DARIOHEALTH CORP. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Form 10-K)

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

Overview

We are a leading global DTx company revolutionizing the way people manage their
health across the chronic condition spectrum to live a better and healthier
life. Our mission is to transform how affected individuals manage their health
and chronic conditions by empowering our customers to easily manage their
conditions and take steps to improve their overall health. Most chronic
conditions are driven by personal behaviors and the actions that are or are not
taken. We believe that changing these behaviors can dramatically improve our
customers' overall health and substantially reduce unnecessary health spending.
However, behavioral change and habit formation are difficult, especially in
managing chronic disease and related conditions. Our digital therapeutics
endeavor to produce lasting behavior changes in our customers by applying a
novel combination of AI-driven dynamic personalization and behavioral science at
scale. This allows us to engage and support our customers, and offer them a
complete virtual care solution, ideally resulting in improved health outcomes
and reduced total cost of care.

Our principal operating subsidiary, LabStyle Innovation Ltd., is an Israeli
company ("LabStyle") with its headquarters in Caesarea, Israel. We were formed
on August 11, 2011, as a Delaware corporation with the name LabStyle Innovations
Corp. On July 28, 2016, we changed our name to DarioHealth Corp. We began our
sales in the direct-to-consumer space, solving first for what we deemed the most
difficult problems: how to engage users and support behavior

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change to improve clinical outcomes in diabetes. Our most developed AI tools
leverage the direct-to-consumer experience from over 150,000 members to drive
superior engagement and outcomes. In early 2020, we broadened our solutions to
include other medical conditions in addition to diabetes, and to serve business
customers who seek to improve the health of their stakeholders. Presently, we
have deployed solutions for diabetes, hypertension, and pre-diabetes, and
through our acquisition of Upright, we now offer solutions for musculoskeletal
("MSK") conditions. We intend to deploy behavioral health and other condition
solutions in 2021, which conditions will also be powered by our AI-driven
behavior change platform. We are currently delivering B2B2C solutions for
providers, employers, and pharmaceutical companies.

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

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

ramping up mass production, marketing and distribution, and sales efforts

? related to Dario smart diabetes management solution and DarioEngage

Platform;

expand our customer care and telemarketing services to support the

? expect our revenue to grow and the number of users and service providers to grow

who will use our platform to better serve people with diabetes and improve

their clinical outcome;

ongoing product and software development and related activities (including

costs associated with application development and data storage capabilities

? as well as all necessary design modifications to the various elements of the Dario

Smart Diabetes Management Solution, the DarioEngage platform and the Dario Buckle

tools and capabilities);

? continuing work on registering our patents worldwide;

? Regulatory and quality assurance issues;

? professional fees associated with being a publicly reporting company; and

? general and administrative matters.

On January 26, 2021, Dario, Labstyle, Upright Technologies Ltd., an Israeli
limited company, Vertex C (C.I.) Fund L.P. (in its capacity as the
representative of the Selling Shareholders), and all holders of Upright's
outstanding securities (the "Selling Shareholders"), entered into a share
purchase agreement (the "Upright Agreement") pursuant to which Dario, through
Labstyle, acquired all of the outstanding securities of Upright. The agreement
was consummated on February 1, 2021, and Upright now operates as a wholly owned
subsidiary of the Company. As part of the acquisition, Dario issued the Selling
Shareholders 1,687,612 shares of the Company's common stock, and agreed to
assume options to purchase up to 100,193 shares of the Company's common stock,
subject to certain escrow and indemnity provisions contained in the Upright
Agreement (in the aggregate, the "Consideration Shares"). In addition, the
shares issued are subject to the terms of a lock-up agreement, pursuant to which
the Selling Shareholders (subject to certain exceptions) have agreed to restrict
their ability to transfer their shares as follows: (i) shares representing

