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 ☒x No ☐¨

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ 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 ~~and post~~ such files). Yes ☒x 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.

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 ☒x

As of ~~November 10, 2017,~~August 12, 2019, the registrant had ~~10,352,424~~43,601,280 shares of common stock outstanding.

When used in this quarterly report, the terms ~~“Dario,~~“DarioHealth,” “the Company,” “we,” “our,” and “us” refer to DarioHealth Corp., a Delaware ~~corporation.~~corporation and our subsidiary LabStyle Innovation Ltd., an Israeli 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

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 launch and market penetration plans;

	•	our ability to manufacture, market and generate sales of our Dario Smart Diabetes Management Solution;

	•	our ability to commercialize DarioEngage;

	•	our ability to develop, launch and commercialize Dario Intelligence;

	•	our ability to maintain our relationships with key partners;

	•	our ability to complete required clinical trials of our product and obtain clearance or approval from the United States Food and Drug Administration, or 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;

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

	•	acceptance of our business model by investors.

~~our ability to manufacture, market and generate sales of our Dario™ diabetes management solution;~~

~~our ability to maintain our relationships with key partners;~~

our ability to complete required clinical trials of our product and obtain clearance or approval from the United States Food and Drug Administration, or 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;~~

~~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, ~~2016~~2018 (filed on March ~~22, 2017)~~25, 2019) 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.

DARIOHEALTH CORP. AND ITS ~~SUBSIDIARIES~~

SUBSIDIARY

INTERIM CONSOLIDATED FINANCIAL STATEMENTS

AS OF ~~SEPTEMBER~~JUNE 30, ~~2017~~

2019

UNAUDITED

INDEX

	Page

Consolidated Balance Sheets	F-2 - F-3

Consolidated Statements of Comprehensive Loss	F-4

Statements of Changes in Stockholders' Equity ~~(Deficiency)~~	F-5 - F-6

Consolidated Statements of Cash Flows	~~F-6~~F-7

Notes to Consolidated Financial Statements	~~F-7~~F-8 - ~~F-14~~F-15

F-1

DARIOHEALTH CORP. AND ITS ~~SUBSIDIARIES~~SUBSIDIARY

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

~~CONSOLIDATED~~ STATEMENTS OF ~~COMPREHENSIVE LOSS~~CHANGES IN STOCKHOLDERS' EQUITY

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

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

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

In May 2014, the Financial Accounting Standards Board (the “FASB”) issued ASC 606. The ~~significant~~standard replaced the revenue recognition guidance in U.S. generally accepted accounting ~~policies~~principles under ASC 605, and was required to be applied retrospectively to each prior period presented, or applied using a modified retrospective method with the cumulative effect recognized in the ~~audited annual consolidated financial statements~~beginning retained earnings during the period of initial application. Subsequently, the FASB issued several additional ASUs related to ASU No. 2014-09, collectively referred to as the “new revenue standards”, which became effective for the Company beginning January 1, 2019. The Company adopted the standard using the modified retrospective method. The adoption of ASC 606 did not have a significant impact on the Company’s Condensed Consolidated Financial Statements. See Note 5 for further information.

The Company recognizes revenue when (or as) it satisfies performance obligations by transferring promised products or services to its customers in an amount that reflects the consideration the Company expects to receive. The Company applies the following five steps: (1) identify the contract with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract, and (5) recognize revenue when a performance obligation is satisfied.

The Company considers customer and distributers purchase orders to be the contracts with a customer. For each contract, the Company considers the promise to transfer tangible products and services, each of which are distinct, to be the identified performance obligations. In determining the transaction price, the Company evaluates whether the price is subject to rebates and adjustments to determine the net consideration to which the Company expects to receive. As the Company’s standard payment terms are less than one year, the contracts have no significant financing component. The Company allocates the transaction price to each distinct performance obligation based on their relative standalone selling price. Revenue from tangible products is recognized when control of the ~~Company~~product is transferred to the customer (i.e., when the Company’s performance obligation is satisfied), which typically occurs at shipment. The revenues from fixed-price services are recognized ratably over the contract period and the costs associated with these contracts are recognized as ~~disclosed in~~incurred. The Company's standard arrangements with its customers typically do not allow for rights of return.

In February 2016, the ~~Company's Annual Report~~FASB issued ASU No. 2016-02, “Leases” (ASC 842). The standard requires lessees to recognize almost all leases on ~~Form 10-K~~the balance sheet as a right-of-use (“ROU”) asset and a lease liability and requires leases to be classified as either an operating or a finance type lease. The standard excludes leases of intangible assets or inventory. The standard becomes effective for the Company beginning January 1, 2019. The Company adopted ASC 842 using the modified retrospective approach, by applying the new standard to all leases existing at the date of initial application. Results and disclosure requirements for reporting periods beginning after January 1, 2019 are presented under ASC 842, while prior period amounts have not been adjusted and continue to be reported in accordance with our historical accounting under ASC 840. The Company elected the package of practical expedients permitted under the standard, which also allowed the Company to carry forward historical lease classifications. The Company also elected the practical expedient related to treating lease and non-lease components as a single lease component for all equipment leases as well as electing a policy exclusion permitting leases with an original lease term of less than one year ~~ended December 31, 2016 are applied consistently in these unaudited interim consolidated financial statements.~~to be excluded from the ROU assets and lease liabilities.

As a result of the adoption of ASC 842 on January 1, 2019, the Company recorded both operating lease ROU assets and operating lease liabilities of $847. The adoption did not impact the Company's beginning retained earnings, or prior year condensed consolidated statements of comprehensive loss and statements of cash flows. See Note 7 for further information on leases.

Under ASU No. 2016-02, “Leases” (ASC 842), the Company determines if an arrangement is a lease at inception. ROU assets and liabilities are recognized at the commencement date based on the present value of remaining lease payments over the lease term. For this purpose, the Company considers only payments that are fixed and determinable at the time of commencement, however, certain lease agreements contain variable payments, which are expensed as incurred and not included in the operating lease assets and liabilities. These amounts include payments affected by the Consumer Price Index. As most of the Company's leases do not provide an implicit rate, the Company, with the assistance of a third party valuation firm, determined the incremental borrowing rate in determining the present value of lease payments. The ROU assets also include any lease payments made prior to commencement and are recorded net of any lease incentives received. The Company lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise such options.

Operating leases are included in operating lease ROU assets, current and non-current operating lease liabilities, on the Company's condensed consolidated balance sheets.

In June 2018, the FASB issued ASU 2018-07, “Compensation—Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting.” This ASU supersedes ASC 505-50, “Equity—Equity Based Payments to Non-Employees,” and expands the scope of ASC 718, “Compensation – Stock Compensation,” to include all share-based payment arrangements related to the acquisition of goods and services from both nonemployees and employees. The standard becomes effective for the Company beginning January 1, 2019. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements.

