# DarioHealth Corp.: Form 10-Q for the period ended Mar 31, 2025

- Company: [DarioHealth Corp.](/companies/drio.md) (CIK 1533998)
- Form: 10-Q
- Filed: 2025-05-14
- Accepted by EDGAR: May 14, 2025, 06:06 ET
- Period: 2025-03-31
- Accession: 0001558370-25-007640
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1533998/000155837025007640/drio-20250331x10q.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1533998/000155837025007640/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2025-03-31.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2025-01-01 to 2025-03-31 | $6.8m | us-gaap:RevenueFromContractWithCustomerIncludingAssessedTax |
| Cost of revenue | 3 months, 2025-01-01 to 2025-03-31 | $2.9m | us-gaap:CostOfGoodsAndServicesSold |
| Gross profit | 3 months, 2025-01-01 to 2025-03-31 | $3.9m | us-gaap:GrossProfit |
| Research and development | 3 months, 2025-01-01 to 2025-03-31 | $4.1m | us-gaap:ResearchAndDevelopmentExpense |
| Operating income | 3 months, 2025-01-01 to 2025-03-31 | −$9.4m | us-gaap:OperatingIncomeLoss |
| Income tax | 3 months, 2025-01-01 to 2025-03-31 | $22.0k | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2025-01-01 to 2025-03-31 | −$9.2m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2025-01-01 to 2025-03-31 | $0.14 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2025-01-01 to 2025-03-31 | $0.14 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2025-01-01 to 2025-03-31 | 47,370,317 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 3 months, 2025-01-01 to 2025-03-31 | −$6.7m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 3 months, 2025-01-01 to 2025-03-31 | $31.0k | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Cash and equivalents | at 2025-03-31 | $27.9m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2025-03-31 | $38.6m | us-gaap:AssetsCurrent |
| Total assets | at 2025-03-31 | $115.6m | us-gaap:Assets |
| Current liabilities | at 2025-03-31 | $19.2m | us-gaap:LiabilitiesCurrent |
| Long-term debt | at 2025-03-31 | $18.9m | us-gaap:LongTermDebtNoncurrent |
| Current portion of debt | at 2025-03-31 | $10.3m | us-gaap:LongTermDebtCurrent |
| Shareholders' equity | at 2025-03-31 | $73.7m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 39,618 characters.

*Readers are advised to review the following discussion and analysis of our financial condition and results of operations together with our consolidated financial statements and related notes thereto included elsewhere in this Quarterly Report on Form 10-Q and the consolidated financial statements and related notes thereto in our Annual Report on Form 10-K for the year ended December 31, 2024. Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties. See “Cautionary Note Regarding Forward-Looking Statements”. You should review the “Risk Factors” section of our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.*

*The following financial data in this narrative are expressed in thousands, except for stock and stock data or as otherwise noted.*

We are a leading global digital health company with a mission to power the behavior changes that drive better health. We are committed to transforming healthcare by delivering a comprehensive and highly engaging whole-person health platform, which enables us to create a future where healthy change is effortless and accessible to all.

At the core of our mission and vision is engagement. We believe that most existing digital health solutions in the market fail to deliver improved health outcomes because users are not engaged due to a lack relevance, personalization, consumerization, and longitudinal data and information. We, and our acquired companies, first commercialized our digital behavioral health products in the direct-to-consumer (“D2C”) marketplace, and we continue to use the D2C marketplace as a sandbox and laboratory to innovation. These consumers pay for these digital health products out of their own pockets and are therefore the most value driven among all healthcare consumers. These consumers demanded that we deliver highly engaging user experiences that deliver strong clinical health outcomes for which consumers will pay. The bottom line is that if users are not engaged in digital solutions over a long period of time, they cannot change their behavior and they cannot get healthier – we first deliver engagement followed by sustained behavior change that then leads to measurable health outcomes and improvement. We believe that our D2C marketplace roots and continued focus delivers better user experiences, longer sustained engagement, stronger clinical outcomes, at the most affordable prices, that then delivers the highest return on investment (“ROI”) in the industry.

Our whole-person health model includes the following five elements:

1\. Physical Health: Focuses on the prevention, and treatment of physical ailments; primarily cardiometabolic and musculoskeletal conditions.

2\. Mental Health: Addresses emotional and psychological well-being, including stress management, as well as clinical anxiety, and depression across all levels of severity.

3\. Social and Environmental Factors: Considers influences like socioeconomic status, community resources, housing, and education.

4\. Individualized Care: Tailored user journey and care plans that respect personal goals, cultural values, and life circumstances.

5\. Integration of Clinical Services: Combines different healthcare providers and systems to deliver seamless care for both physical and mental health needs.

We have created our whole-person healthcare solution through both organic development and acquisitions of leading companies across several therapeutic areas. As a digital health consolidation leader, we have acquired companies that have spent over a decade and nearly $525 million, in combination with our own investment, to develop and deliver the most engaging whole-person health platform in the market to empower individuals to achieve their optimal health through data-driven, precision artificial intelligence (“AI”) personalized care solutions that integrate the management of physical and mental health needs.

