# EDGAR Filing Document

**Accession Number:** 0001835567
**File Stem:** 0001835567-23-000018
**Filing Date:** 2023-3
**Character Count:** 854728
**Document Hash:** 50643aff64d5e2aebd6979cbd58fbb80
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001835567-23-000018.hdr.sgml**: 20230331

**ACCESSION NUMBER**: 0001835567-23-000018

**CONFORMED SUBMISSION TYPE**: 10-K

**PUBLIC DOCUMENT COUNT**: 111

**CONFORMED PERIOD OF REPORT**: 20221231

**FILED AS OF DATE**: 20230331

**DATE AS OF CHANGE**: 20230331

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** Pear Therapeutics, Inc.
- **CENTRAL INDEX KEY:** 0001835567
- **STANDARD INDUSTRIAL CLASSIFICATION:** SERVICES-HEALTH SERVICES [8000]
- **IRS NUMBER:** 854103092
- **STATE OF INCORPORATION:** DE
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 10-K
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-39969
- **FILM NUMBER:** 23787353

**BUSINESS ADDRESS:**
- **STREET 1:** 200 STATE STREET
- **STREET 2:** 13TH FLOOR
- **CITY:** BOSTON
- **STATE:** MA
- **ZIP:** 02109
- **BUSINESS PHONE:** 6469322774

**MAIL ADDRESS:**
- **STREET 1:** 200 STATE STREET
- **STREET 2:** 13TH FLOOR
- **CITY:** BOSTON
- **STATE:** MA
- **ZIP:** 02109

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** Thimble Point Acquisition Corp.
- **DATE OF NAME CHANGE:** 20201208

?xml version="1.0" ? pear-20221231

**UNITED STATES** 

**SECURITIES AND EXCHANGE COMMISSION** 

**Washington, D.C. 20549** 

**FORM 10-K**

(Mark One)

**☒** **ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934** For the fiscal year ended December 31, 2022

**OR**

**☐** **TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**

Commission File Number: **001-39969**![pear-20221231_g1.jpg](pear-20221231_g1.jpg)

**Pear Therapeutics, Inc.** 

**(Exact name of Registrant as specified in its charter)** 

---

| | | |
|:---|:---|:---|
| | **200 State Street, 13th Floor** | |
| | **Boston, MA 02109** | |
| **Delaware** | **(617) 925-7848** | **85-4103092** |
| (State or other jurisdiction of<br>incorporation or organization) | (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) | (I.R.S. Employer<br>Identification No.) |

---

Securities registered pursuant to Section 12(b) of the Act:

---

| | | |
|:---|:---|:---|
| Title of Each Class | Trading Symbol(s) | Name of Each Exchange on Which Registered |
| **Class A common stock, <br>par value $0.0001 per share** | **PEAR** | **The Nasdaq Stock Market LLC** |
| **Warrants, each exercisable for one share of Class A common stock for $11.50 per share** | **PEARW** | **The Nasdaq Stock Market LLC** |

---

Securities registered pursuant to section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

---

| | | | |
|:---|:---|:---|:---|
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| Non-accelerated filer | ☒ | Smaller reporting company | ☒ |
| | | Emerging growth company | ☒ |

---

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒ The aggregate market value of the voting common shares held by non-affiliates of the registrant was approximately $126.8 million, computed by reference to the closing sale price of the Class A common stock as reported by the Nasdaq Capital Market on June 30, 2022, the last trading day of the registrant's most recently completed second fiscal quarter. The Company has no non-voting common shares.

The number of shares of the registrant's Class A common stock outstanding as of March 30, 2023 was 142,739,169.

------

**DOCUMENTS INCORPORATED BY REFERENCE**

Certain information required to be provided in Part III of this Annual Report on Form 10-K will be provided by a Definitive Proxy Statement for our 2023 Annual Meeting of Stockholders (the "Proxy Statement") to be filed with the Securities and Exchange Commission on or before May 1, 2023.

------

**Pear Therapeutics, Inc.**

**Form 10-K**

**For the Year Ended December 31, 2022**

**TABLE OF CONTENTS** 

---

| | | |
|:---|:---|:---|
| | | **Page** |
| | <u>[Cautionary](#i314e5111d658400ab7dce73a0dda6c41_190)[Statement](#i314e5111d658400ab7dce73a0dda6c41_190)[and Cautionary](#i314e5111d658400ab7dce73a0dda6c41_190)[Note Regarding Forward-Looking Statements](#i314e5111d658400ab7dce73a0dda6c41_190)</u> | [2](#i314e5111d658400ab7dce73a0dda6c41_190) |
| | **PART I** | |
| <u>[Item 1](#i314e5111d658400ab7dce73a0dda6c41_193)</u> | <u>[Business](#i314e5111d658400ab7dce73a0dda6c41_193)</u> | [5](#i314e5111d658400ab7dce73a0dda6c41_193) |
| <u>[Item](#i314e5111d658400ab7dce73a0dda6c41_142)[1A](#i314e5111d658400ab7dce73a0dda6c41_142)</u> | <u>[Risk Factors](#i314e5111d658400ab7dce73a0dda6c41_142)</u> | [52](#i314e5111d658400ab7dce73a0dda6c41_142) |
| <u>[Item](#i314e5111d658400ab7dce73a0dda6c41_238)[1B](#i314e5111d658400ab7dce73a0dda6c41_238)</u> | <u>[Unresolved Staff Comments](#i314e5111d658400ab7dce73a0dda6c41_238)</u> | [105](#i314e5111d658400ab7dce73a0dda6c41_238) |
| <u>[Item](#i314e5111d658400ab7dce73a0dda6c41_241)[2](#i314e5111d658400ab7dce73a0dda6c41_241)</u> | <u>[Properties](#i314e5111d658400ab7dce73a0dda6c41_241)</u> | [105](#i314e5111d658400ab7dce73a0dda6c41_241) |
| <u>[Item 3](#i314e5111d658400ab7dce73a0dda6c41_139)</u> | <u>[Legal Proceedings](#i314e5111d658400ab7dce73a0dda6c41_139)</u> | [105](#i314e5111d658400ab7dce73a0dda6c41_139) |
| <u>[Item](#i314e5111d658400ab7dce73a0dda6c41_175)[4](#i314e5111d658400ab7dce73a0dda6c41_175)</u> | <u>[Mine Safety Disclosures](#i314e5111d658400ab7dce73a0dda6c41_175)</u> | [105](#i314e5111d658400ab7dce73a0dda6c41_175) |
|  | **PART II** |  |
| <u>[Item](#i314e5111d658400ab7dce73a0dda6c41_244)[5](#i314e5111d658400ab7dce73a0dda6c41_244)</u> | <u>[Market for Registrant's Common Equity, Related Shareholder Matters, and Issuer Purchases of Equity Securities](#i314e5111d658400ab7dce73a0dda6c41_244)</u> | [106](#i314e5111d658400ab7dce73a0dda6c41_244) |
| <u>[Item](#i314e5111d658400ab7dce73a0dda6c41_247)[6](#i314e5111d658400ab7dce73a0dda6c41_247)</u> | <u>[Select Financial Data](#i314e5111d658400ab7dce73a0dda6c41_247)</u> | [106](#i314e5111d658400ab7dce73a0dda6c41_247) |
| <u>[Item](#i314e5111d658400ab7dce73a0dda6c41_91)[7](#i314e5111d658400ab7dce73a0dda6c41_91)</u> | <u>[Management's Discussion and Analysis of Financial Condition and Results of Operations](#i314e5111d658400ab7dce73a0dda6c41_91)</u> | [107](#i314e5111d658400ab7dce73a0dda6c41_91) |
| <u>[Item](#i314e5111d658400ab7dce73a0dda6c41_130)[7A](#i314e5111d658400ab7dce73a0dda6c41_130)</u> | <u>[Quantitative and Qualitative Disclosures About Market Risk](#i314e5111d658400ab7dce73a0dda6c41_130)</u> | [123](#i314e5111d658400ab7dce73a0dda6c41_130) |
| <u>[Item](#i314e5111d658400ab7dce73a0dda6c41_250)[8](#i314e5111d658400ab7dce73a0dda6c41_250)</u> | <u>[Financial Statements and Supplemental Data](#i314e5111d658400ab7dce73a0dda6c41_250)</u> | [124](#i314e5111d658400ab7dce73a0dda6c41_250) |
| <u>[Item 9](#i314e5111d658400ab7dce73a0dda6c41_265)</u> | <u>[Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](#i314e5111d658400ab7dce73a0dda6c41_265)</u> | [164](#i314e5111d658400ab7dce73a0dda6c41_265) |
| <u>[Item 9A](#i314e5111d658400ab7dce73a0dda6c41_133)</u> | <u>[Controls and Procedures](#i314e5111d658400ab7dce73a0dda6c41_133)</u> | [164](#i314e5111d658400ab7dce73a0dda6c41_133) |
| <u>[Item 9B](#i314e5111d658400ab7dce73a0dda6c41_268)</u> | <u>[Other Information](#i314e5111d658400ab7dce73a0dda6c41_268)</u> | [166](#i314e5111d658400ab7dce73a0dda6c41_268) |
|  | **PART III** |  |
| <u>[Item 10](#i314e5111d658400ab7dce73a0dda6c41_277)</u> | <u>[Directors, Offices, and Corporate Governance](#i314e5111d658400ab7dce73a0dda6c41_277)</u> | [167](#i314e5111d658400ab7dce73a0dda6c41_277) |
| <u>[Item 11](#i314e5111d658400ab7dce73a0dda6c41_295)</u> | <u>[Executive Compensation](#i314e5111d658400ab7dce73a0dda6c41_295)</u> | [167](#i314e5111d658400ab7dce73a0dda6c41_295) |
| <u>[Item 12](#i314e5111d658400ab7dce73a0dda6c41_313)</u> | <u>[Security Ownership of Certain Beneficial Owners and Management and Related Stockholders Matters](#i314e5111d658400ab7dce73a0dda6c41_313)</u> | [167](#i314e5111d658400ab7dce73a0dda6c41_313) |
| <u>[Item 13](#i314e5111d658400ab7dce73a0dda6c41_322)</u> | <u>[Certain Relationships and Related Transactions and Director Independence](#i314e5111d658400ab7dce73a0dda6c41_322)</u> | [167](#i314e5111d658400ab7dce73a0dda6c41_322) |
| <u>[Item 14](#i314e5111d658400ab7dce73a0dda6c41_331)</u> | <u>[Principal Accountant Fees and Services](#i314e5111d658400ab7dce73a0dda6c41_331)</u> | [167](#i314e5111d658400ab7dce73a0dda6c41_331) |
|  | **PART IV** |  |
| <u>[Item 15](#i314e5111d658400ab7dce73a0dda6c41_337)</u> | <u>[Exhibits and Financial Statement Schedules](#i314e5111d658400ab7dce73a0dda6c41_337)</u> | [168](#i314e5111d658400ab7dce73a0dda6c41_337) |
| <u>[Item 16](#i314e5111d658400ab7dce73a0dda6c41_340)</u> | <u>[Form 10-K Summary](#i314e5111d658400ab7dce73a0dda6c41_340)</u> | [172](#i314e5111d658400ab7dce73a0dda6c41_340) |
|  | <u>[Signatures](#i314e5111d658400ab7dce73a0dda6c41_184)</u> | [173](#i314e5111d658400ab7dce73a0dda6c41_184) |

---

References throughout this Form 10-K to "we," "us," the "Company," "Pear," or "our company" are to Pear Therapeutics, Inc. and its consolidated subsidiaries, and "Legacy Pear" refers to Pear Therapeutics (US), Inc. and its consolidated subsidiary prior to the business combination that we consummated with Thimble Point Acquisition Corp. on December 3, 2021, unless otherwise noted or the context otherwise indicates.

This document contains references to trademarks, trade names, and service marks belonging to other entities. Solely for convenience, trademarks, trade names, and service marks referred to in this Annual Report on Form 10-K may appear without the® or TM symbols, but such references are not intended to indicate, in any way, that the applicable licensor will not assert, to the fullest extent under applicable law, its rights to these trademarks and trade names. We do not intend our use or display of other companies' trade names, trademarks, or service marks to imply a relationship with, or endorsement or sponsorship of us by, any other company.

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 1

------

**CAUTIONARY STATEMENT**

In February 2023, we initiated a process to explore a range of strategic alternatives to maximize shareholder value. The Company has engaged MTS Health Partners, L.P. to act as the Company's exclusive investment banker to assist in evaluating potential alternatives. Potential strategic alternatives that may be evaluated include a sale or merger of the Company, the sale of all or a portion of the Company's assets and/or intellectual property, or securing additional financing or partnerships that would enable further development of our programs. There is no set timetable for this process and there can be no assurance that this process will result in the Company pursuing a transaction or that any transaction, if pursued, will be completed on attractive terms. Additionally, there can be no assurances that any particular course of action, business arrangement or transaction, or series of transactions, will be pursued, successfully consummated, or lead to increased stockholder value. If the strategic process is unsuccessful, our Board may decide to pursue a liquidation or obtain relief under the US Bankruptcy Code. The Company has hired advisors to explore strategic alternatives including, if needed, filing for bankruptcy protection. In the event of such liquidation, bankruptcy case, or other wind-down event, holders of our securities will likely suffer a total loss of their investment.

As of the date of this filing, Perceptive Credit Holdings III, LP, as administrative agent and lender ("<u>Perceptive</u>") has alleged that certain defaults or events of default have occurred and are continuing under the terms of our secured Amended and Restated Credit Agreement and Guaranty with Perceptive Credit Holdings III, LP, ("<u>Perceptive Credit Facility</u>"). Perceptive has not delivered any formal notice of Default or Event of Default. To the extent that any such allegations are valid, Perceptive would have certain rights and remedies under the Perceptive Credit Facility. The Company disputes the allegations and is in discussions with Perceptive to resolve this dispute and otherwise to address the Company's obligations under the Perceptive Credit Facility. There can be no assurances that such discussions will result in any resolution, and any resolution, or the lack of any resolution, may result in Perceptive exercising remedies under the Perceptive Credit Facility.

**Pear Therapeutics, Inc. cautions that trading in the Company's securities is highly speculative and poses substantial risks. Trading prices for the Company's securities may bear little or no relationship to the actual value realized, if any, by holders of the Company's securities. Accordingly, the Company urges extreme caution with respect to existing and future investments in its securities.**

**CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS**

This Annual Report on Form 10-K ("<u>Form 10-K</u>") contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, that involve risks and uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. Many of the forward-looking statements are located in Part II, Item 7 of this Form 10-K under the heading "*Management's Discussion and Analysis of Financial Condition and Results of Operations*." Forward-looking statements provide current expectations of future events based on certain assumptions and include any statement that does not directly relate to any historical or current fact. These risks and uncertainties include, but are not limited to, those factors described under the heading "*Risk Factors*". The risks described under the heading "*Risk Factors*" are not exhaustive. Forward-looking statements can also be identified by words such as "future," "anticipates," "believes," "estimates," "expects," "intends," "plans," "predicts," "will," "would," "could," "can," "may," and similar terms. Forward-looking statements are not guarantees of future performance and the Company's actual results may differ significantly from the results discussed in the forward-looking statements. Factors that might cause such differences include, but are not limited to, those discussed in Part I, Item 1A of this Form 10-K under the heading "*Risk Factors*." New risk factors emerge from time to time and it is not possible to predict all such risk factors, nor can we assess the impact of all such risk factors on our business or the extent to which any factor or combination of factors may cause actual results to differ materially from those contained in any forward-looking statements. Such forward-looking statements involve various risks and uncertainties that could cause actual outcomes or results to differ materially from those indicated in these statements. Forward-looking statements in this Form 10-K include, but are not limited to, statements about:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;▪ plans and expectations for the outcome of strategic alternatives, expectations regarding our strategic alternative review process, and the timing and success of such process regarding a potential transaction;

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 2

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;▪ beliefs about our available options and financial condition;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;▪ our ability to fund our planned operations for the next twelve months and our ability to continue as a going concern;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;▪ expectations that our cash will be sufficient to fund our operating expenses into the future;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;▪ estimates for our expenses and capital requirements; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;▪ our expectations regarding our ability to maintain the listing of our common stock on the National Association of Securities Dealers Automated Quotations ("<u>Nasdaq</u>") Capital Market.

All of our forward-looking statements are as of the date of this Form 10-K only. In each case, actual results may differ materially from such forward-looking information. We can give no assurance that such expectations or forward-looking statements will prove to be correct. An occurrence of or any material adverse change in one or more of the risk factors or risks and uncertainties referred to in this Form 10-K or included in our other public disclosures or our other periodic reports or other documents or filings filed with or furnished to the Securities and Exchange Commission (the "<u>SEC</u>"), could materially and adversely affect our business, prospects, financial condition, and results of operations. Therefore, you should not place undue reliance on forward-looking statements. Any public statements or disclosures by us following this Form 10-K that modify or impact any of the forward-looking statements contained in this Form 10-K will be deemed to modify or supersede such statements in this Form 10-K.

Except as required by law, we do not intend to update or change any forward-looking statements as a result of new information, future events, or otherwise.

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 3

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

**PART I**

**BASIS OF PRESENTATION**

*References throughout this Form 10-K to "we," "us," the "Company," "Pear" or "our company" are to Pear Therapeutics, Inc. (formerly known as Thimble Point Acquisition Corp.), and "Legacy Pear" refers to Pear Therapeutics (US), Inc. prior to the Business Combination, unless otherwise noted or the context otherwise indicates.* 

On December 3, 2021 (the "<u>Closing</u>"), we consummated a business combination, (the "<u>Business Combination</u>"), pursuant to the terms of the business combination agreement ("<u>Business Combination Agreement</u>"), dated June 21, 2021, by and among the Company (formerly known as Thimble Point Acquisition Corp., or "<u>THMA</u>"), Pear Therapeutics (US), Inc., a Delaware corporation incorporated on August 14, 2013 ("<u>Pear US</u>") (formerly known as Pear Therapeutics, Inc.) and Oz Merger Sub, Inc., pursuant to which Oz Merger Sub., Inc. (a Delaware corporation and wholly-owned subsidiary of THMA, or "<u>Merger Sub</u>") merged with and into Pear US, with Pear US surviving as our wholly owned subsidiary. Upon the closing of the Business Combination, THMA changed its name to Pear Therapeutics, Inc. ("<u>Pear</u>" or the "<u>Company</u>").

Pursuant to the terms of the Business Combination Agreement, each share of Legacy Pear common stock, par value $0.0001 per share ("<u>Legacy Pear Common Shares</u>") issued and outstanding immediately prior to the Closing, after giving effect to the conversion of all issued and outstanding shares of Legacy Pear preferred stock, par value $0.0001 per share ("<u>Legacy Pear Preferred Shares</u>") to Legacy Pear Common Shares, were canceled and converted into the right to receive a number of shares of Class A common stock, par value $0.0001 per share of the Company ("<u>Class A common stock</u>") equal to the number of shares of Legacy Pear Common Shares multiplied by the exchange ratio of approximately 1.47. In addition, all outstanding equity awards of Legacy Pear were converted into equity awards with the option to purchase Class A common stock with the same terms and conditions adjusted by the exchange ratio of approximately 1.47.

Legacy Pear is deemed the accounting predecessor and the post-company successor SEC registrant, which means Legacy Pear financial statements for previous periods are disclosed in this Form 10-K. Future period reports filed with the SEC will include Pear Therapeutics, Inc. and its subsidiaries.

See Note 3, *Business Combination*, in the accompanying notes to the consolidated financial statements included in Part II, Item 8 of this Form 10-K for further information.

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 4

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

**ITEM 1. BUSINESS**

**Overview**

We have initiated a process to explore a range of strategic alternatives to maximize shareholder value and have engaged professional advisors. The Company has engaged MTS Health Partners, L.P. ("<u>MTS</u>") to act as the Company's exclusive investment bank to assist in evaluating potential alternatives. Potential strategic alternatives that may be evaluated include a sale or merger of the Company, the sale of all or a portion of the Company's assets and/or intellectual property, or securing additional financing or partnerships that would enable further development of our programs. There is no set timetable for this process, and there can be no assurance that this strategic review process will result in our pursuit of any transaction or that any transaction, if pursued, will be completed. Additionally, there can be no assurances that any particular course of action, business arrangement or transaction, or series of transactions, will be pursued, successfully consummated, or lead to increased stockholder value. If the strategic process is unsuccessful, our Board may decide to pursue a liquidation or obtain relief under the US Bankruptcy Code. The Company has hired advisors to explore strategic alternatives including, if needed, filing for bankruptcy protection. In the event of such liquidation, bankruptcy case, or other wind-down event, holders of our securities will likely suffer a total loss of their investment.

Pear is a commercial-stage healthcare company pioneering a new class of software-based medicines, sometimes referred to as Prescription Digital Therapeutics ("<u>PDTs</u>"), which use software to treat diseases directly. Our vision is to advance healthcare through the widespread use of PDTs and to be the one-stop shop for PDTs offered by Pear and other organizations that may choose to make their products available to patients, providers, and payors via our commercial platform, known as PearConnect™.

Recent global trends are converging to highlight a significant unmet need for new and innovative disease treatment solutions. We believe that our software-based, data-driven solutions are well suited to satisfy this growing unmet need for the treatment of diseases, including addiction and insomnia. We believe that PDTs have the potential to become a cornerstone of the emerging digital health ecosystem and that PDTs are a transformative new generation of therapeutics.

Pear is one of the category creators and leaders of the PDT industry, as evidenced by being the first company to receive market authorization from the US Food and Drug Administration ("<u>FDA</u>") for a PDT. Our marketed PDTs, reSET, reSET-O, and Somryst, were among the first three PDTs authorized by FDA and address psychiatric indications, an area with significant unmet needs. While we continue supporting Somryst, our primary focus is fully commercializing reSET and reSET-O.

Two of Pear's FDA-authorized PDTs, reSET and reSET-O, treat addiction, which currently affects nearly 46 million people in the United States ("<u>US</u>").

Pear's first product, reSET, is indicated for the treatment of substance use disorder ("<u>SUD</u>") as a monotherapy. To combat SUD, reSET works to enhance patient abstinence, improve patient treatment retention relative to human intervention-based alternatives, and extends clinicians' reach outside of scheduled office visits. reSET's mechanisms of action seek to directly modify addiction-related neurocircuitry and induce dopamine in the brain, a process with the potential to repair dysfunctional neurophysiology.

Pear's second product, reSET-O, is the first PDT to receive FDA Breakthrough Designation, and is FDA-authorized for the treatment of opioid use disorder ("<u>OUD</u>") in combination with buprenorphine. Approximately 5.6 million Americans suffer from OUD annually in the US, and more than 100,000 Americans die annually from an opioid overdose. To combat OUD, reSET-O works alongside buprenorphine to reduce dependence on opioids and, similar to reSET, to improve patient treatment adherence and extend clinicians' reach outside of scheduled office visits.

Our third product, Somryst, is indicated for the treatment of chronic insomnia. The Company has deprioritized commercialization efforts regarding Somryst while focusing available resources on the commercialization of reSET and reSET-O. During the year ended December 31, 2022, we determined the acquired technology used in our Somryst product that was previously capitalized in intangible assets was impaired and recorded an impairment

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 5

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

expense of $0.8 million, which is included in cost of revenue in the Company's consolidated statement of operations.

We believe that PDTs have the potential to directly treat a breadth of additional diseases beyond our initial products for the treatment of addiction and insomnia, including the diseases listed in the graphic below. To capitalize on this potential, Pear has developed a robust pipeline of PDTs for a variety of additional indications across psychiatry, neurology, and other therapeutic areas. In July 2022, however, we paused investment in our pipeline candidates to focus investment on our commercial products. We believe our pipeline could provide significant long-term value for patients, providers, payors, and our shareholders if we are able to obtain additional funding or complete a strategic alternative. Due to the worsening macroeconomic environment and the longer-term outlook, in the year ended December 31, 2022, we wrote off $2.1 million of intangible assets related to acquired technology in connection with our pipeline products. We intend to restart investment in our pipeline if we are able to consummate a strategic alternative and if funds become available.

**The Prescription Digital Therapeutic Opportunity** 

For decades, innovations have expanded the classes of therapeutics to treat disease, from small molecules starting in the 1900s to biologics starting in the late 1970s to cell and gene therapies starting around 2000. This collective innovation has resulted in consistent improvement of health outcomes around the world. Still, across numerous disease states, limited treatment options and substantial barriers to access persist. These barriers include excessive cost, conditions that are difficult to treat with drugs, geographic inaccessibility, and unfavorable side effect profiles.

Pear is advancing PDTs, a novel class of therapeutics, which are software that can be prescribed by a clinician, either alone or in combination with drugs, to treat disease directly. We believe that PDTs are a transformative new class of medicines.

![pear-20221231_g2.jpg](pear-20221231_g2.jpg)Similar to pharmaceuticals, novel PDTs undergo rigorous clinical development via clinical trials designed to seek FDA authorization to safely and effectively treat disease. Similar to wellness apps, PDTs utilize digital technology to directly interface with patients. PDTs are designed to expand access and convenience for patients, improve reach for clinicians, and reduce cost for payors by reducing and/or augmenting human intervention, providing for more efficient care, and by ideally improving clinical outcomes.

Currently, we believe the medical community is embracing the integration of software into the navigation and delivery of care. We believe payors are increasingly recognizing the near- and long-term cost benefits of using software for the treatment of diseases. The pervasiveness of technology and growth of telehealth allows for virtual access that was not previously available. Pear is defining and expanding the opportunities in this market due to factors which include, but are not limited to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• being the first mover and leader in the PDT space, defining the industry via the first three FDA-authorized products;

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 6

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• having products in major markets, with reSET and reSET-O for the treatment of addiction, and Somryst for the treatment of chronic insomnia, with the potential to address, in the aggregate, more than 50 million US patients and more than 850 million patients worldwide;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the potential ability to implement scalable end-to-end platforms (PearCreate and PearConnect) that are designed to discover, develop, and deliver PDTs to patients, creating the horizontal infrastructure to enable our PDTs, and potentially those of other companies, to come to market and be delivered to patients;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• having the potential to integrate into care delivery and payor infrastructure with virtuous network effects and modularity, facilitating speed and scale in PDT deployment; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• demonstrating adoption by patients, clinicians, and payors, which could be leveraged across various future opportunities.

**Products and Pipeline** 

***Products*** 

PDTs are software applications authorized by FDA that are intended to treat disease. PDTs are designed to be prescribed by clinicians, reimbursed by third-party payors, and used by patients to improve clinical outcomes as part of a patient's care, similar to FDA approved medications and medical devices. PDTs are authorized to deliver evidence-based mechanisms-of-action, such as cognitive behavioral therapy, contingency management, and exposure therapy, that the patient engages with on their mobile device and may be used alone or in combination with medications. The value of Pear's FDA-authorized PDTs is supported by evidence demonstrating safety and clinical effectiveness in randomized control trials, collected data on PDT usage and clinical outcomes in real-world data, and health economic value.

We believe PDTs can be utilized in the treatment of a wide variety of diseases. Pear's first three FDA-authorized products address behavioral health indications:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• reSET is authorized in the US and Singapore for the treatment of substance use disorder related to alcohol, cannabis, cocaine, and stimulants (such as methamphetamine).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• reSET-O is authorized in the US for use in combination with buprenorphine in the US for the treatment of opioid use disorder.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Somryst is FDA-authorized in the US for treatment of chronic insomnia.

The Company has deprioritized commercialization efforts regarding Somryst while focusing available resources on the commercialization of reSET and reSET-O. During the year ended December 31, 2022, we determined the acquired technology previously capitalized in intangible assets and used in our Somryst product offering was impaired and recorded an impairment expense of $0.8 million, which is included in cost of revenue in the Company's consolidated statement of operations.

For the year ended December 31, 2022, the majority of our revenue was generated through Access Agreements, and three customers: a state government agency, a state department, and a state, representing 18%, 14%, and 11%, respectively, of total revenue. Additionally, all of our subscription, support, and professional services revenue, which represented 11% of total revenue, came from one customer, the Medicaid program of a state government. For the year ended December 31, 2021, the majority of our revenue was generated through bulk purchases from three customers: a state government, state department and a state agency, representing 34%, 23%, and 10%, respectively, of total revenue.

As of December 31, 2022, four customers: a state government, a state department, and two state agencies, representing 33%, 21%, 20%, and 11%, respectively, of accounts receivable. As of December 31, 2021, two customers, a department of a state and the Medicaid program of a state government, represented 33% and 32% of accounts receivable, respectively.

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 7

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

***Pipeline***

In July 2022, we paused investment in our pipeline to focus investment in our commercial products. We believe our pipeline could provide significant long-term value for patients, providers, payers, and our shareholders if sufficient funding were available. In addition, we would need to increase revenues, and the macroeconomic environment would need to improve before further investments in the pipeline could be made. We continue to market reSET and reSET-O and support Somryst. In the fourth quarter 2022, we recorded an impairment in our intangibles assets of $2.1 million related to certain acquired technology for Pear-015, our depression product candidate, that was capitalized during the year ended December 31, 2021 sometimes referred to as our Waypoint asset.

Our pipeline consists of product candidates in psychiatry, neurology, and outside of central nervous system therapeutic areas PDT product candidate development is conducted in humans. There are no *in vivo* animal or *in vitro* pre-clinical or non-clinical studies. This reduces the translational risk of going from animals to humans that many biotechnology and typical pharmaceutical companies encounter.

The pipeline chart below uses four stages of development: Discovery, Proof of Concept ("<u>POC</u>"), Pivotal, and Commercial. Because PDTs are regulated as medical devices, these four stages align with guidance from the Center for Devices and Radiological Health ("<u>CDRH"</u>), which has two broad stages of clinical development before commercialization—pre-pivotal (such as feasibility, including first-in-human) and pivotal (generates definitive evidence of the safety and effectiveness for a specified intended use). Pear breaks down the pre-pivotal clinical development stage into Discovery and POC.

Pre-commercial development at Pear is segregated into three stages: Discovery, POC, and Pivotal. Pear refers to the stage before clinical development as Discovery. Discovery is the concept stage, in which the product candidate, its mechanism(s) of action, and target patient population(s) are defined, technical capabilities and prototypes are built, and then the candidate concept is rapidly tested in iterative evaluations. Some Discovery stage programs are focused on a specific indication, and others are focused on a disease area that may be refined based on further research. POC is the early clinical development stage, in which the product candidate is being tested in human clinical trials designed to prove that the candidate concept is worthy of advancement to the Pivotal stage. POC stage activities are related to technical work, study design, planning, other operational clinical trial activities, and statistical analysis. Pivotal is the registrational phase, in which the product candidate is tested in a randomized controlled trial designed to support market authorization from a regulatory authority such as FDA. Pivotal stage activities are related to technical work, study design, planning, other operational clinical trial activities, and/or statistical analysis that are part of a regulatory submission. Commercial stage includes any products which have received market authorization from FDA.

Pear has historically licensed content suitable for the development of PDTs that third parties have initially developed. These parties, or content partners, are primarily academics or academic institutions, and Pear's current partners are listed in the table below.

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 8

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

**At present, other than immaterial investments, we have paused all development activities in our pipeline product candidates unless and until we consummate a strategic alternative.** Below is a summary of our products, product candidates, and partners:

![pear-20221231_g3.jpg](pear-20221231_g3.jpg)

\*Dartmouth transaction is with a researcher employed by Dartmouth. Pear has no direct contractual relationship with Dartmouth relating to this content.

\*\*Karolinska transaction is with individual researchers who are employed by the Karolinska Institute. Pear has no direct contractual relationship with the Karolinska Institute relating to this content.

\*\*\*Services agreement with Ironwood to evaluate a PDT in GI diseases.

As reflected above, Pear has licensed or otherwise acquired rights in content suitable for the development of PDTs from a variety of content partners. For further information concerning content collaborations, see the section below entitled "*License Agreements*."

Our agreement involving the University of Virginia relates to our license agreement with BeHealth Solutions, LLC and the relationship between Pear and the University of Virginia Patent Foundation d/b/a University of Virginia Licensing & Ventures.

Our license with Red 5 Group LLC relates to our content collaboration involving a researcher employed by Dartmouth College.

Pear licenses certain content related to the treatment of irritable bowel syndrome ("<u>IBS</u>") developed by individual researchers employed by the Karolinska Institute who founded a company called Hedman-Lagerlöf Och Ljótsson Psykologi AB ("<u>NCAB</u>") and assigned intellectual property rights in and to the IBS-related content to NCAB. Under Pear's license agreement with NCAB, entered into on December 14, 2019, Pear was granted an exclusive license in the US and a non-exclusive license throughout the rest of the world to develop and commercialize digital therapeutic products incorporating NCAB's IBS-related content, in exchange for an upfront payment in the mid-five figures, one-time milestone payments in low-six figures upon delivery to Pear of updated IBS-related content and upon first FDA approval of such a therapeutic product, and a royalty percentage in the low-single digits on net sales of such therapeutic products.

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 9

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

Pear licenses contain content related to the treatment of stress disorders from the University of Southern California ("<u>USC</u>"). Under the Technology License and Distribution Agreement entered into with USC on January 11, 2016, Pear was granted worldwide exclusive rights to develop drug/software combination products incorporating that content to treat disorders, illness, or trauma, in addition to certain worldwide non-exclusive rights. Pear initially paid USC an upfront fee in the low-five figures and agreed to pay a royalty percentage in the low-to-mid single digits on net sales of licensed products, an annual license fee (creditable against royalty payment obligations in the same year) increasing in amount from the low-six figures in 2018 to the low-seven figures in 2021, and regulatory and commercialization milestone payments that, in the aggregate, could reach a total in the low-seven figures. On February 11, 2019, Pear notified USC of its election no longer to pay the annual license fee, thus converting the exclusive license granted by USC to a non-exclusive license.