In August 2018, the FASB issued ASU No. 2018-13, “Fair Value Measurement (Topic 820) - Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement”, which is designed to improve the effectiveness of disclosures by removing, modifying and adding disclosures related to fair value measurements. ASU No. 2018-13 is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years; the ASU allows for early adoption in any interim period after issuance of the update. The adoption of this ASU is not expected to have a significant impact on the Company’s consolidated financial statements.

In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments – Credit Losses” (Topic 326), to require the measurement of expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions and reasonable forecasts. The main objective of this ASU is to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. ASU No. 2016-13 is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years; the ASU allows for early adoption as of the beginning of an interim or annual reporting period beginning after December 15, 2018. The Company is currently assessing the impact this ASU will have on its consolidated financial statements.

The accompanying unaudited interim consolidated financial statements as of ~~September~~June 30, ~~2017,~~2019, have been prepared in accordance with U.S. generally accepted accounting principles and standards of the Public Company Accounting Oversight Board for interim financial information. Accordingly, they do not include all the information and footnotes required by generally accepted accounting principles in the United States for complete financial statements. 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 ~~September~~June 30, ~~2017,~~2019, and the Company's consolidated results of operations and the Company's consolidated cash flows for the ~~nine~~three and six months ended ~~September~~June 30, ~~2017.~~2019. Results for the ~~nine~~three and six months ended ~~September~~June 30, ~~2017~~2019 are not necessarily indicative of the results that may be expected for the year ending December 31, ~~2017.~~2019.

During the ~~nine months'~~six months’ period ended ~~September~~June 30, ~~2017~~2019, and the year ended December 31, ~~2016,~~2018, total inventory write-off expenses amounted to ~~$120~~$0 and ~~$315,~~$190, respectively.

On January 1, 2019, the Company adopted ASC 606 using the modified retrospective method and applied the standard to those contracts which were not completed as of January 1, 2019. Results for reporting periods beginning after January 1, 2019 are presented under ASC 606, while prior period amounts are not adjusted and continue to be reported in accordance with the historic accounting under ASC 605.

The following tables represent our total revenues for the three and six months ended June 30, 2019 and 2018 by product type (prior period amounts have not been adjusted under the modified retrospective method):

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 six months ended June 30, 2019:

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.

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.

At the beginning of fiscal 2019, the Company adopted ASC 842. The adoption of ASC 842 did not have a significant impact on the Company’s consolidated financial statements.

The Company has entered into various non-cancelable operating lease agreements for certain of its offices and car leases. The Company's leases have original lease periods expiring between 2019 and 2022. Many leases include one or more options to renew. The Company does not assume renewals in determination of the lease term unless the renewals are deemed to be reasonably assured at lease commencement. The Company's lease agreements do not contain any material residual value guarantees or material restrictive covenants.

The following is a schedule, by years, of maturities of lease liabilities as of June 30, 2019:

The Pre-Funded Warrants was sold at a public offering price of $0.5999 per Pre-Funded Warrant, which represents the per share public offering price per Share, less a $0.0001 per share exercise price for each such Pre-Funded Warrant. The shares and Pre-Funded Warrants were offered, issued and sold pursuant to a shelf registration statement filed with the Securities and Exchange Commission. The Pre-Funded Warrants have been accounted for as equity instruments.

The Pre-Funded Warrants are exercisable at any time after the date of issuance. A holder of Pre-Funded Warrants may not exercise the warrant if the holder, together with any group that the holder is a member, would beneficially own more than 4.99% (or, at the election of the purchaser, 9.99%) of the number of shares of common stock outstanding immediately after giving effect to such exercise. A holder of Pre-Funded Warrants may terminate, increase or decrease this percentage by providing at least 61 days’ prior notice to the Company. A holder of Pre-Funded Warrants is also subject to a limitation on exercise of the Pre-Funded Warrant if such exercise would result in such holder, together with any group that the holder is a member, beneficially owning more 19.99% of the number of shares of common stock outstanding immediately before giving effect to such exercise, unless shareholder approval is obtained.

Transactions related to the grant of options to employees, directors and non-employees under the above plans during the ~~nine-month~~six month period ended ~~September~~June 30, ~~2017~~2019, were as follows:

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 ~~third~~second quarter of ~~2017~~2019 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 ~~September~~June 30, ~~2017.~~2019. This amount is impacted by the changes in the fair market value of the Common Stock.

As of ~~September~~June 30, ~~2017,~~2019, the total amount of unrecognized stock-based compensation expense was approximately ~~$1,010 thousand~~$561 which will be recognized over a weighted average period of ~~1.15 years.~~1.29 year.

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:

The total compensation cost related to all of the Company's equity-based awards recognized during the ~~nine-month~~six month period ended ~~September~~June 30, ~~2017~~2019, and ~~2016~~2018 was comprised as follows:

Accounting Standards Codification 820, "Fair Value Measurements and Disclosures" ("ASC 820"), defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and considers assumptions that market participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions and risk of nonperformance.

ASC 820 also establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument's categorization within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. ASC 820 establishes three levels of inputs that may be used to measure fair value:

On September 23, 2014, the Company consummated a private placement (the "September 2014 Private Placement") consisting of an aggregate of 42,350 units which consisted of 42,350 shares of newly designated Series A Convertible Preferred Stock which were convertible into up to an aggregate of 10,683,662 shares of Common Stock, and warrants to purchase 5,341,834 shares of Common Stock with an exercise price of $0.48 per share which is subject to a standard anti-dilution protections clause.

The warrants issued in the September 2014 Private Placement contain a net settlement cash feature and liquidated damages penalties and therefore the Company accounts for such warrants as a liability according to the provisions of ASC 815-40 "Contracts in entity's own equity," and re-measures such liability using the Binomial option-pricing model as described below.

~~In estimating the warrants' fair value, the Company used the following assumptions:~~

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, ~~2016.~~2018. 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”.~~Statements.” You should review the “Risk Factors” section of our Annual Report for the fiscal year ended December 31, ~~2016~~2018 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 inthousands, except for stock and stock data or as otherwise noted.

We are a leading Global Digital Therapeutics (DTx) company revolutionizing the way people manage their health across the chronic condition spectrum by delivering evidence-based interventions that are driven by precision data analytics, high quality software, and personalized coaching. We have developed a novel approach that empowers individuals to adjust their lifestyle in a unique and holistic way. Our cross-functional team operates at the intersection of life science, behavioral science, and software technology to deliver seamlessly integrated and highly engaging therapeutic interventions. Already one of the highest-rated diabetes solutions, its user-centric approach is loved by tens of thousands of customers around the globe. We are rapidly expanding solutions for additional chronic conditions such as hypertension, using a performance-based approach to improve the health of users managing chronic disease.

