DarioHealth Corp. (Form: 10-Q, Received: 08/11/2016 06:04:10)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended June 30, 2016

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. 333-186054

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.)

9 Halamish Street

Caesarea Industrial Park, Israel

3088900

(Address of Principal Executive Offices)

(Zip Code)

+972-4-770-4055

(Registrant’s telephone number, including area code)

LabStyle Innovations Corp.

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

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, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

¨ Large accelerated filer	¨ Accelerated filer
¨ Non-accelerated filer	x Smaller reporting company

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 August 9, 2016, the registrant had 5,713,383 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.

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.	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

	Notes to Consolidated Financial Statements	F-7

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

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	9

Item 4.	Control and Procedures	9

PART II-OTHER INFORMATION

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	9

Item 5.	Other Information	9

Item 6.	Exhibits	10

SIGNATURES		11

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 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 lack of operating history;

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

• 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 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 launch and penetrate markets in new locations;

• our ability to implement on-line distribution channels and to generate sales from such channels;

• 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, 2015 (filed on February 8, 2016) 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

(Formerly: LABSTYLE INNOVATIONS CORP.)

INTERIM CONSOLIDATED FINANCIAL STATEMENTS

AS OF JUNE 30, 2016

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

Consolidated Statements of Cash Flows	F-6

Notes to Consolidated Financial Statements	F-7 - F-16

F- 1

DARIOHEALTH CORP. (FORMERLY: LABSTYLE INNOVATIONS CORP.) AND ITS SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

U.S. dollars in thousands

	June 30,		December 31,
	2016		2015
	Unaudited

ASSETS

CURRENT ASSETS:
Cash and cash equivalents	$	6,376	$	2,671
Short-term bank deposits		72		80
Inventories		1,011		601
Other accounts receivable and prepaid expenses		601		935

Total current assets		8,060		4,287

LEASE DEPOSITS		37		41

PROPERTY AND EQUIPMENT, NET		1,035		749

Total assets	$	9,132	$	5,077

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

F- 2

DARIOHEALTH CORP. (FORMERLY: LABSTYLE INNOVATIONS CORP.) AND ITS SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

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

	June 30,			December 31,
	2016			2015
	Unaudited

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)

CURRENT LIABILITIES:
Trade payables	$	1,005		$	978
Deferred revenues		-			31
Other accounts payable and accrued expenses		969			681

Total current liabilities		1,974			1,690

LIABILITY RELATED TO WARRANTS		1,953			2,610


COMMITMENTS AND CONTINGENT LIABILITIES

CONVERTIBLE PREFERRED SHARES:

Series A Preferred Stock of $0.0001 par value - Authorized: 60,000 shares at June 30, 2016 (unaudited) and December 31, 2015; Issued and Outstanding: None and 1,984 shares at June 30, 2016 (unaudited) and December 31, 2015, respectively; Aggregate liquidation preference of none and $3,560 at June 30, 2016 (unaudited) and December 31, 2015, respectively		-			2,357

STOCKHOLDERS' EQUITY (DEFICIENCY)
Common Stock of $0.0001 par value - Authorized: 160,000,000 shares at June 30, 2016 (unaudited) and December 31, 2015; Issued and Outstanding: 5,688,358 and 2,911,788 shares at June 30, 2016 (unaudited) and December 31, 2015, respectively		6			5
Preferred Stock of $0.0001 par value - Authorized: 5,000,000 shares at June 30, 2016 (unaudited) and December 31, 2015; Issued and Outstanding: None at June 30, 2016 (unaudited) and December 31, 2015		-			-
Additional paid-in capital		52,916			41,769
Accumulated deficit		(47,717	)		(43,354	)

Total stockholders' equity (deficiency)		5,205			(1,580	)

Total liabilities and stockholders' equity (deficiency)	$	9,132		$	5,077

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

F- 3

DARIOHEALTH CORP. (FORMERLY: LABSTYLE INNOVATIONS CORP.) AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

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

	Three months ended June 30						Six months ended June 30
	2016			2015			2016			2015
	Unaudited						Unaudited

Revenues	$	669		$	175		$	1,237		$	242
Cost of revenues		826			410			1,496			707

Gross loss		157			235			259			465

Operating expenses:
Research and development	$	521		$	441		$	918		$	1,324
Sales and marketing		1,142			262			1,661			514
General and administrative		803			574			1,708			986

Total operating expenses		2,466			1,277			4,287			2,824

Operating loss		2,623			1,512			4,546			3,289

Financial expenses (income), net:
Revaluation of warrants		90			526			(657	)		376
Other financial expense (income), net		6			(34	)		19			(23	)

Total financial expenses (income), net		96			492			(638	)		353

Net loss	$	2,719		$	2,004		$	3,908		$	3,642

Deemed dividend related to warrants exchange agreement	$	-		$	154		$	-		$	154
Deemed dividend related to Series A Preferred Stock exchange agreement	$	-		$	-		$	455		$	-
Net loss attributable to holders of Common Stock	$	2,719		$	2,158		$	4,363		$	3,796

Net loss per share

Basic and diluted loss per share	$	(0.49	)	$	(1.26	)	$	(0.84	)	$	(2.70	)
Weighted average number of Common Stock used in computing basic and diluted net loss per share		5,587,800			1,680,169			4,644,495			1,435,873

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

F- 4

DARIOHEALTH CORP. (FORMERLY: LABSTYLE INNOVATIONS CORP.) AND ITS SUBSIDIARIES

STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIENCY)

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

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

Balance as of December 31, 2014		902,068	$	2	$	30,761	$	(36,058	)	$	(5,295	)
Issuance of Common Stock and warrants in February 2015 at $3.24 per unit, net of issuance cost		627,035		1		1,955		-			1,956
Issuance of Common Stock in July and August 2015 at $5.40 per unit, net of issuance cost		480,368		1		2,324		-			2,325
Issuance of Common stock in November 2015 at $5.40 per unit, net of issuance cost		446,223		1		2,293		-			2,294
Issuance of Common stock in December 2015 at $6.16 per unit, net of issuance cost		81,222		*)-		500		-			500
Issuance of Common Stock in April, August and December 2015 to service provider		16,668		*)-		118		-			118
Issuance of Common Stock in September 2015 to employees as compensation		97,121		*)-		591		-			591
Issuance of Common Stock in September 2015 to service provider		2,778		*)-		16		-			16
Payment for executives and directors under Salary Program		55,474		*)-		304		-			304
Exercise of warrants into Common Stock in May 2015, net of issuance cost		106,881		*)-		453		-			453
Deemed dividend related to inducement of warrant exercise in May 2015		-		-		154		(154	)		-
Issuance of warrants related to warrant replacement agreement in November and December 2015		-		-		822		-			822
Receipts on account of shares		-		-		20		-			20
Conversion of Series A Preferred Stock into Common Stock		84,812		*)-		400		-			400
Exercise of warrants		10,804		*)-		60		-			60
Exercise of options		334		*)-		*)-		-			*)-
Stock-based compensation		-		-		998		-			998
Net loss		-		-		-		(7,142	)		(7,142	)
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		5,037		-			5,038
Issuance of Common Stock in March 2016 Private Placement, net of issuance cost		599,999		*) -		2,500		-			2,500
Issuance of Common Stock in January 2016 to service provider		5,556		*) -		37		-			37
Payment for executives, employee and directors under Salary Program		32,885		*) -		193		-			193
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 options		84,106		*) -		*) -		-			*) -
Deemed dividend related to Series A Preferred Stock exchange agreement into Common Stock in March 2016		124,737		-		455		(455	)		-
Conversion of Series A Preferred Stock into Common Stock		498,935		*) -		2,277		-			2,277
Stock-based compensation		-		-		352		-			352
Net loss		-		-		-		(3,908	)		(3,908	)

Balance as of June 30, 2016 (unaudited)		5,688,358	$	6	$	52,916	$	(47,717	)	$	5,205

*) Represents an amount lower than $1.

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

F- 5

DARIOHEALTH CORP. (FORMERLY: LABSTYLE INNOVATIONS CORP.) AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

U.S. dollars in thousands

	Six months ended June 30,
	2016			2015
	Unaudited

Cash flows from operating activities:
Net loss	$	(3,908	)	$	(3,642	)
Adjustments required to reconcile net loss to net cash used in operating activities:
Stock-based compensation and Common Stock to service providers		668			242
Depreciation		191			163
Decrease (increase) in accounts receivables and prepaid expenses		84			(44	)
Decrease (increase) in inventories		(410	)		27
Increase in trade payables		27			163
Increase (decrease) in deferred revenues		(31	)		54
Increase (decrease) in other accounts payable and accrued expenses		238			(163	)
Increase (decrease) in fair value of warrants		(657	)		376
Capital loss from disposal of fixed assets		-			(8	)

Net cash used in operating activities	$	(3,798	)	$	(2,832	)

Cash flows from investing activities:
Investment in short-term bank deposit		-			(10	)
Maturity of lease deposits		1			7
Purchase of property and equipment		(246	)		(46	)

Net cash used in investing activities		(245	)		(49	)

Cash flows from financing activities:
Proceeds from issuance of Common Stock and warrants, net of issuance cost		7,538			1,956
Proceeds from conversion of warrants, net of issuance cost		-			453
Proceeds from exercise of options and warrants		210			*)-

Net cash provided by financing activities		7,748			2,409

Increase (decrease) in cash and cash equivalents		3,705			(472	)
Cash and cash equivalents at the beginning of the period		2,671			1,453

Cash and cash equivalents at the end of the period	$	6,376		$	981

Non-cash investing and financing activities:
Purchase of property and equipment	$	-		$	24

Conversion of Series A Preferred Stock into Common Stock	$	2,277		$	401

Payment for directors under Salary Program	$	102		$	110

*) Represents an amount lower than $1.

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

F- 6

DARIOHEALTH CORP. (FORMERLY: LABSTYLE INNOVATIONS CORP.) AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

NOTE 1:-

GENERAL

DarioHealth Corp. (formerly: LabStyle Innovations Corp.) (the “Company”) was incorporated in Delaware as LabStyle Innovations Corp. and commenced operations on August 11, 2011. In July 2016 the Company's Board of Directors approved the change of the name of the Company to DarioHealth Corp., which became effective on July 28, 2016. The Company is a digital health (mHealth) company that is developing and commercializing a patented and proprietary technology providing consumers with laboratory-testing capabilities using smart phones and other mobile devices. The Company’s flagship product, Dario ^TM , also referred to as the Dario ^TM Smart Diabetes Management Solution, is a mobile, real-time, cloud-based, diabetes management solution based on an innovative, multi-feature software application combined with a stylish, ‘all-in-one’, pocket-sized, blood glucose monitoring device, which we call the Dario ^TM Smart Meter.

The Company’s wholly owned subsidiary, LabStyle Innovation Ltd. (“Ltd.” or “Subsidiary”), 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. Ltd. has a wholly-owned subsidiary, LabStyle Innovations US LLC, a Delaware limited liability company (“LabStyle US”), which was established in 2014; however, it has not started its operations to date.

