Exhibit 99.1

TWILL INC. (formerly – Happify Inc.)

CONSOLIDATED FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2023

U.S. DOLLARS IN THOUSANDS

INDEX

Kost Forer Gabbay & Kasierer 144 Menachem Begin Road, Building A, Tel-Aviv 6492102, Israel

Tel: +972-3-6232525 Fax: +972-3-5622555 ey.com

REPORT OF INDEPENDENT AUDITOR

To the Board of Directors and the Stockholders of

TWILL INC. (formerly – Happify Inc.)

Opinion

We have audited the accompanying consolidated financial statements of Twill Inc. (formerly – Happify Inc.) (the "Company"), which comprise the consolidated balance sheets as of December 31, 2023 and 2022 and the related consolidated statements of Comprehensive loss, changes in convertible preferred shares and stockholders' Deficit and cash flows for the years then ended, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2023 and 2022, and the results of its operations and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.

Basis for Opinion

We conducted our audits in accordance with auditing principles generally accepted in the United States of America (GAAP). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the Company and to meet our other ethical responsibilities in accordance with the relevant ethical requirements relating to our audits. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Substantial Doubt About the Company’s Ability to Continue as a Going Concern

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has suffered recurring losses from operations, has a net capital deficiency, and has stated that substantial doubt exists about the Company’s ability to continue as a going concern. Management's evaluation of the events and conditions are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Our opinion is not modified with respect to this matter.

Responsibilities of Management for the Financial Statements

Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free of material misstatement, whether due to fraud or error.

In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern for one year after the date that the financial statements are available to be issued.

Auditor’s Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free of material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAP will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.

In performing an audit in accordance with GAAP, we:

We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters that we identified during the audit.

TWILL INC.

(FORMERLY – HAPPIFY INC.)

CONSOLIDATED BALANCE SHEET

U.S. dollars in thousands (except stock and per stock data)

The accompanying notes are an integral part of the financial statements.

TWILL INC.

(FORMERLY – HAPPIFY INC.)

CONSOLIDATED BALANCE SHEET

U.S. dollars in thousands except stock and per stock data

The accompanying notes are an integral part of the financial statements.

TWILL INC.

(FORMERLY – HAPPIFY INC.)

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

U.S. dollars in thousands

The accompanying notes are an integral part of the financial statements.

TWILL INC.

(FORMERLY – HAPPIFY INC.)

CONSOLIDATED STATEMENTS OF CHANGES IN CONVERTIBLE PREFERRED SHARES AND STOCKHOLDERS’ DEFICIT

U.S. dollars in thousands, except stock data

The accompanying notes are an integral part of the financial statements

TWILL INC.

(FORMERLY – HAPPIFY INC.)

CONSOLIDATED STATEMENTS OF CASH FLOWS

U.S. dollars in thousands

The accompanying notes are an integral part of the financial statements.

TWILL INC.

(formerly – Happify Inc.)

TWILL INC. FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands

The consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States ("U.S. GAAP").

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Management bases its estimates on historical experience and on various other assumptions it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results could differ from those estimates, and such differences may be material.

Management believes the Company’s critical accounting policies and estimates are reasonable based upon information available at the time they are made. These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements including other accounts receivable and prepaid expenses and other accounts payable and accrued expenses, and the reported amounts of revenue, cost of revenues and operational expenses during the reporting period. Actual results could differ from those estimates

The Company's management believes that the U.S dollar is the currency of the primary economic environment in which the Company and its subsidiaries operate. Thus, the functional and reporting currency of the Company and its subsidiaries is the U.S dollar.

TWILL INC.

(formerly – Happify Inc.)

TWILL INC. FINANCIAL STATEMENTS

The Company's transactions and balances denominated in U.S. dollars are presented at their original amounts. Transactions and balances that are denominated in currencies other than the U.S. dollar are remeasured into U.S. dollars in accordance with principles set forth in Accounting Standard Codification ("ASC") Topic 830, Foreign Currency Matters (“ASC 830").

In accordance with ASC 830, monetary assets and liabilities denominated in foreign currencies are remeasured into U.S. dollars at the end of each reporting period using the exchange rates in effect at the balance sheet date. Non-monetary assets denominated in foreign currencies are measured using historical exchange rates. Gains and losses resulting from remeasurement are generally recorded in the statement of comprehensive loss as financial income or expenses, as appropriate.

The consolidated financial statements include the accounts of the Company and its subsidiaries. Intercompany accounts and transactions are eliminated upon consolidation.

Cash and cash equivalents are short-term highly liquid investments that are readily convertible to cash with original maturities of three months or less, at the date acquired.

Restricted cash represents amounts which are legally restricted to withdrawal or usage and are presented in the Consolidated Balance Sheet under Restricted Cash.

The following table provides a reconciliation of the cash balances reported on the balance sheets and the cash, cash equivalents and restricted cash balances reported in the statements of cash flows:

Accounts receivable includes amounts due from customers net of provision for expected credit losses. The Company records an allowance to account for estimated credit losses. The estimate for credit losses is based on the Company’s assessment of the collectability of customer accounts. The Company regularly reviews the allowance by considering factors such as the age of the receivable balances, historical experience, credit quality, current economic conditions, and reasonable and supportable forecasts of future economic conditions that may affect a customer’s ability to pay. The allowance for credit losses was $2 and $27 for the years ended December 31, 2023, and 2022, respectively.

TWILL INC.

(formerly – Happify Inc.)

TWILL INC. FINANCIAL STATEMENTS

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents, accounts receivable and other current assets.