Pear licenses certain content related to the treatment of mental health conditions, including anxiety and depression from Instituto Auxologico Italiano ("<u>IAI</u>"). Under a software license agreement dated March 23, 2015, IAI granted Pear worldwide exclusive rights to develop drug/software combination products incorporating that content, in addition to certain worldwide non-exclusive rights. Pear agreed to pay IAI a royalty percentage in the low-to-mid single digits on net sales of licensed products, subject to an annual minimum revenue threshold in the low-six figures beginning in the fifth year of the license to maintain exclusivity; as this threshold was not met, Pear's license from IAI is now non-exclusive. Pear has obtained additional software, documentation, and other intellectual property rights relating to the therapeutic treatment of depression from Waypoint Health Innovations, LLC ("<u>Waypoint</u>") under an Assignment Agreement and Intellectual Property License Agreement dated November 30, 2021 (collectively, the "Waypoint Agreement"). Under the Waypoint Agreement, Pear acquired all rights related to a CBT-based depression app and a license to all intellectual property rights owned or controlled by Waypoint relating to the app. Pear agreed to pay an upfront payment, regulatory and commercial milestones, a royalty percentage in the low-single digits on net sales, and is required to make annual payments starting in the second half of 2022 through 2026 or until a commercial milestone payment is made under the agreement.

Pear licenses certain content related to the treatment of migraine headaches from Children's Hospital Medical Center, d/b/a Cincinnati Children's Hospital Medical Center ("<u>CHMC</u>"). Under a license agreement entered by the parties on December 17, 2019, CHMC granted a worldwide, non-exclusive license to Pear to develop and commercialize therapeutic products incorporating CHMC's migraine-related content in exchange for an upfront payment in the mid-five figures and Pear's agreement to pay CHMC one-time regulatory and commercial milestone payments that, in the aggregate, could reach a total in the mid-six figures, and a royalty percentage in low-single digits on net sales of such therapeutic products.

Under a services agreement dated January 9, 2020, with Apricity Health, LLC ("<u>Apricit</u>y"), a company engaged in the business of creating digital health therapeutic solutions for improving cancer treatment, Pear has a right of first offer to negotiate terms of a license with Apricity to develop and commercialize each of the first two commercial products developed by Apricity.

Under an assignment agreement dated January 15, 2019, Pear acquired rights in certain assets primarily related to the treatment of acute and chronic pain from Firsthand Technology, Inc. ("<u>Firsthand</u>") (the "<u>Firsthand Agreement</u>"). In exchange for acquiring those assets, Legacy Pear issued Legacy Pear Common Shares to Firsthand, agreed to pay an amount capped in the low-six figures to certain creditors of Firsthand, and agreed to pay a one-time milestone payment in the mid-six figures to Firsthand upon first commercial sale of an FDA-cleared Product (as defined in the Firsthand Agreement) and to pay a royalty percentage in the low-single digits on net sales of such Products. Other than the agreements with ISF, Red 5, and BeHealth, Pear does not consider any of the foregoing agreements to be material for purposes of Item 601(b)(10) of Regulation S-K.

Pear's PDTs and its product candidates achieve their therapeutic potential by delivering evidence-based mechanisms-of-action, such as standard behavioral treatments. For example, reSET delivers an addiction-specific form of cognitive behavioral therapy called Community Reinforcement Approach ("<u>CRA</u>"), fluency training, and contingency management ("<u>CM</u>"). Somryst delivers a disease-specific intervention called Cognitive Behavioral Therapy for Insomnia ("<u>CBTi</u>"), the first-line treatment recommended for patients with chronic insomnia in the American College of Physicians and the American Academy of Sleep Medicine's clinical guidelines for patients with chronic insomnia. Across Pear's pipeline, the product candidates each deliver various forms of standardized and

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 10

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

disease-specific behavioral treatments such as cognitive behavioral therapy ("<u>CBT</u>"), behavioral activation ("<u>BA</u>"), exposure therapy, and/or cognitive restructuring. Product candidates that are intended to treat diseases with standard-of-care pharmacotherapy, such as schizophrenia, for example, would make recommendations on medication usage to support overall care.

Pear's products and product candidates may be studied both in trials sponsored and conducted by Pear and trials that are conducted by non-Pear researchers in collaborative and investigator-initiated trials. In the fourth quarter of 2022 Pear completed a study involving gamification of reSET-O, which was an outpatient-based, randomized-controlled, open-label study conducted at two addiction treatment programs of a gamified-version of reSET-O. This trial was partially supported by a grant from the National Institute on Drug Abuse. The study objectives were (i) to evaluate participant engagement data [Time Frame: From Week 1 to Week 8 (End of Treatment)], and (ii) to evaluate the number of active sessions per week between PEAR-008 (gamified version) and reSET-O.

Pear completed enrollment of the DREAM Study in the third quarter of 2022 and Last Patient Last Visit (the date that the last subject completed the study) in the fourth quarter of 2022. The study objectives are (i) to measure the change in the Insomnia Severity Index ("ISI") [Time Frame: From baseline to Day 63 (End of Treatment) and Days 243, 428, 610, and 793 (Follow-up)], and (ii) to measure the change in the ISI total score from baseline to end of treatment and follow-up. The ISI's total score ranges from 0 (not clinically significant) to 28 (clinically significant). Long-term follow-up assessments are ongoing. If we do not receive additional funding in the future, we may not be able to complete this study and other studies.

**Key Elements of Our Growth Strategy** 

**Our immediate strategy is to continue our strategic process to explore strategic alternatives.** 

We have initiated a process to explore a range of strategic alternatives to maximize shareholder value and have engaged professional advisors, including an investment bank, to act as strategic advisors for this process. Potential strategic alternatives that may be evaluated include a sale or merger of the Company, the sale of all or a portion of the Company's assets and/or intellectual property, or securing additional financing or partnerships that would enable further development of our programs. There can be no assurance that this strategic review process will result in our pursing any transaction or that any transaction, if pursed, will be completed. If the strategic process is unsuccessful, our Board may decide to pursue a liquidation or obtain relief under the US Bankruptcy Code. The Company has hired advisors to explore strategic alternatives including, if needed, filing for bankruptcy protection.

Our mission is to use software to treat disease directly and increase access to care for patients, including underserved constituents of the healthcare ecosystem. In the event our strategic process is successful and we obtain sufficient funding, we plan to accomplish this goal over time by:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• **Focusing on selling reSET and reSET-O to states in the near term.** Most of our 2022 revenue came from sales of our addiction products directly to states and state agencies. We generated additional revenue in 2022 from state Medicaid reimbursement for our addiction products. By focusing on the most mature aspect of our business model in the near-term, we intend to grow revenue while containing costs. We believe our pipeline and platforms provide optionality that will allow us to invest in significant long-term value-creation when our revenues and financing supports such investments.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• **Capitalize on our leadership position in the PDT market**. By obtaining FDA market authorization for the first three PDTs, we established ourselves as the leader and pioneer of a new category. With sufficient funding, we believe we could capitalize on our leadership position via horizontal scale.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• **Establish reimbursement pathways and payment infrastructure.** To date, we provide access to our three FDA-authorized products via listing on certain formularies, as a covered benefit, through bulk purchases, or by funding a study. Pear's payor strategy focuses across all major payor channels, including Integrated Delivery Networks ("<u>IDNs</u>"), pharmacy benefit managers ("<u>PBMs</u>"), commercial payors, and government payors, including Medicaid and Medicare. Pear works with the payor channel to cover Pear's products through both the pharmacy and medical benefit as well as adjudication through both pharmacy and medical operations.

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 11

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• **Protect our intellectual property**. In addition to securing regulatory authorization for our PDTs, we make strategic use of various intellectual property regimes: patents; copyrights; trademarks; and trade secrets. We strive to protect and enhance the proprietary technology, inventions, and improvements that are commercially important to the development of our business, including seeking, maintaining, and defending patent rights, whether developed internally or licensed from third parties.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• **Over time, subject to obtaining necessary funding, advancing PearConnect as a key commercial platform through which patients and clinicians access PDTs**. We are pioneering new commercialization approaches for PDTs. Subject to obtaining sufficient funding, we aspire to connect other product candidates from third-party PDT companies onto PearConnect. This has the potential to create a PDT marketplace for the patients of other PDT manufacturers to access safe, effective, and secure digital therapeutics.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• **Subject to obtaining necessary funding, restart our efforts to opportunistically license and acquire PDT product candidates and connect third-party PDT candidates.** Subject to obtaining necessary funding, we intend to recommence our efforts to opportunistically pursue acquisitions and licensing opportunities to grow our developmental pipeline. Pear's experience developing and guiding PDTs through the regulatory review process, as well as our scalable platforms, could provide a foundation on which Pear could potentially develop, host, and connect other PDTs from Pear as well as third parties.

**Industry Trends Overview** 

Pear believes that major trends are converging to create a significant opportunity to treat disease with software, either alone or in combination with drugs, due to the following factors:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• **The ongoing burden of chronic disease.** Ninety percent of the $4.1 trillion in US annual healthcare expenditures are for people with chronic and mental health conditions.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• **There is a pronounced shortage of clinicians.** Across many disease areas there are tens of millions of patients with only a few thousand trained specialists who can provide treatment.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• **There is rapid patient and clinician adoption of digital solutions for healthcare delivery, such as telemedicine.** The number of people using telehealth has doubled from approximately 39% before the COVID-19 pandemic to nearly 80% post-quarantine.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• **There is pervasive use of technology.** Americans spend an average of 5.4 hours per day on their mobile phones. Connection to a therapeutic delivered digitally is convenient and available for most Americans. The data captured by this engagement could also drive deeper insights into disease states and the ability to personalize treatment.

We believe the trends described above have created a moment in time when technology-based approaches are essential to, and capable of, revolutionizing healthcare. We believe these trends have accelerated due to the COVID-19 pandemic, which resulted in fewer in-person visits and increased the adoption and use of technology and digital health experiences across consumers, clinicians, payors, and the broader healthcare system.

**Our PDT Solution and Value Proposition** 

PDTs are prescribed by clinicians, downloaded by the patient to a smart phone, tablet, or VR headset, and used under the supervision of a prescribing clinician. PDTs have a recommended frequency and duration of use, but patients can use the product whenever they want and wherever they are. PDTs receive market authorization from regulators, like FDA, with a label that addresses both safety and effectiveness. To obtain a label from FDA, PDT companies developing novel therapies are generally required to submit data from one or more randomized, controlled trials ("<u>RCT</u>") that demonstrate safety and effectiveness, and product candidates must be developed in a good manufacturing practice ("<u>GMP</u>")-compliant environment.

In order for a patient to obtain a prescription, there is first an appropriate assessment and diagnosis of the patient, which is then followed by direction and ongoing guidance, as well as patient accountability related to product use

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 12

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

and ongoing care management by the clinician. Engagement levels for Pear's PDTs significantly exceed that of published rates of health and wellness digital products. For patients with disease a prescription is an enabler of access, engagement, and real-world effectiveness. PDTs integrate into existing healthcare infrastructure, allowing for a digital experience via a patient's own clinician, enhancing the continuum of care rather than fragmenting care paradigms.

We believe that PDTs will become an important segment of the digital health revolution and a vital part of the medical armamentarium because they have qualities that are similar to those of both health and wellness apps and pharmaceuticals. PDTs leverage the pervasiveness and accessibility of digital technology to improve human health. However, PDTs are always developed in a GMP-compliant environment, maintain compliance with data security and HIPAA protocols, and integrate into the standard of care. PDTs are also tested in RCTs and are FDA-authorized as safe and effective therapies for particular indications like pharmaceuticals, but they also enable clinicians to receive timely feedback regarding patient progress and therapy adherence. This patient monitoring capability afforded by PDTs may be the difference in a patient's success during a course of treatment. The table below shows some of the key differences between PDTs and other products.

![pear-20221231_g4.gif](pear-20221231_g4.gif)

Pear reimagined what treating disease could look like from the vantage point of patients, clinicians, and payors. We set out to disrupt the healthcare system with urgency because we believe there is a growing need for treatments that can be provided by PDTs. With our proprietary development and commercialization platform, PearConnect, we can bring product candidates to FDA for market authorization, and we can bring FDA-authorized products to patients, clinicians, and payors. We continue to refine and optimize our development capabilities, and we believe we will be able to scale our operations significantly in the near-term, allowing us to pursue authorizations for more product candidates, to self-commercialize our products inside the US, and commercialize our products outside of the US with the help of regional partners.

Pear is a platform-based, product-driven company. Our end-to-end PDT engine, which currently includes three FDA-authorized products and a pipeline of product candidates, continues to produce clinical and real-world data as well as health economic outcome research ("<u>HEOR</u>") data that provide evidence of Pear's ability to enhance outcomes, increase access and reduce healthcare costs, and validate Pear's value proposition. We believe our value proposition will magnify over time, as our model scales and we expand the reach and impact of PDTs.

We believe PDTs are poised to disrupt healthcare delivery in ways that could offer benefits to three major stakeholders:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.**Patients:** PDTs provide 24/7 remote treatment access to patients that can improve outcomes and be used alongside other standard-of-care treatments. Additionally, PDTs have a relatively benign side effect profile compared to traditional pharmaceutical therapies.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.**Clinicians:** PDTs provide additional treatment options and improve clinicians' reach to patients, potentially resulting in broader patient impact. They are integrated into standard practice and may also be used alongside traditional drug-based treatments. Data from the PDT provides insight to the clinician and the clinical care team, which can facilitate enhanced care navigation and delivery. They also provide reimbursable events for interactions on the "<u>PearMD Clinician Dashboard</u>".

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 13

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.**Payors:** PDTs have the potential to reduce overall healthcare costs to payors by providing patients with therapies that may be more cost-effective. Additionally, PDTs may fill gaps in care across indications with high prevalence.

*For Patients* 

PDTs have the potential to be safe, effective, and accessible care options for patients with diseases and mental health disorders. These options are increasingly needed as diseases, and mental health disorders require more innovative approaches to overcome current treatment challenges and realize better patient outcomes. With Pear's PDTs, patients have 24/7 remote access to their treatment program, and clinicians are able to observe progress 24/7 to inform their treatment approach, regardless of physical proximity. PDTs can be integrated into standard of care and may be used alongside pharmacotherapy. Pear's software is designed to be easy-to-use and intuitive, and it also generates data from patient usage to inform the treatment approach for each patient. Our clinical trial and real-world data also continue to demonstrate a favorable side-effect profile versus existing medications, which could foster stronger adherence to treatment programs.

The privacy provided by reSET and reSET-O, for example, is designed to offer access to treatment of addiction without fear of stigma. Patients also gain control over where they conduct addiction treatment and can conduct remote check-ins for their clinician to view, which empowers patients to better navigate their care. Further, we believe that our software enables a larger portion of Americans access to addiction treatment. Only a small fraction of patients with addiction are actively enrolled in treatment today. We believe that reSET and reSET-O may significantly lower treatment barriers to ongoing care and substantially increase clinicians to serve more and diverse patient needs. An analogous shift is seen in Somyrst, Pear's treatment for chronic insomnia. Clinical guidelines indicate Cognitive Behavioral Therapy for insomnia ("<u>CBTi</u>") as the first-line treatment, but there are approximately 300 certified and licensed CBTi clinicians in the US to treat a patient population of approximately 30 million.

*For Clinicians* 

PDTs provide a new treatment option that clinicians can provide to their patients. Many clinicians today lack evidence-based treatment options with the potential to improve outcomes. PDTs are a standardized, evidence-based, cost-effective, and easily accessed class of treatments that can be used as a standalone treatment or in conjunction with pharmacotherapies. Not only can PDTs better enable clinicians to serve their patients, but PDTs can also improve the reach of clinicians, creating the potential for broader patient impact.

In addition, we believe Pear's products enable richer and more effective patient data and engagement capabilities. For clinicians prescribing reSET, reSET-O, or Somryst, clinicians may use our PearMD Clinician Dashboard and review a wealth of data-based, real-time feedback that can help them better understand and manage their patients' treatment journey. The PearMD Clinical Dashboard is easy to use and accessible 24/7, enabling care teams to conveniently manage populations of patients. This real-time engagement is particularly impactful in the world of addiction, in which adherence is continually decided, moment to moment, outside of the walls of the clinician's office. The ability of a clinician to regularly monitor and engage with their patient can make the difference in successful navigation of the treatment journey.

PearMD Clinician Dashboard interactions can also create reimbursable events.

*For Payors* 

We believe Pear's PDTs have the potential to reduce overall medical costs, support value-based care initiatives, and improve member experience. Insights and information collected by Pear's PDTs can be integrated within care management workflows to provide payors with valuable insights that support population health management and value-based care initiatives. Pear's PDTs can also fill gaps in specialty care across large populations, providing timely insights into patient engagement and practice performance via the PearMD Clinician Dashboard.

Pear's PearConnect platform has enabled rapid scaling of evidence generation for the benefit of provider organizations and payors to quantify product use, outcomes, and economic value. Over the past 12 months, Pear

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 14

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

has generated, presented and published numerous new datasets. Previously, Pear published a study of 351 patients evaluating healthcare resource utilization via insurance claims six months after reSET-O initiation found that compared to a six-month baseline there was a 62% reduction in inpatient hospitalizations and a 20% reduction in emergency room visits, resulting in a near-term cost-savings of $2,150 per patient. The durability of reSET-O's treatment effect at nine (9) months was evaluated in a larger group of patients and was communicated in publications. One of those publication compared outcomes between reSET-O patients and controls and found that reSET-O-treated patients experienced costs that were $2,708 lower than for controls, and which were also driven by a reduction in hospital-related utilization.

In addition, Pear published 12-month health economic data evaluating reSET-O compared to control in both national all-comer payor as well as Medicaid subpopulations. This analysis of over 1800 patients demonstrated lower health care costs for reSET-O treated patients compared to controls, as measured by actual health care claims, resulting in a health care cost reduction of an estimated $2,791 per patient in the national population, and a health care cost reduction of $3,832 per patient in the Medicaid population, driven predominantly by reduction in unique hospital encounters (emergency room, inpatient hospitalizations, and others). The study also observed an increase in medication possession ratio of buprenorphine in the reSET-O treated group compared to controls.

Pear also published real world health economic data for reSET. In 101 reSET treated patients in the real-world, claims analysis found an overall reduction in hospital encounters in the post-period compared to the pre-period, observing health care savings of an estimated $3,591 per patient in the 6–months post reSET initiation compared to the 6 months pre-reSET initiation. In addition, on May 19, 2021, Pear presented results of two analyses demonstrating the cost-effectiveness of reSET-O at the virtual annual meeting of The Professional Society for Health Economics and Outcomes Research. The machine learning analysis showed that all clusters of engagement (low, medium, and high) each experienced a very similar reduction in emergency department and inpatient stays of approximately 60%. The budget impact analysis showed that reSET-O plus treatment-as-usual ("TAU") (i.e., transmucosal buprenorphine, face-to-face counseling and contingency management) versus TAU alone resulted in a projected net cost reduction over a five-year period. Supporting this budget impact analysis are two subsequent publications examining the cost effectiveness and cost utility of reSET-O, both showing quality adjusted life year gains from increased retention and abstinence, respectively, which were accompanied by reductions in overall costs, supporting the economic advantages of reSET-O vs. TAU.

Pear published its first health economic data evaluating Somryst. In a real-world claims analysis of patients with chronic insomnia exposed to the digital CBTi, researchers found overall reduction in hospital events in the 24 months post-treatment compared to the 24 months pre-treatment, with facility related cost-savings of an estimated $2,059 per patient in the post-treatment period. An analysis comparing treated patients compared to the control group over 24 months, presented at the EU The Professional Society for Health Economics and Outcomes Research (ISPOR) in Europe and the American Managed Care Pharmacy (<u>AMCP</u>) Nexus in fall 2022, observed a reduction of hospital facility services compared to the control group, resulting in health care utilization savings of an estimated $8,202 per patient.

We believe that the real-world claims analysis and health economic modeling data, together with existing RCT effectiveness data, demonstrate that reSET, reSET-O, and Somryst can provide compelling clinical and economic cost-savings to payors seeking a high level of care for their members.

**Our Scalable Commercial Platform - PearConnect™**

Our goal is for PearConnect to become an agile and scalable resource with the ability to offer multiple PDTs developed by Pear and potentially by third parties. However, to implement that vision, substantial capital will need to be expensed and substantial resources will need to be deployed. While we are not in a position today to pursue this vision, we believe if the requisite investments are made in our development engine, commercialization strategy, clinician and patient awareness, and HEOR data, PearConnect could become an industry leading platform.

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 15

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

**Our Advantages** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• **Pear is pioneering the PDT industry**. Pear is the first mover in the PDT industry, and as a result has advanced experience in developing and commercializing PDTs. Pear was the first company to receive FDA authorization for a PDT. Pear has been developing PDTs since 2013.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• **Pear leverages our data aggregation capabilities**. Pear's ability to collect data from existing PDTs, generate insights and improvements based on these data, and then quickly develop new PDTs using these insights has enabled us to bring to market the first three FDA-authorized PDTs. We believe it will enable us to continue to bring additional FDA-authorized PDTs to market across a breadth of indications.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• **Pear developed a reproducible process for cost-effective development and regulatory review of PDTs**. We conduct agile software development for our medical devices in a GMP-compliant environment. Due to our remote clinical trial infrastructure, we are able to conduct clinical trials without the need for external sites and develop our products iteratively, which both accelerates timelines and reduces costs. This iterative product development paradigm contrasts with traditional drug development in which a molecule that enters the clinic cannot be improved or adapted along the way.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• **Pear is building a robust IP portfolio**. Pear regularly applies for patents, copyrights, and trademarks throughout the development and iteration of its products, and also judiciously maintains trade secrets. Pear protects the iterations of its proprietary technology that are commercially important to its business by filing, maintaining, and, if necessary, defending patent rights, whether developed internally or licensed from third parties. We also rely on copyright, including registrations for product source code, graphic user interfaces and other content, as well as on trademarks. Finally, Pear maintains trade secrets relating to its PDT product development to enable Pear to strengthen its leadership position in the PDT industry over the long-term.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• **Pear has a diverse and scalable management team that is pioneering the PDT space**. The discovery, development, and commercialization of PDTs as a new healthcare delivery system requires both a breadth and depth of experience. Our cross-disciplinary and cross-functional team of experts collectively synthesizes years of experience in medicine, biotech, technology, and data science.

**Our Commercialization Strategy** 

With three FDA-authorized products on the market, we believe Pear has made significant commercial progress. Additionally, the PDT category continues to expand with eight other companies receiving marketing authorization.

*We are pioneering PDT commercialization* 

By developing PDTs as a new class of medicines, Pear pioneers innovative approaches for its commercialization. Pear's commercialization strategy attempts to combine the most effective features of the commercialization methodologies of both tech and life sciences companies to create a scalable yet capital-efficient PDT commercialization model.

Pear deploys two distinct commercialization models. First, Pear utilizes a conventional sales-enabled approach focused on targeting large, multi-specialty health systems to capture the most effective features of traditional life sciences commercialization methodologies. Second, to capture the most effective features of traditional tech commercialization methodologies, Pear utilizes the PearMD Clinician Dashboard to engage with clinicians and patients.

The PearMD Clinician Dashboard enables the collection of data characterizing patient engagement and progress during treatment with PDTs. We believe this data collection capability appeals to clinicians and payors who seek to track treatment progress. The dashboard is configured to provide robust data that describes patient treatment progress to clinicians and payors, thereby providing these stakeholders with insights that have the potential to improve clinical outcomes and lower costs. Clinicians can use the insights provided by Pear's dashboard to enable the clinician to support a patient's course of treatment outside of routine office visits and during periods when the

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 16

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

patient may be experiencing increased challenges with treatment adherence. Similarly, payors can use the data provided by Pear's dashboard to supplement their understanding of population-level treatment outcomes and to adjust access to PDTs accordingly. As a result, the PearMD Clinician Dashboard serves as an enterprise sales tool for stakeholders looking to monitor and improve the clinical outcomes of patients through data collection and analysis.

*We are building patient, clinician, and payor awareness.* 

As the pioneer in PDTs, Pear is built to educate all participants of care delivery, including patients, clinicians and payors, about a new class of medicines. To inform and educate the public about PDTs, Pear has built and deployed sales, marketing, patient and clinician services, and medical affairs teams. These PDT specialists are dedicated to educating patients, clinicians, payors, and other stakeholders about PDTs.

As a result of the efforts of our PDT specialists, PDTs are increasingly recognized as a treatment option by the medical community, as evidenced by the increasing number of clinicians prescribing PDTs and the increasing number of PDT prescriptions being written. Pear has educated hundreds of clinicians that have collectively written prescriptions for one or more of Pear's three FDA-authorized products, and we believe that number will grow significantly over time. Once introduced to PDTs, those clinicians are equipped to provide valuable education and guidance to patients and other clinicians regarding how the use of PDTs.

*We are creating access to PDTs by establishing reimbursement pathways.* 

The Pear team is actively working to establish reimbursement pathways for PDTs, and we believe that as a result of these efforts, payors are increasingly providing their members with access to PDTs. To date, Pear has had 39 payors provide access to its PDTs. reSET and reSET-O are currently covered as pharmacy benefits, medical benefits, and/or via direct purchase transactions. To onboard additional payors, Pear engages directly with payors to establish coding, coverage, and payment pathways for its PDTs and the PDT category as a whole. Pear is also exploring innovative contracting models with payors that utilize the strong correlation between patient engagement with PDTs and the resulting clinical and economic benefits. We believe that these continued payor engagement efforts will result in reimbursement for PDTs by both commercial and public payors in the US, including, but not limited to, self-insured employers, PBMs, health plans, IDNs, and public payors, including Medicaid and Medicare.

In addition to pursuing traditional payor reimbursement of PDTs, Pear also offers a PEAR Assistance Program ("<u>PAP</u>") to ensure that eligible, underserved patients have access to Pear's PDTs. PAP is designed for patients who are being treated by a licensed US clinician on an outpatient basis and have been prescribed a PDT. PAP-qualifying patients have limited or no health insurance coverage, a demonstrated qualifying financial need, and live within the US. Patients enrolled in PAP generate additional real-world and HEOR data that may be used to support the utilization and coverage of Pear's products.

*We are building end-to-end infrastructure that provides ease of use to clinicians.*

To enable a high degree of accessibility to PDTs for clinicians, Pear has developed, designed, and deployed PearConnect to be a convenient one-stop shop for PDTs. PearConnect features four distinct system components, consisting of PDTs for patient use, the PearMD Clinician Dashboard, an end-to-end patient service center, and a data analytics system configured to aggregate patient engagement, adherence, and clinical outcome data for insight generation. These components of PearConnect are intentionally designed to improve accessibility to Pear's PDTs. PearConnect also incorporates various data privacy and security features to support the protection, quality, and integrity of each component of PearConnect, including the data that is processed and stored by PearConnect. Each component plays a meaningful role in ongoing and product evolution and performance, building Pear's PDT marketplace and enabling clinicians and payors to assess the value of each PDT on a population and individual level.

Pear's end-to-end patient service center provides support to patients that have been prescribed PDTs, which includes informational and technical support regarding the use of the PDT and the PearMD Clinician Dashboard. The service makes it easier for clinicians to introduce new patients to PDTs and to Pear's platform.

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 17

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

The data analytics component of PearConnect collects patient engagement, adherence, and clinical outcome data, and generates insights based on this data. The insights generated by the data analytics component of PearConnect can be accessed by clinicians via the PearMD Clinician Dashboard to inform clinicians of their patients' progress over the course of a PDT prescription. The insights generated by the data analytics can also be used by us to incrementally evolve individual PDTs to better serve patients, and we believe we will ultimately generate improved clinical outcomes.

*We are able to demonstrate the value of our PDTs with HEOR data generated based on commercial patients.* 

Pear's commercial infrastructure allows for the analysis of patients' healthcare claims data pre-, during, and post-use of Pear's PDTs. Based on these robust analytics, Pear is able to gain insight into PDT utilization across patient groups, and to understand how use of its PDTs correlates with clinical outcomes. Data-derived insights support collaboration with clinicians, coverage and reimbursement by payors, and product enhancements.

**Discovery, Strategy, and Development - PearCreate™** 

Developing a new class of medicines led to Pear pioneering new approaches for the discovery and development of PDTs. We have invested in and created a model to progress from concept to market authorization, and we believe we have optimized that model to the point where it is now ready to scale subject to our ability to invest in our pipeline. In July 2022, we announced that we paused substantially all investment in our pipeline.

Our PearCreate platform consists of three approaches consist of: (i) an integrated virtual and decentralized clinical study platform, (ii) agile development as therapeutic candidates move through phases, and (iii) integrated health economic and real-world extension studies to facilitate regular and timely evidence generation.

First, Pear has designed and built its own integrated virtual and decentralized study platform. This technology facilitates a seamless experience for fully virtual and decentralized studies. DREAM, Pear's remote, real-world clinical study of Somryst is the first to utilize PearCreate, with recruitment, enrollment, consent, monitoring, and assessments all completed through digital and virtual means. Patients do not need to be present at a clinic or site for any step of the process. In addition to being more cost-effective, the speed of recruitment and enrollment is enhanced by facilitating fully automated screening and consenting and by minimizing the number of patients requiring manual or direct human interaction.

Second, as Pear's therapeutic candidates move from discovery and through subsequent stages of development, Pear iterates on the product. If data indicate that adding additional modalities or mechanisms of action to the candidate is warranted, Pear is able to refine the PDT in between subsequent studies and re-evaluate the candidate in a variety of clinical study designs. We believe deploying this agile and adaptable framework to clinical development has the potential to increase not only speed but also the probability of success.

Third, as Pear conducts pre-market studies on PearCreate, health economic endpoints are integrated and real-world extension studies are built into development plans. Registrational and even earlier stage development studies having health economic or insurance claims endpoints have the potential to facilitate earlier insights to support payor engagement. Post-randomized studies and even post-market, Pear continues to generate clinical and economic data on every patient that uses a PDT, whether it is a Pear PDT or a third-party PDT using PearConnect. Adaptive real-world extension studies post-registration demonstrate generalizability from RCTs and have the ability to demonstrate that RCT outcomes are consistent in real-world use and across various clinical settings and patient populations.

**Our Commercial Products** 

***reSET***

reSET is the first PDT to receive FDA market authorization and is authorized in the US and Singapore for the treatment of SUD in patients who are 18 years of age and older. reSET is the only FDA-authorized product indicated to treat addiction to alcohol, cannabis, cocaine, and stimulants (such as methamphetamines) as no pharmacotherapy or other FDA-approved treatments for this patient population exist. reSET is a 12-week

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 18

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

prescription-only treatment for patients who are actively enrolled in outpatient therapy under the supervision of a clinician.

*Disease Overview* 

Addiction is a disease of the brain that manifests as compulsive substance use. In the US, the disease of addiction can be characterized as an epidemic, with more than 46 million Americans struggling with addiction based on 2021 data.

Each year, there are approximately 13,000 overdose deaths related to stimulant use, particularly methamphetamine, and approximately 16,000 deaths related to cocaine use. Since the 1970s, there has been a significant increase in mortality related to unintentional drug poisonings, growing at 7% per year. Unfortunately, the COVID-19 pandemic has only accelerated these trends. In 2020, there was an 18% increase in drug-related overdose deaths and a 26% increase in overdoses involving cocaine.

Traditional medical guidelines recommend Cognitive Behavioral Therapy ("<u>CBT</u>") and contingency management ("<u>CM</u>") as best practices in treating SUD. However, multiple roadblocks prevent a majority of SUD patients from ultimately receiving effective behavioral treatment, such as CBT and CM. CBT is largely conducted in outpatient settings and is a time-intensive, location-dependent treatment methodology. This and the sheer quantity of SUD patients results in an insufficient number of trained therapists and facilities to meet demand. This results in SUD patients often receiving inconsistent treatment in inconvenient locations. Insufficient access to CBT can cause patients to drop out of therapy or not pursue therapy in the first place. Even when SUD patients are able to gain sufficient access to CBT, clinician education, training, and treatment paradigms vary. Documented discrepancies in CBT administration standards and protocols impede the ability of CBT to adequately and uniformly treat the wide range and quantity of SUD patients that require care. Furthermore, many patients may experience perceived or real stigma associated with physical attendance at CBT sessions. As a result of these many obstacles, only a fraction of SUD patients receive CBT treatment. For instance, in 2019, only 1.5% of SUD patients received formal treatment.

In addition to the challenges of initiating and completing a first round of SUD treatment, addiction can be a lifelong battle that often involves multiple relapses for many patients. This constant and recurring need for treatment places additional burdens on SUD patients, particularly given the currently insufficient treatment options available. There remains a significant unmet need for accessible and effective SUD treatment options.

*Our Solution* 

To bridge this gap between disease prevalence and treatment availability, Pear has an FDA-authorized PDT that has been clinically proven to help treat addiction and extend the reach of clinicians to patients during their recovery journey. reSET is authorized for the treatment of SUD in patients 18 years or older. reSET's mechanism of action combines addiction-specific CBT, fluency training, contingency management, and craving and trigger assessment, all provided by Pear's software-based application. It is intended to reduce substance abuse during treatment, eventually supporting discontinuance and recovery while simultaneously improving retention rates in the outpatient treatment program.

