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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	For the quarterly period ended June 30, 2025

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	For the transition period from to

Commission File No. 001-37704

DarioHealth Corp.

(Exact name of registrant as specified in its charter)

Delaware	45-2973162
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)


322 W. 57th St. #33B
New York, New York	10019
(Address of Principal Executive Offices)	(Zip Code)

(972)-4 770-4042

(Registrant’s telephone number, including area code)

n/a

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of exchange on which registered
Common Stock, par value $0.0001 per share	DRIO	The Nasdaq Capital Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

☐	Large accelerated filer	☐	Accelerated filer
☒	Non-accelerated filer	☒	Smaller reporting company
		☐	Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of August 10, 2025, the registrant had 45,496,954 shares of common stock outstanding.

When used in this quarterly report, the terms “Dario,” “DarioHealth,” “the Company,” “we,” “our,” and “us” refer to DarioHealth Corp., a Delaware corporation and our subsidiary LabStyle Innovation Ltd., an Israeli company, PsyInnovations Inc., a Delaware company, Twill, Inc., a Delaware company, Twill ISR Ltd, an Israeli company, and DarioHealth Services Pvt. Ltd., an Indian company. “Dario” is registered as a trademark in the United States, Israel, China, Canada, Hong Kong, South Africa, Japan, Costa Rica, and Panama. “DarioHealth” is registered as a trademark in the United States and Israel.

Table of Contents

DarioHealth Corp.

Quarterly Report on Form 10-Q

TABLE OF CONTENTS

		Page

Cautionary Note Regarding Forward-Looking Statements		3

PART 1 - FINANCIAL INFORMATION

Item 1.	Condensed Consolidated Interim Financial Statements (unaudited)	F-1

	Condensed Consolidated Interim Balance Sheets (Unaudited)	F-2 – F-3

	Condensed Consolidated Interim Statements of Comprehensive Loss (Unaudited)	F-4

	Condensed Consolidated Interim Statements of Changes in Stockholders’ Equity (Unaudited)	F- 5 – F-6

	Condensed Consolidated Interim Statements of Cash Flows (Unaudited)	F-7

	Notes to Condensed Consolidated Interim Financial Statements	F-8 – F-34

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	4

Item 4.	Control and Procedures	15

PART II - OTHER INFORMATION		17

Item 1A.	Risk Factors	17

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	21

Item 5.	Other Information.	21

Item 6.	Exhibits	22

SIGNATURES		23

Table of Contents

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain information set forth in this Quarterly Report on Form 10-Q, including in Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere herein may address or relate to future events and expectations and as such constitutes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Statements which are not historical reflect our current expectations and projections about our future results, performance, liquidity, financial condition, prospects and opportunities and are based upon information currently available to us and our management and their interpretation of what is believed to be significant factors affecting our business, including many assumptions regarding future events. Such forward-looking statements include statements regarding, among other things:

●

our current and future capital requirements and our ability to satisfy our capital needs through financing transactions or otherwise;

●

our ability to meet the requirements of our existing debt facility;

●

our product launches and market penetration plans;

●

the execution of agreements with various providers for our solution;

●

our ability to maintain our relationships with key partners;

●

our ability to complete required clinical trials of our product and obtain clearance or approval from the United States Food and Drug Administration (the “FDA”), or other regulatory agencies in different jurisdictions;

●

our ability to maintain or protect the validity of our U.S. and other patents and other intellectual property;

●

our ability to retain key executive members;

●

our ability to internally develop new inventions and intellectual property;

●

that our financial position raises substantial doubt about our ability to continue as a going concern;

●

general market, political and economic conditions in the countries in which we operate, including those related to recent unrest and actual or potential armed conflict in Israel and other parts of the Middle East, such as the attack by Hamas and other terrorist organizations in the Middle East and Israel’s war against them;

●

changes or developments in U.S. laws or policies, including changes in U.S. trade policies and tariffs;

●

interpretations of current laws and the passages of future laws; and

●

acceptance of our business model by investors.

Forward-looking statements, which involve assumptions and describe our future plans, strategies, and expectations, are generally identifiable by use of the words “may,” “should,” “would,” “could,” “scheduled,” “expect,” “anticipate,” “estimate,” “believe,” “intend,” “seek,” or “project” or the negative of these words or other variations on these words or comparable terminology. Actual results, performance, liquidity, financial condition and results of operations, prospects and opportunities could differ materially and perhaps substantially from those expressed in, or implied by, these forward-looking statements as a result of various risks, uncertainties and other factors. These statements may be found under the section of our Annual Report on Form 10-K for the year ended December 31, 2024 (filed on March 10, 2025) entitled “Risk Factors” as well as in our other public filings.

In light of these risks and uncertainties, and especially given the start-up nature of our business, there can be no assurance that the forward-looking statements contained herein will in fact occur. Readers should not place undue reliance on any forward-looking statements. Except as expressly required by the federal securities laws, we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, changed circumstances or any other reason.

Table of Contents

DARIOHEALTH CORP. AND ITS SUBSIDIARIES

CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

JUNE 30, 2025

UNAUDITED

INDEX

		Page
Condensed Consolidated Interim Balance Sheets		F-2 – F-3

Condensed Consolidated Interim Statements of Comprehensive Loss		F-4

Condensed Consolidated Interim Statements of Changes in Stockholders’ Equity		F-5 – F-6

Condensed Consolidated Interim Statements of Cash Flows		F-7

Notes to Condensed Consolidated Interim Financial Statements		F-8 – F-34

F-1

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DARIOHEALTH CORP. AND ITS SUBSIDIARIES

CONDENSED CONSOLIDATED INTERIM BALANCE SHEETS (UNAUDITED)

U.S. dollars in thousands


	June 30,		December 31,
	2025		2024
ASSETS

CURRENT ASSETS:
Cash and cash equivalents	$	21,954	$	27,764
Short-term bank deposits		-		697
Short-term restricted bank deposits		218		175
Trade receivables, net		2,556		4,804
Inventories		4,609		4,753
Other accounts receivable and prepaid expenses		2,833		2,336

Total current assets		32,170		40,529

NON-CURRENT ASSETS:
Deposits		79		79
Operating lease right of use assets		861		1,065
Long-term assets		300		313
Property and equipment, net		610		709
Intangible assets, net		16,878		18,762
Goodwill		57,427		57,427

Total non-current assets		76,155		78,355

Total assets	$	108,325	$	118,884

The accompanying notes are an integral part of the unaudited condensed consolidated interim financial statements.

