​ ​ — ​ ​ — ​ ​ ( 42,747 ) ​ ​ ( 42,747 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance as of December 31, 2024 38,388,431 ​ $ 4 ​ 49,585 ​ $ *) - ​ $ 462,358 ​ $ ( 390,343 ) ​ $ 72,019 *) Represents an amount lower than $1. The accompanying notes are an integral part of the consolidated financial statements. ​ F-9 Table of Contents ​ DARIOHEALTH CORP. AND ITS SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS U.S. dollars in thousands ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended ​ ​ December 31, ​ 2024 2023 Cash flows from operating activities: ​ ​ ​ ​ ​ ​ Net loss ​ $ ( 42,747 ) ​ $ ( 59,427 ) Adjustments required to reconcile net loss to net cash used in operating activities: ​ ​ ​ ​ Stock-based compensation ​ 15,796 ​ 19,701 Depreciation and impairment ​ 1,327 ​ 473 Change in operating lease right of use assets ​ 907 ​ 239 Amortization of acquired intangible assets ​ 6,100 ​ 4,512 Decrease in trade receivables, net ​ 1,680 ​ 3,261 Increase in other accounts receivable, prepaid expense and long-term assets ​ ( 80 ) ​ ( 426 ) Decrease in inventories ​ 308 ​ 2,894 Decrease in trade payables ​ ( 496 ) ​ ( 1,191 ) Decrease in other accounts payable and accrued expenses ​ ( 3,483 ) ​ ( 256 ) Decrease in deferred revenues ​ ( 156 ) ​ ( 323 ) Change in operating lease liabilities ​ ( 1,150 ) ​ ( 124 ) Change in fair value of warrant liability ​ ( 16,504 ) ​ ( 670 ) Non-Cash financial expenses ​ 516 ​ 1,198 Other ​ ( 580 ) ​ ( 240 ) ​ ​ ​ ​ ​ ​ ​ Net cash used in operating activities ​ ( 38,562 ) ​ ( 30,379 ) ​ ​ ​ ​ ​ ​ ​ Cash flows from investing activities: ​ ​ Purchase of property and equipment ​ ( 138 ) ​ ( 584 ) Purchase of short-term investments ​ ​ — ​ ​ ( 4,996 ) Proceeds from redemption of short-term investments ​ ​ — ​ ​ 5,033 Payments for business acquisitions, net of cash acquired ​ ​ ( 8,796 ) ​ ​ — ​ ​ ​ ​ ​ ​ ​ Net cash used in investing activities ​ ( 8,934 ) ​ ( 547 ) ​ ​ ​ ​ ​ ​ ​ Cash flows from financing activities: ​ ​ ​ ​ Proceeds from issuance of common stock, net of issuance costs ​ ​ — ​ ​ 1,614 Proceeds from issuance of preferred stock, net of issuance costs ​ 38,531 ​ 14,868 Proceeds from borrowings on credit agreement ​ ​ — ​ ​ 29,604 Repayment of long-term loan ​ ​ — ​ ​ ( 27,833 ) ​ ​ ​ ​ ​ ​ ​ Net cash provided by financing activities ​ 38,531 ​ 18,253 ​ ​ ​ ​ ​ ​ ​ Decrease in cash, cash equivalents and restricted cash and cash equivalents ​ ( 8,965 ) ​ ( 12,673 ) Effect of exchange rate differences on cash, cash equivalents and restricted cash and cash equivalents ​ ​ ( 68 ) ​ ​ — Cash, cash equivalents and restricted cash and cash equivalents at beginning of period ​ 36,797 ​ 49,470 Cash, cash equivalents and restricted cash and cash equivalents at end of period ​ $ 27,764 ​ $ 36,797 Supplemental disclosure of cash flow information: ​ ​ ​ Cash paid during the period for interest on long-term loan ​ $ 3,927 ​ $ 4,031 Non-cash activities: ​ ​ ​ Right-of-use assets obtained in exchange for lease liabilities ​ $ 428 ​ $ 136 Exercise of pre-funded warrant to common stock upon acquisition ​ $ 2,225 ​ $ - ​ ​ ​ ​ ​ F-10 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. On February 15, 2024 (the “Closing Date”), the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Twill, Inc. (“Twill”), (see note 4). Pursuant to the provisions of the Merger Agreement, on the Closing Date, TWILL Merger Sub, Inc. (“Merger Sub”) was merged with and into Twill, the separate corporate existence of Merger Sub ceased and Twill continued as the surviving company and a wholly owned subsidiary of the Company. Twill is a clinical grade technology company working to shorten the distance between need and care by configuring personalized digital therapeutics and care solutions at scale for the modern healthcare cloud. Twill’s Intelligent Healing Platform(tm): integrates artificial intelligence (AI) with empathy, making healing more personal, precise, and connected for the entire care journey. Twill deploys a full spectrum of science-backed care solutions-including digital therapeutics, coaching, community, and well-being products for pharma, health plans, enterprises, and individuals everywhere. d. The Company has incurred net losses since its inception. As of December 31, 2024, The Company has incurred recurring losses and negative cash flows since inception and has an accumulated deficit of $ 390,343 as of December 31, 202 4 . For the year ended December 31, 202 4 , the Company used approximately $ 38,562 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 expects 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 to fund its operations. 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. e. The Company’s common stock (the “Common Stock”) is listed on the Nasdaq Capital Market under the symbol “DRIO”. 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 The consolidated financial statements are prepared according to United States generally accepted accounting principles (“U.S. GAAP”). a. Use of estimates: The preparation of the consolidated financial statements and related disclosures in conformity with U.S. GAAP requires the Company’s management to make judgments, assumptions and estimates that affect the amounts reported in its consolidated financial statements and accompanying notes. Management bases its estimates on historical experience and on various other assumptions it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results may differ from these estimates, and such differences may be material. These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements including other accounts receivable and prepaid expenses and other accounts payable and accrued expenses, and the reported amounts of revenue, cost of revenues and operational expenses during the reporting period. Actual results could differ from those estimates. b. Financial statements in U.S. dollars (“$,” “dollar” or “dollars”): The functional currency of the Company and its subsidiaries is the U.S dollar. The Company’s revenues and financing activities are incurred in U.S. dollars. Although a portion of the Company’s expenses is denominated in New Israeli Shekels (“NIS”), a substantial portion of its expenses is denominated in dollars. Accordingly, the Company’s management believes that the currency of the primary economic environment in which the Company and its subsidiaries operate is the dollar; thus, the dollar is the functional currency of the Company. Transactions and balances denominated in dollars are presented at their original amounts. Monetary accounts denominated in currencies other than the dollar are re-measured into dollars in accordance with Accounting Standards Codification (“ASC”) 830, “Foreign Currency Matters”. All transaction gains and losses of the re-measurement of monetary balance sheet items are reflected in the consolidated statements of comprehensive loss as financial income or expenses, as appropriate. c. Principles of consolidation: The consolidated financial statements include the accounts of the Company and its subsidiaries. Intercompany accounts and transactions have been eliminated upon consolidation. d. Segment information: Operating segments are defined as components of an enterprise about which separate financial information is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and assessing performance. The Company identified its Chief Executive Officer as the Chief Operating Decision Maker (CODM). The Company’s Chief Executive Officer reviews the financial information presented on consolidated basis for purposes of allocating resources and evaluating its financial performance. e. Cash and cash equivalents: The Company considers all highly liquid investments, which are readily convertible to cash with a maturity of three months or less at the date of acquisition, to be cash equivalents. F-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.) 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 guarantees issued to the landlords of the Company’s offices and credit card payments. The short-term restricted bank deposits are denominated in NIS and USD and bear interest at an average rate of 4.56 % and 5.2 % as of December 31, 202 4 and 202 3 , respectively. The short-term restricted bank deposits are presented at their cost, including accrued interest. As of December 31, 202 4 , and 202 3 , the Company had a short-term restricted bank deposit which are used as collateral for rent in the amount of $ 175 and $ 229 , respectively. As of December 31, 202 4 , and 2023, the Company had short-term restricted bank deposits which were used as collateral for credit payments in amounts of $ 0 and $ 63 , 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, ​ December 31, ​ ​ 2024 2023 ​ Cash, and cash equivalents as reported on the balance sheets ​ $ 27,764 $ 36,797 ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash, restricted cash, cash equivalents, and restricted cash and cash equivalents as reported in the statements of cash flows ​ $ 27,764 $ 36,797 ​ ​ g. Trade receivables, net: The Company records trade receivables when an enforceable right to payment exists, net of allowance for credit losses. The Company’s expected credit loss allowance methodology for trade receivables is based upon its assessment of various factors, including historical experience, the age of the trade receivable balances, credit quality of its customers, current economic conditions, reasonable and supportable forecasts of future economic conditions, and other factors that may affect its ability to collect from customers. The estimated credit loss allowance is recorded as general and administrative expenses on the Company's Consolidated Statements of Comprehensive Loss. As of December 31, 2024, and 2023, the credit loss allowance was $ 169 and $ 163 , respectively. 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, 202 4 , and 202 3 amounted to $ 301 and $ 121 , respectively. 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.) 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 (or asset group) may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset (or asset group) to the future undiscounted cash flows expected to be generated by the assets. If such assets (or asset group) are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets (or asset group). For the years ended December 31, 202 4 , and 202 3 , the Company recorded an impairment loss of $ 860 and $ 0 , respectively. k. Revenue recognition The Company recognizes revenue in accordance with ASC 606, when (or as) it satisfies performance obligations by transferring promised hardware or services to its customers in an amount that reflects the consideration the Company expects to receive. The Company applies the following five steps: (1) identify the contract with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract, and (5) recognize revenue when a performance obligation is satisfied. If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. For contracts that contain multiple performance obligations, the Company allocates the transaction price to each performance obligation based on the relative standalone selling price (“SSP”) for each performance obligation. The Company uses judgment in determining the SSP for its performance obligations. 