Leveraging advanced analytics, data-driven AI precision and personalization, a deep understanding of consumer behavior, user-centric technology, and a holistic approach, we provide tailored interventions that meet the unique needs of each user to deliver the health industry’s highest levels of user activation and sustained engagement. Our digital self-care solutions ensure optimal levels of clinical outcomes with the highest levels of clinical efficacy by empowering users to overcome the psychological, social, and physical barriers to effective and sustainable behavior change.

With our whole-person digital health platform, we address a broad range of health needs, including chronic condition management (e.g., diabetes, hypertension, obesity, and musculoskeletal issues), behavioral health (e.g., stress, anxiety, and depression), and preventive care. By integrating digital therapeutics and well-being solutions with real-time data monitoring and access to professional care teams, we ensure an AI driven adaptive and continuous care experience that combines digital self-care, with virtual coaching, and virtual clinical care. As of 2024, our eligible user base spans millions of individuals worldwide, supported by partnerships with employers, health plans, pharmaceutical companies, and providers aiming to deliver instant access to the highest quality and most effective self-care and virtual human care that delivers the optimal level of clinical utilization to ensure the best value and outcomes to our users and customers.

### Recent Developments

#### New Clients

During the period ended March 31, 2025, we signed 14 new clients year-to-date, including one national and one regional health plan and 12 employers, as part of our 2025 goal to add 40 new clients.

#### U.S. Healthcare Institution Deploys DarioHealth's Full Suite

On April 8, 2025, we announced a new employer partnership with one of the nation's most respected research and medical institutions. The signed agreement is already live and generating recurring revenue in 2025, marking a significant milestone in our ongoing expansion among innovation-driven employers seeking measurable health outcomes and return on investment. The institution's decision to implement our full suite of solutions reinforces our momentum in the enterprise healthcare segment and contributes to our position as a trusted provider of clinically proven, scalable digital health solutions. Our AI-driven platform will provide employees with data-driven support through our full suite of solutions—Dario Health, Dario Mind, and Dario Move—spanning multiple chronic conditions, including diabetes, hypertension, weight management, musculoskeletal pain, and behavioral health.

#### Collaboration with Leading National Benefit Plan Administrator to Offer Cardiometabolic Solution including a GLP-1 Support Program to Employers

On April 17, 2025, we announced a new strategic partnership with a leading benefit administrator to deliver our comprehensive cardiometabolic solution including a GLP-1 support program and full AI-driven digital health suite to employers, with initial clients already implemented and contributing to revenue since January 2025. This marked our first national benefit administrator collaboration and represented a strategic step toward broader adoption across benefit administration channels. The benefit administrator selected our integrated platform to address rising healthcare costs associated with metabolic conditions including diabetes, pre-diabetes, hypertension, and weight management. The collaboration specifically targets the growing demand for effective GLP-1 medication support as employers seek solutions that maximize the clinical and economic benefits of these breakthrough therapies while ensuring sustainable outcomes for members.

#### Strategic Refinancing of Existing Debt Facility of up to $50 Million to Provide Additional Operational Flexibility and Support Growth Initiatives

On May 1, 2025, we announced the closing of a debt financing facility for up to $50 million provided by Rand Capital and Callodine Group. The capital refinances our existing credit facility, providing additional operational flexibility and supporting the commercial execution of our Business-to-Business-to-Consumer ("B2B2C") strategy across pharmaceutical companies, self-insured employers and payer channels. Under the terms of the credit agreement (the "Credit Agreement"), we borrowed $32.5 million at closing. In addition, an aggregate of up to an additional $17.5 million is available to be drawn down at our option, based on the achievement of certain revenue thresholds. The Credit Agreement has a five-year term that matures in April 2030. In connection with the funding of the closing amount, we also issued a warrant to purchase 2,114,140 shares of our common stock, with an exercise price of $0.8278. In addition, up to $2.5 million of the loaned amount can be converted into shares of our common stock at a price of $0.9933 per share. With the refinancing and current cash on hand, we believe that deferring the debt amortization from the end of 2025 to 2028 will allow the time to generate funds from operations to support our cash flow.

#### Published Research Relating to Flu Vaccine Awareness

In May 2025, we announced that new research was published in the Journal of Medical Internet Research (JMIR) demonstrating the effectiveness of personalized digital health interventions to drive flu vaccine awareness in Dario members living with diabetes.

### Results of Operations

### Comparison of the three months ended March 31, 2025 and March 31, 2024 (dollar amounts in thousands)

#### Revenues

Revenues for the three months ended March 31, 2025 amounted to $6,752, compared to revenues of $5,758, during the three months ended March 31, 2024, representing an increase of 17.3%. The increase in revenues resulted from an increase in our revenues from our commercial channel.

