DarioHealth Corp.

NOTE 1: - GENERAL

DarioHealth is a global digital therapeutics (DTx) company delivering personalized evidence-based interventions that are driven by precision data analytics, software, and personalized coaching, DarioHealth has developed an approach with the intent to empower individuals to adjust their lifestyle in a holistic way.

DarioHealth’s cross-functional team operates at the intersection of life sciences, behavioral science, and software technology to deliver seamlessly integrated and highly engaging digital therapeutics interventions. Our platform and suite of solutions deliver personalized and dynamic interventions driven by data analytics and one-on-one coaching for diabetes, hypertension, weight management, musculoskeletal pain, and behavioral health.

DarioHealth’s digital therapeutic platform has been designed with a ‘user-first’ strategy, focusing on the user’s needs first and foremost, and user experience and satisfaction. User satisfaction is constantly measured and drives all Company processes, including our technology design.

The Company hasone reporting unit andone operating segment.

f. The Company has incurred net losses since its inception. As of June 30, 2026, the Company has incurred recurring losses and negative cash flows since inception and has an accumulated deficit of $468,251. For the six months ended June 30, 2026, the Company used approximately $12,108 of cash in operations. On July 22, 2026, the Company entered into securities purchase agreements in a registered direct offering, resulting in aggregate gross proceeds to the Company of approximately $23,500. Management believes that the Company has sufficient funds to support its operation for a period of at least twelve months from the date of the issuance of these interim condensed consolidated financial statements. The Company expects to incur future net losses and its transition to profitability is dependent upon, among other things, the successful development and commercialization of the Company’s products and the achievement of a level of revenues adequate to support the cost structure. Until the Company achieves profitability or generates positive cash flows, it will continue to be dependent on raising additional funds to fund its operations. The Company intends to fund its future operations through cash on hand, additional private and/or public offerings of debt or equity securities or a combination of the foregoing. There are no assurances, however, that the Company will be able to obtain an adequate level of financial resources that are required for the long-term development and commercialization of its product offerings.

NOTE 2: - SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited interim condensed consolidated financial statements as of June 30, 2026 have been prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”) and applicable rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”) regarding interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, the unaudited interim condensed consolidated financial statements include all adjustments of a normal recurring nature necessary for a fair statement of the Company’s consolidated financial position as of June 30, 2026 and the Company’s consolidated results of operations and cash flows for the six months ended June 30, 2026. Results for the six months ended June 30, 2026 are not necessarily indicative of the results that may be expected for the year ending December 31, 2026. These unaudited interim condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.

Use of Estimates

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

Significant Accounting Policies

a. The significant accounting policies applied in the audited annual consolidated financial statements of the Company as disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 are applied consistently in these unaudited interim consolidated financial statements.

b. Concentrations of credit risk:

Financial instruments that potentially subject the Company to credit risks primarily consist of cash and cash equivalents, short-term deposits, restricted deposits, and trade receivables. For cash and cash equivalents, the Company is exposed to credit risks in the event of default by the financial institutions to the extent that amounts recorded on the accompanying consolidated balance sheets exceed federally insured limits. The Company places its cash and cash equivalents and short-term deposits with financial institutions with high-quality credit ratings and has not experienced any losses in such accounts.

For trade receivables, the Company is exposed to credit risk in the event of non-payment by customers to the extent of the amounts recorded on the accompanying consolidated balance sheets.

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

NOTE 2: - SIGNIFICANT ACCOUNTING POLICIES (Cont.)

As of June 30, 2026 and December 31, 2025, the Company’s major customer accounted for 16.8% and 30.5%, respectively, of the Company’s accounts receivable balance. For the three and six months ended June 30, 2026 the Company’s major customers accounted for 15.1% and 12.6%, respectively, of the Company’s revenue in the period. For the three and six months ended June 30, 2025, the Company's major customer accounted for 9.3% and 10.6%, respectively, of the Company's revenue in the period. Revenues from the Company's major customers in the three and six months ended June 30, 2026 were generated primarily under arrangements with a channel partner, through which the Company provides its solutions to multiple underlying employer and health plan customers.

c. Recently issued Accounting Pronouncements

NOTE 3: - INVENTORIES

During the three and six months periods ended June 30, 2026, total inventory write-down expenses amounted to $57 and $57, respectively, and$38 and $212 for the three and six months ended June 30, 2025.