20%
of their respective

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Consideration Shares will be restricted from transfer for a period of one
hundred and eighty (180) days from the date of the closing of the acquisition
(the "Closing Date"), (ii) shares representing 30% of their respective
Consideration Shares will be restricted from transfer for a period of two
hundred and seventy (270) days from the Closing Date, (iii) shares representing
30% of their respective Consideration Shares will be restricted from transfer
for a period of three hundred and sixty (360) days from the Closing Date and
(iv) shares representing 20% of their respective Consideration Shares will be
restricted from transfer for a period of four hundred and fifty (450) days from
the Closing Date. The Company has also agreed to file a registration statement
covering the resale of the shares within ninety (90) days following the Closing
Date. In addition, 30% of the Consideration Shares issuable to Upright's
founder, Mr. Oded Cohen, shall be held in a specific holdback retention
mechanism, of which 50% shall be released at the lapse of twelve (12) months of
retention following the Closing Date, and the balance of 50% shall be released
at the lapse of eighteen (18) months of retention following the Closing Date.

On February 1, 2021, the Company, through Labstyle, has also agreed to enter
into an employment agreement with Mr. Cohen, pursuant to which he will serve as
General Manager of MSK. In consideration for Mr. Cohen's duties, he will be
entitled to (a) a monthly salary of NIS 63,000, (b) an annual bonus of up to
four times his monthly salary, and (c) up to 220,980 shares of restricted stock
of the Company, subject to meeting certain key performance metrics. See
"Management - Employment Agreements."

Readers are cautioned that, according to our management's estimates, based on
our budget and the initial launch of our commercial sales, we believe that we
will have sufficient resources to continue our activity only into June 2021
without raising additional capital. This includes an amount of anticipated
inflows from sales of Dario through direct sales in the United States and
through distribution partners. As such, we have a significant present need for
capital. If we are unable to scale up our commercial launch of Dario or meet our
commercial sales targets (or if we are unable to ramp up revenues), and if we
are unable to obtain additional capital resources in the near term, we may be
unable to continue activities, absent material alterations in our business
plans, and our business might fail.

Critical accounting policies

Our consolidated financial statements are prepared using the accrual basis of
accounting in accordance with accounting principles generally accepted in the
United States ("U.S. GAAP"). Our fiscal year ends December 31.

This Management's Discussion and Analysis of Financial Condition and Results of
Operations discuss our consolidated financial statements, which have been
prepared in accordance with U.S. GAAP. The preparation of these consolidated
financial statements requires making estimates and assumptions that affect the
reported amounts of assets and liabilities and the disclosure of contingent
assets and liabilities at the date of the consolidated financial statements, as
well as the reported revenues and expenses for the reporting periods. On an
ongoing basis, we evaluate such estimates and judgments. We base our estimates
on historical experience and on various other factors that we believe are
reasonable under the circumstances, the results of which form the basis for
making judgments about the carrying value of assets and liabilities that are not
readily apparent from other sources. Actual results may differ (perhaps
significantly) from these estimates under different assumptions or conditions.

While all the accounting policies impact the consolidated financial statements,
certain policies may be viewed to be critical. Our management believes that the
accounting policies which involve more significant judgments and estimates used
in the preparation of our consolidated financial statements, include revenue
recognition, inventories, liability related to certain warrants, and accounting
for production lines and its related useful life and impairment.

Revenue recognition

We derive our income mainly from:

selling our products, device-specific disposable test strip cartridges,

? lancets and our Dario Blood Glucose Monitoring System through distributors or

directly to end users;

? revenue from providing remote patient monitoring services to healthcare

suppliers via the DarioEngage platform; and

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revenue from ongoing membership programs, providing our users with

? diabetes management programs including lifestyle changes, healthy eating,

advanced tracking and live coaching.

Revenue is recognized under the five-step methodology in accordance with
Accounting Standards Codification ("ASC") - ASC 606, which requires us to
identify the contract with the customer, identify the performance obligations in
the contract, determine the transaction price, allocate the transaction price to
the performance obligations identified, and recognize revenue when (or as) each
performance obligation is satisfied.