#### Cost of Revenues

During the three months ended March 31, 2025, we recorded costs related to revenues in the amount of $2,870, compared to costs related to revenues of $3,326 during the three months ended March 31, 2024, representing a decrease of 13.7%. The decrease was mainly a result of the decrease in amortization of technology and a reduction in payroll costs.

Cost of revenues consists mainly of the cost of hardware and consumables production, employees’ salaries and related overhead costs, stock-based compensation, depreciation of production lines and related cost of equipment used in production, amortization of technologies, hosting costs, shipping and handling costs and inventory write-downs.

#### Gross Profit

Gross profit for the three months ended March 31, 2025, amounted to $3,882 (57.5% of revenues) compared to $2,432 (42.2% of revenues) during the three months ended March 31, 2024. The increase in gross profit as a percentage of revenues resulted mainly from the increase in the revenues from our commercial channel and lower amortization of technology and payroll related expenses recorded in the cost of revenues. Gross profit for the three months ended March 31, 2025, excluding amortization of acquired technology was $4,757(70.5% of revenues) compared to $3,595 (62.4% of revenues) during the three months ended March 31, 2024.

#### Research and Development Expenses

Our research and development expenses decreased by $2,534, or 38.2%, to $4,108 for the three months ended March 31, 2025, compared to $6,642 for the three months ended March 31, 2024. The decrease was mainly due to the decrease in payroll expenses, stock-based compensation and subcontractors and consulting expenses. Our research and development expenses, excluding stock-based compensation and depreciation, for the three months ended March 31, 2025, were $3,542 compared to $5,466 for the three months ended March 31, 2024, a decrease of $1,924. The decrease was mainly due to a decrease in payroll, and subcontractors and consulting expenses.

Research and development expenses consist mainly of employees’ salaries and related overhead costs involved in research and development activities, expenses related to: (i) our solutions including our Dario Smart Diabetes Management Solution, Dario Move solution and our digital behavioral health solution, (ii) labor, stock-based compensation contractors and engineering expenses, (iii) depreciation and maintenance fees related to equipment and software tools used in research and development, (iv) clinical trials performed in the United States to satisfy the FDA approval requirements and (v) facilities expenses associated with and allocated to research and development activities.

#### Sales and Marketing Expenses

Our sales and marketing expenses decreased by $1,037, or 15%, to $5,873 for the three months ended March 31, 2025, compared to $6,910 for the three months ended March 31, 2024. The decrease was mainly a result of lower payroll related expenses, and stock-based compensation expenses, partially offset by higher amortization of our customer relationships intangible asset due to the full quarter of expense from the acquisition of Twill, and an increase in subcontractors and consulting expenses. Our sales and marketing expenses, excluding stock-based compensation, depreciation and amortization for the three months ended March 31, 2025, were $4,748 compared to $5,078 for the three months ended March 31, 2024, a decrease of $330. The decrease was mainly due to a decrease in payroll related expenses.

Sales and marketing expenses consist mainly of employees’ salaries and related overhead costs, stock-based compensation, customer relationship intangible asset, online marketing campaigns of our service offering, trade show expenses and marketing consultants, marketing expenses and subcontractors.

#### General and Administrative Expenses

Our general and administrative expenses decreased by $3,425, or 50.9%, to $3,310 for the three months ended March 31, 2025, compared to $6,735 for the three months ended March 31, 2024. The decrease was mainly due to a decrease in stock-based compensation expenses and acquisition related costs. Our general and administrative expenses, excluding stock-based compensation, depreciation, and acquisition related costs for the three months ended March 31, 2025 was $2,305 compared to $2,150 for the three months ended March 31, 2024, an increase of $155. The increase was mainly due to an increase in legal and accounting expenses.

Our general and administrative expenses consist mainly of employees’ salaries and related overhead costs, stock-based compensation, directors’ fees, legal and accounting fees, acquisition related costs, patent registration, expenses related to investor relations, as well as our office rent and related expenses.

#### Financial Income, net

Our financial income, net for the three months ended March 31, 2025, was $204, representing a decrease of $8,482, compared to financial income of $8,686 for the three months ended March 31, 2024. The decrease in our financial income, net was mainly due to the decrease in financial income resulting from the revaluation of pre-funded warrants issued in the first quarter of 2024.

Financial income, net primarily consist of credit facility interest expense, interest income from cash balances, revaluation of warrants, revaluation of short-term investments and long-term loan, bank charges, lease liability and foreign currency translation differences.

#### Income tax

Income tax expenses was $22 for the three months ended March 31, 2025, representing a decrease of $2,016 as compared to income from taxes of $1,994 for the three months ended March 31, 2024. The decrease in our income from tax was due to a reduction in the valuation allowance for deferred tax liability that resulted from the acquisition of Twill.

#### Net loss

Net loss increased by $2,052, or 28.6%, to $9,227 for the three months ended March 31, 2025, compared to a net loss of $7,175 for the three months ended March 31, 2024. The increase in net loss was mainly due to the decrease in our financial income from the valuation of the pre-funded warrants.