Cash and cash equivalents comprised mainly of cash deposits invested in and maintained with high credit quality financial institutions and U.S banks. Deposits in the U.S. may be in excess of insured limits and are not insured in other jurisdictions. Management believes that the financial institutions that hold the Company’s and its subsidiaries’ cash and cash equivalents are institutions with high credit standing, and accordingly, minimal credit risk exists with respect to these assets.

For accounts receivable, the Company mitigates its credit risks by performing an ongoing credit evaluations of its customers. The Company is exposed to credit risk in the event of non-payment by customers to the extent of the amounts recorded on the accompanying consolidated balance sheets.

Significant Customers

The following table sets forth customers that represented more than 10% of the Company’s total revenues in each of the periods presented below:

As of December 31, 2023, the Company’s major customers accounted for 59.6% of the Company’s accounts receivable balance.

Property and equipment are stated at cost, net of accumulated depreciation and impairment. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets as follows:

Depreciation begins at the time the asset is ready for its intended use. Maintenance and repairs are charged to expense as incurred while significant improvements are capitalized.

TWILL INC.

(formerly – Happify Inc.)

TWILL INC. FINANCIAL STATEMENTS

The carrying amounts of property and equipment are reviewed for impairment in accordance with ASC Topic 360, Property, Plant and Equipment ("ASC 360"), whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. The determination of whether any impairment exists includes a comparison of estimated undiscounted future cash flows anticipated to be generated over the remaining life of an asset or asset group to their net carrying amount. If such assets are considered to be impaired, the impairment loss to be recognized is measured by the amount by which the carrying amount of the asset or asset group exceeds the fair value of the asset or asset group. There were no impairment losses during any of the periods presented.

The Company applies ASC Topic 820, Fair Value Measurement (“ASC 820”), that defines fair value and establishes a framework for measuring and disclosing fair value. Fair value is based on the price that would be received from the sale of an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The Company measures certain financial assets and liabilities at fair value based on applicable accounting guidance using a fair value hierarchy, which requires the Company to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s classification within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Three levels of inputs may be used to measure fair value.

Level 1 -       Quoted prices in active markets for identical assets or liabilities.

Level 2 -       Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 -       Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The carrying value of cash and cash equivalents, restricted cash, account receivables, other current assets, account payables and other current liabilities approximate their fair values due to the short-term maturities of such instruments.

Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instruments. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect these estimates.

The Company has elected the fair value option pursuant to ASC 825 to account for its non-convertible debt, which include the December 2020 Term-Loan, the June 2022 Term-Loan, the March 2023 Bridge Loan and the June 2023 Secured Loan (see note 8). Under the fair value option, changes in fair value are recorded in earnings except for fair value adjustments related to instrument specific credit risk, which are recorded as other comprehensive income or loss. The Company utilized a discounted cash flow model to estimate the fair value of its non-convertible debt which utilizes certain unobservable inputs and is therefore considered a Level 3 fair value measurement.

TWILL INC.

(formerly – Happify Inc.)

TWILL INC. FINANCIAL STATEMENTS

The Company utilized a Black-Scholes option pricing model to estimate the fair value of the warrant liabilities, which utilizes certain unobservable inputs and is therefore considered a Level 3 fair value measurement.

The Company accounts for stock-based compensation in accordance with ASC 718, "Stock-based Compensation" ("ASC 718"). Compensation cost for share-based awards is measured at the fair value on the grant date and recognized as expense over the requisite service periods in the Company's statement comprehensive loss.

The value of the award is recognized as expense on a straight-line basis over the requisite service periods in the Company's consolidated statement of comprehensive loss. Expense for awards with performance conditions is estimated and adjusted based upon the assessment of the probability that the performance condition will be met.

The Company selected the Black-Scholes option-pricing model as the most appropriate model for determining the fair value for its stock-based awards, The option-pricing model requires the Company to make several assumptions, including the Company’s share price, expected volatility, expected term, risk-free interest rate, and expected dividends. 

Risk-free interest rates are based on the yield from U.S. Treasury zero-coupon bonds with a term equivalent to the contractual life of the options; volatility of price of the Company's stocks based upon the historical equity volatility of the Ordinary stocks of publicly traded comparable companies. The expected term of the options granted is determined based on the simplified method. The dividend yield assumption is based on the expectation of no future dividend payouts since no dividends have been declared or paid to date.

The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance. The assessment considers whether the warrants are freestanding financial instruments, meet the definition of a liability under ASC 480, and meet all of the requirements for equity classification under ASC 815-40, including whether the warrants are indexed to the Company’s own common stock and whether the warrant holders could potentially require “net cash settlement” in a circumstance outside of the Company’s control, among other conditions for equity classification.

This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent reporting period end date while the warrants are outstanding. Warrants that meet all the criteria for equity classification, are recorded as a component of additional paid-in capital. Warrants that do not meet all the criteria for equity classification, are recorded as liabilities at their initial fair value on the date of issuance and remeasured to fair value at each balance sheet date thereafter.

TWILL INC.

(formerly – Happify Inc.)

TWILL INC. FINANCIAL STATEMENTS

All outstanding warrants were classified as liabilities since these warrants do not meet all the conditions to be classified as equity pursuant to ASC 815-40

The liability-classified warrants are recorded under non-current liabilities. Changes in the estimated fair value of the warrants are recognized in “Financial expenses, net” in the consolidated statements of comprehensive loss.

