DarioHealth (DRIO) risk factors, FY2024 10-K

Risks Related to Our Financial Position and Capital Requirements

1. 01We were formed in August 2011 and are thus subject to the risks associated with new businesses
2. 02According to our management’s estimates, based on our current cash on hand and further based on our budget and the assumption that initial commercial sales will commence during our anticipated timeframes, we believe that we will have sufficient resources to continue our activities through 2025
3. 03If we raise additional funds through collaborations and licensing arrangements, we may be required to relinquish some rights to our technologies or candidate products, or to grant licenses on terms that are not favorable to us
4. 04We have incurred significant losses since inception. As such, you cannot rely upon our historical operating performance to make an investment decision regarding our company
5. 05We may be subject to claims for rescission or damages in connection with certain sales of shares of our securities
6. 06Our revenues are concentrated with a major customer, and our revenues may decrease significantly if we were to lose our major customer

Risks Related to Our Business

1. 07There is no assurance that our digital health engagement platform will succeed or be adopted by healthcare providers
2. 08The success of our Dario product will depend on the acceptance of Dario in the healthcare market
3. 09We cannot accurately predict the volume or timing of any future sales, making the timing of any revenues difficult to predict
4. 10If Dario fails to satisfy current or future customer requirements, we may be required to make significant expenditures to redesign the product, and we may have insufficient resources to do so
5. 11We expect to derive substantially all of our revenues from our principal technology, which leaves us subject to the risk of reliance on such technology
6. 12We are dependent upon third-party manufacturers and suppliers making us vulnerable to supply shortages and problems and price fluctuations, which could harm our business
7. 13We rely in part on a small group of third-party distributors to effectively distribute our products
8. 14Failure in our online and digital marketing efforts could significantly impact our ability to generate sales
9. 15We rely upon Software-as-a-Services, or SAAS, technologies from third parties to operate our business, and interruptions or performance problems with these technologies may adversely affect our business, financial condition and results of operations
10. 16The SaaS pricing model is evolving and our failure to manage its evolution and demand could lead to lower than expected revenue and profit
11. 17Our results of operations may fluctuate significantly due to the timing of our recognition of SaaS revenues
12. 18Any damage, failure or disruption of our SaaS network infrastructure or data centers could impair our ability to effectively provide our solution, harm our reputation and adversely affect our business
13. 19Our products are subject to technological changes which may impact their use
14. 20As we conduct business internationally, we are susceptible to risks associated with international relationships
15. 21We expect to be exposed to fluctuations in currency exchange rates, which could adversely affect our results of operations
16. 22Non-U.S. governments often impose strict price controls, which may adversely affect our future profitability
17. 23Our Dario platform and associated business processes may contain undetected errors, which could limit our ability to provide our services and diminish the attractiveness of our service offerings
18. 24Our future performance will depend on the continued engagement of key members of our management team
19. 25If we are not able to attract and retain highly skilled managerial, scientific and technical personnel, we may not be able to implement our business model successfully
20. 26We may not generate the expected benefits of our acquisition of Twill

Risks Related to Product Development and Regulatory Approval

1. 27The regulatory clearance process which we must navigate is expensive, time-consuming, and uncertain and may prevent us from obtaining clearance for the commercialization of Dario or our any future product
2. 28We are not permitted to market Dario in any jurisdiction until we receive marketing authorization from the applicable regulatory authority. To date, we have received regulatory authorization in Australia, Canada, Israel, Italy, the Netherlands, New Zealand, the United Kingdom, and the United States
3. 29We have conducted limited clinical trials of Dario. Clinical and nonclinical data is susceptible to varying interpretations, which could delay, limit or prevent additional regulatory clearances
4. 30We may be unable to complete required clinical trials, or we may experience significant delays in completing such clinical trials, which could significantly delay our targeted product launch timeframe and impair our viability and business plan
5. 31If we or our manufacturers fail to comply with the FDA’s Quality System Regulation or any applicable state equivalent, our operations could be interrupted, and our operating results could suffer
6. 32We are subject to the risk of reliance on third parties to conduct our clinical trial work
7. 33delayed or terminated, and we may not be able to obtain marketing authorization for or successfully commercialize our product candidates
8. 34Broad-based domestic and international government initiatives to reduce spending, particularly those related to healthcare costs, may reduce reimbursement rates for medical procedures, or make it more difficult for customers to purchase our products and services, all of which could adversely affect our business
9. 35Product liability suits, whether or not meritorious, could be brought against us due to an alleged defective product or for the misuse of Dario or our potential future products. These suits could result in expensive and time-consuming litigation, payment of substantial damages, and an increase in our insurance rates
10. 36If we are found to have violated laws protecting the confidentiality of patient health information, we could be subject to civil or criminal penalties, which could increase our liabilities and harm our reputation or our business
11. 37of price or service when a consumer exercises a privacy right. If we fail to comply with these regulations, we could be subject to civil sanctions, including fines and penalties for noncompliance
12. 38Our employees, independent contractors, consultants, manufacturers and suppliers may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements

Risks Related to Our Intellectual Property

1. 39The failure to obtain or maintain patents, licensing agreements and other intellectual property could materially impact our ability to compete effectively
2. 40Costly litigation may be necessary to protect our intellectual property rights and we may be subject to claims alleging the violation of the intellectual property rights of others
3. 41We have limited foreign intellectual property rights and may not be able to protect our intellectual property rights throughout the world
4. 42We rely on confidentiality agreements that could be breached and may be difficult to enforce, which could result in third parties using our intellectual property to compete against us
5. 43We may be subject to claims challenging the inventorship of our patents and other intellectual property

Risks Related to Our Industry

1. 44We face intense competition in the digital support solution and the self-monitoring of blood glucose market, and as a result we may be unable to effectively compete in our industry
2. 45If we fail to respond quickly to technological developments our products may become uncompetitive and obsolete
3. 46If third-party payors do not provide adequate coverage and reimbursement for the use of our products and services, our revenue will be negatively impacted

Risks Related to Our Operations in Israel

1. 47Our principal executive offices and other significant operations are located in Israel, and, therefore, our results may be adversely affected by political, economic and military instability in Israel, including a multi front war against Israel

Risks Related to the Ownership of Our Common Stock

1. 48Nasdaq may delist our securities from trading on its exchange, which could limit investors’ ability to make transactions in our securities and subject us to additional trading restrictions
2. 49Our officers and directors may exert significant influence over our affairs, including the outcome of matters requiring stockholder approval
3. 50If securities or industry analysts do not publish or cease publishing research or reports about us, our business or our market, or if they change their recommendations regarding our common stock adversely, the price of our common stock and trading volume could decline
4. 51The market price of our common stock has been extremely volatile and may continue to be volatile due to numerous circumstances beyond our control
5. 52Shares eligible for future sale may adversely affect the market for our common stock and warrants
6. 53If we fail to maintain effective internal control over financial reporting, the price of our common stock may be adversely affected
7. 54Anti-takeover provisions in our charter documents and Delaware law could discourage, delay or prevent a change in control of our company and may affect the trading price of our common stock and warrants
8. 55We are a smaller reporting company and the reduced reporting requirements applicable to smaller reporting companies may make our common stock less attractive to investors
9. 56We do not currently intend to pay dividends on our common stock in the foreseeable future, and consequently, your ability to achieve a return on your investment will depend on appreciation in the price of our common stock