During the six months period ended June 30, 2016, the Company incurred operating losses and negative cash flows from operating activities amounting to $4,546 and $3,798, respectively. The Company will be required to obtain additional liquidity resources in order to support the commercialization of its products and maintain its research and development activities. The Company is addressing its liquidity needs by seeking additional funding from public and/or private sources and by ramping up its commercial sales. There are no assurances, however, that the Company will be able to obtain an adequate level of financial resources required for the short and long-term development and commercialization of its product. According to management estimates, the Company has sufficient liquidity resources to continue its planned activity into June 2017.

These conditions raise substantial doubt about the 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.

F- 7

DARIOHEALTH CORP. (FORMERLY: LABSTYLE INNOVATIONS CORP.) AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

NOTE 1:-

GENERAL (Cont.)

On June 15, 2015, the Company held its 2015 Annual Meeting of Stockholders in which, among other matters, Company stockholders approved an amendment to the Company’s certificate of incorporation with respect to a reverse split of the Company’s issued and outstanding Common Stock in a ratio to be determined by the Company’s Board of Directors.

On February 17, 2016, the Company’s Board of Directors approved a reverse split in a ratio of one-to-eighteen. The 2016 reverse split was implemented on February 26, 2016 (the "2016 Reverse Split"). The amount of authorized Common Stock as well as the par value for the Common Stock were not affected. Any fractional shares resulting from the 2016 Reverse Split were rounded up to the nearest whole share.

All Common Stock, warrants, options and per share amounts set forth herein are presented to give retroactive effect to the 2016 Reverse Split for all periods presented.

In December 2015, the United States Food and Drug Administration (“FDA”) granted the Subsidiary 510(k) clearance for the Dario ^TM Blood Glucose Monitoring System, including its components, the Dario Blood Glucose Meter, Dario ^TM Blood Glucose Test Strips, Dario ^TM Glucose Control Solutions and the Dario app on the Apple iOS 6.1 platform and higher.

On March 4, 2016, the Company's Common Stock and warrants were approved for listing on the NASDAQ Capital Market under the symbols “DRIO” and “DRIOW,” respectively .

NOTE 2:-

SIGNIFICANT ACCOUNTING POLICIES

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, 2015 are applied consistently in these unaudited interim consolidated financial statements.

F- 8

DARIOHEALTH CORP. (FORMERLY: LABSTYLE INNOVATIONS CORP.) AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

NOTE 3:-

UNAUDITED INTERIM FINANCIAL STATEMENTS

The accompanying unaudited interim consolidated financial statements as of June 30, 2016, 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 June 30, 2016, and the Company's consolidated results of operations and the Company's consolidated cash flows for the six months ended June 30, 2016. Results for the six months ended June 30, 2016 are not necessarily indicative of the results that may be expected for the year ending December 31, 2016.

NOTE 4:-

INVENTORIES

	June 30,		December 31,
	2016		2015
	Unaudited

Raw materials	$	501	$	469
Finished products		510		132

	$	1,011	$	601

During the six month period ended June 30, 2016, and the year ended December 31, 2015, total inventory write-off expenses amounted to $195 and $193, respectively.

NOTE 5:-

COMMITMENTS AND CONTINGENT LIABILITIES

From time to time the Company is involved in claims and legal proceedings. The Company reviews the status of each matter and assesses its potential financial exposure. If the potential loss from any claim or legal proceeding is considered probable and the amount can be reasonably estimated, the Company accrues a liability for the estimated loss.

F- 9

DARIOHEALTH CORP. (FORMERLY: LABSTYLE INNOVATIONS CORP.) AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

NOTE 6:-

STOCKHOLDERS' EQUITY (DEFICIENCY) AND CONVERTIBLE PREFERRED SHARES

On February 18, 2016, the Company entered into a Preferred Stock Conversion Agreement with the holders of the Series A Preferred Stock (the "Purchasers") according to which the then currently outstanding 1,984 shares of the Series A Preferred Stock would be converted into 623,672 shares of our Common Stock, reflecting an increase of 25% in the original number of shares of Common Stock issuable upon conversion of the Series A Preferred Stock. Accordingly, in March 2016 the Company issued to the remaining Purchasers 623,672 shares of Common Stock and recorded an increase of $2,277 to additional paid in capital, net of issuance costs. The increase of 25% in the original number of shares of Common Stock issued to the Purchasers was accounted for as change in the conversion terms in the Company's financial statements and a deemed dividend in the amount of $455 was recorded to the Statement of Changes in Equity (Deficiency).

On April 3, 2015, the Company's Board of Directors approved the issuance of restricted Common Stock (“Compensation Shares”) to directors, officers and employees of the Company as consideration for a reduction in or waiver of cash salary or fees owed to such individuals. During the six month period ended June 30, 2016, the Company issued 32,885 Compensation Shares to certain members of the Board of Directors and officers as consideration for a waiver of cash owed to such individuals amounting to $193.

On March 8, 2016, the Company closed a public offering (the “Public Offering”) of 1,333,333 shares of the Common Stock, at a purchase price of $4.50 per share, and 1,333,333 immediately exercisable five-year warrants (the “March 2016 Warrants”) each to purchase one share of Common Stock with an exercise price of $4.50 per share, at a purchase price of $0.01 per Warrant for a consideration of $5,038, net of issuance costs. Out of the above issuance, 111,112 shares of Common Stock were issued to the Chief Financial Officer of the Company for gross proceeds of $500.

The March 2016 Warrants are exercisable for cash or on a cashless basis if no registration statement covering the resale of the shares issuable upon exercise of the Warrants is available.

In addition, the Company granted to the underwriters in the offering a 45-day option period to purchase up to 200,000 additional shares of Common Stock and/or 200,000 warrants (the “Option Warrants”) each to purchase one share of Common Stock at the public offering price less underwriting discounts and commissions to cover over-allotments. The underwriters agreed to purchase the shares and March 2016 Warrants from the Company, with the option to purchase the option securities, pursuant to the Underwriting Agreement, at a purchase price of $4.185 per Share and $0.0093 per Warrant. On March 4, 2016, the Underwriters exercised the Option with respect to the Option Warrants. The shares, March 2016 Warrants and Option Warrants were offered, issued and sold under a prospectus filed with the Securities and Exchange Commission (the “SEC”) pursuant to an effective registration statement filed with the SEC. In connection with the Public Offering, the Company agreed to issue to the representatives of the underwriters five-year warrants (the “Representatives’ Warrants”) to purchase up to 153,333 shares of Common Stock.

F- 10

DARIOHEALTH CORP. (FORMERLY: LABSTYLE INNOVATIONS CORP.) AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

NOTE 6:-

STOCKHOLDERS' EQUITY (DEFICIENCY) AND CONVERTIBLE PREFERRED SHARES (Cont.)

In connection with the Public Offering, the Representatives’ Warrants are exercisable at a per share exercise price equal to $5.625 per share of Common Stock for cash or on a cashless basis if no registration statement covering the resale of the shares issuable upon exercise of the Representatives’ Warrants is available.

On March 3, 2016, concurrent with the Public Offering, the Company entered into securities purchase agreements (the “Securities Purchase Agreements”) with certain existing stockholders (the “Investors”) with respect to the sale in a private placement (the “Private Offering”) of 555,555 of the Company’s units (the “Units”). The purchase price per Unit was $4.50 and the total consideration amounted to $2,500, net of issuance costs. Each Unit sold in the Private Offering is comprised of (i) one share of Common Stock, and (ii) one warrant to purchase 1.2 shares of Common Stock (the “2016 Series A Warrant”) which is immediately exercisable at an exercise price of $4.50 per share of Common Stock and expires 5 years from the date of issuance. In total, in the Private Offering, the Company issued 555,555 shares of Common Stock and 2016 Series A Warrants exercisable for an aggregate of 666,666 shares of Common Stock. The 2016 Series A Warrants are exercisable for cash or on a cashless basis if no registration statement covering the resale of the shares issuable upon exercise of the 2016 Series A Warrants is available.

In connection with the Private Offering, the Company agreed to issue to two non-U.S. finders an aggregate of 44,444 restricted shares of Common Stock, 73,333 warrants to purchase Common Stock at an exercise price of $4.50 per share which expire 5 years from the date of issuance, and 38,889 non-plan stock options which have an exercise price of $0.0001 per share and are fully vested and exercisable after the lapse of four months from the grant date.

The Public Offering and Private Offering triggered the anti-dilution mechanism of the warrants issued in the 2011-2012 Private Placement (as hereinafter defined) by adjusting the current exercise price of the warrants for the investors and placement agent to $3.59 per share and an additional 415,316 and 78,662 shares became subject to such warrants, respectively. In addition, the exercise price of the placement agent's warrants in the 2011-2012 Private Placement, was adjusted to $3.33 per share and an additional 48,054 warrants were issued.

In March 2016, the Company issued 20,000 shares of Common Stock under the 2012 Equity Incentive Plan to an officer according to the Israeli sub-plan. Consequently, the Company recorded General and Administrative expenses amounting to $86.

As of June 30, 2016, warrants to purchase an aggregate of 4,897,994 shares of Common Stock were outstanding with expiration dates between October 16, 2016 and March 8, 2021 at exercise prices ranging from $3.24 to $135 per share.

F- 11

DARIOHEALTH CORP. (FORMERLY: LABSTYLE INNOVATIONS CORP.) AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

NOTE 6:-

STOCKHOLDERS' EQUITY (DEFICIENCY) AND CONVERTIBLE PREFERRED SHARES (Cont.)

Stock option compensation:

Transactions related to the grant of options to employees, directors and non-employees under the above plans during the six month period ended June 30, 2016 were as follows:

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

Options outstanding at beginning of year		587,678		16.87		5.80		1.26
Options granted		67,667		4.80
Options exercised		84,106		*)-
Options expired		6,835		8.81
Options forfeited		10,056		6.71

Options outstanding at period end (unaudited)		554,348		18.04		5.40		34.86

Options vested and expected to vest at period end (unaudited)		591,044		16.31		4.73		32.50

Exercisable at period end (unaudited)		283,161		28.01		5.29		11.29

The aggregate intrinsic value in the table above represents the total intrinsic value (the difference between the Company's closing stock price on the last day of the second quarter of 2016 and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on June 30, 2016. This amount is impacted by the changes in the fair market value of the Common Stock.

As of June 30, 2016, the total amount of unrecognized stock-based compensation expense was approximately $972 which will be recognized over a weighted average period of 1.02 years.

F- 12

DARIOHEALTH CORP. (FORMERLY: LABSTYLE INNOVATIONS CORP.) AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

NOTE 6:-

STOCKHOLDERS' EQUITY (DEFICIENCY) AND CONVERTIBLE PREFERRED SHARES (Cont.)

The total compensation cost related to all of the Company's equity-based awards recognized during the six month periods ended June 30, 2016 and 2015 was comprised as follows:

	Six months ended June 30,
	2016		2015
	Unaudited

Cost of revenues	$	19	$	6
Research and development		53		64
Sales and marketing		62		22
General and administrative		218		120

Total stock-based compensation expenses	$	352	$	212

NOTE 7:-

FAIR VALUE MEASUREMENTS

ASC 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:

Level 1 -	quoted prices in active markets for identical assets or liabilities;

Level 2 -	inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices in active markets for similar assets or liabilities, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; or

Level 3 -	unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

F- 13

DARIOHEALTH CORP. (FORMERLY: LABSTYLE INNOVATIONS CORP.) AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

NOTE 7:-

FAIR VALUE MEASUREMENTS (Cont.)