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-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.) The Company’s payment terms are generally 45 days or less. In instances where the timing of revenue recognition differs from the timing of invoicing, the Company determines its contracts generally do not include a significant financing component since the Company's selling prices are not subject to billing terms nor is the Company’s purpose to receive financing from its customers or to provide customers with financing. In addition, the Company elected to apply the practical expedient not to adjust the promised amount of consideration for the effects of a significant financing component if the Company expects, at the inception of a contract, that the period between when the Company will transfer a promised good or service to a customer and when the customer will pay for that good or service will be one year or less. Revenue is recognized net of any taxes collected from customers which are subsequently remitted to governmental entities. The Company elected to account for shipping and handling activities as fulfillment activities. Shipping and handling activities are classified as part of cost of revenues. Consumers revenue The Company considers customer and distributor purchase orders to be contracts with customers. For each contract, the Company considers the promise to transfer tangible hardware and/or services, each of which are distinct, and accounted for as separate performance obligations. In determining the transaction price, the Company evaluates whether the price is subject to rebates and adjustments to determine the net consideration to which the Company expects to receive. Revenue from tangible hardware is recognized when control of the hardware is transferred to the customer (i.e., when the Company’s performance obligation is satisfied), which typically occurs at shipment. The revenues from fixed-price services are recognized ratably over the contract period as the services have a consistent continuous pattern of transfer to a customer during the contract period. Commercial revenue – B2B2C The Company provides a mobile and web-based digital therapeutics health management programs to employers and health plans for their employees or covered individuals. Such programs include live clinical coaching, content, automated journeys, hardware, and lifestyle coaching, currently supporting diabetes, prediabetes and obesity, hypertension, behavioral health (BH) and musculoskeletal health (MSK). At contract inception, the Company assesses the type of services being provided and assesses the performance obligations in the contract. These solutions integrate access to the Company’s web-based platform, and clinical and data services to provide an overall health management solution. The promises to transfer these goods and services are not separately identifiable and are considered a single continuous service comprised of a series of distinct services recognized over time that are substantially the same and have the same pattern of transfer (i.e., distinct days of service). Revenues related to the Company's newly acquired Twill platform are recognized over time, since the customer simultaneously receives and consumes the benefits provided by the Company’s performance. Revenues related to health management programs and to the Twill platform are recognized using a time-elapsed measure of progress, since those services have a consistent continuous pattern of transfer to the customer. To the extent the transaction price includes variable consideration, revenue is recognized using the variable consideration allocation exception, or, if the allocation exception is not met, the Company recognizes revenue ratably based on estimates of the variable consideration to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. When the variable consideration allocation exception is met, the Company recognizes revenue each month using either on a per engaged member per month (PEMPM) or a per employee per month (PEPM) basis. Since the acquisition of Twill (note 4), the Company also provides professional services and advertisement serving services related to the Twill platform. Revenues related to professional services are recognized over time, since the customer simultaneously receives and consumes the benefits provided by the Company’s performance. 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.) The Company generally recognizes revenues for professional services using an input method, based on labor hours consumed, which the Company believes best depicts the transfer of the services to the customer. Revenues related to advertisement serving services are recognized when impressions are delivered. The Company recognizes revenue from the display of advertisements in the contracted period in which the impressions are delivered. Impressions are considered delivered when an advertisement is displayed. Certain of the Company’s contracts include client performance guarantees and a portion of the fees in those contracts are subject to performance-based metrics such as clinical outcomes or minimum member utilization rates. The Company includes in the transaction price some or all of an amount of variable consideration only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. Refunds to a customer that result from performance levels that were not met by the end of the measurement period are adjusted to the transaction price, and therefore estimated at the outset of the arrangement. The Company follows the guidance provided in ASC 606 for determining whether it is a principal (i.e., report revenues on a gross basis) or an agent (i.e., report revenues on a net basis) in arrangements with customers that involve another party that contributes to providing specified services to a customer, based on whether the Company controls the specified good or service. Commercial revenue - Strategic partnerships 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-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.) 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. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance at ​ ​ ​ ​ ​ ​ ​ ​ Balance at ​ ​ ​ beginning of period ​ ​ Additions ​ ​ Deduction ​ ​ end of period Year ended December 31, 2024 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Allowance for credit losses ​ $ 163 ​ $ 268 $ ( 262 ) $ 169 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, 2023 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Allowance for credit losses ​ $ 23 ​ $ 140 ​ $ — ​ $ 163 ​ The Company has no off-balance-sheet concentration of credit risk. ​ Customer A: As of December 31, 2024, and as December 31, 2023, the Company's major customer accounted for 41.6 % and 0 %, respectively of the Company's accounts receivable balance. For the year ended December 31, 2024 and December 31, 2023, the Company's major customer accounted for 24.6 % and 0 %, respectively, of the Company's revenue in the period. Customer B: As of December 31, 2024, and as December 31, 2023, the Company's major customer accounted for 0 % and 66.5 %, respectively of the Company's accounts receivable balance. For the year ended December 31, 2024, and December 31, 2023, the Company's major customer accounted for 0 % and 29.9 %, 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, 2024, and 2023, no liability for unrecognized tax benefits was recorded. 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.) o. Research and development costs: Research and development costs are charged to the consolidated statements of comprehensive loss, as incurred. 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. ​ 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.) Level 3 - Valuations based on inputs that are unobservable and significant to the overall fair value measurement. The availability of observable inputs can vary from instrument to instrument and is affected by a wide variety of factors, including, for example, the type of investment, the liquidity of markets and other characteristics particular to the transaction. To the extent that valuation is based on models or inputs that are unobservable in the market, the determination of fair value requires more judgment, and the fair value are categorized as Level 3. The carrying amounts of cash and cash equivalents, short-term restricted bank deposits, trade receivables, other accounts receivable and prepaid expenses, trade payables and other accounts payable and accrued expenses approximate their fair value due to the short-term maturity of such instruments. The Company's 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 comprehensive loss. 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-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.) 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, 2024 and 2023 amounted to $ 935 and $ 947 , respectively. The Company has a 401(k) defined contribution plan covering certain employees in the U.S. All eligible employees may elect to contribute up to $ 23 per year (for certain employees over 50 years of age the maximum contribution is $ 30.5 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, 202 4 , and 202 3 , 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 not to recognize a lease liability or right-of-use (“ROU”) asset for leases with a term of twelve months or less. The Company also elected the practical expedient not to separate lease and non-lease components for its leases. ROU assets represent the right to use an underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease. ROU assets are initially measured at amounts, which represents the discounted present value of the lease payments over the lease, plus any initial direct costs incurred. The ROU assets are reviewed for impairment. The lease liability is initially measured at lease commencement date based on the discounted present value of the lease payments over the lease term. The implicit rate within the operating leases is generally not determinable; therefore, the Company uses the Incremental Borrowing Rate (“IBR”) based on the information available at commencement date in determining the present value of lease payments. The Company’s IBR is estimated to approximate the interest rate on similar terms and payments and in economic environments where the leased asset is located. ​ F-20 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. Intangible Assets: Acquired identifiable finite-lived intangible assets are amortized on a straight-line basis over the estimated useful lives of the assets. The basis of amortization approximates the pattern in which the assets are utilized, over their estimated useful lives. The Company routinely reviews the remaining estimated useful lives of finite-lived intangible assets. In case the Company reduces the estimated useful life for any asset, the remaining unamortized balance is amortized over the revised estimated useful life (see Note 11). y. 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, 2024 and 2023, no impairment of goodwill has been recorded. ​ F-21 Table of Contents DARIOHEALTH CORP. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS U.S. dollars in thousands NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.) z. Recently Adopted Accounting Pronouncements (i) In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280), Improvements to Reportable Segment Disclosures requiring public entities to disclose information about their reportable segments’ significant expenses and other segment items on an interim and annual basis. Public entities with a single reportable segment are required to apply the disclosure requirements in ASU 2023-07, as well as all existing segment disclosures and reconciliation requirements in ASC 280 on an interim and annual basis. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods for the fiscal years beginning after December 15, 2024. The Company adopted the ASU 2023-07 during the year ended December 31, 2024, on a retrospective basis which resulted in updated segment disclosures. See Note 18 in the accompanying notes to the consolidated financial statements for further detail. aa. Recently issued accounting pronouncements, not yet adopted: (i) In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740) - Improvements to Income Tax Disclosures. The ASU requires that an entity disclose specific categories in the effective tax rate reconciliation as well as provide additional information for reconciling items that meet a quantitative threshold. Further, the ASU requires certain disclosures of state versus federal income tax expense and taxes paid. The amendments in this ASU are required to be adopted for fiscal years beginning after December 15, 2024. Early adoption is permitted, and the amendments should be applied on a prospective basis. The Company is currently evaluating the effect of adopting the ASU on its disclosures. (ii) In November 2024, the FASB issued ASU 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40) - Disaggregation of Income Statement Expenses. The ASU requires, among other items, additional disaggregated disclosures in the notes to financial statements for certain categories of expenses that are included on the Statements of Operations. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and for interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted, and may be applied either prospectively or retrospectively. The Company is currently evaluating the effect of adopting the ASU on its disclosures. NOTE 3:- OTHER ACCOUNTS RECEIVABLE AND PREPAID EXPENSES ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ 2024 2023 ​ ​ ​ ​ ​ ​ ​ Prepaid expenses ​ $ 1,788 ​ $ 1,536 Costs to fulfill a contract ​ ​ 259 ​ ​ 238 Government authorities ​ 289 ​ 250 ​ ​ ​ ​ ​ ​ ​ ​ ​ $ 2,336 ​ $ 2,024 ​ ​ ​ ​ ​ ​ ​ ​ ​ F-22 Table of Contents DARIOHEALTH CORP. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS U.S. dollars in thousands NOTE 4:- ACQUISITIONS ​ Acquisition of Twill On February 15, 2024, the Company completed the merger and the associated acquisition of all issued and outstanding shares of Twill for an aggregate consideration of (A) $ 10.0 million in cash, and (B) pre-funded warrants (the “Pre-Funded Warrants”) to purchase up to 10,000,400 shares of the Company’s Common Stock, per value $ 0.0001 per share (the "common stock"). In addition, the Company issued stock options to purchase up to 2,963,459 shares of Common Stock and a combination of warrants and restricted stock units (“RSUs”) to acquire up to 1,766,508 shares of Common Stock to certain employees and officers of Twill. The Company accounted for the stock options, warrants and RSUs separately from the acquisition. The Company incurred acquisition-related costs in a total amount of $ 857 , which were included in general and administrative expenses in the Consolidated Statements of Comprehensive loss. ​ The acquisition of Twill advances the Company’s strategy to evolve from a point solution to a comprehensive multi condition platform. With the integration of Twill, the Company believes it can achieve multiple advantages as well as synergies in multiple fronts like its product offering, commercial channels, improved clients and member experience. ​ Preliminary purchase price allocation: ​ Pursuant to ASC 805, the total purchase price was allocated to Twill’s net tangible and intangible assets based on their estimated fair values as set forth below. The excess of the purchase price over the net tangible and identifiable intangible assets was recorded as goodwill. A portion of the acquisition price was recorded as goodwill due to the synergies with Twill and is not expected to be deductible for tax purposes. ​ The allocation of the purchase price to the assets acquired and liabilities assumed based on management’s estimate of fair values at the date of acquisition as follows: ​ F-23 Table of Contents DARIOHEALTH CORP. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS U.S. dollars in thousands NOTE 4 – ACQUISITIONS (Cont.) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash and cash equivalents ​ $ 531 Short-term restricted bank deposits ​ ​ 673 Trade receivables ​ ​ 3,329 Other accounts receivable and prepaid expenses ​ ​ 475 Property and equipment, net ​ ​ 580 Operating lease right of use assets ​ ​ 995 Acquisition-related intangibles ​ ​ 19,435 Other assets ​ ​ 23 Total assets acquired ​ ​ 26,041 Trade payables ​ ​ 2,411 Other accounts payable and accrued expenses ​ ​ 1,223 Deferred revenues ​ ​ 742 Operating lease liabilities ​ ​ 995 Deferred tax liability ​ ​ 2,001 Liabilities assumed ​ ​ 7,372 Fair value of net assets acquired ​ ​ 18,669 Goodwill ​ ​ 15,787 Total purchase consideration ​ $ 34,456 ​ Following are details of the purchase consideration allocated to acquired intangible assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Amortization ​ ​ Fair value ​ period (Years) Technology (1) ​ $ 5,644 ​ ​ 7.9 Customer relationship healthcare (2) ​ ​ 13,791 ​ ​ 11.9 Total identified intangible assets acquired ​ $ 19,435 ​ ​ ​ ​ (1) The technology has been calculated through the Income Approach, in particular the Relief from Royalty method. (2) The fair value of Twill’s customer relationships has been calculated using the Multi-Period excess earnings method (“MPEEM method”). ​ ​ ​ ​ ​ ​ ​ Amount Number of shares of common stock issuable upon the exercise of the consideration warrants. ​ ​ 10,000,400 Value of each warrant issued ​ $ 2.446 Total consideration warrant shares ​ ​ 24,456 ​ ​ ​ ​ Cash consideration ​ ​ 10,000 Total purchase price ​ $ 34,456 ​ ​ F-24 Table of Contents DARIOHEALTH CORP. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS U.S. dollars in thousands NOTE 4 – ACQUISITIONS (Cont.) The consolidated statement of comprehensive loss includes the following revenue and net loss attributable to Twill in 2024: ​ ​ ​ ​ ​ ​ ​ Year ended ​ ​ December 31, 2024 Revenues ​ $ 12,931 Net loss ​ $ 5,645 ​ The Company recognized $ 2,001 of a deferred tax liability which relates to the purchase price allocation fair value adjustments, other than goodwill. The Company is planning to file a consolidated tax return in the U.S. together with Twill and to utilize the benefit of the Company's loss carryforwards against the future taxable income of Twill and consequently decreased its valuation allowance in an amount equal to the deferred tax liability recognized in the business combination. ​ Supplemental Unaudited Pro Forma Information ​ The following table sets forth a summary of the unaudited pro forma results of the Company as if the acquisition of Twill, which closed in February 2024, had taken place had Twill been acquired as of January 1, 2023. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended ​ December 31, ​ 2024 2023 Total revenues $ 29,003 $ 38,542 Net loss ​ $ 55,985 ​ $ 69,711 ​ ​ ​ ​ ​ ​ ​ ​ The unaudited pro forma financial information presented is for informational purposes only and is not necessarily indicative of the results of operations that would have been achieved if the Twill acquisition was completed at the beginning of 2023 and are not indicative of the future operating results of the combined company. The pro forma results include adjustments related primarily to purchase accounting, and amortization of acquisition-related intangible assets. The pro forma results also include income from revaluation of the pre-funded warrants issued as part of the consideration for the acquisition of Twill, as these warrants are classified as a liability under U.S. GAAP. ​ ​ NOTE 5:- INVENTORIES ​ Inventory consists of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ December 31, ​ ​ 2024 ​ 2023 Raw materials $ 563 $ 1,015 Finished products ​ 4,190 ​ 4,047 ​ ​ ​ ​ ​ ​ ​ ​ ​ $ 4,753 ​ $ 5,062 ​ ​ F-25 Table of Contents DARIOHEALTH CORP. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS U.S. dollars in thousands NOTE 6: - REVENUE The Company is operating a multi-condition healthcare business, empowering individuals to manage their chronic conditions and take steps to improve their overall health. The Company generates 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. The contract included fixed and variable amounts, which were fully constrained. In addition, the Company may provide development services for new products of the other party. During fiscal year 2022 and 2023, three development plans were approved and accounted for as separate contracts. The Company's measured the progress of the development services performance obligations using an input method, based on labor hours consumed as the Company believes that this method best depicts the transfer of services to the customer. In the years ended December 31, 2022, and 2023, the Company recognized revenues in the amounts of $ 5,506 and $ 4,592 , respectively. During fiscal 2024, the Company provided a price concession to the preferred partner in the amount of $ 1,088 to resolve an outstanding dispute. As a result, the Company has recorded the price concession amount as a reduction in revenue. On December 26, 2024, the agreement with the preferred partner was terminated. Concurrently, the Company entered into a new agreement (the "New Agreement") to provide its SaaS services. As part of these arrangements, the preferred partner shall pay $ 1,580 . The Company accounted for the termination and the creation of a new contract as a contract modification. Since the additional services were not priced at SSP, the contract modification was accounted for prospectively. Under the new contract, the Company will provide the preferred customer with SaaS and professional services and ad-serving services. During the year ended December 31, 2024, the Company recognized revenues related to the modified contract in the amount of $ 292 . Agreement with National Health Plan On October 1, 2021, the Company entered into a Master Service Agreement (the “MSA”) and a statement of work (“SOW”, and such SOW, the “October SOW”) with a national health plan (“Health Plan”). Pursuant to the October SOW, the Company will provide the Health Plan access to the Company’s 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 (the “August SOW”) with the Health Plan according to which the Company will provide implementation services 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-26 Table of Contents DARIOHEALTH CORP. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS U.S. dollars in thousands NOTE 6: - REVENUES (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, and July 1, 2024, the Company entered into change orders 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 orders include a fixed consideration in the amount of $ 90 and $ 85 , respectively. For the year ended December 31, 2023, the Company recognized revenues of $ 962 . The August SOW was completed during the second quarter of 2023. Revenue Source: The following table represent the Company total revenues for the year ended December 31, 2024 and 2023 disaggregated by revenue source: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended ​ ​ December 31, ​ 2024 2023 Commercial - Business-to-Business-to-Consumer (“B2B2C”) $ 20,023 $ 5,005 Commercial - Strategic partnerships ​ ​ ( 514 ) ​ ​ 7,054 Consumers ​ ​ 7,531 ​ ​ 8,293 ​ ​ ​ ​ ​ ​ ​ ​ $ 27,040 $ 20,352 ​ Deferred Revenue The Company recognizes contract liabilities, or deferred revenues, when it receives advance payments from customers prior to the satisfaction of the Company's performance obligations. The balance of deferred revenues approximates the aggregate amount of the transaction price allocated to the unsatisfied performance obligations at the end of the reporting period. The Company expects to recognize approximately $ 1,525 over the next 12 months and the remainder thereafter. The Company elected to not disclose information about remaining performance obligations for which the variable consideration is allocated to a wholly unsatisfied promise to transfer a distinct good or service that is subject to the variable consideration allocation exception. The following table presents the significant changes in the deferred revenue balance during the year ended December 31, 2024: ​ ​ ​ ​ ​ Balance, beginning of the period $ 997 Additions through acquisition of Twill ​ ​ 742 New performance obligations ​ ​ 5,191 Reclassification to revenue as a result of satisfying performance obligations ​ ​ ( 5,347 ) ​ ​ ​ ​ Balance, end of the period $ 1,583 ​ Costs to fulfill a contract F-27 Table of Contents DARIOHEALTH CORP. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS U.S. dollars in thousands 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 NOTE 6: - REVENUE (Cont.) 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. 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, 2024, and December 2023, consisted of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ December 31, ​ ​ 2024 ​ 2023 ​ ​ Unaudited ​ ​ ​ Costs to fulfill a contract, current ​ $ 259 $ 238 Costs to fulfill a contract, noncurrent ​ 65 ​ 59 ​ ​ ​ ​ ​ ​ ​ Total costs to fulfill a contract ​ $ 324 ​ $ 297 ​ Costs to fulfill a contract were as follows: ​ ​ ​ ​ ​ ​ ​ ​ Costs to ​ ​ ​ fulfill a contract ​ ​ ​ ​ Beginning balance as of December 31, 2023 ​ $ 297 Additions ​ ​ 391 Cost of revenue recognized ​ ​ ( 364 ) ​ ​ ​ ​ Ending balance as of December 31, 2024 ​ ​ 324 ​ ​ F-28 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 Loan and Security Agreement, and Supplement thereto (the “LSA” or the “Avenue Loan Facility”) by and between the Company and its subsidiary PsyInnovations Inc., collectively as the borrowers (the “Borrowers”) and Avenue Venture Opportunities Fund II, L.P. and Avenue Venture Opportunities Fund, L.P., collectively as the lenders (the “Avenue Lenders”). The LSA provides for a four-year secured credit facility in an aggregate principal amount of up to $ 40,000 , 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. ​ 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 and the outstanding balance shall be due and payable. As part of the LSA, the Company issued a warrant (the “Warrant”) to purchase up to 584,882 shares of the Company’s Common Stock, at an exercise price of $ 3.334 per share, which has a term of five years from the issuance date. ​ On February 15, 2024, the Company and the Borrowers entered into the First Amendment to Loan and Security Agreement and Supplement (the “Avenue Amendment”) with the Avenue Lenders. Pursuant to the Avenue Amendment, the parties agreed to include the Merger Sub and Twill as parties to the Company’s existing loan facility with the lenders. In addition, the Avenue Amendment permit the lenders, subject to Nasdaq rules, to convert up to $ 2,000 of the principal amount of its loan to the Company at a fixed conversion price of $ 4.001 per share. ​ On June 25, 2024, the Company stockholders approved the Avenue Amendment and repriced the Warrant to purchase up to 584,882 shares of Common Stock issued to the lenders on May 1, 2023 at an exercise price $ 3.334 per share, to permit an amendment to the exercise price of such Warrants to $ 2.02 which is 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 $ 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 conversion price of $ 4.001 . ​ Pursuant to the LSA and the Avenue Amendment, the Company is obligated to maintain at least $ 5,000 of unrestricted cash in deposit accounts located in the United States. ​ The Company concluded that Avenue Loan Facility and the Warrant are freestanding financial instruments since these instruments are legally detachable and separately exercisable. The Company has concluded that the Warrant meets all the conditions to be classified as equity pursuant to ASC 480 and ASC 815-40. In addition, the Company elected to account for the Avenue Loan Facility under the fair value option in accordance with ASC 825, “Financial Instruments.” Under the fair value option, changes in fair value are recorded in earnings except for fair value adjustments related to instrument specific credit risk, which are recorded as other comprehensive income or loss. As such, the proceeds were first allocated to the Avenue Loan Facility at fair value in the amount of $ 28,215 and the remaining amount of $ 1,389 was allocated to the Warrant. ​ F-29 Table of Contents DARIOHEALTH CORP. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS U.S. dollars in thousands NOTE 7: - DEBT (Cont.) The Company remeasurement expenses related to the Avenue Loan for the year ended December 31, 2024 were $ 378 , compared to $ 42 of remeasurement income for the year ended December 31, 2023, which were included as part of the financial (income) expenses in the Company's statements comprehensive loss. During the years ended December 31, 2024, and December 31, 2023, the Company did not recognize any instrument specific credit risk fair value adjustment. ​ In connection with the debt modification, the Company also modified the Warrant by reducing the exercise price of the Warrant from $ 3.334 to $ 2.02 . The Company recognized the incremental fair value resulting from the modification through earnings in the amount of $ 70 . ​ On December 16, 2024, the Company, entered into the Third Amendment to Loan and Security Agreement and Supplement (the “Third Avenue Amendment”) with the Avenue Lenders. Pursuant to the Third Avenue Amendment, the parties agreed to (i) amend the potential interest only period under the loan facility such that the existing interest only period ending on May 30, 2025 was extended by a period of six months provided the Company achieving certain net proceeds from an equity financing on or before March 31, 2025 in the aggregate; (ii) an additional sixth month interest only extension period was added, which is conditioned on the Company achieving a certain net revenue milestone, with cash burn not to exceed a certain level, for the trailing six month period ending September 30, 2025; (iii) the interest only period may not exceed a total of 36 months from the closing of the loan as of May 1, 2023; and (iv) the maturity date of the loan will be extended from May 1, 2027 to November 1, 2027, provided that the Company meets the foregoing amended milestones. In January 2025, the Company met the equity financing milestone. ​ In addition, the Avenue Amendment provides (i) that the Company will seek stockholder approval to reprice the Warrant issued to the Avenue Lenders on May 1, 2023 to permit an amendment to the exercise price of such Warrant to the “minimum price” as defined by Nasdaq rules as of the closing of the Avenue Amendment (or $ 0.7208 per share) and (ii) permit the Avenue Lenders, subject to Nasdaq rules, to convert up to $ 2,000 of the principal amount of its loan to the Company’s common stock at a conversion price of $ 0.8650 per share. As of December 31, 2024, the Company has not yet obtained stockholder approval for these items. ​ Orbimed Warrants ​ On June 9, 2022 (the closing date of the Orbimed Loan, which was repaid in May 2023), the Company agreed to issue Orbimed a warrant (the “Orbimed Warrant”) to purchase up to 226,586 shares of the Company’s Common Stock, at an exercise price of $ 6.62 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. Following the issuance and sale of the Company’s Series C Preferred Stock in February 2024, and as a result of a certain price protection provision in the Orbimed Warrant, the exercise price of the Orbimed Warrant was adjusted to a price per share of $ 4.00 . ​ The Company has concluded that the Orbimed Warrant is not indexed to the Company's own stock and should be recorded as a liability measured at fair value with changes in fair value recognized in earnings. The Company remeasurement income related to the Orbimed Warrant for the year ended December 31, 2024, were $ 168 , compared to $ 670 for the year ended December 31, 2023. ​ Pre-funded warrants ​ On February 15, 2024, as part of the acquisition of Twill (See note 4) the Company issued Pre-Funded Warrants to purchase up to 10,000,400 shares of Company Common Stock, issuable to a trust (the “Trust”) formed for the benefit of certain equity and debt holders of Twill. F-30 Table of Contents DARIOHEALTH CORP. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS U.S. dollars in thousands NOTE 7: - DEBT (Cont.) The Company has classified the Pre-Funded Warrants as liability pursuant to ASC 815-40 since the Pre-Funded Warrants do not meet all the equity classification conditions. Accordingly, the Company measured the Pre-Funded Warrants at their fair value. The warrants liability is subject to re-measurement at each balance sheet date until exercised, and any change in fair value is recognized in our statement of comprehensive loss. ​ In November 2024, a total of 2,500,100 Pre-Funded Warrants were exercised into 2,499,828 shares of Common Stock. During the year ended December 31, 2024, the Company recognized $ 16,336 respectively, of remeasurement income related to the Pre-Funded Warrants. The estimated fair value of the Pre-Funded Warrants liabilities is determined using Level 1 inputs based on quoted prices in active markets. ​ ​ NOTE 8:- FAIR VALUE MEASUREMENTS ​ Under U.S. GAAP, fair value is defined as the amount that would be received for selling an asset or paid to transfer a liability in an orderly transaction between market participants and requires that assets and liabilities carried at fair value are classified and disclosed in the following three categories: ​ Level 1 - Valuations based on quoted prices in active markets for identical assets that the Company has the ability to access. Valuation adjustments and block discounts are not applied to Level 1 instruments. Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these products does not entail a significant degree of judgment. Level 2 - Valuations based on one or more quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly. Level 3 - Valuations based on inputs that are unobservable and significant to the overall fair value measurement. ​ The availability of observable inputs can vary from instrument to instrument and is affected by a wide variety of factors, including, for example, the type of investment, the liquidity of markets and other characteristics particular to the transaction. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment, and the investments are categorized as Level 3. ​ The carrying amounts of cash and cash equivalents, short-term restricted bank deposits, trade receivables, other accounts receivable and prepaid expenses, trade payables and other accounts payable and accrued expenses approximate their fair value due to the short-term maturity of such instruments. The Company’s Orbimed loan facility was measured at fair value using Level 3 unobservable inputs until the payoff date of May 1, 2023. The Orbimed Warrant liability was measured at fair value using Level 3 unobservable inputs. In addition, the Avenue Loan Facility is also measured at fair value using level 3 inputs. ​ F-31 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 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, 2024 ​ Fair Value ​ Level 1 ​ Level 2 ​ Level 3 ​ ​ ​ (in thousands) ​ ​ Financial assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash and cash equivalents: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ U.S. treasury notes ​ $ 7,305 ​ $ — ​ $ 7,305 ​ $ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total financial assets ​ $ 7,305 ​ ​ $ — ​ $ 7,305 ​ $ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Financial liabilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Long-term loan ​ ​ 28,923 ​ ​ — ​ ​ — ​ ​ 28,923 Orbimed Warrant liability ​ ​ 72 ​ ​ — ​ ​ — ​ ​ 72 Pre-funded warrant liability ​ ​ 5,896 ​ ​ ​ — ​ ​ 5,896 ​ ​ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total financial liabilities ​ $ 34,891 ​ ​ $ — ​ $ 5,896 ​ $ 28,995 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2023 ​ ​ Fair Value ​ Level 1 ​ Level 2 ​ Level 3 ​ ​ ​ ​ (in thousands) ​ ​ Financial liabilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Long-term loan ​ ​ 28,545 ​ ​ — ​ ​ — ​ ​ 28,545 Orbimed Warrant liability $ 240 ​ ​ — ​ ​ — ​ ​ 240 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total financial liabilities $ 28,785 ​ $ — ​ $ — ​ $ 28,785 ​ Loan Facilities The fair value of the Avenue Loan Facility was determined based on significant inputs not observable in the market, which represents a Level 3 measurement within the fair value hierarchy. The Avenue Loan Facility fair value estimate incorporates comparisons to instruments with similar covenants, collateral, and risk profiles and was obtained using a discounted cash flow technique. 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, 2024, was estimated using a discount rate of 19 % which reflects the internal rate of return of the Avenue Loan Facility at closing, as of May 1, 2023. For the years ended December 31, 2024 and December 31, 2023, the change in the fair value of the loan was recorded in earnings since the Company concluded that the change in fair value was not related to instrument-specific credit risk. ​ Orbimed Warrant Liability ​ The fair value of the Orbimed Warrant liability was determined based on significant inputs not observable in the market, which represents a Level 3 measurement within the fair value hierarchy. The fair value of the Orbimed Warrant liability is estimated by the Company based on the Monte-Carlo simulation valuation technique, in order to predict the probability of different outcomes that rely on repeated random variables. ​ F-32 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 inputs were used to estimate the fair value of the Orbimed Warrant liability: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ ​ December 31, ​ ​ ​ 2024 ​ ​ 2023 Stock price ​ $ 0.79 ​ $ 1.72 ​ Exercise price ​ ​ 4.00 ​ ​ ​ 5.79 ​ Expected term (in years) ​ ​ 4.44 ​ ​ ​ 5.44 ​ Volatility ​ ​ 91.2 % ​ ​ ​ 96.8 % ​ Dividend rate ​ ​ — ​ ​ ​ — ​ Risk-free interest rate ​ ​ 4.53 % ​ ​ ​ 3.88 % ​ ​ The following tables present the summary of the changes in the fair value of our financial instruments: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Long-Term Loan ​ ​ Orbimed Warrant Liability ​ ​ Pre-funded 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 ​ $ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Long-Term Loan ​ ​ Orbimed Warrant Liability ​ ​ Pre-funded Warrant Liability Balance as of January 1, 2024 ​ $ 28,545 ​ $ 240 ​ $ — Issuance ​ ​ — ​ ​ — 24,457 Exercise ​ ​ — ​ ​ — ​ ​ ( 2,225 ) Change in fair value ​ ​ 378 ​ ​ ( 168 ) ​ ​ ( 16,336 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance as of December 31, 2024 ​ $ 28,923 ​ $ 72 ​ $ 5,896 ​ ​ F-33 Table of Contents DARIOHEALTH CORP. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS U.S. dollars in thousands NOTE 9:- LEASES The Company has entered into various non-cancelable operating lease agreements for certain of its offices and car leases. The Company's leases have original lease periods expiring between 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, ​ ​ ​ 2024 ​ Lease cost ​ ​ ​ Operating lease cost $ 1,050 ​ Sublease rent income ​ ​ ( 371 ) ​ Short term lease cost ​ 133 ​ Variable lease cost ​ ​ 13 ​ Total lease cost ​ $ 825 ​ ​ ​ ​ Weighted Average Remaining Lease Term ​ ​ Operating leases ​ 3.14 ​ ​ ​ ​ ​ Weighted Average Discount Rate ​ ​ Operating leases ​ 9.35 % ​ The following is a schedule, by years, of maturities of lease liabilities as of December 31, 202 4 : ​ ​ ​ ​ ​ ​ Operating ​ ​ Leases ​ ​ ​ ​ 2025 $ 525 2026 ​ ​ 376 2027 ​ ​ 277 2028 ​ ​ 283 2029 ​ ​ — Total undiscounted cash flows ​ ​ 1,461 Less imputed interest ​ ​ ( 192 ) Present value of lease liabilities ​ $ 1,269 ​ Supplemental cash flow information related to leases are as follows: ​ ​ ​ ​ ​ ​ ​ Year ended ​ ​ December 31, ​ 2024 Cash paid for amounts included in the measurement of lease liabilities: ​ ​ ​ Operating cash flows from operating leases $ 1,289 Lease liabilities arising from obtaining right-of-use assets: ​ ​ ​ Operating leases $ 428 ​ ​ ​ ​ F-34 Table of Contents DARIOHEALTH CORP. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS U.S. dollars in thousands NOTE 10:- PROPERTY AND EQUIPMENT, NET Composition of assets, grouped by major classification, is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ 2024 2023 Cost: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Computers and peripheral equipment ​ $ 1,122 ​ $ 937 Office furniture and equipment ​ 132 ​ 137 Production lines ​ 1,030 ​ 988 Leasehold improvement ​ 336 ​ 326 ​ ​ ​ ​ ​ ​ ​ ​ ​ 2,620 ​ 2,388 Accumulated depreciation: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Computers and peripheral equipment ​ 835 ​ 542 Office furniture and equipment ​ 48 ​ 43 Production lines ​ 930 ​ 874 Leasehold improvement ​ 98 ​ 30 ​ ​ ​ ​ ​ ​ ​ ​ ​ 1,911 ​ 1,489 ​ ​ ​ ​ ​ ​ ​ Property and equipment, net ​ $ 709 ​ $ 899 ​ Depreciation expenses for the year ended December 31, 2024, and 202 3 amounted to $ 466 and $ 392 , respectively. ​ ​ ​ ​ F-35 Table of Contents DARIOHEALTH CORP. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS U.S. dollars in thousands NOTE 11:- OTHER INTANGIBLE ASSETS , NET ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ a. Finite-lived other intangible assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ December 31, ​ Weighted Average ​ ​ 2024 ​ 2023 ​ Remaining Life ​ ​ ​ ​ As of December 31, 2024 Original amounts: ​ ​ ​ ​ ​ ​ ​ ​ Technology ​ $ 22,580 ​ $ 16,936 ​ 5.9 Brand ​ 376 ​ 376 ​ 0.0 Customer Relationship Healthcare ​ ​ 13,791 ​ ​ — ​ 11.0 Domains ​ ​ 23 ​ ​ — ​ ​ ​ ​ 36,770 ​ 17,312 ​ ​ Accumulated amortization: ​ ​ ​ ​ ​ ​ ​ ​ Technology ​ 16,611 ​ 11,586 ​ ​ Brand ​ 376 ​ 322 ​ ​ Customer Relationship Healthcare ​ ​ 1,018 ​ ​ — ​ ​ Domains ​ ​ 3 ​ ​ — ​ ​ ​ ​ 18,008 ​ 11,908 ​ ​ Other intangible assets, net ​ $ 18,762 ​ $ 5,404 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ b. Amortization expenses for the years ended December 31, 2024 and December 31, 2023 amounted to $ 6,100 and $ 4,512 , respectively. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ c. Estimated amortization expense: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the year ended December 31, ​ ​ ​ ​ ​ ​ ​ ​ 2025 ​ ​ 2,827 ​ ​ ​ ​ ​ 2026 ​ ​ 1,875 ​ ​ ​ ​ ​ 2027 ​ ​ 1,875 ​ ​ ​ ​ ​ 2028 ​ ​ 1,880 ​ ​ ​ ​ ​ 2029 ​ ​ 1,877 ​ ​ ​ ​ ​ Thereafter ​ ​ 8,428 ​ ​ ​ ​ ​ ​ ​ $ 18,762 ​ ​ ​ ​ ​ ​ ​ ​ F-36 Table of Contents DARIOHEALTH CORP. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS U.S. dollars in thousands NOTE 12:-GOODWILL ​ The following table set forth the changes in the carrying amount of the Company’s goodwill during the year ended December 31, 2024 and the year ended December 31, 2023 (in thousands): ​ ​ ​ ​ ​ ​ December 31, ​ 2024 ​ ​ ​ ​ As of December 31, 2022 ​ $ 41,640 Additions ​ ​ — As of December 31, 2023 ​ ​ 41,640 Additions ​ ​ 15,787 As of December 31, 2024 ​ $ 57,427 ​ ​ ​ ​ ​ NOTE 13:- OTHER ACCOUNTS PAYABLE AND ACCRUED EXPENSES ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ 2024 2023 Employees and payroll accruals ​ $ 4,112 ​ $ 4,073 Accrued expenses ​ 1,940 ​ 2,227 ​ ​ ​ ​ ​ ​ ​ ​ ​ $ 6,052 ​ $ 6,300 ​ ​ NOTE 14:- COMMITMENTS AND CONTINGENT LIABILITIES From time to time, the Company is involved in claims and legal proceedings. The Company reviews the status of each matter and assesses its potential financial exposure. If the potential loss from any claim or legal proceeding is considered probable and the amount can be reasonably estimated, the Company accrues a liability for the estimated loss. Royalties The Company has a liability to pay future royalties to the Israeli Innovation Authority (the “IIA”) for participation in programs sponsored by the Israeli government for the support of research and development activities. The Company is obligated to pay royalties to the IIA, amounting to 3 % of the sales of the products and other related revenues (based on the U.S. dollar) generated from such projects, up to 100 % of the grants received. Royalty payment obligations also bear interest at the LIBOR rate. The obligation to pay these royalties is contingent on actual sales of the products and in the absence of such sales, no payment is required. In connection with specific research and development activities, Physimax Technology (“Physimax”), prior to its acquisition by the Company, received $ 1,012 of participation payments from the IIA. The Company’s total commitment for royalties payable with respect to future sales, based on IIA participations received, net of royalties accrued or paid, totaled $ 932 as of December 31, 2024. During the year ended December 31,2024 and the year ended December 31, 2023 the company recorded IIA royalties related to the acquisition of Physimax Technology in amount of $ 2 and $ 1 , respectively. ​ F-37 Table of Contents DARIOHEALTH CORP. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS U.S. dollars in thousands 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 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: The Corporate tax rate in Israel in 2024 and 2023 was 23 %. Net operating loss carryforward: Labstyle has accumulated net operating losses for Israeli income tax purposes as of December 31, 2024, in the amount of approximately $ 221,030 . The net operating losses may be carried forward and offset against taxable income in the future for an indefinite period. As of December 31, 2024, the Company, WayForward and Twill had a U.S. federal net operating loss carryforward of approximately $ 42,429 , $ 6,305 and $ 143,670 of which $ 7,120 , $ 371 and $ 19,779 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. A "change in ownership" has occurred during 2024 when Twill was acquired by Dario, resulting in a limitation of $ 2,316 per year for the years 2025-2028. The remaining NOLs of the Company, WayForward and Twill are approximately $ 35,309 , $ 5,934 and $ 123,891 were generated in years 2018-2024, 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. F-38 Table of Contents DARIOHEALTH CORP. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS U.S. dollars in thousands NOTE 15:- TAXES ON INCOME (Cont.) 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 2018-202 4 are excluded from the limitation and can be carried forward indefinitely to offset 100 % of future net income. 