On February 20, 2026, the U.S. Supreme Court issued a ruling striking down certain tariffs previously imposed under the International Emergency Economic Powers Act ("IEEPA"). Further, on March 4, 2026, the Court of International Trade ruled that U.S. Customs and Border Protection must refund the IEEPA tariffs that were collected. Based on these court rulings affirming the Company's legal right to recover IEEPA tariffs, the Company determined that it is entitled to a tariff refund of approximately $536, which was recorded in receivables, net on the condensed consolidated balance sheet. For the six months ended June 30, 2026, the Company recorded a $369 benefit for these tariffs in cost of revenues on the condensed consolidated statements of operations and comprehensive loss, $265 of which related to prior fiscal year costs and $104 related to current-period costs. The remaining $167 of the approximately $536 tariff refund reduced the carrying value of inventory on the condensed consolidated balance sheet as of June 30, 2026. As of the date of this filing, the Company had received approximately $23 of such refunds, with the remaining amount expected to be received in batches through the U.S. Customs and Border Protection refund process.

NOTE 4: - REVENUES

The Company is operating a multi-condition healthcare business, empowering individuals to manage their chronic conditions and take steps to improve their overall health. The Company generates revenues from contracts with enterprise business market groups to provide digital therapeutics solutions for individuals to receive access to services through the Company’s commercial arrangements Business-to-Business-to-Consumer (“B2B2C”); revenues from B2B2C arrangements for the three and six months ended June 30, 2026 were $2,504 and $5,219. The Company also generates revenue directly from individuals through à la carte offering and membership plans ("Consumers"); Consumers revenues for the three and six months ended June 30, 2026 were $2,673 and $5,541. For the three and six months ended June 30, 2025, revenues from B2B2C arrangements were $3,535 and $8,272, and Consumer revenues were $1,834 and $3,849.

Deferred Revenue

The Company recognizes contract liabilities, or deferred revenues, when it receives advance payments from customers prior to the satisfaction of the Company’s performance obligations. The balance of deferred revenues approximates the aggregate amount of the transaction price allocated to the unsatisfied performance obligations at the end of the reporting period. The Company expects to recognize approximately $521 over the next 12 months and theremainder thereafter.

The Company elected to not disclose information about remaining performance obligations for which the variable consideration is allocated to a wholly unsatisfied promise to transfer a distinct good or service that is subject to the variable consideration allocation exception.

The following table presents the significant changes in the deferred revenue balance during the six months ended June 30, 2026:

NOTE 4: - REVENUES (Cont.)

Costs toFulfill a Contract

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

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

Costs to fulfill acontract consist of (1) deferred consumer hardware costs incurred in connection with the delivery of services that are deferred, and (2) deferred costs incurred related to future performance obligations which are capitalized.

Costs to fulfill a contract as of June 30, 2026 and December 31, 2025 consisted of the following:

Costs to fulfill a contract were as follows:

NOTE 5: - DEBT

Callodine Loan Facility

On April 30, 2025, the Company refinanced its previous $30,000 credit facility with a new $32,500 credit agreement (the “Credit Agreement”), by and among the Company as borrower, the financial institutions party thereto from time to time as lenders, and Callodine Commercial Finance, LLC (in its capacity as agent for all lenders, “Agent,” and collectively with other lenders, “Lenders”) (the “Callodine Loan Facility”). Under the terms of the Credit Agreement, each Lender agreed to make a multi-draw term loan (each a “Term Loan”) in which the Company borrowed $32,500 at the time of closing on April 30, 2025. In addition, subject to the discretion of the Agent and the Lenders, the Company may at its option draw an aggregate of up to an additional $17,500. $2,500 of such additional Term Loan is subject to the achievement of certain revenue and gross margin thresholds, subject to the discretion of the Agent and the Lenders. $15,000 of such additional Term Loan is subject to the discretion of the Agent and the Lenders. The Credit Agreement has afive-year term that matures in April 2030. Principal repayments on the Term Loan are not due until May 2028, at which point the Company is required to make equal quarterly principal installments in the amount of $1,367, with all remaining outstanding principal due on the Term Loan Maturity Date of April 30, 2030.