Revenue from product sales is recognized in the period in which the products are supplied to customers. Revenue is recognized when control of promised products is transferred to customers, in an amount that reflects the consideration we expect to receive from patients.

Revenues from ongoing membership programs and Remote Patient Monitoring services
are recognized for each individual performance obligation when delivery has
occurred, by fulfillment of product and service to the customer. Our revenues
are recognized in the period in which services and related products are provided
to customers and are recorded either at a point in time for the sale of
products, or over the fixed service period for membership. The fee paid in
upfront, fixed or determinable, the allocation of the transaction price to each
performance obligations product and service based on the best estimate of
selling price which is established considering several internal factors
including, but not limited to, historical sales, pricing practices and
geographies in which we offer our products.

Inventories

Inventory write-down is measured as the difference between the cost of the
inventory and net realized value based upon assumptions about future demand, and
is charged to the cost of sales. At the point of the loss recognition, a new,
lower-cost basis for that inventory is established, and subsequent changes in
facts and circumstances do not result in the restoration or increase in that
newly established cost basis.

If there were to be a sudden and significant decrease in demand for our products
or if there were a higher incidence of inventory obsolescence because of rapidly
changing technology and customer requirements, we could be required to increase
our inventory write-downs and our gross margin could be adversely affected.
Inventory and supply chain management remain areas of focus as we balance the
need to maintain supply chain flexibility, to help ensure competitive lead times
with the risk of inventory obsolescence.

During the year ended December 31, 2021total inventory depreciation charges amount to $73,000.

Production Lines

Capitalization of Costs. We capitalize direct incremental costs of third-party
manufacturers related to the equipment in our production lines. We cease
construction cost capitalization relating to our production lines once they are
ready for its intended use and held available for occupancy. All renovations and
betterments that extend the economic useful lives of assets and/or improve the
performance of the production lines are capitalized.

Useful Lives of Assets. We are required to make subjective assessments as to the
useful lives of our production lines for purposes of determining the amount of
depreciation to record on an annual basis with respect to our construction of
the production lines. These assessments have a direct impact on our net income
(loss). Production lines are usually depreciated on a straight-line basis over a
period of up to seven years, except any renovations and betterments which are
depreciated over the remaining life of the production lines.

Impairment of production lines. We are required to review our production lines
for impairment in accordance with ASC 360, "Property, Plant and Equipment,"
whenever events or changes in circumstances indicate that the carrying amount of
an asset may not be recoverable. Recoverability of assets to be held and used is
measured by a comparison of the carrying amount of an asset to the future
undiscounted cash flows expected to be generated by the assets. If such assets
are considered to be impaired, the impairment to be recognized is measured by
the amount by which the carrying amount of the assets exceeds the fair value of
the assets.

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Results of Operations

Comparison of the year ended December 31, 2021 at the end of the year December 31, 2020

Revenue

Turnover for the year ended December 31, 2021 amounted to $20,513,000 compared to $7,576,000 during the year ended December 31, 2020.

Revenues generated during the year ended December 31, 2021 were derived mainly
from the sales of the hardware and services, through direct sales to consumers
located mainly in the United States through our on-line store and through
distributors, and from the offering of our membership services to our customers
located mainly in the United States.

Revenue cost

During the years ended December 31, 2021 and 2020, we recorded costs related to
revenues in the amount of $16,550,000 and $5,063,000, respectively. The increase
in cost of revenues was mainly due to higher costs related to shipping of
inventory, and amortization of inventory step up and acquired technology in the
amount of $4,106,000 as a result of the acquisition of Upright and WayForward.

Revenue cost mainly includes the production cost of devices, employee salaries and related overheads, production line depreciation and related cost of equipment used in production, technology depreciation, hosting charges, shipping and handling charges, and inventory write-downs.