F-2

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DARIOHEALTH CORP. AND ITS SUBSIDIARIES

CONDENSED CONSOLIDATED INTERIM BALANCE SHEETS (UNAUDITED)

U.S. dollars in thousands (except stock and per share data)


	June 30,		December 31,
	2025		2024
LIABILITIES AND STOCKHOLDERS’ EQUITY

CURRENT LIABILITIES:
Trade payables	$	3,379	$	3,045
Deferred revenues		727		1,583
Operating lease liabilities		510		504
Other accounts payable and accrued expenses		5,138		6,052
Current maturity of long-term loan		—		5,451

Total current liabilities		9,754		16,635

NON-CURRENT LIABILITIES
Operating lease liabilities		612		765
Long-term loan		30,499		23,472
Warrant liability		3,393		5,968
Other long-term liabilities		81		25

Total non-current liabilities		34,585		30,230

STOCKHOLDERS’ EQUITY
Common stock of $0.0001 par value - authorized: 160,000,000 shares; issued and outstanding: 45,474,935 and 38,388,431 shares on June 30, 2025 and December 31, 2024, respectively		4		4
Preferred stock of $0.0001 par value - authorized: 5,000,000 shares; issued and outstanding: 53,440 and 49,585 shares on June 30, 2025 and December 31, 2024, respectively		*) -		*) -
Additional paid-in capital		486,953		462,358
Accumulated deficit		(422,971)		(390,343)

Total stockholders’ equity		63,986		72,019

Total liabilities and stockholders’ equity	$	108,325	$	118,884

*) Represents an amount lower than $1.

The accompanying notes are an integral part of the unaudited condensed consolidated interim financial statements.

F-3

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DARIOHEALTH CORP. AND ITS SUBSIDIARIES

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF COMPREHENSIVE LOSS (UNAUDITED)

U.S. dollars in thousands (except stock and per share data)


	Three months ended				Six months ended
	June 30,				June 30,
	2025		2024		2025		2024
Revenues:
Services	$	3,661	$	4,660	$	8,536	$	8,820
Consumer hardware		1,708		1,595		3,585		3,193
Total revenues		5,369		6,255		12,121		12,013

Cost of revenues:
Services		821		960		1,686		1,925
Consumer hardware		1,151		1,306		2,281		2,504
Amortization of acquired intangible assets		433		1,233		1,308		2,396
Total cost of revenues		2,405		3,499		5,275		6,825

Gross profit		2,964		2,756		6,846		5,188

Operating expenses:
Research and development	$	3,721	$	6,810	$	7,829	$	13,452
Sales and marketing		5,231		7,132		11,104		14,042
General and administrative		3,212		5,005		6,522		11,740

Total operating expenses		12,164		18,947		25,455		39,234

Operating loss		9,200		16,191		18,609		34,046

Total financial expenses (income), net		3,790		(2,581)		3,586		(11,267)

Loss before taxes		12,990		13,610		22,195		22,779

Income tax (benefit)		—		—		22		(1,994)

Net loss	$	12,990	$	13,610	$	22,217	$	20,785

Deemed dividend (contribution)	$	5,572	$	(8,706)	$	10,411	$	(6,672)

Net loss attributable to common shareholders	$	18,562	$	4,904	$	32,628	$	14,113

Net loss per share:

Basic and diluted loss per share of common stock	$	0.18	$	0.08	$	0.33	$	0.27
Weighted average number of common stock used in computing basic and diluted net loss per share		49,630,949		39,830,793		48,500,775		37,778,087

The accompanying notes are an integral part of the unaudited condensed consolidated interim financial statements.

F-4

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DARIOHEALTH CORP. AND ITS SUBSIDIARIES

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(UNAUDITED)

U.S. dollars in thousands (except stock and per share data)


							Additional				Total
	Common Stock			Preferred Stock			paid-in		Accumulated		stockholders’
Three Months Ended June 30, 2025	Number	Amount		Number	Amount		capital		deficit		equity
Balance as of March 31, 2025	42,706,594	$	4	54,585	$	*)-	$	478,104	$	(404,409)	$	73,699

Modification of preferred stock	—		—	—		—		1,604		(1,604)		—
Deemed dividend related to issuance of preferred stock	—		—	—		—		3,968		(3,968)		—
Conversion of Preferred Stock to Common Stock	812,627		*)-	(1,145)		*)-		—		—		*)-
Stock-based compensation	1,955,714		*)-	—		—		2,035		—		2,035
Issuance of warrants in connection with Callodine loan facility, net of issuance cost	—		-	—		—		1,140		—		1,140
Modification of Avenue warrants	—		—	—		—		102		—		102
Net loss	—		—	—		—		—		(12,990)		(12,990)

Balance as of June 30, 2025	45,474,935	$	4	53,440	$	*)-	$	486,953	$	(422,971)	$	63,986

							Additional				Total
	Common Stock			Preferred Stock			paid-in		Accumulated		stockholders’
Six Months Ended June 30, 2025	Number	Amount		Number	Amount		capital		deficit		equity
Balance as of December 31, 2024	38,388,431	$	4	49,585	$	*)-	$	462,358	$	(390,343)	$	72,019