The factors described above resulted in net loss attributable to common stockholders for the three months ended March 31, 2025, amounted to $14,066, compared to net loss attributable to common stockholders of $9,209 for the three months ended March 31, 2024.

### Non-GAAP Financial Measures

To supplement our unaudited condensed consolidated financial statements presented in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”) within this Quarterly Report on Form 10-Q, management provides certain non-GAAP financial measures (“NGFM”) of the Company’s financial results, including such amounts captioned: “Non-GAAP Adjusted Loss”, as presented herein below. Importantly, we note the NGFM measures captioned “Non-GAAP Adjusted Loss” is not recognized terms under U.S. GAAP, and as such, it is not a substitute for, considered superior to, considered separately from, nor as an alternative to, U.S. GAAP and /or the most directly comparable U.S. GAAP financial measures.

Such NGFM are presented with the intent of providing greater transparency of information used by us in our financial performance analysis and operational decision-making. Additionally, we believe these NGFM provide meaningful information to assist investors, shareholders, and other readers of our unaudited condensed consolidated financial statements, in making comparisons to our historical financial results, and analyzing the underlying financial results of our operations. The NGFM are provided to enhance readers’ overall understanding of our current financial results and to provide further information to enhance the comparability of results between the current year period and the prior year period.

We believe the NGFM provide useful information by isolating certain expenses, gains, and losses, which are not necessarily indicative of our operating financial results and business outlook. In this regard, the presentation of the NGFM herein below, is to help the reader of our unaudited condensed consolidated financial statements to understand the effects of the non-cash impact on our (U.S. GAAP) unaudited condensed consolidated statement of operations of the revaluation of the warrants and the expense related to stock-based compensation, each as discussed herein above.

A reconciliation to the most directly comparable U.S. GAAP measure to NGFM, as discussed above, is as follows:

*(in thousands)*

| ​ ​ ​ ​ Net Loss Reconciliation | ​ ​ ​ | ​ ​ Three Months Ended March 31, 2025 ​ | ​ | ​ ​ 2024 ​ | ​ | ​ ​ $ Change ​ |
| --- | --- | ---: | --- | ---: | --- | ---: |
| Net loss - as reported | ​ | $(9,227) | ​ | $(7,175) | ​ | $(2,052) |
| ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ |
| Adjustments | ​ |  | ​ | ​ | ​ |  |
| Depreciation and impairment expense | ​ | 94 | ​ | 110 | ​ | (16) |
| Amortization of acquired technology, brand and customer relationship | ​ | ​ 1,162 | ​ | ​ 1,216 | ​ | ​ (54) |
| Other financial (income) expenses, net | ​ | (204) | ​ | (8,686) | ​ | 8,482 |
| Income tax | ​ | 22 | ​ | (1,994) | ​ | 2,016 |
| Acquisition costs | ​ | ​ — | ​ | ​ 593 | ​ | ​ (593) |
| Stock-based compensation expenses | ​ | 2,342 | ​ | 6,858 | ​ | (4,516) |
| ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ |
| Non-GAAP adjusted loss | ​ | $(5,811) | ​ | $(9,078) | ​ | $3,267 |

### Liquidity and Capital Resources

As of March 31, 2025, we had approximately $27,854 in cash and cash equivalents compared to $27,764 on December 31, 2024.

We have experienced cumulative losses of $404,409 since inception (August 11, 2011) through March 31, 2025, and have a stockholders’ equity of $73,699 as of March 31, 2025. In addition, we have not completed our efforts to establish a stable recurring source of revenues sufficient to cover our operating costs and expect to continue to generate losses for the foreseeable future.

Since inception, we have financed our operations primarily through private placements and public offerings of our common stock and warrants to purchase shares of our common stock, receiving aggregate net proceeds totaling $289,740 and a credit facility of $25,564 as of March 31, 2025.

On June 25, 2024, upon obtaining the vote of a majority of the holders of the relevant classes of preferred stock, we filed a Second Amended and Restated Certificate of Designation of Preferences, Rights and Limitations of our Series B Preferred Stock (the “Series B Certificate of Designation”) and Second Amended and Restated Certificate of Designation of Preferences, Rights and Limitations of our Series B-1 Preferred Stock, all with the Secretary of State of the State of Delaware (collectively, the “Certificates of Designation”).The Certificates of Designation were amended 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 Series B Certificate of Designation and Series B-1 Certificate of Designation 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, upon obtaining the vote of a majority of the holders of the relevant class of preferred stock, we filed a Second Amended and Restated Certificate of Designation of Preferences, Rights and Limitations of our Series B-3 Preferred Stock with the Secretary of State of the State of Delaware (the “Series B-3 Certificate of Designation”). The Series B-3 Certificate of Designation was amended 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 Series B-3 Certificate of Designation 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 May 1, 2023, we entered into a Loan and Security Agreement, and Supplement thereto (the “LSA”), by and between the us and our subsidiary, PsyInnovations Inc. (“PsyInnovations”), collectively as the borrowers (the “Borrowers”) and the Avenue Lenders. The LSA provided for a four-year secured credit facility in an aggregate principal amount of up to $40 million (the “Loan Facility”), of which $30 million was made available on the closing date (the “Initial Tranche”) and up to $10 million (the “Discretionary Tranche”) would have been made available on the later of July 1, 2023 or the date the Avenue Lenders approved the issuance of the Discretionary Tranche. On May 1, 2023, we closed on the Initial Tranche, less certain fees and expenses payable to or on behalf of the Avenue Lenders.