The Company applies ASC 470 “Debt”. When a Debt is issued with additional instruments in a single transaction, the Company allocates the total proceeds from the transaction to the individual freestanding instruments identified. After the proceeds are allocated to the freestanding instruments, the Company further allocates the proceeds between the freestanding financial instrument and any embedded derivatives required to be bifurcated. The Company allocates the proceeds using the fair value method, the relative fair value method and the residual value method, depending on the instruments issued. Pursuant to ASC 815 “Derivatives and Hedging” (“ASC 815”), the Company bifurcates embedded derivatives that require bifurcation and accounts for them separately from the debt. For convertible debt, the Company also assesses whether the convertible debt includes a substantial premium that should be recognized as part of equity. The proceeds allocated to the Debt are then accounted for using the effective interest method.

The Company applies ASC 815, “Derivatives and Hedging” to all features related to its debt. When features meet the definition of a derivative, are not clearly and closely related to the characteristics of the debt, and do not qualify for any scope exceptions within ASC 815, they are required to be accounted for separately from the debt instrument and recorded as derivative instrument liabilities. The fair value assigned to the embedded derivative instruments is marked to market in each reporting period. The Company has recorded embedded derivative liabilities related to its convertible debt (see note 9).

The Company has elected the fair value option pursuant to ASC 825 to account for its non-convertible debt, which include the December 2020 Term-Loan, the June 2022 Term-Loan, the March 2023 Bridge Loan and the June 2023 Secured Loan (see note 8). Under the fair value option, changes in fair value are recorded in earnings except for fair value adjustments related to instrument specific credit risk, which are recorded as other comprehensive income or loss.

The Company provides its customers a software as a service (SaaS) platform and derives most of its revenues from providing access to its SaaS app-based healthcare platform and affiliated implementation services. The Company also generates revenue through ad-sales on the platform.

In accordance with ASC Topic 606, Revenues from Contracts with Customers (“ASC 606”), the Company recognizes revenue when a customer obtains control of promised services. The amount of revenue recognized reflects the consideration the Company expects to be entitled to receive in exchange for these services.

The Company recognizes revenue by applying the following steps: (1) identify the contract with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract, and (5) recognize revenue when a performance obligation is satisfied.

TWILL INC.

(formerly – Happify Inc.)

TWILL INC. FINANCIAL STATEMENTS

For arrangements with multiple performance obligations, which represent promises within an arrangement that are capable of being distinct and are separately identifiable, the Company allocates the contract consideration to all distinct performance obligations based on their relative standalone selling price (“SSP”).

Revenues related to the Company's SaaS platform are recognized over time, since the customer simultaneously receives and consumes the benefits provided by the Company’s performance. To the extent the transaction price includes variable consideration, revenue is recognized using the variable consideration allocation exception, or, if the allocation exception is not met, the Company recognizes revenue ratably based on estimates of the variable consideration to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved.

Revenues related to professional services are recognized over time, since the customer simultaneously receives and consumes the benefits provided by the Company’s performance. The Company generally recognize revenues for professional services using an input method, based on labor hours consumed, which the Company believes best depict the transfer of the services to the customer.

Revenues related to ad serving are recognized when impressions are delivered. The Company recognizes revenue from the display of ads in the contracted period in which the impressions are delivered. Impressions are considered delivered when an ad is displayed.

The Company’s payment terms are generally 45 days or less. In instances where the timing of revenue recognition differs from the timing of invoicing, the Company determines its contracts generally to not include a significant financing component since the Company's selling prices are not subjected to billing terms nor is its purpose to receive financing from its customers or to provide customers with financing. In addition, the Company elected to apply the practical expedient to not adjust the promised amount of consideration for the effects of a significant financing component if the Company expects, at contract inception, that the period between when the Company will transfer a promised good or service to a customer and when the customer will pay for that good or service will be one year or less.

Revenues expected to be recognized from remaining performance obligations were $13,028 and $24,229 as of December 31, 2023 and December 31, 2022, respectively. Of the balance as of December 31, 2023 the Company expects to recognize approximately $10,345 over the next 12 months and the remainder thereafter.

The Company follows the guidance provided in ASC 606 for determining whether it is a principal (i.e., report revenues on a gross basis) or an agent (i.e., report revenues on a net basis) in arrangements with customers that involve another party that contributes to providing specified services to a customer. The Company determines whether the nature of its promise is a performance obligation to provide the specified products or services itself (as a principal) or to arrange for those products or services to be provided by the other party (as an agent), based on whether it controls the specified products or services before they are transferred to the end customer. In making this determination, the Company evaluates indicators such as which party is primarily responsible for fulfillment, which party has inventory risk and has discretion in determining pricing. All of the Company’s revenues are generated in the US.

TWILL INC.

(formerly – Happify Inc.)

TWILL INC. FINANCIAL STATEMENTS

Cost of revenues is primarily comprised of hosting services and payment processing costs.

Research and development costs are generally expensed as incurred. Research and development expenses primarily consist of product, engineering, regulatory compliance, and research activities.

The Company accounts for income taxes in accordance with ASC 740, “Income Taxes”. Deferred income taxes are determined utilizing the “asset and liability” method based on the estimated future tax effects of temporary differences between the financial accounting and tax basis of assets and liabilities under the applicable tax laws, and on tax rates anticipated to be in effect when the deferred income taxes are expected to be paid or realized. A valuation allowance is provided if, based upon the weight of available evidence, it is more likely than not that a portion of the deferred income tax assets will not be realized. In determining whether a valuation allowance is needed, the Company considers all available evidence, including historical information, long range forecast of future taxable income and evaluation of tax planning strategies. Amounts recorded for valuation allowance can result from a complex series of judgments about future events and can rely on estimates and assumptions. Deferred income tax liabilities and assets are classified as non-current.