To begin treatment, the clinician prescribes the patient the PDT. The patient then downloads the software to a smart phone, tablet, or VR headset, inputs their prescription access code, and gets access to the PDT. The PDT includes three evidence-based treatments, each of which represent a distinct mechanism of action:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The first is an addiction-specific form of cognitive behavioral therapy, called a community reinforcement approach ("<u>CRA</u>"), that moves patients from actively using a substance to reducing and ultimately discontinuing use. CRA is a form of treatment that integrates cognition and learning with treatment techniques. CRA is based on the insight that cognitive, emotional, and behavioral variables are functionally interrelated. Treatment is aimed at identifying and modifying the patient's maladaptive thought processes and problematic behaviors through cognitive restructuring and behavioral techniques to achieve change. Disease-specific CRA targets the associated neurocircuitry for addiction, harnessing adaptive neuroplasticity. reSET is comprised of 61 interactive modules (31 core and 30 supplement modules). Core modules focus on key CRA concepts to build skills to support behavior change and prevent

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 19

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

relapse. Supplemental modules provide more in-depth information on specific topics, such as relationship skills and living with a disease.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The second is fluency training, which assesses proficiency and reinforces concept mastery. Fluency training supports the ability of the patient to apply their learnings in moments of stress to facilitate their treatment and ultimate recovery.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The third is contingency management, which is a positive reinforcement mechanism. CM induces a dopamine response directly competing with the negative response induced by substance use. It does this by rewarding healthy behaviors and key outcomes such as engagement in treatment and reduced substance use through a clinical algorithm.

CRA and fluency training strengthen affected neurocircuitry while CM induces dopamine in the nucleus accumbens repairing dysfunctional neurophysiology, driving engagement with CRA and treatment in a virtuous cycle. These integrated mechanisms of action drive patient engagement and target the pathophysiology of addiction to correct and restore neurofunction.

![pear-20221231_g5.jpg](pear-20221231_g5.jpg)

reSET also includes validated assessments, including substance use, triggers, and cravings supporting interactive engagement and insights to the clinical care team. All of this information is shared with the clinical care team via the PearMD Clinician Dashboard, enabling the clinician and care team to derive insights to inform optimal patient care.

By integrating PDTs into the practice of medicine, the clinician and patient relationship may be strengthened, and data insights facilitate clinician extension for greater efficiency and effectiveness. reSET and reSET-O provide 24/7 anytime, anywhere treatment. As the patient undergoes therapy with reSET, the patient and clinician can continue to meet in person or virtually as part of their outgoing treatment therapy, and the clinician has easy access via the PearMD Clinician Dashboard to monitor and adjust treatment. We believe the connectivity established through our PDTs is valuable to patients and clinicians.

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 20

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

*Our Clinical Trial Data* 

Among patients with SUD (i.e., addiction to cocaine, cannabis, stimulants, and/or alcohol), RCT data demonstrated that adding the PDT to TAU more than doubled abstinence rates during the last month of the 12-week trial. Among all patients, adding a PDT to outpatient care improved the retention rate compared to TAU (72.2% vs 63.5%) at the end of the 12-week trial. Treatment with PDT did not demonstrate a significant difference in unanticipated adverse events compared to TAU.

Adult men and women (N=399) entering 10 outpatient addiction treatment programs were randomly assigned to receive 12 weeks of either TAU (N=193) or reduced treatment-as-usual ("<u>rTAU</u>") plus the PDT, with the intervention substituting for about two hours of standard care per week (N=206).

TAU consisted of individual and group counseling at the participating programs for 4-6 hours per week. rTAU consisted of 2 hours less than TAU of aggregate individual and group counseling. The primary outcome measures were abstinence from drugs and heavy drinking (measured by twice-weekly urine drug screens and self-report) and time to dropout from treatment.

Those in the PDT+rTAU group had a higher retention rate of 76.2% compared to 63.2% in TAU and a greater abstinence rate in the last 4 weeks of 40.3% in the PDT+rTAU group relative to 17.6% in the TAU group. This effect was more pronounced among patients who had a positive urine drug or breath alcohol screen at study entry (N=192) with an abstinence rate in the last four (4) weeks in the PDT+rTAU group of 16.1% compared to 3.2% of TAU.

*reSET Pivotal Clinical Trial. Abstinence in TAU relative to rTAU + PDT.*![pear-20221231_g6.jpg](pear-20221231_g6.jpg)

*reSET Pivotal Clinical Trial. Abstinence and Retention in TAU relative to rTAU + PDT.* 

---

| | | | |
|:---|:---|:---|:---|
| **Outcomes** | **TAU** | **rTAU+reSET** | **p-value** |
| Abstinence: All patients | 17.6% | 40.3% | 0.4000 |
| Abstinence: Non-abstinent at study start | 3.2% | 16.1% | 1.3000 |
| Retention in treatment: All patients | 63.2% | 76.2% | 4.2000 |

---

Overall safety was in-line with expectations and no significant difference was observed in the rate of adverse events between groups (p = 0.3563).

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 21

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

*Evaluation of rTAU+PDT abstinence and retention compared to TAU.* 

---

| | | | |
|:---|:---|:---|:---|
| **Outcomes** | **TAU** | **rTAU+PDT** | **p-value** |
| Number of Adverse Events | 29000 | 37000 | n/a |
| % of Adverse Events | 11.5% | 14.5% | 0.3563 |

---

Adverse events evaluated were typical of patients with SUD, including cardiovascular disease, GI events, depression, mania, suicidal behavior, suicidal thoughts and attempts. None of the adverse events in the interventional arm were adjudicated by the study investigators to be related to the PDT.

This RCT was reviewed by FDA and supported Pear's FDA market authorization of reSET to treat patients with SUD to improve clinical outcomes.

*Real World Evidence and Health Economic and Outcomes Research Data* 

Pear published reSET Real World Evidence ("RWE") and HEOR data starting with a six-month duration. In 101 reSET treated patients in the real-world, claims analysis found an overall reduction in hospital encounters in the post-treatment compared to the pre-treatment, observing health care savings of an estimated $3,591 per patient in the 6 months post reSET initiation compared to the 6 months pre-reSET initiation.

***reSET-O***

reSET-O is the second PDT to receive FDA authorization and the first to receive breakthrough designation in the US for the treatment of OUD in patients who are 18 years of age and older. reSET-O is a 12-week prescription-only treatment that is intended to increase retention of patients with OUD in outpatient treatment by providing CBT as an adjunct to outpatient treatment that includes transmucosal buprenorphine and CM. reSET-O is indicated only for patients who are currently under the supervision of a clinician.

*Disease Overview* 

Opioid use disorder in the US has increased so dramatically and taken such a heavy toll on American lives over the past decade that, in 2017, the US Department of Human Health Services declared the opioid epidemic a public health emergency. Approximately 1.6 million Americans suffer from OUD annually in the US, and according to the CDC, the substance use and opioid use disorder epidemics continue to grow with unprecedented numbers of fatal opioid overdoses, in excess of 200 deaths daily (over 75,000 annually), approximately 87% of which are due to widely available, inexpensive yet pharmacologically-potent synthetic opioids. Nonfatal overdoses far outnumber fatal overdoses and place a tremendous burden the health care system through excess utilization of acute care services such as emergency department and inpatient stays, which contributes to rising health care costs. For example, every year, there are over 500,000 emergency room visits for opioid overdoses in the US. Of those patients that are discharged from the emergency room following an overdose, 24% are readmitted to the emergency room for additional emergency care within 30 days. As a result of these frequent emergency room visits, opioid overdoses are estimated to cost the US $11.0 billion in hospital costs alone. A recent study evaluated the direct healthcare cost of 2,044,467 people with OUD to be $89.1 billion, with an average cost of $43,581 per patient per year. The cost of the current opioid crisis in the US is estimated to exceed $700.0 billion.

Treatment has been shown to help patients avoid the increased risk of respiratory arrest and organ system damage, and dramatically reduce the use of acute care services and associated high costs. However, only 11.2% of patients in the US receive treatment with Medications for Opioid Use Disorder ("<u>MOUD</u>") in a given year. For those who obtain treatment, dropout rates are high, ranging between 30% and 50% at 90 days, highlighting the need for comprehensive support to keep patients engaged in their recovery. Progress in recovery helps reduce the burden on the health care system and helps to mitigate the harm the opioid crisis causes.

The current standard of care for treating opioid addiction is medication-assisted treatment ("<u>MAT</u>"). MAT consists of the administration of medication, such as buprenorphine, in combination with counseling and behavioral therapy. Only a fraction of opioid-addicted patients, however, receive treatment. Similar to SUD patients, there are

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 22

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

significant barriers to opioid-addicted patients receiving accessible and effective care. Many patients fail to receive care as a result of care inaccessibility, cost, or patient stigmatization. It is estimated that only 19% of opioid-addicted patients receive treatment each year. In addition, many opioid-addicted patients elect to rely solely on medication and reject counseling. For example, only 10% of opioid-addicted patients that are prescribed buprenorphine receive adjunct psychotherapy treatment. While reliance solely on the medication portion of the recommended treatment paradigm may provide a higher level of convenience for patients, adherence to only a portion of treatment decreases the overall probability of success. Therefore, due to the current lack of effective treatment options for OUD and the continually growing number of patients, there remains a significant unmet need in the fight against OUD.

*Our Solution* 

To bridge this gap between disease prevalence and treatment, Pear has an FDA-authorized PDT that has been clinically proven to treat OUD and extend the reach of clinicians to patients during their recovery journey. reSET-O is authorized for use in combination with buprenorphine in the US for the treatment of OUD in patients who are 18 years or older.

Similar to reSET, reSET-O is intended to increase the retention of patients with OUD in outpatient treatment by providing the same behavioral treatments. This PDT is a 12-week treatment used as an adjunct to outpatient treatment, including transmucosal buprenorphine and CM. Patients using reSET-O are required to be under the supervision of a clinician.

reSET-O has three mechanisms of action consisting of addiction-specific CRA, fluency training, and CM. reSET-O has an additional function that supports the patient's appropriate use of buprenorphine. This function includes reminders, assessments of use, non-use, and reasons and beliefs. reSET-O also has additional content modules specific to OUD.

Similar to reSET, patients download reSET-O to their smart phone, tablet, or VR headset for discreet, convenient access to therapy, interactive treatment, learning, and support. reSET-O lets patients practice what their clinicians taught them anytime, anywhere, and report daily triggers, cravings, and substance use, so they feel more engaged and supported between appointments.

reSET-O also encourages patients with tangible rewards via its CM capabilities. These rewards can be managed by clinicians.

As the patient undergoes therapy with reSET-O, the patient and clinician continue to meet in person or virtually as part of their outgoing treatment therapy, and the clinician has real-time access via the PearMD Clinician Dashboard to monitor and adjust treatment.

*Our Clinical Trial Data* 

There have been multiple RCTs evaluating PDTs in patients with OUD in combination with MAT and MOUD. These studies have been conducted across a variety of durations and clinical care models. The primary RCT that the FDA reviewed to support the marketing authorization of reSET-O is described below.

In summary, the clinical data demonstrated that adding reSET-O alongside outpatient treatment and buprenorphine use increased the retention of patients with OUD by 14% at the end of the 12-week trial and reduced opioid use. Patients achieving no substance use by the end of treatment was 75.9% in TAU + PDT group versus 60.6% in TAU-alone (p = 0.03). Patients in the TAU + PDT group had an 82.4% retention rate compared to 68.4% in the TAU group (p = 0.02). The observed adverse events were of a type and frequency as anticipated in a large population of patients with OUD or associated with buprenorphine pharmacotherapy, particularly during the induction phase. The adverse events observed were not adjudicated to be device-related.

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 23

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

A block-randomized, parallel, 12-week treatment trial was conducted with 170 opioid-dependent adult patients. Participants received an internet-based community reinforcement approach intervention plus CM ("<u>CRA+</u>") and buprenorphine, or CM-alone plus buprenorphine.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• All patients received 30 minutes of face-to-face clinician interaction every other week.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Patients provided urine samples three times per week to objectively monitor substance use.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Primary endpoints were:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;▪ retention in treatment, and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;▪ no substance use (during last four weeks).

*Incorporation of a PDT increased retention and abstinence*![pear-20221231_g7.jpg](pear-20221231_g7.jpg)

---

| | | | |
|:---|:---|:---|:---|
| | **TAU + PDT** | **TAU** | **p-value** |
| Retention | 82.4% | 68.4% | 20.00 |
| No Substance Use (last 4 weeks) | 77.3% | 62.1% | 30.00 |

---

Among patients whose primary addiction was opioids, adding reSET-O to TAU had significantly greater odds of opioid abstinence during weeks 9-12 of the 12-week trial with abstinence rates (no opioids) at 77.3% for the TAU + reSET-O treatment group versus 62.1% for the TAU group (p = 0.02). Further, adding reSET-O to outpatient therapy, buprenorphine increased retention of patients with OUD by 14% at the end of the 12-week trial, with retention found to be 82.4% in the TAU + reSET-O treatment group versus 68.4% in the TAU group (p = 0.02).

Overall safety was in line with expectations and no significant difference was observed in the rate of adverse events between groups (p = 0.42). The observed adverse events were of a type and frequency as anticipated in a large population of patients with OUD or associated with buprenorphine pharmacotherapy, particularly during the induction phase. The adverse events observed were not adjudicated to be device related.

*Real World Evidence* 

Pear continues to generate RWE evaluating the use of reSET-O across prospective and commercial use. We plan to continue to publish and disseminate reSET-O real-world data.

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 24

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

For example, a published real-world analysis evaluated patient engagement, usage of reSET-O, and associated outcomes of opioid use and treatment retention in those using buprenorphine MAT/MOUD. The results demonstrated that reSET-O is readily and broadly used by patients with OUD and that real-world therapeutic engagement is positively associated with abstinence and retention in treatment.

The real-world observational analysis was conducted in a population of 3,144 patients with OUD who were prescribed their first 12-week prescription for reSET-O. The patients came from 30 different states and represented a wide range of demographics (15.4% of individuals were between ages 19-29, 45.5% were between 30-39, 25% were between 40-49, 11.2% were between 50-59, and 2.9% were age 60 or older).

A summary of the results is set forth below:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Patients in the 40-49 age range had highest level of "Active" days of treatment.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• 80% of patients completed at least 25% of core modules, 66% completed half of all core modules, and 49% completed all core modules across the entire cohort of patients.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Patients exhibited usage of reSET-O across a 24-hour period, including before and after clinic hours, at times when clinicians would not traditionally be available.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Over 70% of patients were retained in reSET-O treatment and continued to use their PDT during the last 4 weeks.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• 91% of the patients were "responders", meaning 80% of their self-reports and urine drug screens ("<u>UDS</u>") were negative for illicit opioid use.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Patient engagement on reSET-O was higher than other products as shown in the chart below.

*Patient Engagement on reSET-O Compared to Other Products* 

*(using the above-reference study for reSET-O)*![pear-20221231_g8.jpg](pear-20221231_g8.jpg)

Patients have also benefited from repeat prescriptions for reSET-O. Another peer-reviewed study evaluated the impact of longer-term (24 week) engagement and use of reSET-O in a sample of 3,817 patients) and found increased abstinence (86%) and retention in treatment (91%), and 94.4% met the responder rate of being abstinent for at least 80% of the weeks of treatment.

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 25

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

*Healthcare Economic & Outcomes Research* 

Pear continues to generate real-world evidence evaluating the use of reSET-O.

reSET-O's impact on healthcare resource utilization has been demonstrated in two separate analyses. In the first study, there was a per-patient reduction of $2,150 in the six months after reSET-O initiation vs. a six-month baseline, and there was a $2,708 difference versus controls at nine months, driven largely in both instances by reductions in emergency department visits and inpatient stay-associated costs.

A follow-on analysis of this patient population examined the cost implications for payors and found real-world cost reductions of $2,385 six months after product initiation (vs. the six-month baseline period) for a typical US payer after factoring in rebates. This analysis also showed that the number-needed-to-treat, i.e., the number of patients you need to treat to prevent one additional hospital-related event, was just 4.8 treated patients.

In addition, an analysis of the impact of a second prescription of reSET-O using a linear regression model found a further 27% reduction in hospital-related events with a second prescription for reSET-O (24 weeks of treatment), compared to the first (12 weeks of treatment).

![pear-20221231_g9.jpg](pear-20221231_g9.jpg)

In addition to clinical value, these results support the cost-savings benefit of reSET-O as an adjunct to TAU.

In 2022 Pear published 12-month health economic data, evaluating reSET-O compared to a control group in both national all-comer payor as well as Medicaid subpopulations. This analysis of over 1800 patients demonstrated lower health care costs for reSET-O treated patients compared to controls, as measured by actual health care claims, resulting in a health care cost reduction of an estimated $2,791 per patient in the national population, and a health care cost reduction of an estimated $3,832 per patient in the Medicaid population, driven predominantly by reduction in unique hospital encounters (emergency room, inpatient hospitalizations, and others).

***Somryst***

The Company has deprioritized commercialization efforts regarding Somryst while focusing available resources on the commercialization of reSET and reSET-O and wrote off the acquired technology previously capitalized in intangible assets used in our Somryst product offering and therefore recorded impairment expense of $0.8 million, which is included in cost of revenue in the Company's consolidated statement of operations, during the year ended December 31, 2022.

Somryst is the only non-drug FDA-authorized and guideline-recommended treatment for chronic insomnia in adults over 22 years of age. It is intended to improve patients' symptoms of chronic insomnia. Somryst is the first PDT submitted through FDA's traditional 510(k) pathway while simultaneously reviewed as part of the FDA's Software Precertification Pilot Program to help build and test FDA's Digital Health Precertification Working Model 1.0. Somryst is a nine-week prescription-only treatment. Somryst has been the subject of 29 completed clinical studies and ongoing clinical studies.

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 26

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

*Disease Overview* 

Insomnia is a sleep disorder that manifests as difficulty falling or remaining asleep. Insomnia can be a short-term (e.g., acute) or a long-term (e.g., chronic) condition. Chronic insomnia is classified as persistent insomnia that occurs at least three nights a week for a period of at least three months. Chronic insomnia is a relatively common medical condition in the US, and is estimated to affect approximately 30 million Americans.

Chronic insomnia adversely affects many facets of a patient's everyday quality of life, including social, occupational, and educational. These reductions in a patient's daily quality of life can also give rise to more serious and life-threatening medical conditions, including depression, suicidality, hypertension, and heart attacks. For example, in patients with chronic insomnia approximately 40% have depression, and up to 35% have anxiety. Chronic insomnia also results in a plethora of more measurable detrimental consequences, including heavy costs and resource utilization strain on the healthcare system. For example, annual medical costs for patients diagnosed with insomnia are approximately 25% higher relative to those without insomnia.

Current options for the treatment of chronic insomnia are limited, and the available treatment options have thus far proven ineffective. The American Academy of Sleep Medicine and the American College of Physicians clinical guidelines recommend CBTi as the first-line treatment for patients suffering from chronic insomnia. However, CBTi is difficult to access, as approximately 300 certified and licensed CBTi clinicians currently exist in the US to treat a patient population of approximately 30 million.

Despite the clinical guidance recommending CBTi as the first-line treatment for chronic insomnia, over 50% of chronic insomnia patients do not seek CBTi treatment, but instead rely on the use of sleep medications (e.g., "sleeping pills"), such as Ambien (zolpidem). Because most available sleep medications are only recommended for short-term use, they are not recommended as a long-term solution to chronic insomnia. Long-term use of sleep medications can yield unwanted side-effects and result in serious, adverse health consequences. Further, utilization of sleep medications can result in reliance on the medication for sleep induction, rather than addressing the underlying condition, thereby perpetuating the chronic nature of the disease.

*Our Solution* 

We believe Somryst addresses the limitations of current standard of care by treating the underlying factors without a label risk of dependence, inappropriate use, and adverse effects of pharmacotherapy. Somryst effectively delivers all three primary mechanisms of actions provided by face-to-face CBTi (sleep restriction and consolidation, cognitive restructuring, and stimulus control) using Pear's software-based PDT. By delivering CBTi digitally, barriers to people with chronic insomnia are reduced while receiving guideline-recommended treatment. The following is a brief description of each mechanism of action.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Sleep restriction and consolidation reduce the time it takes to fall-to-sleep and reduce the amount of wakefulness in the middle of the night by consolidating the patient's sleep through an algorithm to direct the patient's sleep-wake pattern.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Cognitive restructuring teaches patients to identify maladaptive thought patterns related to sleep circuits and replace and strengthen healthy neurocircuits.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Stimulus control teaches patients to identify behaviors, thoughts, and practices that increase arousal and limit sleep and then to correct those behaviors.

Patients are prescribed Somryst by their clinician. After downloading the PDT to a smart phone, tablet, or VR headset, patients engage in fully digital, automated, and interactive exercises that move patients through the mechanisms of action to get better sleep. These interactive modules span a range of topics, including properly tracking sleep patterns and identifying stimulants that may be harming sleep quality and restructuring maladaptive thoughts about sleep. Patients use Somryst for approximately 45-60 minutes weekly, over a period of 6-9 weeks. The content and interface encourage engagement, facilitate active learning, and promote behavioral change, while the algorithm supports a tailored experience.

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 27

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

*Our Clinical Trial Data* 

Somryst provides a clinician-facing dashboard via the PearMD Clinician Dashboard that allows healthcare providers to track patient treatment and progress. The PearMD Clinician Dashboard displays information about patients' use of Somryst, including the Insomnia Severity Index ("<u>ISI</u>"), the Patient Health Questionnaire 8 scores, and sleep metrics derived from nightly sleep diaries ("<u>Sleep-Onset-Latency</u>" or "<u>SOL</u>") and Wakefulness-After-Sleep-Onset ("<u>WASO</u>"). The evidence base for Somryst is extensive and includes the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Somryst has been examined in an aggregate of 29 completed and ongoing studies. FDA submission and authorization was supported by two RCTs with an aggregate of more than 1,400 adults with chronic insomnia. The data from the RCTs showed a 45% decrease in the severity of insomnia symptoms, a 50% decrease in depression symptoms, and nearly a 45% decrease in anxiety symptom. It has also demonstrated a durable effect on insomnia, depression, and anxiety for up to 18 months.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• In a clinical trial of 303 patients with chronic insomnia (Study 1), those on treatment demonstrated clinically meaningful improvements in insomnia severity, SOL (time to fall asleep), and WASO (time awake at night) at the end of treatment, as well as at six and 12 months follow-up compared to active control. Results of the study were published in JAMA Psychiatry.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• In a separate study of 1,149 adult patients with chronic insomnia and depressive symptoms (Study 2), those on treatment for nine weeks saw a significant reduction in insomnia severity measurements compared to controls.

The majority of patients randomized to the Somryst arm no longer met clinical criteria for insomnia at the end of the nine-week treatment. Patients were examined at baseline, nine weeks, six months, 12 months, and 18 months following treatment. At treatment end, the patients who received Somryst experienced a decrease in their mean ISI score to 7.3 from baseline of mean 15.9, while the control arm had a reduction to 13.2 from 16.2 baseline. In addition, the Somryst group had a reduction in depression severity to a mean score of 3.8 from an 8.0 baseline mean. The mean score decreased to 6.2 from a mean of 7.8 at baseline in control subjects. It was observed that the clinical improvements were maintained to 18 months post-treatment. Study data published in Lancet Psychiatry showed decreases in anxiety symptoms and suicidal ideation.

The Diagnostic and Statistical Manual of Mental Disorders, Fifth Edition ("<u>DSM-5</u>") makes no distinction between primary and comorbid insomnia. This previous distinction had been of questionable relevance in clinical practice, and a diagnosis of insomnia is made if an individual meets the diagnostic criteria, despite any coexisting conditions. The International Classification of Sleep Disorders, Third Edition criteria are consistent with the changes to the DSM-5.

The DSM-5 defines insomnia as dissatisfaction with sleep quantity or quality associated with one (or more) of the following symptoms:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Difficulty initiating sleep;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Difficulty maintaining sleep, characterized by frequent awakenings or problems returning to sleep after awakenings; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Early-morning awakening with inability to return to sleep.

Other criteria include the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The sleep disturbance causes clinically significant distress or impairments in social, occupational, educational, academic, behavioral, or other important areas of functioning;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The sleep difficulty occurs at least three nights per week;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The sleep difficulty is present for at least three months;

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 28

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The sleep difficulty occurs despite adequate opportunity for sleep;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The insomnia cannot be explained by and does not occur exclusively during the course of another sleep-wake disorder;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The insomnia is not attributable to the physiological effects of a drug of abuse or medication; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Coexisting mental disorders and medical conditions do not adequately explain the predominant complaint of insomnia.

Somryst use led to a meaningful reduction in ISI as well as reduction SOL and WASO, as shown by the UVA and GoodNight Studies.

![pear-20221231_g10.jpg](pear-20221231_g10.jpg)

UVA Study: ISI Score Results

*Proportion of ISI responders (reduction in ISI score > 7 from baseline)* 

---

| | | | |
|:---|:---|:---|:---|
| **Time of Assessment** | **Somryst Group** | **Control Group** | **p-value** |
| End of Treatment Period (Week 9) | 52.6% | 16.9% | <0.0001 |
| Month 6 Follow-Up | 59.6% | 35.7% | 0.0002 |
| Month 12 Follow-Up | 69.7% | 43.0% | <0.0001 |

---

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 29

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

![pear-20221231_g11.jpg](pear-20221231_g11.jpg)

GoodNight Study: ISI Score Results

*Proportion of ISI responders (reduction in ISI score > 7 from baseline)*

---

| | | | |
|:---|:---|:---|:---|
| **Time of Assessment** | **Somryst Group** | **Control Group** | **p-value** |
| End of Treatment Period (Week 9) | 62.8% | 14.0% | <0.0001 |
| Month 6 Follow-Up | 56.2% | 18.9% | <0.0001 |
| Month 12 Follow-Up | 59.3% | 25.2% | <0.0001 |

---

*Real World Evidence and Health Economics & Outcomes Research* 

Pear continues to generate RWE and HEOR data in patients with chronic insomnia.

A real-world deployment with 7,414 patients who utilized Somryst evaluated the benefits and health outcomes. In the real-world experience, patients utilized the product for nine weeks, consisting of six treatment modules. Data were collected on the FDA-reviewed endpoint, ISI, patient reported outcomes, and over 300,000 sleep diaries. As shown in the figures below, ISI, SOL, and WASO scores saw meaningful decreases as patients progressed through the six treatment modules.

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 30

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

*Patient Engagement, ISI Score, SOL and WASO by completed core of the six cores in Somryst.*![pear-20221231_g12.jpg](pear-20221231_g12.jpg)

Pear published its first health economic data evaluating Somryst in 2022. In a real-world claims analysis of patients with chronic insomnia exposed to the digital CBTi, researchers found an overall reduction in hospital events in the 24 months post-treatment compared to the 24 months pre-treatment, with facility related cost-savings of an estimated $2,059 per patient in the post-treatment period. An analysis comparing treated patients compared to control patients over 24 months, presented at the EU The Professional Society for Health Economics and Outcomes Research (ISPOR) in Europe and the American Managed Care Pharmacy (AMCP) Nexus in fall 2022, observed a reduction of hospital facility services compared to control, resulting in health care utilization savings of an estimated $8,202 per patient.

**Dynamic Evidence Generation** 

We believe that PDTs have an advantage over molecular therapeutics because data of product usage, patient-reported, and clinical outcomes of PDTs may be captured more rapidly. These data collected in studies as well as in commercial use facilitate regular evidence generation. Pear's platforms can facilitate linking healthcare resource utilization in the form of public and private insurance claims. Pear is able to rapidly scale evidence (clinical and health economic) and analyze across care-settings, specific populations, regions, and customers.

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 31

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

This evidence continuum is a key competitive advantage of Pear and its platforms. Pear plans to continue to expand the evidence for its PDTs in additional RCTs, RWE, and health-economic evaluation to support continued product improvement and to generate information for clinicians and value for payors.

![pear-20221231_g13.jpg](pear-20221231_g13.jpg)

**Our Development Pipeline** 

PDTs have the potential to treat many diverse diseases directly and enhance health outcomes for patients. **Currently, we have paused the development of all the product candidates in our pipeline.** Below is a summary of the pipeline products:

![pear-20221231_g3.jpg](pear-20221231_g3.jpg)

\*Dartmouth transaction is with a researcher employed by Dartmouth. Pear has no direct contractual relationship with Dartmouth relating to this content.

\*\*Karolinska transaction is with individual researchers who are employed by the Karolinska Institute. Pear has no direct contractual relationship with the Karolinska Institute relating to this content.

\*\*\*Services agreement with Ironwood to evaluate a PDT in GI diseases.

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 32

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

The Company paused its investment in its pipeline of product candidates as part of a restructuring it implemented on July 25, 2022, in order to prioritize certain commercial efforts. The Company has suspended development of its pipeline candidates subject to obtaining additional funding due to increased revenue or other financing activities.

We have built a portfolio of PDT product candidates that is primarily focused on psychiatric conditions. Over time, if we are able to consummate a strategic alternative and sufficient funding is available, we could expand into other therapeutic areas. We anticipate the first two areas in which we would invest if we return to investing in our pipeline are Alcohol Use Disorder ("<u>AUD</u>") and depression. These two additions have the potential to help fill the need for additional treatment options and enhance the offering to mental and behavioral health clinicians and psychiatrists while supporting payors' need to reduce morbidity and cost in these indications.

Our ability to initiate development activities for product candidates will be subject to our ability to increase revenue or obtain additional funding in addition to other risks and uncertainties. All therapeutic development activities have risk and probabilities of success that can vary by disease indication. In many of the disease areas Pear is developing product candidates there is a long history of failure. The areas of mental and behavioral health or neuropsychiatry, which is a primary focus for Pear, have had notable failures across biotech, pharma, and digital health. Each of Pear's pipeline candidates have technical, clinical, regulatory, and commercial risk. See the heading "Risk Factors—Risks Related to Pear's Products" in Part I, Item 1A of this Form 10-K for more information on risks related to product development.

Additional specific risks and uncertainties also include but are not limited to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• each potential therapeutic must achieve levels of use by the patient in their disease population sufficient for the evidence-based treatment or mechanism of action to exert its behavioral and/or biologic effect. If levels of product use or engagement are not high enough a study may not be successful and a product candidate may not be viable;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• even if patients do engage at sufficient levels, the proposed evidence-based treatment or scientific mechanism of action may not be effective in achieving the desired clinical outcome;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• clinical trials may fail for numerous reasons including operational complexities, difficulty in measurement, challenges in enrollment, adverse events and safety events, poor endpoints, variabilities amongst sites, protocol deviations, and many others; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the technology, such as algorithms or engineering, may fail.

**Future PDT discovery** 

Currently, Pear is not pursuing any PDT discovery efforts. If a successful strategic transaction is consummated and sufficient funding is available, Pear could re-engage in discovery.

There are two categories of PDT's interventional mechanisms of action. The first is delivery of neurobehavioral interventions. These are scientific and evidence-based practices, many of which we know work from face-to-face delivery, and target affected disease-specific neurocircuitry. Examples include CBT, cognitive restructuring, behavioral activation, exposure therapy, and CM. The second category is dose-optimization. In diseases where pharmacotherapy exists, PDTs can be integrated with the molecular therapeutic to assess patient response and optimize medication dose and frequency. Use cases include titrating a medication to therapeutic effect, optimizing chronic dosing, tapering medication, and recommending dosing as needed when a disease exacerbation is occurring.

Gastroenterology, cardiology, and oncology are particularly promising therapeutic areas. In oncology, combining dose-optimization of immuno-oncology drugs (which could target both solid or liquid tumors) with neurobehavioral mechanisms of action, multi-modal PDTs could optimize both the treatment of cancer directly and the behavioral disorders that often coincide with cancer treatment. For example, by utilizing labs, patient-reported outcomes, and sensor data, recommendations to refine the dosing and frequency of chemotherapeutic agents to reduce dose-limiting toxicities and maximize overall-survival can be integrated with CBTi for insomnia in patients undergoing treatment for cancer. Similar approaches may be deployed in GI and cardiovascular.

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 33

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

In addition, over time, if we are able to consummate a strategic alternative and sufficient funding is available, we could continue our strategic pursuit of enabling technologies, such as digital sensors, that may be used to potentially enhance our products and product candidates.

**Competition** 

The pharmaceutical, biotechnology, and digital health industries are characterized by rapidly advancing technologies, intense competition, and an emphasis on proprietary products. While Pear believes that Pear's technology, development experience, and scientific knowledge provide Pear with competitive advantages, Pear faces potential competition from many different sources, including large pharmaceutical and biotechnology companies, digital health companies, and academic institutions. To drive continual technology advantage, Pear seeks patent protection and establishes collaborative arrangements for the research, development, manufacturing, and commercialization of evidence-based therapeutics. Any products that Pear successfully develops and commercializes will compete with new therapies that may become available in the future.

Pear competes in the segments of the pharmaceutical, biotechnology, and other related markets that develop therapeutics as treatments, in particular treatments for addiction (reSET and reSET-O) and insomnia (Somryst). There are many other companies that have commercialized and/or are developing such treatments for addiction and insomnia, including large pharmaceutical and biotechnology companies such as Alkermes and their product Vivitrol, Orexo and their product Zubsolv, Indivior and their product Suboxone, Braeburn and their product Brixadi, Pfizer and their product Halcion, Merck and their product Belsomra, Sunovion and their product Lunesta and Sanofi and their product Ambien.

Pear's competitors in the digital health space, with specific focus in addiction and insomnia have created non-regulated products are not supported by randomized controlled trials to support treatment claims, such as Dynamicare, CHESS Health and Orexo and their product Modia, and Big Health and their products Sleepio and Daylight.

