On February 15, 2024 (the “Closing Date”), the Company completed the merger and the associated acquisition of all issued and outstanding shares of Twill for an aggregate consideration of (A) $10.0 million in cash, and (B) pre-funded warrants (the “Pre-Funded Warrants”) to purchase up to 10,000,400 shares (the “Warrant Shares”) of Company’s common stock, par value $0.0001 per share (the “Common Stock”). In addition, the Company issued stock options to purchase up to 2,963,459 shares of Common Stock and restricted stock units (“RSUs”) to acquire up to 733,562 shares of Common Stock to certain employees and officers of Twill. The Company accounted for the stock options and RSUs separately from the acquisition. The Company incurred acquisition-related costs in a total amount of $722, which were included in general and administrative expenses in the Interim Consolidated Statements of Comprehensive loss.

The acquisition of Twill advances our strategy to evolve from a point solution to a comprehensive multi condition platform. Twill brings a global, digital-first approach to improving mental and physical health through its personalized and connected care services. These services include evidence-based programs, supportive communities, human-led coaching, and therapy, which are accessible globally in 10 languages and cover over 18 million lives. Utilized by enterprises, health plans, pharmaceutical companies, and individuals around the world. With the integration of Twill, the Company believes it can achieve multiple advantages as well as synergies in multiple fronts like its product offering, commercial channels, improved clients and member experience.

Under business combination accounting principles, the total purchase price was allocated to Twill’s net tangible and intangible assets based on their estimated fair values as set forth below. The excess of the purchase price over the net tangible and identifiable intangible assets was recorded as goodwill. A portion of the acquisition price was recorded as goodwill due to the synergies with Twill and is not expected to be deductible for tax purposes.

The allocation of the purchase price to the assets acquired and liabilities assumed based on management’s estimate of fair values at the date of acquisition as follows:





Cash and cash equivalents	$	531
Short-term restricted bank deposits		673
Trade receivables		3,329
Other accounts receivable and prepaid expenses		475
Property and equipment, net		580
Operating lease right of use assets		995
Acquisition-related intangibles		19,435
Other assets		22
Tangible assets acquired		26,040
Trade payables		2,410
Other accounts payable and accrued expenses		1,223
Deferred revenues		742
Operating lease liabilities		995
Deferred tax liability		2,001
Liabilities assumed		7,371
Fair value of net assets acquired		18,669
Goodwill		15,787
Total purchase consideration	$	34,456

Following are details of the purchase consideration allocated to acquired intangible assets:


	Fair value		Amortization
	Unaudited		period (Years)
Technology ⁽¹⁾	$	5,644		8
Customer relationship healthcare ⁽²⁾		13,791		12
Total identified intangible assets acquired	$	19,435


	Amount
	Unaudited
Number of shares of common stock issuable upon the exercise of the consideration warrants.		10,000,400
Value of each warrant issues	$	2.446
Total consideration warrant shares		24,456

Cash consideration		10,000
Total purchase price	$	34,456

The interim consolidated statement of comprehensive loss includes the following revenue and net loss attributable to Twill in 2024:



	2024
	Unaudited
Revenues	$	1,927
Net loss	$	2,077

The Company recognized $2,001 of a deferred tax liability which relates to the purchase price allocation fair value adjustments, other than goodwill. The Company is planning to file a consolidated tax return in the U.S. together with Twill and to utilize the benefit of the Company's loss carryforwards against the future taxable income of Twill and consequently decreased its valuation allowance in an amount equal to the deferred tax liability recognized in the business combination. The Company recognized the decrease in valuation allowance as income tax benefit.

The following table sets forth a summary of the unaudited pro forma results of the Company as if the acquisition of Twill, which closed in February 2024, had taken place had Twill been acquired as of January 1, 2023.


	Three months ended		Three months ended
	March 31,		March 31,
	2024		2023
Total revenue	$	7,721	$	11,812
Net loss	$	15,765	$	23,100

The unaudited pro forma financial information presented is for informational purposes only and is not necessarily indicative of the results of operations that would have been achieved if the Twill acquisition was completed at the beginning of 2023 and are not indicative of the future operating results of the combined company. The pro forma results include adjustments related to purchase accounting, primarily amortization of acquisition-related intangible assets and expense from assumed stock-based compensation awards. The pro forma results also include income from revaluation of the pre-funded warrants issued as part of the consideration for the acquisition of Twill, as these warrants are classified as a liability under GAAP.