Our flagship product, Dario, which we also refer to as our Dario Smart Diabetes Management Solution, is a mobile, real-time, cloud-based, diabetes management solution based on an innovative, multi-feature software application to track and monitor all facets of diabetes, combined with a stylish, ‘all-in-one’, pocket-sized, blood glucose monitoring device, which we call the Dario Blood Glucose Monitoring System, that essentially turns a smartphone into a glucometer. In addition, our product offerings will focus on the newly launched Dario Engage software platform, where we digitally engage with Dario users, assist them in monitoring their chronic illnesses and provide them with coaching, support, digital communications and real time alerts, trends and pattern analysis. The Dario Engage platform can be leveraged by our potential partners, such as clinics, health ~~(mHealth) company~~care service providers, employers and payers for scalable monitoring of people with diabetes in a cost-effective manner, which we expect will open for us additional revenue streams. Finally, we intend to utilize the data we obtain from our Dario Smart Diabetes Management Solution and Dario Engage platform to develop our upcoming healthcare analytics program, Dario Intelligence. As such our solutions will span the full spectrum of disease monitoring, user-centric engagement, coaching tools, and big data and intelligence solutions. We have obtained regulatory clearance or approval for the Dario Blood Glucose Monitoring System in the U.S., Canada, the E.U., Israel and Australia, among others. We believe that our targeted health platform is ~~developing~~a highly personalized preventative and ~~commercializing a patented~~proactive approach to health improvement based on individual behavior and ~~proprietary technology providing consumers with laboratory-testing capabilities using smart phones and other mobile devices.~~ treatment, tailored to each person’s unique profile.

Our principal operating subsidiary, LabStyle Innovation Ltd., is an Israeli company with its headquarters in Caesarea, Israel. We were formed on August 11, 2011 as a Delaware ~~corporation. Our flagship product, Dario™, is a mobile, real-time, cloud-based, diabetes management solution based on an innovative, multi-feature software application combined~~corporation with ~~a stylish, ‘all-in-one’, pocket-sized, blood glucose monitoring device, which~~the name LabStyle Innovations Corp. On July 28, 2016, we ~~call the Dario™ Smart Meter.~~changed our name to DarioHealth Corp.

We commenced a commercial launch of ~~the~~our free ~~Dario™~~ application in the United Kingdom in late 2013 and commenced an initial soft launch of the full ~~Dario™~~Dario solution (including the app and the ~~Smart Meter)~~Dario Blood Glucose Monitoring System) in selected jurisdictions in March ~~2014 and~~2014. We continued to scale up launch during 2014 in the United Kingdom, the Netherlands and New Zealand, and during 2015 in Australia, Israel and Canada, with the goal of collecting customer feedback to refine our longer-term roll-out strategy. We are consistently adding new additional features and functionality in making ~~Dario™~~Dario the new standard of care in diabetes data management.

Through our Israeli subsidiary, Labstyle Innovation Ltd., our plan of operations is to continue the development of our software and hardware offerings and related technology. During 2015, we successfully launched the ~~Dario™~~Dario Smart Diabetes Management Solution according to plan and are currently expanding the launch to other jurisdictions. In 2016, we established our direct to consumer model in the U.S. to achieve higher and faster penetration into the market during the launch phase. We have invested in a robust digital marketing department with in-house platforms, experienced personnel and robust infrastructures to support expected growth of users and online subscribers in this market. During the third quarter of 2016 we expanded these ~~effort~~efforts to include Australia as well. In 2017, we expanded our direct to consumer marketing efforts in the United Kingdom in cooperation with our local distributor and launched similar marketing efforts in Germany. In support of these goals, we intend to utilize our funds for the following activities:

Readers are cautioned that, according to our management’s estimates, based on our budget and the initial launch of our commercial sales, we believe that we will have sufficient resources to continue our activity ~~only~~ into ~~the third quarter of 2018~~January 2020 without raising additional capital. This includes an amount of anticipated inflows from sales of ~~Dario™~~Dario through direct sales in the United States and through distribution partners. As such, we have a significant present need for capital. If we are unable to ~~continue the market penetration~~scale up our commercial launch of ~~Dario™~~Dario or meet our commercial sales targets (or if we are unable to ramp up revenues), and if we are unable to obtain additional capital resources in the near term, we may be unable to continue activities, absent a material ~~alternations~~alterations in our business plans and our business might fail.

~~Reference~~Please see Note 2 of Part I, Item 1 of this Quarterly Report on Form 10-Q for the summary of significant accounting policies. In addition, reference is made to Part I, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation of our Annual Report on Form 10-K for the year ended December 31, ~~2016~~2018 (filed on March ~~22, 2017)~~25, 2019) with respect to our Critical Accounting ~~Policies, which~~Policies. There have ~~not changed.~~been no other material changes to our critical accounting policies and estimates since our Annual Report on Form 10-K for the year ended December 31, 2018.

Comparison of the ~~three and nine~~six months ended ~~September~~June 30, ~~2017~~2019 and ~~2016 (in~~2018 (dollar amounts in thousands)

Revenues for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2019, amounted to ~~$1,375~~$1,651 and ~~$3,592,~~$3,893, respectively, compared to ~~$728~~revenues of $2,059 and ~~$1,965 of revenues~~$3,815 during the three and ~~nine~~six months ended ~~September~~June 30, ~~2016.~~2018, representing a decrease of 20% and an increase of 2%, respectively. The ~~increases~~decrease in revenues infor the three ~~and nine~~ months ended ~~September~~June 30, ~~2017~~2019, compared to the three ~~and nine~~ months ended ~~September~~June 30, ~~2016~~2018, is due to a decrease in our direct to consumer (“D2C”) acquisition in the second quarter of 2019, and an increase in our provision for deferred income. The decision to decrease D2C acquisition is a result of our efforts to shift resources from direct to consumer sales to sales through business to business channels that are with lower cost per acquisition. The increase in revenues for the six months ended June 30, 2019, compared to the six months ended June 30, 2018, is mainly as a result of ~~increase~~higher revenues in the ~~sales~~first quarter of ~~our products.~~2019 compared to the first quarter of 2018.

Revenues were derived mainly from the sales of ~~Dario™’s~~Dario’s components, including the ~~Smart Meter~~Dario Blood Glucose Monitoring System itself and the membership offering, through direct sales to consumers located mainly in the United States and Australia, through our on-line store and ~~through~~ distributors.

During the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2019, we recorded costs related to revenues in the amount of ~~$1,099~~$1,325 and ~~$2,850,~~$3,009 respectively, as compared to ~~$652 and $2,148 of~~ recorded costs related to revenues of $1,537 and $2,741 during the three and ~~nine~~six months ended ~~September~~June 30, ~~2016.~~2018, representing a decrease of 14% and an increase of 10%, respectively. The ~~increases~~decrease in costs related to revenues in the three ~~and nine~~ months ended ~~September~~June 30, ~~2017~~2019, compared to three months ended June 30, 2018, is mainly a result of a decrease in the sales of our products during that period. The increase in costs related to revenues in the six months ended June 30, 2019, compared to the ~~three and nine~~six months ended ~~September~~June 30, ~~2016 are~~2018, is mainly as a result of an increase in the sales of our products ~~and~~during the ~~write-off of old production fixtures and related inventories amounting to $102 in the third~~first quarter of ~~2017.~~2019.