Conversion of Preferred Stock to Common Stock	1,668,033		*)-	(2,945)		*)-		*)-		—		*)-
Modification of preferred stock	—		—	—		—		1,604		(1,604)		—
Deemed dividend related to issuance of preferred stock	—		—	—		—		8,807		(8,807)		—
Stock-based compensation	2,558,796		*)-	—		—		4,377		—		4,377
Exercise of Prefunded warrants to common stock	2,859,675		*)-	—		—		1,750		—		1,750
Issuance of preferred stock, net of issuance cost	—		—	6,800		*)-		6,815		—		6,815
Issuance of warrants in connection with Callodine loan facility, net of issuance cost	—		—	—		—		1,140		—		1,140
Modification of Avenue warrants	—		*)-	—		—		102		—		102
Net loss	—		—	—		—		—		(22,217)		(22,217)

Balance as of June 30, 2025	45,474,935	$	4	53,440	$	*)-	$	486,953	$	(422,971)	$	63,986

*) Represents an amount lower than $1.

The accompanying notes are an integral part of the unaudited condensed consolidated interim financial statements.

F-5

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DARIOHEALTH CORP. AND ITS SUBSIDIARIES

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(UNAUDITED)

U.S. dollars in thousands (except stock and per share data)


							Additional				Total
	Common Stock			Preferred Stock			paid-in		Accumulated		stockholders’
Three Months Ended June 30, 2024	Number	Amount		Number	Amount		capital		deficit		equity
Balance as of March 31, 2024	29,439,740	$	3	41,381	$	*)-	$	436,600	$	(358,570)	$	78,033

Exercise of options	4,688		*)-	—		—		*)-		—		*)-
Extinguishment of preferred stock in connection with preferred stock modification	—		—	—		—		(11,786)		11,786		—
Deemed dividend related to issuance of preferred stock	—		—	—		—		3,080		(3,080)		—
Issuance of warrants to service providers	—		—	—		—		2,001		—		2,001
Conversion of preferred stock to common stock	376,810		*)-	(1,050)		*)-		—		—		*)-
Stock-based compensation	203,037		*)-	—		—		1,561		—		1,561
Modification of Avenue warrants	—		*)-	—		—		70		—		70
Net loss	—		—	—		—		—		(13,610)		(13,610)

Balance as of June 30, 2024	30,024,275	$	3	40,331	$	*)-	$	431,526	$	(363,474)	$	68,055

							Additional				Total
	Common Stock			Preferred Stock			paid-in		Accumulated		stockholders’
Six Months Ended June 30, 2024	Number	Amount		Number	Amount		capital		deficit		equity
Balance as of December 31, 2023	27,191,849	$	3	18,959	$	*)-	$	407,502	$	(349,361)	$	58,144

Exercise of options	6,709		*)-	—		—		*)-		—		*)-
Extinguishment of preferred stock in connection with preferred stock modification	—		—	—		—		(11,786)		11,786		—
Deemed dividend related to issuance of preferred stock	—		—	—		—		5,114		(5,114)		—
Issuance of warrants to service providers	—		—	—		—		2,028		—		2,028
Stock-based compensation	2,048,907		*)-	—		—		8,392		—		8,392
Conversion of preferred stock to common stock	776,810		*)-	(1,050)		*)-		—		—		*)-
Issuance of preferred stock, net of issuance cost	—		—	22,422		*)-		20,206				20,206
Modification of Avenue warrants	—		*)-	—		—		70		—		70
Net loss	—		—	—		—		—		(20,785)		(20,785)

Balance as of June 30, 2024	30,024,275	$	3	40,331	$	*)-	$	431,526	$	(363,474)	$	68,055

F-6

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DARIOHEALTH CORP. AND ITS SUBSIDIARIES

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS (UNAUDITED)

U.S. dollars in thousands


	Six months ended
	June 30,
	2025		2024
Cash flows from operating activities:
Net loss	$	(22,217)	$	(20,785)
Adjustments required to reconcile net loss to net cash used in operating activities:
Stock-based compensation		4,377		10,420
Depreciation and impairment		174		648
Change in operating lease right of use assets		204		425
Amortization of acquired intangible assets		1,884		2,516
Decrease (increase) in trade receivables, net		2,248		(247)
Increase in other accounts receivable, prepaid expense and long-term assets		(484)		(1,171)
Decrease (increase) in inventories		143		(71)
Increase (decrease) in trade payables		334		(190)
Decrease in other accounts payable and accrued expenses		(858)		(3,034)
Decrease in deferred revenues		(856)		(224)
Change in operating lease liabilities		(147)		(417)
Change in fair value of warrant liability		(825)		(12,643)
Non-cash financial expenses		2,665		204
Other		654		96

Net cash used in operating activities		(12,704)		(24,473)

Cash flows from investing activities:
Purchase of property and equipment		(75)		(85)
Payments for business acquisitions, net of cash acquired		—		(8,796)

Net cash used in investing activities		(75)		(8,881)

Cash flows from financing activities:
Proceeds from issuance of preferred stock, net of issuance costs		6,754		20,206
Proceeds from borrowings on credit agreement, net		31,700		-
Repayment of long-term loan		(31,515)		—

Net cash provided by financing activities		6,939		20,206

Increase (decrease) in cash, cash equivalents and restricted cash and cash equivalents		(5,840)		(13,148)
Effect of exchange rate differences on cash, cash equivalents and restricted cash and cash equivalents		30		(48)
Cash, cash equivalents and restricted cash and cash equivalents at beginning of period		27,764		36,797
Cash, cash equivalents and restricted cash and cash equivalents at end of period	$	21,954	$	23,601
Supplemental disclosure of cash flow information:
Cash paid during the period for interest on long-term loan	$	1,250	$	1,972
Non-cash activities:
Right-of-use assets obtained in exchange for lease liabilities	$	—	$	428
Exercise of pre-funded warrants to common stock upon acquisition	$	1,750	$	—

The accompanying notes are an integral part of the unaudited condensed consolidated interim financial statements.