On March 30, 2012, the Company consummated the final closing of a 2011 − 2012 private placement pursuant to which certain accredited investors purchased an aggregate of 27,345 shares of Common Stock and warrants to purchase 27,345 shares of Common Stock at an exercise price of $135.00 per share for total consideration of $2,461 (the “2011-2012 Private Placement”).

The placement agent for the 2011 − 2012 Private Placement and its permitted designees were granted warrants to purchase an aggregate of (i) 5,358 shares of Common Stock at the exercise price of $90.00 per share and (ii) 5,358 shares of Common Stock at the exercise price of $135.00 per share. Subsequent to the issuance of the 2011 − 2012 Private Placement warrants the original exercise price of the warrants for the investors and placement agent was adjusted from $135.00 per share to $3.59 per share and additional 950,152 and 180,557 warrants were issued, respectively. In addition, the exercise price for the placement agent warrants of the 2011 − 2012 Private Placement, with an original exercise price of $90.00 per share was adjusted to $3.33 per share and an additional 119,705 warrants were issued. The majority of the warrants granted to the placement agents to purchase shares of Common Stock expired unexercised during the second quarter of 2016.

On September 23, 2014, the Company consummated the September 2014 Private Placement.

The warrants of the 2011-2012 Private Placement contain non-standard anti-dilution protection provisions and the warrants of a private placement that occurred in September 2014 (the “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:

Investors' warrants in 2011-2012 Private Placement:

	June 30, 2016

Risk-free interest rate (1)		0.26	%
Expected volatility (2)		90.24	%
Expected life (in years) (3)		0.33
Expected dividend yield (4)		0	%

Fair value per warrant	$	1.87

F- 14

DARIOHEALTH CORP. (FORMERLY: LABSTYLE INNOVATIONS CORP.) AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

NOTE 7:-

FAIR VALUE MEASUREMENTS (Cont.)

Investors' warrants in September 2014 Private Placement:

	June 30, 2016

Risk-free interest rate (1)		0.61	%
Expected volatility (2)		103.96	%
Expected life (in years) (3)		2.23
Expected dividend yield (4)		0	%

Fair value per warrant	$	2.33

(1)

Risk-free interest rate - based on yield rates of non-index linked U.S. Federal Reserve treasury bonds.

(2)

Expected volatility - was calculated based on actual historical stock price movements of the Company together with companies in the same industry over a term that is equivalent to the expected term of the option.

(3)

Expected life - the expected life was based on the expiration date of the warrants.

(4)

Expected dividend yield - was based on the fact that the Company has not paid dividends to its stockholders in the past and does not expect to pay dividends to its stockholders in the future.

(5)

The changes in Level 3 liabilities associated with the 2011-2012 Private Placement and the September 2014 Private Placement warrants are measured at fair value on a recurring basis. The following tabular presentation reflects the components of the liability associated with such warrants as of June 30, 2016:

	Fair value of liability related to warrants

Balance at December 31, 2015	$	2,610
Change in fair value of warrants during the period		(657	)

Balance at June 30, 2016 (unaudited)	$	1,953

As of June 30, 2016, there were outstanding warrants to purchase 1,030,469 shares of Common Stock from the above issuances which were recorded as a liability.

F- 15

DARIOHEALTH CORP. (FORMERLY: LABSTYLE INNOVATIONS CORP.) AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

NOTE 8:-

FINANCIAL EXPENSES (INCOME), NET

	Six months ended June 30,
	2016			2015
	Unaudited

Bank charges	$	12		$	4
Foreign currency translation adjustments		7			(27	)
Change in fair value of warrants		(657	)		376

Total financial expenses (income), net	$	(638	)	$	353

NOTE 9:-

SUBSEQUENT EVENTS

In July 2016, 25,025 Compensation Shares of Common Stock were issued to certain members of the Board of Directors and Officers of the Company as consideration for a reduction in or waiver of cash salary or fees owed to such individuals.

On July 23, 2015 and August 28, 2015, the Company completed two closings of a private placement (the “July 2015 Private Placement”). The Company issued in the July 2015 Private Placement series A warrants to purchase 261,677 shares of Common Stock (the “2015 Series A Warrants”). The 2015 Series A Warrants were immediately exercisable at an exercise price of $6.30 per share and expire 12 months from the closing date.

In July 2016, following the request of substantially all of the buyers to amend the term of the existing warrants, the Company's Board of Directors approved a Warrant Amendment Agreement, according to which the term of the 2015 Series A Warrants shall be extended by one year and the exercise price shall be amended to $6.66 per share. This modification is considered a modification of the original terms of the 2015 Series A Warrants and therefore the Company will record a deemed dividend in the amount of approximately $265 during the third quarter of 2016.

On August 10, 2016, the Company entered into an agreement (the “Agreement”) with Dicilyon Consulting and Investment Ltd., an existing stockholder (the “Stockholder”), and David Edery, who previously purchased certain securities from the Company, which were granted certain registration rights which required, among other things, the continued effectiveness of certain registration statements. In consideration of the Stockholder waiving its registration rights with respect to certain previously purchased securities, the Company agreed to issue to the Stockholder a warrant, or the Warrant, to purchase 300,000 shares of our Common Stock at an exercise price of $4.50 per share exercisable for a period of 4.5 years from the date of the Agreement. In addition, the Company has also agreed to register the shares of Common Stock underlying the Warrant. The Warrant is exercisable for cash or on a cashless basis if a registration statement covering the shares issuable upon exercise of the Warrants is unavailable.

F- 16

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

The following financial data in this narrative are expressed in thousands , except for stock and stock data.

On February 26, 2016, we affected a 1-for-18 reverse stock split of our outstanding common stock, which we refer to herein as the “reverse split”. Our authorized common stock and the par value of our common stock were not impacted by the reverse split. References in this Quarterly Report to our capitalization and other matters pertaining to our common stock relate to our capitalization and common stock after giving effect to the reverse split.

The following discussion should be read in conjunction 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, 2015.

This discussion contains certain forward-looking statements that involve risks and uncertainties. Our actual results and the timing of certain events could differ materially from those discussed in these forward-looking statements as a result of certain factors, including, but not limited to, those set forth herein and elsewhere in this Quarterly Report and in our other filings with the Securities and Exchange Commission. See “Cautionary Note Regarding Forward Looking Statements.”

Overview

We are a digital health (mHealth) company that is developing and commercializing a patented and proprietary technology providing consumers with laboratory-testing capabilities using smart phones and other mobile devices. 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. Effective as of July 28, 2016, we changed our name from LabStyle Innovations Corp. to DarioHealth Corp. Our flagship product, Dario ^TM , is a mobile, real-time, cloud-based, diabetes management solution based on an innovative, multi-feature software application combined with a stylish, ‘all-in-one’, pocket-sized, blood glucose monitoring device, which we call the Dario ^TM Smart Meter.

We commenced a commercial launch of the free Dario ^TM application in the United Kingdom in late 2013 and commenced an initial soft launch of the full Dario ^TM solution (including the app and the Smart Meter) in selected jurisdictions in March 2014 with the goal of collecting customer feedback to refine our longer-term roll-out strategy and continued to scale up launch during 2014 in the United Kingdom, the Netherlands and New Zealand, in 2015 in Australia, Israel and Canada and in 2016 in the United States, with additional launch and market penetration plans for Italy, India, Panama and Costa Rica, all of which are planned for 2016. We are consistently adding additional features and functionality in making Dario ^TM Smart Diabetes Management Solution the new standard of care in diabetes data management.

In the United States we commenced commercialization in March 2016 and intend to continue to generate demand through a digital direct to consumer marketing campaign. Customers are currently able to purchase the product directly through our proprietary e-store where they can also subscribe to a subscription-based service. In July 2016, we signed an agreement with GEMCO Medical, an established healthcare distributor and a pioneer in the diabetes supply industry, to become the first authorized United States distributor of Dario ^TM and to complement the Company's direct-to-consumer model to further expand and strengthen its presence in the United States. Additional third party distribution channels are expected to be established through the second half of 2016, although there is no guarantee we will be successful. We also intend to continue to broaden our reach via distribution agreements with national and regional durable medical equipment and pharmacy chains.

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. Through June 2016, we successfully launched the Dario ^TM Smart Diabetes Management Solution according to plan and are currently expanding the launch to other jurisdictions. In support of these goals, we intend to utilize our funds for the following activities:

•

ramp up of mass production, marketing, distribution and sales efforts related to the Dario ^TM application, Smart Meters and test strips;

•

investing in our digital marketing efforts in the United States and expand them to other markets like Australia and Canada;

•

continued product development and related activities (including costs associated with application development and data storage capabilities as well as any necessary design modifications to the various elements of the Dario ^TM solution);

•

continued work on registration of our patents worldwide;

•

regulatory matters;

•

professional fees associated with being a publicly reporting company; and

•

general and administrative matters.

According to our management’s estimates, based on our budget and the launch of our commercial sales, we believe that we will have sufficient resources to continue our activity only into June 2017. This includes anticipated inflows from sales of Dario ^TM through distribution partners and our sales in the United States. If we are unable to scale up our commercial launch of Dario ^TM or meet our commercial sales targets (or if we are unable to increase our revenues), and if we are unable to obtain additional capital resources, we may be unable to continue activities, absent a material alterations in our business plans and our business might fail as a result.

Critical Accounting Policies

Reference is made to 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, 2015 (filed on February 8, 2016) with respect to our Critical Accounting Policies, which have not changed.

Results of Operations

Comparison of three and six months ended June 30, 2016 and 2015 (in thousands except for stock and stock data)

Revenues

Revenues for the three and six months ended June 30, 2016 amounted to $669 and $1,237, respectively, compared to $175 and $242 of revenues during the three and six months ended June 30, 2015. The increases in revenues in the three and six months ended June 30, 2016 compared to the six months ended June 30, 2015 are mainly as a result of revenues derived from the sales of Dario™’s Smart Meter and related disposables, through distributors to end users in Australia, the United Kingdom and Canada and through sales derived from our proprietary e-store directly to end users in the United States.

Revenues are derived from the successful launch of the Dario™’s Smart Meter and related disposables in the United Kingdom, the Netherlands, New Zealand, Australia, Israel, Canada and the United States as well as services rendered to Maccabi Healthcare. We recognize revenues on a cash basis, when all revenue recognition criteria are met, until we are able to determine the ability of the distributor to honor its commitment to complete payment.

Cost of Revenues

During the three and six months ended June 30, 2016 we recorded costs related to revenues in the amount of $826 and $1,496, respectively. The increases in costs related to revenues in the three and six months ended June 30, 2016 compared to the three and six months ended June 30, 2015 are mainly as a result of costs related to the sales of Dario™ Smart Meter and related disposables as well as a number of nonstandard items that resulted from a write off of a deferred inventory balance of $32 that was recorded as a result of a legal settlement with a former distributor and write off of an inventory balance of $48 and of machinery equipment of $14 that was recorded as a result of a change in manufacturer that allowed us to increase our manufacturing capacity. In addition, our cost of revenues for the six month period ended June 30, 2016 also includes $118 that was recorded to cover inventory write-downs due to net realized value which was lower than original cost.

Cost of revenues consists mainly of cost of device and disposables' production, employees’ salaries and related overhead costs, depreciation of production lines and related cost of equipment used in production, shipping and handling costs and inventory write-downs.