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, shipping and handling costs and inventory write-downs.

Gross profit for the three and six months ended June 30, 2019, amounted to $326 (19.7% of revenues) and $884 (22.7% of revenues), respectively, compared to $522 (25.4% of revenues) and $1,074 (28.2% of revenues) during the three and six months ended June 30, 2018. The decrease in gross profit for the three and six months ended June 30, 2019, compared to the three and six months ended June 30, 2018, is mainly as a result of the decrease in product sales in the second quarter and the deferral of a portion of the revenues generated from our membership offering.

Our research and development expenses ~~increased~~decreased by ~~$138,~~$19, or ~~21%~~2%, to ~~$797~~$991 for the three months ended ~~September~~June 30, ~~2017~~2019, compared to ~~$659~~$1,010 for the three months ended ~~September~~June 30, ~~2016,~~2018, and increased by ~~$873,~~$241, or ~~55%~~14%, to ~~$2,450~~$1,993 for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2019 compared to ~~$1,577~~$1,752 for the ~~nine~~six months ended ~~September~~June 30, ~~2016. These increases were~~2018. The second quarter decrease for the three months ended June 30, 2019, compared to the three months ended June 30, 2018, was mainly due to decreases in stock-based compensation, mostly offset by an increase in payroll and other research and development costs relating primarily to product development. The second quarter increase for the six months ended June 30, 2019, compared to the six months ended June 30, 2018, was mainly due to increases in ~~salaries, stock based compensation~~payroll and other research and development costs ~~associated with clinical trials.~~relating primarily to product development.

Research and development expenses consist mainly of payroll expenses to employees involved in research and development activities, expenses related to our ~~Dario™~~Dario software application and related ~~Smart Meter~~Dario Blood Glucose Monitoring System device, labor contractors and engineering expenses, depreciation and maintenance fees related to equipment and software tools used in research and development, clinical trials performed in the United States to satisfy the FDA product approval requirements and facilities expenses associated with and allocated to research and development activities.

Our sales and marketing expenses increased by ~~$149,~~$624, or ~~9.7%~~26%, to ~~$1,682~~$2,993 for the three months ended ~~September~~June 30, ~~2016~~2019, compared to ~~$1,533~~$2,369 for the three months ended ~~September~~June 30, ~~2017~~2018, and increased by ~~$2,513,~~$2,706, or ~~79%~~64%, to ~~$5,707~~$6,939 for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2019, compared to ~~$3,194~~$4,233 for the ~~nine~~six months ended ~~September~~June 30, ~~2016.~~2018. These increases were mainly due to ~~the increase in~~expanding our sales and marketing activities in the United States, ~~and Australia during 2017 compared to partial activity during the first nine months of 2016, an increase~~increases in costs of ~~our~~ online marketing campaigns, ~~the cost related to marketing consultants~~ and the costs associated with ~~subcontractors and~~ employee payroll.

Sales and marketing expenses consist mainly of payroll expenses, online marketing campaigns of the Dario,^TM, trade show expenses, customer support expenses and marketing consultants and subcontractors.

Our general and administrative expenses ~~increased~~decreased by ~~$176,~~$1,232, or ~~29%~~42%, to ~~$781~~$1,704 for the three months ended ~~September~~June 30, ~~2017~~2019, compared to ~~$605~~$2,936 for the three months ended ~~September~~June 30, ~~2016,~~2018, and ~~increased~~decreased by ~~$1,574,~~$1,120, or ~~68%~~29%, to ~~$3,887~~$2,677 for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2019, compared to ~~$2,313~~$3,797 for the ~~nine~~six months ended ~~September~~June 30, ~~2016.~~2018. These ~~increases~~decreases were mainly due to ~~an increase~~decreases in share based compensation resulting from shares issued to management during the period. On January 30, 2017 the Compensation Committee of the Board of Directors approved the grant of shares and options to members of management pursuant to our Amended and Restated 2012 Share Incentive Plan. In that regard, on January 30, 2017, we issued 227,616 shares of common stock to our Chairman and Chief Executive Officer and 74,896 shares of common stock to our Chief Financial Officer. These share grants were accounted for as expenses according to the closing price of our shares of common stock on January 30, 2017 ($3.40 per share) amounting to an expense of $1,029 in the aggregate and included in the share based compensation expenses for the period. On April 20, 2017, the Compensation Committee of the Board of Directors approved the grant of shares to management, pursuant to our Amended and Restated 2012 Share Incentive Plan as a bonus payment for the Company’s achievements during the year ending December 31, 2016. In that regard, on April 20, 2017, we issued 50,000 shares of common stock to our Chairman and Chief Executive Officer and 20,000 shares of common stock to our Chief Financial Officer. These share grants were accounted for as expenses according to the closing price of our shares of common stock on April 19, 2017 ($2.73 per share) amounting to an expense of $191 in the aggregate and included in the share based compensation expenses for the period.share-based compensation.

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

Our ~~finance income~~financial expenses for the three ~~and nine~~ months ended ~~September~~June 30, ~~2017~~2019, were ~~$6 and $7,479, respectively,~~$20, representing a decrease of 56%, compared to finance ~~income~~expenses of ~~$2,110 and $241~~$45 for the three ~~and nine~~ months ended ~~September~~June 30, ~~2016, respectively. This change was mainly due~~2018. Our financial expenses for the six months ended June 30, 2019, were $33, representing a decrease of 33%, compared to finance expenses $49 for the six months ended June 30, 2018. The decreases in financial expenses for the three months ended June 30, 2019, as compared to the ~~reversing of~~three months ended June 30, 2018, and for the ~~warrant revaluation expense during~~six months ended June 30, 2019, as compared to the ~~first quarter of 2017 which was initially recorded during the fiscal year~~six months ended ~~2016, due~~June 30, 2018, are mainly attributable to ~~a price protection feature included~~differences in warrants issued to investors in March and August of 2016. These price protection features expired on March 8, 2017, and as a result, we cancelled the liability related to these warrants by recording financing income of $7,460 during the period.foreign currency translation expenses.

Financial income includes mainly the results of a revaluation of warrants to investors and a former placement agent, which are recorded as a liability and presented at fair value each reporting period.

Financial expenses include mainly bank charges, lease liability translation differences and foreign currency translation differences.

Net loss ~~increased~~decreased by ~~$2,367,~~$456, or ~~387%~~8%, to ~~$2,978~~$5,382 for the three months ended ~~September~~June 30, ~~2017~~2019, compared to a net loss of ~~$611~~$5,838 for the three months ended ~~September~~June 30, ~~2016~~2018, and ~~decreased~~increased by ~~$3,203,~~$2,001, or ~~45%~~22.9%, to ~~$3,823~~$10,758 for the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2019, compared to ~~$7,026~~$8,757 for the ~~nine~~six months ended ~~September~~June 30, ~~2016.~~2018.