Rather, Pear believes the competitive landscape is best understood by comparing the primary mechanism of action (behavioral support/intervention or improving medication adherence and tracking); to the business model for patient acquisition (apps marketed direct-to-consumer; tech-enabled healthcare services offered to members of health plans, most often those of self-insured employers; or regulated products prescribed by providers).

While some solutions have evolved to include elements of various mechanisms such as behavioral support, reminders for medication adherence, or remote monitoring and transmission of biometric data, in Pear's view, each has a primary mechanism for affecting disease and a clearly defined model for acquiring patients or consumers.

To Pear's knowledge, reSET and reSET-O are the only FDA-authorized PDTs with a direct treatment-related claim for addiction, and Pear's Somryst is the only FDA-authorized PDT with a direct treatment-related claim for chronic insomnia that can be prescribed by providers and reimbursed by insurance. This has required Pear to generate significant evidence to demonstrate safety, effectiveness, clinical outcomes and distinct impact on the total cost of care. While many early market entrants (in fact, nearly 350,000 health and wellness apps are now available in Apple's App Store) are making marketing claims related to the ability to help treat addiction and insomnia, Pear believes the landscape will change dramatically when new solutions that can be prescribed by providers and covered by insurance become broadly available.

There are a number of companies in the prescription digital therapeutics space, but none of these companies have commercialized an FDA-authorized prescription digital therapeutic to target addiction or insomnia at this time. Other than Pear, we are aware of six companies that have received FDA-authorization to make medical claims as prescription digital therapeutics. This includes (i) Akili Interactive Labs and their product Endeavor for ADHD, (ii) Mahana Therapeutics and their product Parallel for IBS, (iii) Nightware for patients with PTSD that are experiencing nightmares, (iv) AppliedVR and their product RelieVRx for chronic pain, (v) Luminopia for patients with amblyopia, and (vi) metaME and their product Regulora for abdominal pain due to IBS. Other companies of which Pear is aware in the space that have not received FDA-authorization and are not authorized to make medical claims but may pursue FDA-authorization in the future include: (i) Click Therapeutics in Depression, (ii) Better Therapeutics in

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 34

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

Cardiometabolic, (iii) Cognoa in Autism, (iv) AppliedVR in Pain, (v) Orexo and GAIA AG in Depression, (vi) MedRhythms in Stroke, and (vii) Blue Note Therapeutics for Cancer Related Anxiety and Depression.

**License Agreements** 

We have rights to use and exploit technologies disclosed in issued and pending patents and other therapeutic content under licenses and/or assignment agreements with other entities (collectively, "<u>License Agreements</u>"). We consider the commercial terms of these License Agreements, which provide for milestone and royalty payments, and their provisions regarding diligence, insurance, indemnification, and other similar matters, to be reasonable and customary for our industry.

The material License Agreements related to our three commercial products are those with The Invention Science Fund I, LLC ("<u>ISF</u>"), Red 5 Group, LLC ("<u>Red 5</u>"), and BeHealth Solutions, LLC ("<u>BeHealth</u>").

*The Invention Science Fund I, LLC* 

We entered into a contribution and license agreement with ISF in February 2015, as amended on February 28, 2018 (the "<u>ISF Agreement</u>"), pursuant to which ISF grants the Company certain licenses under specified patent rights to develop and commercialize licensed products either independently and/or in combination with a drug for use in connection with the treatment of central nervous system disorders. The oldest patent in the family is expected to expire in 2028.

Under the terms of the ISF Agreement, we are required to pay a minimum annual royalty, capped at low-seven figures per year. From inception through December 31, 2022, we have paid ISF $2.6 million in minimum annual royalties, and for the year ended December 31, 2022, recorded annual minimum royalties payable of $1.0 million. The ISF Agreement also requires us to pay a royalty percentage in the low single digits on net sales of products covered by the in-licensed patents that do not include drugs. To date, no royalties have been paid on net sales of products covered by the in-licensed patents that do not include drugs. In addition, as to sales of products covered by the in-licensed patents that do include drugs, the ISF Agreement requires us to pay either (i) a royalty percentage on net sales in the low single digits or (ii) an annual fee based on net sales. To date, no royalties have been paid on net sales of products covered by the in-licensed patents that include drugs.

Under the ISF Agreement, ISF covenants that neither it nor any of its affiliates will sue or assert any claim against (or cause any third party to sue or assert any claim against) us for infringement of any patent covered under the ISF Agreement with respect to our permitted use of such patents under the ISF Agreement (the "<u>Covenant</u>").

In consideration of the Covenant granted to us in the ISF Agreement, the ISF Agreement requires us to pay an annual covenant fee (the "<u>Covenant Fee</u>") in a variable amount ranging from mid-to-high five digits to a low-six figures per year through December 2030. Through December 31, 2022, we have paid ISF $0.3 million in annual Covenant Fees.

The ISF Agreement will terminate upon the expiration or invalidation of all of the patents subject to the license. Additionally, ISF may terminate the ISF Agreement upon certain breaches by us of the terms of the ISF Agreement, and we may terminate the ISF Agreement 90 days after providing written notice to ISF. The Covenant, and our related obligation to pay the annual Covenant Fee, may be terminated by us 30 days after providing written notice to ISF.

*Red 5 Group, LLC*

In January 2015, we entered into a software license agreement with Red 5, and on March 21, 2018, the parties entered into an amended and restated software license agreement which was further amended on July 1, 2021 to clarify certain terms and increase the royalty rate by a *de minimis* amount (such agreement, as amended, "<u>Amended Red 5 Group Licens</u>e"). Under the Amended Red 5 Group License, Red 5 grants us, *inter alia*, an exclusive (other than a limited reserved right for ongoing academic studies), worldwide, sublicensable, royalty-bearing license to develop and commercialize integrated products incorporating certain technology and documentation materials relating to the treatment of psychological and substance use disorders. Under the

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 35

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

Amended Red 5 Group License, we agreed to use commercially reasonable efforts to develop integrated products in accordance with a development plan, to introduce any integrated products that gain regulatory approval into the commercial markets, to market integrated products that have gained regulatory approval following such introduction into the market, and to make integrated products that have gained regulatory approval reasonably available to the public.

In March 2018, the parties amended the original Red 5 agreement, and we subsequently paid an amendment fee in the high-six figures in consideration for expanding the scope of our exclusive license. On July 1, 2021, the parties amended the Amended Red 5 Group License to further clarify certain terms and increase the royalty rate by a *de minimis* amount.

To the extent achieved, we are obligated to pay Red 5 up to an aggregate of $0.4 million if certain milestones related to product regulatory approval and commercial sales are achieved in respect to a software/drug combination, which we are not currently pursuing. Each such regulatory and sales milestone is payable only once.

The Amended Red 5 Group License also requires us to pay a single digit royalty percentage on net revenue from integrated products. Through December 31, 2022, we have recorded $1.9 million in royalties to Red 5. We are also required to make annual maintenance fee payments capped at a sum in the low-six figures per year, creditable against future royalty and milestone payment obligations. From inception through December 31, 2022, we have recorded $1.0 million of annual maintenance fees under the terms of the agreement.

The Amended Red 5 Group License will continue in perpetuity unless terminated in accordance with its terms, under which Red 5 may terminate the license upon certain breaches by us of the terms of the license, and we may terminate the license 60 days after providing written notice to Red 5.

*BeHealth Solutions, LLC*

We entered into an assignment, license, and services agreement with BeHealth, effective March 24, 2018 (the "<u>BeHealth Agreement</u>"), which relates to software, documentation, and intellectual property rights in and to certain therapeutic content related to cognitive behavioral treatment for insomnia and other sleep disorders that BeHealth licensed from the University of Virginia Patent Foundation d/b/a University of Virginia Licensing & Ventures Group ("<u>UVA LVG</u>").

Under the terms of the BeHealth Agreement, we paid an initial up-front fee in the mid-six figures to BeHealth, and during the year ended December 31, 2019, we paid a milestone payment to BeHealth of $0.8 million upon the FDA's acceptance of a filing seeking marketing authorization for Somryst that was recorded as a research and development expense in the consolidated statement of operations and comprehensive loss for the period then ended. During the year ended December 31, 2020, we paid a milestone payment to BeHealth of $0.8 million upon the FDA's marketing authorization of Somryst. The milestone payment was capitalized in other long-term assets and amortized on a straight-line basis to cost of revenue over the estimated useful life, which was ten years at initial recognition. During the year ended December 31, 2021, we recorded $1.0 million related to the achievement of a commercial milestone. Each such regulatory and sales milestone is payable only once, and no other milestone payment may become due and payable after March 24, 2028. In the future, should the Company pursue sales of Somryst and we meet the remaining commercial milestones, the Company could be obligated to make payments of up to an additional $26.0 million in the aggregate upon achievement of various annual commercial milestones and a mid-to-high-single-digit percentage royalty on net sales to BeHealth.

The Company's forecasted future revenue and expense cash flow projections indicated the carrying amounts of this intangible asset was not recoverable, and therefore the Company recorded an impairment expense of $0.8 million, which is included in cost of revenue in the Company's consolidated statement of operations, during the year ended December 31, 2022.

Because the underlying license agreement (with exclusive rights relating to the content and non-exclusive rights relating to the underlying platform) between BeHealth and UVA LVG was assigned to us, we owe a royalty percentage in the mid-single digits on net sales of integrated products to UVA LVG. We have the right to sublicense our rights under the assigned license agreement, and we will be required to pay a percentage of such sublicense

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 36

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

income in the low-double digits to UVA LVG. We are required to make annual minimum royalty payments in the low-five figures to UVA LVG under the assigned license agreement, which payments are creditable against royalty payments on a year-by-year basis. Through December 31, 2022, we have recorded only *de minimis* royalties under the UVA LVG assigned license agreement, and we have paid *de minimis* royalties, $2.5 million in milestone payments, and $0.5 million in other fees to BeHealth. We have a buyout option in the assigned license agreement under which we may pay UVA LVG a lump sum of $1.0 million in exchange for a perpetual royalty-free license in the field.

The underlying license from UVA LVG will continue in perpetuity unless terminated in accordance with the terms of the assigned license agreement, under which UVA LVG may terminate the license upon certain breaches by us of the terms of the license, and we may terminate the license at any time upon 30 days' written notice to UVA LVG.

**Emerging Growth Company Status (JOBS Act)**

Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can choose not to take advantage of the extended transition period and comply with the requirements that apply to non-emerging growth companies, and any such election to not take advantage of the extended transition period is irrevocable. We are an "emerging growth company" as defined in Section 2(A) of the Securities Act of 1933, as amended, and have elected to take advantage of the benefits of this extended transition period.

We expect to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public business entities and nonpublic business entities until the earlier of the date we (a) are no longer an emerging growth company or (b) affirmatively and irrevocably opts out of the extended transition period provided in the JOBS Act. This may make it difficult or impossible to compare our financial results with the financial results of another public company that is either not an emerging growth company or is an emerging growth company that has chosen not to take advantage of the extended transition period exemptions because of the potential differences in accounting standards used.

In addition, we have chosen to take other exemptions and reduced reporting requirements provided by the JOBS Act and are not required to, among other things:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) &nbsp;&nbsp;&nbsp;&nbsp;provide an auditor's attestation report on Pear's system of internal control over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) &nbsp;&nbsp;&nbsp;&nbsp;provide all of the compensation disclosure that may be required of non-emerging growth public companies under the Dodd-Frank Wall Street Reform and Consumer Protection Act; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) &nbsp;&nbsp;&nbsp;&nbsp;disclose certain executive compensation-related items, such as the correlation between executive compensation and performance and comparisons of the Chief Executive Officer's compensation to median employee compensation.

**Intellectual Property** 

In addition to securing regulatory authorization for our PDTs, we make strategic use of various intellectual property regimes: patents, copyrights, trademarks, and trade secrets. We strive to protect and enhance the proprietary technology, inventions, and improvements that are commercially important to the development of our business, including seeking, maintaining, and defending patent rights, whether developed internally or licensed from third parties. We also rely on copyrights (including copyright registrations for product source code), on trademarks, and on trade secrets relating to our PDT product development to develop, strengthen, and maintain our proprietary position in the PDT field.

Our commercial success may depend in part on our ability to: consummate a strategic alternative, obtain and maintain patent and other proprietary protection for commercially important technology, inventions and know-how related to our business; defend and enforce our patents, copyrights, trademarks, and other proprietary rights;

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 37

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

preserve the confidentiality of our trade secrets; and operate without infringing the valid, enforceable patents, and proprietary rights of third parties. Our ability to limit third parties from making, using, selling, offering to sell, or importing our products may depend on the extent to which we have rights under valid and enforceable licenses, patents, copyrights, or trade secrets that cover these activities. In some cases, enforcement of these rights may depend on third-party licensors or co-owners. With respect to both company-owned and licensed intellectual property, we cannot be sure that patents will be granted with respect to any of our pending patent applications or with respect to any patent applications filed by us in the future, nor can we be sure that any of our existing patents or any patents that may be granted to us in the future will be commercially useful in protecting our commercial products.

Patent expiration dates noted below refer to statutory expiration dates and do not take into account any potential patent term adjustment or extension that may be available.

*Solely Owned Patent Assets* 

We exclusively own eleven patent families directed to a variety of different aspects related to PDTs. One family is directed to ensuring data security in the treatment of diseases and disorders using digital therapeutics. One US patent has issued in this family and will expire in 2038. A continuation patent application has been filed claiming the benefit of the allowed application, and, if granted, will expire in 2038. A Patent Cooperation Treaty application has been filed in this family, and national phase entry applications have been filed in Europe, Japan, Singapore, New Zealand, China, Israel, Canada, and Australia; of those, patents have issued in Canada, New Zealand, Australia, Israel and Japan. Another family is directed to the optimization of buprenorphine induction. If granted, the patent(s) in this family would expire in 2039. A Patent Cooperation Treaty application has been filed in this family, and national phase entry applications have been filed in Australia, Canada, China, Europe, Israel, Japan, New Zealand, Singapore, and South Korea. Another family is directed to the treatment of migraines. If granted, the patent(s) in this family would expire in 2040. A Patent Cooperation Treaty application has been filed in this family, and national phase entry applications have been filed in Australia, Canada, China, Europe, Israel, Japan, New Zealand, Singapore, and South Korea. Another family is directed to treating depressive symptoms associated with multiple sclerosis. If granted, the patent(s) in this family would expire in 2040. A Patent Cooperation Treaty application has been filed in this family, and national phase entry applications have been filed in Australia, Canada, China, Europe, Israel, Japan, New Zealand, Singapore, and South Korea. Another family is directed to clinical curation of crowdsourced data. If granted, the patent(s) in this family would expire in 2040. A Patent Cooperation Treaty application has been filed in this family, and national phase entry applications have been filed in Australia, Canada, China, Europe, Israel, Japan, New Zealand, Singapore, and South Korea. Another family is directed to visualizing and modifying treatment of a patient utilizing digital therapeutics. If granted, the patent(s) in this family would expire in 2040. A Patent Cooperation Treaty application has been filed in this family, but this application has lapsed. Another family is directed to generating and administering digital therapeutic placebo and shams. If granted, the patent(s) in this family would expire in 2041. A Patent Cooperation Treaty application has been filed in this family, and national phase entry applications have been filed in Australia, Canada, China, Europe, Israel, Japan, New Zealand, Singapore, and South Korea.

Another family is directed to a display screen or portion thereof with an animated graphical user interface. A US design patent has issued in this family and will expire in 2035. A European design has been registered in this family and will expire in 2024. Another family is directed to a display screen or portion thereof with a graphical user interface. A US design patent has issued in this family and will expire in 2035. A European design has been registered in this family and will expire in 2024. Another family is directed to a display screen or portion thereof with an animated graphical user interface. A US design patent has issued in this family and will expire in 2036. A European design has been registered in this family and will expire in 2024. Another family is directed to a graphical user interface. A European design has been registered in this family and will expire in 2024.

*Jointly Owned Patent Assets* 

We jointly own two patent families directed to a variety of different aspects related to digital therapeutics. One family is directed to the treatment of depressive symptoms and disorders utilizing digital therapies. If granted, the patent(s) in this family would expire in 2040. A Patent Cooperation Treaty application has been filed in this family,

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 38

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

and national phase entry date applications have been filed in Australia, Canada, China, Europe, Israel, Japan, New Zealand, Singapore, and South Korea. Another family is directed to treatment utilizing antipsychotics in combination with digital therapies. If granted, the patent(s) in this family would expire in 2039. A Patent Cooperation Treaty application has been filed in this family, and national phase entry applications have been filed in Australia, Canada, China, Europe, Israel, Japan, New Zealand, Singapore, and South Korea.

*Licensed Patent Assets* 

As discussed in "*License Agreements - ISF*" above, we are the exclusive licensee within a broad field of use to a portfolio of patents directed to combinational drug and prescription digital therapy treatment. Nineteen US patents have been allowed in this portfolio, the patents expiring between 2028 and, at the latest, 2036. Those patents encompass more than 550 granted claims directed to drug/software combinations and that may potentially cover aspects of current or future PDTs. As exclusive licensee, we have played a pivotal role in the prosecution of this portfolio.

*Registered Copyrights* 

In addition to our portfolio of utility and design patents, we hold copyright in each of our PDTs and pursue federal copyright registration where appropriate. We have registered copyright in the source code for each of our commercial products with the US Copyright Office.

*Registered Trademarks* 

Beyond patent and copyright protection, we also protect our valuable trademarks and associated brand recognition by registering trademarks with the US Patent and Trademark Office and in certain foreign jurisdictions. We own seven US trademark registrations covering goods and services in multiple classes. Our federally registered trademarks are PEAR THERAPEUTICS, the Pear logo, RESET, RESET-O, and SOMRYST. Our pending application to register RESET-A and one of our RESET trademark registrations are the subject of ongoing opposition and cancellation proceedings, respectively, and decisions in our favor in prior opposition and cancellation proceedings brought by the same entity related to other RESET and RESET-O trademark applications and registrations, respectively, are the subject of an appeal pending in a federal district court in California. We have registered PEAR THERAPEUTICS in the European Union. We have registered SOMRYST in the United Kingdom.

**Government Regulation** 

*Insurance and Coverage* 

In the US and markets in other countries, patients generally rely on third-party payors to reimburse all or part of the costs associated with their treatment. Adequate coverage and reimbursement from governmental healthcare programs, such as Medicare and Medicaid, and commercial payors is critical to new product acceptance. Pear's ability to successfully commercialize Pear's product candidates will depend in part on the extent to which coverage and adequate reimbursement for these products and related treatments will be available from government health administration authorities, private health insurers, and other organizations. Government authorities and third-party payors, such as private health insurers and health maintenance organizations, decide which medications they will pay for and establish reimbursement levels. The availability of coverage and extent of reimbursement by governmental and private payors is essential for most patients to be able to afford treatments. Sales of product candidates that Pear may identify will depend substantially, both domestically and abroad, on the extent to which the costs of Pear's product candidates will be paid by health maintenance, managed care, pharmacy benefit, and similar healthcare management organizations, or reimbursed by government health administration authorities, private health coverage insurers, and other third-party payors.

There is also significant uncertainty related to the insurance coverage and reimbursement of newly approved products, and coverage may be more limited than the purposes for which the product is approved by FDA or comparable foreign regulatory authorities. In the US, a key decision-maker about reimbursement for new products is the Centers for Medicare & Medicaid Services ("<u>CMS</u>"), an agency within the US Department of Health and

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 39

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

Human Services ("<u>HHS</u>"). CMS decides whether and to what extent a new product will be covered and reimbursed under Medicare, and several US private payors tend to follow CMS to some degree.

In determining reimbursement, payors generally consider whether the product is:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• a covered benefit under its health plan;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• safe, effective, and medically necessary;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• appropriate for the specific patient;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• cost-effective; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• neither experimental nor investigational.

Each payor determines whether or not it will provide coverage for a treatment, what amount it will pay the manufacturer for the treatment, and on what tier of its formulary it will be placed. The position on a payor's list of covered drugs, biological products, and medical devices, or formulary, generally determines the co-payment that a patient will need to make to obtain the therapy and can strongly influence the adoption of such therapy by patients and clinicians. Patients who are prescribed treatments for their conditions and clinicians prescribing such services generally rely on third-party payors to reimburse all or part of the associated healthcare costs. Patients are unlikely to use Pear's products unless coverage is provided and reimbursement is adequate to cover a significant portion of the cost of Pear's products. There may be significant delays in obtaining such coverage and reimbursement for newly authorized products, and coverage may be more limited than the purposes for which the product is authorized by FDA.

*Healthcare Laws and Regulations* 

Pear is subject to applicable fraud and abuse and other healthcare laws and regulations, including, without limitation, the US federal Anti-Kickback Statute and the US federal False Claims Act, which may constrain the business or financial arrangements, and relationships through which Pear sells, markets, and distributes Pear's products. In particular, the promotion, sales and marketing of healthcare items and services, as well as certain business arrangements in the healthcare industry (e.g., healthcare providers, clinicians and third-party payors), are subject to extensive laws designed to prevent fraud, kickbacks, self-dealing and other abusive practices. These laws and regulations may restrict or prohibit a wide range of pricing, discounting, marketing and promotion, structuring and commission(s), certain customer incentive programs, and other business arrangements generally. Pear also may be subject to patient information and privacy and security regulation by both the federal government and the states in which Pear conducts its business. The applicable federal and state healthcare laws and regulations that may affect Pear's ability to operate include, but are not limited to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the federal Anti-Kickback Statute, which prohibits, among other things, persons or entities from knowingly and willfully soliciting, receiving, offering or paying any remuneration (including any kickback, bribe or rebate), directly or indirectly, overtly or covertly, in cash or in kind, to induce, or in return for, the purchase, lease, order, arrangement, or recommendation of any good, facility, item or service for which payment may be made, in whole or in part, under a federal healthcare program, such as the Medicare and Medicaid programs. A person or entity does not need to have actual knowledge of the federal Anti-Kickback Statute or specific intent to violate it to have committed a violation. Violations are subject to civil and criminal fines and penalties for each violation, plus up to three times the remuneration involved, imprisonment, and exclusion from government healthcare programs. In addition, the government may assert that a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the federal False Claims Act or federal civil money penalties. On December 2, 2020, the Office of Inspector General ("<u>OIG</u>") published further modifications to the federal Anti-Kickback Statute. Under the final rules, OIG added safe harbor protections under the Anti-Kickback Statute for certain coordinated care and value-based arrangements among clinicians, providers, and others. This rule, with certain exceptions, became effective January 19,

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 40

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2021. Implementation of this change is currently under review by the Biden administration and may be amended or repealed. Pear continues to evaluate what effect, if any, the rule will have on Pear's business;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the federal civil and criminal false claims laws and civil monetary penalty laws, such as the federal False Claims Act, which impose criminal and civil penalties and authorize civil whistleblower or qui tam actions, against individuals or entities for, among other things: knowingly presenting, or causing to be presented, to the federal government, claims for payment that are false or fraudulent; knowingly making, using or causing to be made or used, a false statement of record material to a false or fraudulent claim or obligation to pay or transmit money or property to the federal government or knowingly concealing or knowingly and improperly avoiding or decreasing an obligation to pay money to the federal government. A person can be held liable under the federal False Claims Act even when they do not submit claims directly to government payors if they are deemed to "cause" the submission of false or fraudulent claims. The federal False Claims Act also permits a private individual acting as a "whistleblower" to bring actions on behalf of the federal government alleging violations of the federal False Claims Act and to share in any monetary recovery;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• applicable privacy laws and regulations, including HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009 ("<u>HITECH</u>"), and their respective implementing regulations, including the Final Omnibus Rule published in January 2013, which impose requirements on certain covered healthcare providers, health plans, and healthcare clearinghouses as well as their respective business associates, independent contractors or agents of covered entities, that perform services for them that involve the creation, maintenance, receipt, use, or disclosure of, individually identifiable health information relating to the privacy, security and transmission of individually identifiable health information. HITECH also created new tiers of civil monetary penalties, amended HIPAA to make civil and criminal penalties directly applicable to business associates, and gave state attorneys general new authority to file civil actions for damages or injunctions in federal courts to enforce the federal HIPAA laws and seek attorneys' fees and costs associated with pursuing federal civil actions. In addition, there may be additional federal, state and non-US laws which govern the privacy and security of health and other personal information in certain circumstances, many of which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the US federal transparency requirements under the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Affordability Reconciliation Act of 2010, or collectively, the Affordable Care Act ("<u>ACA</u>") including the provision commonly referred to as the Physician Payments Sunshine Act, and its implementing regulations, which requires applicable manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children's Health Insurance Program to report annually to CMS, information related to payments or other transfers of value made to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors) and teaching hospitals, as well as ownership and investment interests held by the physicians described above and their immediate family members. Effective January 1, 2022, these reporting obligations will extend to include transfers of value made to certain non-physician providers such as physician assistants and nurse practitioners; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• federal consumer protection and unfair competition laws, which broadly regulate marketplace activities and activities that potentially harm consumers.

Additionally, Pear is subject to state equivalents of each of the healthcare laws and regulations described above, among others, some of which may be broader in scope and may apply regardless of the payor. Many states in the US have adopted laws similar to the federal Anti-Kickback Statute and False Claims Act, and may apply to Pear's business practices, including, but not limited to, research, distribution, sales or marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental payors, including private insurers. Several states also impose other marketing restrictions or require medical device manufacturers to make marketing or price disclosures to the state, and may also require that medical device manufacturers, such as Pear, maintain licenses to manufacture and/or distribute products within their state. State laws also govern the privacy and security of health information in some circumstances, many of which differ from each other in significant ways and

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 41

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

often are not preempted by HIPAA, thus complicating compliance efforts. There are ambiguities as to what is required to comply with these state requirements and if Pear fails to comply with an applicable state law requirement, Pear could be subject to penalties.

*Data Privacy and Security Laws* 

Numerous federal and state laws and regulations govern the collection, use, disclosure, storage and transmission of personally identifiable information, including protected health information. These laws and regulations, including their interpretation by governmental agencies, are subject to frequent change and could have a negative impact on Pear's business. In addition, in the future, industry requirements or guidance, contractual obligations, and/or legislation at both the federal and the state level may limit, forbid or regulate the use or transmission of health information outside of the US.

These varying interpretations can create complex compliance issues for Pear and Pear's partners and potentially expose Pear to additional expense, adverse publicity and liability, any of which could adversely affect Pear's business.

Federal and state consumer protection laws are increasingly being applied by the FTC and states' attorneys general to regulate the collection, use, storage, and disclosure of personal or personally identifiable information, through websites or otherwise, and to regulate the presentation of website content.

The security measures that Pear and Pear's third-party vendors and subcontractors have in place to ensure compliance with privacy and data protection laws may not protect Pear's facilities and systems from security breaches, ransomware acts of vandalism or theft, computer viruses, misplaced or lost data, programming, and human errors or other similar events. Even though Pear provides for appropriate protections through Pear's agreements with Pear's third-party vendors, Pear still has limited control over their actions and practices. A breach of privacy or security of personally identifiable health information may result in an enforcement action, including criminal and civil liability, against us. Pear is not able to predict the extent of the impact such incidents may have on Pear's business. Enforcement actions against Pear could be costly and could interrupt regular operations, which may adversely affect Pear's business. While Pear has not received any notices of violation of the applicable privacy and data protection laws, and we believe Pear is in compliance with such laws, there can be no assurance that Pear will not receive such notices in the future.

There is ongoing concern from privacy advocates, regulators, and others regarding data privacy and security issues, and the number of jurisdictions with data privacy and security laws has been increasing. Also, there are ongoing public policy discussions regarding whether the standards for de-identification, anonymization or pseudonymization of health information are sufficient, and the risk of re-identification sufficiently small, to adequately protect patient privacy. Pear expects that there will continue to be new proposed and amended laws, regulations and industry standards concerning privacy, data protection and information security in the US, such as the California Consumer Privacy Act ("<u>CCPA</u>"), which went into effect on January 1, 2020 and has been amended several times. Effective January 1, 2023, a new California privacy law, the CPRA, (with certain provisions having retroactive effect to January 1, 2022) went into effect. The CPRA creates additional obligations with respect to processing and storing personal information. Other states in the Unites States also are considering omnibus privacy legislation, and industry organizations regularly adopt and advocate for new standards in these areas. While the CCPA contains exceptions for certain activities involving protected health information already regulated under HIPAA, Pear cannot yet determine the impact the CCPA or other such future laws, regulations and standards may have on Pear's business.

*Healthcare Legislative Reform* 

In both the US and certain foreign jurisdictions, there have been a number of legislative and regulatory changes to the healthcare system that could impact Pear's ability to sell Pear's products profitably. In particular, in 2010, the ACA was enacted, which contained a number of measures aimed at controlling healthcare costs.

Since its enactment, there have been numerous judicial, administrative, executive, and legislative challenges to certain aspects of the ACA, and Pear expects there will be additional challenges and amendments to the ACA in the

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 42

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

future. Additionally, the Trump administration issued various Executive Orders which eliminated cost-sharing subsidies and various provisions that would impose a fiscal burden on states or a cost, fee, tax, penalty, or regulatory burden on individuals, healthcare providers, health insurers, or manufacturers of pharmaceuticals or medical devices and Congress has introduced several pieces of legislation aimed at significantly revising or repealing the ACA. Further, on December 20, 2019, President Trump signed into law the Further Consolidated Appropriations Act (H.R. 1865), which repealed the Cadillac tax, the health insurance provider tax, and the medical device excise tax. It is unclear whether the ACA will be overturned, repealed, replaced, or further amended. Pear cannot predict what affect further changes to the ACA would have on Pear's business, especially given the new administration.

Other legislative changes have been proposed and adopted in the US since the ACA was enacted. In August 2011, the Budget Control Act of 2011, among other things, created measures for spending reductions by Congress. A Joint Select Committee on Deficit Reduction, tasked with recommending a targeted deficit reduction of at least $1.2 trillion for the years 2013 through 2021, was unable to reach required goals, thereby triggering the legislation's automatic reduction to several government programs. This includes aggregate reductions of Medicare payments to providers up to 2% per fiscal year, and, due to subsequent legislative amendments, will remain in effect through 2030 unless additional congressional action is taken. The Coronavirus Aid, Relief, and Economic Security Act, as well as subsequent legislation, suspended the sequestration payment adjustment percentage of 2% applied to all Medicare Fee-for-Service claims from May 1, 2020 through March 31, 2022. Sequestration resumed at 1% for dates between April 1, 2022 and June 30, 2022, and then increased to the pre-pandemic level of 2% for dates after July 1, 2022.

There has been increasing legislative and enforcement interest in the US with respect to prescription-pricing practices. It is unclear what effect such legislative and enforcement interest may have on prescription devices. Further, it is unclear whether the Biden administration will challenge, reverse, revoke or otherwise modify the prior administration's executive and administrative actions.

Pear expects that these and other healthcare reform measures that may be adopted in the future, may result in more rigorous coverage criteria and in additional downward pressure on the price that Pear received for any approved device, which could have an adverse effect on customers for Pear's product candidates. Any reduction in reimbursement from Medicare or other government programs may result in a similar reduction in payments from private payors.

There have been, and likely will continue to be, legislative and regulatory proposals at the foreign, federal and state levels in the US directed at broadening the availability of healthcare and containing or lowering the cost of healthcare. The implementation of cost containment measures or other healthcare reforms may prevent Pear from being able to generate revenue, attain profitability or commercialize Pear's products. Such reforms could have an adverse effect on anticipated revenue from product candidates that Pear may successfully develop and for which Pear may obtain regulatory approval and that may affect Pear's overall financial condition and ability to develop product candidates. If Pear or any third parties Pear may engage are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if Pear or such third parties are not able to maintain regulatory compliance, Pear's current or any future product candidates Pear may develop may lose any regulatory approval that may have been obtained and Pear may not achieve or sustain profitability.

*FDA Regulation* 

***United States***

Pear's PDTs are medical devices subject to extensive and ongoing regulation by FDA under the Federal Food, Drug, and Cosmetic Act ("<u>FD&C Act</u>") and its implementing regulations, as well as other federal and state regulatory bodies in the US The laws and regulations govern, among other things, product design and development, preclinical and clinical testing, manufacturing, packaging, labeling, storage, recordkeeping and reporting, clearance, authorization, or approval, marketing, distribution, promotion, import and export and post-marketing surveillance. Failure to comply with applicable requirements may subject a device and/or its manufacturer to a variety of

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 43

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

administrative sanctions, such as issuance of warning letters, import detentions, civil monetary penalties, mandatory recalls, and/or judicial sanctions, such as product seizures, injunctions and criminal prosecution.

Generally, establishments that design and/or manufacture devices are required to register their establishments with the FDA. They also must provide the FDA with a list of the devices that they design and/or manufacture at their facilities.

The FDA enforces its requirements by market surveillance and periodic visits, both announced and unannounced, to inspect or re-inspect equipment, facilities, laboratories and processes to confirm regulatory compliance. These inspections may include the manufacturing facilities of subcontractors. Following an inspection, the FDA may issue a report, known as a Form 483, listing instances where the manufacturer has failed to comply with applicable regulations and/or procedures or, if observed violations are sufficiently severe and urgent, a warning letter. If the manufacturer does not adequately respond to a Form 483 or warning letter, the FDA make take enforcement action against the manufacturer or impose other sanctions or consequences, which may include:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• cease and desist orders;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• injunctions or consent decrees;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• civil monetary penalties;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• recall, detention or seizure of products;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• operating restrictions, partial or total shutdown of production facilities;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• refusal of or delay in granting requests for 510(k) clearance, de novo authorization, or premarket approval of new products or modified products;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• withdrawing 510(k) clearances, de novo authorizations, or premarket approvals that are already granted;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• refusal to grant export approval or export certificates for devices; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• criminal prosecution.

