10-Q

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 March 31, 2022
☐	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.)

18 W. 18th St.
New York, New York	10011
(Address of Principal Executive Offices)	(Zip Code)

(972)-4 770-6377

(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 May 9, 2022, the registrant had 21,986,598 shares of common stock outstanding.

When used in this quarterly report, the terms “DarioHealth,” “the Company,” “we,” “our,” and “us” refer to DarioHealth Corp., a Delaware corporation, our subsidiaries LabStyle Innovation Ltd. and Upright Technologies Ltd., each of which are Israeli companies, and Upright Technologies Inc. and PsyInnovations Inc., each a Delaware 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.

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.	Interim Consolidated Financial Statements (unaudited)	F-1
	Interim Consolidated Balance Sheets	F-2 – F-3
	Interim Consolidated Statements of Comprehensive Loss	F-4
	Interim Statements of Stockholders’ Equity	F-5 – F- 6
	Interim Consolidated Statements of Cash Flows	F-7
	Notes to Interim Consolidated Financial Statements	F-8 – F-18
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	4
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	10
Item 4.	Control and Procedures	10
PART II- OTHER INFORMATION		11
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	11
Item 6.	Exhibits	11
SIGNATURES		12

2

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 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, including Sanofi U.S. Services Inc. (“Sanofi”) ;

● 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;

● the impact of the COVID-19 pandemic on our manufacturing, sales, business plan and the global economy;

● 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, 2021 (filed on March 22, 2022) 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.

3

DARIOHEALTH CORP. AND ITS SUBSIDIARIES

INTERIM CONSOLIDATED FINANCIAL STATEMENTS

AS OF MARCH 31, 2022

UNAUDITED

INDEX

	Page
Interim Consolidated Balance Sheets	F-2 – F-3
Interim Consolidated Statements of Comprehensive Loss	F-4
Interim Statements of Stockholders’ Equity	F-5 – F- 6
Interim Consolidated Statements of Cash Flows	F-7
Notes to Interim Consolidated Financial Statements	F-8 – F-18

F-1

DARIOHEALTH CORP. AND ITS SUBSIDIARIES

INTERIM CONSOLIDATED BALANCE SHEETS

U.S. dollars in thousands

	March 31,		December 31,
	2022		2021
	Unaudited
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	55,558	$	35,808
Short-term restricted bank deposits		190		192
Trade receivables		4,574		1,310
Inventories		7,783		6,228
Other accounts receivable and prepaid expenses		3,271		2,067
Total current assets		71,376		45,605
NON-CURRENT ASSETS:
Deposits		7		20
Operating lease right of use assets		280		287
Long-term assets		16		57
Property and equipment, net		698		702
Intangible assets, net		13,314		12,460
Goodwill		41,640		41,640
Total non-current assets		55,955		55,166
Total assets	$	127,331	$	100,771

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

F-2

DARIOHEALTH CORP. AND ITS SUBSIDIARIES

INTERIM CONSOLIDATED BALANCE SHEETS

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

	March 31,		December 31,
	2022		2021
	Unaudited
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Trade payables	$	4,228	$	5,109
Deferred revenues		1,093		1,195
Operating lease liabilities		212		266
Other accounts payable and accrued expenses		7,192		7,806
Earn-out liability		373		825
Total current liabilities		13,098		15,201
NON-CURRENT LIABILITIES
Operating lease liabilities		48		21
Total non-current liabilities		48		21
STOCKHOLDERS’ EQUITY
Common stock of $0.0001 par value - Authorized: 160,000,000 shares at March 31, 2022 (unaudited) and December 31, 2021; Issued and Outstanding: 22,070,963 and 16,573,420 shares at March 31, 2022 (unaudited) and December 31, 2021, respectively		2		2
Preferred stock of $0.0001 par value - Authorized: 5,000,000 shares at March 31, 2022 (unaudited) and December 31, 2021; Issued and Outstanding: 10,897 and 11,927 shares at March 31, 2022 (unaudited) and December 31, 2021, respectively		*) -		*) -
Additional paid-in capital		352,564		307,561
Accumulated deficit		(238,381)		(222,014)
Total stockholders’ equity		114,185		85,549
Total liabilities and stockholders’ equity	$	127,331	$	100,771

*) -  Represents an amount lower than $1

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

F-3

DARIOHEALTH CORP. AND ITS SUBSIDIARIES

INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

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

	Three months ended
	March 31,
	2022		2021
	Unaudited
Revenues	$	8,059	$	3,595
Cost of revenues (excluding amortization and inventories step-up shown separately below)		3,142		1,988
Amortization of acquired intangible assets and inventories step-up		932		526
Gross profit		3,985		1,081
Operating expenses:
Research and development	$	5,927	$	2,655
Sales and marketing		9,535		7,132
General and administrative		4,395		5,621
Total operating expenses		19,857		15,408
Operating loss		15,872		14,327
Total financial expenses, net		44		639
Net loss	$	15,916	$	14,966
Deemed dividend	$	451	$	544
Net loss attributable to holders of common stock	$	16,367	$	15,510
Net loss per share:
Basic and diluted loss per share	$	0.74	$	0.92
Weighted average number of common stock used in computing basic and diluted net loss per share		19,624,079		14,025,921

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

F-4

DARIOHEALTH CORP. AND ITS SUBSIDIARIES

INTERIM STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED)

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

							Additional				Total
	Common Stock			Preferred Stock			paid-in		Accumulated		stockholders’
	Number	Amount		Number	Amount		capital		deficit		equity
Balance as of December 31, 2021(audited)	16,573,420	$	2	11,927	$	*)-	$	307,561	$	(222,014)	$	85,549
Exercise of warrants	81,221		*)-	-		-		-		-		-
Issuance of common stock to directors and employees	24,191		*)-	-		-		161		-		161
Issuance of common stock to consultants and service provider	4,983		*)-	-		-		113		-		113
Conversion of preferred stock to common stock	316,052		*)-	(1,030)		*)-		-		-		*)-
Deemed dividend related to issuance of preferred stock	-		-	-		-		451		(451)		-
Issuance of warrants to service providers	-		-	-		-		1,301		-		1,301
Stock-based compensation	139,982		*)-	-		-		3,768		-		3,768
Issuance of common stock and pre-funded warrants, net of issuance cost	4,674,454		*)-	-		-		38,023		-		38,023
Issuance of Common Stock, net of issuance cost upon Acquisition of Physimax Technologies Ltd.	256,660		*)-	-		-		1,186		-		1,186
Net loss	-		-	-		-		-		(15,916)		(15,916)
				-
Balance as of March 31, 2022 (unaudited)	22,070,963	$	2	10,897	$	*)-	$	352,564	$	(238,381)	$	114,185

*)  Represents an amount lower than $1.

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

F-5

DARIOHEALTH CORP. AND ITS SUBSIDIARIES

INTERIM STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED)

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

							Additional				Total
	Common Stock			Preferred Stock			paid-in		Accumulated		shareholders'
	Number	Amount		Number	Amount		capital		deficit		equity
Balance as of December 31, 2020 (audited)	8,119,493	$	*)-	15,823	$	*)-	$	171,399	$	(143,248)	$	28,151
Payment for executives and directors under Stock for Salary Program	5,579		*)-	-		-		72		-		72
Exercise of options	33,773		*)-	-		-		201		-		201
Exercise of placement agent warrants	92,575		*)-	-		-		—		-		*)-
Exercise of warrants	219,760		*)-					633				633
Issuance of common stock to directors and employees	102,667		*)-					1,484				1,484
Conversion of preferred stock to common stock	802,061		*)-	(3,423)		*)-		—				*)-
Deemed dividend related to issuance of preferred stock	—		—					544		(544)		—
Issuance of warrants to service providers	—		—					846		-		846
Stock-based compensation	1,056,643		*)-	-		-		2,036		—		2,036
Issuance of common stock, net of issuance cost	3,278,688		*)-	-		-		64,877		—		64,877
Issuance of common stock upon acquisition of Upright Technologies Ltd.	1,687,612		*)-	-		-		28,933		-		28,933
Net loss	-		-	-		-		—		(14,966)		(14,966)
Balance as of March 31, 2021 (unaudited)	15,398,851	$	*)-	12,400	$	*)-	$	271,025	$	(158,758)	$	112,267

*)   Represents an amount lower than $1.

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

F-6

DARIOHEALTH CORP. AND ITS SUBSIDIARIES

INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS

U.S. dollars in thousands

	Three months ended
	March 31,
	2022		2021
	Unaudited
Cash flows from operating activities:
Net loss	$	(15,916)	$	(14,966)
Adjustments required to reconcile net loss to net cash used in operating activities:
Stock-based compensation, common stock, and payment in stock to directors, employees, consultants, and service providers		5,343		4,438
Depreciation		70		64
Change in operating lease right of use assets		7		6
Amortization of acquired inventories step-up		-		151
Amortization of acquired intangible assets		963		375
Decrease (increase) in trade receivables		(3,264)		318
Decrease (increase) in other accounts receivable, prepaid expense and long-term assets		(1,550)		207
Increase in inventories		(1,555)		(32)
Increase in trade payables		(890)		(544)
Decrease in other accounts payable and accrued expenses		(721)		(609)
Increase (decrease) in deferred revenues		(102)		93
Change in operating lease liabilities		(27)		(33)
Remeasurement of earn-out		(452)		-
Net cash used in operating activities		(18,094)		(10,532)
Cash flows from investing activities:
Purchase of property and equipment		(66)		(68)
Cash paid as part of Upright Technologies Ltd. acquisition		-		(2,472)
Intangible assets purchases incurred, Physimax Technologies LTD.		(115)		-
Net cash used in investing activities		(181)		(2,540)
Cash flows from financing activities:
Proceeds from issuance of common stock and prefunded warrants (net of issuance costs)		38,023		64,877
Proceeds from exercise of warrants		-		633
Proceeds from exercise of options		-		201
Net cash provided by financing activities		38,023		65,711
Increase in cash, cash equivalents and restricted cash and cash equivalents		19,748		52,639
Cash, cash equivalents and restricted cash and cash equivalents at beginning of period		35,948		28,725
Cash, cash equivalents and restricted cash and cash equivalents at end of period	$	55,696	$	81,364

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

F-7

DARIOHEALTH CORP. AND ITS SUBSIDIARIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

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

NOTE 1:  -   GENERAL

a. DarioHealth Corp. (the “Company” or “DarioHealth”) was incorporated in Delaware and commenced operations on August 11, 2011.

DarioHealth is a Global Digital Therapeutics (DTx) company changing the way people with chronic conditions manage their health. By delivering personalized evidence-based interventions that are driven by precision data analytics, software, and personalized coaching, DarioHealth has developed an approach that empowers 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 diabetes solution, its user-centric approach is used by tens of thousands of customers around the globe. DarioHealth is rapidly expanding its solutions for additional chronic conditions such as hypertension and moving into new geographic markets.

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 operates as a unit and one operating segment.

b. The Company has a wholly owned subsidiary, LabStyle Innovation Ltd. (“LabStyle”), which was incorporated and commenced operations on September 14, 2011 in Israel. Its principal business activity is to hold the Company’s intellectual property and to perform research and development, manufacturing, marketing and other business activities.

c. On January 26, 2021, the Company entered into a share purchase agreement (the “Share Purchase Agreement”) pursuant to which the Company, through LabStyle, acquired all of the outstanding securities of Upright Technologies Ltd. and its wholly owned subsidiary Upright Technologies Inc. (“Upright”). Upright is a digital musculoskeletal (“MSK”) health company focused on preventing and treating the most common MSK conditions through behavioral science, biofeedback, coaching, and wearable tech.

d. On May 15, 2021, the Company entered into an agreement and plan of merger pursuant to which the Company, through its wholly owned subsidiary WF Merger Sub, Inc. (“Merger Sub”), merged with PsyInnovations Inc. (“WayForward”), pursuant to which the Merger Sub was the surviving company. WayForward is a mental health company who develops the WayForward behavioral digital health platform with artificial intelligence (AI) enabled screening to triage and navigate members to specific interventions, digital cognitive behavioral therapy (CBT), self-directed care, expert coaching and access to in-person and telehealth provider visits.

e. During the three months ended March 31, 2022, the Company incurred operating losses and negative cash flows from operating activities amounting to $15,872 and $18,094, respectively. On March 31, 2022, we had $55,558 in available cash and cash equivalent. Management believes that our cash on hand is 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 consolidated financial statements. 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 offering.

F-8

DARIOHEALTH CORP. AND ITS SUBSIDIARIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

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

NOTE 2: -   SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited interim consolidated financial statements as of March 31, 2022, have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission regarding interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. s. In the opinion of management, the unaudited interim consolidated financial statements include all adjustments of a normal recurring nature necessary for a fair presentation of the Company’s consolidated financial position as of March 31, 2022, and the Company’s consolidated results of operations and the Company’s consolidated cash flows for the three months ended March 31, 2022. Results for the three months ended March 31, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022. 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, 2021.

Use of Estimates

Preparation of condensed consolidated financial statements in conformity with 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, 2021 are applied consistently in these unaudited interim consolidated financial statements.

b.    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:

F-9

DARIOHEALTH CORP. AND ITS SUBSIDIARIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

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

NOTE 2: -   SIGNIFICANT ACCOUNTING POLICIES (Cont.)

	March 31,		March 31,
	2022		2021
	Unaudited		Unaudited
Cash, and cash equivalents as reported on the balance sheets	$	55,558	$	81,171
Short-term restricted bank deposits, as reported on the balance sheets		138		193
Cash, restricted cash, cash equivalents and restricted cash and cash equivalents as reported in the statements of cash flows	$	55,696	$	81,364

c.   Business and Asset Acquisitions

When the Company acquires a business, the purchase price is allocated to the tangible and identifiable intangible assets, net of liabilities assumed. Any residual purchase price is recorded as goodwill. The allocation of the purchase price requires management to make significant estimates in determining the fair values of assets acquired and liabilities assumed, especially with respect to intangible assets. These estimates can include, but are not limited to, the cash flows that an asset is expected to generate in the future, the appropriate weighted-average cost of capital and the cost savings expected to be derived from acquiring an asset. These estimates are inherently uncertain and unpredictable. During the measurement period, which may be up to one year from the acquisition date, adjustments to the fair value of these tangible and intangible assets acquired and liabilities assumed may be recorded, with the corresponding offset to goodwill. Upon the conclusion of the measurement period or final determination of the fair value of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded to the Company’s consolidated statements of operations.

The Company accounts for a transaction as an asset acquisition when substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets, or otherwise does not meet the definition of a business. Asset acquisition-related costs are capitalized as part of the asset or assets acquired.

d.    Recently issued accounting pronouncements, not yet adopted:

1. In September 2016, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”). ASU 2016-13 changes the impairment model for most financial assets and certain other instruments. For tradeand other receivables, held-to-maturity debt securities, loans, and other instruments, entities will be required to use a new forward-looking “expected loss” model that generally will result in the earlier recognition of allowances for losses. The guidance also requires increased disclosures. For the Company, the amendments in the update were originally effective for

fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. In November 2019, the FASB issued ASU No. 2019-10 which delayed the effective date of ASU 2016-13 for smaller reporting companies (as defined by the U.S. Securities and Exchange Commission) and other non-SEC reporting entities to fiscal years beginning after December 15, 2022, including interim periods within those fiscal periods. Early adoption is permitted. The Company is currently assessing the impact the guidance will have on its consolidated financial statements.

F-10

DARIOHEALTH CORP. AND ITS SUBSIDIARIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

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

NOTE 2: -   SIGNIFICANT ACCOUNTING POLICIES (Cont.)

2. In August 2020, the FASB issued ASU 2020-06 (“ASU 2020-06”), which simplifies the guidance on the issuer’s accounting for convertible debt instruments by removing the separation models for (1) convertible debt with a cash conversion feature and (2) convertible instruments with a beneficial conversion feature. As a result, entities will not separately present in equity an embedded conversion feature in such debt. Instead, they will account for a convertible debt instrument wholly as debt, unless certain other conditions are met. The elimination of these models will reduce reported interest expense and

increase reported net income for entities that have issued a convertible instrument that was within the scope of those models before the adoption of ASU 2020-06. ASU 2020-06 also requires that the effect of potential share settlement be included in the diluted earnings per share calculation when an instrument may be settled in cash or share. This amendment removes current guidance that allows an entity to rebut this presumption if it has a history or policy of cash settlement. Furthermore, ASU 2020-06 requires the application of the if-converted method for calculating diluted earnings per share, the treasury stock method will be no longer available. The provisions of ASU 2020-06 are applicable for fiscal years beginning after December 15, 2023, with early adoption permitted for fiscal years beginning after December 15, 2020. The Company is currently evaluating the impact of ASU 2020-06 on its consolidated financial statements.

3. In October 2021, the FASB issued ASU 2021-08, which requires companies to apply ASC 606 to recognize and measure contract assets and contract liabilities from contracts with customers acquired in a business combination. This creates an exception to the general recognition and measurement principle in ASC 805. requires companies to apply ASC 606 to recognize and measure contract assets and contract liabilities from contracts with customers acquired in a business combination. For the Company, the guidance is effective for fiscal years beginning after December 15, 2022 and interim periods within those fiscal years. The Company is currently evaluating the impact of ASU 2021-08 on its consolidated financial statements.

NOTE 3: – ACQUISITIONS

Technology Purchase of Physimax Technologies Ltd.

On March 31, 2022 (the “Acquisition Date”), the Company completed the acquisition, through its subsidiary LabStyle, of a technology from Physimax Technologies Ltd (“Physimax Technology”). The Company considered this transaction as an asset acquisition. As a result, the estimated fair value of the assets acquired have been included in the accompanying balance sheet from the Acquisition Date.

The consideration transferred included the issuance of  256,660 shares of Common Stock subjected to certain terms of lock-up periods valued at $1,186, a cash payment of $500, of which $400 was paid during the fourth quarter of 2021, and the remaining to be paid on the second quarter of 2022, The total consideration transferred in the acquisition of Physimax Technology was $1,686.

In addition, the Company capitalized acquisition-related costs in an aggregate amount of $131. The acquisition-related costs include legal and accounting services.

F-11

DARIOHEALTH CORP. AND ITS SUBSIDIARIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

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

NOTE 3: – ACQUISITIONS (Cont.)

Purchase price allocation:

Under asset acquisition accounting principles, the total purchase price was allocated to Physimax Technology as an intangible asset based on cost value as set forth below.

			Amortization
			period (Years)
Technology	$	1,817		4

NOTE 4: -   INVENTORIES

	March 31,		December 31,
	2022		2021
	Unaudited
Raw materials	$	927	$	714
Finished products		6,857		5,514
	$	7,783	$	6,228

During the three-month period ended March 31, 2022, and the year ended December 31, 2021, total inventory write-downs expenses amounted to $18 and $73, respectively.

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 revenue directly from individuals through a la carte offering and membership plans. The Company also contracts with enterprise business market groups to provide digital therapeutics solutions for individuals to receive access to services through the Company’s commercial arrangements.

On February 28, 2022, the Company entered into an exclusive preferred partner, co-promotion, development collaboration and license agreement for a term of five (5) years. Pursuant to the Agreement, the Company will provide a license to access and use certain Company data. In addition, the Company may provide development services for new products of the other party.

The Company has determined that the other party is a customer. The aggregative consideration under the contract is up to $30 million over the initial term of the agreement, consisting of (i) an upfront payment, (ii) annual compensation for development costs per annual development plans to be agreed upon annually and (iii) certain contingent milestone payments upon meeting certain net sales and enrollment rate milestones at any time during the term of the Agreement.

F-12

DARIOHEALTH CORP. AND ITS SUBSIDIARIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

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

NOTE 5: -   REVENUES (Cont.)

The following tables represent the Company’s total revenues for the three months ended March 31, 2022, and 2021 disaggregated by revenue source:

	March 31,
	2022		2021
	Unaudited
Commercial	$	4,549	$	53
Consumers		3,510		3,542
	$	8,059	$	3,595

The Company recognizes contract liabilities, or deferred revenues, when it receives advance payments from customers before performance obligations primarily related services have been performed. Advance payments are received at the beginning of the service period and the related deferred revenues are reclassified to revenue ratably over the service period. The balance of deferred revenues approximates the aggregate amount of the transaction price allocated to the unsatisfied performance obligations at the end of reporting period.

The following table presents the significant changes in the deferred revenue balance during the three months ended March 31, 2022:

Balance, beginning of the period	$	1,195
New performance obligations		608
Reclassification to revenue as a result of satisfying performance obligations		(710)
Balance, end of the period	$	1,093

Because all performance obligations in the Company’s contracts with customers relate to contracts with a duration of less than one year, the Company has elected to apply the optional exemption and is not required to disclose the aggregate amount of the transaction price allocated to performance obligations that are unsatisfied or partially unsatisfied at the end of the reporting period.

NOTE 6: -   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-	Unadjusted quoted prices in active markets for identical assets or liabilities accessible to the reporting entity at measurement date.
Level 2-	Other than quoted prices included in Level 1 inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability.
Level 3	Unobservable inputs for the asset or liability used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at measurement date.

F-13

DARIOHEALTH CORP. AND ITS SUBSIDIARIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

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

NOTE 6: -   FAIR VALUE MEASUREMENTS (Cont.)

As part of the acquisition of Wayforward on June 7, 2021, the consideration transferred included earn-out payable in up to 237,076 restricted shares of Common Stock. The earn-out arrangement is not indexed to the Company's own stock, and was accounted as a liability, subsequently measured at fair value through earnings until settlement.

In determining the earn-out fair value, the Company used the Monte-Carlo simulation valuation technique, in order to predict the probability of different outcomes that rely on repeated random variables.

For the three months ended March 31, 2022, the Company recorded income from remeasurement in the amount of $452.

The following table presents information about our financial instruments that are measured at fair value basis:

	March 31, 2022
	Unaudited
	Fair Value		Level 1		Level 2		Level 3
			(in thousands)
Financial Liabilities:
Earn out liability	$	373	$	—	$	—	$	373
	December 31, 2021
	Fair Value		Level 1		Level 2		Level 3
			(in thousands)
Financial Liabilities:
Earn out liability	$	825	$	—	$	—	$	825

NOTE 7: -   COMMITMENTS AND CONTINGENT LIABILITIES

a. 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.

b. Royalties:

The company has a liability to pay future royalties to the Israeli Innovation Authority (the “IIA) for participated in programs sponsored by the Israeli government for the support of research and development activities. The Company is obligated to pay royalties to the IIA, amounting to 3% of the sales of the products and other related revenues (based on the US dollar) generated from such projects, up to 100% of the grants received. Royalty payment obligations also bear interest at the LIBOR rate. The obligation to pay these royalties is contingent on actual sales of the products and in the absence of such sales, no payment is required.

F-14

DARIOHEALTH CORP. AND ITS SUBSIDIARIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

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

NOTE 8: -   STOCKHOLDERS’ EQUITY

a. On January 4, 2022, out of the pre-funded warrants that were issued in May 2019, 81,233 were exercised on a cashless basis into 81,221 shares of Common Stock. As of March 31, 2022 the Company’s total outstanding prefunded warrants amounted to 1,769,794.

b. On February 28, 2022, the Company entered into securities purchase agreements with institutional accredited investors relating to an offering with respect to the sale of an aggregate of 4,674,454 shares of the Company’s Common Stock, and pre-funded warrants to purchase an aggregate of 667,559 shares of Common Stock at an exercise price of $0.0001 per share, at a purchase price of $7.49 per share (or share equivalent). The aggregate gross proceeds were approximately $40,000 ($38,023, net of issuance expenses).

c. On March 9, 2022, the Company’s Compensation Committee of the Board of Directors approved the grant of 24,191 shares of Common Stock to employees of the Company, and the grant of 149,550 restricted shares of Common Stock to employees and consultants. The shares vest over a period of three years commencing on the respective grant dates. The Compensation Committee also approved the grant of options to purchase up to 396,050 shares of Common Stock to employees and a consultant of the Company, at exercise prices between $6.67 and $8.10 per share. The stock options vest over a three-year period commencing on the respective grant dates. The options have a ten-year term and were issued under the 2020 Plan.

d. In April 2020, the Compensation Committee of the Board of Directors approved a monthly grant of shares of the Company’s Common Stock equal up to $16 of restricted shares per month to a certain service provider, to be granted monthly during the period that the certain consulting agreement remains in effect. During the first quarter of 2022, the Company issued a total of 4,983 restricted shares of Common Stock to the certain service provider.

e. In February 2021, the Board of Directors authorized the Company to issue warrants to purchase up to 400,000, shares of Common Stock, to a certain consultant of the Company, at a purchase price of $25.00. During the three-month ended March 31, 2022, the Company recorded compensation expense for this certain service provider in the amount of $863.

f. In July 2021, the Compensation Committee authorized the Company to issue warrants to purchase 30,000 shares of Common Stock, to certain consultants of the Company, with an exercise price of $23.30 per share, and warrants to purchase 83,948 shares of Common Stock with an exercise price of $16.06 per share. Of these warrants, warrants to purchase 35,000 shares of Common Stock shall vest over a 48-month period and warrants to purchase 48,948 shares of Common Stock are subjected to certain performance terms. During the three-month ended March 31, 2022 the Company recorded compensation expense for this certain service provider in the amount of $11.

g. In October and December 2021, the Compensation Committee authorized the Company to issue 8,000 shares which shall vest over a six-month period, and warrants to purchase up to 40,000, and 208,000 shares of Common Stock, respectively, to certain consultants of the Company, at a purchase price of $25.10 and $13.60, respectively. During the three-month ended March 31, 2022, the Company recorded compensation expense for those certain service providers in the amount of $427

h. During the three-month ended March 31, 2022, certain series A Convertible Preferred Stockholders converted 1,030 shares of various classes of the Company’s A Convertible Preferred stock into 254,322 shares of Common Stock.

F-15

DARIOHEALTH CORP. AND ITS SUBSIDIARIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

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

NOTE 8: - STOCKHOLDERS' EQUITY (Cont.)

i. During the three-month ended March 31, 2022, 61,730 shares of Common Stock were issued as dividend to certain Series A Convertible Preferred stockholders upon conversion of such shares.

j. Stock based compensation:

On January 23, 2012, the Company’s Amended and Restated 2012 Equity Incentive Plan (the “2012 Plan”) was adopted by the Board of Directors of the Company and approved by a majority of the Company’s stockholders, under which options to purchase shares of Common Stock have been reserved. Under the 2012 Plan, options to purchase shares of Common Stock may be granted to employees and non-employees of the Company or any affiliate, each option granted can be exercised to one share of Common Stock. The 2012 Plan has expired.

On October 14, 2020, the Company’s stockholders approved the 2020 Equity Incentive Plan (the “2020 Plan”) and the immediate reservation of 900,000 shares under the 2020 Plan for the remainder of the 2020 fiscal year. Under the 2020 Plan, options to purchase shares of Common Stock may be granted to employees and non-employees of the Company or any affiliate, each option granted can be exercised to one share of Common Stock.

In January 2022, pursuant to the terms of  the 2020 plan as approved by the Company’s stockholders, the Company increased the number of shares authorized for issuance under the 2020 Plan by 1,339,624 shares, from 2,528,890 to 3,868,514.

Transactions related to the grant of options to employees, directors, and non-employees under the above plans during the three-months period ended March 31, 2022, 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	1,878,168	18.13	6.96	3,861
Options granted	396,050	7.41	—	—
Options exercised			—	—
Options expired	(70,711)	9.44	—	—
Options forfeited	(78,391)	15.82	—	—
Options outstanding at end of period	2,125,116	17.04	7.35	179
Options vested and expected to vest at end of period	1,942,997	16.20	7.03	178
Exercisable at end of period	728,983	21.68	5.50	176

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 first quarter of 2022 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 March 31, 2022. This amount is impacted by the changes in the fair market value of the Common Stock.

F-16

DARIOHEALTH CORP. AND ITS SUBSIDIARIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

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

NOTE 8: - STOCKHOLDERS' EQUITY (Cont.)

Transactions related to the grant of restricted shares to employees, directors, and non-employees under the above plans during the three-months period ended March 31, 2022, were as follows:

	Number of
	Restricted shares
Restricted shares outstanding at beginning of period	1,094,637
Restricted shares granted	149,550
Restricted shares forfeited	(9,568)
Restricted shares outstanding at end of period	1,234,619

As of March 31, 2022, the total amount of unrecognized stock-based compensation expense was approximately $25,395 which will be recognized over a weighted average period of 1.2 years.

The following table presents the assumptions used to estimate the fair values of the options granted to employees, directors, and non-employees in the period presented:

	Three months ended
	March 31,
	2022		2021
	Unaudited
Volatility	91.11-91.40	%	94.73-111.82	%
Risk-free interest rate	1.89	%	0.11-0.96	%
Dividend yield	0	%	0	%
Expected life (years)	5.81-5.88		2.09-5.88

The total compensation cost related to all of the Company’s stock-based awards recognized during the three-month period ended March 31, 2022, and 2021 was comprised as follows:

	Three months ended
	March 31,
	2022		2021
	Unaudited
Cost of revenues	$	23	$	13
Research and development		1,488		414
Sales and marketing		1,651		1,035
General and administrative		2,181		2,976
Total stock-based compensation expenses	$	5,343	$	4,438

F-17

DARIOHEALTH CORP. AND ITS SUBSIDIARIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

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

NOTE 9: -   FINANCIAL EXPENSES (INCOME), NET

	Three months ended
	March 31,
	2022		2021
	Unaudited
Bank charges	$	26	$	43
Foreign currency adjustments expenses, net		22		605
Interest income		(4)		(9)
Total Financial losses, net	$	44	$	639

NOTE 10: -   SUBSEQUENT EVENTS

a. In April and May 2022, the Company issued a total of 5,439 restricted shares of Common Stock to a certain service provider. These issuances were made under the compensation committee approval, dated April 2020.

F-18

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

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, 2021. 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 for the fiscal year ended December 31, 2021 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 revolutionizing how people with chronic conditions manage their health through the innovation of a new category of digital health: Digital Therapeutics as a Service (DTaaS).  We believe that our innovative approach to digital therapeutics disrupts the traditional provider-centered system of health care delivery by offering user-centric care that is continuous, customized and multi-condition.  Our solutions combine the power of technologies and behavior science to make better health accessible, affordable, and easy for all by solving for what people need, when and where they want it, with hyper-personalized care that is always connected – to services, devices, and people – and delivered continuously. This is how we deliver meaningful and sustainable results that result in measurable value for all stakeholders, supporting the full transformation of health care into a more effective and affordable ecosystem.

We began as a direct-to-consumer digital therapeutics company, solving first for the problem of how to engage users and support behavior change to improve clinical outcomes in diabetes. In the last two years, we made two strategic shifts to transform our business: first, we significantly expanded commercial growth opportunities by adding a business-to-business product (B2B) and a commercial team alongside the legacy direct-to-consumer channel. In addition, we began targeting three traditional health business verticals – health plans, employers, and provider groups. As a result, we believe that our new B2B business now leverages our consumer-centric capabilities as a competitive advantage.

Second, we transitioned from a single condition platform to a multi-condition platform, creating a robust suite of solutions to address the five most commonly co-occurring and expensive chronic conditions, which are also representative of some of the most sought-after digital health solutions: diabetes, hypertension, pre-diabetes/weight management, musculoskeletal and behavioral health. After building weight loss and hypertension management into the legacy diabetes platform, we made three acquisitions in order to expand into musculoskeletal and behavioral health.

Our acquisition of Upright Technologies Ltd. (“Upright”) in early 2021 and Physimax in early 2022 enables our musculoskeletal (“MSK”) solutions – “Dario Move.”, our digital behavioral health capabilities were secured through the acquisition of PsyInnovations, Inc. (dba WayForward) in mid-2021.

We believe a key success factor is our ability to integrate multiple chronic conditions into a single digital therapeutics’ platform, the “Dario One.” During 2021 we successfully won contracts in all three B2B business segments, including several contracts for Dario One, creating a compounding effect as more members enroll and many in multiple programs. The combination of moving from direct-to-consumer to the enterprise business market (B2B2C) and expanding from a single condition to multi condition platform, created multiple commercial growth engines as well as a multiplying impact that we believe will improve our financial profile by increasing potential revenue per account and per user.

According to our management’s estimates, based on our current cash on hand and further based on our budget and the assumption that initial commercial sales will commence during our anticipated timeframes, we believe that we will have sufficient resources to continue our activities through 2023.

4

Since we might be unable to generate sufficient revenue or cash flow to fund our operations for the foreseeable future, we will need to seek additional equity or debt financing to provide the capital required to maintain or expand our operations. We may also need additional funding for developing products and services, increasing our sales and marketing capabilities, and promoting brand identity, as well as for working capital requirements and other operating and general corporate purposes. Moreover, the regulatory compliance arising out of being a publicly registered company has dramatically increased our costs.

We do not currently have any arrangements or credit facilities in place as a source of funds, and there can be no assurance that we will be able to raise sufficient additional capital on acceptable terms, or at all. If such financing is not available on satisfactory terms, or is not available at all, we may be required to delay, scale back or eliminate the development of business opportunities and our operations and financial condition may be materially adversely affected.

If we raise additional capital by issuing equity securities, the percentage ownership of our existing stockholders may be reduced, and accordingly these stockholders may experience substantial dilution. We may also issue equity securities that provide for rights, preferences and privileges senior to those of our common stock. Given our need for cash and that equity raising is the most common type of fundraising for companies like ours, the risk of dilution is particularly significant for stockholders of our company.

Debt financing, if obtained, may involve agreements that include liens on our assets, covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, could increase our expenses and require that our assets be provided as a security for such debt. Debt financing would also be required to be repaid regardless of our operating results.

If we raise additional funds through collaborations and licensing arrangements, we may be required to relinquish some rights to our technologies or candidate products, or to grant licenses on terms that are not favorable to us.

Funding from any source may be unavailable to us on acceptable terms, or at all. If we do not have sufficient capital to fund our operations and expenses, we may not be able to achieve or maintain competitiveness, which could lead to the failure of our business and the loss of your investment.

Recent Developments

Employer Contracts and Health Providers

In April 2022, we announced new contract with Health Plan Colorado Access, the largest public sector health plan in the state of Colorado, to provide digital chronic condition management solutions for its Medicaid population beginning with thousands of its members in the second quarter of 2022.

In addition, in April 2022, we announced the publication of a retrospective, real-world study demonstrating the impact of managing diabetes and weight together on a single digital platform at the Advanced Technologies and Treatments for Diabetes (ATTD) Conference held in April 2022 in Barcelona and online. The study found that nearly two thirds of participants with a body mass index (“BMI”) of more than 30 reduced their BMI by an average of 2.8 units with an average weight loss of 7.4% (p≤0.05). In addition, the study also examined a subgroup of participants with BMIs greater than 30 and high-risk blood glucose readings of more than 180 mg/dL to understand the impact on both diabetes and weight management. This subgroup also demonstrated improved clinical outcomes, reducing their weight by an average of 4.9% and reducing their average blood glucose by 16.1% over a 12-months period.

Agreement with Sanofi

In March 2022, we announced our entering into a strategic agreement with Sanofi U.S., an innovative global healthcare company. The multi-year, $30 million-dollar agreement, which is subject to certain contingencies, will help accelerate commercial adoption of our full suite of digital therapeutics and drive the expansion of digital health solutions on our platform. We and Sanofi will collaborate on promoting our multi-condition digital therapeutics solution, significantly increasing our sales reach in the health plan market and selectively in the employer channel. In addition, the agreement calls for us and Sanofi to develop new or enhanced solutions leveraging our platform, and for the parties to generate robust evidence to support future commercialization in the health plan channel.

5

Results of Operations

Comparison of the three months ended March 31, 2022 and 2021 (dollar amounts in thousands)

Revenues

Revenues for the three months ended March 31, 2022, amounted to $8,059, compared to revenues of $3,595 during the three months ended March 31, 2021, representing an increase of 124.2%. The increase in revenues for the three months ended March 31, 2022, compared to the three months ended March 31, 2021, is due to the increase in revenues from sales through our commercial channel.

Cost of Revenues

During the three months ended March 31, 2022, we recorded costs related to revenues in the amount of $4,074, compared to costs related to revenues of $2,514 during the three months ended March 31, 2021, representing an increase of 62%. The increase in cost of revenues in the three months ended March 31, 2022, compared to the three months ended March 31, 2021, was mainly due to higher costs related to the shipping of inventory and amortization of acquired technology in the amount of $932.

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

Gross Profit

Gross profit for the three months ended March 31, 2022, amounted to $3,985 (49.4% of revenues) compared to $1,081 (30.1% of revenues) during the three months ended March 31, 2021. The increase in gross profit as a percentage of revenue for the three months ended March 31, 2022, compared to the three months ended March 31, 2021, is due to the revenues derived from sales through our commercial channel, partially offset by amortization of acquired technology amounting to $932. Gross profit excluding these amortizations was $4,917 (61.0% of revenues).

Research and Development Expenses

Our research and development expenses increased by $3,272, or 123.2%, to $5,927 for the three months ended March 31, 2022, compared to $2,655 for the three months ended March 31, 2021. This increase was mainly a result of expanding our research and development activities into additional product offerings. Our research and development expenses, excluding stock-based compensation and depreciation, for the three months ended March 31, 2022, were $4,428 compared to $2,226 for the three months ended March 31, 2021, an increase of $2,202.