F-7

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DARIOHEALTH CORP. AND ITS SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)

U.S. dollars in thousands (except stock and per share data)

NOTE 1: - GENERAL

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.

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 general and administrative business activities.

On February 15, 2024, the Company acquired Twill, Inc. (“Twill”) pursuant to the terms of an Agreement and Plan of Merger (the “Twill Agreement”). Pursuant to the provisions of the Twill Agreement, 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.

The Company also has, through its wholly owned subsidiary, PsyInnovations Inc., a company located in India, DarioHealth Services, which serves as the Company’s primary research and development center. DarioHealth Services is engaged in software development and other R&D activities in support of the Company’s operations.

The Company has incurred net losses since its inception. As of June 30, 2025, the Company has incurred recurring losses and negative cash flows since inception and has an accumulated deficit of $422,971. For the six months ended June 30, 2025, the Company used approximately $12,704 of cash in operations. 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. 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.

F-8

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DARIOHEALTH CORP. AND ITS SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)

U.S. dollars in thousands (except stock and per share data)

NOTE 1: - GENERAL (Cont.)

These conditions raise substantial doubt about the Company’s ability to continue as a going concern for twelve months from the date of issuance of these interim condensed consolidated financial statements. The accompanying condensed interim consolidated financial statements do not include any adjustments to reflect the possible future effects on recoverability and classification of assets or the amounts and classification of liabilities that may result from the outcome of this uncertainty.

NOTE 2: - SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited interim condensed consolidated financial statements as of June 30, 2025, have been prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”) and applicable rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”) regarding interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, the unaudited interim condensed consolidated financial statements include all adjustments of a normal recurring nature necessary for a fair statement of the Company’s consolidated financial position as of June 30, 2025, and the Company’s consolidated results of operations and cash flows for the six months ended June 30, 2025. Results for the six months ended June 30, 2025, are not necessarily indicative of the results that may be expected for the year ending December 31, 2025. These unaudited interim condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2024.

Use of Estimates

Preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires the use of estimates and judgments that affect the reported amounts in the condensed consolidated financial statements and accompanying notes. These estimates form the basis for judgments we make about the carrying values of our assets and liabilities, which are not readily apparent from other sources. We base our estimates and judgments on historical information and on various other assumptions that we believe are reasonable under the circumstances. These estimates are based on management's knowledge about current events and expectations about actions we may undertake in the future. Actual results could differ materially from those estimates.

Significant Accounting Policies

a. The significant accounting policies applied in the audited annual consolidated financial statements of the Company as disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 are applied consistently in these unaudited interim consolidated financial statements.

b. Concentrations of credit risk:

Financial instruments that potentially subject the Company to credit risks 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.

F-9

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DARIOHEALTH CORP. AND ITS SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)

U.S. dollars in thousands (except stock and per share data)

NOTE 2: - SIGNIFICANT ACCOUNTING POLICIES (Cont.)

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
Three months ended June 30, 2025
Allowance for credit losses	$	191	$	—	$	(35)	$	156

Three months ended June 30, 2024
Allowance for credit losses	$	273	$	10	$	(69)	$	214


		Balance at						Balance at
		beginning of period		Additions		Deduction		end of period
Six months ended June 30, 2025
Allowance for credit losses	$	169	$	28	$	(41)	$	156

Six months ended June 30, 2024
Allowance for credit losses	$	163	$	120	$	(69)	$	214

The Company has no off-balance-sheet concentration of credit risk.

As of June 30, 2025, and December 31, 2024, the Company's major customer accounted for 16.4% and 41.6%, respectively, of the Company's accounts receivable balance. For the three and six months ended June 30, 2025, the Company's major customer accounted for 9.3% and 10.6%, respectively, of the Company's revenue in the period. For the three and six months ended June 30, 2024, the Company's major customers accounted for 30.4% and 23.7%, respectively, of the Company's revenue in the period.

c. Short-term restricted bank deposits:

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:


	June 30,		June 30,
	2025		2024
Cash, and cash equivalents as reported on the balance sheets	$	21,954	$	22,938
Short-term bank deposits		—		663

Cash, restricted cash, cash equivalents, and restricted cash and cash equivalents as reported in the statements of cash flows	$	21,954	$	23,601

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DARIOHEALTH CORP. AND ITS SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)

U.S. dollars in thousands (except stock and per share data)

NOTE 2: - SIGNIFICANT ACCOUNTING POLICIES (Cont.)

d. Recently issued Accounting Pronouncements

(i)

In December 2023, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“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, with an option to apply the standard retrospectively. 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 in 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: - INVENTORIES


	June 30,		December 31,
	2025		2024
Raw materials	$	850	$	563
Finished products		3,759		4,190

	$	4,609	$	4,753

During the three and six months periods ended June 30, 2025, total inventory write-down expenses amounted to $38 and $212, respectively, and $101 for the three and six months ended June 30, 2024.

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DARIOHEALTH CORP. AND ITS SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)

U.S. dollars in thousands (except stock and per share data)

NOTE 4 – ACQUISITIONS

The interim consolidated statement of comprehensive loss includes the following revenue and net loss attributable to Twill for the three and six months ended June 30, 2024:


	Three		Six
	months ended		months ended
	June 30, 2024		June 30, 2024
Revenues	$	3,611	$	5,538
Net loss	$	2,839	$	2,915

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 on February 15, 2024, had taken place had Twill been acquired as of January 1, 2024.