The outstanding principal balance under the loan shall bear interest at a per annum rate of interest equal to (i) the Secured Overnight Financing Rate (“SOFR”), (as defined in the Credit Agreement) plus (ii) seven and three-quarters of one percent (7.75%). Upon maturity and/or upon an event of default (or upon any acceleration), interest shall automatically accrue without notice to the Company at a rate per annum equal to the lesser of (i) three percent (3%) over the Contract Rate (as defined in the Credit Agreement), or (ii) the maximum rate of interest permitted to be charged by applicable laws or regulations until paid. The Company paid certain fees with respect to the Term Loan, including a closing fee and an agent fee. Voluntary prepayments of the Term Loan prior to the third anniversary of the closing are also subject to certain pre-payment penalties.

In connection with the funding of the closing amount, the Company agreed to issue the Lenders a warrant to purchase an aggregate of 105,707 shares of our Common Stock, with an exercise price of $16.56, which shall have a term ofseven years from the issuance date. In addition, up to $2,500 of the loaned amount can be converted into shares of our Common Stock at a price of $19.87 per share.

The Company concluded that the Callodine Loan Facility and the Warrant are freestanding financial instruments since these instruments are legally detachable and separately exercisable. The Company has concluded that the Warrant meets all the conditions to be classified as equity pursuant to ASC 480 and ASC 815-40. The Callodine Loan Facility is measured at amortized cost.

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

The Callodine Loan Facility incorporates comparisons to instruments with similar covenants, collateral, and risk profiles and was obtained using a discounted cash flow technique. On the date of Callodine Loan Facility origination, or April 30, 2025, the discount rate was arrived at by calibrating the loan amount of $32,500 with the fair value of the warrants of $1,234 and the loan terms interest rate equal to the greater of (i) The SOFR, and(ii)4.0% plus a margin of 7.75%. The implied internal rate of return of the loan resulted with B rating U.S. dollar zero coupon discount curve plus a 11.473% credit curve. Interest expense related to the Callodine Loan Facility that measured at amortized cost were recorded within “Interest expense” in the consolidated statements of comprehensive loss.

On November 5, 2025, the Company entered into an Amendment to the Credit Agreement with the Lenders. Among other things, the amendment (i) resets financial covenants and waives financial-covenant testing for the second and third quarters of 2025; (ii) replaces the minimum cash covenant with a $10,000 minimum consolidated unencumbered liquid assets covenant; (iii) adds monthly 13-week cash-flow reporting when liquidity is below certain amount (subject to an EBITDA exception); (iv) clarifies that Tranche B is uncommitted and at lender discretion; and (v) increases the exit fee by $150 (waived if a change-of-control prepayment fee is triggered). In connection therewith, the Company repriced the Warrant to purchase up to 105,707 shares of Common Stock issued to the lenders on April 30, 2025, at an exercise price $16.56 per share, to permit an amendment to the exercise price of such Warrants to $15.35. In addition, conversion right of the lender in the amount of $2,500 was amended to a conversion price of $15.35 per share. As of June 30, 2026, the Company was in compliance with all applicable covenants under the Credit Agreement, as amended.

NOTE 5: - DEBT (Cont.)

Orbimed Warrant

On June 9, 2022, the Company entered into a Credit Agreement, with OrbiMed Royalty and Credit Opportunities III, LP (“Orbimed”), as the lender for afive-year senior secured credit facility in an aggregate principal amount of up to$50,000 , of which$25,000 was made available on the closing date and up to$25,000 was to be made available on or prior to June 30, 2023, subject to certain revenue requirements (the “Orbimed Loan”).