Research and Development Expenses

Our research and development expenses increased by $80, or 18%, to $521 for the three months ended June 30, 2016 compared to $441 for the three months ended June 30, 2015, and decreased by $406, or 31%, to $918 for the six months ended June 30, 2016 compared to $1,324 for the six months ended June 30, 2015. The increase in the three months ended June 30, 2016 compared to the three months ended June 30, 2015 was mainly due to employee payroll, software development and consultants' costs, offset by decreases in travel and overhead costs. The decrease in the six months ended June 30, 2016 compared to the six months ended June 30, 2015 was mainly due to clinical trial expenses incurred in 2015 due to a clinical trial performed in the United States in response to FDA comments, product development, consultants and overhead costs.

Research and development expenses consist mainly of payroll expenses to personnel involved in research and development activities and expenses related to our Dario ^TM software application and related Smart Meter device.

Sales and Marketing Expenses

Our sales, marketing and pre-production expenses increased by $880, or 336%, to $1,142 for the three months ended June 30, 2016 compared to $262 for the three months ended June 30, 2015, and increased by $1,147, or 223%, to $1,661 for the six months ended June 30, 2016 compared to $514 for the six months ended June 30, 2015. These increases were mainly due to the commencement of our sales and marketing efforts in the United States, increase in costs of on line marketing campaigns, sales and marketing consultants and subcontractors and employee payroll.

Sales and marketing expenses consist mainly of payroll expenses, on line marketing of the Dario ^TM , and marketing consultants and subcontractors.

General and Administrative Expenses

Our general and administrative expenses increased by $229, or 40%, to $803 for the three months ended June 30, 2016 compared to $574 for the three months ended June 30, 2015, and increased by $722, or 73%, to $1,708 for the six months ended June 30, 2016 compared to $986 for the six months ended June 30, 2015. These increases were mainly due to increases in employee payroll and bonuses, legal expense recorded during the first quarter of 2016 in connection with a legal settlement with a former distributor, patent registration expenses and stock based compensation.

Our general and administrative expenses consist mainly of payroll, bonus and stock-based compensation expenses for management and employees, legal and professional expenses, patent registration expenses as well as our office rent and related expenses.

Financial Expense (income), net

Our finance expense (income) for the three and six months ended June 30, 2016 were $96 and $(638), respectively, compared to finance expense of $492 and $353 for the three and six months ended June 30, 2015, respectively. Financial expense (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.

Net loss

Net loss increased by $715, or 36%, to $2,719 for the three months ended June 30, 2016 compared to $2,004 for the three months ended June 30, 2015 and increased by $266, or 7%, to $3,908 for the six months ended June 30, 2016 compared to $3,642 for the six months ended June 30, 2015. The increase in net loss for the three months ended June 30, 2016 compared to the three months ended June 30, 2015 was mainly due to an increase of $1,189 in operating expenses, offset by a decrease of $396 in financial expense as a result of the revaluation of warrants to certain investors and a placement agent and a decrease of $78 in our gross loss. The increase in net loss for the six months ended June 30, 2016 compared to the six months ended June 30, 2015 was mainly due to an increase of $1,463 in operating expenses, offset by financial income of $638 recorded in the six months ended June 30, 2016 compared to financial expense of $353 recorded in the six months ended June 30, 2015 and a decrease of $206 in our gross loss.

Liquidity and Capital Resources

As of June 30, 2016, we had approximately $6,376 in cash and cash equivalents compared to $981 at June 30, 2015.

We have experienced cumulative losses of $47,717 from inception (August 11, 2011) through June 30, 2016, and have a stockholders’ equity of $5,205 at June 30, 2016. 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 is no assurance that we will be able to obtain an adequate level of financing needed for the long-term development and commercialization of our product. These conditions raise substantial doubt about our ability to continue as a “going 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 $38,780 as of June 30, 2016, approximately $5,038 and $2,500 of which were raised during March 2016 pursuant to a concurrent public offering and private placement, respectively, pursuant to which we issued a total of 1,333,333 and 555,555, respectively, shares of our common stock and 1,533,333 and 666,666, respectively, warrants to purchase an aggregate of 2,199,999 shares of our common stock. In connection with the public offering, we agreed to grant to the placement agent up to 153,333 warrants at an exercise price of $4.50 per share, and to certain finders that assisted with the private placement 44,444 restricted shares of common stock, 38,889 non-plan stock options to purchase 38,889 shares of our common stock, and 73,333 warrants at an exercise price of $4.50 per share. In addition, we have an effective Registration Statement on Form S-3, filed under the Securities Act of 1933, as amended, with the Securities and Exchange Commission using a “shelf” registration process. Under this shelf registration process, we may, from time to time, sell common stock, warrants or units in one or more offerings up to a total dollar amount of $40 million.

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 June 2017 without raising additional capital. This includes an amount of anticipated inflows from sales of Dario ^TM 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 ^TM 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 as a result.

Additionally, our available resources may be consumed more rapidly than we currently anticipate, resulting in the need for additional funding sooner than we expect. 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 ^TM Smart Meter and its related application and data storage components, (2) our efforts to obtain regulatory clearances or approvals necessary to be able to commercially launch Dario ^TM , (3) expenses which will be required in order to start and expand production of Dario ^TM , (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 launch Dario ^TM in the jurisdictions and in the timeframes we expect.

Cash Flows

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

	June 30,
	2016			2015
	$			$
Cash used in operating activities:		(3,798	)		(2,832	)
Cash used in investing activities:		(245	)		(49	)
Cash provided by financing activities:		7,748			2,409

		3,705			(472	)

Net cash used in operating activities

Net cash used in operating activities was $3,798 for the six months ended June 30, 2016 compared to $2,832 used in operations for the same period in 2015. Cash used in operations increased due to the increase in the volume of our operations.

Net cash used in investing activities

Net cash used in investing activities was $245 for the six months ended June 30, 2016 compared to $49 for the same period in 2016. Cash used in investing activities increased mainly due to production line investments that we made in the first and second quarters of 2016 with the aim of improving the capabilities and efficiency of our production lines.

Net cash provided by financing activities

Net cash provided by financing activities was $7,748 for the six months ended June 30, 2016 compared to $2,409 for the same period in 2015. During the six months ended June 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. During the six months ended June 30, 2015 we raised net proceeds in an amount of $2,409, of which $1,956 was raised through our February 2015 private placement and $453 was raised in May 2015 through our Warrant Exercise and Replacement Agreements with certain of the investors and placement agent from our February 2015 private placement.

Off-Balance Sheet Arrangements

As of June 30, 2016 we did not have any off-balance sheet arrangements as defined in Item 303(a)(4) of Regulation S-K.

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, or 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 June 30, 2016, 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 June 30, 2016 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.

PART II- OTHER INFORMATION

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

See Item 5 below regarding our issuance of certain warrants.

Item 5. Other Items.

Given the timing of the event, the following information is included in this Form 10-Q pursuant to Item 1.0.1 “Entry into Material Definitive Agreement” and Item 3.02 “Unregistered Sales of Equity Securities” of Form 8-K in lieu of filing a Form 8-K.

On August 10, 2016, we entered into an agreement, or the Agreement, with Dicilyon Consulting and Investment Ltd., an existing stockholder, or the Stockholder, and David Edery, who previously purchased certain securities from the Company, which were granted certain registration rights which required, among other things, the continued effectiveness of certain registration statements. In consideration of the Stockholder waiving its registration rights with respect to certain previously purchased securities, the Company agreed to issue to the Stockholder a warrant, or the Warrant, to purchase 300,000 shares of our Common Stock at an exercise price of $4.50 per share exercisable for a period of 4.5 years from the date of the Agreement. In addition, we have also agreed to register the shares of Common Stock underlying the Warrant. The Warrant is exercisable for cash or on a cashless basis if a registration statement covering the shares issuable upon exercise of the Warrants is unavailable. We claimed exemption from registration under the Securities Act of 1933, as amended, or the Securities Act, for the foregoing transaction under Section 4(a)(2) and Regulation S under the Securities Act.

Item 6. Exhibits.

No.		Description of Exhibit
3.1*		Composite Copy of Certificate of Incorporation, as amended as of July 28, 2016.
3.2*		Composite Copy of Certificate of Incorporation, as amended as of July 28, 2016 (marked copy).
10.1		Form of Warrant Amendment Agreement (Incorporated by reference to the Company’s Current Report on Form 8-K, filed July 28, 2016).
10.2*		Agreement between the Company, Dicilyon Consulting and Investment Ltd. and David Edery, dated August 10, 2016.
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 June 30, 2016, formatted in XBRL: (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Comprehensive Loss, (iii) Statements of Changes in Stockholders’ Equity (Deficiency), (iv) Consolidated Statements of Cash Flows and (v) the Notes to Consolidated Financial Statements, tagged as blocks of text and in detail.

Filed herewith.

Furnished herewith.

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: August 10, 2016		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 Financial Officer)

Exhibit 3.1

CERTIFICATE OF INCORPORATION

DARIOHEALTH CORP.

as amended as of July 28, 2016

The undersigned, for the purposes of forming a corporation for conducting the business and promoting the purposes hereinafter stated, under the provisions and subject to the requirements of the laws of the State of Delaware (particularly Chapter 1, Title 8 of the Delaware Code and the acts amendatory thereof and supplemental hereto, and generally known as the “ Delaware General Corporation Law ”), does hereby make, file and record this Certificate of Incorporation, and does hereby certify as follows:

FIRST : The name of the corporation is DarioHealth Corp. (hereinafter sometimes referred to as the “ Corporation ”).

SECOND : The address of the Corporation’s registered office in the State of Delaware is 1811 Silverside Road, Wilmington, DE 19810, New Castle County; and the name of the registered agent of the Corporation in the State of Delaware at such address is Vcorp Services LLC. The Corporation shall have the authority to designate other registered offices and registered agents both in the State of Delaware and in other jurisdictions.

THIRD: The nature of the business and the purposes to be conducted and promoted by the Corporation shall be to engage in any lawful business, to promote any lawful purpose, and to engage in any lawful act or activity for which corporations may be organized under the Delaware General Corporation Law.

FOURTH: The capital stock of the Corporation shall be as follows:

1. Classes of Stock . The Corporation is authorized to issue two classes of shares of capital stock to be designated, respectively, common stock (“ Common Stock ”) and preferred stock (“ Preferred Stock ”). The number of shares of Common Stock authorized to be issued is one hundred sixty million (160,000,000), par value $0.0001 per share, and the number of shares of Preferred Stock authorized to be issued is five million (5,000,000), par value $0.0001 per share; the total number of shares which the Corporation is authorized to issue is one hundred sixty five million (165,000,000).