Research and development expenses consist mainly of payroll expenses to employees involved in research and development activities, expenses related to: (i) our solutions including our Dario Smart Diabetes Management Solution, DarioEngage platform, Dario Move solution and our digital behavioral health solution, (ii) labor 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 product approval requirements and (v) facilities expenses associated with and allocated to research and development activities. We view research and development as a principal strategic investment and have continued our commitment to invest in this area. We will need to continue to invest in research and development and such expenses may increase in the future to keep pace with new trends in our industry.

Sales and Marketing Expenses

Our sales and marketing expenses increased by $2,403, or 33.7 %, to $9,535 for the three months ended March 31, 2022, compared to $7,132 for the three months ended March 31, 2021. The increase was mainly due to increases in our stock-based compensation and payroll related expenses. Our sales and marketing expenses, excluding stock-based compensation and depreciation, for the three months ended March 31, 2022 were $7,843 compared to $6,086 for the three months ended March 31, 2021, an increase of $1,757.

6

Sales and marketing expenses consist mainly of payroll expenses, online marketing campaigns of our service offering, and other costs associated with sales and marketing activities, as well as trade show expenses, customer support expenses and marketing consultants and subcontractors.

General and Administrative Expenses

Our general and administrative expenses decreased by $1,226, or 21.8%, to $4,395 for the three months ended March 31, 2022, compared to $5,621 for the three months ended March 31, 2021. This decrease was mainly due to decrease in consulting expenses during the three months ended March 31, 2022. Our general and administrative expenses, excluding stock-based compensation, depreciation and earn-out remeasurement for the three months ended March 31, 2022 were $2,552 compared to $2,260 for the three months ended March 31, 2021, an increase of $292.

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

Financial Expenses, net

Our financial expenses, net for the three months ended March 31, 2022, were $44, compared to financial expenses of $639 for the three months ended March 31, 2021. The changes in our financial expenses were mainly due to foreign currency translation differences.

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

Net loss

Net loss increased by $950, or 6.35%, to $15,916 for the three months ended March 31, 2022, compared to a net loss of $14,966 for the three months ended March 31, 2021.

The increase in net loss for the three months ended March 31, 2022, compared to the three months ended March 31, 2021, was mainly due to the increase in our operating expenses.

The factors described above resulted in net loss attributable to common stockholders for the three months ended March 31, 2022, amounted to $16,367, compared to net loss attributable to common stockholders of $15,510 for the three months ended March 31, 2021.

Non-GAAP Financial Measures

To supplement our unaudited condensed consolidated financial statements presented in accordance with accounting principles generally accepted in the United States of America (“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: “net loss before interest, taxes, depreciation, and amortization” or “EBITDA”, and “Non-GAAP Adjusted Loss”, as presented herein below. Importantly, we note the NGFM measures captioned “EBITDA” and “Non-GAAP Adjusted Loss” are not recognized terms under U.S. GAAP, and as such, they are 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.

7

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:

	Three Months Ended March 31,
	(in thousands)
	2022		2021		$ Change
Net Loss Reconciliation
Net loss - as reported	$	(15,916)	$	(14,966)	$	(950)
Adjustments
Depreciation expense		70		64		6
Inventory step up amortization		—		151		(151)
Amortization of acquired technology		963		375		588
Other financial expenses, net		44		639		(595)
EBITDA		(14,839)		(13,737)		(1,102)
Acquisition costs		87		378		(291)
Earn-out remeasurement		(452)		—		(452)
Stock-based compensation expenses		5,343		4,438		905
Non-GAAP adjusted loss	$	(9,861)	$	(8,921)	$	(940)

Liquidity and Capital Resources (amounts in thousands except for share and share amounts)

As of March 31, 2022, we had approximately $55,558 in cash and cash equivalents compared to $35,808 on December 31, 2021.

We have experienced cumulative losses of $238,381 from inception (August 11, 2011) through March 31, 2022 and have a stockholders’ equity of $114,185 on March 31, 2022. 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. However, we believe that our sources of liquidity and capital resources will be sufficient to meet our business needs for at least the next twelve months.

Since inception, we have financed our operations primarily through private placements and public offerings of our common stock, warrants to purchase shares of our common stock, and the exercise of existing warrants and options, receiving aggregate net proceeds totaling $227,708 as of March 31, 2022.

On February 1, 2021, we entered into securities purchase agreements with institutional accredited investors relating to an offering with respect to the sale of an aggregate of 3,278,688 shares of Common Stock, at a purchase price of $21.35 per share. The aggregate gross proceeds were approximately $70,000.

On February 28, 2022, we entered into a securities purchase agreement with institutional investors, pursuant to which we agreed to issue and sell to the investors in a registered direct offering priced at-the-market under Nasdaq rules an aggregate of 4,674,454 shares of our common stock, par value $0.0001 per share, and pre-funded warrants to purchase an aggregate of 667,559 shares of our common stock. Each share was sold at an offering price of $7.49 per share, and each pre-funded warrant was sold at an offering price of $7.4899, for aggregate gross proceeds of approximately $40 million before deducting the offering expenses. In addition, the investors have executed lock up agreements agreeing to a lock up period of three days.

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On October 22, 2021, we entered into a Sales Agreement (the “Sales Agreement”) with Cowen and Company, LLC (“Cowen”), as agent, pursuant to which we may issue and sell shares of our common stock having an aggregate offering price of up to $50 million from time to time through Cowen. As of March 31, 2022, we have not conducted any sales through our Sales Agreement with Cowen.

Management believes that the proceeds from the recent private placement combined with our cash on hand 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. As a result, hawse have resolved to remove the going concern note from its 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 offering.

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, DarioEngage and Dario Intelligence, (3) expenses which will be required in order to expand manufacturing of our products, (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 products and services in the jurisdictions and in the timeframes, we expect.

Cash Flows (dollar amounts in thousands)

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

	March 31,
	2022	2021
	$	$
Cash used in operating activities:	(18,094,000)	(10,532,000)
Cash used in investing activities:	(181,000)	(2,540,000)
Cash provided by financing activities:	38,023,000	65,711,000
	19,748,000	52,639,000

Net cash used in operating activities

Net cash used in operating activities was $18,094 for the three months ended March 31, 2022 an increase of 71.8% compared to $10,532 used in operations for the same period in 2021. Cash used in operations increased mainly due to the increase in our operating activities.

Net cash used in investing activities

Net cash used for investing activities was $181 for the three months ended March 31, 2022, a decrease of 2,359 compared to $2,540 for the same period in 2021. Cash used for investing activities decreased mainly due to the repayment made as part of the acquisition of Upright in the three months ended March 31, 2021.

Net cash provided by financing activities

Net cash provided by financing activities was $38,023 for the three months ended March 31, 2022 compared to $65,711 net cash provided by financing activities during the same period in 2021.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk.

We are a smaller reporting company and therefore are not required to provide the information for this item of Form 10-Q.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this Report, our Chief Executive Officer and Chief Financial Officer, or 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, or 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 Securities and Exchange Commission (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, 2022, 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, 2022, 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.

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PART II- OTHER INFORMATION

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

During the first quarter of 2022, we issued an aggregate of 4,983 shares of our common stock to certain of our service providers as compensation in lieu of cash compensation owed to them for services rendered. We claimed exemption from registration under the Securities Act of 1933, as amended, or the Securities Act, for the foregoing transactions under Section 4(a)(2) of the Securities Act.

Item 6. Exhibits.

No.		Description of Exhibit
10.1*˄	Exclusive Preferred Partner, Co-Promotion, Development Collaboration and License Agreement by and between Sanofi US Services, Inc. and DarioHealth Corp., dated February 28, 2022.
10.2*	Technology Purchase Agreement by and among Physimax Technologies Ltd., Labstyle Innovation Ltd. and DarioHealth Corp., dated January 18, 2022.
31.1*		Certification of Principal Executive Officer Pursuant to Securities Exchange Act Rules 13a-14(a) and 15(d)-14(a).
31.2*		Certification of Principal Financial Officer Pursuant to Securities Exchange Act Rules 13a-14(a) and 15(d)-14(a).
32.1**		Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350.
32.2**		Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350.
101.1*		The following financial statements from the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2022, formatted in Inline XBRL: (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Comprehensive Loss, (iii) Statements of Changes in Stockholders’ Deficiency, (iv) Consolidated Statements of Cash Flows and (v) the Notes to Consolidated Financial Statements, tagged as blocks of text and in detail.
104		Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101).

*Filed herewith.

**Furnished herewith.

˄Certain identified information in the exhibit has been excluded from the exhibit because it is both (i) not material

and (ii) would likely cause competitive harm to the Company if publicly disclosed. The Company agrees to furnish

supplementally a copy of any omitted schedule or exhibit to the SEC upon request.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date:  May 11, 2022		DarioHealth Corp.
	By:	/s/ Erez Raphael
		Name:	Erez Raphael
		Title:	Chief Executive Officer (Principal Executive Officer)
	By:	/s/ Zvi Ben David
		Name:	Zvi Ben David
		Title:	Chief Financial Officer, Secretary and Treasurer (Principal Financial Officer)

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EX-10.1

Exhibit 10.1

CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM TO DARIO HEALTH CORP. IF PUBLICLY DISCLOSED. OMISSIONS ARE DENOTED IN BRACKETS WITH ASTERISKS THROUGHOUT THIS EXHIBIT.

EXECUTION VERSION

EXCLUSIVE PREFERRED PARTNER, CO-PROMOTION, DEVELOPMENT COLLABORATION AND LICENSE AGREEMENT

THIS COLLABORATION AGREEMENT (this “Agreement”) is made and entered into as of February 28, 2022 (the “Effective Date”), by and between Sanofi US Services, Inc., a Delaware corporation, with a place of business located at Head Office 55 Corporate Drive, Bridgewater, NJ 08807, United States (“Sanofi”) and Dario Health Corp., a Delaware corporation with a place of business located at 18 West 18^th Street, New York 10011, United States (“Dario”). Sanofi and Dario are each referred to individually as a “Party” and collectively as the “Parties”.

WHEREAS, Dario is a digital therapy technology company which has developed and commercializes a mobile and web-based, customized, user-centric, modular platform, integrating digital therapeutics, coaching, devices, and care providers, currently supporting diabetes, pre-diabetes, hypertension, behavioral health (BH), musculoskeletal (MSK), and obesity;

WHEREAS, Sanofi and Dario wish to jointly co-promote Dario’s Solution to Targeted Channels in the Territory and for the Therapeutic Areas; and

WHEREAS, Sanofi and Dario also wish to develop and co-promote new digital therapy applications that combine the Solution with Sanofi know how and proprietary Sanofi assets, and conduct relevant medical studies (prospective and retrospective, medical and health economic) to understand various intermediate, post-intermediate, and long term health outcomes.

NOW THEREFORE, in consideration of these premises and mutual promises and agreements herein set forth, and other valuable consideration, the sufficiency of which is hereby acknowledged, the Parties hereby agree as follows:

1. DEFINITIONS.  In this Agreement the following words and phrases have the following meanings:

1.1 “Adequate Anonymization Process” means a process through which Personal Data is subjected to various processing operations resulting in the inability for the data processing owner or any person who will be granted access to such data to relate it to an identified or identifiable natural person without implementing disproportionate efforts. Any Adequate Anonymization Process must at least include actions relating to (i) perturbation of the Personal Data (e.g. through the removal of certain characteristics of the data); (ii) contractual or operational restrictions on the use of the data sets (e.g. through contractual restrictions on the matching, combination or re-identification attempts relating to the data sets) and (iii) technical and organizational security measures designed to ensure the confidentiality of the data sets (e.g. through access rights management). Any anonymization process shall only be regarded as an Adequate Anonymization Process on a case by case basis.

1.2 “Advanced Discussion List” means accounts in the Health Plan Channel provided on Exhibit E. Accounts may be removed from the Advanced Discussion List upon approval by the JSC.

1.3 “Affiliate” of a Party means any corporation or other business entity that, directly or indirectly, through one or more intermediaries, controls, is controlled by or is under common control with such Party for so long as such Party controls, is controlled by or is under common control with such corporation or other business entity. As used herein, the term “control” means the direct or indirect ownership of 50% or more of the stock having the right to vote for directors thereof or other ownership interest or the ability to otherwise control the management thereof.

1.4 “Agreement” has the meaning set forth in the preamble hereto.

1.5 “Anonymized Data” means Personal Data which has been subjected to an Adequate Anonymization Process ensuring that, at the time of its processing, it cannot be related to an identified or identifiable natural person.

1.6 “Applicable Law” means applicable laws, rules or regulations, including any rules, regulations or other requirements of any applicable federal, national, regional, state, provincial or local regulatory agencies, departments, bureaus, commissions, councils or other government entities regulating or otherwise exercising authority with respect to the activities conducted pursuant to this Agreement, including, but not limited to, applicable Data Protection Laws, the Federal Food, Drug, and Cosmetic Act (21 U.S.C. § 301, et seq.) and the regulations promulgated thereunder (“FDCA”), the Public Health Service Act (42 U.S.C. 262) (“PHSA”) and the regulations promulgated thereunder; the federal Anti-Kickback Statute (42 U.S.C. § 1320a-7b), the federal False Claims Act (31 U.S.C. § 3729 et seq.), federal, state or provincial licensing, disclosure and reporting requirements, and all state consumer and other privacy and anti-kickback laws, in each case, as amended from time to time.

1.7 “Business Day” means any twenty-four (24) hour day period other than a Saturday, Sunday or other day on which commercial banks in New York, New York are authorized or required by Applicable Law to close.

1.8 “Calendar Quarter” means any of the 3-month periods beginning on January 1, April 1, July 1 or October 1 of any Calendar Year, except that the first Calendar Quarter of the Term will commence on the Effective Date and end on March 31, 2022, and the last Calendar Quarter will end on the last day of the Term.

1.9 “Calendar Year” means (a) for the first Calendar Year, the period commencing on the Effective Date and ending on December 31, 2022, (b) for the last Calendar Year, the period commencing on January 1 of the last year of the Term, and ending on the last day of the Term, and (c) each interim period of 12 months commencing on January 1 and ending on December 31.

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1.10 “Change of Control” means, with respect to a Party, from and after the Effective Date: (a) a merger or consolidation in which (i) such Party is a constituent party, or (ii) an Affiliate of such Party that directly or indirectly controls such Party is a constituent party, except in the case of either clause (i) or (ii) any such merger or consolidation involving such Party or such Affiliate in which the shares of capital stock of such entity outstanding immediately prior to such merger or consolidation continue to represent, or are converted into or are exchanged for shares of capital stock which represent, immediately following such merger or consolidation, fifty percent (50%) or more by voting power of the capital stock of (A) the surviving or resulting corporation or (B) a parent corporation of such surviving or resulting corporation, whether direct or indirect; (b) the sale, lease, transfer, exclusive license or other disposition, in a single transaction or series of related transactions, by such Party or an Affiliate of such Party of all or substantially all of the assets of such Party or such Affiliate taken as a whole and whether owned directly or indirectly through Affiliates (except where such sale, lease, transfer, exclusive license or other disposition is to an Affiliate of such Party existing prior to such time); or (c), any “person” or “group”, as such terms are defined in Sections 13(d) and 14(d) of the U.S. Securities Exchange Act of 1934, in a single transaction or series of related transactions, becomes the beneficial owner as defined under the U.S. Securities Exchange Act of 1934, directly or indirectly, whether by purchase or acquisition or agreement to act in concert or otherwise, of fifty percent (50%) or more by voting power of the then-outstanding capital stock or other equity interests of such Party or a subsidiary of such Party.

1.11 “Claims” has the meaning set forth in Section 11.1.

1.12 “Competing Solution” has the meaning set forth in Section 6.2.1.

1.13 “Confidential Information” has the meaning set forth in Section 9.1.

1.14 “Contractual Personal Data” has the meaning set forth in Section 8.8.7.

1.15 “Dario Background IP” means any Intellectual Property rights owned or controlled by Dario which has been licensed or developed, or is later licensed or developed, by or on behalf of Dario outside the scope of this Agreement.  For clarity, Dario Background IP includes Intellectual Property rights relating to the Solution.

1.16 “Dario Competitor Companies” means [**].

1.17 “Dario Data” means all data and information controlled by Dario that is not included in Sanofi Data.

1.18 “Dario Foreground IP” means (a) Dario Solution Enhancements, (b) the Intellectual Property rights other than Sanofi Foreground IP that are embodied in, claim, or cover the Enhanced Solution, or any element thereof, and (c) all Intellectual Property conceived, invented, produced, developed, fabricated,

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authored, generated or reduced to practice by Dario other than pursuant to a Development Plan.

1.19 “Dario Member Data” means all De-Identified personal data of Enrolled Users of the Dario integrated platform (meaning Dario’s multi-condition digital therapeutics platform through which Enrolled Users can access solutions for diabetes, hypertension, weight management, MSK and BH) with respect to which Dario has the right to disclose such data to Sanofi pursuant to this Agreement. Dario Member Data excludes data from non-Dario integrated solution services (where “non-integrated” services refer to Dario’s stand-alone platforms for MSK and BH).

1.20 “Data Protection Laws” means any and all Applicable Laws relating (specifically or generally) to the processing of data relating to individuals including but not limited to (a) all U.S. state and federal privacy and data protection laws, including, to the extent applicable, the Health Insurance Portability and Accountability Act of 1996, (42 U.S.C. § 300gg, 29 U.S.C § 1181 et seq., and 42 USC 1320d et seq.) and the rules promulgated thereunder (“HIPAA”); (b) the federal Health Information Technology for Economic and Clinical Health Act of 2009 (“HITECH”); and (c) the General Data Protection Regulation ((EU) 2016/679) (“EU GDPR”) and any national implementing law relating thereto.

1.21 “Dario Solution Enhancement” means improvements to the Solution that are necessary to effectuate a Development Plan but are peripheral to the requirement and features described in the Development Plan.

1.22 “De-Identified” means, with respect to any Personal Data collected or Processed pursuant to this Agreement, which has been de-identified in accordance with Section 164.514(a) of the HIPAA Health Insurance Portability and Accountability Act (HIPAA) Privacy Rule.

1.23 “Derivative Work” means any work product, study and analysis results, reports, publications and other data, generated by or on behalf of Sanofi using Dario Member Data as source data alone or in combination with other data.

1.24 “Development Plan” means the written plan to develop the Enhanced Solution(s), including the components set forth in Section 2.3.

1.25 “Disclosing Party” has the meaning set forth in Section 9.1.

1.26 “Dollars” or “$” means the legal tender of the United States.

1.27 “Effective Date” has the meaning set forth in the preamble hereto.

1.28 “Employer Channel” means (1) employers who contract directly with Dario, (2) private self-funded insurance accounts, (3) pharmacy benefit managers accounts, (4) Third Party administrators (e.g. Maestro). (5) employee benefit

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consultants (e.g. Mercer), and (6) employee benefit digital health brokers (e.g.,  Vitality and other channel partners).

1.29 “Enhanced Solution(s)” has the meaning set forth in Section 4.1.

1.30 “Enrolled User” means an eligible (where “eligible” is defined pursuant to Dario’s end customer contracts) member who agreed to use the Solution or Enhanced Solution.

1.31 “Enrollment Rate” means the percentage calculated by taking the sum of all Enrolled Users from accounts that have been active for at least six (6) months, across all Targeted Channel accounts, and then dividing such sum by the sum of Total Eligible Lives that have been contiguously eligible for at least six (6) months, across all Targeted Channel accounts.

1.32 “Evidence Generation Plan” has the meaning set forth in Section 4.2.9.

1.33 “Excluded Channel” means the direct-to-consumer (DTC) market.

1.34 “Existing Customer” means a customer who was an Enrolled User prior to, or as of, the Effective Date, as set forth in Exhibit G.

1.35 “Fair Market Value” means the monetary consideration that, in an open and unrestricted market place, a prudent and informed buyer would pay to a prudent and informed seller, for the relevant goods or services, each acting with the other and under no compulsion to act. The Fair Market Value of the initial rates and associated calculation are set forth in Exhibit A, and Fair Market Value may be updated from time to time as set forth in Exhibit A.

1.36 “FDA” means the United States Food and Drug Administration.

1.37 “Fee Report” has the meaning set forth in Section 7.8.1.

1.38 “First Contingent Payment” has the meaning set forth in Section 7.3.

1.39 “Force Majeure Event” has the meaning set forth in Section 13.3.

1.40 “Health Plan Channel” means (1) public insurance Medicare accounts, (2) public insurance Medicaid accounts, (3) private fully-insured insurance accounts, and (4) At-risk Integrated Delivery Networks Accounts (“IDN Accounts”), in each case that provide the Solution and Enhanced Solution to their respective customers.

1.41 “Health Plan Revenue Share Stoppage” has the meaning set forth in Section 7.4.1.1.

1.42 “Intellectual Property” means: (i) all Patents, copyrights, Trademarks, trade secrets, and all other intellectual property and proprietary rights and goodwill associated with the foregoing; (ii) databases, algorithms, inventions, processes and techniques (including research techniques, algorithms for data analysis and

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processes for conducting real world evidence data research); (iii) computer software (including source code, object code, firmware, operating systems and specifications); (iv) copies and tangible embodiments of any of the foregoing, in whatever form or medium; and (v) all rights to sue for past, present and future infringement, misappropriation, dilution, misuse or other violation of any of the foregoing, including for injury to goodwill, and to recover all proceeds relating to any of the foregoing, including licenses, royalties, income, payments, claims, damages (including attorneys’ payments and expert payments) and proceeds of suit under the laws of any jurisdiction worldwide.

1.43 “Introduction” means Sanofi has identified to Dario a relevant account, Dario has accepted for Sanofi to introduce Dario to this account, and a meeting between Dario and the account occurs. A list of completed Introductions will be maintained by the JSC.

1.44 “JSC” means the Joint Steering Committee.

1.45 “Losses” has the meaning set forth in Section 11.1.

1.46 “Market Research” means the systematic gathering and interpretation of information from or about individuals or organizations using statistical and analytical methods and techniques of the applied social sciences in order for Sanofi or its Affiliates to gain insight or support decision making. “Market Research” includes Syndicated Secondary Market Research and Primary Market Research but excludes Clinical Study, Retrospective and Prospective Real-World Study.

1.47 “Net Sales” means the gross receipts invoiced and recognized by Dario directly from its sales of subscriptions and licenses to the Solution and the Enhanced Solutions to entities other than those on the Advanced Discussion List, upon meeting Dario’s applicable revenue recognition criteria and after deduction of the following amounts, which are actually incurred, allowed, accrued or specifically allocated during such Calendar Year or Calendar Quarter:

i. royalties or commissions paid to Third Party intermediaries (including channel partners and distributors);

ii. chargebacks;

iii. sales taxes and other government duties;

iv. discounts, including cash, trade and quantity discounts inclusive of free goods, price reduction programs (including co-pay assistance, compulsory refunds, and any other patient payment assistant programs), retroactive price adjustments with respect to licenses or sales of such Solution or Enhanced Solutions; and

v. amounts repaid or credited by reason of defects, refunds, returns, rebates and billing errors.

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1.48 “Negotiation Period” has the meaning set forth in Section 6.3.

1.49 “Officials” has the meaning set forth in Section 8.9.

1.50 “Option” has the meaning set forth in Section 6.3.

1.51 “Option Exercise Notice” has the meaning set forth in Section 6.3.

1.52 “Option Notice” has the meaning set forth in Section 6.3.

1.53 “Optioned Activity” has the meaning set forth in Section 6.3.

1.54 “Other Foreground IP” mean any Intellectual Property conceived, produced, invented, authored, developed, fabricated, generated, or reduced to practice by a Party or by the Parties under this Agreement that is neither Dario Foreground IP nor Sanofi Foreground IP.

1.55 “Parties” has the meaning set forth in the preamble hereto.

1.56 “Party” has the meaning set forth in the preamble hereto.

1.57 “Patent” means national, regional and international (a) issued patents and pending patent applications (including provisional patent applications), (b) patent applications filed either from the foregoing or from an application claiming priority to the foregoing, including all provisional applications, converted provisionals, substitutions, continuations, continuations-in-part, divisions, renewals and continued prosecution applications, and all patents granted thereon, (c) patents-of-addition, revalidations, reissues, reexaminations and extensions or restorations by existing or future extension or restoration mechanisms, including patent term adjustments, patent term extensions, supplementary protection certificates or the equivalent thereof, (d) inventor’s certificates, utility models, petty patents, innovation patents and design patents, (e) other forms of government-issued rights substantially similar to any of the foregoing, including so-called pipeline protection or any importation, revalidation, confirmation or introduction patent or registration patent or patent of additions to any of such foregoing, and (f) United States and foreign counterparts of any of the foregoing.

1.58 “Patentable Intellectual Property” means Intellectual Property that the Parties reasonably believe to be both novel and non-obvious under the Applicable Law.

1.59 “Payment” has the meaning set forth in Section 8.9.

1.60 “Payment Schedule” means the payment schedule set for development costs within a Development Plan, including the associated budget allocation and milestone payments.

1.61 “Personal Data” means any information relating to Enrolled Users which is protected by applicable Data Protection Law. At minimum the Personal Data

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shall include information relating to an identified person or a person who can be identified, directly or indirectly, in particular by reference to an identifier such as a name, contact details, an identification number, location data, an online identifier or to one or more factors specific to the physical, physiological, genetic, mental, economic, cultural or social identity of that natural person. The description of Personal Data, the data flow and processing will be described in the data processing agreement as defined in Section 8 of the Agreement.

1.62 “PHI” means protected health information as defined in 45 C.F.R. § 160.103.

1.63 “Primary Market Research (PMR)” is the process of asking questions directly to customers (health care providers, patients, consumers, payers, etc) for gathering, analyzing and interpreting information from or about individuals, organizations and/or marketplaces using qualitative and/or quantitative methods. It is defined by the objective of providing insight to address business questions and support decision making.

1.64 “Product Complaint” means any written or oral information received from a complainant that alleges deficiencies related to quality, safety, or performance of the Solution or an Enhanced Solution after it has been released and distributed to the commercial market or used in a Study.  Product Complaint shall include reports of the failure of a product to meet its performance specifications or otherwise perform as intended.

1.65 “Promotional Materials” means any promotional or marketing communications describing the Solution or Enhanced Solution.

1.66 “Prospective Real World Evidence Study” means any research sponsored or organized by SANOFI or its Affiliates, carried out on human subjects for the purpose of developing biological, scientific, or medical knowledge and which requires primary data collection to be conducted. A prospective Real World Evidence Study is not a Clinical Study.

1.67 “Qualifying Health Plan Account” has the meaning set forth in Section 7.4.1.

1.68 “Receiving Party” has the meaning set forth in Section 9.1.

1.69 “Retrospective Real-World Study” means any research sponsored or organized by SANOFI or its Affiliates, conducted solely through the reuse of data for the purpose of developing biological, scientific, or medical knowledge and in which there is no interaction with study subjects except to obtain consent. Retrospective Real-World Studies include the analysis of data collected prior to the initiation of the Study and scientific activities based on secondary use of data acquired from Third Parties and previously collected for other purposes.

1.70 “Sanofi Background IP” means any Intellectual Property owned or controlled by Sanofi which has been developed, or is later developed, by Sanofi outside the scope this Agreement.

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1.71 “Sanofi Data” means data embodied in results of Sanofi’s market access relationships and capabilities, data and analytics capabilities, and market research, and any other information generated by Sanofi under this Agreement.

1.72 “Sanofi Excluded Companies” means [**].

1.73 “Sanofi Foreground IP” means (i) all Intellectual Property conceived, produced, developed, fabricated, generated, or reduced to practice by or on behalf of (but not on behalf of Sanofi by Dario hereunder) Sanofi under this Agreement (including, for the removal of doubt, Derivative Works) and (ii) all Patentable Intellectual Property conceived, produced, developed, fabricated, generated or reduced to practice in connection with the Agreement under a Development Plan. For clarity, Sanofi Foreground IP does not include Dario Background IP.

1.74 “Sanofi Introduced Employer Accounts” means an Employer Channel account where Sanofi has made an Introduction.

1.75 “Sanofi North America Market Access Diabetes Group” has the meaning set forth in Section 6.2.1.

1.76 “Second Contingent Payment” has the meaning set forth in Section 7.3.

1.77 “Senior Officers” shall mean for Sanofi, Gustavo Pesquin its General Manager General Medicines, USA and for Dario Erez Raphael, its CEO.

1.78 “Solution” means Dario’s products and services offered as of the Effective Date, including Dario’s devices and accessories that integrate with applications on a user’s smartphone, DarioEngage, a chronic condition coaching and integration platform, and Dario Loop, an AI-driven engine which personalizes user experience across a range of factors including timing, tone, channel, content, frequency, and intervention. The Solution includes enhancements, modifications and improvements to the foregoing, whether through development or through acquisition, and excludes Unavailable Products.

1.79 “Study” means, collectively, any Market Research and/or Clinical Study and/or Retrospective and/or Prospective Real-World Study, in each case as conducted by Sanofi.

1.80 “Syndicated Secondary Market Research” or “Syndicated SMR” refers to research projects conducted using preexisting aggregated data collected by the entity in charge of conducting the Syndicated SMR and licensed to and/or purchased by multiple subscribers, and not specifically conducted or collected at the request of one client. Secondary data analyses include but are not limited to sales volume or value data, prescription data, promotional volume or spending value data, longitudinal patient data, aggregated or compiled meta-analysis or data.

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1.81 “Targeted Channel” means entities within the Health Plan Channel and the Employer Channel that Dario contracts with in order to license or sell (directly or in-directly through resellers, distributors or channel partners) the Solution and any Enhanced Solutions. Targeted Channels expressly exclude Excluded Channels.

1.82 “Term” has the meaning set forth in Section 12.1.

1.83 “Territory” means the United States of America.

1.84 “Therapeutic Areas” means (1) diabetes, (2) pre-diabetes, (3) obesity, (4) behavioral health, (5) musculoskeletal conditions only when bundled with diabetes, pre-diabetes, obesity and/or behavioral health, (6) hypertension only when bundled with only when bundled with diabetes, pre-diabetes, obesity or behavioral health, (7) any therapeutic area other than the foregoing (1) through (6) which Dario independently, commercializes and integrates into the Solution, and (8) any therapeutic area other than the foregoing (1) through (6) that is integrated by Dario into the Solution pursuant to Dario’s acquisition of a Third Party’s business or assets in such therapeutic area.

1.85 “Third Party” means any person or entity other than Sanofi, Dario and their respective Affiliates, officers, directors, employees and agents.

1.86 “Tokenization” means, when applied to data security, the process of substituting a sensitive data element with a non-sensitive equivalent, referred to as a token, that has no extrinsic or exploitable meaning or value. The token is a reference that maps back to the sensitive data through a tokenization system.

1.87 “Total Eligible Lives” means the total number of users eligible (defined pursuant to Dario’s end customer contracts) to enroll in a Dario product or service.

1.88 “Trademarks” means, collectively, trademarks, service marks, trade dress, logos, brand names, trade names, corporate names and Internet domain names (in each case, whether or not registered), including all variations, derivations, combinations, applications, registrations, and renewals therefor, and all rights and priorities with respect thereto afforded under the Applicable Law of any jurisdiction worldwide, together with all goodwill associated therewith.

1.89 “Transition Payment” means $[**].

1.90 “Unavailable Product” means a digital product or service that is (i) a platform-as-a-service (PaaS); or (ii) a standalone behavior health with optional employee assistance plan (EAP) product or service (e.g. is stand-alone and not combined or bundled with any non-behavioral health product or service). No Enhanced Solution(s) will include an Unavailable Product.

1.91 “Year X” means the corresponding “X” anniversary of the Effective Date. For example, Year 2 means the 12-month period beginning on the first (1^st)

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anniversary of the Effective Date, Year 3 means the 12-month period beginning on the second (2^nd) anniversary of the Effective Date, and so on.

2. GOVERNANCE

2.1 Alliance Managers. Promptly following the Effective Date, each Party will designate an individual to act as the primary point of contact between the Parties (each such individual, an “Alliance Manager”) to facilitate the effective exchange of information between the Parties, discuss the Parties’ respective performance under this Agreement, assist with governance activities and serve as the initial point of contact to resolve any disputes between the Parties. The Alliance Managers will jointly be responsible for (a) the preparation and circulation of JSC meeting minutes for approval, (b) facilitate the scheduling and conduct of JSC meetings, (c) launch of the collaboration, (d) ensuring that relevant action items from JSC meetings are carried out or otherwise addressed, and (e) bringing matters to the attention of the relevant JSC subcommittee, as applicable.  The Alliance Managers will be permanent guests at the JSC meetings or at any related forums. They will receive all meeting materials, but will not be members of any such committees and will have no voting rights. A Party may replace its designated Alliance Manager at any time by written notice to the other Party.

2.2 The Joint Steering Committee.

2.2.1 Formation and Composition.  Within 30 days after the Effective Date, each Party will appoint its initial members of the JSC, which will be composed of two (2), and always an equal number of, appointed representatives of each of Sanofi and Dario.

2.2.2 Meetings. The JSC shall meet on a quarterly basis, with each meeting to take place no later than ten (10) Business Days after the start of each Calendar Quarter, unless otherwise agreed to by the Parties.  If possible, the meetings shall be held in person or where appropriate, by video or telephone conference. The location of face-to-face meetings of the JSC shall be subject to mutual agreement by the Parties on a case-by-case basis.  The Parties shall determine the form of the meeting, including not but limited to virtual or video conferencing.  Except as otherwise set forth herein, decisions shall be made unanimously, each Party having one (1) vote regardless of the number of representatives present or voting; provided, that no such decision/vote shall be valid unless each Party is represented by at least one member’s actual or virtual presence at the meeting at which the vote is taken. Subject to appropriate confidentiality undertakings where applicable, additional participants may be invited by any member to attend meetings where appropriate.  Such additional participants shall not be deemed to be, or have any rights or responsibilities of, a member of the JSC.  Subject to the terms of this Agreement, and except as otherwise specifically provided by the terms of this Agreement, including the dispute resolution provisions of Section 2.4, the JSC shall have the final decision-making authority with respect to all matters within the jurisdiction of

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any of the committees established pursuant to this Agreement which are referred to the JSC for determination or resolution. The JSC shall exercise this authority in good faith and in accordance with this Agreement, all decisions shall have a reasonable basis, and subject to the terms of this Agreement, any such decision shall be binding upon the Parties.  Where the JSC is unable to reach consensus regarding a matter before it for decision, such disputes shall be resolved in accordance with the provisions of Section 2.4 hereof.

2.3 Responsibilities of the JSC.  Except as otherwise set forth herein, the JSC shall coordinate all co-promotion, development and evidence generation activities of the Parties under this Agreement.

The responsibilities of the JSC shall be exercised consistent with this Agreement and shall include, but shall not be limited to, the following:

a) To define, approve and update or amend Development Plans, which shall include the following:

i. the product requirements that define the unique features as specified by the Parties using an agile development methodology, as described in Exhibit F;

ii. development milestones to develop the product with  corresponding project deliverables, program timelines and success criteria. Milestones shall include, inter alia, beta testing, proof of concept and validation and be consistent with the agile development methodology;

iii. the regulatory strategy (as needed); and

iv. Cost and Payment Schedule based on the Fair Market Value of the activities to be conducted by Dario pursuant to such Development Plan. For clarity, the amounts due under any Development Plan will reflect the Fair Market Value of the activities under such Development Plan and shall not exceed the amounts listed in Section 7.2.

In the event the Parties cannot agree to add an idea proposed by either Party to the Development Plan, with Dario voting against the addition of the idea to the Development Plan, Sanofi will retain a right of first negotiation as described in Section 6.3 with respect to such idea in the event Dario proceeds with such idea individually.

b) determine co-promotion strategy and activities of the Solution;

c) review financial information provided pursuant to Section 4.2.6 and if any financial information provided suggests that Dario may, within the next six (6) months, not have the resources necessary to perform any

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activities assigned to Dario under the Development Plan, determine where mitigation strategies are necessary under Section 4.2.6;

d) determine pricing and marketing strategy for the Enhanced Solution;

e) determine whether or not a customer or potential customer falls within a Targeted Channel; provided, in the event an account falls into both the Health Plan Channel and Employer Channel, the Parties will discuss in good faith how that account will be address financially. and Sanofi may decide whether or not to make the Introduction based on this determination;

f) determine updates and amendments to Dario Competitor Companies list, Advanced Discussion List and Sanofi Excluded Companies;

g) maintain a list of Introductions;

h) oversee implementation of the (i) Development Plans, (ii) regulatory strategy, and (iii) co-promotion strategy, of Enhanced Solutions;

i) adopt and oversee the Evidence Generation Plans described in Exhibit D;

j) discuss and make a good faith effort to resolve issues or disputes presented to it by the Alliance Managers;

k) determine delivery schedule of Dario Member Data to Sanofi, to be provided no less frequently than every six months; and

l) additional governance responsibilities as defined herein.

2.4 Expenses. Sanofi and Dario expressly acknowledge and agree that each shall be solely responsible for any and all of its costs and expenses incurred in relation to performing, organizing, attending or otherwise participating in the JSC.