ASC 740 also contains a two-step approach of recognizing and measuring a liability for uncertain tax positions. The first step is to evaluate the tax position taken or expected to be taken in a tax return by determining if the weight of available evidence indicates that it is more likely than not that, on an evaluation of the technical merits, the tax position will be sustained on audit, including resolution of any related appeals or litigation processes. The second step is to measure the tax benefit as the largest amount that is more than 50% likely to be realized upon ultimate settlement.

As of December 31, 2023, and 2022, no liability for unrecognized tax benefits was recorded.

The Company has a 401(k) defined contribution plan covering employees in the U.S. All eligible employees may elect to contribute up to $22.5 per year (for certain employees over 50 years of age the maximum contribution is $30 per year), of their annual compensation to the plan through salary deferrals, subject to Internal Revenue Service limits.

In January 2022, the Company implemented the new ASC 842 lease accounting guidance.

The Company accounts for its leases in accordance with ASC Topic 842, Leases (“ASC 842”). The Company determines if an arrangement is a lease at inception and classifies its leases at commencement. Leases are classified as either finance leases or operating leases. A lease is classified as a finance lease if any one of the following criteria are met: the lease transfers ownership of the asset by the end of the lease term; the lease contains an option to purchase the asset that is reasonably certain to be exercised; the lease term is for a major part of the remaining useful life of the asset; the present value of the lease payments equals or exceeds substantially all of the fair value of the asset; or the underlying asset is of such a specialized nature that it is expected to have no alternative use to the lessor at the end of lease term.

TWILL INC.

(formerly – Happify Inc.)

TWILL INC. FINANCIAL STATEMENTS

A lease is classified as an operating lease if it does not meet any one of these criteria. During the periods presented, all of the Company’s leases are accounted for as operating leases.

The Company elected to not recognize a lease liability or right-of-use (“ROU”) asset for leases with a term of twelve months or less. The Company's lease agreements may include lease and non-lease components, which are combined and accounted for as a single lease component. Certain lease agreements contain variable payments, which are excluded from the measurement of the operating lease right-of-use (“ROU”) assets and lease liabilities. Variable lease payments are expensed as incurred.

ROU assets represent the Company's right to use an underlying asset for the lease term and lease liabilities represent the Company's obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at commencement date, based on the present value of lease payments over the lease term.

As the Company’s leases do not generally provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The Company’s lease terms may include options to extend or terminate the lease. These options are included in the lease terms when it is reasonably certain they will be exercised.

The carrying amounts of ROU assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amounts of such assets may not be recoverable. There were no impairment charges during any of the periods presented.

The Company accounts for its contingent liabilities in accordance with ASC 450 “Contingencies”. A provision is recorded when it is probable that a liability has been incurred and the cost is reasonably estimable. When accruing these costs, the Company will recognize an accrual in the amount within a range of loss that is the best estimate within the range. When no amount within the range is a better estimate than any other amount, the Company accrues for the minimum amount within the range.

The Company recognizes gain contingencies when they are realized or when all related contingencies have been resolved.

As of December 31, 2023, and 2022, the Company is not a party to any litigation that could have a material adverse effect on the Company’s business, financial position, results of operations or cash flows.

Recently adopted accounting pronouncements

TWILL INC.

(formerly – Happify Inc.)

TWILL INC. FINANCIAL STATEMENTS

Recently issued accounting pronouncements

TWILL INC.

(formerly – Happify Inc.)

TWILL INC. FINANCIAL STATEMENTS

The composition of property and equipment, net is as follows:

Depreciation expenses for the year ended December 31, 2023, and 2022 amounted to $285 and $236, respectively.

The Company has entered into operating lease agreements, primarily for office facilities located in New York and Boston in the United States, as well as Latvia and Montenegro in the European Union.

The weighted-average remaining lease term and discount rate related to operating leases were as follows:

The components of lease expense as follows for the periods presented:

TWILL INC.

(formerly – Happify Inc.)

TWILL INC. FINANCIAL STATEMENTS

Cash payments related to operating lease liabilities for the years ended December 31, 2023, and 2022, were $1,217, and $1,064, respectively.

During 2023, the company terminated the Boston, Latvia and Montenegro operating lease agreement.

Deferred Revenue

The Company recognizes contract liabilities, or deferred revenues, when it receives advance payments from customers prior to the satisfaction of the Company's performance obligations. The balance of deferred revenues approximates the aggregate amount of the transaction price allocated to the unsatisfied performance obligations at the end of reporting period.

The following table presents the significant changes in the deferred revenue balance during the year ended December 31, 2023:

All of the Company’s revenues are generated in the US.

The PPP Loan

In April 2020, in light of the outbreak of the COVID-19 in the U.S. the Company received a loan in the amount of $888 (The "PPP") for which the Company was eligible under the Paycheck Protection Program instituted under the Coronavirus Aid, Relief, and Economic Security Act. The principal amount of the loan bears 0.98% interest which will be repaid with the principal at the lapse of 24 months from the funding date. During 2022 the company recorded interest expenses regarding the PPP of $12 and repaid $480 of principle. All outstanding principal and interest payable were fully repaid to the lender by the Company on April 20, 2022.

TWILL INC.

(formerly – Happify Inc.)

TWILL INC. FINANCIAL STATEMENTS

December 2020 Term-Loan

The Company elected to account for the December 2020 Term-Loan, under the fair value option in accordance with ASC 825, “Financial Instruments.” Under the fair value option, changes in fair value are recorded in earnings except for fair value adjustments related to instrument specific credit risk, which are recorded as other comprehensive income or loss. During the years ended December 31, 2023, and December 31, 2022, the Company recognized $8,809 and $1762, respectively of remeasurement expenses and $145 and $(3,131), respectively of instrument specific credit risk fair value adjustment related to the December 2020 Term-Loan.