On June 9, 2022 (the closing date of the Orbimed Loan, which was repaid in May 2023), the Company agreed to issue Orbimed a warrant (the “Orbimed Warrant”) to purchase up to 11,330 shares of the Company’s Common Stock, at an exercise price of$132.40 per share, which shall have a term of 7 years from the issuance date. The Orbimed Warrant contains customary share adjustment provisions, as well as weighted average price protection in certain circumstances but in no event will the exercise price of the Warrant be adjusted to a price less than$80.00 per share. Following the issuance and sale of the Company’s Series C Preferred Stock in February 2024, and as a result of a certain price protection provision in the Orbimed Warrant, the exercise price of the Orbimed Warrant was adjusted to a price per share of$80.

The Company has concluded that the Orbimed Warrant is not indexed to the Company's own stock and should be recorded as a liability measured at fair value with changes in fair value recognized in earnings. The Company remeasurement income related to the Orbimed Warrant for the three and six-months periods ended June 30, 2026 were$8 and$28, respectively. For the three and six-months periods ended June 30, 2025 the Company remeasurement income were$0 and$29, respectively.

Pre-Funded Warrants

On February 15, 2024, as part of the acquisition of Twill the Company issued Pre-Funded Warrants to purchase up to 500,020 shares of Company Common Stock, issuable to a trust (the “Trust”) formed for the benefit of certain equity and debt holders of Twill.

The Company has classified the Pre-Funded Warrants as liability pursuant to ASC 815-40 since the Pre-Funded Warrants do not meet all the equity classification conditions. Accordingly, the Company measured the Pre-Funded Warrants at their fair value. The Pre-Funded Warrants liability is subject to re-measurement at each balance sheet date until exercised, and any change in fair value is recognized in our statement of comprehensive loss.

In February 2025, a total of 125,005 Pre-Funded Warrants were cashless exercised into 124,985 shares of Common Stock.

In February 2026, a total of 125,005 Pre-Funded Warrants were cashless exercised into 124,982 shares of Common Stock. This represented the final tranche of the Pre-Funded Warrants issued in connection with the Twill acquisition, and as of March 31, 2026, no Pre-Funded Warrants related to the acquisition of Twill remain outstanding.

During the three and six months ended June 30, 2026, the Company recognized$0 and$157, respectively, of remeasurement income related to the Pre-Funded Warrants. For the three and six-months periods ended June 30, 2025, the Company recognized$289 of remeasurement expenses and$796 of remeasurement income related to the Pre-Funded Warrants respectively.

The estimated fair value of the Pre-Funded Warrants liabilities was determined using observable market inputs, primarily the quoted market price of the Company’s common stock, and is classified within Level 2.

NOTE 6: - FAIR VALUE MEASUREMENTS

Under U.S. GAAP, fair value is defined as the amount that would be received for selling an asset or paid to transfer a liability in an orderly transaction between market participants and requires that assets and liabilities carried at fair value are classified and disclosed in the following three categories:

NOTE 6: - FAIR VALUE MEASUREMENTS**(Cont.)**

The availability of observable inputs can vary from instrument to instrument and is affected by a wide variety of factors, including, for example, the type of investment, the liquidity of markets and other characteristics particular to the transaction. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment, and the investments are categorized as Level 3.

The carrying amounts of cash and cash equivalents, short-term restricted bank deposits, trade receivables, other accounts receivable and prepaid expenses, trade payables and other accounts payable and accrued expenses approximate their fair value due to the short-term maturity of such instruments. In addition, the Callodine Loan Facility approximates its fair value. The Orbimed Warrant liability was measured at fair value using Level 3 unobservable inputs.

The following tables present information about the Company’s financial assets and liabilities measured at fair value on a recurring basis:

NOTE 7: - COMMITMENTS AND CONTINGENT LIABILITIES

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

Royalties

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

In connection with specific research and development activities, Physimax Technology (“Physimax”), prior to its acquisition by the Company, received $1,012 of participation payments from the IIA. The Company’s total commitment for royalties payable with respect to future sales, based on IIA participation received, net of royalties accrued or paid, totaled $985 as of June 30, 2026.

During the six months ended June 30, 2026 and June 30, 2025, the Company did not record significant IIA royalties related to the acquisition of Physimax Technology.