2. Common Stock . Except as otherwise provided by law or by the resolution or resolutions providing for the issue of any series of Preferred Stock, the holders of outstanding shares of Common Stock shall have the exclusive right to vote for the election of directors and for all other purposes. Except as otherwise required by law or this Certificate of Incorporation of the Corporation, each holder of Common Stock is entitled to one vote for each share of Common Stock held of record by such holder with respect to all matters on which holders of Common Stock are entitled to vote. Subject to the Delaware General Corporation Law and the rights, if any, of the holders of any outstanding series of Preferred Stock, dividends may be declared and paid on the Common Stock at such times and in such amounts as the Board of Directors of the Corporation (the “ Board of Directors ”) in its discretion shall determine. Upon the dissolution, liquidation or winding up of the Corporation, subject to the rights, if any, of the holders of any outstanding series of Preferred Stock, the holders of the Common Stock, as such, shall be entitled to receive the assets of the Corporation available for distribution to its stockholders ratably in proportion to the number of shares held by them. Upon the effectiveness of the amendment to the certificate of incorporation containing this sentence (the “ Split Effective Time ”), each share of the Common Stock issued and outstanding immediately prior to the date and time of the filing hereof with the Secretary of State of Delaware shall be automatically changed and reclassified into a smaller number of shares such that each eighteen (18) shares of issued Common Stock immediately prior to the Split Effective Time is reclassified into one (1) share of Common Stock. Notwithstanding the immediately preceding sentence, there shall be no fractional shares issued and, in lieu thereof, a holder of Common Stock on the Split Effective Time who would otherwise be entitled to a fraction of a share as a result of the reclassification, following the Split Effective Time, shall receive a full share of Common Stock upon the surrender of such stockholders' old stock certificate. No stockholders will receive cash in lieu of fractional shares.

3. Rights, Preferences and Restrictions of Preferred Stock . The Preferred Stock may be issued from time to time in one or more series, without further stockholder approval. The Board of Directors is hereby authorized, in the resolution or resolutions adopted by the Board of Directors providing for the issue of any wholly unissued series of Preferred Stock, within the limitations and restrictions stated in this Certificate of Incorporation, to fix or alter the dividend rights, dividend rate, conversion rights, voting rights, rights and terms of redemption (including sinking fund provisions), the redemption rights and price or prices(and the method of determining such price or prices), the liquidation preferences of any wholly unissued series of Preferred Stock, the number of shares constituting any such series and the designation thereof and the restrictions on issuance of shares of the same series or of any other class or series, if any, or any of them, and to increase or decrease the number of shares of any series subsequent to the issue of shares of that series, but not below the number of shares of such series then outstanding, and any other preferences, privileges and relative rights of such series as the Board of Directors may deem advisable, provided no shares of such series are then outstanding. In case the number of shares of any series shall be so decreased, the shares constituting such decrease shall resume the status that they had prior to the adoption of the resolution originally fixing the number of shares of such series.

4. Rights and Options . The Corporation has the authority to create and issue rights, warrants and options entitling the holders thereof to purchase shares of any class or series of the Corporation’s capital stock or other securities of the Corporation, and such rights, warrants and options shall be evidenced by instrument(s) approved by the Board of Directors. The Board of Directors is empowered to set the exercise price, duration, times for exercise and other terms and conditions of such rights, warrants or options; provided , however , that the consideration to be received for any shares of capital stock subject thereto may not be less than the par value thereof.

FIFTH: The Corporation shall have perpetual existence.

SIXTH: For the management of the business and for the conduct of the affairs of the Corporation, and in further definition, limitation and regulation of the powers of the Corporation and of its directors and of its stockholders or any class thereof, as the case may be, it is further provided that:

1. The business of the Corporation shall be conducted by the officers of the Corporation under the supervision of the Board of Directors.

2. The number of directors which shall constitute the whole Board of Directors shall be fixed by, or in the manner provided in, the Bylaws of the Corporation (the “ Bylaws ”). No election of Directors need be by written ballot.

3. Notwithstanding any other provision of law, all action required to be taken by the stockholders of the Corporation shall be taken at a meeting duly called and held in accordance with law, the Certificate of Incorporation and the Bylaws, or by written consent signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted.

SEVENTH:

1. The Corporation may, to the fullest extent permitted by Section 145 of the Delaware General Corporation Law, as the same may be amended and supplemented, indemnify any and all persons whom it shall have power to indemnify under said section from and against any and all of the expenses, liabilities, costs or other matters referred to in or covered by said section, and the indemnification provided for herein shall not be deemed exclusive of any other rights to which a person indemnified may be entitled under any Bylaw, agreement, insurance, vote of stockholders or disinterested directors or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office, and shall continue as to a person who has ceased to be director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person.

2. No director shall be personally liable to the Corporation or its stockholders for monetary damages for any breach of fiduciary duty by such director as a director. Notwithstanding the foregoing sentence, a director shall be liable to the extent provided by applicable law: (i) for breach of the director’s duty of loyalty to the Corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) pursuant to Section 174 of the Delaware General Corporation Law or (iv) for any transaction from which the director derived an improper personal benefit. No amendment to or repeal of this paragraph (2) of this Article Seventh shall apply to or have any effect on the liability or alleged liability of any director of the Corporation for or with respect to any acts or omissions of such Director occurring prior to such amendment.

EIGHTH: From time to time any of the provisions of this Certificate of Incorporation may be amended, altered or repealed, and other provisions authorized by the laws of the State of Delaware at the time in force may be added or inserted in the manner and at the time prescribed by said laws, and all rights at any time conferred upon the stockholders of the Corporation by this Certificate of Incorporation are granted subject to the provisions of this Article EIGHTH.

NINTH: Whenever a compromise or arrangement is proposed between this Corporation and its creditors or any class of them and/or between this Corporation and its stockholders or any class of them, any court of equitable jurisdiction within the State of Delaware may, on the application in a summary way of this Corporation or of any creditor or stockholder thereof or on the application of any receiver or receivers appointed for this Corporation under the provisions of Section 291 of Title 8 of the Delaware Code or on the application of trustees in dissolution or of any receiver or receivers appointed for this Corporation under the provisions of Section 279 of Title 8 of the Delaware Code order a meeting of the creditors or class of creditors, and/or of the stockholders or class of stockholders of this Corporation, as the case may be, to be summoned in such manner as the said court directs. If a majority in number representing three-fourths in value of the creditors or class of creditors, and/or of the stockholders or class of stockholders of this Corporation, as the case may be, agree to any compromise or arrangement and to any reorganization of this Corporation as a consequence of such compromise or arrangement, the said compromise or arrangement and the said reorganization shall, if sanctioned by the court to which the said application has been made, be binding on all the creditors or class of creditors, and/or on all the stockholders or class of stockholders, of this Corporation, as the case may be, and also on this Corporation.

Exhibit 3.2

CERTIFICATE OF INCORPORATION

~~LABSTYLE INNOVATIONS CORP.~~ DARIOHEALTH CORP.

as amended as of ~~February 26, 2016~~ July 28, 2016

FIRST : The name of the corporation is ~~LabStyle Innovations~~ DarioHealth Corp. (hereinafter sometimes referred to as the “ Corporation ”).

FOURTH: The capital stock of the Corporation shall be as follows:

FIFTH: The Corporation shall have perpetual existence.

1. The business of the Corporation shall be conducted by the officers of the Corporation under the supervision of the Board of Directors.

SEVENTH:

Exhibit 10.2

AGREEMENT

This AGREEMENT (this “ Agreement ”) is dated as of August 10, 2016 by and among DarioHealth Corp., a Delaware corporation (the “ Company ”), Dicilyon Consulting and Investment Ltd.(“ Dicilyon ”) and David Edery, an individual (“Edery” and together with Dicilyon collectively referred to as the “ Investor ”). The Company and the Investor shall be individually referred to as a “ Party ” and collectively as the “ Parties .”

WHEREAS , Investor purchased certain securities from the Company which were granted certain registration rights which required, among other things, the continued effectiveness of certain registration statements (the “ Registration Rights ”); and

WHEREAS , the Company has agreed to issue the Investor the Warrant (as hereinafter defined) in consideration for the waiver of the Registration Rights; and

NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement, and for other good and valuable consideration the receipt and adequacy of which are hereby acknowledged, the Company and the Investor agree as follows:

1. Issuance of Warrant . As consideration for the Investor’s execution of this Agreement, the Company will issue Dicilyon a warrant to purchase 300,000 shares of the Company’s common stock in the form annexed hereto as Exhibit A (the “ Warrant ”). The shares of common stock underlying the Warrant shall be referred to as the “ Warrant Shares .”

2. Release by Investor . In consideration of the mutual covenants and agreements set forth in this Agreement, Dicilyon and Edery on behalf of themselves and their respective direct or indirect affiliates, members, shareholders, successors, parent companies, subsidiaries, related business entities, managers, officers, directors, employees, agents, attorneys, heirs, executors, administrators, predecessors, beneficiaries, successors and/or assigns, and any other persons or entities acting on behalf of Dicilyon and Edery, unconditionally and irrevocably and forever waive, release, discharge, and covenant not to sue (either directly or indirectly) the Company and/or any of its respective direct and/or indirect affiliates, members, shareholders, parent companies, subsidiaries, related business entities, managers, officers, directors, employees, agents, attorneys, heirs, executors, administrators, predecessors, beneficiaries, successors and/or assigns, and any other persons or entities acting on behalf of the Company, from any and all claims, actions, causes of action, suits, debts, dues, sums of money, accounts, reckonings, bonds, bills, specialties, covenants, contracts, controversies, agreements, promises, variances, trespasses, damages (including, without limitation, compensatory, consequential and/or punitive damages), judgments, extents, executions, demands, fees, and liabilities of any kind whatsoever, at law or in equity (each, a “ Claim ”, and collectively, “ Claims ”) whether known or unknown, which each of Dicilyon and Edery ever had, now has or can, shall, or may have against the Company and its direct or indirect affiliates, members, shareholders, parent companies, subsidiaries, related business entities, managers, officers, directors, employees, agents, attorneys, heirs, executors, administrators, predecessors, beneficiaries, successors and/or assigns, and any other persons or entities acting on behalf of the Company, arising by reason of any matter, cause or thing whatsoever, from the beginning of the world to the date of this Agreement, including, without limitation, any Claims relating to the waiver of the Registration Rights or otherwise arising under or in connection with any business or personal relationship, contract, or agreement existing or imputed by law, known or unknown.

Dicilyon and Edery irrevocably and forever covenant to refrain from asserting, directly or indirectly, any Claim of any kind which is based upon any matter released or disclaimed by this Agreement. Dicilyon and Edery represent and warrant that they have not assigned or transferred any Claim (or any interest in any Claim) released or discharged by Dicilyon and Edery pursuant to this Agreement. The releases set forth in this Section 2 shall be construed as broadly as possible.

3. Registration Rights . On or prior to November 30, 2016, the Company shall prepare and file with the Securities and Exchange Commission (the “ SEC ”) a Registration Statement for the resale of the Warrant Shares. The Company shall use its commercially best efforts to cause the Registration Statement to be declared effective under the Securities Act of 1933, as amended (the “ Securities Act ”), as promptly as possible after the filing thereof, and shall use its commercially best efforts to keep such Registration Statement, with respect to Dicilyon, continuously effective under the Securities Act until the earlier to occur of (i) the date on which the Dicilyon may sell the Warrant Shares then held in compliance with Rule 144, (ii) all Warrant Shares covered by the Registration Statement have been sold by the Investor, or (iii) two years from the effective date of the Registration Statement.

4. Provision by Investor of Certain Information in Connection with the Registration Statement . The Investor agrees to furnish to the Company in writing (i) such information as the Company may reasonably request for use in connection with the Registration Statement within 5 business days after receipt of a request therefor, and (ii) a completed questionnaire in the form satisfactory to the Company. The Investor agrees to furnish promptly to the Company all information required to be disclosed in order to make the information previously furnished to the Company by the Investor not materially misleading.