2.5 Disputes Regarding JSC Matters.  In the event that the JSC is, after a period of thirty (30) Business Days from the date first presented to the JSC in writing, unable to make a decision with respect to any matter before it for decision due to a lack of required unanimity, either Party may submit the matter being considered to the Senior Officers for a joint decision.  In such event, the JSC, by written notice to each Party, shall formally request the dispute be resolved by the Senior Officers, specifying the nature of the dispute with sufficient specificity to permit adequate consideration by such Senior Officers.  The Senior Officers shall diligently and in good faith, attempt to resolve the referred dispute expeditiously and, in any event, within thirty (30) Calendar Days (or such other period of time as mutually agreed by the Senior Officers) of receiving such written notification.  In the event the Senior Officers are unable to reach a resolution of any referred dispute after good faith negotiations, then, either Party may, by written notice to the other Party, elect to proceed with dispute resolution procedures to be set forth in Section 13.2.

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Without limiting the foregoing, the JSC does not have the power to (i) interpret, amend, modify or waive compliance with this Agreement (except that the JSC may modify the Dario Competitor Companies list, the Advanced Discussion List on Exhibit E, and the Sanofi Excluded Companies list) or (ii) modify the rights and obligations of the Parties under the Agreement.

3. CO-PROMOTION

3.1 Generally. During the Term, Sanofi shall bring market access relationships and capabilities, data and analytics capabilities to identify unmet needs, and market intelligence to generate new leads and support selling activities for the Solution and the Enhanced Solutions. Dario shall provide Sanofi with training during the first Calendar Quarter of each Year X regarding the Solution’s then-current features, capabilities and value proposition, as well as the clinical and outcomes data supporting the Solution.  In addition, Dario shall support, maintain and develop the Solution and Enhanced Solutions, share relevant market and customer insights with Sanofi, and control all selling and post-sale account management activities with respect to the Solution and Enhanced Solutions. The Parties shall manage the ongoing co-promotion activities as described in Exhibit B.

3.2 Introductions.  Sanofi may promote the Solution and Enhanced Solution by performing Introductions or initiating conversations with the intent of a future Introduction, except that Sanofi will not perform Introductions to companies or divisions of companies on the Advanced Discussion List, as provided in Exhibit E.

3.3 Promotional Materials and Communications. Dario will provide Sanofi with marketing material for the Solution to facilitate Sanofi’s creation of Promotional Materials to be used by Sanofi. Dario shall have the right to approve such materials before any use by Sanofi, which approval shall not be unreasonably withheld.

3.4 Neither Party shall use the other Party’s logo or trademark in connection with the co-promotion activities without the other Party’s written consent or as otherwise permitted herein; provided, however, that if a Party consents to the other Party’s use of such Party’s logo or trademark within Promotional Materials, then such consent shall not be required for additional or subsequent use of such Promotional Materials so long as such use is consistent with the approved intended use and trademark usage guidelines provided by such Party.

3.5 The Solution and Enhanced Solutions shall be commercialized exclusively under Dario owned trademarks or the trademarks of Dario’s white label customers. Any fees associates with such promotional related activities shall be the responsibility of the spending Party.

4. DEVELOPMENT

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4.1 General. The principal objective of the development is to combine Sanofi’s insight and relevant expertise in cardiometabolic disorders with Dario’s digital therapy technology tools and expertise, in order to develop new products, services, features and concepts directed to the Therapeutic Areas as may be approved by the JSC in a Development Plan (an “Enhanced Solution”).

4.2 Responsibilities.

4.2.1 Initial Development Plan. The Parties shall mutually approve the initial Development Plan for the first Enhanced Solution through the JSC within 120 days of the Effective Date, which shall include, at a high level, required features and specifications.

4.2.2 Activities. The Parties shall conduct development activities as described in Exhibit C and as approved in Development Plans. Dario shall use diligent efforts to lead product development activities for the Enhanced Solutions.  If required by a Development Plan, Dario shall use commercially reasonable efforts to obtain any and all relevant regulatory authorizations for the Enhanced Solutions, subject to a process and budget as determined by the JSC.

4.2.3 Ongoing.  Following the Effective Date, Dario shall disclose in good faith to the JSC , in response to its requests from time to time, or when Dario becomes aware of, any Sanofi Foreground Intellectual Property created, generated, invented or developed by or on behalf of Dario under the Development Plan.

4.2.4 Adverse Events.  Dario shall be responsible for handling all Product Complaints related to the Solution or Enhanced Solutions.

4.2.5 Annual Reporting and Recordkeeping. The JSC shall review the Development Plans on a regular basis, and in no event less frequently than once each Calendar Year. Each Party shall maintain complete, current and accurate records of all deliverables created pursuant to a Development Plan for at least 3 years after the expiration or termination of this Agreement in its entirety or for such longer period as may be required by Applicable Law.  Such records shall fully and properly reflect all work done and results achieved in the performance of development activities, and to the extent applicable, meet the requirements for any regulatory requirements provided for in the Development Plan. Sanofi shall document all Studies for the Solution and Enhanced Solutions in formal written Study reports, and shall document and conduct all Studies in accordance with Applicable Law and national and international guidelines (e.g., GCP, GLP, and GMP).  Each Party shall have the right to review and copy such records maintained by the other Party and to obtain access to the original to the extent necessary for regulatory and patent purposes or for other legal proceedings, at reasonable times and upon at least 30 days’ prior notice.

4.2.6 Financial Reporting. Dario shall provide to the Alliance Manager, all financial disclosures provided to the public markets on the same schedule as required for the public markets.

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4.2.7 Mitigation Strategies. If any financial information provided to the JSC under Section 4.2.6 demonstrates a reasonable likelihood that Dario may, within the next nine (9) months, not have the resources necessary to perform any activities assigned to Dario under the Development Plan, the JSC will discuss if mitigation strategies are required. If, after such discussion, (a) the JSC agrees that Dario is unable to, or will be unable to, perform such activities in accordance with this Agreement or the Development Plan, (b) Sanofi notifies Dario that Sanofi reasonably determines that Dario is reasonably unlikely to attract the resources beyond those set forth in the initial Development Plan that are now needed to perform such activities and Dario, ninety (90) days after receiving such notice, has not made material progress on attracting such resources or (c) Dario has materially failed to perform such activities and Sanofi notifies Dario that Sanofi reasonably determines that Dario is unlikely to perform such activities within a reasonable time period established by Sanofi, then Sanofi may, by written notice to Dario, elect to assume and complete some or all of such activities and, within a reasonable period of time following Sanofi’s request delivered by notice, Dario shall (i) promptly assist Sanofi with transitioning such activities to Sanofi, including, at Sanofi’s request, by promptly performing Dario’s technology transfer obligations in accordance with Section 4.2.8 and (ii) promptly assign to Sanofi any or all agreements with approved subcontractors to the extent such agreements relate to such activities and as and to the extent such assignment is permitted pursuant to such agreements. In the event that Sanofi assumes any such activities assigned to Dario under the Development Plan, then the JSC shall amend the Development Plan to account for Sanofi’s assumption of such activities. In the event that Sanofi assumes all remaining activities assigned to Dario under the Development Plan with respect to an Enhanced Solution, any payments that would have been payable to Dario with respect thereto shall only be payable if the corresponding milestone events were achieved by Dario prior to the assumption of such activities by Sanofi.  If, within ten (10) Business Days of receipt of Sanofi’s notice under the foregoing clause (b) or clause (c), Dario notifies Sanofi that Dario disputes any of Sanofi’s assertions or conclusions set forth in such notice, then the Parties shall suspend performing the mitigation strategies activities described in (i) and (ii) above and shall submit the disagreement to a mutually acceptable independent and neutral Third Party having experience in capital markets (“Neutral Third Party”) for determination as to whether the circumstances set forth in clause (b) or clause (c), as applicable, have occurred.  Each Party shall provide the Neutral Third Party with such Party’s position and supply supporting documentation within thirty (30) days of appointment of the Neutral Third Party, and the Neutral Third Party shall choose the position of either one Party or the other Party within thirty (30) days thereafter. The Parties shall equally share the costs and expenses of the Neutral Third Party.

4.2.8 Dario Technology Transfer. In the event mitigation strategies pursuant to Section 4.2.7 are required, the Parties will meet promptly to coordinate the transfer of technology required to complete the Development Plan.

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4.2.9 Evidence Generation. Sanofi shall prepare and the JSC shall review and approve or disprove Evidence Generation Plans, whereby Sanofi shall design (including considering Dario’s design input and suggestions in good faith), execute, publish and disseminate medical, economic and user engagement Studies to evidence insights from the use of the Solution and the Enhanced Solution (as approved by the JSC, the “Evidence Generation Plans”).  If the Parties disagree regarding any aspect of the performance of an Evidence Generation Plan, Sanofi shall retain the final approval.  Dario shall, through the JSC, support Sanofi to identify areas where evidence generation is needed and use commercially reasonable efforts to support Sanofi’s evidence generation efforts, including but not limited to cohort construction, running de-ID turnkey software, study design feedback, writing, and evidence dissemination, as described in Exhibit D.

4.2.10 Exclusions.  For the avoidance of doubt, except as expressly provided in this Agreement, and subject to the terms and conditions set forth herein, Dario is not restricted from developing features, functions, applications, products, concepts, products or services outside of the Development Plan for inclusion in the Solution.

5. LICENSE GRANTS

5.1 Licenses Granted to Sanofi.  Subject to the terms and conditions of this Agreement, Dario hereby grants to Sanofi a non-exclusive, sublicensable, royalty-free license to copy and modify the Dario Member Data, during the Term, solely for purposes of creating Derivative Works, including, but not limited to, implementing the Evidence Generation Plan.  Dario will provide an initial delivery of Dario Member Data to Sanofi within [**] days of the Effective Date, and will deliver subsequent updates to Dario Member Data to Sanofi as determined by the JSC but at least every [**]thereafter.

5.1.1 Anonymization; Tokenization or De-Identification.  Dario Member Data licensed to Sanofi will be Anonymized Data, Tokenized or De-identified in a manner consistent with industry practice prior to being transferred or made accessible to Sanofi. The Parties acknowledge and warrant that no direct or indirect access to Personal Data of Enrolled Users will be granted to Sanofi.

5.1.2 Dario Member Data (including, for the removal of doubt, Dario Member Data) shall constitute Confidential Information of Dario for all purposes hereunder.  As a result, pursuant to Section 9, Sanofi may not disclose Dario Member Data to any Third Party during the Term without Dario’s prior written consent, which shall not be unreasonably withheld, conditioned or delayed, and Sanofi may not use Dario Member Data in a way that is competitive with Dario, and may not use or disclose Dario Member Data following the Term (except Sanofi may use and disclose Dario Member Data that is included within an approved Evidence Generation Plan).

5.2 Derivative Works.  Sanofi shall remain free, at all times, to use the Derivative Works, including the results and evidence generated under any Market Research,

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Prospective or Retrospective Real-World Study, for any lawful purpose, including to comply with mandatory publication of the results of such Studies, in accordance with Applicable Laws, provided, however that (i) Sanofi may not share those results and evidence nor use, disclose or leverage Derivative Works in a collaboration with a Dario Competitor Company and (ii) Derivative Works will be solely owned by Sanofi.

5.3 Trademark and Content License.  Subject to Section 3.4, Dario hereby grants to Sanofi an irrevocable, royalty-free non-exclusive non-transferable right and license (except in connection with a permitted assignment of this Agreement) to use Dario’s trademark and content provided by Dario in the Territory solely to the extent required to fulfill its obligations under this Agreement.  All goodwill created by Sanofi’s use of Dario trademarks and content, and all right, title and interest in and to such trademarks and content, shall belong solely to Dario, and Sanofi hereby assigns to Dario all such goodwill and rights.  Neither Party shall have any right to use any trademark of the other Party in connection with its activities under the except as expressly authorized in writing by the other Party or as otherwise permitted herein.

5.4 Licenses Granted to Dario.  Subject to the terms and conditions of this Agreement, Sanofi hereby grants to Dario:

5.4.1 a limited, non-exclusive, non-transferrable license under Sanofi Background IP and Sanofi Foreground IP reasonably related to any Development Plan during the Term and in the Territory for purpose of creating and promoting the Enhanced Solution;

5.4.2 a limited, non-exclusive, non-transferable and non-sublicensable, perpetual license to use and disclose Derivative Works for business purposes, including for purposes of promoting Dario’s products and services, provided however that  Dario may not share the results and evidence generated by Sanofi pursuant to the Evidence Generation Plans with any Third Party, nor leverage any Derivative Works in a collaboration with an Excluded Company; and

5.4.3 a non-exclusive, perpetual, non-transferrable, worldwide, license to use Sanofi Foreground IP and Sanofi Background IP that is incorporated into an Enhanced Solution under a Development Plan for the purposes of developing, supporting, maintaining and commercializing such Enhanced Solution.

5.5 Both Parties are permitted to use unpublished results and unpublished evidence generated by the Evidence Generation Plans for internal business purposes, provided that (i) Sanofi may not share the unpublished results and unpublished evidence in a collaboration with a Dario Competitor Company and (ii) Dario may not share the results and evidence in a collaboration with a Sanofi Excluded Company. Sanofi shall be responsible for the content of the Evidence Generation Plan and the costs of the evidence generation activities under the Evidence Generation Plan (as approved by the JSC).

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5.6 No Implied Licenses.  Except as expressly set forth herein, neither Party shall acquire any license or other Intellectual Property interest, by implication or otherwise, under or to any Trademarks, Patents, know-how, or other Intellectual Property rights controlled by the other Party.

6. EXCLUSIVITY AND RIGHT OF FIRST NEGOTIATION

6.1 Dario Preferred Partnership.

6.1.1 During the Term, Dario will work with Sanofi, in the Territory and within the Therapeutic Areas, as follows:

(a) with Sanofi to co-promote the Solution (except Dario will not promote the Solution to any Sanofi Excluded Companies), and

(i) For clarity, DARIO may sell the Solution or Enhanced Solution to any Sanofi Excluded Company within the Employer Targeted Channel solely for the benefit of such company’s own employees.

(b) with Sanofi as its exclusive partner to co-promote the Enhanced Solutions in the Targeted Channels (except that such exclusivity shall not apply to Dario’s downstream relationships with its distributors and value added resellers).

6.1.2 Dario will work exclusively with Sanofi, in the Territory and within the Therapeutic Areas, to develop the Enhanced Solutions.

(a) For clarity, and subject to Section 6.3, Dario reserves the right to develop, market and promote the Solution (i) outside of the Territory and (ii) with any parties other than Sanofi Excluded Companies.

(b) The Enhanced Solutions may not be promoted or commercialized by either Party outside the Territory or in the Excluded Channel absent their mutual written agreement.

6.2 Sanofi Preferred Partnership.

6.2.1 Sanofi’s employees forming the North America market access - diabetes group, which are responsible for Health Plan payer account management of Sanofi therapeutic Diabetes products in the Territory (the “Sanofi North America Market Access Diabetes Group”) will not promote, co-promote, license or sell, in the Therapeutic Areas, through the Targeted Channels and in the Territory, digital products or services made available by or owned or controlled by Dario Competitor Companies that are substantially similar to the Solution in terms of target patient population and functionalities (a “Competing Solution”).

6.2.2 For clarity, but without limiting any other provision of this Agreement and subject to the other provisions of this Agreement, the Sanofi North America

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Market Access Diabetes Group may promote, co-promote, license or sell, in the Therapeutic Areas, through the Targeted Channels and in the Territory, a Competing Solution owned by Sanofi as a result of internal development activities or of a Change of Control (including a Change of Control targeting a Dario Competitor Company).

6.3 Right of First Negotiation.

6.3.1 Option. If at any time during the Term, and subject to Section 6.3.2, Dario

(a) desires to expand the co-promotion of the Solution and/or Enhanced Solutions, as applicable, in geographies beyond the Territory, or

(b) desires to develop, with a Third Party, new applications, that are not Unavailable Products, in any therapeutic area within the Territory other than the Therapeutic Areas, or

(c) when acting in its role at the JSC, votes against the addition of a new feature or function (proposed by either Party) to a Development Plan, and then proceeds to develop such new feature or function with a Third Party,

(each activities described in (a) through (c) is an “Optioned Activity”) Dario hereby grants Sanofi the option to collaborate with Dario to conduct such Optioned Activity in priority to any Third Party (the “Option”). Dario must notify Sanofi in writing prior to beginning negotiations with any Third Party regarding an Optioned Activity (“Option Notice”).  If Sanofi elects to exercise the Option, it shall deliver a notice in writing to Dario within ten (10) Business Days, unless otherwise agreed by the Parties, after receipt of the Option Notice (“Option Exercise Notice”), in which case the Parties shall negotiate in good faith, an agreement governing each Party’s responsibilities, rights and obligations in relation to the subject matter of the Option Notice for a period of sixty (60) days, unless otherwise agreed by the Parties, from the date of receipt by Dario of the Option Exercise Notice (“Negotiation Period”). Dario is prohibited from negotiating with Third Parties during the Negotiation Period.  Dario may perform the Optioned Activity if Sanofi does not deliver its Option Exercise Notice within the foregoing ten (10) Business Day period, unless otherwise agreed by the Parties, or the Parties do not conclude an agreement with respect to the applicable Optioned Activity within the foregoing sixty (60) day period, unless otherwise agreed by the Parties.

6.3.2 Exclusions. The foregoing Option does not apply to:

(1) a Change of Control of Dario or (2) if Dario commercializes the Solution for an Existing Customer within the Territory for the use by such Existing Customer’s ex-Territory affiliate, and not as a broader market entry into such ex-Territory or (3) Dario’s acquisition of the business or assets of a Third Party. For clarity, during the Negotiation Period, Dario shall not enter into or, as the case may be, shall cease any discussion or negotiation nor sign any

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transaction with a Third Party regarding the Optioned Activity that is the subject of the negotiations.

6.3.3 Disclosure Obligations. From the date of the Option Notice and through the Negotiation Period, in order to assist Sanofi in the evaluation of the opportunity to expand the co-promotion or development, Sanofi may reasonably request information and data from Dario in order to evaluate the applicable Optioned Activity, in which case Dario will use commercially reasonable efforts to promptly provide any information and documentation that Dario controls or possesses (including, inter alia, medical, regulatory, clinical and market access related information and documentation) as Sanofi may reasonably request, within five (5) Business Days of each written request in order to evaluate the applicable Optioned Activity. The Negotiation Period may be extended by up to fifteen (15) days from Dario’s last delivery of such information and documentation in response to Sanofi’s request received during the initial thirty (30) day period. Sanofi may reasonably request additional information and data from Dario during the second half of the Negotiation Period, which shall not further toll the Negotiation Period.

7. PAYMENTS AND RECORDS

7.1 Preferred Partnership Payments.

7.1.1 Preferred Partner Fees.  Sanofi will pay Dario $[**]as consideration for the preferred partnership status.  This preferred status payment accrues in full as of the Effective Date, and will be paid in installments by Sanofi as follows:

(i) an upfront payment of $[**] upon the first delivery of market access team training, Dario Member Data and marketing materials support, but in no event will this be paid later than 30 days following Sanofi’s receipt of the invoice; and

(ii)  upon completion of a second market access team training, delivery of supporting marketing materials, Dario Member Data and acceptance thereof by Sanofi (such acceptance not to be unreasonably withheld, conditioned or delayed), at the beginning of Year Two, Dario will issue an invoice to Sanofi for the second lump sum payment of $[**]. In no event will this be paid later than 60 days following Sanofi’s receipt of the invoice.

7.2 Enhanced Solution Development Service Payments. Sanofi will pay Dario the development costs for the Enhanced Solutions as defined in the Payment Schedules of the approved Development Plans.  All Development Plans shall be approved for the Calendar Year ahead of the year in which they are kicked off (with the exception of Year 1) unless otherwise agreed by the JSC. The Development Plan for each Calendar Year  will include milestone payments that will equal the total development cost payments for such Calendar Year, and the deliverables under each Development Plan shall be deliverable by Dario in the same Calendar Year of the corresponding Development Plan.

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No.	Development Milestone Event	Total Development Cost Payments
1	Calendar Year 1 Development Plan	$[**]
2	Calendar Year 2 Development Plan	$[**]
3	Calendar Year 3 Development Plan	$[**]
4	Calendar Year 4 Development Plan	$[**]
5	Calendar Year 5 Development Plan	$[**]

7.2.1 For Calendar Year 1, Sanofi shall pay Dario an initial $[**] upon JSC approval of the Calendar Year 1 Development Plan, which shall be approved within 120 days of the Effective Date, and such approval constitutes the first deliverable under such Development Plan. The Calendar Year 1 Development Plan shall be designed such that all deliverables will be completed by the end of Calendar Year 1.  When Dario completes all deliverables defined in this first Development plan, Sanofi shall pay Dario the balance of money due in the Development Plan.

7.2.2 For Calendar Year Two, Sanofi shall pay Dario $[**], within 60 days of receipt of an invoice from Dario, upon the approval of the Calendar Year 2 Development Plan by the JSC.  When Dario completes all deliverables defined in the Calendar year 2 Development Plan, Sanofi shall pay Dario the balance of money due in the Development Plan.

7.2.3 For Years 3, 4 and 5, Sanofi shall pay Dario $[**] upon the JSC’s approval of the corresponding Development Plans. When Dario completes all deliverables defined in any given Development Plan, Sanofi shall pay Dario the balance of money due in the Development Plan.

7.2.4 In no event shall the foregoing Development Plan milestone payments exceed $[**] in Calendar Year 1 and Year 2 and exceed $[**] in each of Year 3, Year 4, and Year 5, respectively.  No Development milestone payment will be made on a new Development Plan until the previous year’s Development Plans are completed. For clarity, the maximum aggregate amount of all development milestone payments under all Development Plans payable by Sanofi pursuant to this Section 7.2 is $[**].

7.3 Contingent Payments.

7.3.1 Once Dario has demonstrated to Sanofi that it has achieved a Contingent Milestone for the Solution or Enhanced Solution as specified below then Dario will issue an invoice to Sanofi for the corresponding Contingent Milestone Payment and, subject to the terms and conditions of this Agreement, Sanofi will pay Dario the invoiced amount within 60 days after receipt of such invoice:

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Contingent Milestones	Contingent Milestone Payment
Cumulative Net Sales reach [**] USD and the Enrollment Rate surpasses 25% (“First Contingent Payment”)	$[**]
Cumulative Net Sales reach one hundred and [**] USD and the Enrollment Rate surpasses 25% (“Second Contingent Payment”)	$[**]

7.3.2 Both conditions described in a Contingent Milestone must be satisfied simultaneously for a Contingent Milestone to be met. Each Contingent Milestone Payment in this Section 7.3 is due only once and will be payable only upon the first achievement of the corresponding Contingent Milestone event.  For clarity, the maximum aggregate amount of Contingent Milestone payments payable by Sanofi pursuant to this Section 7.3 is [**] USD.

7.4 Revenue Share.

7.4.1 Solution in Health Plan Channel Accounts. In consideration for the Introductions made by Sanofi, and subject to the terms and conditions of this Agreement, during the Term, Dario will pay to Sanofi a percentage of Net Sales of the Solution within the Health Plan Channel (regardless of Sanofi Introduction to account), where the percentage is identified in the table below (such percentage of Net Sales is the “Revenue Share Rate”).  “Qualifying Health Plan Accounts” means accounts in the Health Plan Channel that were contracted pursuant to an Introduction.

Cumulative Net Sales From Qualifying Health Plan Accounts	% of Net Sales within Health Plan Channel
$[**] - $[**]	[**]%
>$[**] - $[**]	[**]%
>$[**]	[**]%

7.4.1.1 Revenue Share Stoppage. From the start of Year 3, if Net Sales of the Solution from Qualifying Health Plan Accounts is less than [**]% of Net Sales of the Solution in the Health Plan Channel during any given  period of two (2) consecutive Calendar Quarters, excluding accounts (i) signed prior to the Effective Date or (ii) listed in the Advanced Discussion List, then Dario’s obligation to pay fees on Net Sales of the Solution in the Health Plan Channel shall be suspended until Net Sales of the Solution from Qualifying Health Plan Accounts exceed [**]% of Net Sales of the Solution in the Health Plan Channel during any given period of two (2) consecutive Calendar Quarters, which shall be calculated on rolling six (6) month intervals for the preceding two (2) consecutive Calendar Quarters (“Health Plan

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Revenue Share Stoppage”).  To the extent permitted by Qualifying Health Plan Accounts, Dario will promote the Solution to Sanofi Qualifying Health Plan Accounts with a level of effort at least equal to the level of effort Dario employs to promote the Solution to any other account in the Health Plan Channel in the Territory.

7.4.2 Solution in Employer Channel Accounts. In consideration for the Introductions made by Sanofi and other adequate consideration described herein, and subject to the terms and conditions of this Agreement, during the Term, Dario will pay to Sanofi [**]% of Net Sales of the Solution from all accounts in the Employer Channel that were subject to an Introduction, including any Net Sales from any downstream employer accounts that purchase or license the Solution from such accounts (i.e., prescription benefit management’s employer accounts).

7.4.3 Enhanced Solution(s) in Any Channel. Dario will pay Sanofi [**]% of Net Sales of the Enhanced Solution in any channel. Such payments will survive the Term and/or termination of the Agreement until such time as the Enhanced Solution is no longer available to patients, provided that the Agreement is not terminated for Sanofi’s material breach by Dario, in which case all such payments shall cease.

7.4.4 Bundled Pricing.  In the case of an Enhanced Solution and the Solution sold for a bundled price, then, notwithstanding Sections 7.4.1 through 7.4.3, the Revenue Share Rate shall be as follows:

i. [**]% of the Net Sales from the number of Enrolled Users using both the Enhanced Solution and Solution in any given calendar month;

ii. [**]% of the Net Sales from the number of Enrolled Users using only the Enhanced Solution in any given calendar month; and

iii. the applicable percentage of the Net Sales in accordance with Section 7.4.1 or Section 7.4.2 (as applicable), and from the number of Enrolled Users using only the Solution as calculated in the relevant sections above, in any given calendar month.

Illustrative Example - Health Plan Channel Bundle Pricing

Health Plan A - 1000 Enrolled Users at $[**] per calendar month generating $[**] revenue per month

600 Enrolled Users are using both the Solution and the Enhanced Solution

100 Enrolled Users are using only the Enhanced Solution.

300 Enrolled Users are using only the Solution

Sanofi Revenue Share is then calculated as

[**]

NOTE: [**] (see Section 7.4.1)

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7.5 Equity Credits.

7.5.1 In the event that Sanofi invests at least [**] USD in Dario common stock at the mutually agreed to equity price by August 31, 2022, unless such date is extended by Dario, and subject to other terms as agreed by the Parties, then Sanofi’s payment obligations will be adjusted as such:

7.5.1.1 Dario will be responsible for Sanofi’s financial commitments as defined in the Payment Schedules of the Development Plans for up to [**] USD in each of Year 4, and Year 5 respectively; and

7.5.1.2 Sanofi will not pay the Second Contingent Payment.

7.5.2 In the event that Sanofi invests an additional [**] USD to the amounts invested pursuant to Section 7.5.1 in Dario by August 31, 2022, unless such date is extended by Dario, then Sanofi’s payment obligations will be adjusted as such:

7.5.2.1 Dario will be responsible for Sanofi’s financial commitments as defined in the Payment Schedule of the Development Plan for up to [**] USD in Year 3.

7.5.2.2 Sanofi will not pay the First Contingent Payment.

7.6 Currency; Payment Terms; Exchange Rate.  All payments under this Agreement shall be made in Dollars.  Any Net Sales incurred in a currency other than Dollars shall be converted to the Dollar equivalent using the paying Party’s then-current standard exchange rate methodology as applied in its external reporting for the conversion of foreign currency sales into Dollars. Each Party will deliver invoices to the other Party for all payments owed under this Agreement except for amounts payable by Dario to Sanofi hereunder.  Each Party will make all payments owed within 60 days after the date on which the Party receives an invoice for any owed amount, except where a different timeframe is expressly provided in another Section of this Agreement.  All payments to be made by a Party to the other Party under this Agreement shall be made by bank wire transfer in immediately available funds to a bank account designated by written notice from the Party that receives the payment or by other agreed electronic payment method.  Conversion of reimbursable costs incurred hereunder that are recorded in local currencies to Dollars by a Party or its Affiliates shall be performed in a manner consistent with its normal practices used to prepare its audited financial statements for internal and external reporting purposes.

7.6.1 Late Payments.

7.6.1.1 Interest on Late Payments.  If a Party does not receive payment of any undisputed sum due to it on or before the due date therefor, then it shall notify the paying Party.  The paying Party shall pay interest on any undisputed late payments (before and after any judgment) at

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an annual rate (but with interest accruing on a daily basis) of the lesser of (a) 1% per month, or (b) the maximum rate permitted by Applicable Law.

7.6.1.2 Right to Offset.  Sanofi will have the right, exercisable thirty (30) days following notice, to offset any amount owed by Dario to Sanofi under this Agreement, which amount or related obligation or alleged breach is reasonably described in such notice and is not contested by Dario in good faith as set forth in a responsive notice sent within thirty (30) days of receipt of Sanofi’s notice, including but not limited to in connection with any breach or indemnification obligation by Dario pursuant to Article 11, against any undisputed amounts owed by Sanofi to Dario under this Agreement.  Such offsets will be in addition to any other rights or remedies available under this Agreement and Applicable Law.

7.7 Taxes.

7.7.1 General.  The Party receiving each payment under this Agreement will bear any and all taxes levied on account of any such payment received under this Agreement. In the event that the paying Party is required, under Applicable Law, to withhold any deduction or tax from any payment due to the Party receiving payment under this Agreement, such amount will be deducted from the payment to be made by the paying Party, paid to the proper taxing authority, and the paying Party will notify the Party receiving payment and upon that Party’s request promptly provide that Party with copies of any tax certificate or other documentation evidencing such withholding.  Each Party agrees to cooperate with the other Party in claiming exemptions from such deductions or withholdings under any agreement or treaty from time to time in effect.

7.7.2 Value Added Tax.  Notwithstanding anything contained in Section 7.7.1, this Section 7.7.2 will apply with respect to VAT.  All Payments are exclusive of VAT.  If any VAT is chargeable in respect of any Payments, Sanofi will pay VAT at the applicable rate in respect of any such Payments following the receipt of a VAT invoice in the appropriate form issued by Dario in respect of those Payments, such VAT to be payable on the later of the due date of the payment of the Payments to which such VAT relates and  60 days after the receipt by Sanofi of the applicable invoice relating to that VAT payment.

7.8 Payment Reports.

7.8.1 Commencing as of the Effective Date, for so long as any revenue share term remains in effect for the Solution or Enhanced Solution(s), Dario will, with respect to each Calendar Quarter, provide a written report to Sanofi (a “Fee Report”), showing the following information in respect of such Calendar Quarter:

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(a) summary reporting of the Health Plan Channel and applicable Employer Channel accounts,

(b) aggregate Net Sales of the Solution and each Enhanced Solution and the fees due thereon for such Calendar Quarter;

(c) the withholding taxes, if any, required by law to be deducted in respect of such fees; and

(d) Statements shall include a reasonable level of detail to enable Sanofi to understand how the fees are being calculated by channel type, by Solution or Enhanced Solution and the measure of Cumulative Net Sales.

7.8.2 Fee payments and the supporting Fee Reports will be due within 60 days following the end of the Calendar Quarter to which such Fee Report relates. Dario will keep complete and accurate records in sufficient detail to properly reflect all gross sales and Net Sales and to enable the fees payable hereunder to be determined.

7.9 Audits.

7.9.1 Upon the written request of Sanofi and with at least 30 days’ prior written notice, but not more than once in any Calendar Year, Dario will permit an independent certified public accounting firm of internationally recognized standing, selected by Sanofi and reasonably acceptable to Dario, at Sanofi’s sole cost and expense, to have access during normal business hours at such location as Dario’s financial records are kept to any of the records of Dario as reasonably required to verify the accuracy of any payments or receipts due hereunder.  Such accountants may audit only records that are relevant for such audit scope and any financial period during the Term and continuing after expiration or termination until such time as payments for Net Sales are no longer due to Sanofi, and no period may be audited more than once.  The accounting firm will disclose to Sanofi only whether the payments or receipts were correct or not, and the specific details concerning any discrepancies and such information will be shared at the same time with Dario.  No other information obtained by such accountants will be shared with Sanofi.

7.9.2 If such accounting firm concludes that any payments were owed but not paid to Sanofi, Dario will make such additional payments  within 60 days following the date Sanofi delivers to Dario such accounting firm’s written report so concluding.  The fees charged by such accounting firm will be paid by Sanofi; except that if the audit discloses that the revenue share fees payable by Dario for the audited period are more than 105% of the payments  actually paid for such period, then Dario will pay the reasonable fees and expenses charged by such accounting firm. If such accounting firm concludes that the payments paid were more than what was owed during such period, Sanofi will refund or issue to Dario a credit note for the overpayments within 30 days following the date Sanofi receives such accounting firm’s written report so concluding.

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7.9.3 Confidential Financial Information.  The Parties will treat all financial information subject to review under this Article 7 as Confidential Information of such Party as set forth in Article 9, and will cause its accounting firm to retain all such financial information in confidence under terms substantially similar to those set forth in Article 9 and with respect to each inspection, the independent accounting firm will be obliged to execute for each Party’s benefit a reasonable confidentiality agreement prior to commencing any such inspection.

8. REPRESENTATIONS, WARRANTIES AND COVENANTS

8.1 Mutual Representations and Warranties.  Each Party represents, warrants and covenants to the other that:

8.1.1 it has the requisite power and full authority to enter into this Agreement, and such Party’s execution, delivery of, actions relating to and performance under this Agreement have been duly authorized by such Party and do not, and do not and will not violate or conflict with any charter, by-law, law (including but not limited to applicable privacy legislation), contract, including, but not limited to, agreements with Third Parties, permit or obligation applicable to such Party;

8.1.2 such Party is the owner of, or otherwise has all of the rights necessary to use (and, as applicable, permit the other Party to use), all Intellectual Property that it may from time to time make available to the other Party in connection with fulfilling its obligations under this Agreement;

8.1.3 such Party shall perform its obligations under this Agreement in accordance with Applicable Law, and has obtained all necessary consents, approvals and authorizations of all governmental authorities and other persons or entities required to be obtained by it in connection with this Agreement;

8.1.4 nothing herein is in exchange for any explicit or implicit agreement or understanding that either Party purchase, lease, order, prescribe, or recommend or otherwise arrange for, or provide preferential formulary or other status for, the use of any products of the other Party or its Affiliates;

8.1.5 it will perform all obligations and undertakings set forth herein in a good and workmanlike manner and in accordance with generally accepted industry practices; and

8.2 (a) Neither it nor any of its Affiliates has been debarred or is subject to debarment pursuant to Section 306 of the FFDCA or analogous provisions of Applicable Law outside the United States or listed on any excluded list, and (b) neither it nor any of its Affiliates has, to its knowledge, used in any capacity, in connection with the activities to be performed under this Agreement, any individual or entity that has been debarred pursuant to Section 306 of the FFDCA or analogous provisions of Applicable Law outside the United States, or that is the subject of

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a conviction described in such Section or analogous provisions of Applicable Law outside the United States, or listed on any excluded list.

8.3 such Party will maintain throughout the Term all permits, licenses, registrations and other forms of authorizations and approvals from any Governmental Authority, necessary or required to be obtained or maintained by such Party in order for such Party to execute and deliver this Agreement and to perform its obligations hereunder in a manner which complies with all Applicable Law.

8.4 Each Party acknowledges that no other consideration has been provided by such Party or its Affiliates in connection with this Agreement to the other Party, and that nothing herein is in exchange for any explicit or implicit agreement or understanding that the other Party purchase, lease, order, prescribe, or recommend or otherwise arrange for, or provide preferential status for, the use of any products of such Party or its Affiliates.

8.5 In the event either Party receives any communication from a regulatory or other governmental authority, whether verbally or in writing, regarding Dario’s or Sanofi’s co-promotion of the Solution or Enhanced Solutions, including, without limitation, warning letters, untitled letters or other notices or inquiries, such Party will immediately notify the other Party in writing of such communication and will provide copies of all follow up correspondence from the regulatory or governmental authority as relates to the co-promotion issue (with appropriate redaction of any commercial Confidential Information not relating to the co-promotion).  In addition, the Party receiving such inquiry or communication agrees to provide the other Party an opportunity to review and comment on the receiving Party’s proposed response to the regulatory or governmental authority, but only as relates to co-promotion matters.

8.6 Such Party will perform this Agreement in accordance with Applicable Law.

8.7 Dario Representations and Warranties. Dario represents, warrants and covenants to Sanofi that:

8.7.1 it has and will maintain all regulatory clearances, approvals, licenses, and other permits necessary for development and marketing of the Solution (including any future versions thereof);

8.7.2 there are no ongoing or pending warning letters, enforcement letters, inspections, 483s, investigations, or other action from FDA or other authority relating to the Solution, and Dario is not aware of information that could give rise to such actions;

8.7.3 the Solution and Enhanced Solutions is, was and will be developed, investigated, manufactured, labeled, promoted, marketed, etc. by Dario in accordance with all Applicable Laws; and

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8.7.4 the Solution and Enhanced Solutions will be developed using industry practice and in accordance with all Applicable Laws and regulations, including, but not limited to applicable privacy legislation.

8.8 Data Protection. The Parties will process Personal Data pursuant the Agreement, in accordance with applicable Data Protection Law. Insofar, the Parties undertake to seek and obtain any authorization and/or approval prior any processing of Personal Data.