The ~~increase~~decrease in net loss for the three months ended ~~September~~June 30, ~~2017~~2019, compared to the three months ended ~~September~~June 30, ~~2016~~2018, was mainly due to ~~the financing income~~a decrease in our operating expenses recorded in the three months ended ~~September~~June 30, ~~2017 compared to the financing income recorded in the three months ended September 30, 2016, and the increase in the operating expenses recorded during the three months ended September 30, 2017~~2019, compared to the three months ended ~~September~~June 30, ~~2016..~~2018. The ~~decrease~~increase in net loss for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2019, compared to the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2018, was mainly due to the ~~financing income~~increase in operating expenses recorded in the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2019, compared to the ~~financing income recorded~~six months ended June 30, 2018.

The factors described above resulted in net loss attributable to common stockholders of $10,758 and $8,757 for the six months ended June 30, 2019, and 2018, respectively.

To supplement our unaudited condensed consolidated financial statements presented in accordance with accounting principles generally accepted in the ~~nine months ended September 30, 2016.~~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.

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:

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

As of ~~September~~June 30, ~~2017,~~2019, we had approximately ~~$6,262~~$7,986 in cash and cash equivalents compared to ~~$1,093~~$10,997 at December 31, ~~2016.~~2018.

We have experienced cumulative losses of ~~$58,783~~$100,012 from inception (August 11, 2011) through ~~September~~June 30, ~~2017,~~2019, and have a stockholders’ equity of ~~$6,115 on September~~$6,094 at June 30, ~~2017.~~2019. 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. There are no assurances that we will be able to obtain an adequate level of financing needed for our near term requirements or the long-term development and commercialization of our product. These conditions raise substantial doubt about our ability to continue as a “going ~~concern”.~~concern.”

Since inception, we have financed our operations primarily through private placements and public offerings of our common stock and warrants to purchase shares of our common stock, receiving aggregate net proceeds totaling ~~$51,931~~$77,737 as of ~~September~~June 30, ~~2017.~~2019.

On ~~March 3, 2016, we conducted~~May 24, 2019, the Company closed on its a firm commitment, underwritten public offering ~~pursuant to which we issued 1,333,333~~consisting of 4,855,341 shares of common stock and pre-funded warrants ~~exercisable for~~to purchase 7,175,525 shares of its common stock, pursuant to an ~~aggregate~~underwriting agreement entered into with Craig-Hallum Capital Group LLC, as representative of ~~1,333,333~~the underwriters. The shares of common stock ~~for an aggregate net consideration of $5,038.~~

~~Concurrently with our~~were sold at a public offering ~~on March 3, 2016, we conducted~~price of $0.60 per share and the pre-funded warrants were sold at a ~~concurrent private placement pursuant to which we issued 555,555 units, with each unit consisting~~public offering price of ~~one share of common stock and one warrant to purchase 1.2 shares of common stock, such that an~~$0.5999, for aggregate ~~of 555,555 shares of common stock and a warrant to exercisable for an aggregate of 666,666 shares of common stock was issued and sold for an aggregate net consideration~~gross proceeds of approximately ~~$2,500.~~$6,558.

On ~~January 9, 2017,~~February 28, 2018 and March 6, 2018, we ~~commenced a~~closed two concurrent private ~~placement offering of up to $5,100~~placements offerings consisting of ~~up to 1,821,437~~2,262,269 shares of our common stock at $1.40 per share, 1,234,080 shares of our Series C Convertible Preferred Stock at $2.80 per share and warrants to purchase up to 1,821,437 shares of common stock. The warrants are exercisable after the six-month anniversary of each respective closing and will expire on the 5-year anniversary of their issuance. On January 9, 2017, we held the initial closing of the offering with a lead investor and an additional investor and issued and sold 1,113,922 shares of common stock and warrants to purchase 1,113,9223,784,351 shares of common stock for aggregate gross proceeds of approximately ~~$3,119.~~ $6,623.

On ~~January 11, 2017,~~September 13, 2018 and September 26, 2018, we ~~entered into securities purchase agreements with 18 investors for the future issuance and sale~~closed two concurrent private placements offerings consisting of ~~707,515~~4,266,800 shares of our common stock at $0.90 per share, 1,890,257 shares of our Series D Convertible Preferred Stock at $3.60 per share, and warrants to purchase ~~707,515 shares of common stock, provided that the issuance and sale of such securities shall only occur upon our obtaining stockholder approval, pursuant~~up to Nasdaq rules. On March 9, 2017, following receipt of stockholder approval, we issued and sold 707,515 shares of common stock and warrants to purchase 707,515 shares of common stock to the 18 investors for gross proceeds of $1,981.

~~On March 31, 2017, we entered into an underwriting agreement with Aegis Capital Corp., as representative of the underwriters named therein for a firm commitment public offering of 1,450,000~~9,462,272 shares of common stock at aan exercise price ~~to the public~~ of ~~$3.10~~$1.25 per share, for aggregate gross proceeds of approximately $4,500. On April 5, 2017, the Company closed a public offering of 1,450,000 shares of common stock, at a purchase price of $3.10 per share, for aggregate consideration of $3,855, net of issuance costs.$10,645.

~~Between August 16, 2017~~On December 13, 2018 and ~~August 22, 2017,~~December 27, 2018, we ~~conducted~~closed a private placement offering of ~~483,333 shares of common stock and 2,307,654~~3,050,000 shares of our ~~newly designated Series B Preferred Stock,~~common stock at a purchase price of $1.00 per share and warrants to purchase up to 3,050,000 shares of our common stock at an exercise price of $1.25 per share, for aggregate ~~net consideration~~gross proceeds of ~~$4,799.~~approximately $3,050.

According to our management’s estimates, based on our budget and ~~the initial launch of~~ our commercial sales, we believe that we will have sufficient resources to continue our activity into ~~the third quarter of 2018~~April 2020 without raising additional capital. This includes an amount of anticipated inflows from sales of ~~Dario™~~Dario through distribution partners and to direct customers.

As such, we have a significant present need for capital. If we are unable to scale up our commercial launch of ~~Dario™~~Dario 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, testing of our ~~Dario™~~Dario Smart ~~Meter and its related application and data storage components,~~Diabetes Management Solution, (2) our efforts to obtain regulatory clearances or approvals necessary to be able to commercially launch ~~Dario™,~~Dario, DarioEngage and Dario Intelligence, (3) expenses which will be required in order to ~~start and~~ expand production of ~~Dario™,~~Dario, (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 ~~business.~~company. This would particularly be the case if we are unable to commercially launch Dario, DarioEngage and Dario Intelligence in the jurisdictions and in the timeframes we expect.