5. Authority; No Conflict . Each Party represents that he or it has full right, power and authority to enter into this Agreement, and this Agreement constitutes a legal, valid and binding obligation of such Party. Each Party represents that the execution, delivery and performance of this Agreement do not violate or conflict with any law applicable to him or it, any agreement or instrument to which he or it is a party, any order or judgment of any court or other agency of government applicable to him or it or any contractual restriction binding on or affecting him or it.

6. Legal Fees . Each Party will pay his or its own legal fees and costs with respect to this Agreement.

7. Related Parties; Successors in Interest . The Parties hereby agree that this Agreement shall be binding upon the Parties and each of them, and, as applicable, upon (i) their predecessors, successors and heirs, (ii) their affiliates, subsidiaries, divisions, alter egos and related entities, and (iii) their officers, directors, trustees, partners, parents, stockholders, employees, attorneys, assigns, agents and representatives, and any or all of them.

8. No Admission . The Parties expressly agree that this Agreement is made in compromise of disputed claims and with no admission as to fault or liability by any of them.

9. Publicity . The Parties agree that the terms of this Agreement are confidential and may not be disclosed to any third parties except to comply with applicable laws. The Parties agree not to issue any press releases or other public statement regarding the waiver of the Registration Rights, including this Agreement, except that the Parties may issue reports, releases or other announcements reasonably required for SEC, public company reporting or other necessary regulatory purposes. Notwithstanding anything contained herein to the contrary, the Investor acknowledges and agrees that the Company may be required to publicly report the contents of this Agreement and publicly file a copy of this Agreement in order to comply with SEC regulations.

10. No Assignment . This Agreement, and any and all rights, duties and obligations hereunder, shall not be assigned, transferred, delegated or sublicensed by any Party without the prior written consent of the other Parties. Any attempt by a Party without such permission to assign, transfer, delegate or sublicense any rights, duties or obligations that arise under this Agreement shall be void.

11. Advice of Counsel . Each Party represents that it has been represented, or has had the opportunity to be represented, by independent legal counsel of its own choice throughout all of the negotiations that preceded the execution of this Agreement and that it has executed this Agreement with the consent and upon the advice of such independent legal counsel, or that it has had the opportunity to seek such consent and advice. Each Party acknowledges that it has read this Agreement and assents to all the terms and conditions contained herein without any reservation whatsoever and that it has had the opportunity to have the same explained to it by its own counsel, who have answered any and all questions which have been asked of them, with regard to the meaning of any provision hereof.

12. Entire Agreement . This Agreement contain the entire agreement and understanding of the Parties concerning the subject matter hereof, and supersede and replace all prior negotiations, proposed agreements, representations, and agreements. Each of the Parties acknowledges that it is not executing this Agreement in reliance on any promise, representation, or warranty not contained in this Agreement.

13. Severability . If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their commercially reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter declared invalid, illegal, void or unenforceable.

14. Governing Law . All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflicts of law thereof.

15. Waivers; Amendment. A provision of this Agreement may be waived only by a writing signed by the waiving Party. No provision of this Agreement may be modified, supplemented or amended except in a written instrument signed by the Parties.

16. Construction . The parties agree that each of them and/or their respective counsel have reviewed and had an opportunity to revise this Agreement and, therefore, the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Agreement or any amendments thereto.

17. Execution . This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to each other party, it being understood that the parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission or by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or “.pdf” signature page were an original thereof.

[signature page follows]

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


DARIOHEALTH CORP.



By:	/s/ Zvi Ben-David
	Name: Zvi Ben-David
	Title: CFO

INVESTOR:

Dicilyon Consulting and Investment Ltd.

By:	David Edery
	Name: David Edery
	Title: Chairman

By:	/s/ David Edery
	Name: David Edery

Exhibit A

Form of Warrant

NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE HAS BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ SECURITIES ACT ”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE COMPANY TO SUCH EFFECT.

August 10, 2016

DARIOHEALTH CORP.

Common Stock Purchase Warrant

THIS CERTIFIES THAT , for value received, ___________________________ (the “ Holder ”), is entitled to subscribe for and purchase, at the Exercise Price (as defined below), from DarioHealth Corp., a Delaware corporation (the “ Company ”), shares of the Company’s common stock, par value $0.0001 (the “ Common Stock ”), at any time prior to 5:00 p.m., New York time, on March 8, 2021 (the “ Warrant Exercise Term ”).

This Warrant is issued in accordance with, and subject to, the terms and conditions described in the Agreement, dated as of even date herewith, between the initial Holder, David Edery and the Company (the “ Agreement ”). All capitalized terms used but not defined herein shall have the meanings ascribed to them in the Agreement.

This Warrant is subject to the following terms and conditions:

1. Shares . The Holder has, subject to the terms set forth herein, the right to purchase up to an aggregate of 300,000 shares of Common Stock (the “ Warrant Shares ”) at a per share exercise price of $4.50, subject to adjustment as provided for herein (the “ Exercise Price ”).

2. Exercise of Warrant .

(a) Exercise . This Warrant may be exercised by the Holder at any time prior to the end of the Warrant Exercise Term, in whole or in part, by delivering the notice of exercise attached as Exhibit A hereto (the “ Notice of Exercise ”), duly executed by the Holder to the Company at its principal office, or at such other office as the Company may designate, accompanied by payment, by wire transfer of immediately available funds to the order of the Company to an account designated by the Company, of the amount obtained by multiplying the number of Warrant Shares designated in the Notice of Exercise by the Exercise Price (the “ Purchase Price ”). For purposes hereof, “ Exercise Date ” shall mean the date on which all deliveries required to be made to the Company upon exercise of this Warrant pursuant to this Section 2(a) shall have been made. The Holder shall not be required to deliver the original Warrant in order to effect an exercise hereunder. No originals of the Notice of Exercise shall be required to be delivered, nor shall any medallion guarantee (or any other type of guarantee or notarization) of any Notice of Exercise shall be required.

(b) Cashless Exercise .

(i) Notwithstanding anything contained herein to the contrary, if and only if a Registration Statement covering the resale of all or any portion of the Warrant Shares is not available for the resale of such Warrant Shares (such unregistered portion of the Warrant Shares, the “Unavailable Warrant Shares”), the Holder may, in its sole discretion, exercise this Warrant solely with respect to the Unavailable Warrant Shares and, in lieu of making the cash payment otherwise contemplated to be made to the Company upon such exercise in payment of the aggregate Exercise Price for such Unavailable Warrant Shares, elect instead to exercise the Warrant on a cashless basis as described in paragraph (ii) below.

(ii) Upon a “cashless exercise”, the Holder shall be entitled to receive the number of Warrant Shares equal to the quotient obtained by dividing (A-B) (X) by (A), where:

(A)

= the VWAP on the Trading Day immediately preceding the Exercise Date;

(B)

= the Exercise Price of the Warrant, as adjusted as set forth herein; and

(X)

= the number of Warrant Shares that would be issuable upon exercise of the Warrant in accordance with the terms of the Warrant if such exercise were by means of a cash exercise rather than a cashless exercise.

If the Warrant Shares are issued in such a cashless exercise, the Company acknowledges and agrees that, in accordance with Section 3(a)(9) of the Securities Act, the Warrant Shares shall take on the registered characteristics of the Warrants being exercised and the Company agrees not to take any position contrary thereto.

(c) Issuance of Certificates . As soon as practicable after the exercise of this Warrant, in whole or in part, in accordance with Section 2(a) hereof (and in no event later than two (2) Trading Days following the delivery of the Notice of Exercise), the Company, at its expense, shall cause to be issued in the name of and delivered to the Holder: (i) a certificate or certificates for (or, if applicable, by delivery through the facilities of the Depository Trust Company in electronic form of) the number of fully paid and non-assessable Warrant Shares to which the Holder shall be entitled upon such exercise and, if applicable, (ii) a new warrant of like tenor to purchase all of the Warrant Shares that may be purchased pursuant to the portion, if any, of this Warrant not exercised by the Holder. The Holder shall for all purposes hereof be deemed to have become the Holder of record of such Warrant Shares on the date on which the Notice of Exercise and payment of the Purchase Price in accordance with Section 2(a) hereof were delivered and made, respectively, irrespective of the date of delivery of such certificate or certificates, except that if the date of such delivery, notice and payment is a date when the stock transfer books of the Company are closed, such person shall be deemed to have become the holder of record of such Warrant Shares at the close of business on the next succeeding date on which the stock transfer books are open.

(d) Taxes . The issuance of the Warrant Shares upon the exercise of this Warrant, and the delivery of certificates or other instruments representing such Warrant Shares, shall be made without charge to the Holder for any tax or other charge of whatever nature in respect of such issuance and the Company shall bear any such taxes in respect of such issuance.

3. Adjustment of Exercise Price .

(a) Adjustment for Reclassification, Consolidation or Merger . If while this Warrant, or any portion hereof, remains outstanding and unexpired there shall be (i) a reorganization or recapitalization (other than a combination, reclassification, exchange or subdivision of shares otherwise provided for herein), (ii) a merger or consolidation of the Company with or into another corporation or other entity in which the Company shall not be the surviving entity, or a reverse merger in which the Company shall be the surviving entity but the shares of the Company’s capital stock outstanding immediately prior to the merger are converted by virtue of the merger into other property, whether in the form of securities, cash or otherwise, or (iii) a sale or transfer of the Company’s properties and assets as, or substantially as, an entirety to any other corporation or other entity in one transaction or a series of related transactions, then, as a part of such reorganization, recapitalization, merger, consolidation, sale or transfer, unless otherwise directed by the Holder, all necessary or appropriate lawful provisions shall be made so that the Holder shall thereafter be entitled to receive upon exercise of this Warrant, during the period specified herein and upon payment of the Exercise Price then in effect, the greatest number of shares of capital stock or other securities or property that a holder of the Warrant Shares deliverable upon exercise of this Warrant would have been entitled to receive in such reorganization, recapitalization, merger, consolidation, sale or transfer if this Warrant had been exercised immediately prior to such reorganization, recapitalization, merger, consolidation, sale or transfer, all subject to further adjustment as provided in this Section 3. If the per share consideration payable to the Holder for Warrant Shares in connection with any such transaction is in a form other than cash or marketable securities, then the value of such consideration shall be determined in good faith by the Company’s Board of Directors. The foregoing provisions of this paragraph shall similarly apply to successive reorganizations, recapitalizations, mergers, consolidations, sales and transfers and to the capital stock or securities of any other corporation that are at the time receivable upon the exercise of this Warrant. In all events, appropriate adjustment shall be made in the application of the provisions of this Warrant with respect to the rights and interests of the Holder after the transaction, to the end that the provisions of this Warrant shall be applicable after that event, as near as reasonably may be, in relation to any shares or other property deliverable or issuable after such reorganization, recapitalization, merger, consolidation, sale or transfer upon exercise of this Warrant.

(b) Adjustments for Split, Subdivision or Combination of Shares . If while this Warrant, or any portion hereof, remains outstanding and unexpired the Company shall subdivide (by any stock split, stock dividend, recapitalization, reorganization, reclassification or otherwise) the shares of Common Stock subject to acquisition hereunder, then, upon the effective date of such subdivision, the Exercise Price in effect immediately prior to such subdivision will be proportionately reduced and the number of shares of Common Stock subject to acquisition upon exercise of the Warrant will be proportionately increased. If the Company at any time combines (by reverse stock split, recapitalization, reorganization, reclassification or otherwise) the shares of Common Stock subject to acquisition hereunder, then, upon the effective date of such combination, the Exercise Price in effect immediately prior to such combination will be proportionately increased and the number of shares of Common Stock subject to acquisition upon exercise of the Warrant will be proportionately decreased.

