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Item 1.01
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Entry into a Material
Definitive Agreement.
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On December 19, 2019,
DarioHealth Corp. (the “Company”) entered into subscription agreements (each, a “Series A-3 Subscription Agreement”
and collectively the “Series A-3 Subscription Agreements”) with accredited investors relating to an offering (the “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 and Series A-1 Preferred Stock (as reported in the Company’s Current Reports on Forms 8-K and 8-K/A filings made with
the Securities and Exchange Commission on December 3, 2019), and the offering of the Series A-2 Preferred Stock, Series A-3 Preferred
Stock and Series A-4 Preferred Stock (as reported in the Company’s Current Report on Form 8-K filing made with the Securities
and Exchange Commission on December 6, 2019), was $21.375 million.
The Company previously
filed a Certificate of Designation of Preferences, Rights and Limitations of Series A-3 Preferred Stock on December 4, 2019 (the
“A-3 Effective Date”), designating 12,500 shares of Series A-3 Preferred Stock, in connection with the Offering.
Each share of Series
A-3 Preferred Stock is convertible at the option of the holder, subject to certain beneficial ownership limitations as set forth
in the Series A-3 Certificate of Designation into such number of shares of Company’s common Stock (the “Common
Stock”) equal to the number of Series A-3 Preferred Shares to be converted, multiplied by the stated value of $1,000 (the
“Stated Value”), divided by the conversion price in effect at the time of the conversion (the initial conversion price
for the Series A-3 Preferred Stock was $4.98, subject to adjustment in the event of stock splits, stock dividends, and similar
transactions). In addition, the Series A-3 Preferred Stock will automatically convert into shares of Common Stock, subject to certain
beneficial ownership limitations, on the earliest to occur of (i) upon the approval of the holders at least 50.1% of the outstanding
shares of Series A-3 Preferred with respect to the Series A-3 Preferred Stock; or (ii) the 36-month anniversary of each of the
Series A-3 Effective Date. The holders of Series A-3 Preferred Stock will also be entitled dividends payable as follows: (i) a
number of shares of Common Stock equal to ten percent (10%) of the number of shares of Common Stock issuable upon conversion of
the Series A-3 Preferred Stock then held by such holder on the 12-month anniversary of the Series A-3 Effective Date, (ii) a number
of shares of Common Stock equal to fifteen percent (15%) of the number of shares of Common Stock issuable upon conversion of the
Series A-3 Preferred then held by such holder on the 24-month anniversary of the Series A-3 Effective Date, and (iii) a number
of shares of Common Stock equal to twenty percent (20%) of the shares of Common Stock issuable upon conversion of the Series A-3
Preferred Stock then held by such holder on the 36-month anniversary of the Series A-3 Effective Date.
The Series A-3 Preferred
Stock will vote together with the Common Stock as a single class on an as-converted basis on any matter presented to the shareholders
of the Company. Upon any liquidation, dissolution or winding-up of the Company, after the satisfaction in full of the debts of
the Company and payment of the liquidation preference to the Senior Securities, holders of Series A-3 Preferred Stock shall be
entitled to be paid, on a pari passu basis with the payment of any liquidation preference afforded to holders of any Parity Securities,
the remaining assets of the Company available for distribution to its stockholders. For these purposes, (i) “Parity Securities”
means the Common Stock, Series A Preferred Stock, Series A-1 Preferred Stock, Series A-2 Preferred Stock, Series A-3 Preferred
Stock, Series A-4 Preferred Stock and any other class or series of capital stock of the Company hereinafter created that expressly
ranks pari passu with the Series A-2 Preferred Stock, Series A-3 Preferred Stock and Series A-4 Preferred Stock; and (ii) “Senior
Securities” shall mean any class or series of capital stock of the Company hereafter created which expressly ranks senior
to the Parity Securities.
The Company and the
investors in the Offering also executed a registration rights agreement (the “Registration Rights Agreement”), pursuant
to which the Company agreed to file a registration statement covering the resale of the shares of Common Stock issuable upon conversion
of the Series A-3 Preferred Stock within sixty days following the final closing of the Offering.
Pursuant to the Placement
Agency Agreement (the “Placement Agency Agreement”) executed by and between the Company and the registered broker dealer
retained to act as the Company’s exclusive placement agent (the “Placement Agent”)
for the Offering, the Company paid the Placement Agent an aggregate cash fee of $132,100, non-accountable expense allowance
of $40,380 and is required to issue to the Placement Agent or its designees warrants to purchase 39,229 shares of Common Stock
at an exercise price of $4.98 per share (the “Placement Agent Warrants”). The Placement Agent Warrants are exercisable
for a period of five years from the date of each respective closing.
The Subscription Agreements
contains representations and warranties that the parties made to the others in the context of all of the terms and conditions of
that agreement and in the context of the specific relationship between the parties. The provisions of such agreements, including
the representations and warranties contained therein, are not for the benefit of any party other than the parties to such agreement
and are not intended as documents for investors and the public to obtain factual information about the current state of affairs
of the parties to that agreement. Rather, investors and the public should look to other disclosures contained in the Company’s
filings with the U.S. Securities and Exchange Commission.
The securities to be
issued in the Offering are exempt from the registration requirements of the Securities Act of 1933, as amended (the “Securities
Act”) pursuant to Section 4(a)(2) of the Securities Act and/or Rule 506(b) of Regulation D promulgated thereunder. The securities
have not been registered under the Securities Act and may not be resold in the United States absent registration or an exemption
from registration. This Current Report on Form 8-K shall not constitute an offer to sell or the solicitation of an offer to buy
nor shall there be any sale of these securities in any state or jurisdiction in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.
The forgoing description
of the Series A-3 Certificate of Designation is qualified in its entirety by reference to the full text of such document, a copy
of which is filed as Exhibit 3.1 to this Current Report on Form 8-K, respectively. The forgoing descriptions of the Placement Agency
Agreement, the Registration Rights Agreement, the Placement Agent Warrants and the Subscription Agreements are qualified by reference
to the full text of these documents, copies of each of which will be filed in the Company’s next periodic report due to be
filed under the Exchange Act.