June 2022 Term-Loan

In June 2022, the Company entered into an incremental term loan agreement (“the June 2022 Term-Loan”) in the amount of $5,000. The principal amount of the loan bears 12% interest payable in kind quarterly and will mature in September 2023. The Company shall have the right to prepay the loan, without penalty or premium, in whole or in part at any time; provided that, upon any such prepayment, Company shall pay all accrued and unpaid interest on the loan, subject to certain minimum interest requirements.

TWILL INC.

(formerly – Happify Inc.)

TWILL INC. FINANCIAL STATEMENTS

The Company elected to account for the June 2022 Term-Loan, under the fair value option in accordance with ASC 825, “Financial Instruments.” Under the fair value option, changes in fair value are recorded in earnings except for fair value adjustments related to instrument specific credit risk, which are recorded as other comprehensive income or loss. During the years ended December 31, 2023 and December 31, 2022, the Company recognized $1,451 and $885, respectively of remeasurement expenses and $420 and $0, respectively of instrument specific credit risk fair value adjustment related to the June 2022 Term-Loan.

March 2023 Bridge Loan

The Company elected to account for the March 2023 Bridge Loan, under the fair value option in accordance with ASC 825, “Financial Instruments.” Under the fair value option, changes in fair value are recorded in earnings except for fair value adjustments related to instrument specific credit risk, which are recorded as other comprehensive income or loss. During the year ended December 31, 2023, the Company recognized $336 of remeasurement expenses and $134 of instrument specific credit risk fair value adjustment related to the March 2023 Bridge Loan.

June 2023 Secured Loan

In June 2023, the Company entered into a First Lien Secured Term Loan (“the June 2023 Secured Loan”) in the amount of $15,500 with WhiteHawk Capital Partners, LP ("WhiteHawk"). The principal amount of the loan bears an interest rate equal to the SOFR rate plus 10% and will be payable at maturity. The principal amount and interest are payable in December 2023.

TWILL INC.

(formerly – Happify Inc.)

TWILL INC. FINANCIAL STATEMENTS

The Company elected to account for the June 2023 Secured Loan, under the fair value option in accordance with ASC 825, “Financial Instruments.” Under the fair value option, changes in fair value are recorded in earnings except for fair value adjustments related to instrument specific credit risk, which are recorded as other comprehensive income or loss. During the year ended December 31, 2023, the Company did not recognized remeasurement expenses related to the June 2023 Secured Loan. During the year ended December 31, 2023, the Company did not recognize any instrument specific credit risk fair value adjustment.

In August 2022, the Company entered into a convertible loan agreement (the “August 2022 CLA") for a total amount of $33,975 and subsequent closing for a total of $2,000. The convertible loans may be converted to Company's common stocks affected by occurrence of events as specified in the agreement. The principal amount of the loan bears 8% interest which will be repaid with the loan on the second annual anniversary of the initial closing or if several conditions are met. The Maturity Date shall be extended until the earlier of the date of the notes are either repaid by the Company or converted to Company's common stock, or the fourth annual anniversary of the initial closing. The CLA converts into preferred shares subject to five scenarios:

Post-Maturity Date Conversion:

In addition, in a liquidation event, the holders of the CLA will be able to choose to receive the number of shares as a result of the calculation described above or to receive the accrued interest and 1.5 times the principal amount in cash.

In November 2022, the Company entered into a subsequent closing for a total amount of $50. (the “November 2022 CLA"). The convertible loans may be converted to Company's common affected by occurrence of events as specified in the agreement.  The principal amount of the loan bears 8% interest which will be repaid with the loan on the second annual anniversary of the initial closing or if several conditions are met. The maturity date shall be extended until the earlier of the date of the notes are either repaid by the Company or converted to Company's common stock, or the fourth annual anniversary of the initial closing.

The Company determined that the convertible loans contained embedded derivatives that required bifurcation and separate accounting under ASC 815-15. The Company determined that the features in the convertible loans were not considered clearly and closely related to the host debt instrument and therefore required separate accounting. Under ASC 815-15, these features are bundled together and accounted for as a single, compound embedded derivative That embedded derivative is measured at any period end to its fair value with changes in fair value recognized in Financial expenses (income), net.

TWILL INC.

(formerly – Happify Inc.)

TWILL INC. FINANCIAL STATEMENTS

The embedded derivative liability is presented as part of the convertible loan liability.

The following tables present information about the Company’s financial assets and liabilities measured at fair value on a recurring basis and indicate the level of the fair value hierarchy used to determine such fair values:

During the years ended December 31, 2023, and 2022, the Company had no transfers in or out of Level 3 of the fair value hierarchy of its assets measured at fair value.

TWILL INC.

(formerly – Happify Inc.)

TWILL INC. FINANCIAL STATEMENTS

Term Loans and Warrants Liability

As discussed in Note 9, the Company has made an irrevocable election to account for the December 2020 Term-Loan, the June 2022 Term-Loan, the March 2023 Bridge Loan and the June 2023 Secured Loan, under the fair value option in accordance with ASC 825. As such, all of the outstanding loans as of December 31, 2023, are initially recorded as a liability at estimated fair value and are subject to re-measurement at each balance sheet date with changes in fair value recognized in the Company's consolidated statements of comprehensive loss.

The fair value of the loans was determined based on significant inputs not observable in the market, which represents a Level 3 measurement within the fair value hierarchy. The fair value measurement was done using discounted cash flow approach based on significant inputs that are generally determined, with breakdown of the changes in fair value to instrument specific credit risk and market changes.