***FDA's Pre-market Clearance, Authorization, and Approval Requirements***

Each prescription digital therapeutic Pear seeks to commercially distribute in the US will require either a prior de novo authorization, 510(k) clearance, unless it is exempt, or a Premarket Approval ("<u>PMA</u>") from FDA under its medical device authorities. Generally, if a new device has a predicate that is already classified as Class II, FDA will allow that new device to be marketed under a 510(k) clearance. If there is no legally marketed predicate device and general controls alone or with special controls provide reasonable assurance of safety and effectiveness, FDA will allow the new device to be marketed under a de novo authorization; otherwise, a PMA is required. Medical devices are classified into one of three classes—Class I, Class II or Class III—depending on the degree of risk associated with each medical device and the extent of control needed to provide reasonable assurance of safety and effectiveness. Class I devices are deemed to be low risk and are subject to the general controls of the FD&C Act, such as provisions that relate to: adulteration; misbranding; registration and listing; notification; records and reports; and good manufacturing practices. Class II devices are moderate risk. They are subject to general controls and may also be subject to special controls. Special controls include, for example, performance standards, post market surveillance, patient registries and guidance documents. Devices deemed by FDA to pose the greatest risk, such as life-sustaining, life-supporting or implantable devices, or devices deemed not substantially equivalent to a previously cleared 510(k) device, are placed in Class III. A Class III device cannot be marketed in the US unless FDA approves the device after submission of a PMA. However, there are some Class III devices for which FDA has not yet called for a PMA. For these devices, the manufacturer must submit a pre-market notification and obtain 510(k) clearance in order to commercially distribute these devices. FDA can also impose sales, marketing or other restrictions on devices in order to assure that they are used in a safe and effective manner. There is no guarantee that a submission to FDA will result in a clearance, authorization, or approval. In addition, various review processes and goals to which applications are currently subject are the result of Medical Device User Fee Act ("<u>MDUFA</u>") IV,

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 44

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

which expires after September 30, 2022; negotiations for enactment of a MDUFA V law and adoption of associated goals are ongoing.

While most Class I and some Class II devices may be marketed without prior FDA authorization, most other medical devices can be legally sold within the US only if the FDA has: (i) approved a PMA application prior to marketing, generally applicable to most Class III devices; (ii) cleared the device in response to a 510(k) submission, generally applicable to some Class I and most Class II devices; or (iii) authorized the device to be marketed through the de novo classification process, generally applicable for novel Class I or II devices.

***510(k) Clearance Pathway***

Product marketing in the US for most Class II and a limited number of Class I devices typically follows the 510(k) premarket notification pathway. When a 510(k) clearance is required, Pear must submit a pre-market notification to FDA demonstrating that Pear's proposed device is substantially equivalent to a legally marketed device, referred to as a "predicate device." A predicate device may be a previously 510(k) cleared device or a Class III device that was in commercial distribution before May 28, 1976 for which the FDA has not yet called for PMA applications, or a product previously placed in Class II or Class I through the de novo classification process. To demonstrate substantial equivalence, the manufacturer must show that the proposed device has the same intended use as the predicate device, and it either has the same technological characteristics, or different technological characteristics and the information in the pre-market notification demonstrates that the device is equally safe and effective and does not raise different questions of safety and effectiveness as compared to the predicate device. FDA may require further information, including clinical data, to make a determination regarding substantial equivalence. If FDA determines that the device, or its intended use, is not substantially equivalent to a previously cleared device or use, FDA will place the device into Class III.

There are three types of 510(k)s: traditional, special and abbreviated. Special 510(k)s are for devices that are modified, and the modification needs a new 510(k) but does not affect the intended use or alter the fundamental scientific technology of the device. Abbreviated 510(k)s are for devices that conform to a recognized standard. FDA has a user fee goal to apply no more than 90 calendar review days to traditional and abbreviated 510(k) submissions. During the process, FDA may issue an Additional Information request, which stops the clock. The applicant has 180 days to respond. Therefore, the total review time could be up to 270 days. The special and abbreviated 510(k)s are intended to streamline review, and FDA intends to process special 510(k)s within 30 days of receipt, although it can take longer, if FDA has questions. There are no guarantees that FDA meet its goals, although it has agreed to try to meet its 90 calendar day decision goals in 95% of 510(k) submissions for FY 2022.

After a device receives 510(k) clearance, any modification that could significantly affect its safety or effectiveness, or that would constitute a major change in its intended use, requires a new 510(k) clearance or could require a PMA approval or de novo classification. The FDA requires each manufacturer to make this determination in the first instance, but the FDA can review any such decision. If the FDA disagrees with a manufacturer's decision not to seek a new 510(k) clearance for the modified device, the agency may retroactively require the manufacturer to seek 510(k) clearance, de novo classification, or PMA approval. The FDA also can require the manufacturer to cease marketing and/or recall the modified device until 510(k) clearance, de novo authorization, or PMA approval is obtained.

***De Novo Classification***

When it is determined there is no legally marketed predicate device, the de novo process provides a pathway to classify novel low- or moderate-risk medical devices for which general controls alone, or general and special controls, provide reasonable assurance of safety and effectiveness. Medical device types that FDA has not previously classified as Class I, II or III are automatically classified into Class III regardless of the level of risk they pose. The de novo classification procedure allows a manufacturer whose novel device is automatically classified into Class III to request down-classification of its medical device into Class I or Class II on the basis that the device presents low or moderate risk, rather than requiring the submission and approval of a PMA application. Prior to the enactment of the FDA Safety and Innovation Act of 2012 ("<u>FDASIA</u>"), a medical device could only be eligible for de novo classification if the manufacturer first submitted a 510(k) pre-market notification and received a

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 45

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

determination from FDA that the device was not substantially equivalent. FDASIA streamlined the de novo classification pathway by permitting manufacturers to request de novo classification directly without first submitting a 510(k) pre-market notification to FDA and receiving a not substantially equivalent determination. Under FDASIA, FDA is required to classify the device within 120 days following receipt of the de novo application. If the manufacturer seeks reclassification into Class II, the manufacturer must include a draft proposal for special controls that are necessary to provide a reasonable assurance of the safety and effectiveness of the medical device. In addition, FDA may reject the reclassification petition if it identifies a legally marketed predicate device that would be appropriate for a 510(k) or determines that the device is not low to moderate risk or that general controls would be inadequate to control the risks and special controls cannot be developed. Devices that are classified into Class I or Class II through a de novo classification request may be marketed and used as predicates for future premarket notification 510(k) submissions.

FDA has a user fee goal to review a de novo request in 150 calendar review days (which FDA agreed to try and meet for 70% of De Novo submissions in FY 2022). During the process, FDA may issue an Additional Information request, which stops the clock. The applicant has 180 days to respond. Therefore, the total review time could be as long as 330 days.

***Pre-market Approval Pathway***

A Class III product not eligible for either 510(k) clearance or de novo classification must follow the PMA approval pathway. The PMA application process is generally more expensive, rigorous, lengthy, demanding, and uncertain than the 510(k) premarket notification or de novo process. A PMA application must be supported by extensive data, including but not limited to technical, preclinical, clinical trials, manufacturing, marketing history, design, controls, and labeling to demonstrate to FDA's satisfaction reasonable assurance of safety and effectiveness of the device.

FDA may convene an advisory panel of experts from outside FDA to review and evaluate the application and provide recommendations to FDA as to the safety and effectiveness of the device. Although FDA is not bound by the advisory panel decision, the panel's recommendations are important to FDA's overall decision-making process. In addition, FDA may conduct a preapproval inspection of the manufacturing facility to ensure compliance with the Quality System Regulation ("<u>QSR</u>"), which imposes elaborate testing, control, documentation, and other quality assurance requirements. The agency also may inspect one or more clinical sites to assure compliance with FDA's regulations.

FDA has a user fee goal to review a PMA in 180 calendar review days, if the submission does not require advisory committee input, or 320 review days if the submission does require advisory committee input. FDA has agreed to try to meet this goal in most cases for FY 2022, though it is not guaranteed. During the process, FDA may issue a major deficiency letter, which stops the review clock. The applicant has up to 180 days to respond. Therefore, the total review time could be up to 360 days, if the submission does not require advisory committee input, or 500 days if the submission does require advisory committee input.

Upon completion of the PMA review, FDA may: (i) approve the PMA which authorizes commercial marketing with specific prescribing information for one or more indications, which can be more limited than those originally sought and can include post-approval conditions that the FDA believes necessary to ensure the safety and effectiveness of the device including, among other things, restrictions on labeling, promotion, sale and distribution; (ii) issue an approvable letter which indicates FDA's belief that the PMA is approvable and states what additional information FDA requires, or the post-approval commitments that must be agreed to prior to approval; (iii) issue a not approvable letter which outlines steps required for approval, but which are typically more onerous than those in an approvable letter, and may require additional clinical trials that are often expensive and time consuming and can delay approval for months or even years; or (iv) deny the application. If FDA issues an approvable or not approvable letter, the applicant has 180 days to respond, after which FDA's review clock is reset.

Even after approval of a PMA, a new PMA or PMA supplement may be required in the event of a modification to the device, its labeling or its manufacturing process. Supplements to a PMA often require the submission of the

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 46

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

same type of information required for an original PMA, except that the supplement is generally limited to that information needed to support the proposed change from the product covered by the original PMA.

***Breakthrough Devices***

The Breakthrough Devices Program is a voluntary program intended to expedite the review, development, assessment and review of certain medical devices that provide for more effective treatment or diagnosis of life-threatening or irreversibly debilitating human diseases or conditions for which no approved or cleared treatment exists or that offer significant advantages over existing approved or cleared alternatives. Submissions for devices designated as Breakthrough Devices will receive priority review, meaning that the review of the submission is placed at the top of the appropriate review queue and receives additional review resources, as needed and available. Although Breakthrough Device designation or access to any other expedited program may expedite the development or clearance/authorization/approval process, it does not change the standards for clearance/authorization/approval. Designation for any expedited review procedure does not ensure that we will ultimately obtain regulatory clearance or approval for such product.

***Clinical Trials***

Clinical trials are almost always required to support a PMA, are often required for a de novo authorization, and are sometimes required for 510(k) clearance. Clinical trials may also be conducted or continued to satisfy post-approval requirements for devices with PMAs. In the US, for significant risk devices, these trials require submission of an application for an investigational device exemption ("<u>IDE</u>") to FDA prior to initiating clinical trials. The IDE application must be supported by appropriate data, such as animal and laboratory testing results, showing it is safe to test the device in humans and that the testing protocol is scientifically sound. The IDE must be approved in advance by FDA for a specific number of patients at specified study sites. A 30-day waiting period after the submission of each IDE is required prior to the commencement of clinical testing in humans. If the FDA disapproves the IDE within this 30-day period, the clinical trial proposed in the IDE may not begin. During the trial, the clinical trial sponsor must comply with FDA's IDE requirements for investigator selection, trial monitoring, reporting and recordkeeping. The investigators must obtain patient informed consent, rigorously follow the investigational plan and study protocol, control the disposition of investigational devices and comply with all reporting and recordkeeping requirements. Clinical trials for significant risk devices may not begin until the IDE application is approved by FDA and the appropriate institutional review boards ("<u>IRBs</u>") at the clinical trial sites. An IRB is an appropriately constituted group that has been formally designated to review and monitor medical research involving subjects and which has the authority to approve, require modifications in, or disapprove research to protect the rights, safety and welfare of human research subjects. A nonsignificant risk device does not require FDA approval of an IDE; however, the clinical trial must still be conducted in compliance with various requirements of FDA's IDE regulations and be approved by an IRB at the clinical trials sites. FDA or the IRB at each site at which a clinical trial is being performed may withdraw approval of a clinical trial at any time for various reasons, including a belief that the risks to study subjects outweigh the benefits or a failure to comply with FDA or IRB requirements. Even if a trial is completed, the results of clinical testing may not demonstrate the safety and effectiveness of the device, may be equivocal or may otherwise not be sufficient to obtain approval, authorization, or clearance of the product.

Sponsors of applicable clinical trials of devices are required to register with www.clinicaltrials.gov, a public database of clinical trial information. Information related to the device, patient population, phase of investigation, study sites and investigators and other aspects of the clinical trial is made public as part of the registration.

Although the QSR does not fully apply to investigational devices, the requirement for controls on design and development does apply. The clinical trial sponsor also must manufacture the investigational device in conformity with the quality controls described in the IDE application and any conditions of IDE approval that the FDA may impose with respect to manufacturing.

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 47

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

***Ongoing Regulation by FDA***

Even after a device receives clearance, authorization, or approval and is placed on the market, numerous regulatory requirements apply. These include:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• establishment registration and device listing;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the QSR, which requires manufacturers, including third-party manufacturers, to follow stringent design, testing, control, documentation, and other quality assurance procedures during all aspects of the manufacturing, design, development, distribution, and labeling process;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• labeling regulations and FDA prohibitions against the promotion of products for uncleared, unapproved, or "off-label" uses and other requirements related to promotional activities;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• medical device reporting regulations, which require that manufactures report to FDA if their device may have caused or contributed to a death or serious injury, or if their device malfunctioned and the device or a similar device marketed by the manufacturer would be likely to cause or contribute to a death or serious injury if the malfunction were to recur;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• corrections and removal reporting regulations, which require that manufacturers report to FDA field corrections or removals if undertaken to reduce a risk to health posed by a device or to remedy a violation of the FD&C Act that may present a risk to health; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• post market surveillance regulations, which apply to certain Class II or III devices when necessary to protect the public health or to provide additional safety and effectiveness data for the device.

FDA regulations require manufacturers to register with FDA and to list the devices they market. Additionally, the California Department of Health Services ("<u>CDHS</u>") requires manufacturers to register within the state. Following these registrations, FDA and CDHS inspect manufacturers on a routine basis for compliance with the QSR and applicable state regulations. These regulations require that Pear manufacture Pear's products and maintain related documentation in a prescribed manner with respect to manufacturing, testing and control activities. Other states might also require non-resident licenses concerning distribution of devices into their states. Pear is also subject to other federal, state and local laws and regulations relating to safe working conditions, laboratory and manufacturing practices. Failure to comply with applicable regulatory requirements can result in enforcement action by FDA or state authorities, which may include any of the following sanctions:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• warning or untitled letters, fines, injunctions, consent decrees and civil penalties;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• customer notifications, voluntary or mandatory recall or seizure of Pear's products;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• operating restrictions, partial suspension or total shutdown of production;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• delay in processing submissions or applications for new products or modifications to existing products;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• withdrawing clearance, authorization, and/or approvals that have already been granted; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• criminal prosecution.

The medical device reporting laws and regulations require manufacturers to provide information to FDA when they receive or otherwise become aware of information that reasonably suggests their devices may have caused or contributed to a death or serious injury as well as a device malfunction that likely would cause or contribute to death or serious injury if the malfunction were to recur. Failure to properly identify reportable events or to file timely reports, as well as failure to address each of the observations to FDA's satisfaction, can subject a manufacturer to warning letters, recalls, or other sanctions and penalties.

Advertising, marketing and promotional activities for devices are also subject to FDA and US Federal Trade Commission ("<u>FTC</u>") oversight and must comply with the statutory standards of the FD&C Act and the FDA's implementing regulations, and the Federal Trade Commission Act and FTC's implementing regulations. The FDA's

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 48

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

and FTC's oversight authority review of marketing and promotional activities encompasses, but is not limited to, direct-to-consumer advertising, healthcare provider-directed advertising and promotion, sales representative communications to healthcare professionals, promotional programming and promotional activities involving electronic media. The FDA also regulates industry-sponsored scientific and educational activities that make representations regarding product safety or efficacy in a promotional context.

Manufacturers of medical devices are permitted to promote products solely for the uses and indications set forth in the approved or cleared product labeling, and all claims must be truthful, non-misleading, and adequately substantiated. In addition, although healthcare providers may use medical devices in an off-label manner in accordance with the practice of medicine, FDA prohibits marketed devices from being marketed for off-label uses and regulates the advertising of certain devices as well. FDA and other agencies actively enforce the laws and regulations prohibiting the promotion of off-label uses, and a company that is found to have improperly promoted off-label uses may be subject to significant liability, including substantial monetary penalties and criminal prosecution, including False Claims Act liability for products covered under the federal health care programs.

Finally, newly discovered or developed safety or effectiveness data may require changes to a marketed product's labeling, including the addition of new warnings and contraindications, and also may require the implementation of other risk management measures. Also, new government requirements, including those resulting from new legislation, may be established, or FDA's policies may change, which could delay or prevent regulatory clearance or approval of Pear's products under development.

Pear has three FDA-authorized products: reSET, reSET-O, and Somryst. Pear's first product, reSET, obtained a de novo authorization as a Class II device. Pear's second and third products, reSET-O and Somryst, obtained 510(k) clearance as Class II devices.

**Human Capital**

The Company believes it has a talented, motivated, and dedicated team. Management is committed to supporting the development of all of its team members and continuously building on its strong culture that operates at the intersection of biology and software technology. As of December 31, 2022, we had approximately 200 employees, that includes, primarily full-time employees but also part-time employees and interns. We also engage consultants and temporary workers when needed. No employees were represented by labor unions or subject to collective bargaining agreements.

On July 25, 2022, the Company restructured of its operations and executed a reduction in workforce of 25 full-time employees. On November 14, 2022, the Company announced a second reduction in workforce, further reducing our headcount by approximately 59 employees.

***Workplace Practices and Policies***

The Company is committed to providing a workplace free of harassment or discrimination based on race, color, religion, sex, sexual orientation, gender identity or expression, pregnancy, age, national origin, disability status, genetic information, protected veteran status, or any other characteristic protected by law. The Company is an equal opportunity employer committed to inclusion and diversity.

In managing our business, we strive to develop and implement policies and programs that support our business goals, maintain competitiveness, promote shared fiscal responsibility among our company and our employees, strategically align talent within our organization and reward performance, while also managing the costs of such policies and programs. Our employees are supported with training and development opportunities to pursue their career paths and to ensure compliance with our policies. We adhere to our code of business conduct and ethics (the "<u>Code of Business Conduct and Ethics</u>"), which sets forth a commitment to our stakeholders, including our employees, to operate with integrity and mutual respect.

During the COVID-19 pandemic, we have taken and continue to take necessary actions to safeguard the health of our employees. Steps we have taken include enhancing office safety measures, encouraging hygiene practices

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 49

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

advised by health authorities, restricting non-essential business travel at certain times during the pandemic, requiring proof of COVID-19 vaccinations, including booster shots as applicable, for employees, visitor protocols, and flexibility in remote working for all of our employees, which has continued to evolve. We continue to actively monitor risks related to COVID-19 and proper application of our safety protocol to remain aligned with federal, state, and local laws, regulations, and guidelines. We are committed to providing consistent, transparent communication to employees around safe practices, quarantine and testing protocols, vaccine availability, and policies and procedures for safely returning to office work for those employees. We believe our technology platform will continue to support the effectiveness of our employees that choose to work remotely. Our employees and their families are also supported with access to a variety of flexible and convenient health and welfare programs, including benefits that support their physical and mental health.

***Inclusion and Diversity***

The Company is committed to actively recruiting from diverse backgrounds, providing training and development opportunities, fostering an inclusive culture, and ensuring equitable pay for employees, and is continuing to focus on increasing diverse representation at every level of the Company. As of December 31, 2022, our board of directors was comprised of three female directors and four male directors, and our executive team was comprised of three female officers and four male officers.

Two female officers departed the Company, Kathy Jeffery, our Chief People Officer, departed on February 17, 2023, and Julia Strandberg, our Chief Commercial Officer, departed on March 10, 2023.

As of December 31, 2022, our leadership team was comprised of seven women and six men; one male vice president departed the Company in March 2023. Three female vice presidents and one male vice president will be departing the Company in April 2023.

***Compensation, Benefits, Growth, and Development***

Pear seeks to attract, develop, and retain talented professionals from the healthcare and tech sectors. We utilize a pay-for-performance compensation structure that involves a combination of salary, bonus (which includes a personal component and a company component, the proportions of which are based on the level of the employee), and stock-based compensation awards. We also have a robust rewards and recognition program. We seek to develop all of our employees, which we refer to as "Pearmates", with a learning and development program. We strive to stretch our highest potential employees by promoting from within where possible.

Pear has a number of Employee Resource Groups: employee-led, voluntary groups, based around a shared interest or goal, and aligned with the mission and objectives of the company. The following are our current Employee Resource Groups and their missions:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• DEI Committee - to enable a diverse, inclusive, and engaging organization capable of leveraging our differences and to outperform, innovate, and lead the way in enhancing diversity, equity, and inclusion within healthcare;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Pear Women & Allies - to create and maintain a strong environment that focuses on development, mentoring, leadership, and empowering women's success at Pear and to be the leading digital health company for women employees;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Employee Engagement Council - a cross-functional and cross-geographic team empowered to improve the employee experience at Pear; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Fun Committee: To support Pearmates by encouraging them to take a moment out of their day to have some fun!

***Engagement***

The Company believes that open and honest communication among Pearmates, managers, and leadership fosters an open, collaborative work environment where everyone can participate, develop and thrive. Pearmates are encouraged to come to their managers with questions, feedback, or concerns, and we regularly conduct surveys

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 50

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

that gauge employee sentiment in areas like the Company culture, communication, leadership, work environment, well-being, rewards and recognition, compensation and benefits, and career development.

**Available Information**

We file annual, quarterly, and current reports, proxy statements, and other information with the SEC. The SEC maintains an Internet website at <u>www.sec.gov</u> that contains reports, proxy and information statements and other information about issuers, like us, that file electronically with the SEC. We also maintain a website at <u>https://peartherapeutics.com/</u>. We make available, free of charge, on our investor relations website at <u>https://investors.peartherapeutics.com/financial-information/sec-filings</u>, our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to these reports as soon as reasonably practicable after electronically filing or furnishing those reports to the SEC. Information contained on our website is not a part of or incorporated by reference into this or any other report we file with or furnish to the SEC.

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 51

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

**ITEM 1A. RISK FACTORS** 

**Summary of Risk Factors**

*Below is a summary of the principal factors that make an investment in our Class A common stock speculative or risky. This summary does not address all of the risks that we face. Additional discussion of the risks summarized in this risk factor summary, and other risks that we face, can be found below under the heading "Risk Factors" and should be carefully considered, together with other information in this Form 10-K and our other filings with the SEC before making an investment decision regarding our Class A common stock.*

Risks relating to our Strategic Alternative Process, Potential Strategic Transaction, and Financial Position:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We have decided to seek a strategic acquisition, business combination, partnership or other change of control transaction, and there is no guarantee that this strategic path will be successful.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• If we are unable to successfully complete a strategic acquisition, we may be forced to cease operations altogether or file for bankruptcy protection.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We may not realize any additional value in a strategic transaction.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• If we are successful in completing a strategic transaction, we may be exposed to other operational and financial risks.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We may not fully realize the expected cost savings and/or operating efficiencies from our restructuring activities and our ability to consummate a strategic transaction depends on our ability to retain our employees required to consummate such transaction.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We may become involved in securities litigation that could divert management's attention and harm the company's business, and insurance coverage may not be sufficient to cover all costs and damages.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We have identified conditions and events that raise substantial doubt about our ability to continue as a going concern, we need substantial funding, and if we are unable to raise capital on favorable terms, our business, financial condition, and results of operation could be materially and adversely affected.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We have incurred net losses in every year since our inception and anticipate that we will continue to incur net losses for the foreseeable future.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Our credit agreement with Perceptive Credit Holdings III, LP restricts our current and future operations, particularly our ability to respond to changes or to take certain actions.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Perceptive claims that certain events of default have occurred under the Perceptive Credit Facility. Upon the occurrence of an Event of Default, Perceptive may declare the full amount outstanding under the Perceptive Credit Agreement due and payable, which would materially and adversely affect our ability to continue operations.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The amount of our future losses is uncertain and our quarterly and annual operating results may fluctuate significantly or fall below the expectations of investors or securities analysts, each of which may cause our stock price to fluctuate or decline.

Risks relating to our business and industry include:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The failure of our prescription digital therapeutics to achieve and maintain market acceptance and adoption by patients and physicians would cause our business, financial condition and results of operations to be materially and adversely affected.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The insurance coverage and reimbursement status of novel products, such as prescription digital therapeutics, is uncertain and only a limited number of healthcare insurers have agreed to reimburse purchases of our products. Failure to obtain or maintain adequate coverage and reimbursement for our products would substantially impair our ability to generate revenue.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The market for prescription digital therapeutics is new, rapidly evolving, and increasingly competitive, as the healthcare industry in the US is undergoing significant structural change.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Our future depends on the continued contributions of our senior management team and our ability to attract and retain other highly qualified personnel; in particular, Corey McCann, our President and Chief Executive Officer, and Christopher Guiffre, our Chief Financial Officer and Chief Operating Officer.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We rely significantly upon Access Agreements from third-parties for the sale of our products and, if the opportunities for Access Agreements decline, such reliance could adversely affect our results.

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 52

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• A limited number of healthcare insurers have agreed to reimburse purchases of our products, and there is no assurance that healthcare insurers will agree to reimburse purchases of our products in the future.

Risks relating to our intellectual property and technology include:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Limitations on our ability to maintain or obtain patent protection and/or the patent rights relating to our products and product candidates may limit our ability to prevent third parties from competing against us.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We in-license patents and content from third parties to develop our products and product candidates. If we had a dispute or fail to comply with obligations in the agreements with a third-party licensor, we could lose rights that are important to our business, or it could materially and adversely affect our ability to commercialize the product or product candidate affected by the dispute.

Risks relating to our products include:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The success of our products or any new products depends on several factors, including regulatory review timelines, timely completion, competitive pricing, adequate quality testing, integration with new and existing technologies in our products and third-party collaborators' technologies and overall market acceptance.

Risks relating to our regulatory compliance and legal matters include:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We operate in a highly regulated industry and are subject to a wide range of federal, state and local laws, rules and regulations, including US Food and Drug Administration ("<u>FDA</u>") and Federal Trade Commission ("<u>FTC</u>") regulatory requirements and laws pertaining to fraud and abuse in healthcare, that affect nearly all aspects of our operations. Failure to comply with these laws, rules and regulations, or to obtain and maintain required licenses, could subject Pear to enforcement actions and might require Pear to recall or withdraw a product from the market or cease operations.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Security breaches, ransomware attacks and other disruptions to our information technology structure could compromise our information, disrupt our business and expose us to significant liability, which would cause our business and reputation to suffer, and we may be unable to maintain and scale our technology.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The regulatory framework for digital health products is constantly evolving. Increasingly stringent regulatory requirements could create barriers to our development and introduction of new products. Conversely, in the event that regulatory requirements are lowered, competitors could potentially enter the prescription digital therapeutic market and compete against us more easily.

Risks relating to our financial reporting include:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• As a public reporting company, we are subject to rules and regulations established from time to time by the SEC regarding our internal control over financial reporting. If we fail to maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results or prevent fraud. As a result, investors may lose confidence in the accuracy of our financial reports, which would harm our business and the trading price of our Class A common stock.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Our management has identified certain internal control deficiencies that constitute material weaknesses. If we fail to maintain an effective system of disclosure controls and internal control over financial reporting, our ability to produce timely and accurate financial statements or comply with applicable regulations could be impaired.

Risks relating to ownership of our Class A common stock and Warrants:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The exercise of Warrants for our stock would increase the number of shares eligible for future resale in the public market and result in dilution to our stockholders. Such dilution will increase if more of our shares are redeemed.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Future resales of the Class A common stock may cause the market price of our securities to drop significantly, even if our business is doing well.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• If we fail to satisfy the continued listing requirements of Nasdaq such as the corporate governance requirements or the minimum closing bid price requirement, Nasdaq may take steps to delist our securities.

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 53

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

**Risk Factors**

*You should carefully consider the risks and uncertainties described below, together with the information included elsewhere in this Annual Report on Form 10-K and other documents we file with the SEC. The risks and uncertainties described below are those that we have identified as material, but are not the only risks and uncertainties facing us. Our business is also subject to general risks and uncertainties that affect many other companies, such as overall US and non-US economic and industry conditions including a global economic slowdown, geopolitical events, changes in laws or accounting rules, fluctuations in interest and exchange rates, terrorism, international conflicts, major health concerns, natural disasters or other disruptions of expected economic and business conditions. Additional risks and uncertainties not currently known to us or that we currently believe are immaterial also may impair our business operations and liquidity.* 

*This section should be read in conjunction with Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the consolidated financial statements and accompanying notes in Part II, Item 8, Financial Statements, of this Form 10-K.*

**Risks Related to Strategic Alternative Process, Potential Strategic Transaction, and Financial Position** 

***We have decided to seek a strategic acquisition, business combination, partnership or other change of control transaction, and there is no guarantee that this strategic path will be successful.***

We have engaged MTS Health Partners, L.P. ("MTS") as our advisor to assist with the exploration of strategic alternatives. MTS is providing a range of advisory services aimed to enhance stockholder value. The alternatives to be considered may include, but are not limited to, the sale of all or substantially all of our assets; a strategic merger or other business combination transaction; or another change of control transaction between us and a third party. We have and expect to continue to devote substantial time and resources to exploring such strategic alternatives; however, there is no set time frame and there can be no assurance that such activities will result in any agreements or transactions that will enhance stockholder value. Evaluating a strategic alternative may divert the attention of our management from ordinary operating matters. The identification, negotiation, and completion of any such transaction may also require more time and cash resources than we anticipate. In addition, potential strategic alternatives that require stockholder approval may not be approved by our stockholders.

There can be no assurance that our process to identify and evaluate potential strategic alternatives will result in any definitive offer to consummate a strategic transaction, or if made that the terms thereof will be acceptable to us. If any definitive offer to consummate a strategic transaction is received, there can be no assurance that a definitive agreement will be executed or that, if a definitive agreement is executed, the transaction will be consummated. In addition, there can be no assurance that any transaction, involving our company and/or assets, that is consummated would enhance stockholder value.

If we are successful in completing a strategic transaction, we may be exposed to other operational and financial risks, including increased near-term or long-term expenditures, exposure to unknown liabilities, incurrence of substantial debt, higher-than-expected acquisition and integration costs, write-downs of assets or impairment charges, increased amortization expenses, difficulty and cost in combining the operations and personnel of any merged businesses with our operations and personnel, impairment of relationships with key suppliers or customers of any acquired businesses due to changes in management and ownership, and inability to retain key employees of our company or any acquired businesses. If a strategic alternative is not completed, we may be subject to a number of material risks or suffer a number of consequences that may adversely affect our business, financial results, and operations.

***If we are unable to successfully complete a strategic transaction, we may be forced to cease operations altogether or file for bankruptcy protection.***

There can be no assurance that any of our plans will be successful or that additional capital will be available to us on reasonable terms, or at all, when needed or that we will successfully complete a strategic transaction. If we do not maintain governmental approval for our products, or if we are unsuccessful in our commercial efforts to sell our products, our business would experience significant harm. If we are unable to obtain sufficient additional

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 54

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

capital or to conclude a successful strategic transaction, we may be forced to defer, reduce or eliminate significant planned expenditures, restructure, curtail, or eliminate some or all of our commercial operations, dispose of technology or assets including intangible assets, conclude a strategic transaction that is unfavorable to stockholders, enter into arrangements that may require us to relinquish rights to certain of our products or product candidates, technologies or potential markets, delay or stop ongoing clinical trials, cease operations altogether or file for bankruptcy protection.

Our board of directors remains dedicated to diligently deliberating upon and making informed decisions that the directors believe are in the best interests of the company and its stockholders. There can be no assurance, however, that the company's current strategic direction, or the board's evaluation of strategic alternatives, will result in any initiatives, agreements, transactions or plans that will further enhance stockholder value.

In addition, given the substantial restructuring of our operations and reduction in force over the last year, it may be difficult to evaluate our current business and future prospects on the basis of historical operating performance.

***We may not realize any additional value in a strategic transaction.***

Potential counterparties in a strategic transaction involving our company may place minimal or no value on our assets. Further, the continued commercialization of our existing products, the development and any potential commercialization of our product candidates will require substantial additional cash to fund the costs associated with conducting the necessary preclinical and clinical testing and obtaining regulatory approval. Consequently, any potential counterparty in a strategic transaction involving our company may choose not to spend additional resources and continue to commercialize our existing products, development of our product candidates and may attribute little or no value, in such a transaction, to those product candidates.

***If we are successful in completing a strategic transaction, we may be exposed to other operational and financial risks.***

Although there can be no assurance that a strategic transaction will result from the process we have undertaken to identify and evaluate strategic alternatives, the negotiation and consummation of any such transaction will require significant time on the part of our management, and the diversion of management's attention may disrupt our business. The negotiation and consummation of any such transaction may also require more time or greater cash resources than we anticipate and expose us to other operational and financial risks, including:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• &nbsp;&nbsp;&nbsp;&nbsp;inability to retain key employees of our company or any merged business;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• increased near-term and long-term expenditures;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• &nbsp;&nbsp;&nbsp;&nbsp;exposure to unknown liabilities;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•&nbsp;&nbsp;&nbsp;&nbsp;higher than expected acquisition or integration costs;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• &nbsp;&nbsp;&nbsp;&nbsp;incurrence of substantial debt or dilutive issuances of equity securities to fund future operations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•&nbsp;&nbsp;&nbsp;&nbsp;write-downs of assets or incurrence of non-recurring, impairment or other charges;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• &nbsp;&nbsp;&nbsp;&nbsp;increased amortization expenses;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• &nbsp;&nbsp;&nbsp;&nbsp;difficulty and cost in combining the operations and personnel of any acquired business with our operations and personnel;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• &nbsp;&nbsp;&nbsp;&nbsp;impairment of relationships with key suppliers or customers of any acquired business due to changes in management and ownership; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• &nbsp;&nbsp;&nbsp;&nbsp;possibility of future litigation.