8.8.1 Dario herewith represents and warrants that the Enrolled Users have received prior information notice and have given their consent.

8.8.2 Dario herewith represents and warrants that no direct or indirect access to Personal Data will be granted to Sanofi

8.8.3 Dario herewith represents and warrants that the Personal Data will be provided to Sanofi’s duly authorized Third Parties will be qualified as De-Identified Data, Anonymized Data and/or subject to prior Tokenization. Dario undertakes not to disclose or otherwise make available to Sanofi any Personal Data, De-Identified and/or subject to Tokenization to Sanofi or give access to Sanofi to any code allowing identification of Enrolled Users.

8.8.4 Dario undertakes to provide Sanofi with all cooperation and assistance reasonably expected to enable it to comply with all applicable obligations to pursuant Study to the extent set forth in the Evidence Generation Plan.

8.8.5 Further, Sanofi herewith represents and warrants that it will not undertake any actions to determine the personality or personal data of Enrolled Users, or to get access to any code allowing identification of Enrolled Users.

8.8.6 For the sole purpose of carrying out the Agreement, the Parties will process Personal Data. Therefore, such processing shall be governed by a data processing agreement (DPA) that sets out the terms and conditions of the processing activities. The Parties agree to execute this specific agreement within twenty (20) days of the Effective Date. The DPA will form a part of the Agreement.

8.8.7 Each Party will process personal data relating to the other Party and its staff (such as the name, professional contact details, position and role in connection with this Agreement; jointly referred to as the “Contractual Personal Data”) to manage this Agreement and to comply with any applicable Data Protection Law requirements.

8.8.8 In this regard, the Parties will be deemed as independent controllers and will be responsible for their own processing of Contractual Personal Data, which shall be carried out in compliance with applicable laws. In particular, the Contractual Personal Data will be kept as long as the contractual rights and duties arising from the Agreement and applicable regulatory rights and duties could be enforced by or against a Party. Only for the above-mentioned

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purposes, each Party may store the Contractual Personal Data in centralized databases and disclose them to its Affiliates or Third Parties in other countries. Each Party’s staff shall communicate any requests in relation to this Section to the Data Protection Officer of the Party concerned.

8.9 Payments and Commitments.  In performing the activities contemplated by this Agreement, neither Party shall make any payment, either directly or indirectly, of money or other assets (hereinafter collectively referred as a “Payment”), to government or political party officials, officials of international public organizations, candidates for public office, or representatives of other businesses or persons acting on behalf of any of the foregoing (hereinafter collectively referred as “Officials”) where such Payment would constitute violation of Applicable Law.  In addition, neither Party shall make any Payment either directly or indirectly to Officials if such Payment is for the purpose of unlawfully influencing decisions or actions with respect to the subject matter of this Agreement.  No employee of either Party or their Affiliates shall have authority to give any direction, either written or oral, relating to the making of any commitment by such Party or its agents to any Third Party in violation of terms of this Section 8.9.

8.10 Import/Export Controls.  The Parties agree that no material or information relating to this Agreement will be exported, re-exported, transferred or disclosed contrary to the Applicable Law and regulations of the United States, or to any country, entity or other Party that is ineligible to receive such items under any Applicable Law, including all applicable U.S. Commerce and Treasury law and regulations.

8.11 EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, NEITHER PARTY MAKES ANY, AND EACH PARTY HEREBY SPECIFICALLY DISCLAIMS ANY REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, REGARDING ITS PERFORMANCE UNDER AND ARRANGEMENTS CONTEMPLATED BY THIS AGREEMENT, INCLUDING ANY IMPLIED WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT AND IMPLIED WARRANTIES ARISING FROM COURSE OF DEALING OR COURSE OF PERFORMANCE.

9. CONFIDENTIALITY

9.1 Confidential Information.  Each Party (the “Receiving Party”) acknowledges and agrees that it will have access to Confidential Information of the other Party (the “Disclosing Party”) in connection with the performance of its obligations hereunder.  For purposes of this Agreement, “Confidential Information” shall mean all confidential or proprietary information, property, or material of the Disclosing Party and any derivatives, portions, or copies thereof, disclosed or made available by or on behalf of the Disclosing Party to the Receiving Party in connection with this Agreement.  Other than as provided in Section 9.3, the Receiving Party shall keep all Confidential Information in strict confidence and

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shall not, without the Disclosing Party’s prior consent, disclose, publish, disseminate or otherwise make available, directly or indirectly, any item of the Disclosing Party’s Confidential Information to anyone at any time during or for seven (7) years after the expiration or earlier termination of this Agreement, or for such longer time period that any such information constitutes a trade secret of the Disclosing Party or is PHI governed by Applicable Law.  The Receiving Party shall use the Disclosing Party’s Confidential Information only in connection with the performance of its obligations or exercise of its rights under this Agreement.

9.2 Exceptions.  Notwithstanding the foregoing, Confidential Information shall not include information which the Receiving Party can prove: (i) is or becomes publicly known through no wrongful act of the Receiving Party or any Affiliate of the Receiving Party; (ii) is rightfully received by the Receiving Party from a Third Party without restriction on disclosure; (iii) is independently developed by the Receiving Party or any of its Affiliates without access to or use of the Disclosing Party’s Confidential Information; or (iv) is approved by the Disclosing Party for unrestricted publication.

9.3 Permitted Disclosures.  Except with respect to PHI, the use and disclosure of which shall be governed by Applicable Law, notwithstanding the obligations set forth above, each Party may disclose Confidential Information of the other Party to any of its employees, agents, attorneys, financial advisors or consultants who need to receive the Confidential Information in order for the Receiving Party to perform its responsibilities and obligations related to this Agreement or to exercise a right granted under this Agreement, provided that each Party shall ensure that, prior to disclosing the Confidential Information, each person or entity to whom the Confidential Information is to be disclosed is made aware that such Confidential Information is confidential to the Disclosing Party, and agrees to adhere to terms of confidentiality that are no less burdensome than those set forth in this Section 9.  If the Receiving Party is required to disclose the Disclosing Party’s Confidential Information pursuant to any judicial or administrative process or order or requirement under Applicable Law, the Receiving Party shall, as soon as practicable and prior to any such disclosure, give the Disclosing Party sufficient notice and reasonable assistance to contest such requirement or order.  The Receiving Party agrees to cooperate fully with the Disclosing Party in seeking any protective order at the Disclosing Party’s request and expense.  If the Receiving Party is required to disclose the Disclosing Party’s Confidential Information pursuant to such process, the Receiving Party shall only disclose such Confidential Information that is required by such process.

9.4 Nondisclosure of Terms.  Each Party agrees that it will not disclose the terms of this Agreement to any Third Party without the prior consent of the other Party, to the extent the terms of this Agreement have not been publicly disclosed by prior agreement of the Parties or as otherwise permitted herein. If either Party is required to disclose the terms of this Agreement in submissions to the U.S. Securities and Exchange Commission or other equivalent governmental

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authority, it will (a) consult with the other Party as to which information to redact from the copy of this Agreement that will be disclosed; and (b) to the extent permitted under Applicable Law, redact all sensitive, material and non-public information, from such copy.

9.5 Retained Rights.  As between the Parties, each Party shall retain ownership of its Confidential Information made available to the other Party in the course of fulfilling its obligations under this Agreement.  Nothing in this Agreement is intended to transfer ownership of either Party’s Confidential Information to the other Party.

9.6 Upon written request or expiration or termination of this Agreement, a Party shall either return to the other Party or destroy Confidential Information of the other Party (including hard and electronic copies thereof); provided, however, that a Party is not required to destroy electronic copies of the Confidential Information stored in its electronic archive systems, and may retain one (1) copy of such Confidential Information for purpose of complying with its obligations under this Agreement or under Applicable Law, but shall not otherwise use or rely on such Confidential Information.

10. INTELLECTUAL PROPERTY

10.1 Disclosure of Inventions. Dario will disclose to Sanofi any patentable components of the Enhanced Solutions promptly after becoming aware thereof.

10.2 Ownership of Intellectual Property.

10.2.1 Foreground IP. Subject to the licenses granted in Article 5, as between the Parties:

10.2.1.1Dario shall own all right, title and interest in and to any Dario Foreground IP and Dario Data;

10.2.1.2Sanofi will own all right, title and interest in and to any Sanofi Foreground IP and Sanofi Data;

10.2.1.3Ownership of Other Foreground IP will be determined according to the Applicable Law.

10.2.2 Subject to the licenses granted in Article 5, Sanofi will retain ownership of the Sanofi Background IP and Dario will retain ownership of the Dario Background IP.

11. INDEMNIFICATION; LIMITATION OF LIABILITY; INSURANCE

11.1 Indemnity.

11.1.1 Each Party shall indemnify, defend and hold harmless the other Party, its Affiliates, and its and their respective directors, officers, shareholders,

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members, managers and employees (“Indemnified Parties”) from and against any and all Third Party claims, actions, causes of action, demands, or suit brought against any of the Indemnified Parties (collectively “Claims”), and all related liabilities, losses, damages, judgments, costs and expenses, including reasonable attorneys’ fees, costs and interest (collectively, “Losses”), to the extent arising out of or relating to: (i)any gross negligence or willful misconduct of the indemnifying Party in connection with this Agreement, or (ii) breach or alleged breach by the indemnifying Party of its obligations set forth in this Agreement.

11.1.2 Additionally, Dario shall indemnify, defend and hold harmless Sanofi, its Affiliates, and its and their respective directors, officers, shareholders, members, managers and employees from and against any and all Third Party Claims and related Losses arising out of or relating to such Third Party’s allegation that (i) the Solution or an Enhanced Solution infringes or misappropriates or violates such Third Party’s rights (including but not limited to Intellectual Property rights), or (ii) such Third Party suffered personal injury or property damage caused by such Third Party’s use of the Solution or an Enhanced Solution, provided, however, that neither Party shall have any obligation under Section 11.1 to indemnify the other Party for such Claims or Losses to the extent that i) the other Party is required to indemnify for such Claims, ii) in the case of Dario as the indemnifying Party, Claims relate solely to the Sanofi Data or Sanofi Background IP as provided to Dario as stand-alone items, and not Claims resulting from the incorporation or integration of such Sanofi Data or Sanofi Background IP into the Enhanced Solution or otherwise used under a Development Plan, iii) in the case of Sanofi as the indemnifying Party, the Claims relate to Dario Data, Dario Member Data or Dario Background IP.

11.2 Limitation of Liability.  NOTWITHSTANDING ANY PROVISION IN THIS AGREEMENT TO THE CONTRARY AND WITH THE EXCEPTION OF A BREACH OF SECTION 9 OR SECTION 10, A PARTY’S GROSS NEGLIGENCE, FRAUD OR INTENTIONAL OR WILLFUL MISCONDUCT, (i) NEITHER PARTY HERETO SHALL BE LIABLE HEREUNDER FOR ANY CONSEQUENTIAL, PUNITIVE, INDIRECT, INCIDENTAL OR SPECIAL DAMAGES OR LOST PROFITS UNLESS SUCH DAMAGES OR LOST PROFITS ARE PAYABLE TO A THIRD PARTY IN CONNECTION WITH SUCH PARTY’S INDEMNIFICATION OBLIGATIONS SET FORTH IN SECTION 11.1; AND (ii) EXCEPT WITH REGARD TO THEIR INDEMNIFICATION OBLIGATIONS SET FORTH IN SECTION 11.1, ABOVE, EACH PARTY’S TOTAL, AGGREGATE LIABILITY TO THE OTHER PARTY FOR ANY CLAIM HEREUNDER SHALL NOT EXCEED  TWO TIMES (2X) THE AMOUNTS PAID BY SANOFI TO DARIO UNDER SECTION 7.1, SECTION 7.2 AND SECTION 7.3 DURING THE TWELVE (12) MONTHS IMMEDIATELY PRECEDING THE CAUSE OF ACTION.  Amounts accrued and payable by one Party to the other hereunder are not limited by Section 11.2(ii).

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11.3 Notice of Claim.  Each Party’s agreement to indemnify, defend and hold the other harmless from a Claim pursuant to Section 11.1 is conditioned on the indemnified Party:

11.3.1 providing prompt written notice to the indemnifying Party of the Claim (provided that failure to promptly notify shall not relieve the indemnifying Party of its obligation to defend the Claim except to the extent that such failure materially prejudices the indemnifying Party’s ability to defend the Claim);

11.3.2 permitting the indemnifying Party to assume full control of and responsibility for the defense of such Claim;

11.3.3 reasonably assisting the indemnifying Party, at the indemnifying Party’s reasonable expense and written request, in investigation of, preparation for and defense of any such Claim; and not compromising or settling such Claim without the indemnifying Party’s prior written approval.  The indemnifying Party shall not settle any Claim in any manner that does not provide for the full and complete release of the indemnified Party without such indemnified Party’s prior written approval, which approval shall not be unreasonably withheld, conditioned or delayed. The indemnified Party may participate in the defense of the Claim with its own counsel at its own expense.

11.4 Insurance Requirements.  During the Term of the Agreement, each Party shall maintain adequate insurance or self-insurance to reasonably cover its obligations hereunder.

12. TERM AND TERMINATION

12.1 Term.  This Agreement will remain in effect for five (5) years from the Effective Date, with a right of renewal for a subsequent five (5) year term upon mutual written agreement by Parties, unless terminated in accordance with Section 12.2 (the “Term”).  The Parties shall start discussions regarding a potential renewal no later than twelve (12) months prior to the expiration date of the initial Term, but the Parties have no obligation to renew this Agreement.

12.2 Termination.

12.2.1 Termination by Either Party for Material Breach.  If either Party believes that the other is in material breach of this Agreement, then the non-breaching Party may deliver notice of such breach to the other Party. Following notification by a Party of a material breach by the other Party, which breach is not cured within thirty (30) days of receipt of the notice of such breach (or such longer time as may be agreed by the Parties in writing), the non-breaching Party may terminate this Agreement in its entirety upon notice to the other Party. If a Party disputes an invoiced amount in good faith and notifies the invoicing Party of the good faith dispute within the original time for payment, accompanying such notice with an explanation of the dispute and providing supporting documentation, then such Party may withhold the disputed amount (but shall pay the undisputed amount), and such withholding is not considered

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a material breach. In this event, the Parties will meet promptly to discuss the dispute, and will work in good faith to resolve the dispute as quickly as possible.

12.2.2 Termination by Either Party for Force Majeure. If the event of Force Majeure continues for a period of more than one hundred eighty (180) days, then the Party not claiming the benefit of Force Majeure may terminate this Agreement upon giving the other Party thirty (30) days’ written notice of its intention so to do, but such notice shall not take effect if the Party claiming the benefit of Force Majeure gives notice within that period that the cause has ceased to prevent its performance of this Agreement.

12.2.3 Termination by Either Party for Insolvency. In the event that either Party (a) files for protection under bankruptcy or insolvency laws, (b) makes an assignment for the benefit of creditors, (c) appoints or suffers appointment of a receiver or trustee over substantially all of its property that is not discharged within 90 days after such filing, (d) proposes a written agreement of composition or extension of its debts, (e) proposes or is a party to any dissolution or liquidation, (f) files a petition under any bankruptcy or insolvency act or has any such petition filed against it that is not charged within 60 days of the filing thereof, or (g) admits in writing its inability generally to meet its obligations as they fall due in the general course, then the other Party may terminate this Agreement in its entirety effective immediately upon writing notice to such Party.

12.2.4 Termination by Dario for Failure to Meet Net Sales Requirements. Dario will have the right, but not the obligation, to terminate this Agreement if beginning at the end of Year 3, annual Net Sales of the Solution and Enhanced Solution from Qualifying Health Plan Accounts is less than 35% of corresponding annual Net Sales of the Solution and Enhanced Solution in the Health Plan Channel, excluding Qualifying Health Plan Accounts (i) signed prior to the Effective Date or (ii) listed in the Advanced Discussion List; provided that for purposes of this calculation, Qualifying Health Plan Accounts whose subscription terms are, as of the effective date of termination, within their first 6 months will be included assuming that the revenues from such Qualifying Health Plan Accounts would be equivalent to the revenue of a similarly sized account using the average of the Dario book of business for health plans, and following the first 6 months, the calculation shall be based on actual revenues.

12.2.5 Termination for Convenience. Starting at Year 3, and for the remainder of the Term, including any extensions, Sanofi will have the right to terminate the Agreement for convenience upon sixty (60) days’ notice to Dario.  If Sanofi exercises this termination for convenience, Sanofi will pay Dario the Transition Payment within sixty (60) days of the effective date of termination.

12.2.5.1In the event Sanofi provides notice of termination for convenience and Sanofi wishes to continue the development of Development Plan

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approved by the JSC prior to Sanofi’s termination notice, Sanofi will provide Dario with notice of that wish at the time of termination notice and Dario will, within 15 Business Days of receipt of such notice either

(1) reject such request and invoice Sanofi for the Transition Payment and for any development costs incurred under the current Development Plan through the termination notice date (if any). Dario will stop all development activities on the current Development Plan no later than the date Dario rejects such request, or

(2) forfeit the Transition Payment, continue the development activities as set forth in the Development Plan, and pay future revenue share as set forth in Section 7.4.3 at a fixed rate of 33%.

12.2.6 Termination by Sanofi for Dario Failure to Complete a Development Plan.  If Dario is more than 9 months late in completing any Development Plan, then Sanofi will have the right, but not the obligation, to terminate the Agreement in its entirety or to terminate any further Development related activities, upon 30 days’ prior written notice. If Sanofi elects not to terminate, Dario will agree to good faith negotiations regarding mitigation strategies as set forth in Section 4.2.6.

12.2.7 Termination by Sanofi for Change of Control of Dario. Dario will notify Sanofi in writing no later than three (3) Business Days after the execution of any agreement pursuant to which Dario would, upon consummation of the underlying transactions, undergo a Change of Control of Dario, in which case Sanofi will be entitled, upon 30 days’ notice, to terminate this Agreement in its entirety upon written notice to Dario no more than 60 days after receipt of such notice, if such Change of Control is the consequence of acquisition of Dario by any of the Sanofi Excluded Companies that offers any product that is substantially similar to an Enhanced Solution. If Sanofi elects not to terminate, Dario will ensure assumption of the Agreement by the acquirer, including the continuation of the licensing rights and royalties as granted to Sanofi under the Agreement.

12.3 Effect of Termination.  In the event this Agreement is terminated, the Parties shall:

12.3.1 cooperate with each other in good faith to wind down each Party’s performance obligations hereunder and no further activities shall be performed other than as expressly agreed by the Parties in writing including the transfer to Sanofi of Sanofi Foreground IP.

12.3.2 In the event of termination for convenience under Section 12.2.5, and subject to the Health Plan Revenue Share Stoppage, Dario shall continue to pay to Sanofi amounts as set forth in Section 7.4 on accounts signed prior to the effective date of termination until the earlier of (a) what would have been the

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remainder of the Term, and (b) the conclusion of the contract term (including any renewals) of such accounts.

12.3.3 In the event of termination due to Dario’s failure to complete a Development Plan under Section 12.2.6 or due to termination for convenience under Section 12.2.5, the Parties will work together to calculate, as of the date of termination, based on the amount of Development Plan milestone payments made by Sanofi to Dario under Section 7.2 and the Fair Market Value of the deliverables that Dario completed and delivered pursuant to the Development Plan, whether Dario will repay any Fair Market Value for deliverables not yet delivered, or whether Sanofi will pay Dario for any Fair Market Value for deliverables delivered, as applicable.

12.3.4 Except in the event of termination due to Sanofi’s uncured material breach under Section 12.2.1, in the event of any other termination under Section 12.2, Dario shall continue to pay to Sanofi 33% of revenue generated from accounts signed for the Enhanced Solution for a period of three (3) years after the effective date of termination or until the end of the Term (or renewed term, if applicable), whichever is longer. Dario reporting to Sanofi will continue for the period set forth above.

12.3.5 In the event of termination due to Dario’s insolvency pursuant to Section 12.2.3, Dario shall immediately proceed with a technology transfer pursuant to Section 4.2.7 of all Dario Foreground IP necessary to complete the approved Development Plans.

12.3.6 In the event of Sanofi termination for convenience under Section 12.2.5, where additional development activities will be completed under an already approved Development Plan in accordance with Section 12.2.5.1, the JSC duties set forth in Section 2.3 will be limited to decisions relating to the existing pre-approved Development Plan.

12.4 Survival.  Expiration or termination of this Agreement will not affect any rights or obligations that have accrued before expiration or termination, including outstanding payment obligations.  The following provisions shall survive and apply after expiration or termination of this Agreement: Sections 5.4.2, 5.4.3, 5.5, 5.6, 7.8, 7.9, 8.11, 9, 10, 11.1, 11.2, 11.3, 12.3, 12.4 and 13.

13. MISCELLANEOUS

13.1 Notices.  Any notice required to be given hereunder shall be in writing and shall be deemed to have been given: (a) when received, if delivered in person; (b) on the third Business Day following the mailing thereof, if mailed by certified first class mail, postage prepaid, return receipt requested; (c) when received, if delivered by overnight commercial courier service; or (d) on the Business Day sent by electronic mail, provided, however, in the case of electronic mail, the sender arranges for the recipient to acknowledge receipt by return electronic mail, in any such case to the addresses specified below, and sends a physical

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copy of the notice by one of the other above methods following electronic mail delivery:

If to Dario:

DarioHealth Corp.

18 W 18^th Street

New York, NY 10011

Attention: President

Email: rick@dariohealth.com

If to Sanofi:

Sanofi

50 Binney Street

Cambridge, MA 02142

Attention: Gustavo Pesquin

Email: Gustavo.Pesquin@sanofi.com

With a copy to:

Arnold & Porter

250 West 55th Street

New York, New York 10019

Attention: Joshua Blank, Esq

Email: Joshua.Blank@arnoldporter.com

13.2 Governing Law; Jurisdiction; Venue and Service.

13.2.1 Governing Law.  This Agreement will be governed by and construed in accordance with the laws of the State of New York, excluding any conflicts or choice of law rule or principle that might otherwise refer construction or interpretation of this Agreement to the substantive law of another jurisdiction.  The Parties agree to exclude the application to this Agreement of the United Nations Convention on Contracts for the International Sale of Goods.

13.2.2 Jurisdiction.  The Parties hereby irrevocably and unconditionally consent to the exclusive jurisdiction of any New York State court sitting in the borough of Manhattan in the City of New York or any federal court sitting in the borough of Manhattan in the City of New York for any action arising out of or relating to this Agreement and agree not to commence any action, suit or proceeding (other than appeals and enforcements of awards therefrom) related thereto except in such courts.  The Parties irrevocably and unconditionally waive their right to a jury trial in any such action.

13.2.3 Venue.  Subject to Section 13.2.2 the Parties further hereby irrevocably and unconditionally waive any objection to the laying of venue of any action arising out of or relating to this Agreement in the courts of the State of New

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York and hereby further irrevocably and unconditionally waive and agree not to plead or claim in any such court that any such action brought in any such court has been brought in an inconvenient forum.

13.3 Force Majeure.  Except with respect to payment obligations, neither Party shall be liable for any failure to perform or any delays in performance, and neither Party shall be deemed to be in breach or default of its obligations set forth in this Agreement, if, to the extent, and for as long as such failure or delay is due to any causes that are beyond its reasonable control and not due to its negligent or wrongful acts or omissions, including such causes as acts of God, fire, flood, severe storm, earthquake, pandemic, civil disturbance, lockout, riot, order of any court or administrative body, embargo, acts of government, war (whether or not declared), acts of terrorism, or other similar causes (“Force Majeure Event”).  In the event of a Force Majeure Event, the Party prevented from or delayed in performing shall promptly inform the other Party of the Force Majeure Event and the expected delay, and shall use reasonable efforts to avoid or minimize the delay.  The Party affected by the other Party’s delay may elect to suspend performance and extend the time for performance for the duration of the Force Majeure Event.

13.4 Use of Names; Publicity.  Except to the extent reasonably necessary in furtherance of the co-promotional activities contemplated herein, neither Party shall, without the prior written approval of the other Party: (i) advertise or otherwise publicize the existence or terms of this Agreement or any other aspect of the relationship between the Parties or (ii) use the other Party’s name or any trade name, trademark or service mark belonging to such Party in press releases or in any form of advertising.

13.5 Relationship of the Parties.  It is expressly agreed that Dario, on the one hand, and Sanofi, on the other hand, will be independent contractors and that the relationship between the Parties will not constitute a partnership, joint venture or agency.  Neither Dario, on the one hand, nor Sanofi, on the other hand, will have the authority to make any statements, representations or commitments of any kind, or to take any action that will be binding on the other, without the prior written consent of the other Party to do so.  All persons employed by a Party will be employees of such Party and not of the other Party and all costs and obligations incurred by reason of any such employment will be for the account and expense of such first Party.

13.6 No Third-Party Beneficiaries.  This Agreement issued shall not benefit, or create any right or cause of action in or on behalf of, any person or entity other than Sanofi or Dario (including their respective Affiliates, subsidiaries and assignees).

13.7 Successors.  This Agreement will bind and inure to the benefit of the successors and permitted assigns of each Party.

13.8 Assignments.  Neither Party shall have the right to assign this Agreement or any of its rights or obligations hereunder without prior written consent of the other

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Party, provided, however, that an assignment may occur without such consent in conjunction with a Change of Control of the assigning Party.  This Agreement shall inure to the benefit of and be binding upon each Party, its successors and permitted assigns.

13.9 Rights in Bankruptcy.  All rights and licenses granted under or pursuant to this Agreement by Sanofi or Dario are and shall otherwise be deemed to be, for purposes of Section 365(n) of the U.S. Bankruptcy Code or any analogous provisions in any other country or jurisdiction, licenses of right to “intellectual property” as defined under Section 101 of the U.S. Bankruptcy Code.  The Parties agree that the Parties, as licensees of such rights under this Agreement, shall retain and may fully exercise all of their rights and elections under the U.S. Bankruptcy Code or any analogous provisions in any other country or jurisdiction.  The Parties further agree that, in the event of the commencement of a bankruptcy proceeding by or against either Party under the U.S. Bankruptcy Code or any analogous provisions in any other country or jurisdiction, the Party hereto that is not a Party to such proceeding shall be entitled to a complete duplicate of (or complete access to, as appropriate) any intellectual property expressly licensed to it hereunder and all embodiments of such intellectual property, which, if not already in the non-subject Party’s possession, shall be promptly delivered to it (i) upon any such commencement of a bankruptcy proceeding upon the non-subject Party’s written request therefor, unless the Party subject to such proceeding elects to continue to perform all of its obligations under this Agreement or (ii) if not delivered under clause (i) above, following the rejection of this Agreement by or on behalf of the Party subject to such proceeding upon written request therefor by the non-subject Party.

13.10 No Waiver.  Failure to exert a right under this Agreement does not constitute a waiver of that right or remedy.  No waiver of any right or remedy is effective unless in writing and signed by the Party who waives the right or remedy.

13.11 Construction.  The headings of this Agreement are for convenience of reference only and do not define, describe, extend or limit the scope or intent of this Agreement or the scope or intent of any provision contained in this Agreement.  The term “including” or “includes” as used in this Agreement means including without limiting the generality of any description preceding such term.  The wording of this Agreement shall be deemed to be the wording mutually chosen by the Parties and no rule of strict construction shall be applied against any Party.  References to any Exhibit, schedule, attachment, or other document are to that Exhibit, schedule, attachment, agreement or other document as this document is modified from time to time.  Whenever this Agreement refers to a number of days, unless otherwise specified, such number refers to calendar days.

13.12 Severability.  If any provision of this Agreement is determined to be illegal or unenforceable, that provision will be severed from the Agreement and the remainder will remain valid, legal, and enforceable, provided that the surviving portion materially comports with the original intent of the Parties.

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13.13 Amendments.  All amendments and modifications of this Agreement (including any Exhibit hereto) will require the consent of each Party to be deemed effective.

13.14 Entire Agreement.  This Agreement and its Exhibits (and associated attachments) entered into pursuant to this Agreement represent the entire understanding between the Parties relating to the collaboration. This Agreement supersedes all previous agreements between the Parties (oral and written) relating to the collaboration described herein, except for any obligations that, by their terms, survive termination or expiration.  To the extent of any conflict between this Agreement and any Exhibit attached hereto, the terms of this Agreement shall prevail.

13.15 Counterparts.  This Agreement may be executed in two (2) or more counterparts, each of which shall be deemed to be an original, and all of which shall together constitute one and the same agreement.  The exchange of copies of this Agreement and of signature pages by facsimile or other electronic transmission shall constitute effective execution and delivery of this Agreement as to the Parties and may be used in lieu of the original Agreement for all purposes.

Signature page follows

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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the Effective Date.

SANOFI US SERVICES, INC.
By:
Name:	Naira Adamyan
Title:	Head of Innovation & Strategy, GenMed
Date:
DARIO HEALTH CORP.
By:
Name:	Richard Anderson
Title:	President and General Manager North America
Date:

[Signature Page to Collaboration Agreement]

EXHIBIT A

Development Plan Fair Market Value

[**]

44

EXHIBIT B

Ongoing Relationship between the Parties for Co-Promotion

[**]

45

EXHIBIT C

Responsibilities for Development

[**]

46

Exhibit D

Responsibilities for Evidence Generation

[**]

47

EXHIBIT E

Advanced Discussion List

[**]

48

EXHIBIT F

Agile Methodology

[**]

49

EXHIBIT G

Existing Customers

[**]

50

EX-10.2

Exhibit 10.2

TECHNOLOGY PURCHASE AGREEMENT

This Technology Purchase Agreement (this “Agreement”) is entered into as of January 18, 2022 (the “Effective Date”) by and among Physimax Technologies Ltd., located at 17 Ruhama St., Herzliya, Israel (the “Seller”) and any of its subsidiaries (“Subsidiaries”) on one hand, and Labstyle Innovation Ltd., located at HaTokhen Street, Caesarea Industrial Park, Israel (“Buyer”) and Dario Health Corporation, a Delaware corporation (“Parent”), on the other hand. Seller and Buyer are each referred to herein as a “Party,” and together as “Parties.”

RECITALS

WHEREAS, Seller is engaged in the business of Video-based AI (computer vision AI) Software Development and Cloud Service - analyzing body movement patterns to objectively measure and score functional musculoskeletal condition and non-contact injury risk, with recommended personalized exercises programs to address findings (the “Business”);

WHEREAS, Seller desires to transfer to Buyer, and Buyer desires to receive from Seller, all of Seller’s right, title, and interest in and to certain Purchased Assets as well as related agreements, including all patents, copyrights, trademarks, trade secrets and other intellectual property rights therein and thereto all as specified herein;

WHEREAS, a portion of the Purchase Price otherwise payable by Buyer to Seller in connection with the transactions contemplated by this Agreement shall be deposited by Buyer into an escrow account as security for the indemnification obligations set forth in this Agreement;

WHEREAS, after the Closing has taken place, the Seller will be placed into liquidation and distribute any assets remaining to its Equity Holders, which have given equity holder undertaking in the form, attached hereto as Exhibit A (“Equity Holder Undertaking”), to Buyer; and

NOW, THEREFORE, in consideration of the foregoing and of the mutual promises contained in this Agreement, the Parties hereby agree as follows:

AGREEMENT 1

DEFINITIONS AND CONSTRUCTION

1.1. Capitalized Terms

In addition to other defined items in this Agreement, the following capitalized terms shall have the meanings set forth below:

1.1.1 “Action” has the meaning set forth in Subsection ‎9.2.3.

1.1.2 “Advance Payment” means an amount of US$400,000 already provided to Seller.

1.1.3 “Affiliate” means any Entity which controls, or is controlled by, or is under common control with, the Seller or the Buyer (as the case may be). For the purpose herein “Control” means the holding of more than fifty percent (50%) of (i) the equity (ii) the voting rights or (iii) the right to elect or appoint directors

1.1.4 “Agreed Amount” has the meaning set forth in Subsection ‎9.4.4

1.1.5 “Ancillary Agreements” means all agreements attached as exhibits to this Agreement.

1.1.6 “Assumed Liabilities” has the meaning set forth in Subsection ‎2.6.

1.1.7 “Buyer” has the meaning set forth in the first paragraph hereof.

1.1.8 “Business” has the meaning set forth in the first Recital hereof.

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1.1.9 “Business Day” means a day, other than a Friday or Saturday, on which banks are generally open for business in Israel.

1.1.10 “Claim Notice” has the meaning set forth in Subsection ‎9.1.1.

1.1.11 “Claimed Amount” has the meaning set forth in Subsection ‎9.4.1.

1.1.12 “Confidential Information” has the meaning set forth in Subsection ‎5.1.

1.1.13 “Consideration Shares” means such number of Parent’s shares of common stock, nominal value $0.0001 as specified on Subsection ‎3.1.1.

1.1.14 “Contested Amount” has the meaning set forth in Subsection ‎9.4.2.

1.1.15 “Critical Problem” has the meaning set forth in Subsection ‎8.10.4.

1.1.16 “Developer” means all persons (including employees, directors, contractors, consultants) who contributed to the creation of the Transferred Software (other than Transferred Third Party Software).

1.1.17 “Disclosure Schedule” has the meaning set forth in Section ‎8.

1.1.18 “Dispute Period” has the meaning set forth in Subsection ‎9.4.2.

1.1.19 “Domain Names” means all Internet electronic addresses, uniform resource locators and alphanumeric designations associated therewith and all registrations for any of the foregoing.

1.1.20 “Effective Parent Stock Price” means the higher of (i) the volume weighted average of the closing sale prices for one share of Parent Common Stock as quoted on the NASDAQ Global Select Market over the five Trading Days ending on the Trading Day immediately preceding the Effective Date, or (ii) US$21.35.

1.1.21 “Effective Date” has the meaning set forth in the first paragraph hereof.

1.1.22 “End Users” shall mean any and all Persons who have downloaded or otherwise used any of the Transferred Software before the Closing Date.

1.1.23 “Entity” means any corporation (including any non-profit corporation), general partnership, limited partnership, limited liability partnership, joint venture, estate, trust, company (including any limited liability company or joint stock company), firm or other enterprise, association, organization or entity.

1.1.24 “Equity Holders” has the meaning set forth in Subsection ‎8.12.3.

1.1.25 “Escrow Account” has the meaning set forth in Subsection ‎9.7.2.

1.1.26 “Escrow Agent” means IBI Trusts Ltd. (or any other entity agreed between the Parties prior to Closing), its successors and permitted assigns pursuant to the Escrow Agreement, whom shall also serve as a trustee under the Key Personnel Holdback Letter.

1.1.27 “Escrow Agreement” has the meaning set forth in Subsection ‎9.7.2.

1.1.28 “Escrow Shares” has the meaning set forth in Subsection ‎9.7.1.

1.1.29 “Escrow Period” has the meaning set forth in Subsection ‎9.8.

1.1.30 “Excluded Assets” means all assets of the Company, whether tangible or intangible, which are not sold, transferred, assigned and/or conveyed to Buyer pursuant to the transactions contemplated hereunder, including any Personal Information of Users Data, as listed under Exhibit B.

1.1.31 “Excluded Liabilities” mean any and all Liabilities of Seller, whether or not related to the Business and/or the Purchased Assets, other than Assumed Liabilities. For the avoidance of doubt, and without derogating from the generality of the foregoing, “Excluded Liabilities” include but are not limited to (a) all Liabilities to any employees or service providers (whether under law, contract or custom) arising from facts or circumstances occurring on or prior to or after the Closing Date including, without limitation, any obligation to deduct and contribute any amounts

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to any plan and any obligation to pay, deduct or withhold any taxes in respect of any of such persons on or prior to the Closing, any Liabilities arising in connection with the termination of their employment or engagement on or prior to the Closing Date, and (b) all Liabilities associated with any Purchased Assets that arose prior to or on the Closing Date, regardless of whether any such Liabilities are determined or asserted after the Closing Date.

1.1.32 “Governmental Body” means any: (a) nation, state, commonwealth, province, territory, county, municipality, district or other jurisdiction of any nature; (b) federal, state, local, municipal, foreign or other government; or (c) governmental or quasi-governmental authority of any nature (including any governmental division, department, agency, commission, instrumentality, official, organization, unit, body or Entity and any court or other tribunal).

1.1.33 “IIA Liabilities” means any obligation by Company and/or Subsidiary, whether or not outstanding, due, contingent, or otherwise, to make any payment to the Israeli Innovation Authority (or any other Governmental Body).

1.1.34 “Indemnification” has the meaning set forth in Subsection ‎9.4.

1.1.35 “Indemnified Party” and “Indemnified Parties” have the meanings set forth in Subsection ‎9.2.1.

1.1.36 “Intellectual Property Rights” means and refer to all (i) patents and patent applications, and any divisional, continuation, continuation in part, reissue, renewal or re-examination patent issuing therefrom (including any foreign counterparts), (ii) copyrights and registrations thereof, (iii) mask works and registrations and applications for registration thereof, (iv) computer software, including any and all software implementations of algorithms, models and methodologies, whether in source code or object code, (v) databases and compilations, including any and all data and collections of data, whether machine readable or otherwise, (vi) technology supporting any Internet site(s) operated by or on behalf of the Seller (including any Domain Names and other Internet Resources), (vii) trade secrets and other confidential business information, whether patentable or unpatentable and whether or not reduced to practice, know-how, technology, proprietary processes, techniques, methodologies, formulae, algorithms, models, user interfaces, research and development information, copyrightable works, financial, marketing and business data, pricing and cost information, business and marketing plans and customer and supplier lists and information, inventions, source code, object code, and, with respect to all of the foregoing, related confidential documentation, (viii) trademarks, service marks, trade names, domain names and applications and registrations therefore, (ix) all documentation, including user manuals and training materials relating to any of the foregoing and descriptions, flow-charts and other work product used to design, plan, organize and develop any of the foregoing and, (x) other proprietary rights relating to the foregoing.