Gross profit

Gross profit for the year ended December 31, 2021, amounted to $3,963,000 (19.3%
of revenues) compared to $2,513,000 (33.2% of revenues) for the year ended
December 31, 2020. The decrease in gross profit as a percentage of revenue for
the year ended December 31, 2021, compared to the year ended December 31, 2020,
is mainly as a result of amortization of inventory step up and acquired
technology following the acquisition of Upright and WayForward amounting to
$4,106,000, decrease in profitability generated from products and higher
shipping costs of inventory. Gross profit excluding these amortizations was
$8,069,000 (39.3% of revenues).

Research and development costs

Our research and development expenses increased by $12,786,000 to $17,219,000
for the year ended December 31, 2021 compared to $4,433,000 for the year ended
December 31, 2020. This increase was mainly due to the increase in our
activities during the year ended December 31, 2021. Our research and development
expenses, excluding stock-based compensation and depreciation, for the year
ended December 31, 2021, were $13,272,000 compared to $3,584,000 for the year
ended December 31, 2020, an increase of $9,688,000. This increase is mainly as a
result of an increase in salaries and software development expenses.

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

Sales and Marketing

Our sales and marketing expenses increased by $24,479,000 to $39,706,000 for the
year ended December 31, 2021 compared to $15,227,000 for the year ended December
31, 2020. This increase was mainly due to the increases in our digital
marketing, payroll related expenses, stock-based compensation during the year
ended December 31, 2021. Our sales and marketing expenses, excluding stock-based
compensation, depreciation and amortization, for the year ended December 31,
2021 were $33,555

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,000 compared to $12,452,000 for the year ended December 31, 2020, an increase
of $21,103,000. This increase was due to an increase in our digital marketing,
and payroll related expenses, as a result of hiring our sales and marketing team
in the U.S. to lead the penetration into the B2B2C market.

Sales and marketing expenses primarily include personnel expenses, online marketing campaigns of our service offering, trade show expenses, customer support expenses, and marketing consultants and contractors.

General and administrative expenses

Our general and administrative expenses increased by $10,776,000 to $23,532,000
for the year ended December 31, 2021 compared to $12,756,000 for the year ended
December 31, 2020. The increase was mainly due to an increase in our stock-based
compensation, investor relations, insurance expenses and the costs related with
the acquisitions performed during the year ended December 31, 2021. Our general
and administrative expenses, excluding stock-based compensation, acquisition
costs and depreciation, for the year ended December 31, 2021 were $8,150,000
compared to $5,239,000 for the year ended December 31, 2020, an increase of
$2,911,000. This increase was due to an increase in insurance, consulting
services, legal expenses and investor relations expenses.

Our general and administrative expenses primarily include salary and stock-based compensation expenses for management, employees, directors and consultants, legal and accounting fees, patent registration, investors, as well as our office rent and related expenses.

Financial income (expenses), net

Our financial expenses, net, increased by $693,000 for $235,000 for the year ended
December 31, 2021 compared to $458,000 financing income for the year ended
December 31, 2020. Changes in our financial charges are mainly due to foreign currency translation differences.

Financial expense (income), net, mainly includes bank charges, interest income, rental debt and currency translation differences.

Income tax

Income tax charges have been $32,000 for the year ended December 31, 2021. compared to none for the year ended December 31, 2020.

Net loss

Net loss for the year ended December 31, 2021 was $76,761,000. Net loss for the
year ended December 31, 2020 was $29,445,000. The increase from 2020 was mainly
due to the increase in our operating expenses.

Net operating losses carried forward

As of December 31, 2021, we and WayForward had a U.S. federal net operating loss
carryforward of approximately $37,910, of which $7,491 were generated from tax
years 2011-2017 and can be carried forward and offset against taxable income,
which expires during the years 2031 to 2037.

On December 22, 2017, the U.S. Tax Cuts and Jobs Act of 2017 (the "TCJA")
modified the rules regarding utilization of net operating loss and net operating
losses generated subsequent to the TCJA can only be used to offset 80% of
taxable income with an indefinite carryforward period for unused carryforwards
(i.e., they should not expire). During 2018 - 2021, we generated additional
$30,419,000 of net operating losses carryforwards which are not subject to the
annual limitation described above.