	Six
	months ended
	June 30, 2024
Total revenues	$	13,976
Net loss	$	26,659

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 2024 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.

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DARIOHEALTH CORP. AND ITS SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)

U.S. dollars in thousands (except stock and per share data)

NOTE 5: - REVENUES

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 revenues from contracts with enterprise business market groups to provide digital therapeutics solutions for individuals to receive access to services through the Company’s commercial arrangements Business-to-Business-to-Consumer (“B2B2C”). The Company also generates revenue directly from individuals through a la carte offering and membership plans.

Revenue Source

The following tables represent the Company’s total revenues for the three and six month periods ended June 30, 2025 and June 30, 2024 disaggregated by revenue source:


	Three months ended				Six months ended
	June 30,				June 30,
	2025		2024		2025		2024
Commercial - Business-to-Business-to-Consumer (“B2B2C”)	$	3,535	$	5,543	$	8,272	$	9,013
Commercial - Strategic partnerships		—		(1,088)		—		(599)
Consumers		1,834		1,800		3,849		3,599

	$	5,369	$	6,255	$	12,121	$	12,013

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 $727 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 six months ended June 30, 2025:


Balance, beginning of the period	$	1,583
New performance obligations		1,858
Reclassification to revenue as a result of satisfying performance obligations		(2,675)

Balance, end of the period	$	766

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DARIOHEALTH CORP. AND ITS SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)

U.S. dollars in thousands (except stock and per share data)

NOTE 5: - REVENUES (Cont.)

Costs to Fulfill a Contract

The Company defers costs incurred to fulfill contracts that: (1) relate directly to the contract; (2) are expected to generate resources that will be used to satisfy the Company’s performance obligations under the contract; and (3) are expected to be recovered through revenue generated under the contract. Contract fulfillment costs are expensed as the Company satisfies its performance obligations and recorded into cost of revenue.

Costs to fulfill a contract are recorded in other accounts receivable and prepaid expenses and long-term assets.

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 June 30, 2025 and December 31, 2024, consisted of the following:


	June 30,		December 31,
	2025		2024
Costs to fulfill a contract, current	$	285	$	259
Costs to fulfill a contract, noncurrent		136		65

Total costs to fulfill a contract	$	421	$	324

Costs to fulfill a contract were as follows:


		Costs to
		fulfill a contract

Beginning balance as of December 31, 2024	$	324
Additions		299
Cost of revenue recognized		(202)

Ending balance as of June 30, 2025		421

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DARIOHEALTH CORP. AND ITS SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)

U.S. dollars in thousands (except stock and per share data)

NOTE 6: - DEBT

Loan Facility

On May 1, 2023, the Company refinanced its former $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 permits 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 was obligated to maintain at least $5,000 of unrestricted cash in deposit accounts located in the United States. This amount is classified within cash and cash equivalents.

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.

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DARIOHEALTH CORP. AND ITS SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)

U.S. dollars in thousands (except stock and per share data)

NOTE 6: - DEBT (Cont.)

The Company remeasurement expenses related to the Avenue Loan for the three and six months ended June 30, 2025, were $807 and $1,077, compared to $169 and $86 of remeasurement income for the three and six months ended June 30, 2024, which were included as part of the financial (income) expenses in the statement of comprehensive loss. During the six month periods ended June 30, 2025 and, 2024, 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. During the six months ended June 30, 2024, the Company recognized the incremental fair value resulting from the modification 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.

On April 28, 2025, the Company held a special meeting of stockholders in which the stockholders approved a reduction to the exercise price of certain warrants to purchase 584,882 shares of Common Stock issued to the Avenue Lenders to $0.7208 per share. The Company recognized the incremental fair value resulting from the modification in the amount of $102.

On April 30, 2025, the Company refinanced its existing $30,000 credit facility with a new $32,500 credit agreement (the “Credit Agreement”), by and among the Company 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”) (the “Callodine Loan Facility). Under the terms of the Credit Agreement, each Lender agreed to make a multi-draw term loan (each a “Term Loan”) in which the Company borrowed $32,500 at the time of closing on April 30, 2025. In addition, the Company may at its option draw an aggregate of up to an additional $17,500. $2,500 of such additional Term Loan is subject to the achievement of certain revenue and gross margin thresholds. $15,000 of such additional Term Loan is subject to the discretion of the Agent and the Lenders. The Credit Agreement has a five-year term that matures in April 2030.

The outstanding principal balance under the loan shall bear interest at a per annum rate of interest equal to (i) the Secured Overnight Financing Rate (“SOFR”), (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 the Company 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

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DARIOHEALTH CORP. AND ITS SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)

U.S. dollars in thousands (except stock and per share data)

NOTE 6: - DEBT (Cont.)

charged by applicable laws or regulations until paid. The Company paid 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.

In connection with the funding of the closing amount, the Company agreed to issue the Lenders a warrant to purchase an aggregate of 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 $2,500 of the loaned amount can be converted into shares of our Common Stock at a price of $0.9933 per share

The Company concluded that Callodine 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 Callodine Loan Facility is measured at amortized cost.

The fair value of the Callodine Loan Facility is recognized in connection with the Company’s Credit Agreement with respect to the Initial Commitment Amount only. The fair value of the Callodine Loan Facility was determined based on significant inputs not observable in the market, which represents a Level 3 measurement within the fair value hierarchy. The fair value of the Callodine Loan Facility, which is reported within non-current liabilities (Maturity Date - April 30, 2030) on the consolidated balance sheets, is estimated by the Company as of April 30, 2025 such that the value of the instruments granted by the Company under the Callodine Loan Facility equals the net principal amount (net of origination fees).