All obligations under the LSA were guaranteed by our wholly owned subsidiary, Labstyle. All obligations under the LSA, and the guarantees of those obligations, were secured by substantially all of our, PsyInnovations’ and the guarantor's assets. Subject to certain milestones set forth in the LSA, the Borrowers were required to make monthly payments to the Avenue Lenders of interest at the then effective rate. If the Borrowers failed to meet the milestones set forth in the LSA, the Borrowers would have been required to make monthly principal installments in advance in an amount sufficient to fully amortize the Loan Facility. The Borrowers were also required to repay amounts outstanding under the Loan Facility in full immediately upon an acceleration as a result of an event of default as set forth in the LSA.

During the term of the Loan Facility, interest payable in cash by the Borrowers accrued on any outstanding balance due under the 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 Loan Facility was to bear interest at a rate of 5.00% in excess of the otherwise applicable rate of interest. The Borrowers were required to pay certain fees with respect to the Loan Facility, including an upfront commitment fee, an administration fee and a prepayment premium, as well as certain other fees and expenses of the Avenue Lenders.

On February 15, 2024, we 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 our existing loan facility with the Avenue Lenders. In addition, the Avenue Amendment provided (i) that we will seek stockholder approval to reprice the warrants issued to the lenders on May 1, 2023 to permit an amendment to the exercise price of such warrants to the “minimum price” as defined by Nasdaq rules as of the closing of the Agreement and Plan of Merger (the “Twill Agreement”) that we executed on February 15, 2024, with Twill, Inc. (“Twill”), and (ii) permit the Avenue Lenders, subject to Nasdaq rules, to convert up to two million of the principal amount of its loan to us at a conversion price of $4.001 per share.

On June 25, 2024, our stockholders approved the Avenue Amendment and repricing of the Warrants to purchase up to 584,882 shares of Common Stock issued to the lenders on May 1, 2023 from an exercise price $3.334 per share, to

$2.02 which was 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 our Common Stock at a conversion price of $4.001.

Pursuant to the LSA, we were obligated to maintain at least $5,000 of unrestricted cash in deposit accounts located in the United States. On April 30, 2025, the Loan Facility pursuant to the LSA was repaid in full.

On April 30, 2025, we entered into a Credit Agreement, by and among us as borrower, the financial institutions party thereto from time to time as lenders, and Callodine Commercial Finance, LLC (in its capacity as agent for all lenders, “Agent”, and collectively with other lenders, “Lenders” and each a “Lender”). Under the terms of the Credit Agreement, each Lender agreed to make a multi-draw term loan to us (each a “Term Loan”) in which we borrowed $32.5 million at the time of closing on April 30, 2025. In addition, we may at our option draw an aggregate of up to an additional $17.5 million. $2.5 million of such additional Term Loans is subject to the achievement of certain revenue and gross margin thresholds. $15.0 million of such additional Term Loans is subject to the discretion of the Agent and the Lenders. The Credit Agreement has a five-year term that matures in April 2030.

All obligations under the Credit Agreement are guaranteed by our subsidiaries (each a “Grantor”). All obligations under the Credit Agreement, and the guarantees of those obligations, are secured by substantially all of our and the Grantors’ assets. In the event of a default set forth in the Credit Agreement, the Agent may apply all or any part of the proceeds as collateral to the payment of the obligations in the order and priority as determined by the Agent in its sole discretion.

The outstanding principal balance under the loan shall bear interest at a per annum rate of interest equal to (i) the Term SOFR Rate (as defined in the Credit Agreement) plus (ii) seven and three-quarters of one percent (7.75%). Upon maturity and/or upon an event of default (or upon any acceleration), interest shall automatically accrue without notice to us at a rate per annum equal to the lesser or (i) three percent (3%) over the Contract Rate (as defined in the Credit Agreement), or (ii) the maximum rate of interest permitted to be charged by applicable laws or regulations until paid. We will pay certain fees with respect to the Term Loan, including a closing fee, an exit fee, and an agent fee. Voluntary prepayments of the Term Loan prior to the third anniversary of the closing are also subject to certain pre-payment penalties.

The Credit Agreement contains customary events of default, including with respect to nonpayment of principal, interest, fees or other amounts; material inaccuracy of a representation or warranty; failure to perform or observe covenants; bankruptcy and insolvency events; material monetary judgment defaults; impairment of any material definitive loan documentation; other material adverse effects; key person events and change of control.