(c) Adjustment Upon Issuance of Common Stock . If and whenever on or after the date hereof and prior to March 8, 2017 (the “ Applicable Period ”), the Company issues, sells or delivers, or in accordance with this Section 3(c) is deemed to have issued, sold or delivered, any Common Stock (including the issuance, sale or delivery of Common Stock owned or held by or for the account of the Company, but excluding any Excluded Securities (as hereinafter defined) issued or sold or deemed to have been issued, sold or delivered) for a consideration per share less than a price equal to the Exercise Price in effect immediately prior to such issuance, sale or delivery or deemed issuance, sale or delivery (such Exercise Price then in effect is referred to as the “ Applicable Price ”) (the foregoing a “ Dilutive Issuance ”), then immediately after such Dilutive Issuance, the Exercise Price then in effect shall be reduced to the New Issuance Price (as hereinafter defined).

For all purposes of the foregoing (including, without limitation, determining the adjusted Exercise Price and consideration per share under this Section 3(c)), the following shall be applicable:

(i) Issuance of Options . If the Company grants or sells any Options (as hereinafter defined) (other than Options that qualify as Excluded Securities) during the Applicable Period and the lowest price per share for which one share is issuable upon the exercise of any such Option or upon conversion, exercise or exchange of any Convertible Securities (as hereinafter defined) issuable upon exercise of any such Option is less than the Applicable Price, then such share shall be deemed to be outstanding and to have been issued and sold or delivered by the Company at the time of the granting or sale of such Option for the New Issuance Price. For purposes of this Section 3(c)(i), the “lowest price per share for which one share of Common Stock is issuable upon the exercise of any such Options or upon conversion, exercise or exchange of any Convertible Securities issuable upon exercise of any such Option” shall be equal to (1) the sum of the lowest amounts of consideration (if any) received or receivable by the Company with respect to any one share of Common Stock upon the granting or sale of such Option, upon exercise of such Option and upon conversion, exercise or exchange of any Convertible Security issuable upon exercise of such Option minus (2) the sum of all amounts paid or payable to the holder of such Option (or any other person or entity) upon the granting or sale of such Option, upon exercise of such Option and upon conversion, exercise or exchange of any Convertible Security issuable upon exercise of such Option plus the value of any other consideration received or receivable by, or benefit conferred on, the holder of such Option (or any other person or entity). Except as contemplated below, no further adjustment of the Exercise Price shall be made upon the actual issuance of such shares of Common Stock or of such Convertible Securities upon the exercise of such Options.

(ii) Issuance of Convertible Securities . If the Company issues or sells any Convertible Securities (other than Convertible Securities that qualify as Excluded Securities) during the Applicable Period and the lowest price per share for which one share of Common Stock is issuable upon the conversion, exercise or exchange thereof is less than the Applicable Price, then such share of Common Stock shall be deemed to be outstanding and to have been issued and sold or delivered by the Company at the time of the issuance or sale of such Convertible Securities for the New Issuance Price. For the purposes of this Section 3(c)(ii), the “lowest price per share for which one share of Common Stock is issuable upon the conversion, exercise or exchange thereof” shall be equal to (x) the sum of the lowest amounts of consideration (if any) received or receivable by the Company with respect to one share of Common Stock upon the issuance or sale of the Convertible Security and upon conversion, exercise or exchange of such Convertible Security minus (2) the sum of all amounts paid or payable to the holder of such Convertible Security (or any other person or entity) upon the issuance or sale of such Convertible Security plus the value of any other consideration received or receivable by, or benefit conferred on, the holder of such Convertible Security (or any other person or entity). Except as contemplated below, no further adjustment of the Exercise Price shall be made upon the actual issuance of such shares of Common Stock upon conversion, exercise or exchange of such Convertible Securities, and if any such issue or sale of such Convertible Securities is made upon exercise of any Options for which adjustment of Warrants has been or is to be made pursuant to other provisions of this Section 3(c), except as contemplated below, no further adjustment of the Exercise Price shall be made by reason of such issue, sale or delivery.

(iii) Change in Option Price . If during the Applicable Period the purchase or exercise price provided for in any Options, the additional consideration, if any, payable upon the issue, conversion, exercise or exchange of any Convertible Securities or the rate at which any Convertible Securities are convertible into or exercisable or exchangeable for Common Stock increases or decreases at any time, the Exercise Price in effect at the time of such increase or decrease shall be adjusted to the Exercise Price which would have been in effect at such time had such revised terms been in effect. For purposes of this Section 3(c)(iii), if the terms of any Option or Convertible Security that was outstanding as of the original issuance of the Warrants are increased or decreased in the manner described in the immediately preceding sentence, then such Option or Convertible Security and the shares of Common Stock deemed issuable upon exercise, conversion or exchange thereof shall be deemed to have been issued as of the date of such increase or decrease. No adjustment pursuant to this Section 3(c) shall be made if such adjustment would result in an increase of the Exercise Price then in effect. For purposes of clarity, if the Company enters into a Variable Rate Transaction (as hereinafter defined), the Company shall be deemed to have issued Common Stock, Options or Convertible Securities at the lowest possible conversion or exercise price at which such securities may be converted or exercised. For purposes herein, no Variable Rate Transaction shall be Excluded Securities.

(d) Other Events . If any event occurs of the type contemplated by the provisions of Section 3(a) or (b) but not expressly provided for by such provisions (including, without limitation, the granting of stock appreciation rights, Adjustment Rights, phantom stock rights or other rights with equity features to all holders of Common Stock for no consideration), then the Company's Board of Directors will, at its discretion and in good faith, make an adjustment in the Exercise Price and the number of Warrant Shares or designate such additional consideration to be deemed issuable upon exercise of a Warrant, so as to protect the rights of the registered Holder. No adjustment to the Exercise Price will be made pursuant to more than one sub-section of this Section 3 in connection with a single issuance.

(e) Notice of Adjustments . Upon any adjustment of the Exercise Price and any increase or decrease in the number of Warrant Shares purchasable upon the exercise of this Warrant, then, and in each such case, the Company, within 15 days thereafter, shall give written notice thereof to the Holder at the address of such Holder as shown on the books of the Company, which notice shall state the Exercise Price as adjusted and, if applicable, the increased or decreased number of Warrant Shares purchasable upon the exercise of this Warrant, setting forth in reasonable detail the method of calculation of each.

4. Notices . Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of: (a) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number or email attachment as set forth on the signature pages attached hereto at or prior to 5:30 p.m. (New York City time) on a Trading Day, (b) the next Trading Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number or email attachment as set forth on the signature pages attached hereto on a day that is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading Day, (c) the second (2nd) Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service or (d) upon actual receipt by the party to whom such notice is required to be given. The address for such notices and communications shall be as set forth on the signature pages attached hereto.

5. Legends . Unless the Warrant Shares are registered for resale with the Commission, each certificate evidencing the Warrant Shares issued upon exercise of this Warrant shall be stamped or imprinted with a legend substantially in the following form (in addition to any legend required by applicable state securities or “blue sky” laws):

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE (THE “SECURITIES”) HAVE 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.”

Certificates evidencing the Warrant Shares shall not be required to contain any legend: (i) while a Registration Statement is effective under the Securities Act, (ii) following any sale of such Warrant Shares pursuant to Rule 144, (iii) if such Warrant Shares are eligible for sale under Rule 144, without the requirement for the Company to be in compliance with the current public information required under Rule 144 as to such Warrant Shares and without volume or manner-of-sale restrictions or (iv) if such legend is not required under applicable requirements of the Securities Act (including judicial interpretations and pronouncements issued by the staff of the Commission).

6. Removal of Legend . Upon request of a holder of a certificate with the legends required by Section 5 hereof, the Company shall issue to such holder a new certificate therefor free of any transfer legend, if, with such request, the Company shall have received an opinion of counsel satisfactory to the Company in form and substance to the effect that any transfer by such holder of the Warrant Shares evidenced by such certificate will not violate the Securities Act or any applicable state securities laws.

7. Fractional Shares . No fractional Warrant Shares will be issued in connection with any exercise hereunder. Instead, the Company shall round up, as nearly as practicable to the nearest whole Share, the number of Warrant Shares to be issued.

8. Rights of Stockholders . Except as expressly provided herein, the Holder, as such, shall not be entitled to vote or be deemed the holder of the Warrant Shares or any other securities of the Company that may at any time be issuable on the exercise hereof for any purpose, nor shall anything contained herein be construed to confer upon the Holder, as such, any of the rights of a stockholder of the Company or any right to vote for the election of directors or upon any matter submitted to stockholders at any meeting thereof, or to give or withhold consent to any corporate action (whether upon any recapitalization, issuance of stock, reclassification of stock, change of par value, consolidation, merger, conveyance, or otherwise) or to receive notice of meetings, or otherwise until this Warrant shall have been exercised and the Warrant Shares purchasable upon the exercise hereof shall have been issued, as provided herein.

9. No Transfer . This Warrant shall be assignable and transferable, provided that no such assignment and transfer shall be valid unless (a) the same shall be valid under and undertaken in accordance with applicable law, rule or regulation and (b) the provision of 11(e) of this Agreement shall be adhered to as a condition to such transfer or assignment. The Warrants may only be disposed of in compliance with U.S. state and U.S. federal securities laws. In connection with any transfer of the Warrants other than pursuant to an effective Registration Statement or Rule 144, to the Company or to an affiliate of the Holder, the Company may require the transferor thereof to provide to the Company an opinion of counsel selected by the transferor and reasonably acceptable to the Company, the form and substance of which opinion shall be reasonably satisfactory to the Company, to the effect that such transfer does not require registration of such transferred Warrants under the Securities Act. As a condition of transfer, any such transferee shall agree in writing to be bound by the terms of this Agreement and shall have the rights and obligations of the Holder.

10. Definitions .

As used herein, the following terms shall have the following meanings:

(a) “ Adjustment Right ” means any right granted with respect to any securities issued in connection with, or with respect to, any issuance, sale or delivery (or deemed issuance, sale or delivery in accordance with Section 3) of Common Stock (other than rights of the type described in Sections 3(a) and 3(b) hereof) that could result in a decrease in the net consideration received by the Company in connection with, or with respect to, such securities (including, without limitation, any cash settlement rights, cash adjustment or other similar rights) but excluding anti-dilution and other similar rights (including pursuant to Section 3(c) of this Agreement).

(b) “ Approved Stock Plan ” means any employee benefit plan which has been approved by the board of directors of the Company prior to or subsequent to the date hereof pursuant to which Common Stock and options to purchase Common Stock may be issued to any employee, consultant, officer or director or other service provider for services provided to the Company in their capacity as such.

(c) “ Convertible Securities ” means any notes, rights, warrants or other securities (other than Options) that are at any time and under any circumstances, directly or indirectly, convertible into, exercisable or exchangeable for, or which otherwise entitles the holder thereof to acquire, shares of Common Stock.

