LabStyle Innovations Announces 2013 Year End Results and Highlights Key Achievements and Anticipated 2014 Milestones

CAESAREA, Israel, March 5, 2014 /PRNewswire/ -- LabStyle Innovations Corp. (OTCQB/OTCBB: DRIO), developer of the Dario™ Diabetes Management Solution, reported today its financial and operational results for the year ended December 31, 2013.  The company also presented an overview of recent corporate achievements and anticipated milestones for 2014.

• The Dario™ personalized smart meter is market ready to be shipped to selected strategic markets in Europe as well as in Australia and New Zealand.
• Distribution agreements and purchase commitments for Dario™ were signed in 2013 and 2014 with distributors in the United Kingdom, Italy, Sweden, Australia, and New Zealand.
• The stand-alone Dario™ diabetes management mobile application for iOS has been launched in the UK and New Zealand and Italy in Italian, and the company plans to launch the Android version in the second quarter of 2014.
• LabStyle was granted CE Mark for Dario™ in September 2013, enabling the company to market the Dario™ personalized smart meter in Europe, Asia, Australia, and the Middle East and beyond.
• A 510K filing in the U.S. for FDA clearance of the Dario™ Blood Glucose Monitoring System was made in late December 2013, and LabStyle believes it could receive regulatory clearance to market the Dario™ personalized smart meter in the United States and Canada in 2014.
• LabStyle strengthened its leadership team with experienced executives and industry thought leaders to drive the company from development stage towards global commercialization.
• After successfully registering the securities issued in its pre-public company phase, LabStyle commenced trading on the OTCQB Marketplace under the symbol "DRIO" in April 2013. 

As of December 31, 2013, LabStyle had $2,263,395 in cash on hand. On February 2014, LabStyle completed $4.2 million in gross financing. The company forecasts such funds will be sufficient to continue its activities through October 2014. 

LabStyle's 2014 business strategy and goals include:

• Expedite production of the Dario™ smart meter with maximum optimization and efficiency.
• Enhance logistics and shipment process in order to ship and deliver Dario™ smart meters and test strips in a timely and productive manner.
• Expand distributor network with purchase commitments in strategic markets.
• Increase product awareness and sales penetration in key target markets. 
• Facilitate insurance reimbursement in the key markets.
• Collaborate with select strategic partners.
• Continue to refine and enrich the cutting edge Dario™ diabetes management software platform.
• Obtain 510K FDA clearance for the Dario™ smart meter by the end of 2014.  
• Establish an online sales strategy.
• Supplement, strengthen and maintain the LabStyle's intellectual property portfolio.

"It was a very exciting 2013 for LabStyle, and we believe the future will be even brighter" stated Erez Raphael, president and chief executive officer of LabStyle.  "We closed 2013 on a positive note as we refined and accelerated the momentum of our business and regulatory strategies, and we believe we are on track to be at the forefront of innovation in the field of mHealth monitoring.  For the vast and growing population of people who struggle daily with diabetes, it is important to deliver engaging products that provide knowledge and support for them, their families and their caregivers and healthcare providers. We designed the Dario personalized smart meter to be the first fully supportive truly social diabetes management platform. We are especially proud of this and look forward to introducing the unparalleled Dario smart meter as well as seek to make life easier for people with diabetes.  On behalf of our management team and board of directors, I want to thank our shareholders and partners for their invaluable support in 2013 and to continuing our work together in 2014 and beyond."

Financial Results

From its founding in August 2011 through December 31, 2013, LabStyle raised approximately $17 million through private placements, and to a small degree, through the exercise of investor warrants.  As company activities have increased, LabStyle deployed its resources in during the company's pre-revenue stage in a much focused manner, to advance its business goals, particularly in the areas of research and development, manufacturing and personnel expansion that have brought the company to be "market" and "product" ready for 2014.

Research and development expenses for the year ended December 31, 2013 were $4,912,457 compared with $1,501,265 for the year ended December 31, 2012. This increase was mainly due to recruitment of new employees as well as stock based compensation expenses related to the granting of stock options to employees, engineering and other product and software development expenses by subcontractors and regulation related expenses which led, among others, to LabStyle's receipt of CE mark certification which allows Dario™ to be marketed and sold in 32 countries across Europe as well as in certain other countries worldwide.

Marketing and pre-production expenses were $2,354,403 for the year ended December 31, 2013 and $295,987 in the year ended December 31, 2012. This increase was mainly due to the commencement of the pre-production stage of Dario™, leading to depreciation expenses amounting to $770,378, recruitment of new employees as well as an increase in payments to certain contractors with relation to such activities.  The increase was also driven by marketing activities and related recruitment of employees as well as the engagement of certain marketing contractors.