The Credit Agreement also contains a number of customary representations, warranties and covenants that, among other things, will limit or restrict our ability and the ability of our subsidiaries to (subject to certain qualifications and exceptions): create liens and encumbrances; incur additional indebtedness; merge, dissolve, liquidate or consolidate; make acquisitions, investments, advances or loans; dispose of or transfer assets; pay dividends or make other payments in respect of their capital stock; amend certain material documents; redeem or repurchase certain debt; engage in certain transactions with affiliates; and enter into certain restrictive agreements.

In connection with the funding of the closing amount, we agreed to issue for each Lender a warrant to purchase 2,114,140 shares of our Common Stock, with an exercise price of $0.8278, which shall have a term of seven years from the issuance date. In addition, up to $2.5 million of the loaned amount can be converted into shares of our common stock at a price of $0.9933 per share.

On February 15, 2024, we entered into securities purchase agreements (each, a “Series C Purchase Agreement”) with accredited investors relating to an offering (the “Series C

Offering”) and the sale of an aggregate of (i) 17,307 shares of newly designated Series C Preferred Stock (the “Series C Preferred Stock”), and (ii) 4,000 shares of Series C-1 Preferred Stock (the “Series C-1 Preferred Stock”), at a purchase price of $1,000 for each share of Preferred Stock. In addition, on February 16, 2024, we entered into Series C Purchase Agreements with accredited investors relating to the Series C Offering and the sale of an aggregate of 1,115 shares of Series C-2 Preferred Stock (the “Series C-2 Preferred Stock” and together with the Series C Preferred Stock and the Series C-1 Preferred Stock, the “Series C Preferred Stock”), at a purchase price of $1,000 for each share of Preferred Stock. As a result of the sale of the Series C Preferred Stock, we received the aggregate gross proceeds from the Series C Offering of approximately $22,422,000. The closing of the Series C Preferred Stock, Series C-1 Preferred Stock and Series C-2 Preferred Stock occurred on or before February 21, 2024.

On December 16, 2024, we entered into securities purchase agreements (each, a “Series D Purchase Agreement”), pursuant to which we 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 we received from the offering were approximately $18,805. The conversion of the preferred stock was 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, we and certain purchasers in the Offering that are holders of our Series B and C Preferred Stock executed lock up agreements (the “Lock Up Agreement”), pursuant to which we 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.

On January 7, 2025, we 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 we received 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 was 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.

On April 28, 2025, we held a special meeting of stockholders in which the stockholders approved the (A) the issuance of shares of our common stock, in excess of 20% of our issued and outstanding shares of Common Stock, upon: (i) the conversion of 25,605 shares of our Series D, D-1, D-2 and D-3 Preferred Stock into an aggregate of 33,956,850 shares of Common Stock, which were issued pursuant to private placement transactions that closed on December 18, 2024 and January 14, 2025 (the “Private Placements”), (ii) the issuance of up to 13,582,740 shares of Common Stock issuable as dividends to the Series D, D-1, D-2 and D-3 Preferred Stock; and (iii) the issuance of up to 4,175,070 shares of Common Stock issuable as share consideration provided under the Lock Up Agreements; and (B) (i) reduce the exercise price of certain warrants to purchase 584,882 shares of Common Stock issued to Avenue Venture Opportunities Fund II, L.P. and Avenue Venture Opportunities Fund, L.P. (collectively “Avenue”) to $0.7208 per share, and (ii) to permit the conversion of up to two million dollars of the principal amount of the loan issued by Avenue to us at a conversion price of $0.8650 per share.

Management believes that the proceeds from the prior private placements and the Credit Facility, combined with our cash on hand and short-term investments are sufficient to meet our obligations as they come due for at least a period of twelve months from the date of the issuance of these unaudited condensed consolidated financial statements. There are no assurances, however, that we will be able to obtain an adequate level of financial resources that are required for the long-term development and commercialization of our product offerings.

As such, we have a significant present need for capital. If we are unable to scale up our commercial launch of our products or meet our commercial sales targets (or if we are unable to generate any revenue at all), and if we are unable to obtain additional capital resources in the near term, we may be unable to continue activities absent material alterations in our business plans and our business might fail.

Additionally, readers are advised that available resources may be consumed more rapidly than currently anticipated, resulting in the need for additional funding sooner than expected. Should this occur, we will need to seek additional capital earlier than anticipated in order to fund (1) further development and, if needed (2) our efforts to obtain regulatory clearances or approvals necessary to be able to commercially launch Dario, Dario Engage and Dario Intelligence, (3) expenses which will be required in order to expand manufacturing of our hardware, (4) sales and marketing efforts and (5) general working capital. Such funding may be unavailable to us on acceptable terms, or at all. Our failure to obtain such funding when needed could create a negative impact on our stock price or could potentially lead to the failure of our company. This would particularly be the case if we are unable to commercially distribute our hardware and services in the jurisdictions and in the timeframes we expect.