Any of the foregoing risks could have a material adverse effect on our business, financial condition and prospects.

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 55

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

***We may not fully realize the expected cost savings and/or operating efficiencies from our restructuring activities and our ability to consummate a strategic transaction depends on our ability to retain our employees required to consummate such transaction.***

On July 25, 2022 and November 14, 2022, we restructured our operations to narrow our near-term business focus and reduce our workforce by approximately 9% and 22% of our then headcount, respectively, primarily due to the ongoing decline in the macroeconomic environment. Our restructuring included external and internal cost reductions in almost all areas of our business. We focused and will continue to focus cost reductions on pipeline candidates, discovery programs, business development, and our dual platform in order to prioritize certain commercial efforts at that time. The reductions in workforce decreased overall headcount by a total of approximately 84 employees. Our headcount has reduced from approximately 300 as of June 30, 2022 to approximately 200 as of December 31, 2022.

We believe these changes were needed to streamline our organization and reallocate our resources to better align with our current strategic goals, including our current focus on pursuing strategic alternatives. However, these expense reduction measures have and may continue to yield unintended consequences and costs, such as the loss of institutional knowledge and expertise, attrition beyond our intended reductions in workforce, a reduction in morale among our remaining employees, and the risk that we may not achieve the anticipated benefits, all of which may have an adverse effect on our results of operations or financial condition. See Note 15, "*Restructuring Charges*" in the accompanying notes to the consolidated financial statements included in Part II, Item 8, of this Form 10-K and the "*Restructuring and Reductions in Workforce*" under Recent Events within Part II Item 7 for further discussion of our current restructuring activities and future anticipated cost savings.

Our ability to consummate a strategic transaction depends upon our ability to retain our employees required to consummate such a transaction, the loss of whose services may adversely impact the ability to consummate such transaction. In February 2023, Pear engaged an investment bank to explore the potential for an acquisition, company sale, merger, divestiture of assets, licensing, or other strategic transactions and/or seeking additional financing. There is no set timetable for this process and there can be no assurance that this process will result in the Company pursuing a transaction or that any transaction, if pursued, will be completed on attractive terms. If the Company is unable to complete a transaction, it may be required to seek a reorganization, liquidation, or other restructuring. In addition, our cash conservation activities, as well as the announcement that we are seeking strategic alternatives, may yield unintended consequences, such as attrition beyond our planned reductions in workforce that took place during 2022 and reduced employee morale, which may cause remaining employees to seek alternative employment. Two officers departed the Company, Kathy Jeffery, our Chief People Officer, departed on February 17, 2023, and Julia Strandberg, our Chief Commercial Officer, departed on March 10, 2023 to pursue other opportunities. In addition, our Vice President, Market Affairs, departed the Company in March 2023 to pursue other opportunities. In addition, four vice presidents will be departing the Company in April 2023. Our ability to successfully complete a strategic transaction depends in large part on our ability to retain certain of our remaining personnel. If we are unable to successfully retain our remaining personnel, we are at risk of a disruption to our exploration and consummation of a strategic alternative as well as business operations.

***We may become involved in securities litigation that could divert management's attention and harm the company's business, and insurance coverage may not be sufficient to cover all costs and damages.***

In the past, securities litigation has often followed certain significant business transactions, such as the sale of a company or announcement of any other strategic transaction. We may be exposed to such litigation even if no wrongdoing occurred. Litigation is usually expensive and diverts management's attention and resources, which could adversely affect our business and cash resources and our ability to consummate a potential strategic transaction or the ultimate value our stockholders receive in any such transaction.

***We have identified conditions and events that raise substantial doubt about our ability to continue as a going concern, we need substantial additional funding, and if we are unable to raise capital when needed or on terms favorable to us, our business, financial condition, and results of operation could be materially and adversely affected.***

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 56

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

We may be forced to wind-down our operations if we are unable to consummate a strategic transaction and/or obtain sufficient funding.

As of December 31, 2022, we had cash and cash equivalents totaling $48.3 million, and there is substantial doubt about our ability to continue as a growing concern. Based on our current operating plans, we do not have sufficient cash and cash equivalents to fund our operating expenses and capital expenditures for at least the next 12 months from the filing date of this Annual Report on Form 10-K.

In addition, we regularly maintain cash balances at third-party financial institutions in excess of the Federal Deposit Insurance Corporation insurance limit of $250,000, such as amounts to secure the letter of credit related to the lease of our San Francisco office in the amount of $0.4 million. On March 10, 2023, the issuer of the landlord's letter of credit, Silicon Valley Bank, was placed into receivership with the FDIC. Since that date the obligations of Silicon Valley Bank have been assumed by First-Citizens Bank & Trust Company. The landlord has demanded a replacement letter of credit by no later than April 21, 2023. While we monitor the cash balances in our operating accounts on a daily basis and adjust the balances as appropriate, these balances could also be impacted from time to time. While the cash and cash equivalents are spread across various third party financial institutions, they are generally accessed through one main financial institution. Should that financial institution cease to exist, or is subject to other adverse conditions in the financial or credit markets there could be a material adverse effect on our business if we are not able to immediately access the funds in other third-party financial institutions. We can provide no assurance that access to our invested cash and cash equivalents will not be impacted by adverse conditions in the financial and credit markets.

In addition, our estimates of cash and cash equivalents needed to fund operation may prove to be wrong, and we could use our available capital resources sooner than expected. We require additional capital to sustain our operations, including our development programs.

On January 3, 2023, we entered into an At The Market Offering Agreement (the "ATM Agreement") with H.C. Wainwright & Co., LLC ("Wainwright") and Virtu Americas LLC ("Virtu" and, collectively with Wainwright, the "Managers" and each, a "Manager"), pursuant to which the Company may offer and sell, from time to time through the Managers, shares of the Company's Class A common stock, par value $0.0001 per share ("Common Stock"), for aggregate gross proceeds of up to $150 million (the "Shares"). To date, we have sold an aggregate of 843,281 shares of Class A common stock pursuant to the ATM Agreement resulting in net proceeds of approximately $1.0 million. Our ability to raise additional funds under the ATM Agreement is subject to market conditions and other factors that may be outside of our control.

In February 2023 we began working with MTS Health Partners, L.P. ("<u>MTS</u>"), an investment bank, to assist with the exploration of strategic alternatives that may include, but are not limited to, the sale of all or substantially all of our assets; a strategic merger or other business combination transaction; or another change of control transaction between us and a third party.

We may seek additional funds through equity or debt financings or through collaborations, licensing transactions or other sources that may be identified through our strategic process. However, there can be no assurance that we will be able to complete any such transactions on acceptable terms or otherwise. The failure to obtain sufficient funds on commercially acceptable terms when needed would have a material adverse effect on our business, results of operations, and financial condition. These factors raise substantial doubt about our ability to continue as a going concern.

We do not currently have any commitments for future funding or additional capital. As such, we have paused or significantly scaled back the development or commercialization of our future product candidates or other research and development initiatives and our commercial activities are not being sufficiently funded. If we are unable to complete a strategic transaction or raise additional capital in sufficient amounts, we will not be able to continue our business and we may need to file for bankruptcy protection.

***We have incurred net losses in every year since our inception and anticipate that we will continue to incur net losses for the foreseeable future.***

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 57

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

We are not profitable and have incurred significant net losses since our inception. We incurred net losses of $75.5 million and $65.1 million for the years ended December 31, 2022 and 2021, respectively. As of December 31, 2022, we had an accumulated deficit of $323.5 million. If we are able to continue as a going concern, which would require a transaction such as a strategic alternative, we expect to continue to incur significant losses for the foreseeable future. We expect to incur significant losses and negative cash flow from operations for the foreseeable future. We face a variety of challenges and risks that we will need to address and manage as we pursue our strategy, including our ability to achieve adequate payor coverage, develop and retain an effective sales force, and more broadly our workforce, achieve market acceptance of PDTs among physicians, patients and third-party payors, and in the future when adequate capital is available, to expand the use of PDTs to additional therapeutic indications. Because of the numerous risks and uncertainties associated with our commercialization efforts to increase adoption of our FDA approval we are unable to predict the timing or amount of increased expenses, or when, if ever, we will be able to achieve or maintain profitability. We expect to continue to incur substantial net losses and negative cash flows from operations as we commercialize our three existing products. We intend to continue to make targeted investments in building our US commercial infrastructure.

Based on our recurring losses and expectations to incur significant expenses and negative cash flow for the foreseeable future, our independent registered public accounting firm has included an explanatory paragraph in its report on our financial statements as of and for the years ended December 31, 2022 and December 31, 2021, expressing substantial doubt about our ability to continue as a going concern.

Further, we may incur significant costs to conduct planned clinical trials and future clinical trials. These clinical trials may be more costly than we expect, and if we do not achieve the benefits anticipated from these clinical trials, or if the realization of these benefits is delayed, they may not result in increased revenue or growth in our business. We also expect our operating costs to increase as a result of becoming a public company and will continue to increase as we grow our business. These efforts may prove more expensive than we currently anticipate, and our expenses may exceed revenues for the foreseeable future and we may not achieve profitability.

Additionally, inflation has the potential to adversely affect our business, financial condition and results of operations by increasing our overall costs. The existence of inflation in the economy has resulted in, and may continue to result in, higher costs, supply shortages, increased costs of labor and other similar effects. As a result of inflation, we have experienced and may continue to experience, cost increases. Although we may take measures to mitigate the impact of inflation, if these measures are not effective our business, financial condition and results of operations could be adversely affected.

To date, we have financed our operations principally from the closing of the Business Combination with Thimble Point Acquisition Corp. ("<u>THMA</u>"), the sale of Legacy Pear convertible preferred stock, payments received in connection with collaboration agreements, and proceeds from borrowings under a credit facility. Historically the revenue from product sales and collaboration agreements have not covered the full cost of our operations. Our cash flow from operations was negative for the years ended December 31, 2022 and 2021. We may not generate positive cash flow from operations or achieve profitability for the foreseeable future. Our limited operating history may make it difficult for you to evaluate our current business and future prospects. Even if we do achieve profitability, we may not be able to sustain or increase profitability on a quarterly or annual basis.

Given our limited operating history, our ability to achieve revenues sufficient to cover our operating costs may not be achieved. If we are not able to scale and grow the business to achieve significant product sales, it would materially and adversely affect our business, financial condition, and results of operations. Our failure to achieve or maintain profitability would negatively impact the value of our common stock.

***Our credit agreement with Perceptive Credit Holdings III, LP restricts our current and future operations, particularly our ability to respond to changes or to take certain actions.***

Our secured Amended and Restated Credit Agreement and Guaranty with Perceptive Credit Holdings III, LP, as lender (the "<u>Perceptive Credit Facility</u>") is collateralized by substantially all of our assets, including our intellectual property, and imposes significant operating and financial restrictions and limit our ability and our other restricted subsidiaries' ability to, among other things:

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 58

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• incur additional indebtedness for borrowed money and guarantee indebtedness;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• pay dividends or make other distributions in respect of, or repurchase or redeem, capital stock;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• make loans, guarantees, investments and acquisitions;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• sell or otherwise dispose of assets;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• incur liens;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• enter into transactions with affiliates;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• enter into agreements restricting our subsidiaries' ability to pay dividends;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• consolidate, merge or incur a change of control; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• incur a material adverse change in our business condition (financial or otherwise), operations, performance or property.

As a result of these covenants and restrictions, we are and will be limited in how we conduct our business, and we may be unable to raise additional debt or equity financing to compete effectively or to take advantage of new business opportunities. In addition, the Perceptive Credit Facility requires us to comply with a minimum consolidated revenue covenant (measured on a trailing twelve-month basis) and maintain a minimum aggregate cash balance of $5.0 million in one or more accounts pledged to our lenders. The operating and financial restrictions and covenants in the Perceptive Credit Facility, as well as any future financing agreements that we may enter into, may restrict our ability to finance our operations, engage in business activities, or expand or fully pursue our business strategies. Our ability to comply with these covenants may be affected by events beyond our control, and we may not be able to meet those covenants. On March 25, 2022, we amended the Perceptive Credit Facility to adjust certain covenants under the agreement. The amendment included reducing the required minimum trailing 12-month revenue for the fiscal quarter ending March 31, 2022, through the fiscal quarter ending March 31, 2025. In the past we have received waivers with respect to certain financial covenants in our credit agreement.

We were not in compliance with the trailing twelve month revenue covenants as of December 31, 2022, and will not be in compliance with the trailing twelve month revenue covenants for the quarter ended March 31, 2023. However we requested and were granted a waiver on the trailing 12-month revenue requirement for both the quarter ended December 31, 2022 and March 31, 2023, respectively. In addition, on February 28, 2023, the Company also obtained a waiver pertaining to the existence of a "going concern" qualification in the accompanying opinion of the Company's auditors in this Form 10-K and any resulting event of default.

We cannot guarantee that we will be able to maintain compliance with the covenants under the Perceptive Credit Facility in the future and, if we fail to do so, that we will be able to obtain waivers from the lenders or amend the covenants.

Our failure to comply with the restrictive covenants described above could, and our interest payment default will, result in an event of default under the credit agreement. An event of default will also occur if, among other things, a material adverse change in our business, operations or condition occurs, which could potentially include a material impairment of the prospect of our repayment of any portion of the amounts we owe under the credit agreement. In the case of a continuing event of default under the credit agreement, the lenders could elect to declare all amounts outstanding to be immediately due and payable, proceed against the collateral in which we granted the lenders a security interest under the credit agreement, or otherwise exercise the rights of a secured creditor. If we are forced to refinance these borrowings on less favorable terms, our business, results of operations and financial condition could be adversely affected and If we are unable to obtain sufficient additional capital or to conclude a successful strategic transaction, we may be forced to defer, reduce or eliminate significant planned expenditures, restructure, curtail, or eliminate some or all of our commercial operations, dispose of technology or assets, conclude a strategic transaction that is unfavorable to stockholders, enter into arrangements that may

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 59

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

require us to relinquish rights to certain of our product candidates, technologies or potential markets, delay or stop ongoing clinical trials, cease operations altogether or file for bankruptcy protection. See Note 7, *Indebtedness,* in the accompanying notes to the consolidated financial statements included in Part II, Item 8 of this Form 10-K for additional information regarding our Perceptive Credit Facility.

***Perceptive claims that certain events of default have occurred under the Perceptive Credit Facility. Upon the occurrence of an Event of Default, Perceptive may declare the full amount outstanding under the Perceptive Credit Agreement due and payable, which would materially and adversely affect our ability to continue operations.***

Perceptive has alleged that certain events of default have occurred and are continuing under our secured Perceptive Credit Facility. Perceptive has not delivered any formal notice of an Event of Default. We dispute the allegations and are in discussions with Perceptive to resolve this dispute and otherwise to address our obligations under the Perceptive Credit Facility.

There can be no assurances that our discussions with Perceptive will result in any resolution or that we will be able to resolve the alleged events of default or that any resolution, or the lack of any resolution, will not result in Perceptive exercising remedies under the Perceptive Credit Facility. In the case of a continuing Event of Default under the Perceptive Credit Facility, Perceptive could elect to declare all amounts outstanding to be immediately due and payable, proceed against the collateral in which we granted the lenders a security interest, or otherwise exercise the rights of a secured creditor. There can be no assurances that Perceptive will not declare a Default and attempt to accelerate the payment of all amounts due thereunder. If the acceleration were to occur, we could also be required to pay a prepayment penalty of $3.6 million.

***The amount of our future losses is uncertain and our quarterly and annual operating results may fluctuate significantly or fall below the expectations of investors or securities analysts, each of which may cause our stock price to fluctuate or decline.***

Our quarterly and annual operating results may fluctuate significantly in the future due to a variety of factors, many of which are outside of our control and may be difficult to predict, including the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our ability to consummate a strategic alternative;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• an event of default under our Perceptive Credit Facility, which Perceptive has alleged currently exists;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• any change in the competitive landscape of our industry, including consolidation among our competitors or partners or as a result of COVID-19;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our ability to attract, hire and retain qualified personnel;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the level of demand for our products from patients, health care providers and payors;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the risk/benefit profile, cost and reimbursement policies with respect to our products;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the changing and volatile US and global economic environments; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• future accounting pronouncements or changes in our accounting policies.

The cumulative effects of these factors could result in large fluctuations and unpredictability in our quarterly and annual operating results. As a result, comparing our operating results on a period-to-period basis may not be meaningful. This variability and unpredictability could also result in our failing to meet the expectations of industry or financial analysts or investors for any period. If our operating results or revenue fall below the expectations of analysts or investors or below any forecasts we may provide to the market, or if the forecasts we provide to the market are below the expectations of analysts or investors, the price of our common stock could decline substantially. Such a stock price decline could occur even when we have met any previously publicly stated guidance we may provide.

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 60

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

**Risks Related to Our Business and Industry** 

***The failure of our prescription digital therapeutics to achieve and maintain market acceptance and adoption by patients and physicians would cause our business, financial condition and results of operations to be materially and adversely affected.***

Our current business strategy is highly dependent on our prescription digital therapeutics, or PDTs, achieving and maintaining broad market acceptance by patients and physicians. Market acceptance and adoption of our PDTs depends on educating people with chronic conditions, as well as self-insured employers, commercial and government payors, health plans and physicians and other government entities, as to the distinct features, therapeutic benefits, cost savings, and other advantages of our PDTs as compared to competitive products or other currently available methodologies. If we are not successful in demonstrating to existing or potential patients and prescribers the benefits of our products, or if we are not able to achieve the support of patients, healthcare providers and payors for our products, our sales may decline or we may fail to increase our sales in line with our forecasts.

Achieving and maintaining market acceptance of our products could be negatively impacted by many factors, including:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the failure of reSET, reSET-O and Somryst to achieve wide acceptance among people with substance use disorder, opioid use disorder and chronic insomnia, self-insured employers, commercial and government payors, health plans, physicians and other government entities, and key opinion leaders in the treatment community;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• lack of additional evidence or peer-reviewed publication of clinical or real world evidence supporting the effectiveness, safety, cost-savings or other advantages of our products over competitive products or other currently available methodologies;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• perceived risks associated with the use of our products or similar products or technologies generally;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our ability to secure and maintain FDA and other regulatory clearance, authorization or approval for our products;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the introduction of competitive products and the rate of acceptance of those products as compared to our products; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• results of clinical, real world and HEOR studies relating to chronic condition products or similar competitive products.

In addition, our products may be perceived by patients and healthcare providers to be more complicated or less effective than traditional approaches, and people may be unwilling to change their current health regimens. Moreover, we believe that healthcare providers tend to be slow to change their medical treatment practices because of perceived liability risks arising from the use of new products and the uncertainty of third-party reimbursement. Accordingly, healthcare providers may not recommend our products until there is sufficient evidence to convince them to alter their current approach.

***The insurance coverage and reimbursement status of novel products, such as prescription digital therapeutics, is uncertain and only a limited number of healthcare insurers have agreed to reimburse purchases of our products. Failure to obtain or maintain adequate coverage and reimbursement for our products would substantially impair our ability to generate revenue.***

In the US, patients generally rely on third-party payors to reimburse all or part of the costs associated with their treatment. Adequate coverage and reimbursement from governmental healthcare programs, such as Medicare and Medicaid, and commercial payors is critical to the ability of patients to afford treatments and achieve new product acceptance. Currently, there is no Medicare benefit category for prescriptions digital therapeutics, and it is unlikely that there will be such a benefit category unless and until Congress passes federal legislation. Our ability to successfully commercialize our products will depend in part on the extent to which coverage and adequate

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 61

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

reimbursement for these products and related treatments will be available from government health administration authorities, private health insurers and other organizations. Government authorities and third-party payors, such as private health insurers and health maintenance organizations, decide which medications they will pay for and establish reimbursement levels. The availability of coverage and extent of reimbursement by governmental and private payors is essential for most patients to be able to afford treatments. Sales of products, and of product candidates that we may identify, will depend substantially on the extent to which the costs to users of such products will be paid by health maintenance, managed care, pharmacy benefit and similar healthcare management organizations, or reimbursed by government health administration authorities, private health coverage insurers and other third-party payors. If coverage and adequate reimbursement is not available, or is available only to limited levels, we may not be able to successfully commercialize our products. Even if coverage is provided, the approved reimbursement amount may not be high enough to allow us to establish or maintain pricing sufficient to achieve profitability.

There is also significant uncertainty related to, and there may be significant delays in obtaining, the insurance coverage and reimbursement of newly cleared, authorized, or approved products and coverage may be more limited than the purposes for which the device is cleared, authorized, or approved by the FDA or comparable foreign regulatory authorities. In the US, the principal decisions about reimbursement for new medicines or medical devices are typically made by the Centers for Medicare & Medicaid Services ("CMS"), an agency within the US Department of Health and Human Services ("HHS"). FDA clearance or authorization provides no assurance of coverage or reimbursement by any payor. CMS decides whether and to what extent a new medicine or medical device will be covered and reimbursed under Medicare, and private payors tend to follow CMS to a substantial degree.

Factors payors consider in determining reimbursement are based on whether the product is:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• a covered benefit under its health plan;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• safe, effective and medically necessary;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• supported by robust clinical data from well-controlled clinical research;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• appropriate for the specific patient;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• cost-effective; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• neither experimental nor investigational.

Each payor determines whether or not it will provide coverage for a treatment, what amount it will pay the manufacturer for the treatment and on what tier of its formulary the treatment will be placed. The position of a treatment on a payor's list of covered drugs, biological products, and medical devices, or formulary, generally determines the co-payment that a patient will need to make to obtain the treatment and can strongly influence the adoption of such treatment by patients and physicians. Patients who are prescribed treatments for their conditions and providers prescribing such services generally rely on third-party payors to reimburse all or part of the associated healthcare costs. Patients are unlikely to use our products unless coverage is provided and reimbursement is adequate to cover a significant portion of the cost of our products.

Moreover, eligibility for coverage and reimbursement does not imply that our products will be paid for in all cases or at a rate that covers our costs, including research, development, intellectual property, manufacturing, marketing, sales and distribution expenses. Interim reimbursement levels for new products, if applicable, may also not be sufficient to cover our costs and may not be made permanent. Reimbursement rates may vary according to the use of our products and the clinical setting in which they are used, may be based on reimbursement levels already set for lower cost products and may be incorporated into existing payments for other services. Net prices for products may be reduced by mandatory discounts or rebates required by government healthcare programs or private payors, by any future laws limiting prices and by any future relaxation of laws that presently restrict imports of products from countries where they may be sold at lower prices than in the US.

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 62

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

Third-party payors have attempted to control costs by limiting coverage and the amount of reimbursement for particular drugs or devices. We cannot be sure that coverage and reimbursement will be available for all products that we commercialize and, if reimbursement is available, what the level of reimbursement will be. Inadequate coverage and reimbursement may impact the demand for, or the price of, any product for which we obtain marketing approval. If coverage and adequate reimbursement are not available, or are available only at limited levels, we may not be able to successfully commercialize our products.

***The market for prescription digital therapeutics is new, rapidly evolving, and increasingly competitive, as the healthcare industry in the US is undergoing significant structural change.***

The market for our PDTs is new and rapidly evolving, and it is uncertain whether it will achieve and sustain high levels of demand and market adoption. Our future financial performance will depend on growth in this market and on our ability to adapt to emerging demands of our customers. It is difficult to predict the future growth rate and size of our target market. The healthcare industry in the US is undergoing significant structural change and is rapidly evolving. We believe demand for our products has been driven in large part by rapidly growing costs in the traditional healthcare system, the movement toward patient-centricity and personalized healthcare, and advances in technology. Widespread acceptance of personalized healthcare is critical to our future growth and success. A reduction in the growth of personalized healthcare could reduce the demand for our PDTs and result in a lower revenue growth rate or decreased revenue.

If our assumptions regarding these uncertainties are incorrect or change in reaction to changes in our markets, or if we do not manage or address these risks successfully, our results of operations could differ materially from our expectations, and our business could suffer.

***Our products and product candidates are novel and negative perception of any of our products or product candidates could adversely affect our ability to conduct our business, obtain marketing authorizations or identify alternate regulatory pathways to market for such product candidates.***

Our products and product candidates are considered relatively new and novel therapeutic approaches. Our success will depend upon physicians who specialize in the treatment of diseases targeted by our products and product candidates prescribing potential treatments that involve the use of our products and product candidates in lieu of, or in addition to, existing treatments with which they are more familiar and for which greater clinical data may be available. Access will also depend on consumer acceptance and adoption of products that are commercialized. In addition, responses by the US, state or foreign governments to negative public perception or ethical concerns may result in new legislation or regulations that could limit our ability to develop or commercialize any product candidates, obtain or maintain marketing authorization, identify alternate regulatory pathways to market or otherwise achieve profitability.

Negative publicity concerning our products or the PDT market as a whole, could limit market acceptance of our products and product candidates. If patients and healthcare providers have a negative perception of PDTs, then a market for our products and product candidates may not develop at all, or it may develop more slowly than we expect. Our success will depend to a substantial extent on the willingness of healthcare providers to prescribe our products, the extent to which coverage and adequate reimbursement for these products and product candidates and related treatments will be available from government health administration authorities, private health insurers and other organizations and our ability to demonstrate the value of our products and product candidates to existing and potential patients and prescribers. Similarly, negative publicity regarding patient confidentiality and privacy in the context of technology-enabled healthcare or concerns experienced by our competitors could limit market acceptance of PDTs.

***Our future depends on the continued contributions of our senior management team and our ability to attract and retain other highly qualified personnel; in particular, Corey McCann, our President and Chief Executive Officer, and Christopher Guiffre, our Chief Financial Officer and Chief Operating Officer.***

Our success depends in large part on our ability to attract and retain high-quality management in sales, market access, product development, software engineering, marketing, operations, finance and support functions. We compete for qualified technical personnel with other life sciences and information technology companies.

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 63

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

Competition for qualified employees is intense in our industry, particularly for software engineers, and the loss of even a few qualified employees, or an inability to attract, train, retain and motivate additional highly skilled employees required for the planned expansion of our business could harm our operating results and impair our ability to grow. The loss of one or more of our key employees, such as Julia Strandberg, our Chief Commercial Officer, in March 2023, who left to pursue other opportunities, and any failure to have in place and execute an effective succession plan for key executives, could seriously harm our business. In addition, our Chief People Officer departed in February 2023 and one of our vice presidents departed the Company in March 2023 to pursue other opportunities. An additional four vice presidents will be departing the Company in April 2023.

We may be unable to continue to attract or retain the personnel we need to maintain our competitive position. To attract, train and retain key personnel, we use various measures, including competitive compensation and benefit packages (including an equity incentive program), which may require significant investment. These measures may not be enough to attract and retain the personnel we require to operate our business effectively and efficiently.

Moreover, decreases in the value of our Class A common stock will impact the perceived value of employee equity awards, which may materially and adversely affect our ability to attract and retain key employees. If we do not maintain the necessary personnel to accomplish our business objectives, we may experience staffing constraints that materially and adversely affect our ability to support our programs and operations. Employees may also receive proceeds from sales of our equity in the public markets, which may reduce their motivation to continue to work for us.

In addition, our future also depends on the continued contributions of our senior management team and other key personnel, each of whom would be difficult to replace. In particular, Corey McCann, our President and Chief Executive Officer, and Christopher Guiffre, our Chief Financial Officer and Chief Operating Officer, are critical to our future vision and strategic direction. Our key employees are at-will, and we do not maintain key person life insurance for some of our key employees.

In addition, from time to time, there may be changes in our senior management team that may be disruptive to our business, such as the departure of Julia Strandberg, our Chief Commercial Officer, in March 2023 who left to pursue other opportunities. If our senior management team, including any new hires that we may make, fails to work together effectively and to execute our plans and strategies on a timely basis, our business, results of operations and financial condition could be harmed.

***We rely significantly upon Access Agreements from third-parties for the sale of our products and, if the opportunities for Access Agreements decline, such reliance could adversely affect our results.***

While we anticipate reimbursement will become a more prominent portion of our overall revenue over time, we are currently reliant upon Access Agreements to generate revenue for the products we provide. Until we can consistently rely on the more conventional reimbursement pathways (e.g., those utilized by drug manufacturers), our revenue will be primarily driven by these Access Agreements. Generating revenue from Access Agreements has risk because they typically have a lengthy sales and contracting process. In addition, each Access Agreement represents a relatively large percentage of quarterly revenue and any failure or delay in the sales or contracting process for a single Access Agreement can have a disproportionate impact on the Pear's revenue performance for the given period. Finally, Access Agreements tend to be funded by governmental resources which adds risk to completing any agreement in a timely manner.

These agreements have varying terms and generally may be revised or terminated for various reasons generally by Pear and in certain circumstances by the Customer. Any failure to maintain existing Access Agreements or enter into new Access Agreements with less favorable terms than currently in place could have a material effect on our results of operations and financial condition. In addition, there can be no assurance that we will be able to generate sufficient revenue from Access Agreements to become profitable.

Similarly, our revenue could be materially and disproportionately impacted by the purchasing decisions of this limited customer base. In the future, our Access Agreement customers may decide to purchase less product from us than they have in the past, may alter purchasing patterns at any time with limited notice, or may decide not to

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 64

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

continue to purchase our products at all, any of which could cause our revenue to decline materially and materially harm our financial condition.

There can be no assurance that state or federal entities will continue to provide grants to support these Access Agreements. Any discontinuance or reduction in government or private party grants could have a significant and adverse effect on these types of agreements, and as a result could have a material and adverse effect on our business, financial condition, or results of operations. Relatedly, states are beginning to receive proceeds from independent and multi-state settlement agreements with pharmaceutical companies that were involved in the distribution and sale of prescription opioids. Individual states have broad discretion for how these settlement funds may be used to prevent opioid abuse and how to distribute the funds. States are creating legislatively appointed bodies to oversee these funds (e.g., New York's Opioid Settlement Fund, Tennessee's Opioid Abatement Fund, Nebraska's Opioid Recovery Fund, etc.). A state's decision not to allocate settlement funds to Access Agreements involving our products, while allocating such funds to other opioid prevention efforts, could have a material and adverse effect on our business, financial condition, or results of operations.

***Our products are made available via the Apple App Store and the Google Play Store and supported by third-party infrastructure. If our ability to access those markets or access necessary third-party infrastructure was stopped or otherwise restricted, it would materially and adversely affect our business.***

Our PDTs are exclusively accessed through and depend on the Apple App Store and the Google Play Store. Both Apple and Google have broad discretion to make changes to their operating systems or payment services or change the manner in which their mobile operating systems function and their respective terms and conditions applicable to the distribution of our PDTs and to interpret their respective terms and conditions in ways that may limit, eliminate or otherwise interfere with our products, our ability to distribute our products through their stores, our ability to update our products, including to make bug fixes or other feature updates or upgrades, the features we provide, the manner in which we market our products and our ability to access native functionality or other aspects of mobile devices. To the extent either or both of them do so, our business, financial condition and results of operations would be materially and adversely affected.

There is no guarantee that the third-party infrastructure that currently support our PDTs will continue to support them or, if it does not, that other alternatives will be available. We will continue to be dependent on third-party mobile operating systems, technologies, networks and standards that we do not control, such as the Android and iOS operating systems, and any changes, bugs, technical or regulatory issues in such systems, our current relationships with carriers or future relationships with mobile manufacturers, or in their terms of service or policies that degrade our PDTs' functionality, reduce or eliminate our ability to distribute our PDTs, limit our ability to deliver high quality PDTs, or impose fees or other charges related to delivering our offerings, could adversely affect our product usage and revenue.

***We rely upon third party providers of cloud-based infrastructure to host our platform. Any disruption in the operations of these third-party providers, limitations on capacity or interference with our use could have a material adverse effect on our business, prospects, results of operations and financial condition.***

Our platform's technological infrastructure is implemented using third-party hosting services, such as Amazon Web Services. We have no control over any of these third parties, and we cannot guarantee that such third-party providers will not experience system interruptions, outages or delays, or deterioration in their performance. We need to be able to access our computational platform at any time, without interruption or degradation of performance. Our hosted platform depends on protecting the virtual cloud infrastructure hosted by third-party hosting services by maintaining our configuration, architecture, features, and interconnection specifications, as well as protecting the information stored in these virtual data centers, which is transmitted by third-party Internet service providers. We have experienced, and expect that in the future we may again experience interruptions, delays and outages in service and availability from time to time due to a variety of factors, including infrastructure changes, human or software errors, hosting disruptions and capacity constraints. Any limitation on the capacity of our third-party hosting services could adversely affect our business, financial condition, and results of operations. In addition, any incident affecting our third-party hosting services' infrastructure, which may be caused by cyber-attacks, natural disasters, fire, flood, severe storm, earthquake, power loss, telecommunications failures, terrorist

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 65

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

or other attacks, and other disruptive events beyond our control, could negatively affect our cloud-based solutions. A prolonged service disruption affecting our cloud-based solutions could damage our reputation or otherwise harm our business. We may also incur significant costs for using alternative equipment or taking other actions in preparation for, or in reaction to, events that damage the third-party hosting services we use.

In the event that our service agreements with our third-party hosting services are terminated, or there is a lapse of service, elimination of services or features that we utilize, interruption of Internet service provider connectivity, or damage to such facilities, we could experience interruptions in access to our platform as well as significant delays and additional expense in arranging or creating new facilities and services and/or re-architecting our hosted software solutions for deployment on a different cloud infrastructure service provider, which could have a material adverse effect on our business, prospects, results of operations and financial condition.

