CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K contains “forward-looking statements”, which include information relating to future events, future financial performance, financial projections, strategies, expectations, competitive environment and regulation. Words such as “may”, “should”, “could”, “would”, “predicts”, “potential”, “continue”, “expects”, “anticipates”, “future”, “intends”, “plans”, “believes”, “estimates”, and similar expressions, as well as statements in future tense, identify forward-looking statements. Forward-looking statements should not be read as a guarantee of future performance or results and may not be accurate indications of when such performance or results will be achieved. Forward-looking statements are based on information we have when those statements are made or management’s good faith belief as of that time with respect to future events, and are subject to significant risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. Important factors that could cause such differences include, but are not limited to:
The foregoing does not represent an exhaustive list of matters that may be covered by the forward-looking statements contained herein or risk factors that we are faced with that may cause our actual results to differ from those anticipate in our forward-looking statements. Please see “Risk Factors” for additional risks which could adversely impact our business and financial performance.
Moreover, new risks regularly emerge and it is not possible for our management to predict or articulate all risks we face, nor can we assess the impact of all risks on our business or the extent to which any risk, or combination of risks, may cause actual results to differ from those contained in any forward-looking statements. All forward-looking statements included in this Annual Report are based on information available to us on the date of this Annual Report. Except to the extent required by applicable laws or rules, we undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements contained above and throughout this Annual Report.
Overview
We are a mobile health (mHealth) company developing and commercializing patent-pending technology providing consumers with laboratory-testing capabilities using smart phones and other mobile devices. Our first product, Dario™, is a mobile, cloud-based, diabetes management solution which includes novel software applications combined with a stylish, ‘all-in-one’, pocket-sized, blood glucose monitoring device. We were formed on August 11, 2011 as a Delaware corporation.
We are initially applying our technology to address the estimated $12 billion worldwide market for diabetic self-monitoring of blood glucose, or SMBG, market. Diabetes is a disease where insufficient levels, or a total absence, of the hormone insulin produces high levels of glucose in the bloodstream, which can lead to long term adverse effects on a patient’s blood vessels, which can lead to heart attack, stroke, high blood pressure, blindness, kidney disease and nerve damage. As part of controlling blood sugar, many patients must self-monitor their blood glucose levels using home testing kits (called glucose meters) and treat high and low blood sugar episodes accordingly to avoid the complications from the disease.
Dario™ is a comprehensive, patent-pending system that combines a cutting edge software application (or app) and cloud-based data services with a novel, all-in-one SMBG device consisting of a lancet (to obtain a blood sample), a device-specific disposable test strip cartridge and a smart mobile device-driven glucose reader adaptor. Roughly the size of a pack of gum, we believe that the Dario™ SMBG device has the potential to replace standalone glucose meters and their kits (lancing, lancets and strips vials) which are the current market standard, most of which have the necessary testing components separated from one another in what we believe is a cumbersome design. Moreover, all but a few glucose meters lack an interface with a smart mobile device, and none presently have the software applications associated with Dario, each of which we believe will distinguish Dario™ as an alternative in the marketplace.
We expect Dario™ to be the first truly social diabetes management system, with communities of users learning to appreciate and sharing its attributes and benefits. More broadly, our goal is for the Dario™ software system to become the centerpiece in a new era of interconnected devices and services that provide healthier and better life for diabetic patients worldwide. Dario™ is designed to be a software driven, comprehensive data-management system with sophisticated insight and analytical tools constantly attuned to each individual patient and designed to enable integration with various devices, including most notably the modern, user-friendly Dario™ SMBG device.
On September 23, 2013, we announced our receipt of CE Mark certification to market Dario™. The receipt of the CE Mark allows Dario™ to be marketed and sold in 32 countries across Europe as well as in certain other countries worldwide.
On November 15, 2013 and February 1st, 2014, we announced that we had entered into exclusive distribution agreement with InnoMed Ltd. and uHealth Pty Ltd., respectfully, to distribute the Dario™ blood glucose monitoring device in New Zealand and Australia. These agreements provide us with market visibility in countries that are well-known for their interest in innovation and early adoption of new technologies. Our distribution agreements with InnoMed and uHealth follow earlier distribution agreements we entered into during 2013, including: (i) a distribution agreement in April 2013 with Farla Medical Limited, a United Kingdom-based company, under which Farla will act as our exclusive distributor for Dario™ in the United Kingdom and Belgium and (ii) a distribution agreement in June 2013 with Harmonium Pharma, an Italian company, under which Harmonium will act as our exclusive distributor for Dario™ in Italy.
On December 12, 2013, we commenced our worldwide roll-out of the Dario™ iOS mobile application with our market launch of the Dario™ iOS mobile application in the United Kingdom, Australia and New Zealand. The Dario™ app has been approved by Apple and with its launch is presently available as a free download to European iPhone and other iOS devices users. As a result of this launch, customers in Europe are able to experience some of the novel functionality of the Dario™ app even without using the Dario™ device itself. This launch has also allowed us to begin the initial phase of building a user base of potential Dario™ customers. We further expect to launch the Dario™ iOS app in Italy and Belgium and the Dario™ Android app in the United Kingdom, New Zealand, Australia, Italy and Belgium during the first quarter of 2014.
We expect to commence an initial soft launch of the full Dario™ solution (including the software and the all-in-one blood glucose meter) for iPhones and other iOS devices in Europe by the second quarter of 2014 with the goal of collecting customer feedback to refine our longer-term roll-out strategy. Also by the second quarter of 2014, we plan on launching the Android version of the full Dario™ solution, quickly expanding to all markets where the iOS version is sold. This will enable us to compete in a segment of the market with less competition. Over time, we expect to add additional features and functionality in making Dario™ the new standard of care in diabetes data management.
With CE mark certification in hand, we accelerated our efforts to prepare and file with the U.S. Food and Drug Administration (or FDA) a 510(k) application for marketing of Dario™ in the United States and on January 7, 2014, we announced the filing of a Premarket Notification Application (known as a 510(k) application) with the FDA for the Dario™ blood glucose monitoring system. We are also actively investigating regulatory approval pathways for Dario™ in Asia and South America.
Currently, we have third-party manufacturing for the Dario™ device, the cartridges and test strips and other relevant components in place, and we are preparing to scale-up manufacturing in a manner necessary to support our roll-out. We may also seek alternative manufacturing solutions as our commercial needs evolve. In addition to our distribution agreements, we are making progress in launching innovative online marketing strategies in other countries, including Germany. We are also actively pursuing third-party reimbursement in our key target geographies in Europe, which we expect to be in place by the end of the second quarter of 2014.