General and administrative expenses for the year ended December 31, 2013 were $6,295,538 and included non-cash stock-based compensation expenses of $2,388,415 and non-cash expenses of $1,011,370 related to the issuance of common stock and warrants for services. General and administrative expenses for the year ended December 31, 2012 were $2,177,156 and included non-cash stock-based compensation expense of $390,403 and non-cash expenses of $437,499 related to the issuance of common stock and warrants for services.

Financing expenses for the year ended December 31, 2013 were mainly driven by a $293,542 non-cash charge related to the revaluation of warrants, compared with $1,606,378 in the year ended December 31, 2012. 

The net loss for the year ended December 31, 2013 was $13,931,778, or $0.76 per share, compared with a net loss of $5,686,573, or $0.46 per share, for the year ended December 31, 2012. 

The non-GAAP adjusted EBITDA loss for the year ended December 31, 2013 was $8,498,509, or $0.46 loss per share, compared with a non-GAAP adjusted EBITDA loss for the year ended December 31, 2012 of $2,948,449, or $0.23 loss per share. 

LabStyle used $7,599,723 in cash to fund operating activities during the year ended December 31, 2013. As of December 31, 2013, LabStyle had cash, cash equivalents, restricted cash and short-term bank deposits of $2,455,029, which was augmented by a gross amount of $4.2 million private placement which closed in February 2014.

Note on Non-GAAP Measures

Readers should note that LabStyle has, in the schedule below, supplemented its GAAP net income (loss) with a non-GAAP measure of adjusted EBITDA.  Management believes that this non-GAAP financial measure provides useful supplemental information to management and investors regarding LabStyle's performance, facilitates a more meaningful comparison of results for current periods with previous operating results, and assists management in analyzing future trends, making strategic and business decisions and establishing internal budgets and forecasts. A reconciliation of non-GAAP adjusted EBITDA to GAAP net income (loss) in the most directly comparable GAAP measure is provided in the schedule below.

There are limitations in using this non-GAAP financial measure because it is not prepared in accordance with GAAP and may be different from non-GAAP financial measures used by other companies. This non-GAAP financial measure should not be considered in isolation or as a substitute for GAAP financial measures. Investors and potential investors should consider non-GAAP financial measures only in conjunction with the Company's consolidated financial statements prepared in accordance with GAAP and the reconciliations of the non-GAAP financial measure provided in the schedule below:

About LabStyle Innovations

LabStyle Innovations Corp. (OTCQB:DRIO) develops and commercializes patent-pending technology providing consumers with laboratory-testing capabilities using smart mobile devices. LabStyle's flagship product is the Dario^™ Diabetes Management Solution.  Dario^™ received CE mark certification in September 2013 and began a world rollout in select countries in December 2013.  LabStyle filed a Premarket Notification Application, also known as a 510(k), with the US Food and Drug Administration (FDA) for the Dario™ smart meter (Dario^™ Blood Glucose Monitoring System) in December 2013. LabStyle is pursuing patent applications in multiple areas covering the specific processes related to blood glucose level measurement as well as more general methods of rapid tests of body fluids using mobile devices and cloud-based services. For more information: www.mydario.com and http://mydario.investorroom.com.

Cautionary Note Regarding Forward-Looking Statements

This news release and the statements of representatives and partners of LabStyle Innovations Corp. (the "Company") related thereto contains or may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Statements that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the generality of the foregoing, words such as "plan," "project," "potential," "seek," "may," "will," "expect," "believe," "anticipate," "intend," "could," "estimate" or "continue" are intended to identify forward-looking statements. Readers are cautioned that certain important factors may affect the Company's actual results and could cause such results to differ materially from any forward-looking statements that may be made in this news release. Factors that may affect the Company's results include, but are not limited to, regulatory approvals, product demand, market acceptance, impact of competitive products and prices, product development, commercialization or technological difficulties, the success or failure of negotiations and trade, legal, social and economic risks, and the risks associated with the adequacy of existing cash resources. Additional factors that could cause or contribute to differences between the Company's actual results and forward-looking statements include, but are not limited to, those risks discussed in the Company's filings with the U.S. Securities and Exchange Commission. Readers are cautioned that actual results (including, without limitation, the timing for and results of the Company's commercial and regulatory plans for Dario™ as described herein) may differ significantly from those set forth in the forward-looking statements. The Company undertakes no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law. 

SOURCE LabStyle Innovations Corp.