NOTE 8: - INTANGIBLE ASSETS

c. Amortization expenses for the three and six months ended June 30, 2026 were $468 and $931, respectively. For the three and six month periods ended June 30, 2025, the amortization expenses were $722 and $1,884, respectively.

NOTE 9: - RELATED PARTIES TRANSACTIONS

In February 2025, the Company appointed a new non-executive director to its Board. The director is a member of a consulting firm that has provided investment and business consulting services to the Company since 2021 under a consulting agreement. Pursuant to the consulting agreement, the Company agreed to pay the consultant a monthly cash retainer upon the successful completion of certain milestones. In addition, the Company agreed to issue 7,500 restricted shares of** **Common Stock to the consulting firm, vesting quarterly over afour-year period. As of June 30, 2026, the consulting firm received approximately 12,900 shares of Common Stock and warrants to purchase up to 5,000 shares of Common Stock. In addition, in February 2025, the Company entered into a second amendment to the consulting agreement, pursuant to which it agreed to pay the consulting firm a fixed monthly cash retainer of $10. During the three and six months ended June 30, 2026, the Company recorded share-based compensation expenses related to this service provider in the amounts of $65 and $130 respectively.

NOTE 10: - STOCKHOLDERS’ EQUITY

The holders of Common Stock have the right 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, to receive dividends as they may be declared at the discretion of the Company’s Board of Directors and to participate in the balance of the Company’s assets remaining after liquidation, dissolution or winding up, ratably in proportion to the number of shares of Common Stock held by them after giving effect to any rights of holders of preferred stock. Except for contractual rights of certain investors, the holders of Common Stock have no pre-emptive or similar rights and are not subject to redemption rights and carry no subscription or conversion rights.

On July 23, 2025, the Company’s stockholders voted to approve an amendment to the Certificate of Incorporation of the Company to increase the number of authorized Common Stock from one hundred sixty million (160,000,000) shares, $0.0001 par value per share, to four hundred million (400,000,000) shares, $0.0001 par value per share.

On March 30, 2026, the Company entered into an At-The-Market Sales Agreement (the “ATM”), allowing the Company to sell its common stock for aggregate sales proceeds of up to $20,000 from time to time and at various prices, subject to the conditions and limitations set forth in the sales agreement. If shares of the Company’s common stock are sold, there is athree percent (3%) fee paid to the sales agent. During the six months ended June 30, 2026, the Company received gross proceeds of $104 from the sale of 14,191 shares of the Company’s common stock and had $154 in related expenses. As of June 30, 2026, there were $19,892 remaining funds available under the ATM.

On February 5, 2026, out of the pre-funded warrants that were issued in September 2025,62,016 were exercised on a cashless basis into 62,016 shares of Common Stock. As of June 30, 2026, the Company’s total outstanding prefunded warrants were exercisable into 2,377,553 shares of Common Stock.

On March 17, 2025, from the pre-funded warrants that were issued in July 2020,18,015 were exercised on a cashless basis into 17,999 shares of Common Stock.

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

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

NOTE 10: - STOCKHOLDERS’ EQUITY (Cont.)

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

During the three and six-months periods ended June 30, 2025, a total of 1,145 and 1,270 shares of certain Series C Convertible Preferred Stock were converted into 40,632 and 44,422 shares of Common Stock, respectively.

During the three and six-month periods ended June 30, 2025, the Company accounted for the dividend shares of Common Stock upon the dividend shares earned by Series C, C-1 and C-2 Preferred Stock as a deemed dividend in a total amount of $1,309 and $3,503, respectively.

On April 28, 2025, the Company held a special meeting of stockholders in which the stockholders approved the (A) the issuance of shares of common stock, in excess of 20% of the issued and outstanding shares of Common Stock, upon: (i) the conversion of 25,605 shares of our Series D, D-1, D-2 and D-3 Preferred Stock into an aggregate of 1,697,843 shares of Common Stock, which were issued pursuant to private placement transactions that closed on December 18, 2024 and January 14, 2025, (ii) the issuance of up to 679,137 shares of Common Stock issuable as dividends to the Series D, D-1, D-2 and D-3 Preferred Stock; and (iii) the issuance of up to 208,754 shares of Common Stock issuable as share consideration provided under the Lock Up Agreements; and (B) (i) reduce the exercise price of certain warrants to purchase 29,245 shares of Common Stock issued to the former lender to $14.416 per share, and (ii) to permit the conversion of up to $2,000 of the principal amount of the loan issued by a former lender to us at a conversion price of $17.30 per share.