***We rely on a limited number of third party digital pharmacies for the fulfillment of prescriptions. This reliance increases the risk that we could have a disruption in the fulfillment of prescriptions, which could have a material and adverse effect on our reputation, business, results of operations and financial condition.***

We do not currently own or operate any pharmacy, nor are we licensed to perform pharmacy fulfillment services. We rely, and expect to continue to rely, on a limited number of third parties for the fulfillment of prescriptions. This reliance increases the risk that we could have a disruption in the fulfillment of prescriptions which could delay, prevent, or impair the distribution and sale of our products.

Pharmacies are subject to state and federal laws and regulations. We do not control the standards and processes of, and will be completely dependent on, our digital pharmacies for compliance with federal and state law and regulations. If our digital pharmacies fail to maintain regulatory compliance, we may need to find alternative pharmacies with the capability to fulfill prescriptions for PDTs. In addition, we have no control over the ability of our digital pharmacies to maintain adequate quality control, quality assurance, and qualified personnel. If a regulatory authority finds deficiencies with or withdraws required pharmacy licenses in the future, we may need to find alternative pharmacies with the capability to fulfill prescriptions for PDTs, which would significantly impact our ability to fulfill, distribute, and sell our products. We may be unable to establish any agreements with other digital pharmacies or to do so on acceptable terms. Even if we are able to establish agreements with other digital pharmacies, reliance on a limited number of digital pharmacies entails additional risks, including:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the possible breach of the services agreement by the third party; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the possible termination or nonrenewal of the agreement by the third party at a time that is costly or inconvenient for us.

There are a limited number of digital pharmacies that have the capability to distribute PDTs and that might be capable of fulfilling prescriptions for our products.

If our current digital pharmacies cannot perform as agreed, we may be required to replace such digital pharmacies. We may incur added costs and delays in identifying and qualifying any such replacements. If the agreement with any of our third-party pharmacies is terminated, if any third-party pharmacy is unable to perform in accordance with the terms of the agreement, or if the services of any third-party pharmacy is terminated for any reason, it could have a material adverse effect on our business, prospects, results of operations, and financial condition.

Our current and anticipated future dependence upon others for the fulfillment of prescriptions for our product candidates or products may adversely affect our future profit margins and our ability to distribute any products on a timely and competitive basis.

***We face significant competition and new products may emerge that provide different or better alternatives for treatment of the conditions that our products are authorized to treat. Many of our current and future competitors have or will have significantly more resources.***

Our ability to achieve our strategic objectives will depend, among other things, on our ability to develop and commercialize products for the treatment of chronic conditions that are effective and safe, offer distinct features, are easy-to-use, provide measurable and meaningful cost savings to payors, and are more appealing than available alternatives. Our competitors, as well as a number of other companies, within and outside the healthcare industry,

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 66

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

are pursuing new delivery devices, delivery technologies, sensing technologies, procedures, drugs, and other therapies for the monitoring and treatment of chronic conditions. Any technological breakthroughs in monitoring, treatment or prevention could reduce the potential market for our products, which would significantly reduce our sales.

The introduction by competitors of products that are or claim to be superior to our products may create market confusion, which may make it difficult for potential customers to differentiate the benefits of our products over competitive products. In addition, the entry of new PDTs to the market which treat the same or similar chronic conditions to our products may lead some of our competitors to employ pricing strategies that could materially and adversely affect the pricing of our products. If a competitor develops a product that competes with or is perceived to be superior to our products, or if a competitor employs strategies that place downward pressure on pricing within our industry, our sales may decline significantly or may not increase in line with our forecasts, either of which would materially and adversely affect our business, financial condition and results of operations.

While our market is in an early stage of development, it is evolving rapidly and becoming increasingly competitive, and we expect it to attract increased competition. We currently face competition from a range of companies. Our competitors include both enterprise companies who are focused on or may enter the healthcare industry, including initiatives and partnerships launched by these large companies, and from private companies that offer solutions for specific chronic conditions. We compete with pharmaceutical and biotechnology companies that are developing treatments for addiction and insomnia, including Alkermes and their product Vivitrol, Orexo and their product Zubsolv, Sandoz and their product Suboxone, Braeburn and their product Brixadi, Pfizer and their product Halcion, Merck and their product Belsomra, Sunovion and their product Lunesta and Sanofi and their product Ambien. In the digital health space we compete with companies that have created non-regulated products to treat addiction and insomnia such as Dynamicare, CBT4CBT, Pzizz, Headspace, Calm, Orexo and their product Modia, and Big Health and their product Sleepio. These and other companies, which may offer their solutions at lower prices, are continuing to develop additional products and becoming more sophisticated and effective. Competition from wellness apps, which are not authorized by the FDA but may attract consumers for other reasons, and from other parties will result in continued pricing pressures, which are likely to lead to price declines in certain product segments, which could negatively impact our sales, profitability and market share.

***Our ability to compete effectively depends on our ability to distinguish our company and our solution from our competitors and their products.***

Some of our competitors may have, or new competitors or alliances may emerge that have, greater name and brand recognition, greater market share, a larger customer base, more widely adopted proprietary technologies, greater marketing expertise, larger sales forces, or significantly greater resources than we do and may be able to offer solutions competitive with ours at a more attractive price than we can. Further, our current or potential competitors may be acquired by third parties with greater available resources. As a result, our competitors may be able to respond more quickly and effectively than we can to new or changing opportunities, technologies, standards or customer requirements and may have the ability to initiate or withstand substantial price competition. In addition, our competitors may in the future establish cooperative relationships with vendors of complementary products, technologies or services to increase the availability of their solutions in the marketplace. Our competitors could also be better positioned to serve certain segments of our market, which could create additional price pressure. In light of these factors, even if our products are more effective than those of our competitors, current or potential customers may accept competitive products in lieu of purchasing our products. If we are unable to successfully compete, our business, financial condition, and results of operations could be materially and adversely affected.

***A limited number of healthcare insurers have agreed to reimburse purchases of our products, and there is no assurance that additional healthcare insurers will agree to reimburse purchases of our products in the future.***

To date, a limited number of healthcare insurers have agreed to reimburse purchases of reSET, reSET-O, and Somryst. We depend upon revenue from sales of reSET, reSET-O, and Somryst, and in turn on reimbursement from third-party payors for such products. The amount that we receive as payment for our products may be materially and adversely affected by factors cannot control, including federal or state regulatory or legislative changes, and

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 67

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

cost-containment decisions and changes in reimbursement schedules of third-party payors. Any reduction or elimination of these payments could have a material adverse effect on our business, prospects, results of operations and financial condition.

Additionally, the reimbursement process is complex and can involve lengthy delays. Also, third-party payors may reject, in whole or in part, requests for reimbursement based on determinations that certain amounts are not reimbursable under plan coverage, that services provided were not medically necessary, that additional supporting documentation is necessary, or for other reasons. Retroactive adjustments by third-party payors may be difficult or cost-prohibitive to appeal, and such changes could materially reduce the actual amount we receive. Delays and uncertainties in the reimbursement process may be out of our control and may materially and adversely affect our business, prospects, results of operations and financial condition.

***If we are unable to expand our marketing infrastructure, we may fail to increase the usage of our products and platform to meet our forecasts.***

We began commercializing our products in October 2019. As a result, we have limited experience marketing our products and engaging customers at our current scale. Our financial condition and results of operations are and will continue to be highly dependent on the ability of our marketing function to adequately promote, market, and attract customers to our products and platform in a manner that complies with applicable laws and regulations and at a cost that does not exceed our current budget allocated to marketing.

If we are unable to expand our marketing capabilities, which will be impacted by our available resources, we may not be able to effectively expand the scope of our ability to attract new customers. Relatedly, if any of our advertising platforms significantly increase their advertising fees, our ability to expand our marketing reach will be greatly impeded. Any such failure could adversely affect our reputation, revenue, and results of operations.

***Failure to adequately expand our direct sales force may impede our growth.***

We believe that our future growth will depend in part on the continued development of our direct sales force and its ability to obtain new customers and to manage our existing customers. Identifying and recruiting qualified personnel and training and managing a geographically dispersed sales team requires significant time, expense, and attention. In March 2023, our Chief Commercial Officer and VP, Market Access both resigned. It can take six months or longer before a new sales representative is fully trained and productive. Our business may be adversely affected if our efforts to expand and train our direct sales force do not generate a corresponding increase in revenue. In particular, if we are unable to hire, develop, and retain sufficient numbers of productive direct sales personnel or if new direct sales personnel are unable to achieve desired productivity levels in a reasonable period of time, sales of our services will suffer, and our growth will be impeded.

***Any failure to offer high quality patient support may adversely affect our relationships with our existing and prospective patients, and in turn our business, results of operations and financial condition.***

In implementing and using our products, our patients will depend on our patient support to resolve issues in a timely manner. We may be unable to respond quickly enough to accommodate short-term increases in demand for patient support. Increased patient demand for support could increase costs and adversely affect our results of operations and financial condition. Any failure to maintain high-quality patient support, or a market perception that we do not maintain high-quality patient support, could adversely affect patient satisfaction or the willingness of physicians to prescribe our products, and in turn our business, results of operations, and financial condition.

***If we cannot maintain our corporate culture, we could lose the innovation, collaboration, and focus on the mission that contribute to our business.***

We believe that our culture has been and will continue to be a critical contributor to our success. We believe our corporate culture has been crucial in our success and our ability to attract highly skilled personnel. If we do not continue to develop our corporate culture or maintain and preserve our core values as we grow and evolve, we may be unable to foster the innovation, curiosity, creativity, focus on execution, teamwork and the facilitation of critical knowledge transfer and knowledge sharing we believe we need to support our growth. Our status as a

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 68

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

public company may result in a change to our corporate culture, which could harm our business. Our reductions in force may yield unintended consequences and costs, such as attrition beyond the intended reduction in force, the distraction of employees and reduced employee morale, which could, in turn, adversely impact productivity, including through a loss of continuity, loss of accumulated knowledge and/or inefficiency during transitional periods. Any of these impacts could also adversely affect our reputation as an employer, make it more difficult for us to hire new employees in the future and increase the risk that we may not achieve the anticipated benefits from the restructuring.

***Business or economic disruptions or global health concerns could seriously harm our business.***

Broad-based business or economic disruptions could adversely affect our business and the sale of our products. For example, in March 2020, the World Health Organization declared COVID-19 a global pandemic. This outbreak resulted in extended shutdowns of certain businesses throughout the world. While the COVID-19 pandemic has not materially adversely affected our financial results and business operations through December 31, 2022, COVID-19 continues to present risks to the Company, and we continue to closely monitor the impact of the pandemic on all aspects of our business. Global health concerns, such as the COVID-19 pandemic, can impact healthcare industry spending for our products, adversely affect demand for our products, affect the ability of our sales team to travel to potential customers and the ability of our professional services teams to conduct in-person services and trainings, impact expected spending from new customers, negatively impact collections of accounts receivable, which could have a material adverse effect on our business and our results of operation and financial condition.

***Changes in funding or disruption at the FDA, the SEC and other government agencies caused by funding shortages or global health concerns could hinder their ability to hire and retain key leadership and other personnel, or otherwise prevent new or modified products from being developed, reviewed or commercialized in a timely manner or at all, or otherwise prevent those agencies from performing normal business functions on which the operation of our business may rely, which could negatively impact our business.***

The ability of the FDA to review and grant marketing authorization for new products can be affected by a variety of factors, including government budget and funding levels, ability to hire and retain key personnel and accept the payment of user fees, and statutory, regulatory and policy changes and other events that may otherwise affect the FDA's ability to perform routine functions. Average review times at FDA have fluctuated in recent years as a result. In addition, government funding of the SEC and other government agencies on which our operations may rely, including those that fund research and development activities is subject to the political process, which is inherently fluid and unpredictable.

Disruptions at the FDA and other agencies, may also slow the time necessary for new digital therapeutics to be reviewed and/or granted marketing authorization by necessary government agencies, which would adversely affect our business. For example, in recent years, including for 35 days beginning on December 22, 2018, the US government shut down several times and certain regulatory agencies, such as the FDA and the SEC, had to furlough critical employees and stop critical activities.

If a prolonged government shutdown occurs, or if global health concerns continue to prevent the FDA or other regulatory authorities from conducting their regular inspections, reviews or other regulatory activities, it could significantly impact the ability of the FDA to timely review and process our regulatory submissions, which could have a material adverse effect on our business. Future government shutdowns or delays could impact our ability to access the public markets and obtain necessary capital in order to properly capitalize and continue our operations.

**Risks Related to Our Intellectual Property and Technology** 

***Limitations on our ability to maintain or obtain patent protection and/or the patent rights relating to our products and product candidates may limit our ability to prevent third parties from competing against us.***

Our success depends, in part, on our ability to obtain and maintain patent protection (including utility patents and design patents) for our products and product features, including back-end architecture and graphical user interfaces. Our success further depends on our ability to obtain copyright registrations for our products' source

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 69

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

code; to obtain and maintain trademark protection for our product names and other key marks; to preserve our trade secrets and know-how; and to operate without infringing the intellectual property rights of others.

We cannot assure investors that we will continue to innovate and file new patent applications, or that if filed any future patent applications will result in granted patents. We cannot assure you that any of our currently pending patent applications will result in issued patents, that any current or future patents will not be challenged, invalidated or circumvented, that the scope of any of our patents will exclude competitors, or that the patent rights granted to us will provide us any competitive advantage or protect our products. The patent position of PDT companies, including ours, is generally uncertain and involves complex legal and factual considerations and, therefore, validity and enforceability cannot be predicted with certainty. Patents may be challenged, deemed unenforceable, invalidated or circumvented. We will be able to protect our proprietary rights from unauthorized use by third parties only to the extent that our proprietary technologies and any future products are covered by valid and enforceable patents and/or copyrights or are effectively maintained as trade secrets.

Any patents we have obtained or do obtain may be challenged in the US Patent and Trademark Office ("<u>USPTO</u>") or in federal courts, and may be invalidated or otherwise found unenforceable. Both the patent application process and the process of managing patent disputes can be time-consuming and expensive. If we (either alone or with a patent licensor or co-owner, as the case may require) were to initiate legal proceedings against a third party to enforce a patent related to one of our products, the defendant in such litigation could counterclaim that our (or our licensors') patent is invalid and/or unenforceable. In patent litigation in the US, defendant counterclaims alleging invalidity and/or unenforceability are commonplace, as are validity challenges by the defendant against the subject patent or other patents before the USPTO. Grounds for a validity challenge could be an alleged failure to meet any of several statutory requirements, including lack of novelty, obviousness or non-enablement, failure to meet the written description requirement, indefiniteness, and/or failure to claim patent-eligible subject matter. Grounds for an unenforceability assertion could be an allegation that someone connected with prosecution of the patent intentionally withheld material information from the USPTO, or made a misleading statement, during prosecution, or otherwise committed fraud on the USPTO. Additional grounds for an unenforceability assertion include an allegation of misuse or anticompetitive use of patent rights, and an allegation of incorrect inventorship with deceptive intent. Third parties may also raise similar claims before the USPTO even outside the context of litigation. The outcome is unpredictable following legal assertions of invalidity and unenforceability. With respect to the validity question, for example, we cannot be certain that no invalidating prior art existed of which we (or a patent licensor or co-owner) and the patent examiner were unaware during prosecution. These assertions may also be based on information known to us or the USPTO. If a defendant or third party were to prevail on a legal assertion of invalidity and/or unenforceability, we would lose at least part, and perhaps all, of the claims of the challenged patent. Such a loss of patent protection would or could have a material adverse impact on our business.

The standards that the USPTO (and foreign equivalents) use to grant patents are not always applied predictably or uniformly and can change. There is also no uniform, worldwide policy regarding the subject matter and scope of claims granted or allowable in utility patents. Accordingly, we do not know the degree of future protection for our proprietary rights or the breadth of claims that will be allowed in any patents issued to us (or to a patent licensor) or to others.

There can be no assurance that our technology will not be found in the future to infringe upon the rights of others or be infringed upon by others. Moreover, patent applications are in some cases maintained in secrecy until patents are issued. The publication of discoveries in the scientific or patent literature frequently occurs substantially later than the date(s) on which the underlying discoveries were made and patent applications were filed. Because patents can take many years to issue, there may be currently pending applications of which we are unaware that may later result in issued patents that our products or product candidates infringe. For example, pending applications may exist that provide support or can be amended to provide support for a claim that results in an issued patent that our products infringe. In such a case, others may assert infringement claims against us, and should we be found to infringe upon their patents or otherwise impermissibly utilize their intellectual property, we might be subject to injunctive relief and/or forced to pay damages, potentially including treble damages, if we are found to have willfully infringed such parties' patent rights. In addition to any damages we might have to pay, we may be required to obtain licenses from the holders of this intellectual property. We may fail to obtain any of these licenses of intellectual property rights on commercially reasonable terms (and even if we are able to obtain a

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 70

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

license, it may be non-exclusive, in which case our competitors would potentially have access to the same technologies licensed to us as non-exclusive licensees). In that event, we may be required to expend significant time and resources to develop or license replacement technology. If we are unable to do so, we may be unable to develop or commercialize the affected products or product candidates, which could materially harm our business, and the third parties owning such intellectual property rights could seek either an injunction prohibiting our sales, or, with respect to our sales, an obligation on our part to pay royalties and/or other forms of compensation. Conversely, we may not always be able to successfully pursue our claims against others that infringe intellectual property rights in our technology. Thus, the proprietary nature of our technology or technology licensed by us may not provide adequate protection against competitors.

In addition to patents, we rely on copyrights to protect our products' source code. We also rely on trademarks and trade names to differentiate our products from those of others and to protect the recognition of our company and products in the marketplace. We also rely on trade secrets, know-how, and proprietary knowledge that we seek to protect, in part, through confidentiality agreements with employees, consultants and others. We cannot assure you, however, that our proprietary information will not be shared or accessed without authorization, that our confidentiality agreements will not be breached, that we will have adequate remedies for any breach, or that our trade secrets will not otherwise become known to or independently developed by competitors.

***Changes to the patent law in the US and other jurisdictions could diminish the value of patents in general and may impact the validity, scope or enforceability of our patent rights, thereby impairing our ability to protect our products and product candidates.***

As is the case with other digital therapeutic companies, our success is dependent on intellectual property, particularly patents and trade secrets. Obtaining and enforcing patents in the digital therapeutic industry involve both technological and legal complexity and are therefore costly, time consuming, and inherently uncertain. Our patent rights, their associated costs, and the enforcement or defense of such patent rights may be affected by developments or uncertainty in the patent statute, patent case law or USPTO rules and regulations. Changes in either the patent laws or interpretation of the patent laws could increase the uncertainties and costs surrounding the prosecution of patent applications and the enforcement or defense of our issued patents.

For example, the US Supreme Court has ruled on several patent cases in recent years, either narrowing the scope of patent protection available in certain circumstances or weakening the rights of patent owners in certain situations. Additionally, there have been recent proposals for additional changes to the patent laws of the US and other countries that, if adopted, could impact our ability to obtain patent protection for our proprietary technology or our ability to enforce rights in our proprietary technology. Depending on future actions by the US Congress, the US courts, the USPTO and the relevant law-making bodies in other countries, the laws and regulations governing patents could change in unpredictable ways that would weaken our ability to obtain new patents or to enforce any patents that we may obtain in the future.

***If our trademarks and trade names are not adequately protected, we may not be able to build name recognition in our markets of interest and our competitive position may be harmed.***

The registered or unregistered trademarks or trade names that we own may be challenged, infringed, circumvented, declared generic, lapsed or determined to be infringing on or dilutive of other marks. We may not be able to protect our rights in these trademarks and trade names, which we need in order to build name recognition with the public. In addition, third parties have filed, and may in the future file, for registration of trademarks similar or identical to our trademarks, thereby impeding our ability to build brand identity and possibly leading to market confusion. If they succeed in registering such trademarks and/or in developing common law rights in such trademarks, and if we are not successful in challenging such third-party rights, we may not be able to use these trademarks to develop brand recognition of our services. In addition, there could be potential trade name or trademark infringement claims brought by owners of other registered trademarks or trademarks that incorporate variations of our registered or unregistered trademarks or trade names. If we are unable to establish or protect our trademarks and trade names, or if we are unable to build name recognition based on our trademarks and trade names, we may not be able to compete effectively, which could harm our competitive position, business, financial condition, results of operations and prospects.

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 71

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

***Accusations of infringement of third-party intellectual property rights could materially and adversely affect our business.***

There has been substantial litigation regarding intellectual property rights, and we may be sued for infringement from time to time. Also, in some instances, we have agreed to indemnify third parties for expenses and liability resulting from claimed intellectual property infringement. From time to time, we may receive requests for indemnification in connection with allegations of intellectual property infringement and we may choose, or be required, to assume the defense and/or reimburse third parties for their expenses, settlement and/or liability. We cannot assure you that we will be able to settle any future claims or, if we are able to settle any such claims, that the settlement will be on terms favorable to us. Our broad range of technology may increase the likelihood that third parties will claim that we infringe their intellectual property rights.

We may in the future receive notices of allegations of infringement, misappropriation or misuse of other parties' proprietary rights. Furthermore, regardless of their merits, accusations and litigation of this nature may require significant time and expense to defend, may negatively affect customer relationships, may divert management's attention away from other aspects of our operations and, upon resolution, may have a material adverse effect on our business, results of operations, financial condition, and cash flows.

Certain technology necessary for us to provide our solutions may, in fact, be patented by other parties either now or in the future. If such technology were validly patented by a third party, we may have to negotiate a license for the use of that technology. We may not be able to negotiate such a license at a price that is acceptable to us or at all. The existence of such a patent, or our inability to negotiate a license for any such technology on acceptable terms, could force us to cease using the technology and cease offering products incorporating the technology, which could materially and adversely affect our business and results of operations.

If we, or any of our products, were found to be infringing on the intellectual property rights of any third party, we could be subject to liability for such infringement, which could be material. We could also be prohibited from using or selling certain products, prohibited from using certain processes, or required to redesign certain products, each of which could have a material adverse effect on our business and results of operations.

These and other outcomes may: result in the loss of a substantial number of existing customers or prohibit the acquisition of new customers; cause us to pay license fees for intellectual property we are deemed to have infringed; cause us to incur costs and devote valuable technical resources to redesigning our products; cause our cost of revenues to increase; cause us to accelerate expenditures to preserve existing revenues; materially and adversely affect our brand in the marketplace and cause a substantial loss of goodwill; cause us to change our business methods or products; and require us to cease certain business operations or offering certain products or features.

***If we are unable to protect the confidentiality of our trade secrets, our business and competitive position would be harmed.***

In addition to patent protection, we rely heavily upon know-how and trade secret protection, as well as non-disclosure agreements and invention assignment agreements with our employees, consultants and third parties, to protect our confidential and proprietary information, especially where we do not believe patent protection is appropriate or obtainable. It is our policy to require our employees and consultants to execute confidentiality agreements upon the commencement of employment or consulting relationships with us. These agreements provide that all confidential information concerning our business or financial affairs developed or made known to the individual or entity during the course of the party's relationship with us is to be kept confidential and not disclosed to third parties except in specific circumstances. In the case of employees, the agreements provide that all inventions conceived or completed by the individual, and which are related to our current or planned business or research and development or made during normal working hours, on our premises or using our equipment or proprietary information, are our exclusive property. In addition to contractual measures, we try to protect the confidential nature of our proprietary information using physical and technological security measures. Such measures may not, for example, in the case of misappropriation of a trade secret by an employee or third party with authorized access, provide adequate protection for our proprietary information. Our security measures may,

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 72

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

for example, not prevent an employee or consultant from misappropriating our trade secrets and providing them to a competitor, and recourse we take against such misconduct may not provide an adequate remedy to protect our interests fully.

Enforcing a claim that a party illegally disclosed or misappropriated a trade secret can be difficult, expensive and time-consuming, and the outcome is unpredictable. In addition, trade secrets may be independently developed by others in a manner that could prevent legal recourse by us. If any of our confidential or proprietary information, such as our trade secrets, were to be disclosed or misappropriated, or if any such information were to be independently developed by a competitor, our competitive position could be harmed. In addition, courts outside the US may be less willing to protect trade secrets. Thus, we may not be able to meaningfully protect our trade secrets outside the US.

If we choose to go to court to stop a third party from using any of our trade secrets, we may incur substantial costs. These lawsuits may consume our time and other resources even if we are successful. Although we take steps to protect our proprietary information and trade secrets, including through contractual means with our employees and consultants, third parties may independently develop substantially equivalent proprietary information and techniques or otherwise gain access to our trade secrets or disclose our technology.

***Third parties may assert that our employees, consultants, collaborators or partners have wrongfully used or disclosed confidential information or misappropriated trade secrets.***

As is common in the digital health, technology, or pharmaceutical industries, we employ individuals who were previously employed at universities or other digital health, technology, or pharmaceutical companies, including our competitors or potential competitors. Although no claims against us are currently pending, and although we try to ensure that our employees and consultants do not use the proprietary information or know-how of others in their work for us, we may be subject to claims that we or our employees or consultants have inadvertently or otherwise used or disclosed intellectual property, including trade secrets or other proprietary information, of a former employer or other third party. Litigation may be necessary to defend against these claims. If we fail in defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights or personnel. This risk is similarly applicable with respect to claims by third parties against any current or future licensors.

***We may not be able to protect our intellectual property rights throughout the world.***

Filing, prosecuting and defending patents on product candidates in all countries throughout the world is expensive. In addition, the laws of some foreign countries do not protect intellectual property rights to the same extent as laws in the US. For instance, following Russia's invasion of Ukraine in February 2022, the US government levied sanctions against Russia, and Russia responded by issuing a decree that removes protections for some patent holders who are registered in unfriendly countries, including the US. Accordingly, the USPTO has terminated its engagement with officials from intellectual property agencies in Russia. This reaction from a globally significant nation sets an unwieldy precedent, wherein other countries may now be expected to respond to political sanctions by extinguishing the intellectual property rights of those it deems "unfriendly." Consequently, we may not be able to prevent third parties from practicing our inventions in all countries outside the US where we have issued patents, or from selling or importing products made using our inventions in other jurisdictions. Competitors may also use our technologies in jurisdictions where we have not obtained patent protection to develop their own products and, further, may export otherwise infringing products to territories where we do not have patent protection or where we have patent protection but where enforcement is not as strong as that in the US. These products may compete with our products, and our patents or other intellectual property rights may not be effective or sufficient to prevent such competition.

Many companies have encountered significant problems in protecting and defending intellectual property rights in foreign jurisdictions. The legal systems of certain countries do not favor the enforcement of patents, trade secrets and other intellectual property rights, particularly those relating to digital health, pharmaceutical and biopharmaceutical products, which could make it difficult for us, our licensors, or our licensees to stop the infringement of our patents or marketing of competing products against third parties in violation of our proprietary

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 73

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

rights generally. The initiation of proceedings for infringement by third parties or by third parties to challenge the scope or validity of our patent rights in foreign jurisdictions could also result in substantial cost and divert our efforts and attention from other aspects of our business, could put our patents at risk of being invalidated or interpreted narrowly and any related patent applications at risk of not issuing, and could provoke third parties to assert claims against us, our licensors, or our licensees. We may not prevail in any lawsuits that we initiate or that are initiated against us, and the damages or other remedies awarded in lawsuits that we initiate, if any, may not be commercially meaningful.

Many countries, including European Union countries, India, Japan and China, have compulsory licensing laws under which a patent owner may be compelled under specified circumstances to grant licenses to third parties. In addition, many countries limit the enforceability of patents against government agencies or government contractors. In those countries, we may have limited remedies if patents are infringed or if we are compelled to grant a license to a third party, which could materially diminish the value of those patents. This could limit our potential revenue opportunities. Accordingly, our efforts to enforce our intellectual property rights around the world may be inadequate to obtain a significant commercial advantage from the intellectual property that we develop or license.

***We are party to and may, in the future, enter into collaborations, in-licensing arrangements, joint ventures, or strategic alliances with third parties that may not result in the development of commercially viable products or the generation of significant or any future revenues.***

In the ordinary course of our business, we have and may continue to enter into collaborations, in-licensing arrangements, joint ventures, or strategic alliances to develop PDTs and to pursue new markets. Proposing, negotiating, and implementing collaborations, in-licensing arrangements, joint ventures, and strategic alliances may be a lengthy and complex process. Other companies, including those with substantially greater financial, marketing, sales, technology or other business resources, may compete with us for these opportunities or arrangements. We may not identify, secure or complete any such transactions or arrangements in a timely manner, on a cost-effective basis, on acceptable terms, or at all. We have limited institutional knowledge and experience with respect to these business development activities, and we may also not realize the anticipated benefits of any such transaction or arrangement. In particular, these collaborations may not result in the development of products that achieve commercial success or result in significant revenues and could be terminated prior to developing any products.

Additionally, we may not be in a position to exercise sole decision-making authority regarding the transaction or arrangement, which could create the potential risk of creating impasses on decisions, and our collaborators may have economic or business interests or goals that are, or that may become, inconsistent with our business interests or goals. It is possible that conflicts may arise with our collaborators, such as conflicts concerning the achievement of performance milestones, or the interpretation of significant terms under any agreement, such as those related to financial obligations or the ownership or control of intellectual property developed during the collaboration. Some of our current license agreements impose various development, diligence, commercialization or sublicensing, and other obligations. In spite of our efforts, a current or future licensor might conclude that we have materially breached our obligations under such license agreements and seek to terminate the license agreements, thereby removing or limiting our ability to develop and commercialize products and technology covered by these license agreements. Furthermore, if any conflicts arise with our current or future collaborators, they may act in their self-interest, which may be adverse to our best interest, and they may breach their obligations to us. In addition, we have limited control over the amount and timing of resources that our current collaborators or any future collaborators devote to our collaborators' or our future products. Disputes between us and our collaborators may result in litigation or arbitration which would increase our expenses and divert the attention of our management. The agreements under which we may license intellectual property or technology from third parties may be complex, and certain provisions in such agreements may be susceptible to multiple interpretations. Further, these transactions and arrangements are contractual in nature and may be terminated or dissolved under the terms of the applicable agreements and, in such event, we may not continue to have rights to the products relating to such transaction or arrangement or may need to purchase such rights at a premium. If any of these various collaborations were terminated, or if the underlying patent rights licensed thereunder fail to provide the intended exclusivity, competitors or other third parties would have the freedom to seek marketing authorization

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 74

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

of, and to market, products identical to ours and we may be required to cease our development and commercialization of certain of our product candidates.

***Our products utilize third-party open source software components, which may pose particular risks to our proprietary software, technologies, products and services in a manner that could negatively affect our business.***

We have chosen, and we may choose in the future, to use open source software in our products. We use various software composition tools, including Veracode and SonarQube, which are designed to monitor risks related to licenses and vulnerabilities related to open-source software. Use and distribution of open source software may entail greater risks than use of third-party commercial software, as open source licensors generally do not provide warranties or other contractual protections regarding infringement claims or the quality of the code. Some open source licenses may contain requirements that we make available source code for modifications or derivative works we create based upon the type of open source software we use. If we combine our proprietary software with open source software in a certain manner, we could, under certain open source licenses, be required to release the source code of our proprietary software to the public. This would allow our competitors to create similar products with less development effort and time and ultimately could result in a loss of product sales.

Although we intend to monitor any use of open source software to avoid subjecting our products to conditions we do not intend, the terms of many open source licenses have not been interpreted by US courts, and there is a risk that any such licenses could be construed in a way that could impose unanticipated conditions or restrictions on our ability to commercialize our products. Moreover, there is no assurance that our processes for controlling our use of open source software in our products will be effective. If we are held to have breached the terms of an open source software license, we could be required to seek licenses from third parties to continue offering our products on terms that are not economically feasible, to re-engineer our products, to discontinue the sale of our products if re-engineering could not be accomplished on a timely basis, or to make generally available, in source code form, our proprietary code, any of which could materially and adversely affect our business, operating results and financial condition.

***Some of our products and research initiatives may be partially supported by government grant awards, which may or may not be available to us in the future or may subject us to federal regulations such as "march-in" rights, certain reporting requirements, and a preference for US manufacturing.***

We have received various forms of grant funding from the National Institute on Drug Abuse (<u>NIDA</u>) to support the clinical and commercial development activities of reSET and reSET-O in substance use disorder and opioid use disorder, respectively. To fund a portion of our future research initiatives and development programs, we may apply for additional grant funding from NIDA or other governmental agencies. However, funding by these governmental agencies may be significantly reduced or eliminated in the future for a number of reasons. For example, some programs are subject to a yearly appropriations process in Congress. In addition, we may not receive full funding under current or future grants because of budgeting constraints of the agency administering the program or unsatisfactory progress on the study being funded. Therefore, we cannot be certain that we will receive any future grant funding from any government agencies, or, that if received, we will receive the full amount of the particular grant award. Any such reductions could delay the development of our products and research initiatives.

Moreover, patent rights on inventions conceived or first actually reduced to practice in the performance of work under a US government funding agreement, or subject inventions, are subject to the Bayh-Dole Act of 1980, or Bayh-Dole Act. US government rights in subject inventions include a non-exclusive, non-transferable, irrevocable, paid up license to practice or have practiced for or on behalf of the US the subject invention throughout the world. In addition, the US government has the right to require us to grant exclusive, partially exclusive, or non-exclusive licenses to any subject inventions to a third party if the government determines that: (1) adequate steps have not been taken to commercialize the subject invention; (2) government action is necessary to meet public health or safety needs; or (3) government action is necessary to meet requirements for public use under federal regulations, which we refer to as march-in rights. The US government also has the right to take title to subject inventions if we fail, or the applicable licensor fails, to disclose the subject invention to the government, elect title, and file a patent application within specified time limits or if we cease to prosecute the patent application or will allow a patent to

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 75

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

lapse. Each subject invention is also subject to certain reporting requirements, compliance with which may require us, or the applicable licensor, to expend substantial resources. In addition, the Bayh Dole Act requires that any exclusive license to use or sell products embodying the subject invention or produced through use of the subject invention in the US include a requirement that such licensed products will be manufactured substantially in the US. The manufacturing preference requirement can be waived if the patent owner can show that reasonable but unsuccessful efforts have been made to grant licenses on similar terms to potential licensees that would be likely to manufacture substantially in the US or that under the circumstances domestic manufacture is not commercially feasible.