The fair value of the loans was determined using a scenario-based discounted cash flow analysis. The Company estimated the probability and timing of the scenarios based on management’s assumptions and knowledge of specified events at issuance and as of each reporting date. The term loans are classified as Level 3 because of the Company’s reliance on unobservable assumptions.

The fair value of the warrant liability was estimated using a using Black-Scholes pricing model, with the following significant unobservable inputs (Level 3):

The inputs for the valuations of the loans were as follows:

December 2020 Term Loan

TWILL INC.

(formerly – Happify Inc.)

TWILL INC. FINANCIAL STATEMENTS

June 2022 Term Loan

March 2023 Bridge Loan

June 2023 Secured Loan

Convertible loan agreements

The Company bifurcated embedded derivatives which are required to be measured at fair value. The fair value of the embedded derivatives was determined based on significant inputs not observable in the market, which represents a Level 3 measurement within the fair value hierarchy. The fair value of the conversion features components on December 31, 2023, and 2022 was estimated using the Black-Scholes method to compute the fair value of the derivative and to market to market the fair value of the derivative.

The following are the data and assumptions used as of the balance sheet dates:

The fair value of the embedded derivatives components on December 31, 2023, and 2022 was estimated using the Black-Scholes model to compute the fair value of the derivative and to mark to market the fair value of the derivative. The derivative liability associated with the conversion features is related to conversion upon a Qualified Event as defined in the agreement.

TWILL INC.

(formerly – Happify Inc.)

TWILL INC. FINANCIAL STATEMENTS

TWILL INC.

(formerly – Happify Inc.)

TWILL INC. FINANCIAL STATEMENTS

Common stock confers upon its holders, pari passu, the right to receive notice of, and to participate in all general meetings of the Company, to vote in such meetings, to receive dividends and to participate in the distribution to the stockholders upon the occurrence of liquidation event, and such other rights under the Company's Certificate of Incorporation articles of association (the "COI").

Conversion Rights:

Each share of Preferred Stock shall be convertible, at the option of the holder thereof, at any time after the date of issuance of such share, at the office of this Company or any transfer agent for such stock, into such number of fully paid and non-assessable shares of Common Stock as is determined by the applicable Conversion Price associated with each class of preferred shares.

Voting Rights:

The holder of each share of Preferred Stock shall have the right to one vote for each share of Common Stock into which such Preferred Stock could then be converted, and with respect to such vote, such holder shall have full voting rights and powers equal to the voting rights and powers of the holders of Common Stock, and shall be entitled, notwithstanding any provision hereof, to notice of any stockholders’ meeting in accordance with the bylaws of this Company, and shall be entitled to vote, together with holders of Common Stock, with respect to any question upon which holders of Common Stock have the right to vote.

Holders of Series Seed Preferred Stock shall be entitled to elect one (1) member to the Board (the “Series Seed Director”);

Holders of Series A Preferred Stock, voting as a separate series, shall be entitled to elect one (1) member to the Board (the “Series A Director”);

Holders of the majority of the Series B Preferred Stock, Series B-1 Preferred Stock and Series B-2 Preferred Stock, voting together as a separate series, shall be entitled to elect one (1) member to the Board (the “Series B Director”);

Holders of the majority of the Series C Preferred Stock, voting as a separate series, shall be entitled to elect one (1) member to the Board (the “Series C Director”);

Holders of record of a majority of the outstanding shares Common Stock and Preferred Stock, voting together as a single class and on an as converted basis, shall be entitled to elect one (1) member to the Board, who will have industry expertise relevant to the Company (the “Independent Director”). The Independent Director shall serve as Chairman of the Board.

TWILL INC.

(formerly – Happify Inc.)

TWILL INC. FINANCIAL STATEMENTS

Liquidation Preference

Upon any liquidation, dissolution, winding up of the Company or realization event, the holders of shares of Series D Preferred Stock and Series D-1 Preferred Stock then outstanding, shall be entitled, pari passu among them to receive, prior and in preference to any distribution of any of the assets as defined in the Company’s bylaws (“Series D/D-1 Preference Amount”).

Following the payment in full of the Series D/D-1 Preference Amount, the holders of shares of Series C Prime Preferred Stock, Series C-1 Prime Preferred Stock and Series C-2 Prime Preferred Stock then outstanding, shall be entitled, pari passu among them to receive, prior and in preference to any distribution of any of the assets as defined in the Company’s bylaws (“Series C Prime Preference Amount”).

Following the payment in full of the Series D/D-1 Preference Amount and the Series C Prime Preference Amount, the holders of the Series B Preferred Stock, Series B-1 Preferred Stock and B-2 Preferred Stock, shall be entitled, pari passu among them to receive, prior and in preference to any distribution of any of the assets as defined in the Company’s bylaws (“Series B Preference Amount”).

Following the payment in full of the Series D/D-1 Preference Amount, the Series C Prime Preference Amount and the Series B Preference Amount, the holders of the Series A Preferred Stock, shall be entitled, pari passu among them to receive, prior and in preference to any distribution of any of the assets as defined in the Company’s bylaws (“Series A Preference Amount”).

Following the payment in full of the Series D/D-1 Preference Amount, the Series C Prime Preference Amount, the Series B Preference Amount and the Series A Preference Amount, the holders of the Series Seed Prime Preferred Stock, shall be entitled to receive, prior and in preference to any distribution of any of the assets as defined in the Company’s bylaws (“Series Seed Prime Preference Amount”).