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, ​ 2024 2023 Deferred tax assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net operating loss and capital losses carry forward ​ $ 63,016 ​ $ 51,533 Research and development expenses ​ ​ 3,163 ​ ​ 3,815 Accrued employees costs ​ 432 ​ 370 Credit losses ​ 36 ​ — Deferred revenue ​ 41 ​ — Debt issuance costs ​ 139 ​ — Stock-based compensation ​ 3,441 ​ 4,328 R&D Capitalization under section 174 ​ ​ 10,245 ​ ​ — Depreciation ​ 72 ​ — Loan ​ ​ 226 ​ ​ 306 Intangible Assets ​ ​ 240 ​ ​ 152 Lease ​ 312 ​ 229 ​ ​ ​ ​ ​ ​ ​ Deferred tax assets: ​ ​ 81,363 ​ ​ 60,733 Less: Valuation allowance ​ ​ ( 77,189 ) ​ ​ ( 58,303 ) ​ ​ ​ ​ ​ ​ ​ Deferred tax assets ​ ​ 4,174 ​ ​ 2,430 ​ ​ ​ ​ ​ ​ ​ Deferred tax liability: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Intangible Assets ​ ​ ( 3,909 ) ​ ​ ( 2,208 ) ROU assets ​ ​ ( 265 ) ​ ​ ( 222 ) ​ ​ ​ ​ ​ ​ ​ Deferred tax liability ​ ​ ( 4,174 ) ​ ​ ( 2,430 ) ​ ​ ​ ​ ​ ​ ​ Net deferred tax asset ​ $ — ​ $ — ​ The deferred tax balances included in the consolidated financial statements as of December 31, 2024, are calculated according to the tax rates that were in effect as of the reporting date and do not take into account the potential effects of the changes in the tax rate. ​ F-39 Table of Contents DARIOHEALTH CORP. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS U.S. dollars in thousands NOTE 15:- TAXES ON INCOME (Cont.) The net change in the total valuation allowance for the year ended December 31, 2024, was an increase of $ 18,886 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. a. Loss before taxes on income consists of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended ​ ​ December 31, ​ 2024 2023 Domestic ​ $ 17,863 ​ $ 23,477 Foreign ​ 26,736 ​ 35,886 ​ ​ ​ ​ ​ ​ ​ ​ ​ $ 44,599 ​ $ 59,363 ​ 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. Income tax expense (benefit) was as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended ​ ​ ​ December 31, Current: ​ 2024 ​ 2023 Domestic ​ $ — ​ $ — Foreign ​ ​ 149 ​ ​ 64 Total current income tax expense ​ ​ 149 ​ ​ 64 Deferred: ​ ​ ​ ​ ​ ​ Domestic ​ ​ ( 2,001 ) ​ ​ — Foreign ​ ​ — ​ ​ — Total deferred income tax expense (benefit) ​ ​ ( 2,001 ) ​ ​ — Income tax ​ $ ( 1,852 ) ​ $ 64 ​ ​ ​ ​ ​ 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 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. In January and March 2024, the Compensation Committee (the “Compensation Committee”) of the Board of Directors of the Company approved the grant of 1,946,500 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 of Common Stock 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 of Common Stock and the options were issued under the Company’s 2020 Equity incentive Plan, as amended (the “2020 Plan”). c. In April 2024, the Compensation Committee approved the grant of 260,500 restricted shares of Common Stock subject to time vesting to employees of the Company and approved the grant of options to purchase up to 564,900 shares of Common Stock, to employees and consultants of the Company, at exercise prices between $ 1.38 and $ 1.48 per share. The time vesting restricted shares of Common Stock 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 of Common Stock and the options were issued under the 2020 Plan. d. In May 2024, the Compensation Committee approved the grant of a non-qualified stock option to purchase up to 2,250,000 shares of Common Stock as an inducement grant to the new Chief Commercial Officer. Out of the 2,250,000 shares of Common Stock, 500,000 shares will vest over three years , with one third of such shares vesting on June 1, 2025 , and the remaining shares vesting in equal quarterly amounts during the following two years . 1,750,000 of the options are performance-based and will commence vesting upon reaching certain performance goals during the fiscal years between 2024 and 2027. Each performance option will vest over a three-year period commencing on the first day of the following fiscal year to which such option relates, in eight equal quarterly instalments. e. In August 2024, the Compensation Committee approved the grant of 590,000 restricted shares of Common Stock subject to time vesting to employees of the Company and approved the grant of 1,692,250 options to purchase Common Stock, and 300,000 performance-based options to purchase Common Stock to officers, employees, and consultants of the Company, at exercise prices between $ 0.93 to $ 1.05 per share. The time vesting restricted shares of Common Stock and stock options vest over three years commencing on the respective grant dates. The options have a ten-year term. The restricted shares of Common Stock and the options were issued under the Company’s 2020 Plan. f. In November 2024, the Compensation Committee approved the grant of 10,000 restricted shares of Common Stock subject to time vesting to employees of the Company and approved the grant of options to purchase up to 367,500 shares of Common Stock, to employees and consultants of the Company, at an exercise price of $ 0.9475 per share. The time vesting restricted shares of Common Stock and stock options vest over various periods between one to three years commencing on the respective grant dates. The options have a ten-year term. The restricted shares of Common Stock and the options were issued under the 2020 Plan. ​ 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.) ​ g. In December 2024, the Compensation Committee approved the grant of 300,000 restricted shares of Common Stock subject to time vesting to an employee of the Company and approved the grant of options to purchase up to 363,500 shares of Common Stock, to employees of the Company, at an exercise price of $ 0.80 per share. The time vesting restricted shares of Common Stock and stock options vest over three years commencing on the respective grant dates. The options have a ten-year term. The restricted shares of Common Stock and the options were issued under the 2020 Plan. h. In August 2024, the Compensation Committee approved the grant of 418,550 restricted shares of Common Stock to certain service providers. During the year ended December 31, 2024, the Company recorded compensation expense in the amount of $ 354 related to the issuance of these shares of Common Stock. i. On November 4, 2024, the Compensation Committee approved amendments to certain previously issued awards of restricted Common Stock in the aggregate amount of 68,750 and 250,000 , respectively, granted to Mr. Erez Raphael, our Chief Executive Officer, and Mr. Zvi Ben David, our Chief Financial Officer, in the aggregate amount of 23,750 and 125,000 , respectively, on May 18, 2022 and March 6, 2024 (collectively, the “Prior Awards”) to permit an immediate acceleration of the unvested portion of the Prior Awards in the event of change in control of the Company. j. In December 2024, the Compensation Committee approved amendments to certain previously issued awards of restricted Common Stock in the aggregate amount of 176,001 , granted to certain employees, to permit an immediate acceleration of the unvested portion of the Prior Awards. 152,000 of the accelerated shares will be subject to a lockup until December 31, 2025. During the year ended December 31, 2024, the Company recorded stock-based compensation expenses related to the acceleration of the unvested portion of the Prior Awards at the amount of $ 75 . k. In April 2024, the Compensation Committee approved the grant of warrants to purchase up to 1,471,250 shares of Common Stock, with exercise prices between $ 1.43 to $ 2.00 per share, to certain consultants. The warrants are exercisable into shares of Common Stock on or before December 31, 2026. In addition, the Compensation Committee approved a reduction in the exercise price of warrants to purchase up to 700,000 shares of Common Stock issued to certain consultants in the past at exercise prices between $ 5.20 to $ 6.45 per share, to an exercise price of $ 1.60 per share. During the year ended December 31, 2024, the Company recorded stock-based compensation expenses related to those repriced warrants at the amount of $ 332 . In August 2024, the Compensation Committee approved the grant of warrants to purchase up to 600,000 shares of Common Stock subject to time vesting of one to two years , with exercise prices of $ 0.93 per share to certain consultants. Out of the warrants to purchase 600,000 shares of Common Stock, 100,000 shares are exercisable into Common Stock on or before December 31, 2027, and 500,000 shares are exercisable into Common Stock on or before August 31, 2029. In addition, the Compensation Committee approved the grant performance-based warrants to purchase up to 800,000 shares of Common Stock, with exercise prices of $ 0.93 per share to a certain consultant. The warrants are exercisable into Common Stock on or before August 31, 2029. Management's assumption is that it is not probable that the condition will be met. During the year ended December 31, 2024, the Company recorded stock-based compensation expenses related to the warrants at the amount of $ 67 . l. In November 2024, the Compensation Committee approved the grant of warrants to purchase up to 469,653 shares of Common Stock, with an exercise price of $ 0.9475 per share to a certain consultant. The warrants are exercisable into Common Stock on or before the five years anniversary of the grant date. During the year ended December 31, 2024, the Company recorded stock-based compensation expenses related to the warrants at the amount of $ 46 . 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.) ​ m. In December 2024, the Compensation Committee approved a reduction in the exercise price of warrants to purchase up to 881,250 shares of Common Stock issued to certain consultants in the past at exercise prices between $ 1.60 to $ 12.00 per share, to an exercise price of $ 0.70 per share. During the year ended December 31, 2024, the Company recorded stock-based compensation expenses related to those repriced warrants at the amount of $ 164 . n. 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 . o. 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 . p. 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 . q. On February 15, 2024, the Company executed a consulting agreement with a former officer of Twill. Pursuant to the terms of the consulting agreement, the Company agreed to issue to the former officer of Twill 350,000 fully vested RSUs. On June 25, 2024, the stockholders of the Company approved the issuance of certain restricted shares of Common Stock and warrants of the Company, under certain consulting agreements with former officers and directors of Twill. Pursuant to the terms of the consulting agreements, the Company agreed to issue to those former officers of Twill warrants to purchase up to 1,032,946 shares of the Company’s Common Stock, of which 717,946 are subject to time vesting and 315,000 are subject to certain performance-based metrics, with an exercise price of $ 2.55 and 383,562 fully vested RSUs. During the year ended December 31, 2024, the Company recorded share-based compensation expenses related to these service providers in the amount of $ 3,196 . For the year ended December 31, 2024, no expenses were recorded related to the performance-based warrants. r. On January 30, and September 27, 2024, out of the pre-funded warrants that were issued in July 2020, 400,017 and 287,303 were exercised on a cashless basis into 400,000 and 287,273 shares of Common Stock respectively. As of December 31, 2024, the Company’s total outstanding prefunded warrants were exercisable into 995,499 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. s. 