### Cash Flows

The following table sets forth selected cash flow information for the periods indicated:

| ​ ​ ​ ​ | ​ ​ ​ | ​ March 31, 2025 $​ | ​ ​ | ​ 2024 $ |
| --- | --- | ---: | --- | ---: |
| Cash used in operating activities: | ​ | (6,673) |  | (13,110) |
| Cash used in investing activities: | ​ | (31) |  | (8,852) |
| Cash provided by financing activities: | ​ | 6,815 |  | 20,206 |
| ​ | ​ | 111 | ​ | (1,756) |

#### Net cash used in operating activities

Net cash used in operating activities was $6,673 for the three months ended March 31, 2025, a decrease of 49.4% compared to $13,110 used in operations for the same period in 2024. Cash used in operations decreased mainly due to the decrease in our operating expenses.

#### Net cash used in investing activities

Net cash used in investing activities was $31 for the three months ended March 31, 2025, compared to $8,852 net cash used in investing activities during the same period in 2024. The decrease is due to the acquisition of Twill during the three months ended March 31, 2024, compared to the same period in 2025.

#### Net cash provided from financing activities

Net cash derived from financing activities was $6,815 for the three months ended March 31, 2025, compared to $20,206 net cash used by financing activities during the same period in 2024. The decrease is mainly due to proceeds from the issuance of preferred shares in the three months ended March 31, 2025, compared to the three months ended March 31, 2024.

## Controls and procedures

As filed, 2,714 characters.

#### Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this Quarterly Report on Form 10-Q, our Chief Executive Officer and Chief Financial Officer (the “Certifying Officers”), conducted evaluations of our disclosure controls and procedures. As defined under Sections 13a–15(e) and 15d–15(e) of the Securities Exchange Act of 1934, as amended, (the “Exchange Act“, the term “disclosure controls and procedures” means controls and other procedures of an issuer that are designed to ensure that information required to be disclosed by the issuer in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC. Disclosure controls and procedures include without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including the Certifying Officers, to allow timely decisions regarding required disclosures.

Based on their evaluation, the Certifying Officers concluded that, as of March 31, 2025, our disclosure controls and procedures were designed at a reasonable assurance level and were therefore effective.

#### Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the quarter ended March 31, 2025, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

#### 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.

## Risk factors

As filed, 10,639 characters.

In addition to the other information set forth in this Quarterly Report on Form 10-Q, you should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2024, which could materially affect our business, financial condition, or future results.

There have been no material changes from the risk factors previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2024, except as noted below.

***Currently, our revenues are concentrated with a major customer, and our revenues may decrease significantly if we were to lose our major customer.***

Due to our limited operating history, we have a limited customer base and have depended on a major customer for a significant portion of our revenue. As of March 31, 2025, our major customer accounted for 18.1% of our accounts receivable balance and, for the three months period ended March 31, 2025, the customer accounted for 19.1% of our revenue. If the customer were to terminate the agreement, or if we fail to adequately perform under the agreement, and if we are unable to diversify our customer base, our revenue could decline, and our results of operations could be adversely affected.

***Our principal executive offices and other significant operations are located in Israel, and, therefore, our results may be adversely affected by political, economic and military instability in Israel, including the multi front war Israel is currently facing.***

Our executive offices and corporate headquarters are located in Israel. In addition, most of our executive officers are residents of Israel, although the majority of our employees are located outside of Israel. Since the establishment of the State of Israel in 1948, a number of armed conflicts have taken place between Israel and its Arab neighbors. In October 2023, Hamas terrorists infiltrated Israel’s southern border from the Gaza Strip and conducted a series of attacks on civilian and military targets. Since the commencement of these events, there had been additional active hostilities against Israel, including Hezbollah in Lebanon, the Houthis terrorist group which controls parts of Yemen, and Iran. Such clashes may escalate in the future into a greater regional conflict.

Furthermore, certain of our employees may be obligated to perform annual reserve duty in the Israel Defense Forces and are subject to being called up for active military duty at any time. Many Israeli citizens who have served in the army are required to perform reserve duty until they reach the age of 40 or older, depending upon the nature of their military service. None of our executive officers have been called up for active military duty.

Our commercial insurance does not cover losses that may occur as a result of events associated with war and terrorism. Although the Israeli government currently covers the reinstatement value of direct damages that are caused by terrorist attacks or acts of war, we cannot assure you that this government coverage will be maintained or that it will sufficiently cover our potential damages.

***Significant changes or developments in U.S. laws or policies, including changes in U.S. trade policies and tariffs and the reaction of other countries thereto, may have a material adverse effect on our business and financial statements.***

Significant changes or developments in U.S. laws and policies, such as laws and policies surrounding international trade, foreign affairs, manufacturing and development and investment in the territories and countries where we or our customers operate, can materially adversely affect our business and financial statements. Tariffs imposed by the U.S. government, may increase the cost of certain raw materials and components used in our hardware. If these tariffs remain in place or are expanded, or if new trade restrictions are implemented, our manufacturing costs could increase, which could materially and adversely affect our margins and financial results.