The Callodine Loan Facility incorporates comparisons to instruments with similar covenants, collateral, and risk profiles and was obtained using a discounted cash flow technique. On the date of Callodine Loan Facility origination, or April 30, 2025, the discount rate was arrived at by calibrating the loan amount of $32,500 with the fair value of the warrants of $1,234 and the loan terms interest rate equal to the greater of (i) The SOFR, and(ii) 4.0% plus a margin of 7.75%. The implied internal rate of return of the loan resulted with B rating US dollar zero coupon discount curve plus a 11.473% credit curve.

As of June 30, 2025, the Company did not meet one of the financial covenants under the Credit Agreement. Upon an Event of Default (as defined in the Credit Agreement) under the Credit Agreement, interest shall accrue to at a rate per annum equal to the lesser of (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. The Company notified Callodine of its intention to utilize an Equity Cure (as defined in the Credit Agreement) to address the event of default. Callodine waived the event of default, subject to the successful implementation of an equity cure no later than November 15, 2025.

The Company can avoid an event of default in connection with such covenant by executing an equity cure. An equity cure may be effected through the issuance of additional Equity Interests and/or Subordinated Debt (each as defined in the Credit Agreement), on terms and conditions reasonably satisfactory to the Agent, in an aggregate amount equal to or greater than one-hundred and fifty percent (150%) of the breached amount for the first such cure, one-hundred and seventy-five percent (175%) for the second such cure, and two-hundred percent (200%) for the third such cure (each such amount referred to as the "Minimum Cure Amount"). The Company notified Callodine of its intention to utilize an equity cure to address the event of default as defined in the Credit Agreement.

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DARIOHEALTH CORP. AND ITS SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)

U.S. dollars in thousands (except stock and per share data)

NOTE 6: - DEBT (Cont.)

Orbimed Warrant

On June 9, 2022 the Company entered into a Credit Agreement, with OrbiMed Royalty and Credit Opportunities III, LP (“Orbimed”), as the lender for a five-year senior secured credit facility in an aggregate principal amount of up to $50 million, of which $25 million was made available on the closing date and up to $25 million was to be made available on or prior to June 30, 2023, subject to certain revenue requirements (the “Orbimed Loan”).

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 three and six-months periods ended June 30, 2025 were $0 and $29, respectively. For the three and six-months periods ended June 30, 2024 the Company remeasurement income were $61 and $86, respectively.

Pre-Funded Warrants

On February 15, 2024, as part of the acquisition of Twill (See note 1) the Company issued Pre-Funded Warrants to purchase up to 10,000,400 shares of Company Common Stock, issuable in 4 equal tranches, to a trust (the “Trust”) formed for the benefit of certain equity and debt holders of Twill.

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 Pre-Funded Warrant 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.

In February 2025, a total of 2,500,100 Pre-Funded Warrants were exercised into 2,499,698 shares of Common Stock.

During the three and six-months periods ended June 30, 2025, the Company recognized $289 of remeasurement expenses and $796 of remeasurement income related to the Pre-Funded Warrants respectively. For the three and six-months periods ended June 30, 2024, the Company remeasurement income was $3,401 and $12,557 respectively.

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DARIOHEALTH CORP. AND ITS SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)

U.S. dollars in thousands (except stock and per share data)

NOTE 7: - 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.

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DARIOHEALTH CORP. AND ITS SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)

U.S. dollars in thousands (except stock and per share data)

NOTE 7: - FAIR VALUE MEASUREMENTS (Cont.)

The availability of observable inputs can vary from instrument to instrument and is affected by a wide variety of factors, including, for example, the type of investment, the liquidity of markets and other characteristics particular to the transaction. To the extent that valuation is based on models or inputs that are 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 (as defined herein) 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.

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:


	June 30, 2025
	Fair Value		Level 1		Level 2		Level 3
Financial assets:
Cash and cash equivalents:
U.S. treasury notes	$	12,521	$	—	$	12,521	$	—

Total financial assets	$	12,521	$	—	$	12,521	$	—

Financial liabilities:
Orbimed Warrant liability		43		—		—		43
Pre-Funded Warrant liability		3,350		—		3,350		—

Total financial liabilities	$	3,393	$	—	$	3,350	$	43


	December 31, 2024
	Fair Value		Level 1		Level 2		Level 3
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

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DARIOHEALTH CORP. AND ITS SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)

U.S. dollars in thousands (except stock and per share data)

NOTE 7: - FAIR VALUE MEASUREMENTS (Cont.)

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. The fair value of the Avenue Loan Facility, as of April 30, 2025, 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 three and six-months periods ended June 30, 2025 and June 30, 2024, 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.

The following inputs were used to estimate the fair value of the Orbimed Warrant liability:


	June 30,		December 31,
	2025		2024
Stock price	$	0.67	$	0.79
Exercise price		4.00		4.00
Expected term (in years)		3.95		4.44
Volatility		86.4%		91.2%
Dividend rate		—		—
Risk-free interest rate		3.71%		4.53%

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DARIOHEALTH CORP. AND ITS SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)

U.S. dollars in thousands (except stock and per share data)

NOTE 7: - FAIR VALUE MEASUREMENTS (Cont.)