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). t. In February 2024, the Company issued 17,307 , 4,000 and 1,115 Series C, C-1 and C-2 preferred shares, respectively, at a purchase price of $ 1,000 per preferred share. The Series C and C-1 Preferred Stock are 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.) ​ 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 were approximately $ 22,422 . In addition, the holders of preferred stock will also be entitled to dividends payable as follows: (i) a number of shares of Common Stock equal to seven and a half five percent ( 7.5 %) 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 fifteen percent ( 15 %) 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 Date. In May, September and November 2024, a total of 100 , 25 and 20 shares of certain Series C Convertible Preferred Stock were converted into 49,505 , 14,234 and 12,129 shares of Common Stock, respectively. During the year ended December 31, 2024, the Company accounted for the dividend shares of Common Stock upon the dividend shares earned by Series C, C-1 and C-2 Preferred Stock as a deemed dividend in a total amount of $ 6,542 . u. In December 2024, the Company issued 7,055 and 11,750 Series D and D-1 preferred shares, respectively, at a purchase price of $ 1,000 per preferred share. The Series D and D-1 Preferred Stock are convertible into Common Stock at $ 0.73 per Common Stock. As a result of the sale of the preferred stock, the aggregate gross proceeds to the Company from the Offering were approximately $ 18,805 . The conversion of the preferred stock is subject to stockholder approval, the preferred stock will automatically convert into shares of Common Stock, subject to certain beneficial ownership limitations, including a non-waivable 19.99 % ownership blocker, on the 12 -month anniversary of the issuance date. The holders of preferred stock will also be entitled to dividends equal to a number of shares of Common Stock equal to ten percent ( 10 %) of the number of shares of Common Stock issuable upon conversion of the preferred stock then held by such holder for each full quarter anniversary of holding for a total of four ( 4 ) quarters from the Closing Date, all issuable upon conversion of the preferred stock. In addition, the Company and certain purchasers in the Offering that are holders of the Company's Series B and C Preferred Stock executed lock up agreements (the “Lock Up Agreement”), pursuant to which the Company agreed to issue, subject to stockholder approval, up to forty percent ( 40 %) of the shares of Common Stock conversion shares of the preferred stock held by such purchaser, including dividend shares of Common Stock due upon conversion of these shares into shares of Common Stock, over the course of twelve ( 12 ) months (the “Additional Shares”). Each holder shall be entitled to receive 10 % of the Additional Shares for each three ( 3 ) month period each holder agrees not to transfer or otherwise sell (subject to certain limitations) the shares of Common Stock issuable upon conversion of the Series B Preferred Stock and Series C Preferred Stock and the dividend shares of Common Stock due upon conversion. During the year ended December 31, 2024, the Company accounted for the dividend shares of Common Stock upon the dividend shares earned by Series D and D-1 Preferred Stock as a deemed dividend in a total amount of $ 318 . v. 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 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.) ​ 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”), 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. w. On June 25, 2024, following the approval of the necessary preferred holders, the Company modified the terms of the Series B and B-1 preferred stock to (i) extend the mandatory conversion period from fifteen ( 15 ) to eighteen ( 18 ) months from the original issue date and (ii) increase the percentage of dividends the holders of the preferred stock will be entitled to receive by including a dividend of ten percent ( 10 %) for the fifth full quarter from the closing date and a dividend of twenty five percent ( 25 %) for the sixth quarter from the closing date. On September 11, 2024, following the approval of the necessary preferred holders, the Company modified the terms of the Series B-3 preferred stock to (i) extend the mandatory conversion period from fifteen ( 15 ) to eighteen ( 18 ) months from the original issue date and (ii) increase the percentage of dividends the holders of the preferred stock will be entitled to receive by including a dividend of ten percent ( 10 %) for the fifth full quarter from the closing date and a dividend of twenty five percent ( 25 %) for the sixth quarter from the closing date. The Company concluded that the Series B, B-1 and B-3 preferred shares modification should be accounted for as an extinguishment transaction. As such, the Company recorded the modified preferred shares at their fair value and derecognized the carrying amount of the previous unmodified shares, resulting in a deemed contribution of $ 12,194 . In November, on the 18-month anniversary of the Series B, B-1 and B-3 Effective Date, 5,950 Series B, 3,000 B-1 and 406 B-3 Preferred Stock converted into 2,766,201 , 1,394,721 and 185,526 shares of Common Stock. During the year ended December 31, 2024, the Company accounted for the dividend shares of common stock upon the deferred conversion of the Series B, B-1, B-2, and B-3 Convertible Preferred Stock as a deemed dividend in a total amount of $ 2,953 . x. In April and June 2024, a total of 700 and 250 of certain Series B Convertible Preferred Stock were converted into 237,323 and 89,982 shares of Common Stock, respectively, including the issuance of dividend shares. In addition, during the year ended December 31, 2024, the Company recorded deemed dividend in the amount of $ 616 with respect to the Series B convertible Preferred Stock. y. In August 2024, 150 Series B-2 Preferred Stock automatically converted into 57,868 shares of Common Stock after the completion of the fifteen ( 15 )-month anniversary of the Series B-2 Preferred Stock. The conversion included accumulative dividends payable upon conversion of Series B-2 Preferred Stock. 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 16:- STOCKHOLDERS’ EQUITY (Cont.) ​ z. Through November 2022, December 2022 and January 2023, 6,355 Series A Preferred Stock automatically converted into 2,133,904 shares of Common Stock after the completion of the 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. aa. As of December 31, 2024, there were 3,557 shares of Series A-1 Preferred stock issued and outstanding. The outstanding Series A-1 Preferred stock is convertible into approximately 1,655,548 shares of Common Stock, including the issuance of dividend shares. As of December 31, 2024, there were 4,946 shares of Series B-1 Preferred stock issued and outstanding. The outstanding Series B-1 Preferred stock is convertible into approximately 2,299,432 shares of Common Stock, including the issuance of dividend shares. As of December 31 , 2024, there were 22,277 shares of Series C, C-1 and C-2 Preferred stock issued and outstanding. The outstanding Series C, C-1 and C-2 Preferred stock is convertible into approximately 13,497,265 shares of Common Stock, including the issuance of dividend shares. As of December 31 , 2024, there were 18,805 shares of Series D, and D-1 Preferred stock issued and outstanding. The outstanding Series D, and D-1 Preferred stock is convertible into approximately 25,762,850 shares of Common Stock, including the issuance of dividend shares. bb. During the year ended December 31, 2024, options were exercised into 10,714 shares of Common Stock. cc. Stock-based compensation: On January 23, 2012, the Company’s Amended and Restated 2012 Equity Incentive Plan (the “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 the Company’s 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. The 2012 Plan has expired. On October 14, 2020, the Company’s stockholders approved the 2020 Plan. Under the 2020 Plan, options to purchase shares of Common Stock may be granted to employees and non-employees of the Company or any affiliate, each option granted can be exercised to one share of Common Stock. In January 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 . ​ 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 . ​ In June 2024, pursuant to the terms of the 2020 Plan as approved by the Company’s stockholders, the Company increased the number of shares authorized for issuance under the 2020 Plan by 3,000,000 shares, from 8,356,624 to 11,356,624 . ​ ​ 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 16:- STOCKHOLDERS’ EQUITY (Cont.) The table below summarizes the outstanding warrants as of December 31, 2024: ​ ​ ​ ​ ​ ​ ​ ​ ​ Warrants ​ ​ ​ ​ outstanding as of ​ Exercise ​ ​ ​ ​ December 31, 2024 ​ price $ ​ Expiration date Agent warrants July 31 2020 150,070 7.47 ​ July 31, 2025 Agent warrants July 31 2020 2,393 7.94 ​ July 31, 2025 Consultants 25,000 13.88 ​ September 26, 2025 Consultants ​ 500,000 ​ 1.08 ​ December 16, 2025 Consultants ​ 50,000 ​ 1.60 ​ December 31, 2025 Consultants ​ 8,000 ​ 13.60 ​ December 31, 2025 Consultants ​ 285,000 ​ 1.60 ​ December 31, 2026 Consultants ​ 145,000 ​ 0.70 ​ December 31, 2026 Consultants ​ 155,000 ​ 0.70 ​ December 31, 2026 Consultants ​ 40,000 ​ 3.46 ​ December 31, 2026 Consultants ​ 130,000 ​ 1.60 ​ December 31, 2026 Consultants ​ 56,250 ​ 2.00 ​ December 31, 2026 Consultants ​ 500,000 ​ 1.60 ​ December 31, 2026 Consultants ​ 30,000 ​ 2.00 ​ December 31, 2026 Consultants ​ 300,000 ​ 1.43 ​ December 31, 2026 Consultants ​ 100,000 ​ 1.60 ​ December 31, 2026 Consultants ​ 100,000 ​ 0.93 ​ August 24, 2027 Consultants ​ 60,000 ​ 0.70 ​ December 31, 2027 Consultants ​ 87,500 ​ 0.70 ​ December 31, 2027 Consultants ​ 45,000 ​ 0.70 ​ December 31, 2027 Consultants ​ 25,000 ​ 0.70 ​ December 31, 2027 Consultants ​ 125,000 ​ 0.70 ​ December 31, 2027 Consultants ​ 125,000 ​ 0.70 ​ December 31, 2027 Consultants ​ 80,000 ​ 0.70 ​ December 31, 2027 Consultants ​ 10,000 ​ 0.70 ​ December 31, 2027 Consultants ​ 10,000 ​ 0.70 ​ December 31, 2027 Lender of loan facility ​ 292,441 ​ 2.02 ​ May 1, 2028 Lender of loan facility 292,441 2.02 ​ May 1, 2028 Agent warrants C Feb. 21, 2024 ​ 1,068,670 ​ 2.02 ​ February 21, 2029 Agent warrants C-2 Feb. 21, 2024 ​ 70,818 ​ 2.14 ​ February 21, 2029 Lender of loan facility ​ 226,586 ​ 4.00 ​ June 9, 2029 Consultants ​ 13,750 ​ 0.70 ​ August 1, 2029 Consultants ​ 500,000 ​ 0.93 ​ August 25, 2029 Consultants ​ 850,000 ​ 0.93 ​ August 25, 2029 Consultants ​ 319,653 ​ 0.95 ​ November 4, 2029 Consultants ​ 150,000 ​ 0.95 ​ November 4, 2029 Consultants ​ 717,946 ​ 2.55 ​ February 15, 2034 Consultants ​ 315,000 ​ 2.55 ​ February 15, 2034 ​ ​ 7,961,518 ​ ​ ​ ​ ​ ​ 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 16:- STOCKHOLDERS’ EQUITY (Cont.) In January 2023 and April 2023, the Board of Directors approved the acceleration of the unvested portion of 42,500 restricted shares of Common Stock to a certain employee of the Company. The share acceleration was part of a separation agreement with the employees. 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 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 of Common Stock will vest immediately, 30,000 restricted shares will vest over a period of six months , and the remaining 662,100 restricted shares of Common Stock 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. 