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

Net cash used in operating activities was ~~$8,223~~$9,491 for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2019, an increase of 98% compared to ~~$6,520~~$4,794 used in operations for the same period in ~~2016.~~2018. Cash used in operations increased due to the increase in our operating ~~loss.~~loss, and a decrease in trade payables, other accounts payables and accrued expenses.

Net cash used infor investing activities was ~~$77~~$78 for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2019, an increase of 247% compared to ~~$560~~cash derived from investing activities of $53 for the same period in ~~2016.~~2018. Cash used infor investing activities ~~decreased~~increased mainly due to ~~reduction~~investments in ~~the purchase of~~ property and equipment and ~~reduction~~investments in ~~investment in bank deposits.~~restricted cash.

Net cash provided by financing activities was ~~$13,469~~$6,558 for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2019, an increase of 9% compared to ~~$7,748~~$6,034 for the same period in 2016. During the nine months ended September 30, 2017 we raised net proceeds of approximately $13,469 through our January 2017 private placement, March 2017 underwritten public offering and the August private placement. During the nine months ended September 30, 2016 we raised net proceeds of approximately $7,538 through our March 2016 public offering and private placement transactions and $210 was raised through proceeds from exercise of warrants.2018. This increase was due to a higher amount of funds we raised from the sale of our equity securities.

As of ~~September~~June 30, ~~2017,~~2019, we did not have any off-balance sheet arrangements as defined in Item 303(a)(4) of Regulation S-K.

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

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, or SEC.~~Commission. 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 ~~September~~June 30, ~~2017,~~2019, our disclosure controls and procedures were designed at a reasonable assurance level and were therefore effective.

There were no changes in our internal control over financial reporting that occurred during the quarter ended ~~September~~June 30, ~~2017~~2019, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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.

Given the timing of the event, the following information is included in this Quarterly Report on Form 10-Q pursuant to Item 1.01 “Entry into a Material Definitive Agreement,” Item 1.02 “Termination of a Material Definitive Agreement,” and Item 3.02 “Unregistered Sales of Equity Securities,” of Current Report on Form 8-K in lieu of filing a Form 8-K.

On November 13, 2017, we entered into exchange agreements (each an “Exchange Agreement”) with certain of our warrant holders who were granted warrants to purchase shares of Common Stock on August 10, 2016 and January 2017. Pursuant to the terms of the Exchange Agreement, the warrant holders agreed to surrender their warrants to purchase an aggregate of 1,871,436 shares of Common Stock for cancellation and received, as consideration for such cancellation, an aggregate of 1,039,676 shares of Common Stock. The description of the Exchange Agreement is not complete and is subject to and qualified in its entirety by reference to the form of Exchange Agreement, a copy of which is filed as Exhibit 10.1 to this Quarterly Report and is incorporated herein by reference.

The securities issued pursuant to the foregoing are exempt from the registration requirements of the Securities Act of 1933, as amended, pursuant to Section 3(a)(9) and/or Section 4(a)(2) of the Securities Act and/or Rule 506(b) of Regulation D promulgated thereunder because, among other things, the transaction did not involve a public offering and the warrant holders are accredited investors.

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.

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

~~9 Halamish~~8 HaTokhen Street
Caesarea Industrial Park, Israel	3088900
(Address of Principal Executive Offices)	(Zip Code)

☐¨	Large accelerated filer	☐¨	Accelerated filer
☐x	Non-accelerated filer	☒x	Smaller reporting company
	~~(Do not check if a smaller reporting company)~~	☒¨	Emerging growth company

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
Warrants to purchase Common Stock	DRIOW	The Nasdaq Capital Market LLC

		Page

Cautionary Note Regarding Forward-Looking Statements		13

PART 1-FINANCIAL INFORMATION

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

	Consolidated Balance Sheets	F-2

	Consolidated Statements of Comprehensive Loss	F-4

	Statements of Changes in Stockholders’ Equity ~~(Deficiency~~)	F-5

	Consolidated Statements of Cash Flows	~~F-6~~F-7

	Notes to Consolidated Financial Statements	~~F-7~~F-8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	24

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	79

Item 4.	Control and Procedures	710

PART II-OTHER INFORMATION

~~Item 5.~~	~~Other Information~~	8

Item 6.	Exhibits	811

SIGNATURES		912

	June 30,		December 31,
	2019		2018
	Unaudited
ASSETS

CURRENT ASSETS:
Cash and cash equivalents	$	7,986	$	10,997
Restricted bank deposits		186		180
Trade Receivables		278		168
Inventories		1,819		1,377
Other accounts receivable and prepaid expenses		553		591

Total current assets		10,822		13,313

LEASE DEPOSITS		44		43

OPERATING LEASE RIGHT OF USE ASSET		749		-

PROPERTY AND EQUIPMENT, NET		711		733

Total assets	$	12,326	$	14,089

	September 30,		December 31,
	2017		2016
	Unaudited
ASSETS

CURRENT ASSETS:
Cash and cash equivalents	$	6,262	$	1,093
Short-term bank deposits		241		225
Trade Receivables		419		226
Inventories		924		888
Other receivables and prepaid expenses		768		504

Total current assets		8,614		2,936

LEASE DEPOSITS		32		35

PROPERTY AND EQUIPMENT, NET		811		901

Total assets	$	9,457	$	3,872

	Three months ended June 30						Six months ended June 30
	2019			2018			2019			2018
	Unaudited						Unaudited

Revenues	$	1,651		$	2,059		$	3,893		$	3,815
Cost of revenues		1,325			1,537			3,009			2,741

Gross profit		326			522			884			1,074

Operating expenses:
Research and development	$	991		$	1,010		$	1,993		$	1,752
Sales and marketing		2,993			2,369			6,939			4,233
General and administrative		1,704			2,936			2,677			3,797

Total operating expenses		5,688			6,315			11,609			9,782

Operating loss		(5,362	)		(5,793	)		(10,725	)		(8,708	)

Financial expenses, net:
Revaluation of warrants		-			*)-			-			1
Other financial expense, net		(20	)		(45	)		(33	)		(50	)

Total financial expenses, net		(20	)		(45	)		(33	)		(49	)

Net loss	$	(5,382	)	$	(5,838	)	$	(10,758	)	$	(8,757	)

Deemed dividend related to warrant exchange	$	-		$	493		$	-		$	493
Net loss attributable to holders of Common Stock	$	(5,382	)	$	(6,331	)	$	(10,758	)	$	(9,250	)

Net loss per share

Basic and diluted loss per share	$	(0.13	)	$	(0.32	)	$	(0.27	)	$	(0.52	)
Weighted average number of Common Stock used in computing basic and diluted net loss per share		42,519,825			19,801,891			39,654,408			17,758,064

									Additional					Total
	Common Stock				Preferred Stock				paid-in		Accumulated			stockholders’
	Number		Amount		Number		Amount		capital		deficit			equity