The following tables present a 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 March 31, 2025	$	29,194	$	42	$	3,061
Exercise		—		—		—
Principal repayments on long-term loan		(31,515)		—		—
Change in fair value		2,321		1		289

Balance as of June 30, 2025	$	0	$	43	$	3,350


		Long-Term Loan		Orbimed Warrant Liability		Pre-funded Warrant Liability
Balance as of January 1, 2025	$	28,923	$	72	$	5,896
Exercise		—		—		(1,750)
Principal repayments on long-term loan		(31,515)		—		—
Change in fair value		2,592		(29)		(796)

Balance as of June 30, 2025	$	0	$	43	$	3,350


		Long-Term Loan		Orbimed Warrant Liability		Pre-funded Warrant Liability
Balance as of March 31, 2024	$	28,462	$	215	$	15,301
Issuance		—		—		—
Change in fair value		169		(61)		(3,401)

Balance as of June 30, 2024	$	28,631	$	154	$	11,900


		Long-Term Loan		Orbimed Warrant Liability		Pre-funded Warrant Liability
Balance as of January 1, 2024	$	28,545	$	240	$	—
Issuance		—		—		24,457
Change in fair value		86		(86)		(12,557)

Balance as of June 30, 2024	$	28,631	$	154	$	11,900

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NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)

U.S. dollars in thousands (except stock and per share data)

NOTE 8: - 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 participation received, net of royalties accrued or paid, totaled $954 as of June 30, 2025.

During the three and six-months periods ended June 30, 2025 and June 30, 2024, the Company did not record IIA royalties related to the acquisition of Physimax Technology.

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DARIOHEALTH CORP. AND ITS SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)

U.S. dollars in thousands (except stock and per share data)

NOTE 9: - INTANGIBLE ASSETS


a. Finite-lived intangible assets:
	June 30,		December 31,		Weighted Average
	2025		2024		Remaining Life
					As of June 30, 2025
Original amounts:
Technology	$	22,580	$	22,580	6.5
Brand		376		376	—
Customer Relationship Healthcare		13,791		13,791	10.5
Domains		23		23
		36,770		36,770
Accumulated amortization:
Technology		17,918		16,611
Brand		376		376
Customer Relationship Healthcare		1,594		1,018
Domains		4		3
		19,892		18,008
Intangible assets, net	$	16,878	$	18,762


b. Estimated amortization expense:

For the year ended December 31,
Remainder of 2025		943
2026		1,875
2027		1,875
2028		1,880
2029		1,877
Thereafter		8,428
	$	16,878

c. Amortization expenses for the three and six month periods ended June 30, 2025 were $722 and $1,884, respectively. For the three and six month periods ended June 30, 2024, the expenses were $1,300 and $2,516, respectively.

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NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)

U.S. dollars in thousands (except stock and per share data)

NOTE 10: - RELATED PARTIES TRANSACTIONS

On February 25, 2025, the Company appointed a new non-executive director to its Board. The director is a member of a consulting firm that has provided investment and business consulting services to the Company since 2021 under a consulting agreement. Pursuant to the consulting agreement, the Company agreed to pay the consultant a monthly cash retainer upon the successful completion of certain milestones. In addition, the Company agreed to issue 150,000 restricted shares of common stock to the consulting firm, vesting quarterly over a four-year period. As of June 30, 2025, the consulting firm received approximately 258,000 shares of Common Stock and warrants to purchase up to 125,000 shares of Common Stock.

On February 24, 2025, the Company entered into a second amendment to the consulting agreement, pursuant to which it agreed to pay the consulting firm a fixed monthly cash retainer of $10. During the three and six- months periods ended June 30, 2025, the Company recorded share-based compensation expenses related to this service provider in the amounts of $35 and $100, respectively.

NOTE 11: - STOCKHOLDERS’ EQUITY

In April 2025, the Compensation Committee of the Company’s Board of Directors (the “Compensation Committee”) approved the grant of 812,800 restricted shares subject to time vesting to employees of the Company and approved the grant of options to purchase up to 1,194,950 shares of Common Stock, to employees and consultants of the Company, at exercise prices between $0.66 to $0.78 per share. The time vesting restricted shares and stock options vest over three years commencing on the respective grant dates. The options have a ten-year term. The restricted shares and the options were issued under Amended and Restated 2020 Equity Incentive Plan, as amended (the “the 2020 Plan”). In addition, the Compensation Committee approved the grant of 175,000 restricted shares of Common Stock to certain service providers and approved a reduction in the exercise price of warrants to purchase up to 356,250 shares of Common Stock issued to certain consultants in the past at exercise prices between $1.43 to $2.00 per share, to an exercise price of $0.78 per share. The warrants are exercisable into shares of Common Stock on or before February 12, 2026 and December 31, 2027.

On April 18, 2025, the Board of Directors of the Company appointed Chen Franco-Yehuda to serve as the Company’s Chief Financial Officer, Treasurer and Secretary, effective as of May 15, 2025. In connection with her appointment, the Company agreed to issue Ms. Franco-Yehuda 500,000 restricted shares of the Company’s common stock, pursuant to the 2020 Plan. The restricted shares vest over three years, with one third of such shares vesting on April 27, 2026, and the remaining shares vesting in equal quarterly amounts.

In June 2025, the Compensation Committee approved the grant of 102,500 restricted shares subject to time vesting and 80,000 performance-based restricted shares to employees of the Company and approved the grant of options to purchase up to 16,000 shares of Common Stock and 150,000 performance-based options to purchase Common Stock to employees of the Company, at an exercise price between $0.67 to $0.70 per share. The time vesting restricted shares and stock options vest over three years commencing on the respective grant dates. The options have a ten-year term. The restricted shares and the options were issued under the 2020 Plan. In addition, the Compensation Committee approved the grant of warrants to purchase up to 450,000 shares of Common Stock, with exercise prices of $0.67 per share, to certain consultants. The warrants are exercisable into shares of Common Stock on or before June 1, 2028.

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DARIOHEALTH CORP. AND ITS SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)

U.S. dollars in thousands (except stock and per share data)

NOTE 11: - STOCKHOLDERS’ EQUITY (Cont.)