Our Israeli subsidiaries, Labstyle and Upright, have accumulated net operating
losses for Israeli income tax purposes as of December 31, 2021 in the amount of
approximately $133,960,000. The net operating losses may be carried forward and
offset against taxable income in the future for an indefinite period.

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In accordance with U.S. GAAP, it is required that a deferred tax asset be
reduced by a valuation allowance if, based on the weight of available evidence
it is more likely than not (a likelihood of more than 50 percent) that some
portion or all of the deferred tax assets will not be realized. The valuation
allowance should be sufficient to reduce the deferred tax asset to the amount
which is more likely than not to be realized. As a result, we recorded a
valuation allowance with respect to our deferred tax asset. Under Sections 382
and 383 of the Internal Revenue Code, if an ownership change occurs with respect
to a "loss corporation" (as defined in the Internal Revenue Code), there are
annual limitations on the amount of the net operating loss and other deductions
which are available to us.

The factors described above resulted in a net loss attributable to common shareholders of $78,766,000 and $33,103,000 for the year ended December 31, 2021
and 2020, respectively.

Non-GAAP Financial Measures

To supplement our consolidated financial statements presented in accordance with
U.S. GAAP within this Annual Report on Form 10-K, management provides certain
non-GAAP financial measures ("NGFM") of the Company's financial results,
including such amounts captioned: "net loss before interest, taxes,
depreciation, and amortization" or "EBITDA," and "Non-GAAP Adjusted Loss," as
presented herein below. Importantly, we note the NGFM measures captioned
"EBITDA" and "Non-GAAP Adjusted Loss" are not recognized terms under U.S. GAAP,
and as such, they are not a substitute for, considered superior to, considered
separately from, nor as an alternative to, U.S. GAAP and /or the most directly
comparable U.S. GAAP financial measures.

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

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

A reconciliation with the most directly comparable data we NGFM’s GAAP measurement, as noted above, is as follows:

                                               Year Ended December 31,
                                                    (in thousands)
                                           2021          2020        $ Change
Net Loss Reconciliation
Net loss - as reported                  $ (76,761)    $ (29,445)    $ (47,316)

Adjustments
Depreciation expense                           282           190            92
Inventory step up amortization               1,140             -         

1,140

Amortization of acquired technology          3,035             -         

3,035

Other financial expenses (income), net         235         (458)           693
Income Tax                                      32             -            32

EBITDA                                    (72,037)      (29,713)      (42,324)

Acquisition costs                              880             -           880
Revaluation of earn-out                      (503)             -         (503)
Stock-based compensation expenses           24,971        11,102        13,869

Non-GAAP adjusted loss                  $ (46,689)    $ (18,611)    $ (28,078)


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Cash and capital resources

From December 31, 2021we had about $35,808,000 in cash and cash equivalents compared to $28,590,000 at December 31, 2020.

We have experienced cumulative losses of $222,014,000 from inception (August 11,
2011) through December 31, 2021 and have a stockholders' equity of $85,549,000
at December 31, 2021. 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.

From inception, we have funded our operations primarily through private placements and public offerings of our common stock and warrants to purchase shares of our common stock, receiving total net proceeds totaling
$189,685,000 from December 31, 2021.

On February 28, 2018 and March 6, 2018, we closed two concurrent private
placements offerings consisting of 113,110 shares of our common stock at $28.00
per share, 61,704 shares of our Series C Convertible Preferred Stock at $56.00
per share and warrants to purchase up to 189,218 shares of common stock for
aggregate gross proceeds of approximately $6,623,000.