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, 2024 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 2,550,829 ​ 9.27 ​ 7.02 ​ 36 Options granted 9,922,009 ​ 1.65 ​ — ​ — Options exercised ( 8,693 ) ​ — ​ — ​ — Options expired ( 525,725 ) ​ 11.94 ​ — ​ — Options forfeited ( 1,715,671 ) ​ 3.13 ​ — ​ — ​ ​ ​ ​ ​ ​ ​ ​ ​ Options outstanding at end of period 10,222,749 ​ 2.78 ​ 8.55 ​ 9 ​ ​ ​ ​ ​ ​ ​ ​ ​ Options vested and expected to vest at end of period 8,324,872 ​ 2.78 ​ 8.48 ​ 9 ​ ​ ​ ​ ​ ​ ​ ​ ​ Exercisable at end of period 3,378,508 ​ 5.39 ​ 7.11 ​ 9 Weighted average grant date fair value of options granted during the year ended December 31, 2024, and 2023 is $ 0.76 and $ 2.14 , 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, 2024. This amount is impacted by the changes in the fair market value of the Common Stock. The average intrinsic value of the options exercised in 2024 and 2023 were $ 1.20 and $ 3.26 , respectively. ​ 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 16:- STOCKHOLDERS’ EQUITY (Cont.) Transactions related to the grant of restricted shares of Common Stock to employees, directors, and non-employees under the above plans during the year ended December 31, 2024 were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Number of ​ ​ ​ ​ ​ ​ ​ ​ Restricted shares ​ ​ ​ ​ ​ ​ ​ ​ ​ Restricted shares outstanding at beginning of year ​ ​ ​ ​ ​ ​ 2,635,926 Restricted shares granted ​ ​ ​ ​ ​ ​ 3,107,000 Restricted shares forfeited ​ ​ ​ ​ ​ ​ ( 334,522 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ Restricted shares outstanding at end of period ​ ​ ​ ​ ​ ​ 5,408,404 ​ The Company estimates the fair value of stock options granted using the Black-Scholes option-pricing model. The fair value of the restricted shares vested during 2024 amounts to $ 1,644 . The assumptions used are determined as follows: Volatility. The expected volatility was derived from the historical volatilities of the Company’s stock price over a period equivalent to the expected term of the stock option grants. Expected Term. The expected term represents the period that the stock-based awards are expected to be outstanding. When establishing the expected term assumption, the Company utilizes the simplified method. Risk-Free Interest Rate. The risk-free interest rate is based on U.S. Treasury zero-coupon issues with terms similar to the expected term on the options. Dividend Yield. The Company has never declared or paid any cash dividends and does not plan to pay cash dividends in the foreseeable future, and therefore, it used an expected dividend yield of zero. 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, ​ 2024 ​ 2023 Volatility 94.75 - 97.97 % 90.90 - 92.62 % Risk-free interest rate 3.67 - 4.72 % 3.45 - 4.13 % Dividend yield 0 % 0 % Expected life (years) 5.00 - 5.87 ​ 5.81 - 5.88 ​ ​ As of December 31, 2024, the total unrecognized estimated compensation cost related to non-vested stock options and restricted shares granted prior to that date was $ 8,367 , which is expected to be recognized over a weighted average period of approximately 1.10 years. ​ F-49 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 total compensation cost related to all the Company’s equity-based awards, recognized during year ended December 31, 2024 and 2023 were comprised as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended ​ ​ December 31, ​ 2024 2023 ​ ​ Unaudited Cost of revenues ​ $ 13 ​ $ 327 Research and development ​ 3,296 ​ 3,803 Sales and marketing ​ 4,890 ​ 6,468 General and administrative ​ 7,597 ​ 9,103 ​ ​ ​ ​ ​ ​ ​ Total stock-based compensation expenses ​ $ 15,796 ​ $ 19,701 ​ ​ NOTE 17:- SELECTED STATEMENTS OF OPERATIONS DATA Financial expenses (income), net: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended ​ ​ December 31, ​ 2024 2023 ​ ​ Unaudited Bank charges ​ $ 96 ​ $ 112 Foreign currency adjustments expenses, net ​ 4 ​ 210 Interest income ​ ​ ( 1,116 ) ​ ​ ( 1,868 ) Revaluation of short-term investments ​ ​ — ​ ​ ( 37 ) Remeasurement of long-term loan ​ ​ 4,305 ​ ​ 4,894 Remeasurement of warrant liability ​ ​ ( 16,504 ) ​ ​ ( 670 ) Modification of warrants ​ ​ 70 ​ ​ — Debt issuance cost ​ ​ — ​ ​ 533 ​ ​ ​ ​ ​ ​ ​ Total Financial expenses (income), net ​ $ ( 13,145 ) ​ $ 3,174 ​ ​ F-50 Table of Contents DARIOHEALTH CORP. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS U.S. dollars in thousands (except stock and stock data) NOTE 1 8 :- SEGMENT REPORTING ​ The Company identifies operating segments in accordance with ASC Topic 280, “Segment Reporting,” as components of an entity for which discrete financial information is available and is regularly reviewed by the chief operating decision maker, or decision-making group, in making decisions regarding resource allocation and evaluating financial performance. The Company operates as one operating segment. Operating segments are defined as components of an enterprise for which separate financial information is regularly evaluated by the CODM, which is the Company’s chief executive officer, in deciding how to allocate resources and assess performance. The Company’s CODM evaluates the Company’s financial information and resources and assesses the performance of these resources on a consolidated basis. There is no expense or asset information that are supplemental to those disclosed in these consolidated financial statements, that are regularly provided to the CODM. The allocation of resources and assessment of performance of the operating segment is based on consolidated net loss as shown in our consolidated statement of comprehensive loss. The CODM considers net loss in the annual forecasting process and reviews actual results when making decisions about allocating resources. Since the Company operates as one operating segment, financial segment information, including profit or loss and asset information, can be found in the consolidated financial statements. Geographic Information • As of December 31, 2024, the majority of the Company’s long live assets are located in Israel. ​ • As of December 31, 2024, the majority of the Company's revenue is generated in the U.S. ​ ​ ​ ​ ​ ​ F-51 Table of Contents DARIOHEALTH CORP. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS U.S. dollars in thousands (except stock and stock data) NOTE 1 9 : - BASIC AND DILUTED NET LOSS PER COMMON STOCK ​ The Company computes net loss per share of common and preferred stock using the two-class method. Basic and diluted net earnings or loss per share is computed using the weighted-average number of shares outstanding during the period. This calculation includes the total weighted average number of the Common Stock, which includes prefunded warrants. ​ The total number of potential common shares related to the outstanding options, warrant and preferred shares excluded from the calculations of diluted net loss per share due to their anti-dilutive effect was 35,670,853 for the year ended December 31, 2024, and for the year ended December 31, 2023, was 12,188,189 . ​ The following table sets forth the computation of the Company’s basic net earnings (loss) per common and preferred stock: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended ​ ​ December 31, ​ ​ 2024 ​ ​ ​ Common ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Stock Preferred A-1 Preferred B Preferred B-1 Preferred B-2 Preferred B-3 Preferred C Preferred C-1 Preferred C-2 Preferred D Preferred D* Preferred D-1 Basic earnings (loss) per share ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Numerator: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Allocation of undistributed loss ​ $ ( 30,088,977 ) ​ $ ( 956,504 ) ​ $ ( 1,145,280 ) ​ $ ( 1,710,847 ) ​ $ ( 18,996 ) ​ $ ( 117,692 ) ​ $ ( 4,933,826 ) ​ $ ( 1,146,033 ) ​ $ ( 301,423 ) ​ $ ( 161,819 ) ​ $ ( 49,399 ) ​ $ ( 351,781 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Denominator: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Number of shares used in per share computation ​ ​ 49,039,410 ​ ​ 3,557 ​ ​ 5,152 ​ ​ 7,486 ​ ​ 89 ​ ​ 550 ​ ​ 14,817 ​ ​ 3,441 ​ ​ 959 ​ ​ 193 ​ ​ 59 ​ ​ 418 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Basic earnings (loss) per share amounts: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Distributed earnings - deemed dividends (contribution) ​ ​ — ​ ​ 173.23 ​ ​ ( 744.18 ) ​ ​ ( 689.74 ) ​ ​ 278.13 ​ ​ ( 487.79 ) ​ ​ 341.29 ​ ​ 341.36 ​ ​ 323.19 ​ ​ 306.32 ​ ​ 543.04 ​ ​ 543.04 Undistributed loss - allocated ​ ​ ( 0.61 ) ​ ​ ( 268.91 ) ​ ​ ( 222.29 ) ​ ​ ( 228.55 ) ​ ​ ( 213.01 ) ​ ​ ( 213.81 ) ​ ​ ( 332.98 ) ​ ​ ( 333.04 ) ​ ​ ( 314.24 ) ​ ​ ( 840.59 ) ​ ​ ( 840.59 ) ​ ​ ( 840.59 ) Basic earnings (loss) per share ​ $ ( 0.61 ) ​ $ ( 95.67 ) ​ $ ( 966.47 ) ​ $ ( 918.29 ) ​ $ 65.12 ​ $ ( 701.61 ) ​ $ 8.31 ​ $ 8.32 ​ $ 8.95 ​ $ ( 534.27 ) ​ $ ( 297.55 ) ​ $ ( 297.55 ) ​ ​ * Series D Preferred Stock which are subject to the lockup agreements (see Note 16). ​ ​ F-52 Table of Contents DARIOHEALTH CORP. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS U.S. dollars in thousands (except stock and stock data) NOTE 1 9 : - BASIC AND DILUTED NET LOSS PER COMMON STOCK (Cont.) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended ​ ​ December 31, ​ ​ 2023 ​ Common Stock Preferred A-1 Preferred B Preferred B-1 Preferred B-2 Preferred B-3 Basic earnings (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 (contribution) ​ ​ — ​ ​ 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 earnings (loss) per share ​ $ ( 1.93 ) ​ $ ( 260.26 ) ​ $ ( 360.24 ) ​ $ ( 360.24 ) ​ $ ( 356.64 ) ​ $ ( 344.71 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ F-53 Table of Contents DARIOHEALTH CORP. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS U.S. dollars in thousands (except stock and stock data) NOTE 20:- SUBSEQUENT EVENTS a. On January 7, 2025, the Company entered into securities purchase agreements (each, a “Series D Purchase Agreement”) with accredited investors relating to an offering (the “Series D Offering”) and the sale of an aggregate of (i) 4,950 shares of newly designated Series D-2 Preferred Stock (the “Series D-2 Preferred Stock”), and (ii) 1,850 shares of Series D-3 Preferred Stock (the “Series D-3 Preferred Stock”), at a purchase price of $ 1,000 for each share of preferred stock. As a result of the sale of the preferred stock, the aggregate gross proceeds to the Company from the Series D Offering are approximately $ 6,800 . The closing of the Series D-2 Preferred Stock, and Series D-3 Preferred Stock occurred on January 14, 2025. The conversion of the preferred stock is subject to stockholder approval. In addition, the preferred stock will automatically convert into shares of Common Stock, subject to certain beneficial ownership limitations, on the 12 -month anniversary of the issuance date. The holders of preferred stock will also be entitled to dividends equal to a number of shares of Common Stock equal to ten percent ( 10 %) of the number of shares of Common Stock issuable upon conversion of the preferred stock then held by such holder for each full quarter anniversary of holding for a total of four quarters from the Closing Date, all issuable upon conversion of the preferred stock. b. In January 2025, pursuant to the terms of the 2020 Plan as approved by the Company’s stockholders, the Company increased the number of shares authorized for issuance under the 2020 Plan by 6,541,028 shares, from 11,356,624 to 17,897,652 . c. In February 2025, the Compensation Committee approved the grant of 575,000 restricted shares of Common Stock to certain service providers and approved the grant of warrants to purchase up to 1,050,000 shares of Common Stock, with exercise prices of $ 0.64 per share, to certain consultants. The warrants are exercisable into shares of Common Stock on or before February 10, 2028. d. In February 2025, a total of 2,500,100 Pre-Funded Warrants were exercised into 2,499,698 shares of Common Stock. e. In February 2025, the Compensation Committee approved the grant of 30,000 restricted shares of Common Stock to a director of the Company and an amendment to certain previously issued awards of restricted Common Stock in the aggregate amount of 35,000 , granted to the director, to permit an immediate acceleration of the unvested portion of the Prior Awards. - - - - - - - - - - - - - - - ​ ​ ​ F-54