Following the payment in full of the Series D/D-1 Preference Amount, the Series C Prime Preference Amount, the Series B Preference Amount the Series A Preference Amount and the Series Seed Prime Preference Amount, the holders of the Series Seed Preferred Stock, shall be entitled to receive, prior and in preference to any distribution of any of the assets as defined in the Company’s bylaws (“Series Seed Preference Amount”).

Dividend Rights

The holders of preferred shares stock shall not be entitled to receive dividends provided, however, that in the event that the Company declares or pays any dividend upon the Common Stock, the Company shall also declare and pay to the holders of Preferred stock, at the same time that it declares and pays such dividend to holders Of Common stock issuable upon conversion of the Preferred stock had all the outstanding shares of preferred stock been converted immediately prior to record date for such dividend, or if no record date is fixed, the date as of which the record holders of Common stock entitled to such dividends are to be determined.

Balance Sheet Classification

The deemed liquidation preference provisions of the convertible preferred shares are considered contingent redemption provisions that are not solely within the Company’s control. Accordingly, the convertible preferred shares have been presented outside of permanent equity in the temporary equity (mezzanine) section of the consolidated financial statements.

TWILL INC.

(formerly – Happify Inc.)

TWILL INC. FINANCIAL STATEMENTS

On February 17, 2012, the Board of Directors approved the Company's Stock Option Plan. Under the Plan, options to purchase Common stock may be granted to employees, consultants and directors of the Company. As of December 31, 2023, the Company reserved for issuance 15,292,385 shares of Common Stock. Options that will be granted under the Plan will expire no later than 10 years from the date of adoption of the Option Plan, and unvested Options will terminate upon termination of the optionee's employment or other relationship with the Company. The options vest over a four-year period (unless otherwise determined by the Board for specific option grants). Each option granted can be exercised to purchase one share of Common stock of the Company. Immediately upon allotment, the share of Common Stock purchased by exercising the options will have the same rights as the Company's Common Stock.

On April 28, 2022, the Company fully adopted the Israeli Sub Plan, forming an integral part of the Plan.

Any options that are canceled or not exercised within the options period become available for future grant.

The Company recognized share-based compensation expense related to employees’ share options in the consolidated statements of operations for the years ended December 31, 2023 and 2012, as follows:

TWILL INC.

(formerly – Happify Inc.)

TWILL INC. FINANCIAL STATEMENTS

The following table summarizes all option award activity for the year ended December 31, 2023:

The weighted average grant-date fair value of options granted during the years 2023 and 2022 was $1.92 and $1.25, respectively.

The following assumptions were used to determine the fair value of all option awards granted for the periods presented:

As of December 31, 2023, there was a total of $1.8 million in unrecognized compensation cost related to unvested option awards, which is expected to be recognized over a weighted-average period of 0.86 year.

1)      Restricted Stock Units:

In March 2019, the Company granted 847,368 restricted stock units that are vested upon achievements of performance conditions which are not probable as of December 31, 2023.

TWILL INC.

(formerly – Happify Inc.)

TWILL INC. FINANCIAL STATEMENTS

The Company's outstanding options as of December 31, 2023, are as follows:

The Company and its subsidiaries are separately taxed under the domestic tax laws of the country of incorporation of each entity.

Tax rates applicable:

The Corporate tax rate in USA in 2022 and 2023 was 21%

The Corporate tax rate in Israel in 2022 and 2023 was 23%

The Corporate tax rate in Montenegro in 2022 and 2023 was 9% for the first 100,000 EUR followed by 12%)

The Corporate tax rate in Latvia in 2022 and 223 was 20% for the first 20,004 EUR followed by 23%

TWILL INC.

(formerly – Happify Inc.)

TWILL INC. FINANCIAL STATEMENTS

Tax Reform

On December 22, 2017, the U.S. Tax Cuts and Jobs Act of 2017 (the “TCJA”) was signed into law. The TCJA makes broad and complex changes to the Internal Revenue Code of 1986 (the “Code”) that may impact the Company’s provision for income taxes. The changes include, but are not limited to:

Net Operating Losses- Before the TCJA, taxable losses generated in the U.S. were able to be carried back for two years or carried forward for 20 years to offset prior/future year taxable income. TCJA changes the rule, and allows losses generated after 2017 (i.e. starting in 2018) to be carried forward indefinitely, but only to offset 80% of future year income. Carryback losses are no longer allowed.

In response to the COVID-19 pandemic, the U.S. passed the Coronavirus Aid, Relief, and Economic Security Act (CARES) in March 2020. The CARES Act changed the treatment of net operating losses (“NOLS”) generated in tax years 2018, 2019 and 2020. Losses generated in these years are able to be carried backward for 5 years, and carried forward indefinitely, without the 80% limitation.

TWILL INC.

(formerly – Happify Inc.)

TWILL INC. FINANCIAL STATEMENTS

Income (loss) before taxes on income was comprised as follows:

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets are as follows:

A valuation allowance is provided when it is more likely than not that the deferred tax assets will not be realized. The Company has established a valuation allowance to offset certain deferred tax assets on December 31, 2023 and 2022, due to the uncertainty of realizing future tax benefits from its net operating loss carryforwards and other deferred tax assets.

The net change in the total valuation allowance for the year ended December 31, 2023, was a decrease $11,032 and is mainly related to decrease in deferred taxes on net operating loss for which a full valuation allowance was recorded.

In 2023 and 2022 the main reconciling item for the Company’s tax rate is tax loss carryforwards and temporary differences, for which a valuation allowance was provided.

Net operating loss carryforward:

As of December 31, 2023, the Company has an accumulated tax loss carryforward of approximately $157,169 from the 2023 tax year. These tax losses in the U.S. can be carried forward and offset against taxable income in the future. Accumulated losses before 2018 expire between 2026-2032, while losses from 2018 forward carryforward indefinitely.