Balance as of December 31, 2018		36,607,775	$	8		-	$	-	$	98,171	$	(89,254	)	$	8,925

Payment for executives and directors under Stock for Salary Program		213,398		*)-		-		-		210		-			210
Stock-based compensation		-		-		-		-		106		-			106
Net loss		-		-		-		-		-		(5,376	)		(5,376	)

Balance as of March 31, 2019 (unaudited)		36,821,173	$	8		-	$	-	$	98,487	$	(94,630	)		3,865

Payment for executives under Stock for Salary Program		142,624		*)-		-		-		141		-			141
Exercise of Options		8,104		*)-		-		-		*)-		-			-
Public Offering		4,855,341								6,558		-			6,558
Issuance of Common Stock to directors and employees		1,032,144		*)-		-		-		795					795
Stock-based compensation		-		-		-		-		117		-			117
Net loss		-		-		-		-		-		(5,382	)		(5,382	)

Balance as of June 30, 2019 (unaudited)		42,859,386	$	8		-	$	-	$	106,098	$	(100,012	)	$	6,094

	Three months ended September 30						Nine months ended September 30
	2017			2016			2017			2016
	Unaudited						Unaudited

Revenues	$	1,375		$	728		$	3,592		$	1,965
Cost of revenues		1,099			652			2,850			2,148

Gross profit (loss)		276			76			742			(183	)

Operating expenses:
Research and development		797			659			2,450			1,577
Sales and marketing		1,682			1,533			5,707			3,194
General and administrative		781			605			3,887			2,313

Total operating expenses		3,260			2,797			12,044			7,084

Operating loss		(2,984	)		(2,721	)		(11,302	)		(7,267	)

Financial income, net:
Revaluation of warrants		1			2,788			7,486			938
Other financial (expense) income, net		5			(678	)		(7	)		(697	)

Total financial income, net		6			2,110			7,479			241

Net loss		(2,978	)		(611	)		(3,823	)		(7,026	)

Deemed dividend related to Series A Preferred Stock exchange agreement		-			-			-			455
Deemed dividend related to extension of July 2015 Series A warrants in July 2016		-			265			-			265
Net loss attributable to holders of Common Stock		(2,978	)		(876	)		(3,823	)		(7,746	)

Net loss per share

Basic and diluted loss per share	$	(0.30	)	$	(0.15	)	$	(0.43	)	$	(1.54	)
Weighted average number of Common Stock used in computing basic and diluted net loss per share		9,950,443			5,705,229			8,931,460			5,019,918

	Common Stock				Preferred Stock				Additional paid-in		Accumulated			Total stockholders' equity
	Number		Amount		Number		Amount		capital		deficit			(deficiency)

Balance as of December 31, 2015		2,911,788	$	5		-		$	$	41,769	$	(43,354	)	$	(1,580	)
Issuance of Common Stock in March 2016 Public Offering, net of issuance cost		1,333,333		1		-		-		1,571		-			1,572
Issuance of Common Stock in March 2016 Private Placement, net of issuance cost		599,999		*) -		-		-		828		-			828
Issuance of Common Stock in January 2016 to service provider		5,556		*) -		-		-		37		-			37
Payment for executives, employee and directors under Salary Program		57,910		*) -		-		-		310		-			310
Issuance of Common Stock in March 2016 to officer		20,000		*) -		-		-		86		-			86
Exercise of warrants into Common Stock, net of issuance cost		77,019		*) -		-		-		210		-			210
Exercise of non-plan options		84,106		*) -		-		-		*) -		-			*) -
Deemed dividend related to Series A Preferred Stock exchange agreement into Common Stock in March 2016		124,737		-		-		-		455		(455	)		-
Deemed dividend related to extension of July 2015 Series A warrants in July 2016		-		-		-		-		265		(265	)		-
Conversion of Series A Preferred Stock into Common Stock		498,935		*) -		-		-		2,277		-			2,277
Stock-based compensation		-		-		-		-		605		-			605
Net loss		-		-		-		-		-		(10,887	)		(10,887	)

Balance as of December 31, 2016		5,713,383		6		-		-		48,413		(54,960	)		(6,541	)
Issuance of Common Stock in January 2017 Private Placement, net of issuance cost		1,113,922		*) -		-		-		2,886		-			2,886
Payment for executives and directors under Stock for Salary Program		185,656		*) -		-		-		547		-			547
Issuance of Common Stock in to Employees		452,257		*) -		-		-		1,472		-			1,472
Issuance of Common Stock to consultants and service provider		114,654		*) -		-		-		423		-			423
Issuance of Common Stock in March 2017 Private Placement, net of issuance cost		707,515		*) -		-		-		1,878		-			1,878
Issuance of Common Stock in April 2017 Public offering, net of issuance cost		1,450,000		*) -		-		-		3,855		-			3,855
Exercise of options		17,500		*) -		-		-		*) -		-			*) -
Issuance of Common Stock in August 2017 Private Placement, net of issuance cost		483,333		*) -		-		-		801		-			801
Issuance of Preferred Stock in August 2017 Private placement, net of issuance cost		-		-		2,307,654		*) -		3,711		-			3,711
Stock-based compensation		-		-		-		-		906		-			906
Net loss		-		-		-		-		-		(3,823	)		(3,823	)

Balance as of September 30, 2017 (unaudited)		10,238,220	$	6		2,307,654	$	*) -	$	64,892	$	(58,783	)	$	6,115

	Nine months ended September 30,
	2017			2016
	Unaudited

Cash flows from operating activities:
Net loss	$	(3,823	)	$	(7,026	)
Adjustments required to reconcile net loss to net cash used in operating activities:
Stock-based compensation and Common Stock to service providers		3,062			914
Registration rights waiver		-			650
Depreciation		155			273
Increase in trade receivables		(193	)		(257	)
Decrease (increase) in other receivables and prepaid expenses		(264	)		80
Increase in inventories		(36	)		(517	)
Increase in trade payables		171			49
Decrease in deferred revenues		-			(31	)
Increase in other payables and accrued expenses		191			283
Change in fair value of warrants to purchase shares of Common Stock		(7,486	)		(938	)

Net cash used in operating activities		(8,223	)		(6,520	)

Cash flows from investing activities:
Investment in short-term bank deposit		(16	)		(155	)
Maturity of lease deposits		3			1
Purchase of property and equipment		(64	)		(406	)

Net cash used in investing activities		(77	)		(560	)

Cash flows from financing activities:
Proceeds from issuance of Stock and warrants, net of issuance cost		13,469			7,538
Proceeds from exercise of options and warrants		*) -			210

Net cash provided by financing activities		13,469			7,748

Increase in cash and cash equivalents		5,169			668
Cash and cash equivalents at the beginning of the period		1,093			2,671

Cash and cash equivalents at the end of the period	$	6,262		$	3,339

Non-cash investing and financing activities:

Conversion of Series A Preferred Stock to Common Stock	$	-		$	2,277

Payment for directors and employees under Stock for Cash Program	$	183		$	154

	Six months ended June 30,
	2019			2018
	Unaudited

Cash flows from operating activities:
Net loss	$	(10,758	)	$	(8,757	)
Adjustments required to reconcile net loss to net cash used in operating activities:
Stock-based compensation and Common Stock to service providers		1,310			2,651
Depreciation		93			101
Amortization of operating lease right of use		130			-
Increase is trade receivables		(110	)		(66	)
Decrease in accounts receivables and prepaid expenses		38			47
Decrease (increase) in inventories		(442	)		16
Increase (decrease) in trade payables		(190	)		226
Increase (decrease) in other accounts payable and accrued expenses		(131	)		939
Increase in deferred revenues		662			50
Change in operating lease liability		(93)			-
Change in fair value of warrants to purchase shares of Common Stock		-			(1	)

Net cash used in operating activities		(9,491	)		(4,794	)

Cash flows from investing activities:
Maturities (investment) of restricted bank deposit		(6	)		76
Investment in lease deposits		(1	)		-
Purchase of property and equipment		(71	)		(23	)

Net cash provided by (used in) investing activities		(78	)		53

Cash flows from financing activities:
Proceeds from issuance of Common Stock, Preferred Stock and warrants, net of issuance cost		6,558			6,034

Net cash provided by financing activities		6,558			6,034

Increase (decrease) in cash and cash equivalents		(3,011	)		1,293
Cash and cash equivalents at the beginning of the period		10,997			3,718

Cash and cash equivalents at the end of the period	$	7,986		$	5,011

Non-cash investing and financing activities:

Payment for directors and consultants under Shares for Salary Program	$	59		$	201

Balance, beginning of the period	$	736
New performance obligations		2,011
Reclassification to revenue as a result of satisfying performance obligations		(1,349	)
Balance, end of the period	$	1,398

	Six Months Ended
	June 30, 2019

Lease cost
Operating lease cost	$	133
Short term lease cost		19
Variable lease cost		37
Total lease cost		189

Weighted Average Remaining Lease Term
Operating leases		3.23 years

Weighted Average Discount Rate
Operating leases		7.23	%

	Operating Leases
The remainder of 2019	$	146
2020		276
2021		246
2022		209
Total undiscounted cash flows		877
Less imputed interest		(91	)
Present value of lease liabilities	$	786

	Six Months Ended
	June 30, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	152
Lease liabilities arising from obtaining right-of-use assets:
Operating leases	$	878

	Number of options			Weighted average exercise price		Weighted average remaining contractual life		Aggregate Intrinsic value		Number of options			Weighted average exercise price		Weighted average remaining contractual life		Aggregate Intrinsic value
				$		Years		$					$		Years		$

Options outstanding at beginning of year		583,334			16.53		4.87		7		1,787,801			5.59		4.32		368
Options granted		823,413			2.00						584,698			0.73
Options exercised		(17,500	)		0.00						(8,104	)		0.00
Options expired		(40,528	)		5.27						(61,182	)		4.36
Options forfeited		(27,681	)		38.86						(55,588	)		1.58

Options outstanding at period end (unaudited)		1,321,038			7.71		4.96		424		2,247,625			4.47		4.33		217

Options vested and expected to vest at period end (unaudited)		1,200,770			7.97		4.970		424		2,015,682			4.58		4.30		216

Exercisable at period end (unaudited)		696,783			11.85		4.64		309		1,309,145			6.88		3.55		348

	Three months ended June 30,
	2019			2018

Volatility		85.53%-90.82	%		85.99%-105.38	%
Risk-free interest rate		2.26%-2.28	%		2.66%-2.77	%
Dividend yield		0	%		0	%
Expected life (years)		3.5-4.5			3.5-5.94

		~~September 30,~~ ~~2017~~

~~Risk-free interest rate (1)~~		~~1.31%~~
~~Expected volatility (2)~~		~~81.03%~~
~~Expected life (in years) (3)~~		~~0.98~~
~~Expected dividend yield (4)~~		0%

~~Fair value per warrant~~		~~$0.03~~

	Fair value of liability related to warrants

Balance at December 31, 2016	$	7,488
Change in fair value of warrants during the period		(7,486	)

Balance at September 30, 2017 (unaudited)	$	2

	Three Months Ended June 30, (in thousands)
	2019			2018			$ Change

Net Loss Reconciliation
Net loss attributable to common stockholders – as reported	$	(5,382	)	$	(6,331	)	$	949

Deemed dividend – related to warrant exchange					493			(493	)

Net Loss as reported		(5,382	)		(5,838	)		456

Adjustments
Depreciation expense		47			48			(1	)
Other financial expenses, net		20			45			(25	)

EBITDA		(5,315	)		(5,745	)		430

Stock-based compensation expenses		1,053			2,421			(1,368	)
Revaluation of warrants		-			(* -			(* -

Non-GAAP adjusted loss	$	(4,262	)	$	(3,324	)	$	(938	)

	Six Months Ended June 30, (in thousands)
	2019			2018			$ Change

Net Loss Reconciliation
Net loss attributable to common stockholders – as reported	$	(10,758	)	$	(9,250	)	$	(1,508	)

Deemed dividend – related to warrant exchange					493			(493	)

Net Loss as reported		(10,758	)		(8,757	)		(2,001	)

Adjustments
Depreciation expense		93			101			(8	)
Other financial expenses, net		33			50			(17	)

EBITDA		(10.632	)		(8,606	)		(2,026	)

Stock-based compensation expenses		1,310			2,651			(1,341	)
Revaluation of warrants					(1	)		1

Non-GAAP adjusted loss	$	(9,322	)	$	(5,956	)	$	(3,366	)

	September 30						June 30,
	2017			2016			2019			2018
	$			$			$			$
Cash used in operating activities:		(8,223	)		(6,520	)		(9,491	)		(4,794	)
Cash used in investing activities:		(77	)		(560	)
Cash provided by (used in) investing activities:								(78	)		53
Cash provided by financing activities:		13,469			7,748			6,558			6,034
		5,169			668			(3,011	)		1,293

No.		Description of Exhibit

10.1*4.1		Form of Pre-Funded Warrant (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange ~~Agreement.~~Commission on May 22, 2019).
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 ~~September~~June 30, ~~2017,~~2019, formatted in 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.

Date: ~~November 13, 2017~~August 12, 2019		DarioHealth Corp.

	By:		/s/ Erez Raphael
		Name:	Erez Raphael
		Title:	~~Chairman and~~ Chief Executive Officer
			(Principal Executive Officer)

	By:		/s/ Zvi Ben David
		Name:	Zvi Ben David
		Title:	Chief Financial Officer, Secretary and Treasurer ~~(Principal~~ (Principal Financial Officer)