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

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

On October 14, 2020, the Company’s stockholders approved the 2020 Plan. Under the 2020 Plan, options to purchase shares of Common Stock may be granted to employees and non-employees of the Company or any affiliate, each option granted can be exercised toone share of Common Stock.

On July 23, 2025, the Company’s stockholders resolved to amend and restate the Company’s 2020 Plan, to (i) provide that for each of the calendar years ending on December 31, 2026, December 31, 2027, December 31, 2028, December 31, 2029 and December 31, 2030, the number of shares available under the 2020 Plan shall be increased by an additional number of shares of the Company’s Common Stock, equal to six percent (6%) of the number of shares of Common Stock issued and outstanding on a fully diluted basis on the immediately preceding December 31; and (ii) authorize the grant of restricted stock units as a permissible form of award under the 2020 Plan.

In January 2026, pursuant to the terms of the 2020 Plan as approved by the Company’s stockholders, the Company increased the number of shares authorized for issuance under the 2020 Plan by 636,131 shares, from 894,883 to 1,531,014.

On January 29, 2026 the Company’s stockholders resolved to amend the Company’s 2020 Plan, to increase the number of shares authorized for issuance under the 2020 Equity Incentive Plan by 500,000 shares, from 1,531,014 to 2,031,014.

2026 Grants

Employees and Consultants: During the six months ended June 30, 2026, the Compensation Committee of the Company’s Board of Directors (the “Compensation Committee”) approved grants of an aggregate of 2,127 restricted shares of Common Stock to employees and Consultants of the Company, and approved grants of options to purchase an aggregate of 23,150 shares of Common Stock to employees of the Company, at exercise prices ranging from $7.81 to $11.38 per share. The time-vesting restricted shares and stock options vest over three years commencing on the respective grant dates, and the options have aten-year contractual term. All such restricted shares and options were issued pursuant to the Company’s Amended and Restated 2020 Equity Incentive Plan, as amended (the “2020 Plan”).

NOTE 10: - STOCKHOLDERS’ EQUITY (Cont.)

In addition, during the six months ended June 30, 2026, the Compensation Committee approved an amendment to certain previously issued restricted stock awards to accelerate the vesting of 6,250 previously unvested restricted shares.

Service Providers: During the six months ended June 30, 2026, the Compensation Committee approved a grant of 23,000 restricted shares of Common Stock subject to time vesting and 55,000 performance-based restricted shares to certain service providers. All such restricted shares were issued pursuant to the 2020 Plan. In addition, the Compensation Committee approved a monthly grant of shares of the Company’s Common Stock equal to $15 of restricted shares to certain service providers per month, to be granted quarterly during the term of that certain consulting agreement. During the three and six months ended June 30, 2026,6,120 restricted unregistered shares of Common Stock, were issued to a service provider under this approval the Company recorded compensation expense in the amount of $45 and $75. The time vesting restricted shares vest over periods ranging fromsix months totwo years commencing on the respective grant dates.

2025 Grants

Employees and Consultants: During the six months ended June 30, 2025, the Compensation Committee approved a grant of 28,750 restricted shares of Common Stock to certain service providers and approved the grant of warrants to purchase up to 52,500 shares of Common Stock, at an exercise price of $12.80 per share, to certain consultants. The warrants are exercisable into shares of Common Stock on or before February 10, 2028. All such restricted shares and warrants were issued pursuant to the 2020 Plan.

Directors: During the six months ended June 30, 2025, the Compensation Committee approved a grant of 1,500 restricted shares of Common Stock to a director of the Company and approved an amendment to certain previously issued awards of restricted Common Stock in the aggregate amount of 1,750 shares, granted to the director, to permit an immediate acceleration of the unvested portion of the prior awards.

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 2026 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, 2026. This amount is impacted by the changes in the fair market value of the Common Stock.