1.1.37 “Internet Resources” means all Domain Names, electronic addresses, uniform resource locators, Internet blogs, social media sites (e.g., Facebook, YouTube, Twitter) and similar online resources.

1.1.38 “ITA” means the Israeli Tax Authority.

1.1.39 “Key Personnel” means Ram Shalev and David Kahani.

1.1.40 “Key Personnel Holdback Letter” means those undertaking by the Key Personnel and the Seller in connection with any assets they may receive from the Seller in

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connection with any distribution of the Consideration Shares, in the form attached hereto as Exhibit C.

1.1.41 “Liabilities” means any liability of any nature, whether or not accrued, contingent or otherwise.

1.1.42 “Liens” means all mortgages, liens, pledges, charges, security interests, right of first refusal, preemptive right, call, community property interest or other similar encumbrances of any kind or nature whatsoever.

1.1.43 “Loss” and “Losses” have the meanings set forth in Subsection ‎9.2.1.

1.1.44 “Open-Source Software” has the meaning set forth in Subsection ‎8.5.

1.1.45 “Party” and “Parties” have the meaning set forth in the first paragraph hereof.

1.1.46 “Paying Agent” means IBI Trusts Ltd. (or any other entity agreed between the Parties prior to Closing), its successors and permitted assigns pursuant to the Paying Agent Agreement.

1.1.47 “Person” means any individual, Entity, or Governmental Body.

1.1.48 “Personal Information”  means (a) any User Data and/or any other personally identifiable information from any individuals, including name, address, telephone number, email address, financial account number, government-issued identifier, and any other data used or intended to be used to identify, contact or precisely locate a person, (b) any information from or about an individual whose use, aggregation, holding or management is restricted under any applicable Law, (c) internet protocol address or other persistent identifier; (d) “information” as defined by the Israeli Privacy Protection Law (whether or not such “information” constitutes “sensitive information” as defined thereunder).

1.1.49 “Purchase Price” has the meaning set forth in Subsection ‎3.1.

1.1.50 “Purchased Assets” means, collectively all Intellectual Property Rights of the Seller and/or its Subsidiaries, [and all Purchased Contracts], Transferred Registration, all Transferred Software and all rights in the Transferred Third Party Software, save for Excluded Assets, as further provided under Exhibit D(1).

1.1.51 “Purchased Contracts” means all contracts set forth in Exhibit D(2), full copies thereof have been provided by the Seller to the Buyer.

1.1.52 “Securities Act” means the Securities Act of 1933, as amended.

1.1.53 “Software” means any and all computer software, documentation, code and other materials, including assemblers, applets, compilers, source code, source code listings, object code, algorithms, data (including image and sound data), manuals, instructions, samples, examples, content, charts, diagrams, design tools and user interfaces, in any form or format, however fixed.

1.1.54 “Stipulated Amount” has the meaning set forth in Subsection ‎9.4.5.

1.1.55 “Third Party Approval” means any notice, approval or consent that are necessary in order to consummate the transactions set forth herein including without limitation the approvals from the Third Parties list in Exhibit E attached hereto.

1.1.56 “Third Party Software” means any Software that is a component of or necessary to compile the Transferred Software and that is not owned by Seller.

1.1.57 “Trading Day” means a day on which the principal Trading Market is open for trading.

1.1.58 “Trading Market” means Nasdaq.

1.1.59 “Transferred Intellectual Property Rights” means all Seller’s Intellectual Property Rights in and to the Transferred Software, or used in or necessary for, or that would be infringed by, the operation of the Business or use, support,

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reproduction, distribution, marketing, sale, license or display of the Transferred Software.

1.1.60 “Transferred Software” means all Seller’s Software existing as of the Closing Date, related to, used in or necessary for the operation of the Business, and all Software owned by or held in the name of Seller, including the Transferred Third Party Software, related to, used in or necessary for the operation of the Business, and all related technology, documentation, customer information and materials, including that described in Exhibit D(3). It is hereby clarified that with respect Third Party Software, only the Transferred Third-Party Software constitutes part of the Transferred Software and/or the Purchased Assets.

1.1.61 “Transferred Third Party Software” means all Seller’s rights to the Third-Party Software listed in Exhibit D(4) attached hereto.

1.1.62 “User Data” means any Personal Information or other data or information collected by or on behalf of the Seller from End Users.

1.1.63 “Valid Tax Certificate” means a valid certificate, ruling or any other written instructions regarding tax withholding, issued by the ITA in the form and substance satisfactory to the Paying Agent, that is applicable to the payments to be made to any Person pursuant to this Agreement, stating that no withholding, or reduced withholding, of Israeli tax is required with respect to such payment or providing other instructions regarding such payment or withholding.

1.2 Construction

1.2.1 The singular number will include the plural, and vice versa; the masculine gender will include the feminine and neuter genders; the feminine gender will include the masculine and neuter genders; and the neuter gender will include the masculine and feminine genders;

1.2.2 Any rule of construction to the effect that ambiguities are to be resolved against the drafting Party will not be applied in the construction or interpretation of this Agreement;

1.2.3 The words “include” and “including” and variations thereof, will not be deemed to be terms of limitation, but rather will be deemed to be followed by the words “without limitation;”

1.2.4 Except as otherwise indicated, all references in this Agreement to “Sections”, “Subsections” and “Exhibits” are intended to refer to Sections or Subsections of this Agreement and Exhibits to this Agreement; and

1.2.5 The headings in this Agreement are for convenience of reference only, will not be deemed to be a part of this Agreement, and will not be referred to in connection with the construction or interpretation of this Agreement.

2 SALE, TRANSFER AND ASIGNMENT OF THE PURCHASED ASSETS, RELATED TRANSACTIONS

2.1 Sale, Transfer and Assignment

At the Closing, subject to the terms and conditions of this Agreement, Seller shall (i) irrevocably grant, convey and assign to  the Buyer all of its worldwide right, title and interest in and to the Purchased Assets, to be held and enjoyed by the Buyer and its successors and assigns; (ii) with respect to any Purchased Asset which is a Transferred Third Party Software, irrevocably assign to the Buyer the license with respect to such Transferred Third

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Party Software, and (iii) further irrevocably grant, convey and assign to  the Buyer all of its worldwide right, title and interest in and to any and all causes of action and rights of recovery for past infringement or misappropriation of the Transferred Intellectual Property Rights, to be held and enjoyed by  Buyer and its successors and assigns, and the  Buyer shall accept the foregoing grants, conveyances and assignments.

2.2 Retained Contracts

2.2.1 Notwithstanding the provisions of Section ‎2.1 above, the Seller shall retain the limited, non-assignable, non-transferrable, royalty free, limited right to use the Transferred Software (directly or through a subcontractor to be engaged to provide phase out services as reasonably coordinated with Buyer) for the sole purpose of providing services under the customers' contracts, as specified under Exhibit F, that are not included in the Purchased Contracts (the "Retained Contracts"), for a period which is the earlier of (a) fourteen (14) months following the Closing, or (b) such time where the term of all Retained Contracts has expired or terminated (the “Phase Out Period”). The Buyer acknowledges and confirms that the Key Personnel and the employees/contractors that are listed on Schedule 2.2.1 shall be allowed to devote some of their business time to provide services to the Seller in connection with the Retained Contracts during the Phase Out Period, but not more than the respective time specified for each such person on Schedule 2.2.1.

2.2.2 During the Phase Put Period, other than as herein prescribed with respect to the Retained Contracts, Seller shall cease all Business, and shall specifically not (i) enter into any new customer, supplier, lease, reseller or distributor agreement with respect to the Purchased Assets, nor extend and/or otherwise make any amendments to the Retained Contracts, (ii) make any developments based on the license specified in Section ‎2.2.1 (provided however, that in case any such developments are made, they shall be deemed as Transferred Intellectual Property Rights in all manners and respects); (iii) advertise and/or otherwise promote the Business.

2.2.3 Seller shall be solely liable for any claims made by any party to the Retained Contracts and shall fully indemnity Buyer, Parent, and their respective employees, consultants, directors, officers and agents for any claims, demands and/or suit brought against them in connection with the Retained Assets.

2.2.4 Seller shall, no later than thirty (30) days prior to the lapse of the Phase Out Period, present to Buyer with a detailed phase out plan for Buyer’s approval (the “POP”) with respect to any data, materials, software (including source code, object code, etc.), vendor contracts, server access and any other Intellectual Property rights held or maintained by Seller for the purpose of fulfilling the Retained Contracts. Buyer shall comment on the POP and Seller shall implement all such comments to the POP to Buyer’s satisfaction. Once approved, the POP shall be carried out by Seller in accordance with its terms.

2.2.5 Seller shall be solely responsible to secure such approvals required from third parties regarding the foregoing interim use of any Third Party Transferred Software during the Phase Out Period in connection with the Retained Contracts.

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2.3 Further Assurances

On the Closing Date, Seller will, without charge and promptly upon request by the Buyer, as may be requested by the Buyer in order to effect and perfect the grants, conveyances and assignments contained herein, to enable the Buyer to obtain the full benefits of this Agreement and the transactions contemplated hereby, or to otherwise enforce or protect the Transferred Intellectual Property Rights:

2.3.1 deliver to the Buyer records, data or other documents relating to the Transferred Intellectual Property Rights that are in Seller’s possession;

2.3.2 deliver to the Buyer records, data or other documents relating to the End Users that are in Seller’s possession;

2.3.3 execute and deliver assignments, licenses, consents, documents or further instruments of transfer, and consent to the filing of the sole applications, including without limitation the short form assignments to be agreed between the Parties prior to Closing and thereafter attached as Schedule ‎2.3.3; and

2.3.4 take other reasonable actions, render other assistance and execute other documents.

2.4 Exclusive Ownership

At the Closing, subject to the terms and conditions of this Agreement, without limiting the foregoing,  the Buyer will have the exclusive and unlimited right to commercialize, prepare and sell products based upon, license, sublicense, prepare derivative works from, transfer to third parties, change, alter and otherwise exploit the Transferred Software and, as applicable, the other Purchased Assets; provided that with respect to any Purchased Asset that is a Transferred Third Party Software, the Buyer shall have the license to use such Transferred Third Party Software in accordance with the terms of such license. Seller hereby waives any and all moral rights, including any right to identification of authorship or limitation on subsequent modification, which Seller (or its employees, agents or consultants) has or may have in any Purchased Assets. To the extent, if any, that Seller retains any right to the Purchased Assets, Seller hereby grants and agree to grant to  the  Buyer a perpetual, exclusive, irrevocable, fully paid-up, royalty free, transferable, sublicensable, worldwide right and license under any rights Seller may have to use, make, reproduce, distribute, display and perform, modify, sell, and otherwise exploit and distribute in any manner, all or any portion of the Transferred Software, in any form or media.

2.5 Power of Attorney

As of the Closing Date, Seller irrevocably designates and appoints the Buyer to act on its behalf and instead of Seller in order to execute and file any such application, and to do all other lawfully permitted acts to further the prosecution and issuance of Transferred Intellectual Property Rights provided for herein with the same legal force and effect as if executed by Seller. This power of attorney shall be deemed coupled with an interest, shall be irrevocable and shall survive the closing of the transactions contemplated herein without any time limitation.

2.6 Assumption of Liabilities; Retention of Liabilities

At the Closing, subject to the terms and conditions of this Agreement, Buyer shall assume (i) all liabilities related to the Business first arising after the Closing under each Purchased Assets; and (ii) without derogating from (i) above, the IIA Liabilities (together, the

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“Assumed Liabilities”); and the Seller shall retain, and the Buyer shall not assume, all Excluded Liabilities.

2.7 Closing

The closing of the transactions contemplated by this Agreement (the “Closing”) shall take place via the electronic exchange of execution versions of the agreements and documents contemplated hereby and the signature pages thereto via facsimile or via email by .pdf, at the offices of Sullivan & Worcester Tel-Aviv, on the date that is two (2) Business Day after the conditions set forth in Section ‎2.10 have been satisfied or waived (other than those conditions that by their terms are to be satisfied at the Closing but subject to the satisfaction or waiver of those conditions at such time) or at such other place or such other time or on such other date as is agreed to in writing by  the Buyer and the Seller.

The date of the Closing is referred to herein as the “Closing Date” and the Closing shall be deemed to occur as of the close of business on the Closing Date.

2.8 Delivery by Seller

On the Closing Date, the Seller shall deliver to the Buyer, each of which shall be in full force and effect:

2.8.1 Full access rights and all necessary passwords and other authorization codes to the servers where the Transferred Software is installed, as more particularly described in Schedule ‎2.8.1 to be agreed upon between Parties prior to Closing and attached thereafter;

2.8.2 A final approval from the IIA for the transactions contemplated hereunder to the reasonable satisfaction of the Buyer.

2.8.3 With respect to the Key Personnel, the termination of employment of the Key Personnel by Seller and/or any of its Subsidiaries in the form attached hereto as Schedule ‎2.8.3, to be agreed upon between Parties prior to Closing and attached thereafter.

2.8.4 The Escrow Agreement as set forth in Exhibit G-1, to be agreed upon between Parties prior to Closing and attached thereafter, duly executed by Seller;

2.8.5 The Paying Agent Agreement as set forth in Exhibit G-2, to be agreed upon between Parties prior to Closing and attached thereafter, duly executed by Seller (the “Paying Agent Agreement”);

2.8.6 The Key Personnel Holdback Letter, duly executed by the respective Key Personnel and the Seller.

2.8.7 Lock-Up agreements in the form attached hereto as Exhibit H (the “Lock-Up Agreements”).

2.8.8 The Equity Holder Undertakings; and

2.8.9 Duly executed general shareholders meeting minutes of Seller authorizing the Board of Directors to approve the transaction contemplated under this Agreement and Ancillary Documents, in the form attached hereto Exhibit I-1, to be agreed upon between Parties prior to Closing and attached thereafter.

2.8.10 Duly executed unanimous written consent of the Seller’s Board of Directors to approve the transaction contemplated under this Agreement and Ancillary Documents, in the form attached hereto as Exhibit I-2.

2.9 Delivery by Buyer

On the Closing Date, the Buyer or the Parent, as applicable, shall deliver to Seller, each of which shall be in full force and effect:

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2.9.1 The Escrow Agreement, duly executed by Buyer and Escrow Agent;

2.9.2 The Paying Agent Agreement, duly executed by Buyer and the Paying Agent;

2.9.3 A copy of an irrevocable instruction by Parent provided to its transfer agent to issue the Consideration Shares, including the Escrow Shares, to the Paying Agent for the benefit of Seller, and Escrow Agent, pursuant to the terms of the Paying Agent Agreement and Escrow Agreement; and

2.9.4 If applicable, executed form of assumption of rights and obligations pertaining to the IIA Liabilities.

2.10 Buyer’s Conditions to Closing

The respective obligations of the Buyer to consummate the transactions contemplated by this Agreement are subject to the satisfaction of, or waiver by the Buyer of, the following conditions as of the Closing Date:

2.10.1 Absence of any breach of the Seller's representations and warranties or covenants in this Agreement; without limiting the foregoing, breach by the Seller of any of the terms of Section ‎2.12 below shall be considered a material breach hereunder;

2.10.2 Receipt of all necessary regulatory, governmental and/or Third Party Approvals necessary for the consummation of this transaction, including without limitation the Third Parties Approval.

2.10.3 Absence of any pending or threatened litigation, including without limitation any pending or threatened litigation challenging the transactions contemplated under this Agreement; and

2.10.4 The delivery by the Seller to the Buyer of all items listed on Section ‎2.8 herein.

2.11 Seller’s Conditions to Closing

The respective obligations of Seller to consummate the transactions contemplated by this Agreement are subject to the satisfaction of, or waiver by Seller of, the following conditions as of the Closing Date:

2.11.1 Absence of any breach of the Buyer's representations and warranties or covenants in this Agreement;

2.11.2 Receipt of all necessary regulatory, governmental or third party approvals;

2.11.3 Absence of any pending or threatened litigation, including without limitation any pending or threatened litigation challenging the transactions contemplated under this Agreement; and

2.11.4 The delivery by the Buyer to the Seller of all items listed on Section ‎2.9 herein.

2.12 Conduct of Seller's Business.

From the Effective Date and until the Closing Date, Seller shall conduct its business in the usual and ordinary course of business consistent with past practice, except as consented to in writing by the Buyer. Without limiting the generality of the foregoing, and without derogating from any other obligation of Seller pursuant to any other arrangement and/or instrument between Buyer and Seller, from the date hereof and until the Closing, except as consented to in writing by the Buyer, Seller shall not:

2.12.1 sell, lease, assign, license or transfer any portion of the Purchased Assets or any rights thereunder; or (b) sell, lease, assign, license or transfer any portion of Seller's technology not related to the Business and the Purchased Assets unless such action

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will not have any effect on the Buyer's rights to, and benefits from, the Purchased Assets or any rights thereunder;

2.12.2 transfer, assign, or grant any license or sublicense of any of the Seller's Transferred Intellectual Property Rights or abandon, dedicate to the public or fail to take action that may result in abandonment or dedication to the public of any of the Seller's Transferred Intellectual Property Rights, or take any action that is intended to reduce the value of any Seller's Transferred Intellectual Property Rights; or (b) take any such action with respect to any other Intellectual Property Rights of Seller unless such action will not have any effect on  the Buyer's rights to, and benefits from, Transferred Intellectual Property Rights;

2.12.3 enter into any new customer, supplier, lease, reseller or distributor agreement with respect to the Purchased Assets;

2.12.4 subject any of the Purchased Assets, or any part thereof, to any Liens or suffer such to exist;

2.12.5 hire or retain any new employee, consultants, independent contractors, officer or director (who is not an officer) or make, grant, promise, adopt, amend or modify any bonus or any wage or salary increase to any employee, officer or director, or make, grant or promise any other change in employment terms for, or employee benefits received or eligible to be received by, any employee, consultant, independent contractor, officer or director other than grant of options to purchase shares of the Seller;

2.12.6 make any loans or guarantees to or for the benefit of any Seller’s employees, officers or directors, or any members of their immediate families, other than travel advances and other advances made in the ordinary course of business consistent with past practice;

2.12.7 make any substantial capital investment, expenditure or commitment (or a series of related capital investments, expenditures or commitments) or any indebtedness, other than in the ordinary course of business consistent with past practice or taking up loans from the Equity Holders in the aggregate amount of less than EUR 50,000 for operational or working capital purposes without any security interest or other right granted in connection with the Seller's Business or Purchased Assets;

2.12.8 declare, set aside or pay any dividend or distribution of cash or other property to any Equity Holder (in its capacity as Equity Holder) with respect to its equity or purchase, redeem or otherwise acquire any of its equity or any warrants, options or other rights to acquire its equity, or make any other payments to any such Equity Holder (other than repurchases of unvested shares at cost from terminated employees and other than in connection with cashless exercise of options);

2.12.9 issue, sell, or otherwise dispose of any of its capital stock or any option, warrant or other right to acquire any capital stock of Seller (other than issuance

2.12.10 of share pursuant to exercise of convertible securities; or issuance of options to employees or service providers); merge, invest in, consolidate with or acquire the business of any other Person or acquire any material property or material assets of any other Person;

2.12.11 adopt a plan of complete or partial liquidation or resolutions providing for or authorizing such a liquidation or dissolution, restructuring, recapitalization or reorganization, other than such a plan that shall commence following the Closing;

2.12.12 apply for or receive a government grant;

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2.12.13 take any other action that would cause a breach of any of the representations, warranties or covenants made by Seller in this Agreement; or

2.12.14 authorize any of, or commit or agree to take any of, the foregoing actions.

2.13 Retention

Prior to (and not later than) the Closing, the Buyer shall enter into engagement agreements with certain Seller's employees and service providers as elected by Buyer. As shall be determined following the Closing, the Parent shall issue a retention package of up to 70,000 options to acquire Parent’s shares of common stock, to be issued within 90 days post-Closing, at the sole discretion of the Parent after consultation with the Key Personnel of the Seller, and subject to the approval of Parent's Board of Directors.

3 CONSIDERATION

3.1 Payment

3.1.1 Purchase Price.

Subject to the other terms and provisions of this Agreement, the sole and aggregate consideration payable by Buyer to Seller for the Purchased Assets shall be by form of issuance by Parent of 256,660 shares of common stock, nominal value $0.0001 to the Seller, plus the Closing Payment (as specified in Section 3.3) (the “Aggregate Purchase Price”).   Such shares, upon issuance, are defined in this Agreement as the "Consideration Shares".

VAT shall be added to the Aggregate Purchase Price paid at Closing against a duly issued invoice at Closing unless an approval from the VAT authorities to issue self-tax invoice by the Buyer will be received.

3.1.2 Form of Payment

At the Closing, the Aggregate Purchase Price, other than the Closing Payment, shall be paid by form of issuance of the Consideration Shares to the Seller (which, if applicable, shall be deemed as fully discharging any payment to any Transferred Assets sold by the Subsidiary), by way of issuance to the Paying Agent and the Escrow Agent (in the respective numbers set forth in this Agreement), for the benefit of the Seller.

3.1.3 Mechanics

At the Closing Date, Buyer shall, subject to Subsection ‎9.2:

(i) Transfer such number of Consideration Shares to the Paying Agent, minus the number of Consideration Shares representing the Escrow Shares.

(ii) Transfer such number of Consideration Shares representing the Escrow Shares, to the Escrow Agent.

3.2 Taxes

3.2.1 Right to Withhold

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(i)Each of Buyer, Parent and the Paying Agent (each a “Payer”) shall be entitled to deduct and withhold from any consideration, in cash or equity, payable or otherwise deliverable pursuant to this Agreement, such amounts as Buyer, or applicable Payer, as the case may be, under the Israeli Income Tax Regulations (withholding from payments for services or assets) 5737-1977 (the “ITR”), with respect to the making of such payment unless the Seller has provided the Payer with a Valid Tax Certificate from the ITA at least three (3) days prior to the proposed date of such payment (or the Withholding Drop Date, as specified in subsection (iii) below). To the extent that such amounts are so withheld by Buyer or applicable Payer, as the case may be, and timely and properly remitted to the applicable Governmental Body in accordance with the ITR and not due to a fault by act or omission of the applicable Payer (i) such withheld amounts shall be treated for all purposes of this Agreement as having been paid to the Person to whom or to which such amounts would otherwise have been paid, and (ii) the applicable Payer shall promptly provide to the Person from which such amounts were withheld written confirmation of the amount so withheld.

(ii)Notwithstanding anything to the contrary, and subject to receiving the undertaking as mentioned below, a Payer shall not deduct or withhold any amount from the Escrow Shares, which amount or any portion thereof, if and when released, shall be released to the Paying Agent, for further disbursement to the Seller and any taxes, if any, shall be withheld by the Paying Agent upon actual payment to the Seller, unless a Valid Tax Certificate was provided to the Paying Agent pursuant to the terms hereof.

(iii)Notwithstanding the foregoing, the Paying Agent shall provide Buyer prior to the Closing Date with an undertaking as required under Section 6.2.4.3(c) of the Income Tax Circular 19/2018 (Transaction for Sale of Rights in a Corporation), with respect to Israeli Tax, any consideration payable or otherwise deliverable pursuant to this Agreement shall be paid to and retained by the Paying Agent for the benefit of the Seller for a period of 180 days from Closing or an earlier date required in writing by the Seller or by the ITA (the “Withholding Drop Date”) (during which time the Paying Agent shall not withhold any Israeli tax on such consideration, except if otherwise required by applicable law or pursuant to a demand from the ITA), and during which time each Seller may obtain a Valid Tax Certificate. In the event that no later than three (3) Business Days before the Withholding Drop Date, the Seller submits to the Buyer and the Payer a Valid Tax Certificate, then the deduction and withholding of any Israeli taxes shall be made only in accordance with the provisions of such Valid Tax Certificate (if withholding is required, the Paying Agent shall sell the portion of the Consideration Shares that is required to enable the Payer to comply with such applicable deduction or withholding requirements based upon the value per share of such Consideration Shares as of the time of such sale) and the balance of the Consideration Shares that is not withheld shall be promptly paid to the Seller. If the Seller (A) does not provide the Paying Agent with a Valid Tax Certificate no later than three Business Days before

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the Withholding Drop Date, or (B) submits a written request with the Paying Agent to release the Consideration Shares prior to the Withholding Drop Date and fails to submit a Valid Tax Certificate to the Payer at or before such time, provided however that such Payer, to the extent the Valid Tax Certificate is insufficient, notifies the Seller of such insufficiency promptly as possible, and that the ITA denies an additional extension request by the Payer, then any amount required to be withheld with respect to the Consideration Shares shall be funded through the forfeiture or sale of the portion of the Consideration Shares, otherwise deliverable to the Seller that is required to enable the Payer to comply with applicable deduction or withholding requirements. To the extent that the Seller is unable, for whatever reason, to sell the applicable portion of the Consideration Shares, then the Payer shall be entitled to hold all of the Consideration Shares, otherwise deliverable to the applicable Seller until the earlier of: (i) the receipt of a Valid Tax Certificate; or (ii) such time when the Payer is practically able to sell the portion of such Consideration Shares otherwise deliverable to the Seller that is required to enable the Payer to comply with such applicable deduction or withholding requirements. Any reasonable costs or expenses incurred by the relevant Payer in connection with such sale shall be borne by, and deducted from the payment to, the Seller, subject to prior written notice thereof to the Seller (if reasonably practicable). The amount in cash to be withheld from such payments shall be calculated according to the applicable withholding rate which amount shall be calculated in NIS based on a US$:NIS exchange rate at the time of release of the applicable Consideration Shares by the Paying Agent which amount shall be delivered to the ITA by the Paying Agent (any applicable currency conversion commissions will be borne by the Seller and deducted from payments to be made to the Seller). The applicable Payer shall furnish the Seller with documents evidencing such Tax withholding and remittance to the ITA. In the event that the Paying Agent receives a demand from the ITA to withhold any amount out of the Consideration Shares payable to the Seller and transfer it to the ITA prior to the Withholding Drop Date, the Paying Agent (1) shall notify the Seller of such matter promptly after receipt of such demand, and provide the Seller with reasonable time (but in no event less than 30 days, unless otherwise explicitly required by the ITA or under any applicable Law) to attempt to delay such requirement or extend the period for complying with such requirement as evidenced by a written certificate, ruling or confirmation from the ITA, and (2) to the extent that any such certificate, ruling or confirmation is not timely provided by the Seller to the Buyer or the Paying Agent, transfer to the ITA any amount so demanded, and such amounts shall be treated for all purposes of this Agreement as having been delivered and paid to the Seller.

3.3 Additional Payment.

The Buyer or the Parent shall provide the Seller at the Effective Date with a payment on account of the purchase price payable in respect of the Purchased Assets, in an amount of US$ 100,000 (the “Closing Payment”), to be deemed as part of the Aggregate Purchase Price.

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4 CESSATION OF BUSINESS

4.1 Covenant

Commencing on the Closing Date and continuing thereafter, Seller shall cease carrying out any Business, other than in connection with the Retained Contracts, and shall act as soon as practicably possible, to commence voluntary liquidation.

4.2 Exclusivity

As of the date hereof, Seller agrees, and agrees to procure that its Equity Holders agree, that for the period (the “Exclusivity Period”) commencing on the date hereof until the Closing neither the Seller, its Subsidiaries nor any of its Equity Holders will, directly or indirectly (including through any person acting on its behalf or at its direction), solicit, negotiate or have any discussions with any other party, or accept any offer from any other person, concerning a possible sale of all or any portion of the Seller, whether structured in the form of a sale of assets, a sale or issuance of stock, or a merger, consolidation, recapitalization, business combination, convertible loan or otherwise; and shall promptly provide Buyer with a written notice of any such expression of interest, inquiry, proposal or offer.

If, in any judicial proceeding, a court refuses to enforce said covenants (or any part thereof), then such unenforceable covenant (or such part) will be eliminated from this Agreement to the extent necessary to permit the remaining separate covenants (or portions thereof) to be enforced. In the event that the provisions of Subsections ‎4.1 and ‎4.2 are deemed to exceed the time, geographic or scope limitations permitted by applicable law, then such provisions will be reformed to the maximum time, geographic or scope limitations, as the case may be, permitted by applicable laws.

5 CONFIDENTIAL INFORMATION

5.1 Disclosure

For purposes of this Agreement, “Confidential Information” means any proprietary information, technical data, trade secrets or know-how, including, but not limited to, research, business plans or models, product plans, products, services, computer software and code, developments, inventions, processes, formulas, technology, designs, drawings, engineering, hardware configuration information, marketing, finances or other business information disclosed by  the Buyer either directly or indirectly in writing, orally to Seller or by drawings or inspection of parts or equipment or owned by  Buyer even though not delivered by  the Buyer to Seller. It is understood that all Confidential Information is and shall remain the sole property of the Buyer and/or Parent, and Seller shall not have any interest therein. Upon the Buyer’s or Parent’s request, Seller shall promptly return to  Buyer all such tangible Confidential Information.

5.2 Exclusions

Notwithstanding the provisions of Subsection ‎5.1, Confidential Information shall exclude information that Seller can demonstrate: (i) was independently developed by Seller without any use of  the Buyer’s Confidential Information or by Seller’s employees or other agents (or independent contractors hired by the Seller) who have not been exposed to  the Buyer’s

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Confidential Information (provided that this clause does not limit the terms of Subsection ‎4.1); (ii) becomes known to Seller, without restriction, from a source other than  the Buyer (or  the Buyer Confidential Information) that had a right to disclose it without breach of this Agreement; or (iii) was in the public domain at the time it was disclosed or enters the public domain through no act or omission of Seller.

5.3 Transferred Software

Notwithstanding anything in Subsection ‎5.1 and Subsection ‎5.2, as of and subject to the Closing, the Transferred Software (other than Transferred Third Party Software) and any other non-public information regarding the Transferred Intellectual Property Rights shall be deemed Confidential Information of Buyer.

5.4 Confidentiality Obligations

Seller shall treat as confidential and not disclose to any third party any of the Buyer’s Confidential Information and shall not use such Confidential Information for its or their own benefit, except as specified in Section ‎2.1 in respect of the Retained Contracts. Without limiting the foregoing, Seller shall use at least the same degree of care which they use to prevent the disclosure of their own confidential information of like importance, but in no event with less than reasonable care, to prevent the disclosure of   Buyer’s Confidential Information. Seller further agrees to take all reasonable precautions to prevent any unauthorized disclosure or use of any Buyer Confidential Information. Seller shall, upon written request from Buyer, destroy or deliver to Buyer all Buyer Confidential Information in its possession, and shall provide Buyer with written confirmation that all such materials have been delivered or destroyed, provided, however, that Seller shall be entitled to keep a copy of the Confidential Information solely for archival purposes.

5.5 Public Announcements

Neither Seller or any Equity Holders shall make any public announcement relating to this Agreement except upon the Buyer's prior written consent, which may be granted or withheld in the Buyer's sole discretion. No similar restriction shall apply to the Buyer’s right to publicly announce the transaction contemplated by this Agreement and the terms related thereto, except however that the Buyer shall, subject to legal requirements, coordinate the timing and content of such publication with the Seller (and the Seller shall not unreasonably delay or withhold its consent to such publication).

6 FURTHER CONVEYANCES AND ASSUMPTIONS; CONSENT OF THIRD PARTIES

6.1 Effective at the Closing, the Seller agrees to give  the Buyer the right to, on behalf of and for the benefit of the  Buyer and at  Buyer’s cost and expense: (i) to demand and receive from time to time any and all the Purchased Assets and to make endorsements and give receipts and releases for and with respect to the same and any part thereof; and (ii) to institute, prosecute and settle any and all actions or proceedings that  Buyer may deem proper in order to collect, assert or enforce any claim, right or title of any kind in or to the Purchased Assets; (iii) to defend or settle any or all actions or proceedings with respect to any of the Purchased Assets, (iv) to do all such acts and things in relation thereto as  Buyer shall deem necessary or desirable. Without limiting the foregoing, in the event that the Seller receives, at any time after the Closing Date, any payments related to the Business (including without limitation from any third party for payment under any Purchased Contract, but

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excluding payments under the Retained Contracts), the Seller shall promptly transfer such payment to Buyer as designated by Buyer.

6.2 Without derogating from the foregoing, from time to time following the Closing and without additional consideration to the Seller, the Seller and  Buyer shall, and shall cause their respective Affiliates to, execute, acknowledge and deliver in a reasonably prompt manner, all such further conveyances, notices, assumptions, releases and such other instruments, and shall take such further actions, in each case, as may be commercially reasonably necessary or appropriate to assure fully to  Buyer and their respective successors or assignees, all of the properties, rights, titles, interests, remedies, powers and privileges intended to be conveyed to  Buyer under this Agreement including with respect to the Purchased Assets and to assure fully to the Seller and its Affiliates, successors and assignees, the assumption of the Assumed Liabilities, and to otherwise make effective the transactions contemplated hereby and thereby provided that Buyer shall bear all expenses in connection with the foregoing.

6.3 Notwithstanding anything to the contrary contained in this Agreement, to the extent the sale, assignment, transfer, conveyance or delivery or attempted sale, assignment, transfer, conveyance or delivery to  Buyer of any Purchased Asset is prohibited by any applicable law or would require any Governmental Body or third-party authorizations, approvals, consents, or waivers and such authorizations, approvals, consents or waivers shall not have been obtained prior to the Closing Date or that Closing has occurred irrespective that such condition was not met, and the obtaining thereof is not a condition to the Closing, then this Agreement will not constitute an agreement to assign any such Purchased Asset or any claim or right or any benefit arising thereunder or resulting therefrom and following the Closing, and the Seller shall be deemed to hold the respective Purchased Asset and all rights, benefits and privileges with respect thereto as a trustee for the sole benefit of  Buyer and shall manage such Purchased Asset solely in accordance with instructions of  Buyer, and the Parties shall use their respective reasonable best efforts, and cooperate with each other, to obtain promptly such authorizations, approvals, consents or waivers. If the failure to transfer or assign any of the Purchased Assets is due to a Seller’s breach of this Agreement, the Seller shall take all said actions at its own cost and expense. Pending such authorization, approval, consent, or waiver, the Parties shall cooperate with each other in any reasonable and lawful arrangements designed to provide to Buyer the full benefits of use of such Purchased Asset. Once such authorization, approval, consent or waiver for the sale, assignment, transfer, conveyance or delivery of a Purchased Asset not sold, assigned, transferred, conveyed or delivered at the Closing is obtained, the Seller shall promptly assign, transfer, convey or deliver, or cause to be assigned, transferred, conveyed and delivered, such Purchased Asset to Buyer for no additional consideration. To the extent that any such Purchased Asset cannot be transferred or the full benefits of use of any such Purchased Asset cannot be provided to  Buyer following the Closing,  Buyer and the Seller shall enter into such arrangements for no additional consideration from  Buyer (including subleasing or subcontracting if permitted and including the allocation of any resources that may be required in connection with such Purchased Assets which may include provisions of the required services and personnel as subcontractors of the Seller), to provide to  Buyer the operational equivalent of obtaining such authorization, approval, consent or waiver, to the extent possible, provided however, that such interim arrangements will only be for a period of six (6) months following the Closing Date. Without limitation of the foregoing, in the event that at the Closing the registration of any Transferred Intellectual Property Rights

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in the name of the applicable Buyer with the relevant Governmental Body was not yet completed and perfected then without limitation of any other rights of  Buyer, to the extent necessary to grant to Buyer full and unrestricted use of such Transferred Intellectual Property Rights, the Seller hereby grants to Buyer, effective as of the Closing, an irrevocable, perpetual, royalty free, fully paid, worldwide, unrestricted, exclusive license to make any use or exploitation with respect thereto, provided however that the costs and expenses shall be borne by the Buyer. The obligations of the Seller under this Section ‎6.3 shall expire after 18 months from the Closing Date.

6.4 In the event that during the period of 18 months following the Closing,  Buyer discover any Contract, Software, Copyright, Trademark or other item of Intellectual Property or other asset owned by the Seller as of the Closing and used in conducting the Business prior to Closing, other than the Retained Contracts, (an “Additional Asset”), but was not properly transferred to  Buyer for any reason, then the Seller undertakes to license or transfer such Additional Asset, as applicable under this Section, to  Buyer in accordance with the provisions hereunder, and such item shall be deemed a Purchased Asset or Transferred Intellectual Property under this Agreement, for no additional consideration. Seller shall provide upon Buyer's request, written confirmation and, to the extent instructed by Buyer, such item shall be transferred, and in any event shall be deemed a part of the Purchased Assets and any Liability in connection therewith shall be considered as an Assumed Liability as of the date of the license or transfer of such item. If the Seller so discover any such Additional Asset, it shall notify Buyer and, Buyer may receive the Additional Asset, and the Seller shall be deemed to have licensed or transferred such Additional Asset in accordance with the terms of this Section.