On September 13, 2018 and September 26, 2018, we closed two concurrent private
placements offerings consisting of 213,340 shares our common stock at $18.00 per
share, 94,513 shares of our Series D Convertible Preferred Stock at $72.00 per
share and warrants to purchase up to 473,114 shares of common stock, for
aggregate gross proceeds of approximately $10,645,000.

At December 13, 2018 and December 27, 2018we closed a private placement of 152,504 common shares at a purchase price of $20.00 per share and warrants to purchase up to 152,500 shares of our common stock at
$25.00 per share for aggregate gross proceeds of approximately $3,050,000.

On November 27, 2019, we entered into subscription agreements with accredited
investors relating to an offering with respect to the sale of an aggregate of
8,361 shares of newly designated Series A Convertible Preferred Stock and an
aggregate of 5,200 shares of newly designated Series A-1 Convertible Preferred
Stock, at a purchase price of $1,000 for each share of Series A Preferred Stock
and Series A-1 Preferred Stock, for aggregate gross proceeds to the Company of
$13,560,000. The initial closing of the offering took place on November 27,
2019. On December 3, 2019, we entered into subscription agreements with
accredited investors relating to an offering and the sale of an aggregate of
1,915 shares of newly designated Series A-2 Preferred Stock, at a purchase price
of $1,000 per share, for aggregate gross proceeds to the Company of $1,915,000.
On December 4, 2019, we into subscription agreements with accredited investors
relating to an offering and the sale of an aggregate of 3,808 shares of newly
designated Series A-3 Preferred Stock, at a purchase price of $1,000 per share,
for aggregate gross proceeds to the Company of $3,808,000. On December 5, 2019,
we entered into subscription agreements with accredited investors relating to an
offering and the sale of an aggregate of 745 shares of newly designated Series
A-4 Preferred Stock, at a purchase price of $1,000 per share, for aggregate
gross proceeds to the Company of $745,000. On December 19, 2019, we entered into
subscription agreements with accredited investors relating to an offering and
the sale of an aggregate of 1,346 shares of newly designated Series A-3
Preferred Stock, at a purchase price of $1,000 per share, for aggregate gross
proceeds to the Company of $1,346,000. The total aggregate gross proceeds of the
offering described above, together with gross proceeds from the closing of the
offering of Series A Preferred Stock, Series A-1 Preferred Stock, Series A-2
Preferred Stock, Series A-3 Preferred Stock and Series A-4 Preferred Stock was
$21,375,000.

On July 28, 2020, we entered into subscription agreements with accredited
investors relating to an offering with respect to the sale of an aggregate of
(i) 2,969,266 shares of our common stock, at a purchase price of $7.47 per
share, and (ii) pre-funded warrants to purchase 824,689 shares of common stock,
at a purchase price of $7.4699 per pre-funded warrant. In addition, on July 30,
2020, we entered into a subscription agreement with an accredited investor for
the purchase of 31,486 shares of our common stock at a purchase price per share
of $7.94 per share. The aggregate gross proceeds were approximately $28,591,000.

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In September 2020, we and an existing warrant holder entered into an agreement
pursuant to which we agreed to lower the exercise price of certain warrants
issued in September 2018, from $25.00 to $13.00 per share. As a result, the
warrant holder exercised warrants to purchase 88,889 shares of our common stock,
resulting in aggregate gross proceeds of approximately $1,156,000.

On January 26, 2021, we entered into securities purchase agreements with
institutional accredited investors relating to an offering with respect to the
sale of an aggregate of 3,278,688 shares of the Company's common stock at a
purchase price of $21.35 per share, for aggregate gross proceeds of $70,000,000.
The closing of the offering was consummated on February 1, 2021. The purchase
price per share represents the "Minimum Price" of the Company's Common Stock
pursuant to Nasdaq Rule 5635(d) as of the date of execution of each respective
securities purchase agreement. The Company and the investors participating in
the offering also executed a registration rights agreement pursuant to which the
Company agreed to file a registration statement covering the resale of the
shares within sixty (60) days following the final closing of the offering.