The related party transaction relates to loans from shareholder which provided the Company Term Loan and Convertible loan (see note 8)

TWILL INC.

(formerly – Happify Inc.)

TWILL INC. FINANCIAL STATEMENTS

Exhibit 99.2

DARIOHEALTH CORP.

Unaudited Pro Forma Condensed Combined Financial Information

Introduction

On February 15, 2024 (the “Closing Date”, "Effective Time"), DarioHealth Corp., (the “Parent”, “Company”, "Dario"), TWILL Merger Sub, Inc. (“Merger Sub”), Twill, Inc. (“Twill”) and Bilal Khan, solely in his capacity as the representatives of Twill’s stockholders and other equity holders, entered into an Agreement and Plan of Merger (the “Merger Agreement” or "Agreement"). Pursuant to the provisions of the Merger Agreement, Parent, Merger Sub and Twill intend to affect a business combination through the merger of Merger Sub with and into Twill (the “Merger”), with Twill continuing as the surviving corporation (also the "Surviving Corporation") in the Merger.

Pursuant to the terms of the Merger Agreement, at the Effective Time, each share of capital stock of Merger Sub issued and outstanding immediately prior to the Effective Time was converted into the right to receive and become one validly issued, fully paid and non-assessable share of common stock, par value $0.00001 per share, of the Surviving Corporation, and such converted shares constitute the only outstanding shares of capital stock of the Surviving Corporation. Each share of Twill capital stock held in Twill's treasury or owned by Twill immediately prior to the effective time was automatically cancelled and ceased to exist and no consideration was delivered in exchange therefor. No Twill's warrant was assumed by Parent in connection with the Merger and they are all cancelled.

Pursuant to the terms of the Merger Agreement, on the Closing Date, the Company paid to Twill’s debt holders and equity holders aggregate consideration (“Merger 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 common stock, par value $0.0001 per share (the “Common Stock”), issuable to a trust (the “Trust”) formed for the benefit of certain equity and debt holders of Twill, issuable in 4 equal tranches.

Pursuant to the terms of the Merger Agreement, the Company has also agreed to appoint a new member to its board of directors, nominated by Twill equity holders and subject to such nominee being acceptable to the Company, within 90 days following the closing of the Merger. Such appointment right shall continue until the earlier of 540 days following the closing of the Merger, or the date which the Trust exercises its third tranche of Pre-Funded Warrants.

On the Closing Date, the Company issued (i) to employees of Twill, as an inducement to their employment with the Company and the Surviving Corporation stock options to purchase up to 2,963,459 shares of Common Stock with an exercise price of $2.55 per share; and (ii) a combination of warrants and restricted stock units (“RSUs”) to acquire up to 1,766,508 shares of Common Stock issued to certain outgoing board members, consultants and outgoing officers of Twill

The following unaudited pro forma condensed combined financial information has been prepared in accordance with Article 11 of Regulation S-X as amended by the final rule, Release 33-10786, “Amendments to Financial Disclosures about Acquired and Disposed Businesses.”

The unaudited pro forma condensed combined balance sheet as of December 31, 2023, gives effect to the Merger as if it had been completed as of December 31, 2023, and combines the condensed consolidated balance sheet of Dario as of December 31, 2023, with the condensed balance sheet of Twill as of December 31, 2023.

The unaudited pro forma condensed combined statements of comprehensive income (loss) for the year ended December 31, 2023, give effect to the Merger as if it had occurred on January 1, 2023. The unaudited pro forma condensed combined statements of comprehensive income (loss) for the fiscal year ended December 31, 2023, combines the consolidated statement of comprehensive income (loss) of Dario for the year ended December 31, 2023, and Twill's statement of operations for the year ended December 31, 2023.

The historical financial statements of Dario and Twill have been adjusted in the accompanying unaudited pro forma condensed combined financial information to give effect to pro forma transaction accounting adjustments. The unaudited pro forma adjustments are based upon available information and certain assumptions that Dario's management believes are reasonable.

It should be noted that there have been no material transactions between Dario and Twill prior to and during the periods presented in the unaudited pro forma condensed combined financial statements. In addition, these statements do not reflect any cost or growth synergies that the combined company may achieve as a result of the Merger Agreement, or the costs to combine the operations of Dario and Twill.

The unaudited pro forma condensed combined financial information and the accompanying notes are provided for informational and illustrative purposes only and should be read in conjunction with the following:

The unaudited pro forma condensed combined financial information does not purport to project the future financial condition and results of operations of the Company. The actual results of the Company may differ significantly from those reflected in the unaudited pro forma condensed combined financial information.

The unaudited pro forma condensed combined financial information has been prepared solely for informational purposes. Information regarding these pro forma adjustments is subject to risks and uncertainties that could cause actual results to differ materially from our unaudited pro forma condensed combined financial information. As a result, the unaudited pro forma condensed combined financial information is not intended to represent and does not purport to be indicative of what the combined company financial condition or results of operations would have been had the Merger and other adjustments related to the Merger occurred at an earlier date or on the dates assumed.

Unaudited Pro Forma Condensed Combined Balance Sheet
As of December 31, 2023
(USD In thousands)

Unaudited Pro Forma Condensed Combined Balance Sheet
As of December 31, 2023
(USD In thousands)

*) Represent an amount lower than $1.

Unaudited Pro Forma Condensed Combined Statement of Comprehensive gain (loss)

For the Year Ended December 31, 2023

(USD In thousands, except share and per share amounts)