6.5 Buyer shall be entitled to benefit from the rights of the Seller under all nondisclosure, non-competition, non-solicitation and assignment agreements (not including the exhibits attached to this Agreement), provisions and arrangements to which the Seller is a party, which are related to the Purchased Assets, the Transferred Intellectual Property Rights or current or former employees of the Seller who are or were engaged in the Business (the “NDA Agreements”). In case of a claimed infringement or breach by any Third Party under an NDA Agreement related to the Purchased Assets and/or the Business and/or the Transferred Intellectual Property, at the request of Buyer, the Seller shall institute legal proceedings and take any other reasonable actions, at the reasonable direction of the Buyer, against such infringing or breaching party. All the expenses incurred by the Seller, including reasonable fees for the time spent by Seller's employees, shall be borne and paid by Buyer, and the Seller shall not be required to take any such actions unless all such expenses are paid in advance or are otherwise guaranteed by the Buyer. The Seller shall not settle or compromise or permit a default or consent to entry of any judgment without the consent of Buyer, which shall not be unreasonably withheld. Nothing herein shall restrict Buyer’s rights to pursue any action to which it is legally entitled independently of the Seller.

7 REPRESENTATIONS AND WARRANTIES OF BUYER AND PARENT

Each of Buyer and Parent respectively represents and warrants to Seller, as of the Effective Date and the Closing Date, as though made as of the Closing Date, as follows:

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7.1 it is a corporation duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation and has all requisite corporate power and authority to own, lease and operate its business.

7.2 it has the full right, power and authority to enter into this Agreement and any Ancillary Agreements to which it is a party and fully perform its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. The execution, delivery and its performance of this Agreement and each Ancillary Agreement to which it is a party have been duly authorized by all necessary corporate actions on its behalf.  This Agreement has been, and each Ancillary Agreement to which it is a party will be at or prior to the Closing, duly executed and delivered by it and (assuming the due authorization, execution and delivery by the other parties hereto and thereto) this Agreement constitutes, and each such Ancillary Agreement when so executed and delivered will constitute, legal, valid and binding obligations of  Buyer, enforceable against it in accordance with their respective terms, subject only to the effect, if any, of (i) applicable bankruptcy and other similar laws affecting the rights of creditors generally and (ii) rules of law governing specific performance, injunctive relief and other equitable remedies.

7.3 The Consideration Shares, when issued at Closing, will be fully paid and shall rank pari passu in all respects with all other issued shares of common stock of the Parent. Upon issuance of the Consideration Shares, the Seller will acquire full legal and beneficial title to the Consideration Shares, free and clear of any encumbrances (subject to the escrow provisions herein, and other than in accordance with applicable securities laws and/or the Lock-Up Agreements).

7.4 The execution, delivery and performance of this Agreement and any Ancillary Agreement to which it is a party will not (i) contravene, conflict with, or result in a violation of or breach of any provision of its organizational documents, (ii) contravene, conflict with, or result in any violation or breach of any provision of any judgment, injunction, order or decree of Governmental Body by which  Buyer is bound, (iii) contravene, conflict with, or result in any violation or breach of any provision of any law applicable to it.

7.5 No consent, approval, order or authorization of, or registration, declaration or filing with, any Governmental Body or any other Person is required by or with respect to it in connection with the execution and delivery of this Agreement and any Ancillary Agreements to which it is a party, that, if not obtained or made, would reasonably be expected to adversely affect its ability to consummate the transactions contemplated hereby and thereby.

7.6 There are no actions, suits, arbitrations, mediations, proceedings or claims pending or, to the best of its knowledge, threatened against it that seek to restrain or enjoin the consummation of the transactions contemplated hereby.

7.7 Without derogating from Seller’s representations and warranties set forth under Section ‎8 below, it (i) has conducted due diligence to its full satisfactory using professional and consultant specialized in executing these kinds of transactions; (ii) has obtained all information and data as requested to obtain all necessary answers and information in connection with the Purchased Assets and the Business; (iii) has had the opportunity to consult with an independent tax, financial and/or legal advisor with respect to the purchase of the Purchased Assets and Business prior to executing this Agreement; (iv) acknowledges that it has such knowledge and experience in financial or business matters that it is capable

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of evaluating the merits and risks of the purchase of the Purchased Assets and Business pursuant to this Agreement.

7.8 The Parent currently makes and keeps publicly available adequate current public information with respect to the Parent, the Buyer and their respective affiliates, within the meaning of Rule 144(c) under the Securities Act or any similar or analogous rule promulgated under the Securities Act, is in compliance with the informational requirements of Rule 144(c) under the Securities Act and of the Exchange Act, and complies with all other necessary filings and other requirements so as to enable the holders of shares of the Parent to sell their shares under Rule 144 of the Securities Act (to the extent available to such holders).

7.9 Without derogating from the representations and warranties of the Seller, the Buyer acknowledge and confirms that its due diligence review has been completed.

8 REPRESENTATIONS AND WARRANTIES OF SELLER

Except as specifically disclosed in the disclosure schedule attached hereto (the “Disclosure Schedule”) (referencing the appropriate section and paragraph numbers), Seller (on its behalf and on behalf of its Subsidiaries, which shall be deemed as “Seller” for the purposes of this Section ‎8) represents and warrants to Buyer, as of the Effective Date and the Closing Date, as though made as of the Closing Date, as follows:

8.1 Validity and Good Standing. Seller is a company duly incorporated and validly existing under the laws of the State of Israel. Seller has the corporate power and authority necessary to own and operate its properties and to carry on its business as now conducted and as presently proposed to be conducted. Seller has not conducted any business under or otherwise used, for any purpose or in any jurisdiction, any fictitious name, assumed name or trade name other than its own name. Seller has all requisite corporate power and authority to enter into this Agreement and any Ancillary Agreement and to perform its obligations under this Agreement and under each Ancillary Agreement to which Seller is or will be a party and to consummate the transactions contemplated by this Agreement and any Ancillary Agreement. The execution, delivery and performance by the Seller of this Agreement and of each such other Ancillary Agreement have been duly authorized by all necessary action on the part of Seller and its board of directors. This Agreement and any Ancillary Agreements that have been duly executed and delivered by Seller constitute the valid and binding obligations of Seller enforceable against Seller in accordance with their terms, subject only to the effect, if any, of (i) applicable bankruptcy and other similar laws affecting the rights of creditors generally and (ii) rules of law governing specific performance, injunctive relief and other equitable remedies. Seller further warrants and represents that the maximum amounts to be actually distributed to the Seller's Equity Holders are as set forth in Schedule 8.1 of the Disclosure Schedule.

8.2 Authority. Except as set forth in Section 8.2 of the Disclosure Schedule, neither: (1) the execution, delivery or performance of this Agreement or any of the other Ancillary Agreements by Seller; nor (2) the consummation of the transactions contemplated herein, will (with or without notice or lapse of time): (a) contravene, conflict with or result in a violation of: (i) any of the provisions of the Articles of Association of Seller; (ii) any

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resolution adopted by the shareholders, board of directors or any committee of the board of directors of Seller; or (iii) any contract, document or other instrument to which Seller is a party or by which Seller or any of its properties are bound; (b) require the consent of, or registration, declaration or filing with, any Governmental Body or other Person the right to challenge any of the transactions contemplated by this Agreement or to exercise any remedy or obtain any relief under, any Action or any order, writ, injunction, judgment or decree to which Seller or any of the assets owned or used by Seller, is subject; (c) result in the imposition or creation of any Liens upon any of the Purchased Assets.

8.3 No Power of Attorney. No Person has on the Effective Date a valid power of attorney granted by the Seller in respect of any Purchased Assets.

8.4 Ownership.

Seller is the exclusive owner of all right, title and interest to and in the Purchased Assets; provided that with respect to any Third-Party Software, the Seller has a valid license to use such Third-Party Software.

8.4.1 Except as set forth in Schedule 8.4.1 of the Disclosure Schedule, Seller has the full and unencumbered right to assign and transfer to Buyer all of Seller’s rights in and to the Transferred Software and the Transferred Third Party Software without incurring, or causing Buyer to incur, any obligation to any third party, including any fee, payment or royalty obligations in connection with the transfer. For the avoidance of doubt, the Buyer shall be responsible for payment of any royalties or other payments due in connection with the use of the Transferred Third-Party Software post-Closing.

8.4.2 To the Seller’s knowledge, following the Closing, Buyer will be permitted to exploit the Purchased Assets to the same extent Seller would have been able to had the transactions contemplated by this Agreement not occurred.

8.4.3 Except as set forth on Schedule 8.4.3 of the Disclosure Schedule, Seller has not transferred ownership of, granted any exclusive license of or right to or authorized the retention of any exclusive rights to or joint ownership of, any Purchased Assets

8.4.4 The Purchased Assets are free and clear of any Liens. The Purchased Assets constitute all of the Software and Intellectual Property Rights owned by or held in the name of Seller or transferable by Seller, that relate to the Business.

8.4.5 To the Seller’s best knowledge, the Purchased Assets and, Third Party Software have not and do not infringe any third party’s Intellectual Property Rights, including, but not limited to patents, Trademarks, trade secrets, or copyrights of any third party.

8.4.6 Seller has not permitted its rights in the Transferred Intellectual Property Rights to lapse or enter the public domain.  Seller has no knowledge of any information, materials, facts or circumstances that would render any Transferred Intellectual Property Rights invalid or unenforceable.

8.4.7 Schedule 8.4.7 of the Disclosure Schedule lists all registrations and registration applications pendent with respect to the Transferred Intellectual Property Rights (collectively, “Transferred Registrations”). With respect to such Transferred

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Registrations, to the best knowledge of the Seller, all necessary registration, maintenance, and renewal fees have been paid as listed in Schedule 8.4.7 of the Disclosure Schedule. Seller has no knowledge of any information, materials, facts or circumstances that would render any Transferred Registrations invalid or unenforceable, or would materially and adversely affect any pending Transferred Registrations. There are no proceedings or actions known to Seller before any court or tribunal related to any such Transferred Registrations.  There are no proceedings or actions (including without limitation, interference, opposition, reissue, re-examination, investigation or other proceedings) known to Seller before any Governmental Body (including the United States Patent and Trademark Office or equivalent authority anywhere in the world). Seller has not knowingly misrepresented, or knowingly failed to disclose, any facts or circumstances in any application for any Transferred Registrations that would constitute fraud or a misrepresentation with respect to such application or that would otherwise affect the enforceability of any Transferred Registrations.

8.4.8 Schedule 8.4.8 of the Disclosure Schedule provides a complete, accurate list of all Third-Party Software and other technology of third parties included in the Transferred Software.

8.4.9 Except as set forth in Schedule 8.4.9 of the Disclosure Schedule, Seller has, and as a result of the transactions contemplated by this Agreement, Seller is not aware of any impediment that will prohibit or circumvent  Buyer's right to use, on a perpetual, non-revocable, world-wide basis, pursuant to valid licenses, all software development tools, library functions, compilers and all other Third Party Software that are or were used by Seller to create, modify, compile, operate or support any Transferred Software or that are or were used in, incorporated into, integrated or bundled with, or used in the development of any Transferred Software without any obligation to pay any royalties, accounting or other similar payments to any third party other than as set forth in the respective Purchased Contracts or in connection with the Third Party Software provided by Seller to  Buyer.

8.4.10 Except as set forth in Schedule 8.4.10 of the Disclosure Schedule, the Purchased Assets constitute all assets and/or rights of Company and/or Subsidiary in connection with the Business.

8.5 Open Source.

8.5.1 Except as set forth in Schedule 8.5.1(a), neither the Seller nor anyone acting on its behalf has disclosed to any person any confidential source code that is part of the Seller’s Intellectual Property Rights (except for employees, consultants and service providers involved in the development of the Seller’s Intellectual Property and bound by customary confidentiality and intellectual property assignment undertakings) and no Person, other than the Seller, possesses any current or contingent right to obtain, modify, distribute, disclose or to the Seller’s best knowledge have disclosed to them any confidential source code that is part of the Seller Intellectual Property. Except as set forth in Schedule 8.5.1(b), neither Seller nor anyone acting on its behalf, has developed any Software and has not written any source code using or that is based upon or incorporates, any software or other material that is distributed as “open source software” (as promulgated by the Open

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Source Initiative), as “free software” (as promulgated by the Free Software Foundation) or under a similar licensing or distribution model (including but not limited to, as applicable, the GNU General Public License, GNU Lesser General Public License, Library General Public License, Lesser General Public License, Mozilla Public License, Eclipse Public License, BSD licenses, the Artistic License, the Netscape Public License, the Sun Community Source License, the Sun Industry Standards License, PHP License and the Apache License, Berkeley Software Distribution license, Open Source Initiative license, MIT (“Open Source Software”)) in any manner that would (i) require the disclosure or distribution in source code form of any Seller product or Seller Intellectual Property Rights owned, purported to be owned or used by the Seller or proprietary software (other than the Open Source Software itself), (ii) require the licensing of any Seller product or Seller Intellectual Property owned, purported to be owned or used by the Seller for the purpose of making derivative works or that would allow reverse engineering or disassembly of any kind, (iii) impose any restriction on the consideration to be charged for the distribution of any Seller product or Seller Intellectual Property, (iv) create, or purport to create, obligations on the Seller requiring the disclosure, distribution or license of all or a portion of the source code for any Software included in the Seller Intellectual Property owned or purported to be owned by the Seller, as applicable, or grant, or purport to grant, to any third party, any rights or immunities under Seller Intellectual Property owned or purported to be owned by the Seller, or (v) impose any other limitation, restriction or condition on the rights or ability of the Seller to use or distribute its products and services or any Seller Intellectual Property owned, purported to be owned or used by the Seller. Other than as set forth in Schedule 8.5.1(v) of the Disclosure Schedule, the Seller has not embedded or linked any Open Source Software in or with any of its products or services generally available or in development or with any Seller Intellectual Property purported to be owned or purported to be owned by the Seller. Seller has been and is in full compliance with the licenses of any Software used by it and any Open Source Software that is or has been used by the Seller in any way.

8.6 Litigation.

8.6.1 Except as set forth in Schedule 8.6.1 of the Disclosure Schedule, there has not been any and there is no action, suit, claim, proceeding or investigation of any nature pending or threatened against Seller relating to any Purchased Assets.

8.6.2 No Purchased Assets (including, to Seller's knowledge, Third Party Software) are subject to any proceeding or outstanding decree, writ, order, judgment, injunction, or settlement agreement or stipulation that restricts in any manner the use, transfer or licensing thereof by Seller or may affect the validity, use or enforceability of such Purchased Assets by Buyer. There are no judgments, orders or decrees, citations, fines or penalties heretofore assessed against Seller, affecting the Purchased Assets under any foreign, federal, state or local law.

8.6.3 Seller is not aware that any Person has infringed or is infringing any Transferred Intellectual Property Rights; and Schedule 8.6.3. of the Disclosure Schedule accurately identifies (and Seller has delivered to Buyer a complete and accurate copy of) each letter or other written or electronic communication or correspondence

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that has been sent by or to Seller or any representative of Seller regarding any actual, alleged or suspected infringement of any Transferred Intellectual Property Rights, and provides a brief description of the current status of the matter referred to in such letter, communication or correspondence.

8.7 Confidentiality. Seller has taken all reasonable steps that are required to protect Seller’s rights in Confidential Information and Trade Secrets within the Transferred Software. Seller, through its past and current employees, contractors, consultants and other service providers, is the sole Developer of the Transferred Software (other than Third Party Software) and no other person has contributed to, created or modified the Transferred Software (other than Third Party Software).

8.8 Public Agencies. Except as set forth in Schedule 8.8 of the Disclosure Schedule, no funding, facilities or personnel of any Governmental Body, university, college, other educational institution or research center or funding from third parties was used directly or indirectly in the development of the Purchased Assets in whole or in part.  Schedule 8.8 provides a fully description of all grants provided, approved in favor of, or otherwise applied for by the Seller, the grant program, amount of grants (approved / provided), terms of repayment and/or any other material terms with respect to such grants.

8.9 Software.

To the extent that any Transferred Software (other than Third Party Software) or Transferred Intellectual Property Rights (or component thereof) was originally owned or created by, for or with any third Person, including any predecessor of Seller:

8.9.1 Seller has a valid or enforceable written agreement with such third party or parties with respect thereto, pursuant to which the Seller has obtained complete, unencumbered, irrevocable and unrestricted ownership and is the exclusive owner of, all such Transferred Software

8.9.2 (other than Third Party Software) or Transferred Intellectual Property Rights by valid assignment or otherwise (including the rights to recover unrecovered past, present and future damages for infringement or misappropriation of such Intellectual Property Rights), which agreement has been filed in a timely manner with the appropriate Governmental Body (to the extent so required); Seller has obtained to the fullest extent allowed under applicable law, waivers of moral rights and other similar rights of attribution, disclaimer of authorship or integrity in published works;

8.9.3 the transfers from Seller to Buyer hereunder do not violate such third-party agreements;

8.9.4 such third parties have not retained and do not have any rights or licenses with respect to any Transferred Software (other than Third Party Software) or Transferred Intellectual Property Rights; and

8.9.5 no basis exists for such third party to challenge or object to this Agreement or to the transfers of any Transferred Software or Transferred Intellectual Property Rights contemplated hereunder.

8.9.6 No third party, including any escrow agent, possesses any copy of, or has a license to or otherwise has access to, any source code to any Transferred Software (other

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than Third Party Software) or any Software that embodies Transferred Intellectual Property Rights. Seller shall have delivered to Buyer all copies of, and neither Seller nor any of its affiliates shall have retained any copy of, any source code to any Transferred Software or Software that embodies Transferred Intellectual Property Rights. Seller does not have any duty or obligation (whether present, contingent or otherwise) to deliver, license or make available the Transferred Software source code to any escrow agent or other Person. No event has occurred, and no circumstance or condition exists, that (with or without notice or lapse of time) will, or could reasonably be expected to, result in the delivery, license or disclosure of the source code to any other Person.

8.9.7 The Transferred Software (other than Third Party Software) performs materially in accordance with its documentation. Seller has disclosed in writing to Buyer, a summary of any known problem or issue with respect to any of the Transferred Software (other than Third Party Software) which does, or may reasonably be expected to, have a materially adverse effect on the functionality or fitness for the current purpose of use of Transferred Software (other than Third Party Software).

8.9.8 The Transferred Software (other than Third Party Software) source code has been documented materially consistently with the relevant industry practice.

8.10 IT and Functionality Matters

8.10.1 Schedule 8.10.1 of the Disclosure Schedule lists all the Software, equipment and information systems (“Information Systems”) owned, licensed, leased or controlled by Seller that are material to the operation of the Purchased Assets. If such Information Systems are operated or hosted by an outsourcer or other third-party provider, the identity of such third-party provider is disclosed in the Disclosure Schedule. Such Information Systems are sufficient for the conduct of the Business of the Seller as currently conducted. The Seller uses reasonable means, consistent with state of the art generally available to the public, to protect the security and integrity of all such Information Systems and the data stored thereon. The use by the Seller of any Software or Information Systems does not exceed the scope of the rights granted to the Seller with respect thereto, including any applicable limitation upon the usage, type or number of licenses, users, hardware, time, services or systems.

8.10.2 To the Seller’s knowledge, the Seller has complied with, is not in violation of, and has not received any notices or other communications (in writing or otherwise) of violation with respect to, any foreign, federal, state or local statute, law or regulation with respect to any Purchased Assets.

8.10.3 Seller has secured any import or export licenses that have been necessary for the distribution of the Purchased Assets exported by Seller.

8.10.4 There are no “Critical Problems” with the Transferred Software (other than Third Party Software). For the purposes of the foregoing, “Critical Problem” means a problem, defect, malfunction, nonconformity or error which has been (or should reasonably be) assigned the most critical level of error for Seller’s internal tracking and reporting systems, in a manner consistent with past practices and reasonable industry standards.

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8.10.5 To the best knowledge of the Seller, the Transferred Software is free of any disabling codes or instructions, timer, copy protection device, clock, counter or other limiting design or routing and any “back door,” “time bomb,” “Trojan horse,” “worm,” “drop dead device,” “virus,” “harmful code,” (as such terms are commonly understood in the software industry) or other software routines, code or hardware components that in each case are designed to harm, or are capable of performing any of the following functions: (i) permitting unauthorized access, or the unauthorized disablement or erasure of, or other unauthorized impediment to,  such (or parts thereof) or data or other software of users, or otherwise causing them to be incapable of being used in the full manner contemplated in the applicable documentation or (ii) damaging, or destroying any data or files without the user’s consent.

8.10.6 Since January 1, 2018, Seller has not experienced any material disruption to, or material interruption in, the conduct of the Business attributable to any software contaminant.  Seller has taken reasonable measures to provide for the back-up and recovery of any and all data necessary to the conduct of its businesses without material disruption to, or material interruption in, the conduct of its businesses.

8.11 Compliance with Privacy Laws.

8.11.1 The Purchased Assets do not include Personal Information, nor any data collected or stored by the Seller in violation of the EU General Data Protection, HIPAA (the “Data Privacy Laws”), or the Protection of Privacy Law, 1981 (the “Israeli Privacy Protection Law”).

8.11.2 Seller has never received notice from, and no Seller has ever been subject to, enquiries by any Governmental Body regarding non-compliance or alleged non-compliance with any Data Privacy Law.  No Seller nor any of its employees or other personnel is under investigation or has any order or action pending by or with, any Governmental Body for any actual or alleged violation of any Data Privacy Law, or Seller Privacy Policy.  No Person has alleged that Seller has failed to comply with any Data Privacy Law, required consent, data processing agreement, or any applicable Seller Privacy Policy, or claimed compensation from any Seller (including for unauthorized access, acquisition, or disclosure of Personal Data).

8.11.3 Seller has not suffered or incurred a breach or incident with respect to any of its systems, source code or data, including any unauthorized or unlawful access, processing or disclosure of data owned, processed, or controlled by or on behalf of Seller.  Seller has never notified, and has never been required to notify or under any contract or Data Privacy Law any Person or Governmental Body of the loss of or unauthorized access to or processing of any data or other data or information of such Person.

8.12 Additional Compliance Matters.

8.12.1 Compliance with Internet Resource Terms. The Seller, the Purchased Assets and the conduct of the Business comply with the applicable terms of use, and other applicable terms and conditions governing the use, of Internet Resources that are utilized by the Seller in the ordinary course of business, nor does the Seller or the

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conduct of the Business require any notices to any regulatory authorities or other third parties.

8.12.2 Compliance with Third Party Licenses. Seller is in compliance with all licenses governing third party components utilized in or in connection with the Purchased Assets and/or Business, including (i) complying with all flowthrough provisions of third party licenses (e.g., a requirement to include a specific notice or disclaimer) and (ii) providing adequate attribution as required by any Open Source Materials license.

8.12.3 The shareholders listed in the capitalization table set forth in Schedule 8.12.3 of the Disclosure Schedule (the “Equity Holders”) represent one hundred percent (100%) of the Seller’s outstanding securities and the Seller does not have any other outstanding securities or derivatives thereof (except for the option holders detailed in the capitalization table set forth in Schedule 8.12.3 of the Disclosure Schedule).

8.12.4 No current or former employee of the Seller has any change of control or severance agreement with the Seller or is the beneficiary of any similar type of obligation on the part of the Seller or any of its affiliates.

8.13 Governmental Grants

8.13.1 Except as set forth in Schedule 8.13.1(a), none of the Seller’s Intellectual Property Rights were developed by or for or on behalf of, or using grants or any other subsidies of, any governmental entity or any university, and no government funding, facilities, faculty or students of a university, college, other educational institution or research center or funding from third parties was used in the development of the Seller’s Intellectual Property (“Grants”). Schedule 8.13.1.(b) sets forth: (a) the aggregate amount of each Grant; (b) the aggregate outstanding obligations of Seller under each Grant with respect to royalties or other payments; (c) the outstanding amounts to be paid to Seller under the Grants by the governmental entity, if any, and (d) the composition of such obligations or amount by the patent, other Intellectual Property, product or product family to which it relates. Seller is in material compliance with the terms and conditions of each Grant. To the Seller’s best knowledge, there is no event or other set of circumstances which would reasonably be expected to lead to the revocation or material modification of any Grant. Except as set forth in Schedule 8.13.1(c), no current or former employee or consultant, of the Seller, who was involved in, or who contributed to, the creation or development of any of the Seller’s Intellectual Property, has performed services for a government, university, college, or other educational institution or research center during a period of time during which such employee or consultant was also performing services for the Seller.

8.13.2 Save for IIA approval, no consent or any other approval is required from the foregoing entities in order to give force to the transactions contemplated herein and thereby.

8.14 Labor Matters

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8.14.1 Each current and former employee, consultant or service provider of and to the Seller or other person associated with the Seller, who has developed or participated in or otherwise contributed to the conception and development of Intellectual Property Rights, has executed and delivered to the Seller a proprietary information, non-competition and invention assignment agreement conveying and assigning to the Seller by appropriately executed instruments of assignment full, effective and exclusive ownership of all tangible and intangible property developed by such individual or entity in the context of his or her engagement by Seller, and has expressly and irrevocably waived any and all moral rights and any right to receive compensation in connection therewith (in case of employees, including without limitation, any right of royalties in connection with “Service Inventions” under Section 134 of the Israeli Patent Law of 1967, or any other similar provision under any applicable law of any applicable jurisdiction). No current or former employee, consultant or service provider of the Seller has excluded any works or inventions related to the Seller’s business from his/her/its assignment of inventions to the Seller, and to the Seller’s knowledge, no current or former employee, consultant or service provider of the Seller is in violation of such proprietary information and invention assignment agreement. no current or former employee, consultant or independent service provider associated with the Seller who has contributed to or participated in, or otherwise contributed to the conception and development of Intellectual Property of the Seller has asserted or, to the Seller’s knowledge, threatened any claim against the Seller in connection with such Person’s involvement in the conception and development of any Intellectual Property of the Seller. To the Seller’s best knowledge, no employee and/or consultant of the Seller is the owner of any patent and/or registered as inventors under any patents that are not owned by the Seller and are expected to be used in the Seller’s business

8.14.2 Schedule 8.14.2 of the Disclosure Schedule contains a list of the current employees of Seller. Each such employee has entered into confidentiality and assignment of inventions agreement.

8.14.3 Schedule 8.14.3 of the Disclosure Schedule contains a list of all material independent contractors currently engaged by Seller in connection with the Business.

8.14.4 There are no legal proceedings pending or, to the knowledge of Seller, threatened against Seller before any tribunal with respect to any labor or employment-related dispute.

8.15 Brokers and Finders. No third party is entitled to receive from Seller, and Seller has no liability to pay, any brokerage commission, finders’ fees or similar consideration in connection with the Purchased Assets, the execution of this Agreement or the transactions contemplated by this Agreement based on any arrangement or agreement made by Seller.

8.16 Taxes. To the best knowledge of the Seller, Seller (a) has duly and timely filed or shall duly and timely file all material tax returns and reports required to be filed on or before the Closing Date by the laws of any jurisdiction to which it or any of the Purchased Assets is or has been subject, (b) has paid in full to the proper taxing authorities all taxes, interest, assessments, fees, and other governmental charges due on account of its assets, properties, income or operations, and (c) has withheld, collected and paid to the proper taxing authorities all amounts that it has been required by law to withhold or collect. There are no liens for taxes on the Purchased Assets.

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9 SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION, AND ESCROW

9.1 Survival of Representations, Warranties, Covenants and Agreements

9.1.1 The representations, warranties and covenants of Seller contained in this Agreement, or in any Ancillary Agreement or officer’s certificate delivered pursuant to this Agreement, shall survive the Closing Date for a period of eighteen (18) months following the Closing Date; provided, however, that notwithstanding the foregoing (ii) the representation, warranties and covenants set forth in Sections ‎8.1 through ‎8.4 (the “Fundamental Representations”), and the representations and covenants prescribed under Sections ‎2.2, ‎4.1, ‎4.2 and ‎10.1 (the shall survive until the lapse of the applicable statute of limitations; provided, further, that if, at any time prior to the applicable expiration date referred to herein, any Indemnified Party delivers to Seller a written notice pursuant to Subsection ‎9.4 (a “Claim Notice”), then the claim asserted in such notice shall survive the expiration date of the applicable representation, warranty or covenant until such time as such Claim Notice is fully and finally resolved. Notwithstanding anything to the contrary in the foregoing, the limitations set forth in this Subsection ‎9.1.1 shall not apply in the case of claims arising out of or based upon an intentionally misleading or deceptive representation, a willful act or omission intended to intentionally breach any covenants, or fraud (collectively, “Fraud Matters”).

9.1.2 All representations, warranties and covenants of Buyer and Parent contained in Section ‎7.1 through Section ‎7.8 shall survive the Closing subject to and in accordance with the applicable statute of limitations laws with respect thereto.

9.1.3 The covenants and agreements set forth in this Agreement or in any certificate or other instrument delivered pursuant to this Agreement shall survive in accordance with their respective terms.

9.2 Indemnification

9.2.1 Subject to the provisions of Subsection ‎9.1, Seller agrees to indemnify and hold  Buyer and/or Parent and their respective employees, officers and directors (each, an “Indemnified Party” and, collectively, the “Indemnified Parties”), harmless against all direct losses, liabilities, damages, deficiencies, costs and expenses, depreciation of value of the Purchased Assets (but excluding any claim for depreciation in reputation or loss of opportunity), including reasonable attorneys’ fees and expenses of investigation and defense  (hereinafter individually, a “Loss” and collectively, “Losses”) actually paid, sustained, incurred or accrued by any Indemnified Party, or any of them, (regardless of whether or not such Losses relate to any third party claims) as a result of or in connection with:

(i) any breach of any representation or warranty of Seller contained in Section ‎8 above;

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(ii) any failure by Seller to perform or comply with any covenant contained in this Agreement, any Ancillary Agreement or any other document, certificate, or agreement delivered in connection hereto;

(iii) all Excluded Liabilities;

(iv) any assets of the Seller other than Purchased Assets; and

(v) any business of the Seller other than the Business.

9.2.2 For the purpose of this Section ‎9 only, in the event of any breach of a representation or warranty of Seller contained in this Agreement or any Ancillary Agreement, the amount of any Loss resulting from such inaccuracy or breach of such representation or warranty shall be determined without giving effect to any qualification in any representation or warranty that an event or fact be material, and any such qualification shall be disregarded for such purpose.

9.2.3 Nothing in this Agreement shall limit the right of any Indemnified Party to pursue remedies under any Ancillary Agreement against the parties thereto.

9.3 Defense of Third Party Claims

9.3.1 In the event of the assertion or commencement by any Person of any claim or judicial action or legal proceeding (whether against Buyer or any other Indemnified Party) (each, an “Action”) with respect to which Seller may become obligated to hold harmless, indemnify, compensate or reimburse any Indemnified Party pursuant to this Section ‎9, the Seller shall have the right, at its election and acting reasonably, to assume or participate in the defense of such Action at its own cost, in a manner not interfering with the conduct of defense by Buyer, and without entering any settlement, nor pleading or making no contest, without Buyer’s prior written approval. An Indemnified Party shall not enter any settlement, nor plead or give any contest, in an Action for which it may seek indemnification hereunder, except with the Seller's prior written approval (which shall not be unreasonably delayed or withheld).

9.3.2 Indemnified Party shall give Seller prompt notice of the commencement of any Action against any Indemnified Party; provided, however, that any failure on the part of Indemnified Party to so notify Seller shall not limit any of the obligations of Seller under Section ‎9 except to the extent the Seller shall have been materially prejudiced as a result of such failure.

9.4 Claims Procedure.

Subject to the provisions of Subsection ‎9.5 and ‎9.6, any claim for indemnification, compensation or reimbursement (collectively, “Indemnification”) pursuant to this Section ‎9 shall be made as follows:

9.4.1 If any Indemnified Party has or claims in good faith to have incurred or suffered Losses for which it is or may be entitled to Indemnification under this Section ‎9, such Indemnified Party may deliver a Claim Notice to Seller and the Escrow Agent (if such Claim Notice is made during the Escrow Period).  Each Claim Notice shall:

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(i) state that the Indemnified Party believes in good faith that the Indemnified Party is entitled to Indemnification under this Section ‎9; (ii) contain a brief description of the facts and circumstances supporting the Indemnified Party’s claim; and (iii) if practicable, contain a non-binding, preliminary, good faith estimate of the amount to which the Indemnified Party claims to be entitled (the aggregate amount of such estimate, as it may be modified by the Indemnified Party in good faith from time to time, being referred to as the “Claimed Amount”).

9.4.2 During the thirty (30) Business Days period commencing upon receipt by Seller of a Claim Notice from an Indemnified Party (the “Dispute Period”), Seller may deliver to the Indemnified Party, with a copy to the Escrow Agent if the Claim Notice was also sent to the Escrow Agent, a written response (the “Response Notice”) in which Seller: (i) agrees that the full Claimed Amount is owed to the Indemnified Party; (ii) agrees that part, but not all, of the Claimed Amount is owed to the Indemnified Party; or (iii) indicates that no part of the Claimed Amount is owed to the Indemnified Party. If the Response Notice is delivered in accordance with clause (ii) or (iii) of the preceding sentence, the Response Notice shall also contain a brief description of the facts and circumstances supporting Seller’s claim that only a portion or no part of the Claimed Amount is owed to the Indemnified Party, as the case may be (any part of the Claimed Amount that is not agreed to be owed to the Indemnified Party pursuant to the Indemnified Party’s Claim Notice being referred to as the “Contested Amount”). If a Response Notice is not received by the Indemnified Party, or by the Escrow Agent if the Claim Notice was also sent to the Escrow Agent, from Seller prior to the expiration of the Dispute Period and after a further period of five (5) days following Buyer’s written notice to the Seller on the Seller’s failure to submit a Response Notice, then Seller shall be conclusively deemed to have agreed that an amount equal to the full Claimed Amount is owed to the Indemnified Party.

9.4.3 If Seller in its Response Notice agrees that the full Claimed Amount is owed to the Indemnified Party, or if no Response Notice is received by the Indemnified Party from Seller prior to the expiration of the Dispute Period, then Buyer will instruct the Escrow Agent to release the Claimed Amount to the Indemnified Party.

9.4.4 If Seller in the Response Notice agrees that part, but not all, of the Claimed Amount is owed to the Indemnified Party (the “Agreed Amount”), then the Parties will jointly instruct the Escrow Agent to release the Agreed Amount to the Indemnified Party.

9.4.5 If any Response Notice expressly indicates that there is a Contested Amount, Seller and the Indemnified Party shall attempt in good faith to resolve the dispute related to the Contested Amount. If Seller and the Indemnified Party resolve such dispute, such resolution shall be binding on Seller and such Indemnified Party and a settlement agreement stipulating the amount owed to such Indemnified Party (the “Stipulated Amount”) shall be signed by such Indemnified Party and Seller. The Parties will jointly instruct the Escrow Agent to release the Stipulated Amount to the Indemnified Party.

9.4.6 In the event that there is a dispute relating to any Claim Notice or Contested Amount (whether it is a matter between the Indemnified Party, on the one hand, and Seller on the other hand, or it is a matter that is subject to an Action asserted or commenced by a third party brought against the Indemnified Party in a litigation

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or arbitration), an action to resolve such dispute may be brought in accordance with Subsection ‎12.6.

9.4.7 Upon final resolution of the action to resolve the dispute relating to the Claim Notice, Buyer will instruct the Escrow Agent (with a copy to Seller) to release the amount of the award specified in the court’s decision to the Indemnified Party (a copy of such final resolution shall be provided by Buyer to the Escrow Agent together with such instruction).

9.4.8 If the Parties fail to jointly instruct the Escrow Agent in any of the situations referred to in this Section ‎9.4, the Parties agree to irrevocably accept any ruling by any arbitral tribunal under the arbitration clause of this Agreement.

9.5 Limits on Indemnification

9.5.1 Except (a) in the case of any Fraud Matters set forth in this Agreement, in any Ancillary Agreement, or in any certificate or other instrument delivered pursuant to this Agreement on the part of Seller, or (b) in the case of any indemnification claim resulting from, arising out of or in connection with clauses (ii) – (v) of Section ‎9.2.1  hereof  or (c) in the case of any indemnification claim resulting from, arising out of or in connection with any breaches of any of the Fundamental Representations, from and after the Closing Date; Seller shall not be obligated to indemnify the Indemnified Parties for any amounts in excess of the Escrow Shares.

9.5.2 The Indemnified Parties shall not be entitled to assert any claim for indemnification under this Agreement (other than in connection with any inaccuracy or breach of the Fundamental Representations, as to which this limitation shall not apply) until such time as the aggregate of all Losses that the Indemnified Parties have under this Agreement exceeds Fifty Thousand Dollars ($50,000), whereupon indemnification may be sought for all such Losses without regard to the such threshold amount.

9.5.3 The indemnification provisions under this Section ‎9 shall be the sole and exclusive monetary remedy of Buyer and Parent and the Indemnified Parties against the Seller provided, however, that the foregoing clause of this sentence shall not be deemed a waiver by any Party of any right to specific performance or injunctive relief.

9.5.4 It is hereby clarified that any indemnification amount that an Indemnified Person is entitled to receive pursuant the provisions herein shall if possible be first recovered from the Escrow Shares, and if such recovery is not available, from the Seller.