On February 28, 2022, we entered into securities purchase agreements with
institutional accredited investors relating to a registered direct offering with
respect to the sale of an aggregate of 4,674,454 shares of our common stock and
pre-funded warrants to purchase an aggregate of 667,559 shares of our common
stock, at a purchase price of $7.49 per share. The aggregate gross proceeds were
approximately $40,000,000.

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

Cash flow

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

                                                 December 31,
                                              2021           2020
                                               $              $

Cash flows used in operating activities: (50,409,000) (17,736,000) Cash flows used in investing activities: (8,134,000) (1,622,000) Cash flows from financing activities: 65 766,000 27,548,000

Net cash used in operating activities

Net cash used in operating activities was $50,409,000 for the year ended
December 31, 2021 compared to $17,736,000 used in operations for the same period
in 2020. Cash used in operations increased mainly due to the increase in our
marketing activities and the consolidation of each of Upright and WayForward,
which we acquired in 2021.

Net cash used in investing activities

Net cash used for investing activities was $8,134,000 for the year ended
December 31, 2021 compared to cash used in investing activities of $1,622,000
for the year ended December 31, 2020. Cash used in investing activities
increased mainly due to the repayment of a loan we made to Upright, the
acquisition of WayForward and cash acquired as part of the acquisition of each
of Upright and WayForward.

Net cash provided by financing activities

Net cash provided by financing activities was $65,766,000 for the year ended
December 31, 2021 compared to $27,548,000 for the year ended December 31, 2020.
During the year ended December 31, 2021, we raised net proceeds in an amount of
approximately $65,766,000 mainly through our January 2021 offering.

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  Table of Contents

Contractual Obligations

Set forth below is a summary of our current obligations as of December 31, 2021
to make future payments due by the period indicated below, excluding payables
and accruals. We expect to be able to meet our obligations in the ordinary
course. Operating lease obligations are for motor vehicle and real property
leases which we use in our business. Purchasing obligations consists of
outstanding purchase orders for materials and services from our vendors.

                                                                  Payments due by period
                                                                (In U.S. dollars thousands)
Contractual Obligations                         Total         Less than 1 year      1-3 years    Over 4 years
Operating Lease Obligations                   $      846     $              495    $       351   $           -
Purchasing Obligations                            12,190                 12,190              -               -

Total contractual cash obligations            $   13,036     $           12,685    $       351   $           -


Contingencies

We account for our contingent liabilities in accordance with ASC 450 “Contingencies”. A provision is recognized when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated.

With respect to legal matters, provisions are reviewed and adjusted to reflect
the impact of negotiations, estimated settlements, legal rulings, advice of
legal counsel and other information and events pertaining to a particular
matter. Currently, we are not a party to any ligation that we believe could have
a material adverse effect on our business, financial position, results of
operations or cash flows.

Recently issued and adopted accounting pronouncements

In September 2016, the Financial Accounting Standards Board (the "FASB") issued
Accounting Standards Update ("ASU") 2016-13, "Financial Instruments - Credit
Losses (Topic 326): Measurement of Credit Losses on Financial Instruments" ("ASU
2016-13"). ASU 2016-13 changes the impairment model for most financial assets
and certain other instruments. For trade and other receivables, held-to-maturity
debt securities, loans, and other instruments, entities will be required to use
a new forward-looking "expected loss" model that generally will result in the
earlier recognition of allowances for losses. The guidance also requires
increased disclosures. For the Company, the amendments in the update were
originally effective for fiscal years beginning after December 15, 2019,
including interim periods within those fiscal years. In November 2019, the FASB
issued ASU No. 2019-10 which delayed the effective date of ASU 2016-13 for
smaller reporting companies (as defined by the U.S. Securities and Exchange
Commission) and other non-SEC reporting entities to fiscal years beginning after
December 15, 2022, including interim periods within those fiscal periods. Early
adoption is permitted. The Company is currently assessing the impact the
guidance will have on its consolidated financial statements.

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