NOTE 10: - STOCKHOLDERS’ EQUITY (Cont.)

As of June 30, 2026, the total unrecognized estimated compensation cost related to non-vested stock options and restricted shares granted prior to that date was $3,689 which is expected to be recognized over a weighted average period of approximately one (1.01) year.

The Company estimates the fair value of stock options granted using the Black-Scholes option-pricing model.

The number of restricted shares vested during the three months period ended June 30, 2026 amounts to 17,274.

The fair value of the restricted shares granted during the three months period ended June 30, 2026 amounts to $145.

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

The total compensation cost related to all of the Company’s stock-based awards recognized during the six month periods ended June 30, 2026 and 2025 was comprised as follows:

NOTE 11: - SELECTED STATEMENTS OF OPERATIONS DATA

Other Financial expenses (income), net:

NOTE 12:-** **SEGMENT REPORTING

The Company identifies operating segments in accordance with ASC Topic 280, “Segment Reporting,” as components of an entity for which discrete financial information is available and is regularly reviewed by the chief operating decision maker, or decision-making group, in making decisions regarding resource allocation and evaluating financial performance.

The Company operates asone operating segment. Operating segments are defined as components of an enterprise for which separate financial information is regularly evaluated by the Chief Operating Decision Maker (“CODM”), which is the Company’s chief executive officer, in deciding how to allocate resources and assess performance. The Company’s CODM evaluates the Company’s financial information and resources and assesses the performance of these resources on a consolidated basis. There is no expense or asset information that are supplemental to those disclosed in these consolidated financial statements, that are regularly provided to the CODM. The allocation of resources and assessment of performance of the operating segment is based on consolidated net loss as shown in our consolidated statement of comprehensive loss. The CODM considers net loss in the annual forecasting process and reviews actual results when making decisions about allocating resources.

Since the Company operates asone operating segment, financial segment information, including profit or loss and asset information, can be found in the consolidated financial statements.

Geographic Information

NOTE 13: - INCOME TAXES

During the three and six months ended June 30, 2026, the Company recorded tax expenses in the amount of $328**,** and $384 respectively, and for the three and six month periods ended June 30, 2025, the Company recorded tax expenses in the amounts of$0 and$22.

The main reconciling item between the statutory tax rate of the Company and the effective tax rate is the recognition of valuation allowance in respect of deferred taxes relating to accumulated net operating losses carried forward due to the uncertainty of the realization of such deferred taxes.

NOTE 14: -** BASIC AND DILUTED NET EARNINGS (LOSS)PERCOMMON STOCK**

The Company computes net loss per share of Common Stock using the two-class method. Basic and diluted net earnings or loss per share is computed using the weighted-average number of shares outstanding during the period. This calculation includes the total weighted average number of the Common Stock, which includes prefunded warrants.

The total number of potential shares of Common Stock related to outstanding options, warrants and preferred shares excluded from the calculations of diluted net loss per share due to their anti-dilutive effect were 919,809 and 919,809 for the three and six months ended June 30, 2026, respectively, and for the three and six months ended June 30 2025,3,924,485 and 3,751,085 respectively.

The following table sets forth the computation of the Company’s basic net earnings (loss) per Common Stock:

NOTE 15: - SUBSEQUENT EVENTS

a. On July 22, 2026, the “Company” entered into a Securities Purchase Agreement (the “Purchase Agreement”) with institutional investors, pursuant to which the Company agreed to issue and sell to the investors in a registered direct offering priced at-the-market under Nasdaq rules (the “Offering”) an aggregate of 2,437,060 shares (the “Shares”) of the Company’s Common Stock, and pre-funded warrants to purchase an aggregate of 1,017,499 shares of Common Stock. Each Share was sold at an offering price of $6.80 per share, and each pre-funded warrant was sold at an offering price of $6.7999, for aggregate gross proceeds of approximately $23,500 and $22,800 net of Offering expenses. In addition, Dennis Matheis, a member of the Company’s Board of Directors, entered into a Purchase Agreement to purchase 14,430 shares of Common Stock at a purchase price of $6.93 per share. The Offering closed on July 23, 2026.