9.5.5 The amount of any Loss subject to indemnification hereunder shall be calculated net of any insurance proceeds or any indemnity, contribution or other similar payment actually received by the Indemnified Party from any third party with respect thereto. In the event that an insurance or other recovery is actually made by any Indemnified Party with respect to any Loss for which any such Person has been indemnified hereunder, then a refund equal to the aggregate amount of the recovery shall be made promptly to the Seller.

9.5.6 Neither Party shall be liable for any special, indirect, incidental, punitive or consequential loss, such as loss of business opportunities or loss of goodwill, whether in respect of any misrepresentation, breach of contract (other than willful

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breaches or Fraud Matters), tort, statutory duty or otherwise, which arises out of or in connection with this Agreement or its subject matter.

9.5.7 In all cases, and without derogating from other limitations of liability specified herein, the Seller’s aggregate liability under this Agreement, the Ancillary Agreements, and in connection with all transactions contemplated hereunder and thereunder, whether under this Agreement, tort or otherwise, shall not exceed the amount of the value of the Aggregate Purchase Price plus the Advance Payment, plus the IIA Liabilities.

9.5.8 The limitations under this Section ‎9.5 shall not apply in case of Fraud Matters or breach of lock up.

9.6 No Indemnification Limitations

9.6.1 If the transaction is not consummated due to failure to meet certain of the Closing conditions set forth herein, no liability shall be imposed on either party hereto.

9.6.2 Notwithstanding anything to the contrary set forth in this Agreement, nothing in this Agreement shall limit the rights of any Party hereto to apply for equitable remedies to enforce the other Parties’ obligations hereunder.

9.6.3 All claims for recovery for any Loss or Losses from the Escrow Shares shall be made pursuant to and in accordance with, and be governed by the terms of, this Agreement and the Escrow Agreement.

9.7 Escrow Arrangements and Payment of Escrow Shares

9.7.1 The number of Consideration Shares to be deposited in escrow with the Escrow Agent shall be equal to 32,787 Consideration Shares (the “Escrow Shares”).

9.7.2 By virtue of this Agreement and as partial security for the indemnity provided for in Subsection ‎9.2 hereof and subject to Subsection ‎8.5 above, the Escrow Shares shall be deposited at the Closing, into an escrow account with the Escrow Agent (the “Escrow Account”) pursuant to the terms and conditions of the  escrow agreement (the “Escrow Agreement”) to be executed by and among  Buyer, Seller and the Escrow Agent prior to the Closing, and Seller hereby directs Buyer to transfer the Escrow Shares to the Escrow Agent. The Escrow Shares shall be deposited by   Buyer at the Closing with the Escrow Agent. The Escrow Shares shall be available during the Escrow Period (subject to the herein terms) as partial compensation to the Indemnified Parties for any claims by such parties for any Losses suffered or incurred by them and for which they are entitled to recovery under Section ‎9.

9.7.3 For the purpose of determining the value of any cap of liability, or the number of Consideration Shares to be released from escrow to discharge Seller's indemnification obligations, or the number of Consideration Shares to be retained by the Escrow Agent upon the lapse of the Escrow Period pursuant to Section ‎9.8,

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the effective price of such Consideration Share shall be the Effective Parent Stock Price.

Seller hereby irrevocably agrees and confirms that any Escrow Share to be released from Escrow to discharge any indemnification obligation hereunder (to the extent such release is in accordance with the terms of this Agreement) shall be deemed as forfeited for the purposes hereto, and Seller irrevocably authorizes any officer of the Parent to make the requisite declaration with respect hereto.

9.8 Distribution of Escrow Shares

The Escrow Agent shall transfer all remaining Escrow Shares in the Escrow Account to Paying Agent, following applicable withholdings, for distribution to Seller at 4:00 p.m., local time to a bank account designed in writing by the Seller, on the first Business Day after the twelve (12) months anniversary of the Closing Date (the “Escrow Period”), provided however that the Escrow Agent may retain Escrow Shares in the amount of the Contested Amount or any Claimed Amount (if no Contested Amount has been presented in accordance with the terms hereof) from unresolved claims specified in Claim Notices made to that date. As soon as all such claims have been resolved by final judgment of a competent court, or the Contested Amount has been reduced, the Escrow Agent shall deliver the remaining portion of the Escrow Shares, if any, to the Seller.

9.9 Fees

All fees of the Escrow Agent and Paying Agent for performance of its duties under this Agreement, the Paying Agent Agreement and the Escrow Agreement shall be borne by Seller.

10 NO REGISTRATION; TRANSFER RESTRICTIONS.

10.1 Seller acknowledges that it has such knowledge and experience in financial or business matters that it is capable of evaluating and understanding the merits and risks of the Consideration Shares. Seller understands that there is no assurance of any economic benefit which may arise in favor of the Seller, and each Seller further acknowledges that, without derogating from the Buyer's representations and warranties under Section ‎7 above, it may incur material financial losses in entering into the transactions contemplated hereunder.  Seller, either alone or together with its representatives, has such knowledge, sophistication and experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment in the Consideration Shares, and has so evaluated the merits and risks of such investment. The Seller is able to bear the economic risk of an investment in the Consideration Shares and, at the present time, is able to afford a complete loss of such investment. Seller acknowledges that as of the date hereof, the Seller has limited financial resources, and thus an investment in the Consideration Shares is subject to significant risk. Seller is either (i) an accredited investor as defined in Rule 501(a) of Regulation D promulgated under Act, or (ii) a Non U.S. Person as defined under Regulation S promulgated under the Securities Act. To the extent that a Selling Shareholder is a non U.S. Person, Seller (x) is not receiving the Consideration Shares for the account or benefit

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of any U.S. Person, (y) is not, at the time of execution of this Agreement, and will not be, at the time of the issuance of the Consideration Shares, in the United States and (z) is not a “distributor” (as defined in Regulation S promulgated under the Act).

10.2 Seller further acknowledges that it has had the opportunity to review the ancillary agreements relating to this Agreement (including all exhibits and schedules thereto) and the SEC Reports and has been afforded (i) the opportunity to ask such questions as it has deemed necessary of, and to receive answers from, representatives of the Seller concerning the terms and conditions of the offering of the Consideration Shares and the merits and risks of investing in the Consideration Shares; (ii) access to information about the Seller and its financial condition, results of operations, business, properties, management and prospects sufficient to enable it to evaluate its investment; and (iii) the opportunity to obtain such additional information that the Seller possesses or can acquire without unreasonable effort or expense that is necessary to make an informed investment decision with respect to the investment.

10.3 Seller understands and acknowledges that any part hereof may only be disposed of in compliance with state and federal securities laws.  In connection with any transfer of Consideration Shares, other than pursuant to an effective registration statement or Rule 144 under the Act, to an affiliate (as such term is defined in Rule 144) of Seller or in connection with a pledge, the Buyer or the Parent  may require the transferor thereof to provide to the Buyer or the Parent, as applicable, an opinion of counsel to the Seller, to the effect that such transfer does not require registration of such transferred Consideration Shares under the Securities Act.  Seller further acknowledges that it might only be able to distribute the Consideration Shares (and if applicable under law or SEC requirements – proceeds derived thereto) subject to maintaining applicable exemptions, and shall provide Parent (if reasonably requested) with supporting documentations to Parent’s reasonable satisfaction.

10.4 Seller agrees to the imprinting, so long as is required, of a legend on any of the Consideration Shares issuable upon the transactions in this Agreement in the following form:

“THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT AND UNDER APPLICABLE STATE SECURITIES LAWS OR THE COMPANY SHALL HAVE RECEIVED AN OPINION OF COUNSEL THAT REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES ACT AND UNDER THE PROVISIONS OF APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED.”

10.5 Each certificate representing the Consideration Shares, if such Consideration Shares are being offered in reliance upon Regulation S, shall be stamped or otherwise imprinted with a legend substantially in the following form (in addition to any legend required by applicable state securities or “blue sky” laws):

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“THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE SECURITIES LAWS AND NEITHER SUCH SECURITIES NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR OTHERWISE TRANSFERRED EXCEPT (1) IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S PROMULGATED UNDER THE SECURITIES ACT, AND BASED ON AN OPINION OF COUNSEL, WHICH COUNSEL AND OPINION ARE REASONABLY SATISFACTORY TO THE COMPANY, THAT THE PROVISIONS OF REGULATION S HAVE BEEN SATISFIED, (2) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS OR (3) PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS, IN WHICH CASE THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE COMPANY AN OPINION OF COUNSEL, WHICH COUNSEL AND OPINION ARE REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH SECURITIES MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR OTHERWISE TRANSFERRED IN THE MANNER CONTEMPLATED PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS. HEDGING TRANSACTIONS INVOLVING THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE SECURITIES ACT.”

10.6 With a view to making available to the Seller the benefits of certain rules and regulations of the SEC which may permit the sale of the Consideration Shares to the public without registration, the Parent agrees, for a period of 21 months following Closing, to: (i) make and keep publicly available and available to the Seller adequate current public information with respect to the Parent and its affiliates, within the meaning Rule 144 under the Securities Act or any similar or analogous rule promulgated under the Securities Act, (ii) furnish to the Seller forthwith upon reasonable request a copy of the most recent annual or quarterly report of the Parent, which are publicly available on the U.S. Securities and Exchange Commission EDGAR website, and (iii) comply with all other reasonable filings and other requirements so as to enable the holders of the Consideration Shares to sell them under Rule 144 under the Securities Act (or similar rule then in effect).

11 TERMINATION

11.1 Termination. Subject to Section ‎11.2 below, this Agreement may be terminated and abandoned at any time prior to the Closing in the following events:

11.1.1 by mutual written consent of the Parties;

11.1.2 by either Seller or  Buyer if a court of competent jurisdiction or other Governmental Body shall have issued an order, decree or ruling or taken any other action (which order, decree or ruling the Parties hereto shall use their reasonable best efforts to lift) and such was not at the request of the party seeking termination of the Agreement, in each case permanently restraining, enjoining or otherwise

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prohibiting the transactions contemplated by this Agreement, and such order, decree, ruling or other action shall have become final and nonappealable;

11.1.3 by Buyer if the Closing has not taken place on or before the lapse of 90 days of the Effective Date (the “Outside Date”) (provided that Buyer shall not be entitled to terminate this Agreement pursuant to this Section ‎11.1.3 if Buyer's or Parent's breach of this Agreement has prevented the consummation of the transactions contemplated hereby at or prior to such time); or

11.1.4 by Buyer, if Seller shall have materially failed to perform in any material respect any of its covenants, obligations or other agreements hereunder, and fails to remedy such failure within 14 days of written notice from the Buyer.

11.1.5 by Seller, if Buyer or Parent shall have materially failed to perform in any material respect any of their covenants, obligations or other agreements hereunder, and fail to remedy such failure within 14 days of written notice from the Seller.

11.2 Termination Procedures. If Buyer wishes to terminate this Agreement pursuant to Section ‎11.1 above, Buyer shall deliver to Seller a written notice stating that Buyer is terminating this Agreement and setting forth a brief description of the basis on which Buyer is terminating this Agreement. If Seller wishes to terminate this Agreement pursuant to Section ‎‎11.1 above, Seller shall deliver to Buyer a written notice stating that Seller is terminating this Agreement and setting forth a brief description of the basis on which Seller is terminating this Agreement.

11.3 Effect of Termination. In the event of termination of this Agreement as provided in Section ‎11.1, this Agreement shall forthwith become void and all further obligations and liabilities of each party to the other party under this Agreement shall terminate; provided, however, that (a) neither party shall be relieved of any obligation or liability arising from any prior breach of any representation, warranty, covenant or agreement in this Agreement that occurred prior to the date of termination; and (b) the Parties shall, in all events, remain bound by and continue to be subject to Section ‎5 (Confidential Information), and ‎12 (General).

12 GENERAL

12.1 Expenses

Except as expressly provided herein, each Party shall be solely responsible for its own costs and expenses (including its attorneys’ fees and accountants’ fees):

12.1.1 incurred in negotiating and consummating the transactions contemplated hereby, and

12.1.2 for maintaining and perfecting the rights granted to such Party hereunder, including costs for recordation of documents, registration of rights and payment of government fees incurred after the Effective Date.

12.2 No Agency

Each Party shall in all matters relating to this Agreement act as an independent contractor. None of the Parties shall have authority, nor shall either Party represent that it has any authority, to assume or create any obligation, express or implied, on behalf of the others, or

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to represent the other Parties as agent or employee or in any other capacity. Neither execution nor performance of this Agreement shall be construed to have established any agency, joint venture or partnership.

12.3 Attorneys’ Fees

Subject to the provisions and limitations of Section ‎8 above, if any legal action or other legal proceeding relating to this Agreement or the enforcement of any provision of this Agreement is brought against any Party to this Agreement, the prevailing Party shall be entitled to recover reasonable attorneys’ fees, costs and disbursements.

12.4 Notices

Any notice or other communication required or permitted to be delivered to any Party under this Agreement must be in writing and shall be deemed properly delivered, given and received when delivered (by hand, by registered mail, by courier or express delivery service or by facsimile) to the address or facsimile telephone number set forth beneath the name of such Party below (or to such other address or facsimile telephone number as such Party may have specified in a written notice given to the other Parties):

if to Buyer:	Labstyle Innovation Ltd.
	HaTokhen Street, Caesarea Industrial Park, Israel 3088900
	Attention: Mr. Zvi Ben-David, CFO
	Email: zvi@mydario.com
if to Parent:	Dario Health Corp.
	142 W 57th Street, New York, NY 10019, USA
	Attention: Mr. Zvi Ben-David, CFO
	Email: zvi@mydario.com
with a copy to (which shall not constitute notice):
	Sullivan & Worcester Tel-Aviv
	28 Ha’arbaa st., Tel-Aviv, Israel
	Attention: Tamir Chagal, Adv.
	Email: tchagal@sullivanlaw.co.il
if to Seller:
	Physimax Technologies Ltd.
	17 Ruhama St., Herzliya, Israel
	Attention: Ram Shalev, CEO
	Email: ram@pmax.com
With a copy to which shall not constitute notice):

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Netta Shaked-Stadler, Adv.

Eitan Mehulal Sadot

10 Abba Eban Blvd., Herzlia, Israel

Email: nettas@ems-legal.com

Any notice delivered by hand or by courier to the Party to whom it is addressed as provided above shall be deemed to have been given and received on the day it is so delivered at such address.  If such day is not a Business Day, or if the notice is received after 4:00 p.m. (addressee’s local time), then the notice shall be deemed to have been given and received on the next Business Day.  Any notice transmitted by facsimile shall be deemed to have been given and received on the day in which transmission is confirmed.  If such day is not a Business Day or if the facsimile transmission is received after 4:00 p.m. (addressee’s local time), then the notice shall be deemed to have been given and received on the first Business Day after its transmission. Attempted delivery of any notice hereunder by electronic communication (including e-mail and Internet or intranet websites, but excluding facsimile transmission) shall not constitute delivery of such notice for the purposes of this Agreement.

12.5 Governing Law

THIS AGREEMENT SHALL BE GOVERNED IN ALL RESPECTS BY THE LAWS OF THE STATE OF ISRAEL, AND THE COMPETENT COURTS OF TEL-AVIV, ISRAEL, SHALL HAVE EXCLUSIVE JURISDICTION THEREOF.

12.6 Forum and Venue

All disputes arising out of or in connection with this Agreement which the parties are unable to resolve within thirty (30) calendar days shall be resolved exclusively in arbitration in accordance with the rules provisions of the Israeli Arbitration Law-1968 (the “Rules”) in Tel-Aviv, Israel by a single arbitrator appointed jointly by Buyer and the Seller, and if no agreement is reached on the identity of the arbitrator within ten (10) days following a written demand, the identity of the arbitrator will be determined in accordance with the Rules.  The language to be used the arbitral shall be English. Any ruling or decision of the Arbitrator may be enforced in any court of competent jurisdiction. The arbitrator shall not be bound by procedure law or rules of evidence, but will rule consistent with the substantive law of the State of Israel (save for where the choice of law herein prescribes otherwise – and in such case, as prescribed herein). The award of the Arbitrator shall be in writing, state the reasons upon which it is based, and shall be final and binding upon the parties. This Section constitutes an Arbitration Agreement in accordance with the Rules. In the event of any contradiction between the provisions hereof and the Rules, the provisions of this Agreement shall prevail. All arbitral proceedings conducted with reference to this arbitration clause shall be kept strictly confidential.  This confidentiality undertaking shall cover all information disclosed in the course of such arbitral proceedings, as well as any decision or award that is made or declared during the proceedings. Information covered by this confidentiality undertaking may not, in any form, be disclosed to any third party without the written consent of all Parties, except for their legal advisors and other advisors or Persons (and, in the case of the Seller, except also for the Indemnifying Parties) with a need to know of such proceedings, provided that such third party advisors and Persons are subject

-39-

to confidentiality undertaking not less strict than the provisions of this confidentiality undertaking.  The immediately preceding sentence notwithstanding, no Party shall be prevented from disclosing such information if, and to the extent, such Party is obliged to disclose it under statute, regulation, decision of a Governmental Body, stock exchange contract or similar, provided that (to the extent lawfully possible) the disclosing party first consults with any affected Party as to the nature, proposed form, timing and purpose of such disclosure and uses all reasonable endeavors to ensure that such information is treated by any receiving party as confidential.

12.7 Injunctive Relief

It is understood and agreed that, notwithstanding any other provision of this Agreement any Party’s breach of the confidentiality obligations or provisions relating to proprietary rights will cause irreparable damage for which recovery of money damages would be inadequate, and that the other Parties will therefor be entitled to timely injunctive relief in any jurisdiction and in any court that can provide a remedy to protect such Party’s rights under this Agreement in addition to any and all other remedies available at law or in equity.

12.8 Waiver

12.1.3 No failure on the part of a Party to exercise any power, right, privilege or remedy under this Agreement, and no delay on the part of any Party in exercising any power, right, privilege or remedy under this Agreement, will operate as a waiver of such power, right, privilege or remedy; and no single or partial exercise of any such power, right, privilege or remedy will preclude any other or further exercise thereof or of any other power, right, privilege or remedy.

12.1.4 No Party shall be deemed to have waived any claim arising from this Agreement, or any power, right, privilege or remedy under this Agreement, unless the waiver of such claim, power, right, privilege or remedy is expressly set forth in a written instrument duly executed and delivered on behalf of such Party; and any such waiver will not be applicable or have any effect except in the specific instance in which it is given.

12.9 Assignment

Neither Party shall have the right to assign or transfer this Agreement, or any of its rights hereunder (provided that, Buyer may assign, transfer and take all actions it deems fit with respect to the Transferred Assets following Closing), without the prior written permission of the other Party, which may be granted or withheld at its sole discretion. Any assignment in violation of this Subsection ‎12.9 is null and void.

12.10 Severability

If, for any reason, a court of competent jurisdiction finds any provision of this Agreement, or portion thereof, to be invalid or unenforceable, such provision of this Agreement will be enforced to the maximum extent permissible so as to effect the intent of the Parties, and the remainder of this Agreement will continue in full force and effect. The Parties agree to negotiate in good faith an enforceable substitute provision for any unenforceable provision that most nearly achieves the intent and economic effect of the unenforceable provision. Notwithstanding the foregoing, if a court of competent jurisdiction determines that any restriction on any license granted herein is invalid or unenforceable, then the license grants to which such restriction relates shall terminate automatically.

-40-

12.11 Entire Agreement

This Agreement (including the Exhibits hereto) sets forth the entire understanding of the Parties hereto relating to the subject matter hereof and supersedes all prior agreements and understandings between or among the Parties hereto relating to the subject matter hereof. Except for the representations and warranties explicitly set forth in this Agreement, no Party makes any other representation or warranty, whether express or implied, to any other Party with respect to the Purchased Assets or otherwise in connection with the transactions contemplated by this Agreement. Upon Closing, the debenture notes issued in respect of the Advance Payments, shall be deemed fully paid and satisfied.

12.12 Amendments

This Agreement may not be amended, modified, altered or supplemented other than by means of a written instrument duly executed and delivered on behalf of Seller and Buyer. Each subsequent Exhibit mutually agreed to and signed by the Parties shall be governed by this Agreement.

12.13 No Third Party Beneficiaries

The terms and provisions of this Agreement are intended solely for the benefit of each Party and their respective permitted successors and permitted assigns, and the Parties do not intend to confer third party beneficiary rights upon any other Person, other than the Indemnified Parties which will be deemed third party beneficiaries for the purposes of Section ‎9.

12.14 Counterparts

This Agreement may be executed in counterparts, which, when taken together, shall constitute one agreement.

[Remainder of Page Intentionally Left Blank]

-41-

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by this respective authorized officer as of the date first written above.

LABSTYLE INNOVATION LTD

By:

Name:

Title:

DARIO HEALTH CORP

By:

Name:

Title:

PHYSIMAX TECHNOLOGIES LTD

By:

Name:

Title:

EX-31.1

Exhibit 31.1

Certification of Chief Executive Officer

Pursuant to Rule 13a-14(a)

I, Erez Raphael, certify that:

1.           I have reviewed this Quarterly Report on Form 10-Q of DarioHealth Corp.;

2.           Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.           Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.           The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)              Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)              Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)              Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)              Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.           The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)              All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)              Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 11, 2022

/s/ Erez Raphael

Erez Raphael

Chief Executive Officer

(Principal Executive Officer)

EX-31.2

Exhibit 31.2

Certification of Chief Financial Officer

Pursuant to Rule 13a-14(a)

I, Zvi Ben David, certify that:

1.           I have reviewed this Quarterly Report on Form 10-Q of DarioHealth Corp.;

2.           Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.           Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.           The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)              Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)              Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)              Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)              Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.           The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)              All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)              Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 11, 2022

/s/ Zvi Ben David

Zvi Ben David

Chief Financial Officer, Secretary and Treasurer

(Principal Financial Officer)

EX-32.1

Exhibit 32.1

DARIOHEALTH CORP.

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350

In connection with the Quarterly Report of DarioHealth Corp. (the “Company”) on Form 10-Q for the period ended March 31, 2022, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Erez Raphael, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. ss.1350, that to my knowledge:

(1)            The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)            The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

/s/ Erez Raphael

Erez Raphael

Chief Executive Officer

(Principal Executive Officer)

May 11, 2022

EX-32.2

Exhibit 32.2

DARIOHEALTH CORP.

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350

In connection with the Quarterly Report of DarioHealth Corp. (the “Company”) on Form 10-Q for the period ended March 31, 2022, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Zvi Ben David, Chief Financial Officer, Secretary and Treasurer of the Company, certify, pursuant to 18 U.S.C. ss.1350, that to my knowledge:

(1)            The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)            The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

/s/ Zvi Ben David

Zvi Ben David

Chief Financial Officer, Secretary and Treasurer

(Principal Financial Officer)

May 11, 2022

XML

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2022	May 09, 2022
Document and Entity Information
Document Type	10-Q
Document Quarterly Report	true
Document Transition Report	false
Amendment Flag	false
Document Period End Date	Mar. 31, 2022
Document Fiscal Year Focus	2022
Document Fiscal Period Focus	Q1
Entity File Number	001-37704
Entity Registrant Name	DarioHealth Corp.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	45-2973162
Entity Address, Address Line One	18 W. 18th St.
Entity Address, City or Town	New York
Entity Address, State or Province	NY
Entity Address, Postal Zip Code	10011
City Area Code	972
Local Phone Number	770-6377
Entity Interactive Data Current	Yes
Entity Current Reporting Status	Yes
Entity Central Index Key	0001533998
Current Fiscal Year End Date	--12-31
Title of 12(b) Security	Common Stock, par value $0.0001 per share
Security Exchange Name	NASDAQ
Trading Symbol	DRIO
Entity Filer Category	Non-accelerated Filer
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		21,986,598
Entity Small Business	true
Entity Emerging Growth Company	false

XML

INTERIM CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Mar. 31, 2022	Dec. 31, 2021
CURRENT ASSETS:
Cash and cash equivalents	$ 55,558	$ 35,808
Short-term restricted bank deposits	190	192
Trade receivables	4,574	1,310
Inventories	7,783	6,228
Other accounts receivable and prepaid expenses	3,271	2,067
Total current assets	71,376	45,605
NON-CURRENT ASSETS:
Deposits	7	20
Operating lease right of use assets	280	287
Long-term assets	16	57
Property and equipment, net	698	702
Intangible assets, net	13,314	12,460
Goodwill	41,640	41,640
Total non-current assets	55,955	55,166
Total assets	127,331	100,771
CURRENT LIABILITIES:
Trade payables	4,228	5,109
Deferred revenues	1,093	1,195
Operating lease liabilities	212	266
Other accounts payable and accrued expenses	7,192	7,806
Earn-out liability	373	825
Total current liabilities	13,098	15,201
NON-CURRENT LIABILITIES
Operating lease liabilities	48	21
Total non-current liabilities	48	21
STOCKHOLDERS' EQUITY
Common Stock of $0.0001 par value - Authorized: 160,000,000 shares at March 31, 2022 (unaudited) and December 31, 2021; Issued and Outstanding: 22,070,963 and 16,573,420 shares at March 31, 2022 (unaudited) and December 31, 2021, respectively	2	2
Preferred Stock of $0.0001 par value - Authorized: 5,000,000 shares at March 31, 2022 (unaudited) and December 31, 2021; Issued and Outstanding: 10,897 and 11,927 shares at March 31, 2022 (unaudited) and December 31, 2021, respectively
Additional paid-in capital	352,564	307,561
Accumulated deficit	(238,381)	(222,014)
Total stockholders' equity	114,185	85,549
Total liabilities and stockholders' equity	$ 127,331	$ 100,771

XML

INTERIM CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Mar. 31, 2022	Dec. 31, 2021
INTERIM CONSOLIDATED BALANCE SHEETS
Common stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Common stock, shares authorized	160,000,000	160,000,000
Common stock, shares, issued	22,070,963	16,573,420
Common stock, shares, outstanding	22,070,963	16,573,420
Preferred stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Preferred stock, shares authorized	5,000,000	5,000,000
Preferred stock, shares issued	10,897	11,927
Preferred stock, shares outstanding	10,897	11,927

XML

INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
Revenues	$ 8,059	$ 3,595
Cost of revenues (excluding amortization and inventories step-up shown separately below)	3,142	1,988
Amortization of acquired intangible assets and inventories step-up	932	526
Gross profit	3,985	1,081
Operating expenses:
Research and development	5,927	2,655
Sales and marketing	9,535	7,132
General and administrative	4,395	5,621
Total operating expenses	19,857	15,408
Operating loss	15,872	14,327
Total financial expenses, net	44	639
Net loss	15,916	14,966
Deemed dividend	451	544
Net loss attributable to holders of Common Stock	$ 16,367	$ 15,510
Net loss per share:
Basic net loss per share	$ 0.74	$ 0.92
Diluted net loss per share	$ 0.74	$ 0.92
Weighted average number of Common Stock used in computing basic net loss per share	19,624,079	14,025,921
Weighted average number of Common Stock used in computing diluted net loss per share	19,624,079	14,025,921

XML

INTERIM STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) $ in Thousands	Common Stock Upright Technologies Ltd	Common Stock Physimax Technologies Ltd.	Common Stock	Preferred Stock [Member]	Additional Paid-in Capital [Member] Upright Technologies Ltd	Additional Paid-in Capital [Member] Physimax Technologies Ltd.	Additional Paid-in Capital [Member]	Accumulated deficit [Member]	Upright Technologies Ltd	Physimax Technologies Ltd.	Total
Balance at Dec. 31, 2020							$ 171,399	$ (143,248)			$ 28,151
Balance (in shares) at Dec. 31, 2020			8,119,493	15,823
Payment for executives and directors under Stock for Salary Program							72				72
Payment for executives and directors under Stock for Salary Program (in shares)			5,579
Exercise of options							201				201
Exercise of options (In Shares)			33,773
Exercise of placement agent warrants (in shares)			92,575
Exercise of Warrants							633				633
Exercise of Warrants (in shares)			219,760
Issuance of common stock to directors and employees							1,484				1,484
Issuance of common stock to directors and employees (in shares)			102,667
Conversion of preferred stock to common stock (in shares)			802,061	(3,423)
Deemed dividend related to issuance of preferred stock							544	(544)
Issuance of warrants to service providers							846				846
Stock-based compensation							2,036				2,036
Stock-based compensation (in shares)			1,056,643
Issuance of common stock, net of issuance cost							64,877				64,877
Issuance of common stock, net of issuance cost (in shares)			3,278,688
Issuance of common stock upon acquisition					$ 28,933				$ 28,933
Issuance of common stock upon acquisition (in shares)	1,687,612
Net loss								(14,966)			(14,966)
Balance at Mar. 31, 2021							271,025	(158,758)			112,267
Balance (in shares) at Mar. 31, 2021			15,398,851	12,400
Balance at Dec. 31, 2021			$ 2				307,561	(222,014)			85,549
Balance (in shares) at Dec. 31, 2021			16,573,420	11,927
Exercise of Warrants (in shares)			81,221
Issuance of common stock to directors and employees							161				161
Issuance of common stock to directors and employees (in shares)			24,191
Issuance of common stock to consultants and service provider							113				113
Issuance of common stock to consultants and service provider (in shares)			4,983
Conversion of preferred stock to common stock (in shares)			316,052	(1,030)
Deemed dividend related to issuance of preferred stock							451	(451)
Issuance of warrants to service providers							1,301				1,301
Stock-based compensation							3,768				3,768
Stock-based compensation (in shares)			139,982
Issuance of common stock, net of issuance cost (in shares)										256,660
Issuance of common stock upon acquisition						$ 1,186				$ 1,186
Issuance of common stock upon acquisition (in shares)		256,660
Issuance of common stock and pre-funded warrants, net of issuance cost							38,023				38,023
Issuance of common stock and pre-funded warrants, net of issuance cost (in shares)			4,674,454
Net loss								(15,916)			(15,916)
Balance at Mar. 31, 2022			$ 2				$ 352,564	$ (238,381)			$ 114,185
Balance (in shares) at Mar. 31, 2022			22,070,963	10,897

XML

INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Cash flows from operating activities:
Net loss	$ (15,916)	$ (14,966)
Adjustments required to reconcile net loss to net cash used in operating activities:
Stock-based compensation, common stock, and payment in stock to directors, employees, consultants, and service providers	5,343	4,438
Depreciation	70	64
Change in operating lease right of use assets	7	6
Amortization of acquired inventories step-up		151
Amortization of acquired intangible assets	963	375
Decrease (increase) in trade receivables	(3,264)	318
Decrease (increase) in other accounts receivable, prepaid expense and long-term assets	(1,550)	207
Increase in inventories	(1,555)	(32)
Increase in trade payables	(890)	(544)
Decrease in other accounts payable and accrued expenses	(721)	(609)
Increase (decrease) in deferred revenues	(102)	93
Change in operating lease liabilities	(27)	(33)
Remeasurement of earn-out	(452)
Net cash used in operating activities	(18,094)	(10,532)
Cash flows from investing activities:
Purchase of property and equipment	(66)	(68)
Cash paid as part of Upright Technologies Ltd. acquisition		(2,472)
Intangible assets purchases incurred, Physimax Technologies LTD.	(115)
Net cash used in investing activities	(181)	(2,540)
Cash flows from financing activities:
Proceeds from issuance of common stock and prefunded warrants (net of issuance costs)	38,023	64,877
Proceeds from exercise of warrants		633
Proceeds from exercise of options		201
Net cash provided by financing activities	38,023	65,711
Increase in cash, cash equivalents and restricted cash and cash equivalents	19,748	52,639
Cash, cash equivalents and restricted cash and cash equivalents at beginning of period	35,948	28,725
Cash, cash equivalents and short-term restricted bank deposits at end of period	$ 55,696	$ 81,364

XML

GENERAL

3 Months Ended

Mar. 31, 2022

GENERAL

GENERAL

NOTE 1:  -   GENERAL

a. DarioHealth Corp. (the “Company” or “DarioHealth”) was incorporated in Delaware and commenced operations on August 11, 2011.

DarioHealth is a Global Digital Therapeutics (DTx) company changing the way people with chronic conditions manage their health. By delivering personalized evidence-based interventions that are driven by precision data analytics, software, and personalized coaching, DarioHealth has developed an approach that empowers 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 diabetes solution, its user-centric approach is used by tens of thousands of customers around the globe. DarioHealth is rapidly expanding its solutions for additional chronic conditions such as hypertension and moving into new geographic markets.

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 operates as a unit and one operating segment.

b. The Company has a wholly owned subsidiary, LabStyle Innovation Ltd. (“LabStyle”), which was incorporated and commenced operations on September 14, 2011 in Israel. Its principal business activity is to hold the Company’s intellectual property and to perform research and development, manufacturing, marketing and other business activities.

c. On January 26, 2021, the Company entered into a share purchase agreement (the “Share Purchase Agreement”) pursuant to which the Company, through LabStyle, acquired all of the outstanding securities of Upright Technologies Ltd. and its wholly owned subsidiary Upright Technologies Inc. (“Upright”). Upright is a digital musculoskeletal (“MSK”) health company focused on preventing and treating the most common MSK conditions through behavioral science, biofeedback, coaching, and wearable tech.

d. On May 15, 2021, the Company entered into an agreement and plan of merger pursuant to which the Company, through its wholly owned subsidiary WF Merger Sub, Inc. (“Merger Sub”), merged with PsyInnovations Inc. (“WayForward”), pursuant to which the Merger Sub was the surviving company. WayForward is a mental health company who develops the WayForward behavioral digital health platform with artificial intelligence (AI) enabled screening to triage and navigate members to specific interventions, digital cognitive behavioral therapy (CBT), self-directed care, expert coaching and access to in-person and telehealth provider visits.

e. During the three months ended March 31, 2022, the Company incurred operating losses and negative cash flows from operating activities amounting to $15,872 and $18,094, respectively. On March 31, 2022, we had $55,558 in available cash and cash equivalent. Management believes that our cash on hand is 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 consolidated financial statements. 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 offering.

XML

SIGNIFICANT ACCOUNTING POLICIES

3 Months Ended

Mar. 31, 2022

SIGNIFICANT ACCOUNTING POLICIES

SIGNIFICANT ACCOUNTING POLICIES

NOTE 2: -   SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited interim consolidated financial statements as of March 31, 2022, have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission regarding interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. s. In the opinion of management, the unaudited interim consolidated financial statements include all adjustments of a normal recurring nature necessary for a fair presentation of the Company’s consolidated financial position as of March 31, 2022, and the Company’s consolidated results of operations and the Company’s consolidated cash flows for the three months ended March 31, 2022. Results for the three months ended March 31, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022. 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, 2021.

Use of Estimates

Preparation of condensed consolidated financial statements in conformity with 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, 2021 are applied consistently in these unaudited interim consolidated financial statements.

b.    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:

NOTE 2: -   SIGNIFICANT ACCOUNTING POLICIES (Cont.)

	March 31,		March 31,
	2022		2021
	Unaudited		Unaudited
Cash, and cash equivalents as reported on the balance sheets	$	55,558	$	81,171
Short-term restricted bank deposits, as reported on the balance sheets		138		193
Cash, restricted cash, cash equivalents and restricted cash and cash equivalents as reported in the statements of cash flows	$	55,696	$	81,364

c.   Business and Asset Acquisitions

When the Company acquires a business, the purchase price is allocated to the tangible and identifiable intangible assets, net of liabilities assumed. Any residual purchase price is recorded as goodwill. The allocation of the purchase price requires management to make significant estimates in determining the fair values of assets acquired and liabilities assumed, especially with respect to intangible assets. These estimates can include, but are not limited to, the cash flows that an asset is expected to generate in the future, the appropriate weighted-average cost of capital and the cost savings expected to be derived from acquiring an asset. These estimates are inherently uncertain and unpredictable. During the measurement period, which may be up to one year from the acquisition date, adjustments to the fair value of these tangible and intangible assets acquired and liabilities assumed may be recorded, with the corresponding offset to goodwill. Upon the conclusion of the measurement period or final determination of the fair value of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded to the Company’s consolidated statements of operations.

The Company accounts for a transaction as an asset acquisition when substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets, or otherwise does not meet the definition of a business. Asset acquisition-related costs are capitalized as part of the asset or assets acquired.

d.    Recently issued accounting pronouncements, not yet adopted:

1. In September 2016, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”). ASU 2016-13 changes the impairment model for most financial assets and certain other instruments. For tradeand other receivables, held-to-maturity debt securities, loans, and other instruments, entities will be required to use a new forward-looking “expected loss” model that generally will result in the earlier recognition of allowances for losses. The guidance also requires increased disclosures. For the Company, the amendments in the update were originally effective for

fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. In November 2019, the FASB issued ASU No. 2019-10 which delayed the effective date of ASU 2016-13 for smaller reporting companies (as defined by the U.S. Securities and Exchange Commission) and other non-SEC reporting entities to fiscal years beginning after December 15, 2022, including interim periods within those fiscal periods. Early adoption is permitted. The Company is currently assessing the impact the guidance will have on its consolidated financial statements.

NOTE 2: -   SIGNIFICANT ACCOUNTING POLICIES (Cont.)