On May 20, 2025, the Company, upon obtaining the vote of a majority of the holders of the relevant classes of preferred stock, filed an Amended and Restated Certificate of Designation of Preferences, Rights and Limitations of the Company’s Series C Preferred Stock (the “Series C Certificate of Designation”), an Amended and Restated Certificate of Designation of Preferences, Rights and Limitations of the Company’s Series C-1 Preferred Stock (the “Series C-1 Certificate of Designation”), and an Amended and Restated Certificate of Designation of Preferences, Rights and Limitations of the Company’s Series C-2 Preferred Stock (the “Series C-2 Certificate of Designation”, collectively with the Series C Certificate of Designation and the Series C-1 Certificate of Designation, the “Series C Certificates of Designation”), all with the Secretary of State of the State of Delaware.

The Series C Certificates of Designation were amended to extend the mandatory conversion period from fifteen (15) to twenty-four (24) months from the original issue date. The Company will issue a dividend equal to fifteen percent (15%) of the number of shares of Common Stock issuable upon conversion of the Series C Preferred Stock, Series C-1 Preferred Stock and/or Series C-2 Preferred Stock then held by such holder for each full quarter anniversary of holding following the filing of the Series C Certificates of Designation with the Secretary of State of the State of Delaware.

The Company concluded that the Series C, C-1 and C-2 preferred shares modification should be accounted for as a modification transaction. For the three months ended June 30, 2025, the Company recorded the increase in fair value as a deemed dividend in the amount of $734.

During the three and six-months periods ended June 30, 2025, a total of 1,145 and 1,270 shares of certain Series C Convertible Preferred Stock were converted into 812,627 and 888,432 shares of Common Stock, respectively.

During the three and six-month periods ended June 30, 2025, 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 $1,309 and $3,503, respectively. For the three and six-month periods ended June 30, 2024, the Company accounted for the dividend shares as a deemed dividend in a total amount of $1,785 and $2,529, respectively.

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 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

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NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)

U.S. dollars in thousands (except stock and per share data)

NOTE 11: - STOCKHOLDERS’ EQUITY (Cont.)

“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 three and six-months period ended June 30, 2025, 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 for an amount of $2,123 and $4,349 respectively.

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 was subject to stockholder approval (Note 11g). 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.

During the three and six-months periods ended June 30, 2025, the Company accounted for the dividend shares of Common Stock upon the dividend shares earned by Series D-2 and D-3 Preferred Stock as a deemed dividend for an amount of $535 and $954 respectively.

On April 28, 2025, the Company held a special meeting of stockholders in which the stockholders approved the (A) the issuance of shares of common stock, in excess of 20% of the 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, (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 the Avenue Lenders 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 the Avenue Lenders to us at a conversion price of $0.8650 per share.

Between May 23, 2025 and May 28, 2025, the Company and holders that previously entered into the Lock-Up Agreement, entered into an Amended and Restated Lock-Up Agreement (the “A&R Lock-Up Agreement”) pursuant to which the holders agreed to extend the restrictive period previously provided in the Lock-Up Agreements until February 21, 2026 for the right to receive an additional 10% of the common stock underlying the Series B Preferred Stock and the Series C Preferred Stock held by the holders.

The Company concluded that the A&R Lock-Up Agreement modification should be accounted for as a modification transaction. For the three months ended June 30, 2025, the Company recorded the increase in fair value as a deemed dividend in the amount of $870.

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NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)

U.S. dollars in thousands (except stock and per share data)

NOTE 11: - STOCKHOLDERS’ EQUITY (Cont.)

As of June 30, 2025, there were 1,882 shares of Series A-1 Convertible Preferred Stock (the “Series A-1 Preferred Stock”) issued and outstanding. The outstanding Series A-1 Preferred Stock is convertible into approximately 875,950 shares of Common Stock, including the issuance of dividend shares.

As of June 30, 2025, there were 4,946 shares of Series B-1 Convertible Preferred Stock (the “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 June 30, 2025, there were 21,007 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 15,062,968 shares of Common Stock, including the issuance of dividend shares.

As of June 30, 2025, there were 25,605 shares of Series D, D-1, D-2 and D-3 Preferred Stock issued and outstanding. The outstanding Series D, and D-1 Preferred Stock is convertible into approximately 39,928,821shares of Common Stock, including the issuance of dividend shares.

In March 2025, a total of 1,675 shares of certain Series A-1 Preferred Stock were converted into 779,601 shares of Common Stock.

Stock plans:

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 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.

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NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)

U.S. dollars in thousands (except stock and per share data)

NOTE 11: - STOCKHOLDERS’ EQUITY (Cont.)

Transactions related to the grant of options to employees, directors, and non-employees under the above plans and non-plan options during the six-months period ended June 30, 2025, 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	10,222,749	2.78	8.55	9
Options granted	1,360,950	0.77	—	—
Options exercised	-	—	—	—
Options expired	(797,216)	5.14	—	—
Options forfeited	(1,227,965)	1.50	—	—

Options outstanding at end of period	9,558,518	2.46	8.38	5

Options vested and expected to vest at end of period	7,484,313	2.50	8.31	3

Exercisable at end of period	3,935,650	4.29	7.19	4

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 the second quarter of 2025 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 June 30, 2025. This amount is impacted by the changes in the fair market value of the Common Stock.

Transactions related to the grant of restricted shares to employees and directors under the above plans during the six-months period ended June 30, 2025, were as follows:


								Number of
								Restricted shares

Restricted shares outstanding at beginning of year								5,408,404
Restricted shares granted								1,525,300
Restricted shares forfeited								(66,504)

Restricted shares outstanding at end of period								6,867,200

As of June 30, 2025, the total unrecognized estimated compensation cost related to non-vested stock options and restricted shares granted prior to that date was $7,434, which is expected to be recognized over a weighted average period of approximately one (1.15) year.

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NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)

U.S. dollars in thousands (except stock and per share data)

DarioHealth Corp. 10-Q