As of December 31, 2020, the Company’s ownership in Onegevity Health, LLC (Onegevity) was approximately 50%. Since Onegevity’s inception in 2018, the Company determined that it had been the primary beneficiary of Onegevity, and has accordingly, consolidated the assets and liabilities of Onegevity in accordance with ASC 810, Consolidations (ASC 810).

During the first quarter of 2021, the Company merged with Onegevity. As part of the merger, the legal entity Onegevity Health, LLC was dissolved; its wholly owned subsidiary, Health Elements, LLC (Health Elements), became a wholly owned subsidiary of the Company.

To effect the merger, the Company issued 6,179,270 shares of Class B common stock, 472,590 which were subject to time-based restrictions, to the minority shareholders of Onegevity, plus an additional 1,959,335 stock options with various strike prices to key managers of Onegevity who had stock options in Onegevity in a tax-free exchange. No cash was involved in the transaction. The shares of Class B common stock did not have voting rights among other restrictions. Immediately prior to the completion of the Company’s IPO on September 22, 2021, all outstanding shares of the Class B common stock automatically converted on a one-to-one basis into shares of common stock. As of December 31, 2021, there were no shares of Class B common stock outstanding.

The merger did not lead to a change in control and therefore the transaction was recorded in the equity section of the Company’s balance sheet.

On April 26, 2021, the Company entered into a merger agreement (the Merger Agreement) with Drawbridge Health, Inc. (Drawbridge), to acquire the majority of the outstanding shares of Drawbridge, a healthcare technology company (the Drawbridge Transaction). Prior to the merger, the Company owned approximately 11.2% of the outstanding shares of Drawbridge and accounted for its investment in Drawbridge as an equity-method investment, because the Company determined it had significant influence over Drawbridge. The Company’s net equity investment was approximately $3.2 million as of March 31, 2021. Under the Merger Agreement, the Company increased its ownership of Drawbridge by 76.3 percentage points to a total ownership of 87.5%. The Merger Agreement calls for the payment of approximately $1.4 million in cash and the assumption of certain liabilities of Drawbridge.

The Drawbridge Transaction was accounted for as an asset acquisition because the Company concluded the assets acquired and liabilities assumed did not constitute a business under ASC 805, Business Combinations (ASC 805). The Company performed a reassessment of Drawbridge as a variable interest entity under ASC 810, and concluded Drawbridge to be a variable interest entity as of the date of the transaction. Furthermore, the Company determined it was the primary beneficiary of Drawbridge as of the transaction date. Accordingly, the Drawbridge Transaction was accounted for as an asset acquisition under ASC 810, rather than under ASC 805. Under ASC 810, the Company is required to recognize a gain (loss) on the acquisition, equal to the sum of the consideration paid, the carrying value of the existing equity-method investment, and the fair value of the resulting non-controlling interest less the fair value of the net assets acquired. The Company concluded the carrying value of the Company’s existing Drawbridge investment of approximately $3.2 million was impaired in the second quarter of 2021 prior to the transaction and recorded a loss from equity interest in unconsolidated affiliates of approximately $3.0 million within the consolidated statements of operations for the year ended December 31, 2021. Additionally, a loss on the Drawbridge Transaction of approximately $0.2 million was recorded during the year ended December 31, 2021 within other (income) expense in the consolidated statements of operations. The net tangible and intangible assets acquired, and liabilities assumed, in connection with the Drawbridge Transaction were recorded based on their fair values as of the acquisition date and the value associated with in-process research and development was expensed because it was determined to have no alternative future use. The in-process research and development costs of approximately $1.6 million are recorded as an operating expense on the consolidated statement of operations. Subsequent to the acquisition, the operations of Drawbridge were fully consolidated in the Company’s consolidated financial statements, and a non-controlling interest of approximately $0.2 million was recorded for the 12.5% equity interest held by other investors.

The assets and liabilities acquired based on their fair value were as follows:


Cash	$	11,823
Accounts receivable		8,686
Prepaid expenses and other current assets		711,389
Inventories		10,051
Property and equipment		914,716
Operating lease right-of-use asset		410,732
Intangible asset consisting of in process research and development		1,563,015
Other assets		22,782
Accounts payable		(701,242	)
Other accrued expenses		(864,483	)
Current portion of operating lease obligations		(263,509	)
Long term operating lease, net of current portion		(147,223	)
Net assets acquired	$	1,676,737
Less: non-controlling interest		(209,592	)
Net assets acquired by Thorne HealthTech, Inc.	$	1,467,145