(d) “ Excluded Securities ” means (1) Common Stock or options or other rights to purchase Common Stock or other awards issued to directors, officers, employees, consultants or other service providers of the Company in their capacity as such pursuant to an Approved Stock Plan, provided that (A) all such issuances (taking into account the Common Stock issuable upon exercise of such options) after the date hereof pursuant to this clause (i) do not, in the aggregate, exceed more than 30% of the Common Stock issued and outstanding immediately prior to the date hereof; provided however, that such issuances to consultants or other service providers do not, in each instance in the aggregate, exceed more than 5% of the Common Stock issued and outstanding immediately prior to the date hereof, and (B) the exercise price of any such options is not lowered, none of such options are amended to increase the number of shares issuable thereunder in each case other than pursuant to the terms hereof (including any anti-dilution provisions contained therein) and none of the terms or conditions of any such options are otherwise materially changed in any manner that adversely affects any of the holders of Warrants; (2) Common Stock issued upon the conversion or exercise of Convertible Securities (other than options or other rights to purchase Common Stock issued pursuant to an Approved Stock Plan that are covered by clause (i) above) issued prior to the date hereof, provided that the conversion price of any such Convertible Securities (other than options or other rights to purchase Common Stock issued pursuant to an Approved Stock Plan that are covered by clause (1) above) is not lowered through the amendment or waiver of such Convertible Security, none of such Convertible Securities (other than options or other rights to purchase Common Stock issued pursuant to an Approved Stock Plan that are covered by clause (1) above) are amended to increase the number of shares issuable thereunder and none of the terms or conditions of any such Convertible Securities (other than options or other rights to purchase Common Stock issued pursuant to an Approved Stock Plan that are covered by clause (1) above) are otherwise materially changed in any manner that adversely affects any of the holders of Warrants; (3) Common Stock issuable upon exercise of the Warrants; and (4) securities issuable in connection with strategic license agreements, other partnering arrangements or acquisitions or mergers where the purchaser or acquirer of the securities in such issuance solely consists of (A) either (x) the actual participants in such strategic license, strategic alliance, strategic partnership or other partnering arrangements, (y) the actual owners of such assets or securities acquired in such acquisition or merger or (z) the stockholders, partners or members of the foregoing persons or entities and (B) number or amount of securities issued to such person or entity by the Company shall not be disproportionate (as determined in good faith by the Board of Directors of the Company) to either (x) the fair market value of such person’s or entity’s actual contribution to such strategic alliance or strategic partnership or (y) the proportional ownership of such assets or securities to be acquired by the Company, as applicable; provided, that, notwithstanding the foregoing, such purchaser or acquirer of the securities in such issuance shall not include any person regularly engaged in the business of buying or selling securities.

(e) “ New Issuance Price ” means a price (calculated to the nearest cent) determined in accordance with the following formula:

EP ₂ = EP ₁ * (A + B) ÷ (A + C).

For purposes of the foregoing formula, the following definitions shall apply:

(i)

“EP2” shall mean the adjusted Exercise Price;

(ii)

“EP1” shall mean the Exercise Price in effect immediately prior to such issuance of Common Stock;

(iii)

“A” shall mean the number of shares of Common Stock outstanding immediately prior to such issue of additional Common Stock including the issuance, sale or delivery of Common Stock owned or held by or for the account of the Company, (treating for this purpose as outstanding all shares of Common Stock issuable upon exercise of Options outstanding immediately prior to such issue or upon conversion or exchange of Convertible Securities outstanding (assuming exercise of any outstanding Options therefor) immediately prior to such issue);

(iv)

“B” shall mean the number of shares of Common Stock that would have been issued if such additional shares of Common Stock had been issued at an Exercise Price equal to EP1 (determined by dividing the aggregate consideration received by the Company in respect of such issue by EP1); and

(v)

“C” shall mean the number of such additional shares of Common Stock issued in such transaction.

(f) “ Options ” means any rights, warrants or options to subscribe for or purchase Common Stock or Convertible Securities.

(g) “ Registration Statement ” shall mean the Registration Statement filed by the Company pursuant to Section 3 of the Agreement.

(h) “ Trading Day ” means any day on which the Common Stock is traded on the Trading Market, or, if the Trading Market is not the principal trading market for the Common Stock, then on the principal securities exchange or securities market in the United States on which the Common Stock is then traded, provided that “Trading Day” shall not include any day on which the Common Stock is are scheduled to trade on such exchange or market for less than 4.5 hours or any day that the Common Stock is suspended from trading during the final hour of trading on such exchange or market (or if such exchange or market does not designate in advance the closing time of trading on such exchange or market, then during the hour ending at 4:00 P.M., New York City time).

(i) “ Trading Market ” means NYSE MKT, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market or the New York Stock Exchange.

(j) “ Variable Rate Transaction ” means a transaction in which the Company (i) issues or sells any debt or equity securities that are convertible into, exchangeable or exercisable for, or include the right to receive, additional shares of Common Stock either (A) at a conversion price, exercise price or exchange rate or other price that is based upon, and/or varies with, the trading prices of or quotations for the Common Stock at any time after the initial issuance of such debt or equity securities or (B) with a conversion, exercise or exchange price that is subject to being reset at some future date after the initial issuance of such debt or equity security or upon the occurrence of specified or contingent events directly or indirectly related to the business of the Company or the market for the Common Stock or (ii) enters into any agreement, including, but not limited to, an equity line of credit, whereby the Company may issue securities at a future determined price.

(k) “ VWAP ” means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the Nasdaq Capital Market, (c) if the Common Stock are not then listed or quoted for trading on the Nasdaq Capital Market and if prices for the Common Stock are then reported in the OTCQB maintained by OTC Markets Group, Inc. (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of Common Stock so reported, or (d) in all other cases, the fair market value of the Common Stock as determined by an independent appraiser selected in good faith by the Company, the fees and expenses of which shall be paid by the Company.

11. Miscellaneous .

(a) Registration Rights . The Holder shall have such registration rights as set forth in Section 3 of the Agreement.

(b) This Warrant and disputes arising hereunder shall be governed by and construed and enforced in accordance with the laws of the State of Delaware applicable to agreements made and to be performed wholly within such State, without regard to its conflict of law rules. Any action brought by either party against the other concerning the transaction contemplated by this Warrant shall be brought only in the state courts of Delaware or in the federal courts located in the state of Delaware. The parties to this Warrant hereby irrevocably waive any objection to jurisdiction and venue of any action instituted hereunder and shall not assert any defense based on lack of jurisdiction or venue or based upon forum non conveniens. The Company and Holder waive trial by jury.

(c) The headings in this Warrant are for purposes of reference only, and shall not limit or otherwise affect any of the terms hereof.

(d) The covenants of the respective parties contained herein shall survive the execution and delivery of this Warrant.

(e) The terms of this Warrant shall be binding upon and shall inure to the benefit of any successors or permitted assigns of the Company and of the Holder and of the Warrant Shares issued or issuable upon the exercise hereof. The Holder may assign any or all of its rights under the Agreement to any person to whom the Holder assigns or transfers the Warrant.

(f) This Warrant and the other documents delivered pursuant hereto constitute the full and entire understanding and agreement between the parties with regard to the subject hereof.

(g) The Company shall not, by amendment of its Certificate of Incorporation or Bylaws, or through any other means, directly or indirectly, avoid or seek to avoid the observance or performance of any of the terms of this Warrant and shall at all times in good faith assist in the carrying out of all such terms and in the taking of all such action as may be necessary or appropriate in order to protect the rights of the Holder contained herein against impairment.

(h) Upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant and, in the case of any such loss, theft or destruction, upon delivery of an indemnity agreement reasonably satisfactory in form and amount to the Company, or, in the case of any such mutilation, upon surrender and cancellation of such Warrant, the Company, at its expense, will execute and deliver to the Holder, in lieu thereof, a new Warrant of like date and tenor.

(i) This Warrant and any provision hereof may be amended, waived or terminated only by an instrument in writing signed by the Company and the Holder.

(j) The remedies provided in this Warrant shall be cumulative and in addition to all other remedies available under this Warrant, at law or in equity (including a decree of specific performance and/or other injunctive relief), and nothing herein shall limit the right of the Holder to pursue actual damages for any failure by the Company to comply with the terms of this Warrant. The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Holder and that the remedy at law for any such breach may be inadequate. The Company therefore agrees that, in the event of any such breach or threatened breach, the holder of this Warrant shall be entitled, in addition to all other available remedies, to an injunction restraining any breach, without the necessity of showing economic loss and without any bond or other security being required.

[Signature Page Follows]

IN WITNESS WHEREOF , the Company has caused this Warrant to be signed by its duly authorized officer.

	DARIO HEALTH CORP.


	By:
		Name:
		Title:

Exhibit A

NOTICE OF EXERCISE

TO:

DarioHealth Corp., attention: President

The undersigned hereby elects to purchase the below referenced shares (the “ Warrant Shares ”) of Common Stock of DarioHealth Corp. (the “ Company ”) pursuant to the terms of the attached Warrant, and tenders herewith payment of the purchase price of such Warrant Shares in full. Payment of the purchase price is being made by:

____________

a cash exercise with respect to _________________ Warrant Shares; or

	____________	a "cashless exercise" with respect to _______________ Warrant Shares
		(if permitted pursuant to Section 2(b) of the Warrant).

Please issue a certificate or certificates representing said shares in the name of the undersigned or in such other name as is specified below:

Name: __________________________________________________

Address: ________________________________________________

DWAC Instructions (if applicable):

___________________________________________

The undersigned hereby represents and warrants the following:

(a) It (i) has such knowledge and experience in financial and business affairs that he/she/it is capable of evaluating the merits and risks involved in purchasing the Warrant Shares, (ii) is able to bear the economic risks involved in purchasing the Warrant Shares, and (iii) is a “non-US person” as defined in Regulation S promulgated under the Securities Act of 1933, as amended;

(b) In making the decision to purchase the Warrant Shares, it has relied solely on independent investigations made by it and has had the opportunity to ask questions of, and receive answers from, the Company concerning the Warrant Shares, the financial condition, prospective business and operations of the Company and has otherwise had an opportunity to obtain any additional information, to the extent that the Company possess such information or could acquire it without unreasonable effort or expense;

(c) Its overall commitment to investments that are not readily marketable is not disproportionate to its net worth and income, and the purchase of the Warrant Shares will not cause such overall commitment to become disproportionate; it can afford to bear the loss of the purchase price of the Warrant Shares;

(d) It has no present need for liquidity in its investment in the Warrant Shares; and

(e) It acknowledges that the transaction contemplated in connection with the purchase of the Warrant Shares has not been reviewed or approved by the Securities and Exchange Commission or by any administrative agency charged with the administration of the securities laws of any state, and that no such agency has passed on or made any recommendation or endorsement of any of the securities contemplated hereby.


	(Signature and Date)

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: August 10, 2016

/s/ Erez Raphael

Erez Raphael

Chairman and Chief Executive Officer
(Principal Executive Officer)

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.;

(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: August 10, 2016

/s/ Zvi Ben David

Zvi Ben David

Chief Financial Officer, Secretary and
Treasurer (Principal Financial Officer)

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 June 30, 2016, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Erez Raphael, Chairman and 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
Chairman and Chief Executive Officer
(Principal Executive Officer)

August 10, 2016

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 June 30, 2016, 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)

August 10, 2016