To date we have faced timeline extensions in certain projects due to tariff-related pressures, which impacted both hardware sourcing and partner-side execution. Some of our medical devices and hardware components are manufactured in China, and several potential partners have been similarly affected, resulting in prolonged decision-making cycles and implementation delays.

Furthermore, changes in trade policy have increased uncertainty in our industry, and any escalation in trade tensions could disrupt our supply chain, delay production timelines, or require costly modifications to sourcing and logistics strategies. The extent and duration of the tariffs and the resulting impact on general economic conditions and on our business are uncertain and depend on various factors, such as negotiations between the U.S. and affected countries, the responses of other countries or regions, exemptions or exclusions that may be granted, availability and cost of alternative sources of supply, and demand for our service in affected markets.

***The market price of our common stock has been extremely volatile and may continue to be volatile due to numerous circumstances beyond our control.***

The market price of our common stock has fluctuated, and may continue to fluctuate, widely, due to many factors, some of which may be beyond our control. These factors include, without limitation:

- “short squeezes”;
- comments by securities analysts or other third parties, including blogs, articles, message boards and social and other media;
- large stockholders exiting their position in our securities or an increase or decrease in the short interest in our securities;
- actual or anticipated fluctuations in our financial and operating results;
- changes in foreign currency exchange rates;
- the commencement, enrollment or results of our planned or future clinical trials of our product candidates or those of our competitors;
- the success of competitive drugs or therapies;
- regulatory or legal developments in the United States and other countries;
- the success of competitive products or technologies;
- developments or disputes concerning patent applications, issued patents or other proprietary rights;
- the recruitment or departure of key personnel;
- the level of expenses related to our product candidates or clinical development programs;
- litigation matters, including amounts which may or may not be recoverable pursuant to our officer and director insurance policies, regulatory actions affecting us and the outcome thereof;
- the results of our efforts to discover, develop, acquire or in-license additional product candidates;
- actual or anticipated changes in estimates as to financial results, development timelines or recommendations by securities analysts;
- disputes or other developments relating to proprietary rights, including patents, litigation matters and our ability to obtain patent protection for our technologies;
- significant lawsuits, including patent or stockholder litigation;
- variations in our financial results or those of companies that are perceived to be similar to us;
- market conditions in our market sector;
- general economic, political, and market conditions and overall fluctuations in the financial markets in the United States and abroad; and
- investors’ general perception of us and our business.

Stock markets in general and our stock price in particular have recently experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of those companies and our company. For example, the closing sale prices of our Common Stock from January 1, 2025 through May 13, 2025, ranged from a high of $1.53 per share (on January 7, 2025) to a low of $0.60 per share (on February 4, 2025). During that time, we have not experienced any material changes in our financial condition or results of operations that would explain such price volatility or trading volume; however, we have sold equity which was dilutive to existing stockholders. These broad market fluctuations may adversely affect the trading price of our securities. Additionally, these and other external factors have caused and may continue to cause the market price and demand for our common stock to fluctuate substantially, which may limit or prevent our stockholders from readily selling their shares of our common stock and may otherwise negatively affect the liquidity of our common stock.

In addition, if the stock price of our common stock continues to trade at its current level, it may imply as a negative indicator of the valuation of our intangible assets and our goodwill, which could result in an impairment for these assets.

***Nasdaq may delist our securities from trading on its exchange, which could limit investors’ ability to make transactions in our securities and subject us to additional trading restrictions.***

On September 16, 2024, we received a written notice from the Nasdaq Stock Market LLC (“Nasdaq”) indicating that we are not in compliance with Nasdaq Listing Rule 5550(a)(2), as our closing bid price for our common stock was below $1.00 per share for the last 30 consecutive business days. Pursuant to Nasdaq Listing Rule 5810(c)(3)(A), we have been granted a 180-calendar day compliance period, or until March 17, 2025, to regain compliance with the minimum bid price requirement. On March 18, 2025, we received a letter from Nasdaq approving an extension of an additional 180 calendar days to regain compliance with the minimum bid price requirement, or until September 15, 2025.

If at any time during the additional compliance period, the bid price of our Common Stock closes at or above $1.00 per share for a minimum of ten (10) consecutive trading days, Nasdaq will provide us with written confirmation of compliance with the minimum bid price requirement and the matter will be closed. If we do not regain compliance within the additional compliance period or do not comply with the terms of the extension, Nasdaq will provide notice that our securities will be delisted from The Nasdaq Capital Market.

We intend to continuously monitor the closing bid price for our Common Stock and are in the process of considering various measures to resolve the deficiency and regain compliance with the minimum bid price requirement, including a stock split, if necessary. However, there can be no assurance that we will be able to regain compliance with the minimum bid price requirement, even if it maintains compliance with the other Nasdaq listing requirements.

Filed May 14, 2025.
Source: SEC EDGAR, the filing index for accession 0001558370-25-007640. Last ingested by Listed: Oct 24, 2026, 15:13 ET. No prices; not investment advice.