2. In August 2020, the FASB issued ASU 2020-06 (“ASU 2020-06”), which simplifies the guidance on the issuer’s accounting for convertible debt instruments by removing the separation models for (1) convertible debt with a cash conversion feature and (2) convertible instruments with a beneficial conversion feature. As a result, entities will not separately present in equity an embedded conversion feature in such debt. Instead, they will account for a convertible debt instrument wholly as debt, unless certain other conditions are met. The elimination of these models will reduce reported interest expense and

increase reported net income for entities that have issued a convertible instrument that was within the scope of those models before the adoption of ASU 2020-06. ASU 2020-06 also requires that the effect of potential share settlement be included in the diluted earnings per share calculation when an instrument may be settled in cash or share. This amendment removes current guidance that allows an entity to rebut this presumption if it has a history or policy of cash settlement. Furthermore, ASU 2020-06 requires the application of the if-converted method for calculating diluted earnings per share, the treasury stock method will be no longer available. The provisions of ASU 2020-06 are applicable for fiscal years beginning after December 15, 2023, with early adoption permitted for fiscal years beginning after December 15, 2020. The Company is currently evaluating the impact of ASU 2020-06 on its consolidated financial statements.

3. In October 2021, the FASB issued ASU 2021-08, which requires companies to apply ASC 606 to recognize and measure contract assets and contract liabilities from contracts with customers acquired in a business combination. This creates an exception to the general recognition and measurement principle in ASC 805. requires companies to apply ASC 606 to recognize and measure contract assets and contract liabilities from contracts with customers acquired in a business combination. For the Company, the guidance is effective for fiscal years beginning after December 15, 2022 and interim periods within those fiscal years. The Company is currently evaluating the impact of ASU 2021-08 on its consolidated financial statements.

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ACQUISITIONS

3 Months Ended

Mar. 31, 2022

ACQUISITIONS

ACQUISITIONS

NOTE 3: – ACQUISITIONS

Technology Purchase of Physimax Technologies Ltd.

On March 31, 2022 (the “Acquisition Date”), the Company completed the acquisition, through its subsidiary LabStyle, of a technology from Physimax Technologies Ltd (“Physimax Technology”). The Company considered this transaction as an asset acquisition. As a result, the estimated fair value of the assets acquired have been included in the accompanying balance sheet from the Acquisition Date.

The consideration transferred included the issuance of  256,660 shares of Common Stock subjected to certain terms of lock-up periods valued at $1,186, a cash payment of $500, of which $400 was paid during the fourth quarter of 2021, and the remaining to be paid on the second quarter of 2022, The total consideration transferred in the acquisition of Physimax Technology was $1,686.

In addition, the Company capitalized acquisition-related costs in an aggregate amount of $131. The acquisition-related costs include legal and accounting services.

NOTE 3: – ACQUISITIONS (Cont.)

Purchase price allocation:

Under asset acquisition accounting principles, the total purchase price was allocated to Physimax Technology as an intangible asset based on cost value as set forth below.

			Amortization
			period (Years)
Technology	$	1,817		4

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INVENTORIES

3 Months Ended

Mar. 31, 2022

INVENTORIES

INVENTORIES

NOTE 4: -   INVENTORIES

	March 31,		December 31,
	2022		2021
	Unaudited
Raw materials	$	927	$	714
Finished products		6,857		5,514
	$	7,783	$	6,228

During the three-month period ended March 31, 2022, and the year ended December 31, 2021, total inventory write-downs expenses amounted to $18 and $73, respectively.

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REVENUES

3 Months Ended

Mar. 31, 2022

REVENUES.

REVENUES

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 revenue directly from individuals through a la carte offering and membership plans. The Company also contracts with enterprise business market groups to provide digital therapeutics solutions for individuals to receive access to services through the Company’s commercial arrangements.

On February 28, 2022, the Company entered into an exclusive preferred partner, co-promotion, development collaboration and license agreement for a term of five (5) years. Pursuant to the Agreement, the Company will provide a license to access and use certain Company data. In addition, the Company may provide development services for new products of the other party.

The Company has determined that the other party is a customer. The aggregative consideration under the contract is up to $30 million over the initial term of the agreement, consisting of (i) an upfront payment, (ii) annual compensation for development costs per annual development plans to be agreed upon annually and (iii) certain contingent milestone payments upon meeting certain net sales and enrollment rate milestones at any time during the term of the Agreement.

NOTE 5: -   REVENUES (Cont.)

The following tables represent the Company’s total revenues for the three months ended March 31, 2022, and 2021 disaggregated by revenue source:

	March 31,
	2022		2021
	Unaudited
Commercial	$	4,549	$	53
Consumers		3,510		3,542
	$	8,059	$	3,595

The Company recognizes contract liabilities, or deferred revenues, when it receives advance payments from customers before performance obligations primarily related services have been performed. Advance payments are received at the beginning of the service period and the related deferred revenues are reclassified to revenue ratably over the service period. The balance of deferred revenues approximates the aggregate amount of the transaction price allocated to the unsatisfied performance obligations at the end of reporting period.

The following table presents the significant changes in the deferred revenue balance during the three months ended March 31, 2022:

Balance, beginning of the period	$	1,195
New performance obligations		608
Reclassification to revenue as a result of satisfying performance obligations		(710)
Balance, end of the period	$	1,093

Because all performance obligations in the Company’s contracts with customers relate to contracts with a duration of less than one year, the Company has elected to apply the optional exemption and is not required to disclose the aggregate amount of the transaction price allocated to performance obligations that are unsatisfied or partially unsatisfied at the end of the reporting period.

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FAIR VALUE MEASUREMENTS

3 Months Ended

Mar. 31, 2022

FAIR VALUE MEASUREMENTS

FAIR VALUE MEASUREMENTS

NOTE 6: -   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-	Unadjusted quoted prices in active markets for identical assets or liabilities accessible to the reporting entity at measurement date.
Level 2-	Other than quoted prices included in Level 1 inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability.
Level 3	Unobservable inputs for the asset or liability used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at measurement date.

NOTE 6: -   FAIR VALUE MEASUREMENTS (Cont.)

As part of the acquisition of Wayforward on June 7, 2021, the consideration transferred included earn-out payable in up to 237,076 restricted shares of Common Stock. The earn-out arrangement is not indexed to the Company's own stock, and was accounted as a liability, subsequently measured at fair value through earnings until settlement.

In determining the earn-out fair value, the Company used the Monte-Carlo simulation valuation technique, in order to predict the probability of different outcomes that rely on repeated random variables.

For the three months ended March 31, 2022, the Company recorded income from remeasurement in the amount of $452.

The following table presents information about our financial instruments that are measured at fair value basis:

	March 31, 2022
	Unaudited
	Fair Value		Level 1		Level 2		Level 3
			(in thousands)
Financial Liabilities:
Earn out liability	$	373	$	—	$	—	$	373
	December 31, 2021
	Fair Value		Level 1		Level 2		Level 3
			(in thousands)
Financial Liabilities:
Earn out liability	$	825	$	—	$	—	$	825

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COMMITMENTS AND CONTINGENT LIABILITIES

3 Months Ended

Mar. 31, 2022

COMMITMENTS AND CONTINGENT LIABILITIES

COMMITMENTS AND CONTINGENT LIABILITIES

NOTE 7: -   COMMITMENTS AND CONTINGENT LIABILITIES

a. 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.

b. Royalties:

The company has a liability to pay future royalties to the Israeli Innovation Authority (the “IIA) for participated in programs sponsored by the Israeli government for the support of research and development activities. The Company is obligated to pay royalties to the IIA, amounting to 3% of the sales of the products and other related revenues (based on the US dollar) generated from such projects, up to 100% of the grants received. Royalty payment obligations also bear interest at the LIBOR rate. The obligation to pay these royalties is contingent on actual sales of the products and in the absence of such sales, no payment is required.

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STOCKHOLDERS' EQUITY

3 Months Ended

Mar. 31, 2022

STOCKHOLDERS' EQUITY

STOCKHOLDERS' EQUITY

NOTE 8: -   STOCKHOLDERS’ EQUITY

a. On January 4, 2022, out of the pre-funded warrants that were issued in May 2019, 81,233 were exercised on a cashless basis into 81,221 shares of Common Stock. As of March 31, 2022 the Company’s total outstanding prefunded warrants amounted to 1,769,794.

b. On February 28, 2022, the Company entered into securities purchase agreements with institutional accredited investors relating to an offering with respect to the sale of an aggregate of 4,674,454 shares of the Company’s Common Stock, and pre-funded warrants to purchase an aggregate of 667,559 shares of Common Stock at an exercise price of $0.0001 per share, at a purchase price of $7.49 per share (or share equivalent). The aggregate gross proceeds were approximately $40,000 ($38,023, net of issuance expenses).

c. On March 9, 2022, the Company’s Compensation Committee of the Board of Directors approved the grant of 24,191 shares of Common Stock to employees of the Company, and the grant of 149,550 restricted shares of Common Stock to employees and consultants. The shares vest over a period of three years commencing on the respective grant dates. The Compensation Committee also approved the grant of options to purchase up to 396,050 shares of Common Stock to employees and a consultant of the Company, at exercise prices between $6.67 and $8.10 per share. The stock options vest over a three-year period commencing on the respective grant dates. The options have a ten-year term and were issued under the 2020 Plan.

d. In April 2020, the Compensation Committee of the Board of Directors approved a monthly grant of shares of the Company’s Common Stock equal up to $16 of restricted shares per month to a certain service provider, to be granted monthly during the period that the certain consulting agreement remains in effect. During the first quarter of 2022, the Company issued a total of 4,983 restricted shares of Common Stock to the certain service provider.

e. In February 2021, the Board of Directors authorized the Company to issue warrants to purchase up to 400,000, shares of Common Stock, to a certain consultant of the Company, at a purchase price of $25.00. During the three-month ended March 31, 2022, the Company recorded compensation expense for this certain service provider in the amount of $863.

f. In July 2021, the Compensation Committee authorized the Company to issue warrants to purchase 30,000 shares of Common Stock, to certain consultants of the Company, with an exercise price of $23.30 per share, and warrants to purchase 83,948 shares of Common Stock with an exercise price of $16.06 per share. Of these warrants, warrants to purchase 35,000 shares of Common Stock shall vest over a 48-month period and warrants to purchase 48,948 shares of Common Stock are subjected to certain performance terms. During the three-month ended March 31, 2022 the Company recorded compensation expense for this certain service provider in the amount of $11.

g. In October and December 2021, the Compensation Committee authorized the Company to issue 8,000 shares which shall vest over a six-month period, and warrants to purchase up to 40,000, and 208,000 shares of Common Stock, respectively, to certain consultants of the Company, at a purchase price of $25.10 and $13.60, respectively. During the three-month ended March 31, 2022, the Company recorded compensation expense for those certain service providers in the amount of $427

h. During the three-month ended March 31, 2022, certain series A Convertible Preferred Stockholders converted 1,030 shares of various classes of the Company’s A Convertible Preferred stock into 254,322 shares of Common Stock.

NOTE 8: - STOCKHOLDERS' EQUITY (Cont.)

i. During the three-month ended March 31, 2022, 61,730 shares of Common Stock were issued as dividend to certain Series A Convertible Preferred stockholders upon conversion of such shares.

j. Stock based compensation:

On January 23, 2012, the Company’s Amended and Restated 2012 Equity Incentive Plan (the “2012 Plan”) was adopted by the Board of Directors of the Company and approved by a majority of the Company’s stockholders, under which options to purchase shares of Common Stock have been reserved. Under the 2012 Plan, options to purchase shares of Common Stock may be granted to employees and non-employees of the Company or any affiliate, each option granted can be exercised to one share of Common Stock. The 2012 Plan has expired.

On October 14, 2020, the Company’s stockholders approved the 2020 Equity Incentive Plan (the “2020 Plan”) and the immediate reservation of 900,000 shares under the 2020 Plan for the remainder of the 2020 fiscal year. Under the 2020 Plan, options to purchase shares of Common Stock may be granted to employees and non-employees of the Company or any affiliate, each option granted can be exercised to one share of Common Stock.

In January 2022, pursuant to the terms of  the 2020 plan as approved by the Company’s stockholders, the Company increased the number of shares authorized for issuance under the 2020 Plan by 1,339,624 shares, from 2,528,890 to 3,868,514.

Transactions related to the grant of options to employees, directors, and non-employees under the above plans during the three-months period ended March 31, 2022, 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	1,878,168	18.13	6.96	3,861
Options granted	396,050	7.41	—	—
Options exercised			—	—
Options expired	(70,711)	9.44	—	—
Options forfeited	(78,391)	15.82	—	—
Options outstanding at end of period	2,125,116	17.04	7.35	179
Options vested and expected to vest at end of period	1,942,997	16.20	7.03	178
Exercisable at end of period	728,983	21.68	5.50	176

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 first quarter of 2022 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 March 31, 2022. This amount is impacted by the changes in the fair market value of the Common Stock.

NOTE 8: - STOCKHOLDERS' EQUITY (Cont.)

Transactions related to the grant of restricted shares to employees, directors, and non-employees under the above plans during the three-months period ended March 31, 2022, were as follows:

	Number of
	Restricted shares
Restricted shares outstanding at beginning of period	1,094,637
Restricted shares granted	149,550
Restricted shares forfeited	(9,568)
Restricted shares outstanding at end of period	1,234,619

As of March 31, 2022, the total amount of unrecognized stock-based compensation expense was approximately $25,395 which will be recognized over a weighted average period of 1.2 years.

The following table presents the assumptions used to estimate the fair values of the options granted to employees, directors, and non-employees in the period presented:

	Three months ended
	March 31,
	2022		2021
	Unaudited
Volatility	91.11-91.40	%	94.73-111.82	%
Risk-free interest rate	1.89	%	0.11-0.96	%
Dividend yield	0	%	0	%
Expected life (years)	5.81-5.88		2.09-5.88

The total compensation cost related to all of the Company’s stock-based awards recognized during the three-month period ended March 31, 2022, and 2021 was comprised as follows:

	Three months ended
	March 31,
	2022		2021
	Unaudited
Cost of revenues	$	23	$	13
Research and development		1,488		414
Sales and marketing		1,651		1,035
General and administrative		2,181		2,976
Total stock-based compensation expenses	$	5,343	$	4,438

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FINANCIAL EXPENSES (INCOME), NET

3 Months Ended

Mar. 31, 2022

FINANCIAL EXPENSES (INCOME), NET

FINANCIAL EXPENSES (INCOME), NET

NOTE 9: -   FINANCIAL EXPENSES (INCOME), NET

	Three months ended
	March 31,
	2022		2021
	Unaudited
Bank charges	$	26	$	43
Foreign currency adjustments expenses, net		22		605
Interest income		(4)		(9)
Total Financial losses, net	$	44	$	639

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SUBSEQUENT EVENTS

3 Months Ended

Mar. 31, 2022

SUBSEQUENT EVENTS

SUBSEQUENT EVENTS

NOTE 10: -   SUBSEQUENT EVENTS

a. In April and May 2022, the Company issued a total of 5,439 restricted shares of Common Stock to a certain service provider. These issuances were made under the compensation committee approval, dated April 2020.

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SIGNIFICANT ACCOUNTING POLICIES (Policies)

3 Months Ended

Mar. 31, 2022

SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

Basis of Presentation

The accompanying unaudited interim consolidated financial statements as of March 31, 2022, have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission regarding interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. s. In the opinion of management, the unaudited interim consolidated financial statements include all adjustments of a normal recurring nature necessary for a fair presentation of the Company’s consolidated financial position as of March 31, 2022, and the Company’s consolidated results of operations and the Company’s consolidated cash flows for the three months ended March 31, 2022. Results for the three months ended March 31, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022. 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, 2021.

Use of estimates

Use of Estimates

Preparation of condensed consolidated financial statements in conformity with 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.

Short-term restricted bank deposits

b.    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:

NOTE 2: -   SIGNIFICANT ACCOUNTING POLICIES (Cont.)

	March 31,		March 31,
	2022		2021
	Unaudited		Unaudited
Cash, and cash equivalents as reported on the balance sheets	$	55,558	$	81,171
Short-term restricted bank deposits, as reported on the balance sheets		138		193
Cash, restricted cash, cash equivalents and restricted cash and cash equivalents as reported in the statements of cash flows	$	55,696	$	81,364

Business and Asset Acquisitions

c.   Business and Asset Acquisitions

When the Company acquires a business, the purchase price is allocated to the tangible and identifiable intangible assets, net of liabilities assumed. Any residual purchase price is recorded as goodwill. The allocation of the purchase price requires management to make significant estimates in determining the fair values of assets acquired and liabilities assumed, especially with respect to intangible assets. These estimates can include, but are not limited to, the cash flows that an asset is expected to generate in the future, the appropriate weighted-average cost of capital and the cost savings expected to be derived from acquiring an asset. These estimates are inherently uncertain and unpredictable. During the measurement period, which may be up to one year from the acquisition date, adjustments to the fair value of these tangible and intangible assets acquired and liabilities assumed may be recorded, with the corresponding offset to goodwill. Upon the conclusion of the measurement period or final determination of the fair value of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded to the Company’s consolidated statements of operations.

The Company accounts for a transaction as an asset acquisition when substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets, or otherwise does not meet the definition of a business. Asset acquisition-related costs are capitalized as part of the asset or assets acquired.

Recently issued accounting pronouncements, not yet adopted:

d.    Recently issued accounting pronouncements, not yet adopted:

1. In September 2016, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”). ASU 2016-13 changes the impairment model for most financial assets and certain other instruments. For tradeand other receivables, held-to-maturity debt securities, loans, and other instruments, entities will be required to use a new forward-looking “expected loss” model that generally will result in the earlier recognition of allowances for losses. The guidance also requires increased disclosures. For the Company, the amendments in the update were originally effective for

fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. In November 2019, the FASB issued ASU No. 2019-10 which delayed the effective date of ASU 2016-13 for smaller reporting companies (as defined by the U.S. Securities and Exchange Commission) and other non-SEC reporting entities to fiscal years beginning after December 15, 2022, including interim periods within those fiscal periods. Early adoption is permitted. The Company is currently assessing the impact the guidance will have on its consolidated financial statements.

NOTE 2: -   SIGNIFICANT ACCOUNTING POLICIES (Cont.)

2. In August 2020, the FASB issued ASU 2020-06 (“ASU 2020-06”), which simplifies the guidance on the issuer’s accounting for convertible debt instruments by removing the separation models for (1) convertible debt with a cash conversion feature and (2) convertible instruments with a beneficial conversion feature. As a result, entities will not separately present in equity an embedded conversion feature in such debt. Instead, they will account for a convertible debt instrument wholly as debt, unless certain other conditions are met. The elimination of these models will reduce reported interest expense and

increase reported net income for entities that have issued a convertible instrument that was within the scope of those models before the adoption of ASU 2020-06. ASU 2020-06 also requires that the effect of potential share settlement be included in the diluted earnings per share calculation when an instrument may be settled in cash or share. This amendment removes current guidance that allows an entity to rebut this presumption if it has a history or policy of cash settlement. Furthermore, ASU 2020-06 requires the application of the if-converted method for calculating diluted earnings per share, the treasury stock method will be no longer available. The provisions of ASU 2020-06 are applicable for fiscal years beginning after December 15, 2023, with early adoption permitted for fiscal years beginning after December 15, 2020. The Company is currently evaluating the impact of ASU 2020-06 on its consolidated financial statements.

3. In October 2021, the FASB issued ASU 2021-08, which requires companies to apply ASC 606 to recognize and measure contract assets and contract liabilities from contracts with customers acquired in a business combination. This creates an exception to the general recognition and measurement principle in ASC 805. requires companies to apply ASC 606 to recognize and measure contract assets and contract liabilities from contracts with customers acquired in a business combination. For the Company, the guidance is effective for fiscal years beginning after December 15, 2022 and interim periods within those fiscal years. The Company is currently evaluating the impact of ASU 2021-08 on its consolidated financial statements.

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SIGNIFICANT ACCOUNTING POLICIES (Tables)

3 Months Ended

Mar. 31, 2022

SIGNIFICANT ACCOUNTING POLICIES

Schedule of reconciliation of the cash balances reported on the balance sheets and the cash, cash equivalents and short-term restricted bank deposits balances

	March 31,		March 31,
	2022		2021
	Unaudited		Unaudited
Cash, and cash equivalents as reported on the balance sheets	$	55,558	$	81,171
Short-term restricted bank deposits, as reported on the balance sheets		138		193
Cash, restricted cash, cash equivalents and restricted cash and cash equivalents as reported in the statements of cash flows	$	55,696	$	81,364

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ACQUISITIONS (Tables)

3 Months Ended

Mar. 31, 2022

Physimax Technologies Ltd.

Business Acquisition [Line Items]

Allocation of the purchase price to intangible assets acquired under Asset Acquisition agreement

			Amortization
			period (Years)
Technology	$	1,817		4

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INVENTORIES (Tables)

3 Months Ended

Mar. 31, 2022

INVENTORIES

Schedule of inventories

	March 31,		December 31,
	2022		2021
	Unaudited
Raw materials	$	927	$	714
Finished products		6,857		5,514
	$	7,783	$	6,228

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REVENUES (Tables)

3 Months Ended

Mar. 31, 2022

REVENUES.

Schedule of aggregate revenue

NOTE 5: -   REVENUES (Cont.)

The following tables represent the Company’s total revenues for the three months ended March 31, 2022, and 2021 disaggregated by revenue source:

	March 31,
	2022		2021
	Unaudited
Commercial	$	4,549	$	53
Consumers		3,510		3,542
	$	8,059	$	3,595

Schedule of significant changes in deferred revenue

The following table presents the significant changes in the deferred revenue balance during the three months ended March 31, 2022:

Balance, beginning of the period	$	1,195
New performance obligations		608
Reclassification to revenue as a result of satisfying performance obligations		(710)
Balance, end of the period	$	1,093

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FAIR VALUE MEASUREMENTS (Tables)

3 Months Ended

Mar. 31, 2022

FAIR VALUE MEASUREMENTS

Schedule of financial instruments measured at fair value on a recurring basis

	March 31, 2022
	Unaudited
	Fair Value		Level 1		Level 2		Level 3
			(in thousands)
Financial Liabilities:
Earn out liability	$	373	$	—	$	—	$	373
	December 31, 2021
	Fair Value		Level 1		Level 2		Level 3
			(in thousands)
Financial Liabilities:
Earn out liability	$	825	$	—	$	—	$	825

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STOCKHOLDERS' EQUITY (Tables)

3 Months Ended

Mar. 31, 2022

STOCKHOLDERS' EQUITY

Schedule of Stock option activity

			Weighted
		Weighted	average
		average	remaining	Aggregate
		exercise	contractual	Intrinsic
	Number of	price	life	value
	options	$	Years	$
Options outstanding at beginning of period	1,878,168	18.13	6.96	3,861
Options granted	396,050	7.41	—	—
Options exercised			—	—
Options expired	(70,711)	9.44	—	—
Options forfeited	(78,391)	15.82	—	—
Options outstanding at end of period	2,125,116	17.04	7.35	179
Options vested and expected to vest at end of period	1,942,997	16.20	7.03	178
Exercisable at end of period	728,983	21.68	5.50	176

Schedule of Restricted Stock option activity

NOTE 8: - STOCKHOLDERS' EQUITY (Cont.)

Transactions related to the grant of restricted shares to employees, directors, and non-employees under the above plans during the three-months period ended March 31, 2022, were as follows:

	Number of
	Restricted shares
Restricted shares outstanding at beginning of period	1,094,637
Restricted shares granted	149,550
Restricted shares forfeited	(9,568)
Restricted shares outstanding at end of period	1,234,619

Schedule of assumptions used to estimate the fair values of the options granted to employees, directors and non-employees

The following table presents the assumptions used to estimate the fair values of the options granted to employees, directors, and non-employees in the period presented:

	Three months ended
	March 31,
	2022		2021
	Unaudited
Volatility	91.11-91.40	%	94.73-111.82	%
Risk-free interest rate	1.89	%	0.11-0.96	%
Dividend yield	0	%	0	%
Expected life (years)	5.81-5.88		2.09-5.88

Schedule of Compensation cost

The total compensation cost related to all of the Company’s stock-based awards recognized during the three-month period ended March 31, 2022, and 2021 was comprised as follows:

	Three months ended
	March 31,
	2022		2021
	Unaudited
Cost of revenues	$	23	$	13
Research and development		1,488		414
Sales and marketing		1,651		1,035
General and administrative		2,181		2,976
Total stock-based compensation expenses	$	5,343	$	4,438

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FINANCIAL EXPENSES (INCOME), NET (Tables)

3 Months Ended

Mar. 31, 2022

FINANCIAL EXPENSES (INCOME), NET

Schedule of financial expenses (income), net

	Three months ended
	March 31,
	2022		2021
	Unaudited
Bank charges	$	26	$	43
Foreign currency adjustments expenses, net		22		605
Interest income		(4)		(9)
Total Financial losses, net	$	44	$	639

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GENERAL (Details) $ / shares in Units, $ in Thousands		3 Months Ended
	Feb. 28, 2022 USD ($) $ / shares	Mar. 31, 2022 USD ($) segment $ / shares	Mar. 31, 2021 USD ($)	Dec. 31, 2021 USD ($) $ / shares
Class of Stock [Line Items]
Number of reporting segments | segment		1
Operating Income (Loss)		$ 15,872	$ 14,327
Net Cash Provided by (Used in) Operating Activities		18,094	10,532
Cash, and cash equivalents as reported on the balance sheets		$ 55,558	$ 81,171	$ 35,808
Common Stock, Par or Stated Value Per Share | $ / shares		$ 0.0001		$ 0.0001
Private placement
Class of Stock [Line Items]
Gross Proceeds From Private Placement	$ 40,000
Proceeds from Issuance of Private Placement	$ 38,023
Common Stock, Par or Stated Value Per Share | $ / shares	$ 0.0001

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SIGNIFICANT ACCOUNTING POLICIES - Summary of reconciliation of the cash balances reported on the balance sheets and the cash, cash equivalents and short-term restricted bank deposits balances (Details) - USD ($) $ in Thousands	Mar. 31, 2022	Dec. 31, 2021	Mar. 31, 2021	Dec. 31, 2020
SIGNIFICANT ACCOUNTING POLICIES
Cash, and cash equivalents as reported on the balance sheets	$ 55,558	$ 35,808	$ 81,171
Short-term restricted bank deposits, as reported on the balance sheets	138		193
Cash, restricted cash, cash equivalents and restricted cash and cash equivalents as reported in the statements of cash flows	$ 55,696	$ 35,948	$ 81,364	$ 28,725

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ACQUISITIONS - Technology Purchase of Physimax Technologies Ltd. (Narrative) (Details) - USD ($) $ in Thousands		3 Months Ended
	Mar. 31, 2022	Mar. 31, 2022	Dec. 31, 2021
Asset Acquisition [Line Items]
Intangible assets, net	$ 13,314	$ 13,314	$ 12,460
Physimax Technologies Ltd.
Asset Acquisition [Line Items]
Effective acquisition date		Mar. 31, 2022
Issuance of common stock for Asset acquisition		256,660
Cash payment made		$ 500	$ 400
Total consideration transferred		1,686
Acquisition related costs		131
Equity issued, fair value	1,186
Physimax Technologies Ltd. | Technology
Asset Acquisition [Line Items]
Intangible assets, net	$ 1,817	$ 1,817
Amortization period		4 years

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INVENTORIES (Details) - USD ($) $ in Thousands	Mar. 31, 2022	Dec. 31, 2021
INVENTORIES
Raw materials	$ 927	$ 714
Finished products	6,857	5,514
Inventory, Net	$ 7,783	$ 6,228

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INVENTORIES - Additional information (Details) - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2022	Dec. 31, 2021
INVENTORIES
Inventory Write-down	$ 18	$ 73

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REVENUES - Total revenues (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Revenues	$ 8,059	$ 3,595
Commercial
Revenues	4,549	53
Consumers
Revenues	$ 3,510	$ 3,542

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REVENUES - Deferred revenue (Details) - USD ($) $ in Thousands		3 Months Ended
	Feb. 28, 2022	Mar. 31, 2022	Mar. 31, 2021
Balance, beginning of the period		$ 1,195
New performance obligations		608
Reclassification to revenue as a result of satisfying performance obligations		(710)
Balance, end of the period		$ 1,093
Revenue, Remaining Performance Obligation, Optional Exemption, Performance Obligation [true false]		true
Revenues		$ 8,059	$ 3,595
Scenario, Plan [Member]
Revenues	$ 30,000

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FAIR VALUE MEASUREMENTS (Details) - USD ($) $ in Thousands		3 Months Ended
	Jun. 07, 2021	Mar. 31, 2022	Dec. 31, 2021
Financial Liabilities:
Earn out liability		$ 373	$ 825
Remeasurement of earn-out		452
Earn-out payable, shares	237,076
Level 3
Financial Liabilities:
Earn out liability		$ 373	$ 825

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COMMITMENTS AND CONTINGENT LIABILITIES - Additional information (Details) - Physimax Technologies Ltd. $ in Thousands	Mar. 31, 2022 USD ($)
Operating Leased Assets [Line Items]
Percentage of royalties payable on sales of products and other revenues	3.00%
Maximum percentage of royalty payable on grants received	100.00%
Amount of royalty payable	$ 0

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STOCKHOLDERS' EQUITY - Additional Information (Details) - USD ($) $ / shares in Units, $ in Thousands			1 Months Ended					3 Months Ended
	Mar. 09, 2022	Feb. 28, 2022	Dec. 31, 2021	Oct. 31, 2021	Jul. 31, 2021	Feb. 28, 2021	Apr. 30, 2020	Jun. 30, 2022	Mar. 31, 2022	Mar. 31, 2021	Jan. 31, 2022	Jan. 04, 2022	Oct. 14, 2020
Class of Stock [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross									396,050
Preferred stock, par value (in dollars per share)			$ 0.0001						$ 0.0001
Proceeds from Warrant Exercises										$ 633
Unrecognized compensation									$ 25,395
Employee Service Share-based Compensation, Non vested Awards, Compensation Cost Not yet Recognized, Period for Recognition									1 year 2 months 12 days
Exercise of options										$ 201
Common stock, par value (in dollars per share)			$ 0.0001						$ 0.0001
2020 Plan
Class of Stock [Line Items]
Shares reservation for future issuance			2,528,890								3,868,514		900,000
Increase in shares reservation for future issuance											1,339,624
Series A Convertible Preferred stock
Class of Stock [Line Items]
Number of shares converted									1,030
Common stock were issued as dividend									61,730
Pre-funded warrants
Class of Stock [Line Items]
Stock issued in exchange for warrants												81,233
Warrants to purchase common stock												81,221
Warrants outstanding									1,769,794
Common Stock
Class of Stock [Line Items]
Stock Issued During Period, Share-based Compensation, Gross										5,579
Number of shares issued upon conversion of preferred stock									316,052	802,061
Exercise of options (In Shares)										33,773
Common Stock | Series A Convertible Preferred stock
Class of Stock [Line Items]
Number of shares issued upon conversion of preferred stock									254,322
Stock options | 2020 Plan
Class of Stock [Line Items]
Vesting period	3 years
Private placement
Class of Stock [Line Items]
Issuance of Common stock in warrant exchange agreement (In Shares)		4,674,454
Shares Issued, Price Per Share		$ 7.49
Gross Proceeds From Private Placement		$ 40,000
Net proceeds from Private Placement, net of issuance expenses		$ 38,023
Common stock, par value (in dollars per share)		$ 0.0001
Private placement | Pre-funded warrants
Class of Stock [Line Items]
Warrants to purchase common stock		667,559
Board Of Directors, Officers And Employees [Member] | 2020 Plan
Class of Stock [Line Items]
Expected life (years)	10 years
Consultants
Class of Stock [Line Items]
Number of shares authorized to be issued under share-based payment arrangement						400,000
Share-based Compensation Arrangement by Share-based Payment Award, Per Share Weighted Average Price of Shares Purchased						$ 25.00
Warrant compensation expense for service provider						$ 863			$ 11
Consultants | 2020 Plan
Class of Stock [Line Items]
Monthly grants of Common Stock and restricted shares approved	24,191
Certain service providers [Member]
Class of Stock [Line Items]
Stock Issued During Period, Share-based Compensation, Gross								5,439
Warrant compensation expense for service provider									$ 427
Officers, employees and consultants | 2020 Plan
Class of Stock [Line Items]
Exercise price of options, minimum	$ 6.67
Exercise price of options, maximum	$ 8.10
Vesting period	3 years
Monthly grants of Common Stock and restricted shares approved	396,050
Restricted shares issued (in shares)	149,550
Service providers | 2020 Plan
Class of Stock [Line Items]
Restricted shares issued							$ 16
Restricted shares issued (in shares)									4,983
Warrants Exercise Price of $23.30 [Member] | Consultants
Class of Stock [Line Items]
Warrants to purchase common stock					83,948
Warrants purchase price					$ 23.30
Warrants Exercise Price of $16.06 [Member] | Consultants
Class of Stock [Line Items]
Warrants to purchase common stock					30,000
Warrants purchase price					$ 16.06
Warrants 35,000 Grouping [Member] | Consultants
Class of Stock [Line Items]
Warrants to purchase common stock					35,000
Vesting period					48 months
Warrants 48,948 Grouping [Member] | Consultants
Class of Stock [Line Items]
Warrants to purchase common stock					48,948
Warrants Exercise Price of $13.60 [Member] | Consultants
Class of Stock [Line Items]
Warrants to purchase common stock			208,000
Warrants purchase price			$ 13.60
Warrants 8,000 Grouping [Member] | Consultants
Class of Stock [Line Items]
Warrants to purchase common stock			8,000	8,000
Vesting period			6 months	6 months
Warrants Exercise Price of $25.10 [Member] | Consultants
Class of Stock [Line Items]
Warrants to purchase common stock			40,000
Warrants purchase price				$ 25.10

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STOCKHOLDERS' EQUITY - Stock option activity (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2022	Dec. 31, 2021
STOCKHOLDERS' EQUITY
Options outstanding at beginning of period, Number of options	1,878,168
Options granted, Number of options	396,050
Options expired, Number of options	(70,711)
Options forfeited, Number of options	(78,391)
Options outstanding at end of period, Number of options	2,125,116	1,878,168
Options vested and expected to vest at end of period, Number of options	1,942,997
Exercisable at end of period, Number of options	728,983
Options outstanding at beginning of period, Weighted average exercise price	$ 18.13
Options granted, Weighted average exercise price	7.41
Options expired, Weighted average exercise price	9.44
Options forfeited, Weighted average exercise price	15.82
Options outstanding at end of period, Weighted average exercise price	17.04	$ 18.13
Options vested and expected to vest at end of period, Weighted average exercise price	16.20
Exercisable at end of period, Weighted average exercise price	$ 21.68
Options outstanding at, Weighted Average remaining contractual life	7 years 4 months 6 days	6 years 11 months 15 days
Options vested and expected to vest at end of period, Weighted Average remaining contractual life	7 years 10 days
Exercisable at end of year, Weighted Average remaining contractual life	5 years 6 months
Options outstanding at beginning of period, Aggregate Intrinsic value	$ 3,861
Options outstanding at end of period, Aggregate Intrinsic value	179	$ 3,861
Options vested and expected to vest at end of period, Aggregate Intrinsic value	178
Exercisable at end of period, Aggregate Intrinsic value	$ 176

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STOCKHOLDERS' EQUITY - Restricted shares (Details) - Restricted Stock	3 Months Ended
	Mar. 31, 2022 shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Restricted shares outstanding at beginning of period	1,094,637
Restricted shares granted	149,550
Restricted shares forfeited	(9,568)
Restricted shares outstanding at end of period	1,234,619

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STOCKHOLDERS' EQUITY - Assumptions Used to estimate fair value (Details) - Employees, Directors And Non-Employee [Member]	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Volatility, Minimum	91.11%	94.73%
Volatility, Maximum	91.40%	111.82%
Risk-free interest rate	1.89%
Risk-free interest rate, Minimum		0.11%
Risk-free interest rate, Maximum		0.96%
Dividend yield	0.00%	0.00%
Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected life (years)	5 years 9 months 21 days	2 years 1 month 2 days
Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected life (years)	5 years 10 months 17 days	5 years 10 months 17 days

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STOCKHOLDERS' EQUITY - Compensation cost (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Total stock-based compensation expenses	$ 5,343	$ 4,438
Cost of revenues
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Total stock-based compensation expenses	23	13
Research and development
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Total stock-based compensation expenses	1,488	414
Sales and marketing
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Total stock-based compensation expenses	1,651	1,035
General and administrative
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Total stock-based compensation expenses	$ 2,181	$ 2,976

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FINANCIAL EXPENSES (INCOME), NET (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
FINANCIAL EXPENSES (INCOME), NET
Bank Charges	$ 26	$ 43
Foreign currency adjustments expenses, net	22	605
Interest income	(4)	(9)
Total Financial losses, net	$ 44	$ 639

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SUBSEQUENT EVENTS (Details) - USD ($) $ in Thousands	3 Months Ended
	Jun. 30, 2022	Mar. 31, 2022	Mar. 31, 2021
Subsequent Event [Line Items]
Exercise of options			$ 201
Common Stock
Subsequent Event [Line Items]
Stock Issued During Period, Share-based Compensation, Gross			5,579
Series A Convertible Preferred stock
Subsequent Event [Line Items]
Common Stock Dividends, Shares		61,730
Number of shares converted		1,030
Certain service providers [Member]
Subsequent Event [Line Items]
Stock Issued During Period, Share-based Compensation, Gross	5,439