As a result of any funding from NIDA, or if we enter into future arrangements involving federal government funding and conceive or first actually reduce to practice an invention in the performance of work under such funding, patent rights in any such subject inventions may be subject to the applicable provisions of the Bayh-Dole Act. To the extent any of our current or future patent rights relate to subject inventions, the provisions of the Bayh-Dole Act may similarly apply. Any exercise by the federal government of certain of its rights under the Bayh-Dole Act could harm our competitive position, business, financial condition, results of operations, and prospects.

**Risks Relating to Our Products** 

***The success of any enhancements or improvements to our products or any new products depends on several factors, including regulatory review timelines, timely completion, competitive pricing, adequate quality testing, integration with new and existing technologies in our products and third-party collaborators' technologies and overall market acceptance.***

We expect that the PDT market, as with many technology markets, will be characterized by rapid technological change, frequent new product and service introductions and enhancements, changing customer demands, and evolving industry standards. As an initial matter, a significant portion of our market may not have access to smartphones or other technology necessary to utilize our PDTs. In addition, the introduction of products and services embodying new technologies could quickly make existing products and services obsolete and unmarketable. Additionally, changes in laws and regulations could impact the usefulness of our products and could necessitate changes or modifications to our products to accommodate such changes. We invest substantial resources in researching and developing new products and enhancing our existing products by incorporating additional features, improving functionality, and adding other improvements to meet our patients' evolving needs. If we are unable to develop and release new products, or successful enhancements, new features and modifications to our existing products, our business, financial condition and results of operations could be materially and adversely affected. We may not succeed in developing, marketing and delivering on a timely and cost-effective basis enhancements or improvements to our products or any new products that respond to continued changes in market demands or new customer requirements, and any enhancements or improvements to our products or any new products may not achieve market acceptance. Since developing our products is complex, the timetable for the release of new products and enhancements to existing products is difficult to predict, and we may not offer new products and updates as rapidly as our users require or expect. Any new products that we develop or acquire may not be introduced in a timely or cost-effective manner, may contain errors or defects, or may not achieve the broad market acceptance necessary to generate significant or any revenue.

The introduction of new products and products by competitors, the development of entirely new technologies to replace existing offerings or shifts in healthcare benefits trends could make our products obsolete or materially and adversely affect our business, financial condition and results of operations. We may experience difficulties with software development, industry standards, design or marketing that could delay or prevent our development, introduction or implementation of new products, enhancements, additional features or capabilities. If patients and healthcare providers do not widely adopt our products, we may not be able to realize a return on our investment. If we do not accurately anticipate patient demand or we are unable to develop, license or acquire new features and capabilities on a timely and cost-effective basis, or if such enhancements do not achieve market acceptance, it could result in adverse publicity, loss of revenue or market acceptance or claims by patients or healthcare providers brought against us, each of which could have a material and adverse effect on our reputation, business, results of operations and financial condition.

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 76

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

***Our products may cause undesirable side effects or have other properties that could limit their commercial potential.***

If we or others identify undesirable side effects directly or indirectly caused by our products, a number of potentially significant negative consequences could result, including:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• regulatory authorities may withdraw clearance, authorization, or approvals of such product;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• regulatory authorities may require additional warnings on the product's label;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• we may be required to issue safety communications to patients or healthcare providers that outline the risks of such side effects;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• we could be sued and held liable for harm caused to patients; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our reputation may suffer.

Any of these events could prevent us from achieving or maintaining market acceptance of the particular product or product candidate and, as a result of negative impacts to our reputation, our other products or product candidates and could significantly harm our business, results of operations and prospects.

***Our current product candidates are in various stages of development. Our product candidates may fail in development or suffer delays that adversely affect their commercial viability. If we fail to maintain clearance, de novo classification or authorization to market our product candidates for expanded indications, or if we are delayed in obtaining such marketing authorizations, our business, prospects, results of operations and financial condition could be materially and adversely affected.***

The process of seeking FDA marketing authorization is expensive and time consuming. There can be no assurance that marketing authorization will be granted. If we are not successful in obtaining timely clearance, de novo classification or approval of our product candidates, we may never be able to generate significant revenue and may be forced to cease operations. The FDA can delay, limit or deny for many reasons, including:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We may not be able to demonstrate to the FDA's satisfaction that our product candidates meet the applicable regulatory standards for clearance, de novo classification, or authorization, as applicable;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The FDA may disagree that our clinical data supports the label and use that we are seeking; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The FDA may disagree that the data from our preclinical or pilot studies and clinical trials is sufficient to support marketing authorization.

Obtaining marketing authorization from the FDA or any foreign regulatory authority could result in unexpected and significant costs for us and consume management's time and other resources. The FDA could ask us to supplement our submissions, collect additional nonclinical data, conduct additional clinical trials, prepare additional manufacturing data or information or engage in other time-consuming actions, or it could simply deny our applications. In addition, if granted marketing authorization, we will be required to obtain additional FDA authorizations or clearances prior to making certain modifications to our devices. Further, FDA may impose other restrictions on our marketing authorizations, or we may lose marketing authorization, if post-market data demonstrates safety issues or lack of effectiveness. If we are unable to obtain and maintain the necessary marketing authorizations to market our products, our financial condition may be adversely affected, and our ability to grow domestically and internationally would likely be limited. Additionally, even if granted marketing authorization, our products may not receive marketing authorization for the indications that are necessary or desirable for successful commercialization or profitability. This could have a material adverse effect on our business, prospects, results of operations and financial condition.

***Clinical trials of any of our products or product candidates may fail to produce results necessary to support regulatory clearance or authorization.***

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 77

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

We incur substantial expense for, and devote significant time to, clinical trials but cannot be certain that the trials will ever result in commercial gains. We may experience significant setbacks in clinical trials, even after earlier clinical trials showed promising results, and failure can occur at any time during the clinical development process. Any of our products may malfunction or may produce undesirable adverse effects that could cause us, institutional review boards ("<u>IRBs</u>") or regulatory authorities to interrupt, delay or halt clinical trials. We, IRBs, the FDA, or another regulatory authority may suspend or terminate clinical trials at any time to avoid exposing trial participants to unacceptable health risks. Our clinical trials may produce negative or inconclusive results or may demonstrate a lack of effect of our product candidates. Additionally, the FDA may disagree with our interpretation of the data from our pilot studies and clinical trials, or may find the clinical trial design, conduct or results inadequate to demonstrate safety or effectiveness, and may require us to pursue additional clinical trials, which could further delay the clearance or authorization of our product candidates. If we are unable to demonstrate the safety and effectiveness of product candidates in our clinical trials, we will be unable to obtain the regulatory clearances or authorizations we need to commercialize new products.

In addition, to the extent that additional information regarding products being studied in clinical trials could translate to currently cleared or authorized products, such as information on new side effects, those results may impact existing clearances and authorizations, and required contraindications, warnings or precautions in product labeling.

***Interim, "topline" and preliminary data from clinical trials of our products or product candidates may change as more patient data becomes available and are subject to confirmation, audit, and verification procedures that could result in material changes in the final data.***

From time to time, we may publicly disclose preliminary or topline data from our pilot studies and clinical trials, which is based on a preliminary analysis of then-available data, and the results and related findings and conclusions are subject to change following a more comprehensive review of the data related to the particular study or trial. We also make assumptions, estimations, calculations, and conclusions as part of our analyses of data, and we may not have received or had the opportunity to fully and carefully evaluate all data. As a result, the topline or preliminary results that we report may differ from future results of the same studies, or different conclusions or considerations may qualify such results, once additional data have been received and fully evaluated. Topline data also remain subject to audit and verification procedures that may result in the final data being materially different from the preliminary data we previously published. As a result, topline data should be viewed with caution until the final data are available. From time to time, we may also disclose interim data from our clinical trials. Interim or preliminary data from clinical trials are subject to the risk that one or more of the clinical outcomes may materially change as patient enrollment and treatment continues and more patient data become available or as patients from our clinical trials continue other treatments for their disease. Adverse differences between preliminary or interim data and final data could significantly harm our business prospects. Further, disclosure of interim data by us or by our competitors could result in volatility in the price of our Class A common stock.

Further, third parties, including regulatory agencies, may not accept or agree with our assumptions, estimates, calculations, conclusions or analyses or may interpret or weigh the importance of data differently, which could impact the potential of the particular program, the likelihood of marketing authorization or clearance or commercialization of the particular product candidate, the commercial success of any product for which we may have already obtained authorization or clearance, and our company in general. In addition, the information we choose to publicly disclose regarding a particular study or clinical trial is derived from information that is typically extensive, and you or others may not agree with what we determine is material or otherwise appropriate information to include in our disclosure.

If the interim, topline, or preliminary data that we report differ from actual results, or if others, including regulatory authorities, disagree with the conclusions reached, our ability to obtain clearance, authorization, or approval for, and commercialize, our product candidates may be harmed, which could harm our business, operating results, prospects or financial condition.

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 78

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

***reSET-O is used in combination with buprenorphine which exposes us to additional risks.***

reSET-O is FDA-authorized for treatment of OUD in combination with buprenorphine. We are subject to the risk that the FDA could revoke approval of buprenorphine or that safety, efficacy, manufacturing or supply issues could arise with buprenorphine. This could materially and adversely affect reSET-O's commercial success. Furthermore, if buprenorphine and/or buprenorphine/Naloxone are utilized less due to other medications being used more frequently this could have a negative impact on the use of reSET-O.

**Risks Related to Our Regulatory Compliance and Legal Matters** 

***We operate in a highly regulated industry and are subject to a wide range of federal, state and local laws, rules and regulations, including FDA regulatory requirements and laws pertaining to fraud and abuse in healthcare, that affect nearly all aspects of our operations. Failure to comply with these laws, rules and regulations, or to obtain and maintain required licenses, could subject us to enforcement actions, including substantial civil and criminal penalties, and might require us to recall or withdraw a product from the market or cease operations. Any of the foregoing could materially and adversely affect our business, financial condition and results of operations.***

We and our products are subject to extensive regulation in the US, including by the FDA. The regulations to which we are subject are complex. The FDA regulates, among other things, with respect to medical devices: design, development and manufacturing; testing, labeling, content and language of instructions for use; clinical trials; product safety; medical device cybersecurity; pre-market clearance, authorization, and approval; establishment registration and device listing; marketing, sales and distribution; complaint handling; record keeping procedures; advertising and promotion; recalls and field safety corrective actions; post-market surveillance, including reporting of deaths or serious injuries and malfunctions that, if they were to recur, could lead to death or serious injury; post-market studies; and product import and export. The FDA monitors compliance with these applicable regulatory requirements through periodic unannounced inspections as well as various other channels, such as reviewing post-market surveillance and recall reports, monitoring advertising and promotional practices on-line and at trade shows, and reviewing trade complaints submitted by competitors or other third parties. We do not know whether we will pass any future inspections for FDA compliance, or whether the FDA might identify compliance concern(s) through other channels of information. Failure to comply with applicable regulations could jeopardize our ability to sell our products and result in enforcement-related actions such as: FDA Form 483s; untitled or warning letters; clinical holds on research; fines; injunctions; civil penalties; termination of distribution; recalls or seizures of products; delays in the introduction of products into the market; total or partial suspension of production; refusal to grant future clearances, authorizations, or approvals; withdrawals or suspensions of current clearances or marketing authorizations, resulting in prohibitions on the sale and distribution of our products; and in the most serious cases, criminal penalties. Any of these sanctions could result in higher than anticipated costs or lower than anticipated sales and have a material adverse effect on our reputation, business, financial condition and results of operations.

The FDA and the FTC also regulate the advertising and promotion of our products to ensure that the claims we make are consistent with our regulatory authorizations, that there is adequate and reasonable data to substantiate the claims and that our promotional labeling and advertising is neither false nor misleading. If the FDA or FTC determines that any of our advertising or promotional claims are false, misleading, not substantiated or not permissible, we may be subject to enforcement actions, including untitled or warning letters, and we may be required to revise our promotional claims and make other corrections or restitutions. We also may be subject to fines, or other regulatory, civil, or criminal sanctions.

Additional federal and state healthcare laws and regulations that may affect our ability to conduct business include, without limitation:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the federal Anti-Kickback Statute, which prohibits, among other things, any person from knowingly and willfully offering, soliciting, receiving or providing remuneration, directly or indirectly, in exchange for or to induce either the referral of an individual for, or the purchase, order or recommendation of, any good or service for which payment may be made under federal healthcare programs, such as CMS programs;

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 79

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the federal civil false claims and civil monetary penalties laws, including, without limitation, the federal False Claims Act, which prohibits, among other things, individuals or entities from knowingly presenting, or causing to be presented, false claims, or knowingly using false statements, to obtain payment from the federal government;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• federal criminal laws that prohibit executing a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the federal Civil Monetary Penalties Law prohibits, among other things, offering or transferring remuneration to a federal healthcare beneficiary that a person knows or should know is likely to influence the beneficiary's decision to order or receive items or services reimbursable by the government from a particular provider or supplier;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the federal Physician Payment Sunshine Act, or Open Payments, created under the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Affordability Reconciliation Act of 2010, or collectively the Affordable Care Act ("<u>ACA</u>"), and its implementing regulations, which requires manufacturers of drugs, medical devices, biologicals and medical supplies for which payment is available under Medicare, Medicaid, or the Children's Health Insurance Program to report annually to CMS information related to payments or other transfers of value made to licensed physicians and teaching hospitals, as well as ownership and investment interests held by physicians and their immediate family members;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Health Insurance Portability Administration and Accountability Act of 1996 ("<u>HIPAA</u>"), as amended by the Health Information Technology for Economic and Clinical Health Act, and its implementing regulations, which impose certain requirements relating to the privacy, security and transmission of protected health information ("<u>PHI</u>"), on certain healthcare providers, health plans and healthcare clearinghouses, and their business associates that access or otherwise process individually identifiable health information on their behalf; HIPAA also created criminal liability for knowingly and willfully falsifying or concealing a material fact or making a materially false statement in connection with the delivery of or payment for healthcare benefits, items or services;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• medical device regulations pursuant to the federal Food, Drug and Cosmetic Act which require, among other things, pre-market clearance, authorization, or approval; compliant labeling; medical device adverse event reporting; establishment registration and device listing; reporting of corrections and removals; and quality system requirements;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• state law equivalents of each of the above federal laws, such as anti-kickback and false claims laws which may apply to items or services reimbursed by any third-party payor, including commercial insurers, and state and foreign laws governing the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways and are in addition to requirements under HIPAA, thus complicating compliance efforts; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• state laws governing the corporate practice of medicine and other healthcare professions and related fee-splitting laws.

Our employees, consultants and commercial collaborators may engage in misconduct or other improper activities, including non-compliance with such regulatory standards and requirements.

Because of the breadth of these laws and the narrowness of available statutory and regulatory exemptions, it is possible that some of our activities could be subject to challenge under one or more of such laws. Any action brought against us for violations of these laws or regulations, even if successfully defended, could cause us to incur significant legal expenses and divert our management's attention from the operation of our business. We may be subject to private "qui tam" actions brought by individual whistleblowers on behalf of the federal or state governments, with potential liability under the federal False Claims Act including mandatory treble damages and significant per-claim penalties.

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 80

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

Although we have adopted policies and procedures designed to comply with these laws and regulations and conduct internal reviews of our compliance with these laws, our compliance is also subject to governmental review. The growth of our business and sales organization including future expansion outside of the US may increase the potential of violating these laws or our internal policies and procedures. The risk of our being found in violation of these or other laws and regulations is further increased by the fact that many have not been fully interpreted by the regulatory authorities or the courts, and their provisions are open to a variety of interpretations. Any action brought against us for violation of these or other laws or regulations, even if we successfully defend against it, could cause us to incur significant legal expenses and divert our management's attention from the operation of our business. If our operations are found to be in violation of any of the federal, state and foreign laws described above or any other current or future fraud and abuse or other healthcare laws and regulations that apply to us, we may be subject to penalties, including significant criminal, civil and administrative penalties, damages and fines, disgorgement, additional reporting requirements and oversight if we become subject to a corporate integrity agreement or similar agreement to resolve allegations of noncompliance with these laws, imprisonment for individuals and exclusion from participation in government programs, such as Medicare and Medicaid, as well as contractual damages and reputational harm. We could also be required to curtail or cease our operations. Any of the foregoing consequences could seriously harm our business, financial condition and results of operations.

***Our employees, independent contractors, consultants and collaborators may engage in misconduct or other improper activities, including non-compliance with regulatory standards and requirements, which could cause significant liability for us and harm our reputation.***

We are exposed to the risk that our employees, independent contractors, consultants and collaborators may engage in fraudulent conduct or other illegal activity. It is not always possible to identify and deter misconduct by employees and other third parties, and the precautions we take to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to comply with these laws or regulations. Misconduct by those parties could include intentional, reckless and/or negligent conduct or disclosure of unauthorized activities to us that violates:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• FDA regulations or similar regulations of comparable non-US regulatory authorities, including those laws requiring the reporting of true, complete and accurate information to such authorities;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• manufacturing standards;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• federal and state healthcare fraud and abuse laws and regulations and similar laws and regulations established and enforced by comparable non-US regulatory authorities; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• laws that require the reporting of financial information or data accurately.

In particular, sales, marketing and business arrangements in the healthcare industry are subject to extensive laws and regulations intended to prevent fraud, misconduct, kickbacks, self-dealing and other abusive practices. These laws and regulations may restrict or prohibit a wide range of pricing, discounting, marketing and promotion, sales commission, customer incentive programs and other business arrangements. Activities subject to these laws may involve the improper use or misrepresentation of information obtained in the course of clinical trials, creating fraudulent data in our clinical trials or illegal misappropriation of product materials, which could result in regulatory sanctions and serious harm to our reputation. It is not always possible to identify and deter misconduct, and the precautions we take to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to be in compliance with such laws, standards or regulations. Additionally, we are subject to the risk that a person or government could allege such fraud or other misconduct, even if none occurred. If any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business and results of operations, including the imposition of civil, criminal and administrative penalties, damages, monetary fines, disgorgement, integrity oversight and reporting obligations, possible exclusion from participation in Medicare, Medicaid and other federal healthcare

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 81

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

programs, contractual damages, reputational harm, diminished profits and future earnings, and curtailment of our operations, any of which could have a material adverse effect on our ability to operate our business and our results of operations.

***We could incur significant liability if it is determined that we are promoting any "off-label" uses of our products.***

Although our products are marketed for the specific therapeutic uses for which the devices were designed and our personnel are trained not to promote our products for uses outside of the FDA-cleared or authorized indications for use, known as "off-label uses," we cannot, however, prevent a physician from using our products in ways, when in the physician's independent professional medical judgment, he or she deems it appropriate. The use of our products for indications other than those authorized, cleared, or approved by the FDA or authorized by any foreign regulatory body may not effectively treat such conditions, which could harm our reputation in the marketplace among primary care physicians and patients.

If the FDA or any foreign regulatory body determines that our promotional materials or training constitute promotion of an off-label use, it could request that we modify our training or promotional materials or subject us to regulatory or enforcement actions, including the issuance or imposition of an untitled letter or warning letter, injunction, seizure, civil fine or criminal penalties. It is also possible that other federal, state or foreign enforcement authorities might take action under other regulatory authority, such as false claims laws, based on our off-label promotion having caused submission of false (non-reimbursable) claims, for any products for which we obtain government reimbursement, if they consider our business activities to constitute promotion of an off-label use, which could result in significant penalties, including, but not limited to, criminal, civil and administrative penalties, damages, fines, disgorgement, exclusion from participation in government healthcare programs and the curtailment of our operations. In addition, certain jurisdictions have "all payor" false claims act laws that extend penalties for false claims beyond those submitted to government programs.

***We face potential product liability exposure, and, if claims brought against us are successful, we could incur substantial liabilities.***

Our business exposes us to potential product liability claims that are inherent in the design, manufacture, testing and sale of medical devices. We could become the subject of product liability lawsuits alleging that component failures, manufacturing flaws, design defects or inadequate disclosure of product-related risks or product-related information resulted in an unsafe condition, injury or death to patients. In addition, physicians may misuse our products with their patients if they are not adequately trained, potentially leading to injury and an increased risk of product liability. The misuse of our products, or the failure of physicians or patients to adhere to operating guidelines, could cause significant harm to patients, including death, which could result in product liability claims. Product liability lawsuits and claims, safety alerts or product recalls, with or without merit, could cause us to incur substantial costs, and could place a significant strain on our financial resources, divert the attention of management from our core business, harm our reputation and materially and adversely affect our ability to attract and retain patients, any of which could have a material adverse effect on our business, financial condition and results of operations.

Although we maintain third-party product liability insurance coverage, it is possible that claims against us may exceed the coverage limits of our insurance policies. Even if any product liability loss is covered by an insurance policy, these policies typically have substantial deductibles for which we are responsible. Product liability claims in excess of applicable insurance coverage could have a material adverse effect on our business, financial condition and results of operations. In addition, any product liability claim brought against us, with or without merit, could result in an increase of our product liability insurance premiums. Insurance coverage varies in cost and can be difficult to obtain, and we cannot guarantee that we will be able to obtain insurance coverage in the future on terms acceptable to us or at all.

Additionally, from time to time we may enter into agreements pursuant to which we indemnify third parties for certain claims relating to our products. These indemnification obligations may require us to pay significant sums of money for claims that are covered by these indemnification obligations. We are not currently subject to any product liability claims; however, any future product liability claims against us, regardless of their merit, may result

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 82

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

in negative publicity about us that could ultimately harm our reputation and could have a material adverse effect on our business, financial condition and results of operations.

***Healthcare reform and other governmental and private payor initiatives may have an adverse effect upon, and could prevent, our products' or product candidates' commercial success.***

In the US and in certain foreign jurisdictions, there have been a number of legislative and regulatory changes to the healthcare system that could impact our ability to sell our products profitably, such as the ACA.

Since its enactment, there have been numerous judicial, administrative, executive, and legislative challenges to certain aspects of the ACA, and we expect there will be additional challenges and amendments to the ACA in the future. For example, various portions of the ACA are currently undergoing legal and constitutional challenges in the US Supreme Court. Additionally, the former Trump administration issued various Executive Orders which eliminated cost-sharing subsidies and various provisions that would impose a fiscal burden on states or a cost, fee, tax, penalty or regulatory burden on individuals, healthcare providers, health insurers, or manufacturers of pharmaceuticals or medical devices and Congress has introduced several pieces of legislation aimed at significantly revising or repealing the ACA. Further, on December 20, 2019, the Further Consolidated Appropriations Act (H.R. 1865), which repeals the Cadillac tax, the health insurance provider tax, and the medical device excise tax, was signed into law. It is unclear whether the ACA will be overturned, repealed, replaced, or further amended. We cannot predict what affect further changes to the ACA would have on our business, especially under the Biden administration.

Other legislative changes have been proposed and adopted in the US since the ACA was enacted. In August 2011, the Budget Control Act of 2011, among other things, created measures for spending reductions by Congress. A Joint Select Committee on Deficit Reduction, tasked with recommending a targeted deficit reduction of at least $1.2 trillion for the years 2013 through 2021, was unable to reach required goals, thereby triggering the legislation's automatic reduction to several government programs. This includes aggregate reductions of Medicare payments to providers up to 2% per fiscal year, and, due to subsequent legislative amendments, will remain in effect through 2030 unless additional congressional action is taken. Pursuant to the Coronavirus Aid, Relief, and Economic Security Act (the "<u>CARES Act</u>"), as well as subsequent legislation, these reductions were suspended from May 1, 2020 through March 31, 2022. Sequestration resumed at 1% for dates between April 1, 2022 and June 30, 2022, and then increased to the pre-pandemic level of 2% for dates after July 1, 2022. Proposed legislation, if passed, would introduce another suspension until the end of the pandemic.

There has been increasing legislative and enforcement interest in the US with respect to prescription-pricing practices. Specifically, there have been several recent US Congressional inquiries and proposed federal and state legislation designed to, among other things, bring more transparency to drug pricing, reduce the cost of prescription drugs under Medicare, review the relationship between pricing and manufacturer patient programs, and reform government program reimbursement methodologies for drugs. The HHS has already started the process of soliciting feedback on some of these measures and, at the same time, is immediately implementing others under its existing authority. It is unclear what effect such legislative and enforcement interest may have on prescription devices. Further, it is unclear whether the Biden administration will challenge, reverse, revoke or otherwise modify the prior administration's executive and administrative actions.

We expect that these and other healthcare reform measures that may be adopted in the future, may result in more rigorous coverage criteria and in additional downward pressure on the price that we receive for any cleared, authorized, or approved device, which could have an adverse effect on patients for our products or product candidates. Any reduction in reimbursement from Medicare or other government programs may result in a similar reduction in payments from private payors.

There have been, and likely will continue to be, legislative and regulatory proposals at the federal and state levels in the US directed at broadening the availability of healthcare and containing or lowering the cost of healthcare. The implementation of cost containment measures or other healthcare reforms may prevent us from being able to generate revenue, attain profitability or commercialize our products. Such reforms could have an adverse effect on anticipated revenue from product candidates that we may successfully develop and for which we may obtain

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 83

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

regulatory clearance, authorization, or approval and that may affect our overall financial condition and ability to develop product candidates. If we or any third parties we may engage are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if we or such third parties are not able to maintain regulatory compliance, our current or any future product candidates we may develop may lose any regulatory clearance, authorization, or approval that may have been obtained and we may not achieve or sustain profitability.

***Noncompliance with billing and documentation requirements could result in non-payment or subject us to billing or other compliance investigations by government authorities or private insurers.***

Payors typically have differing and complex billing and documentation requirements. If we fail to comply with these payor-specific requirements, we may not be paid for our services or payment may be substantially delayed or reduced. Moreover, federal and state laws, rules and regulations impose substantial penalties, including criminal and civil fines, monetary penalties, exclusion from participation in government healthcare programs and imprisonment, on entities or individuals (including any individual corporate officers or physicians deemed responsible) that fraudulently or wrongfully bill government-funded programs or other third-party payors for healthcare services.

From time to time in the ordinary course of business, governmental agencies and private insurers also conduct audits of healthcare companies like us. Such audits could result in the incurrence of additional costs and diversion of management's time and attention. In addition, such audits could trigger repayment demands based on findings that our products were billed in a manner that violated applicable billing requirements. We cannot predict whether any future audits, inquiries or investigations, or the public disclosure of such matters, likely would negatively impact our business, financial condition, results of operations, cash flows and the trading price of our securities.

***We are subject to data privacy and security laws and regulations governing our collection, use, disclosure, or storage of personally identifiable information, including protected health information and payment card data, which may impose restrictions on us and our operations. Any actual or perceived noncompliance with such laws and regulations may result in penalties, regulatory action, loss of business or unfavorable publicity.***

Numerous federal and state laws and regulations govern the collection, use, disclosure, storage and transmission of personally identifiable information ("<u>PII</u>"), including PHI, and information related to treatment for substance use disorders. These laws and regulations, including their interpretation by governmental agencies, are subject to frequent change and could have a negative impact on our business. In addition, in the future, industry requirements or guidance, contractual obligations, and/or legislation at both the federal and the state level may limit, forbid or regulate the use or transmission of health information outside of the US.

These varying interpretations can create complex compliance issues for us and our partners and potentially expose us to additional expense, adverse publicity and liability, any of which could materially and adversely affect our business.

Federal and state consumer protection laws are increasingly being applied by the FTC and states' attorneys general to regulate the collection, use, storage and disclosure of PII, through websites or otherwise, and to regulate the presentation of website content. In addition, other laws, such as the Confidentiality of Substance Use Disorder Patient Records regulations at 42 C.F.R. Part 2, limit the potential use of in substance use disorder treatment-related data in non-treatment-based setting, such as administrative or criminal hearings related to the patient, and include associated restrictions on disclosure of information.

The security measures that we and our third-party vendors and subcontractors have in place to ensure compliance with privacy and data protection laws may not protect our facilities and systems from security breaches, acts of vandalism or theft, computer viruses, misplaced or lost data, programming and human errors or other similar events. Even though we provide for appropriate protections through our agreements with our third-party vendors, we still have limited control over their actions and practices. A breach of privacy or security of PII or PHI may result in an enforcement action, including criminal and civil liability, against us. We are not able to predict the extent of the impact such incidents may have on our business. Enforcement actions against us could be costly and could interrupt regular operations, which may materially and adversely affect our business. While we have not received

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 84

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

any notices of violation of the applicable privacy and data protection laws and believe we are in compliance with such laws, there can be no assurance that we will not receive such notices in the future.

There is ongoing concern from privacy advocates, regulators and others regarding data privacy and security issues, and the number of jurisdictions with data privacy and security laws has been increasing. Also, there are ongoing public policy discussions regarding whether the standards for de-identification, anonymization, or pseudonymization of health information are sufficient, and the risk of re-identification sufficiently small, to adequately protect patient privacy. We expect there will continue to be new proposed and amended laws, regulations and industry standards concerning privacy, data protection and information security in the US, such as the California Consumer Privacy Act ("<u>CCPA</u>"), which went into effect on January 1, 2020, and has been amended several times. Other US states also are considering omnibus privacy legislation and industry organizations regularly adopt and advocate for new standards in these areas. While the CCPA contains exceptions for certain activities involving PHI under HIPAA, we cannot yet determine the impact the CCPA or other such future laws, regulations and standards may have on our business.

Future laws, regulations, standards, obligations, amendments, and changes in the interpretation of existing laws, regulations, standards and obligations could impair our or our customers' ability to collect, use or disclose information relating to patients or consumers, including information derived therefrom, which could decrease demand for our products, increase our costs and impair our ability to maintain and grow our customer base and increase our revenue. Accordingly, we may find it necessary or desirable to fundamentally change our business activities and practices or to expend significant resources to modify our software or platform and otherwise adapt to these changes.

Further, our patients may expect us to comply with more stringent privacy and data security requirements than those imposed by laws, regulations, or self-regulatory requirements, and we may be obligated contractually to comply with additional or different standards relating to our handling or protection of data.

Any failure or perceived failure by us to comply with federal or state laws or regulations, industry standards or other legal obligations, or any actual or suspected privacy or security incident, whether or not resulting in unauthorized access to, or acquisition, release or transfer of PII or other data, may result in governmental enforcement actions and prosecutions, private litigation, fines and penalties or adverse publicity and could cause our customers to lose trust in us, which could have an adverse effect on our reputation and business. We may be unable to make such changes and modifications in a commercially reasonable manner or at all, and our ability to develop new products could be limited. Any of these developments could harm our business, financial condition and results of operations. Privacy and data security concerns, whether valid or not valid, may inhibit retention of our products by existing customer or adoption of our products by new customers.

***Security breaches, ransomware attacks and other disruptions to our information technology structure could compromise our information, disrupt our business, and expose us to significant liability, which would cause our business and reputation to suffer and we may be unable to maintain and scale our technology.***

In the ordinary course of our business, we collect, store, use and disclose sensitive data, including PHI and other types of PII. We also process and store, and use additional third parties to process and store, sensitive information including intellectual property and other proprietary business information, including that of our patients. Patient information is encrypted but not always de-identified. We manage and maintain our platform and data utilizing a combination of managed data center systems and cloud-based computing center systems.

We are highly dependent on information technology networks and systems, including the internet, to securely process, transmit and store this critical information. Security breaches of this infrastructure, including physical or electronic break-ins, computer viruses, attacks by hackers and similar breaches, and employee or contractor error, negligence or malfeasance, can create system disruptions, shutdowns or unauthorized disclosure or modifications of confidential information, causing member PHI and other PII to be accessed or acquired without authorization or to become publicly available. We utilize third-party service providers for important aspects of the collection, storage and transmission of customer, user and patient information, and other confidential and sensitive information, and therefore rely on third parties to manage functions that have material cybersecurity risks.

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 85

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

Because of the sensitivity of the PHI, other PII, and other confidential information we and our service providers collect, store, transmit, and otherwise process, the security of our technology platform and other aspects of our services, including those provided or facilitated by our third-party service providers, are important to our operations and business strategy. We take certain administrative, physical and technological safeguards to address these risks, such as by requiring outsourcing subcontractors who handle customer, user and patient information for us to enter into agreements that contractually obligate those subcontractors to use reasonable efforts to safeguard PHI, other PII, and other sensitive information. Measures taken to protect our systems, those of our subcontractors, or the PHI, other PII, or other sensitive data we or our subcontractors process or maintain, may not adequately protect us from the risks associated with the collection, storage and transmission of such information. Although we take steps to help protect confidential and other sensitive information from unauthorized access or disclosure, our information technology and infrastructure may be vulnerable to attacks by hackers or viruses, failures or breaches due to third-party action, employee negligence or error, malfeasance or other disruptions.

A security breach or privacy violation that leads to disclosure or unauthorized use or modification of, or that prevents access to or otherwise impacts the confidentiality, security, or integrity of, member information, including PHI or other PII, or other sensitive information we or our subcontractors maintain or otherwise process, could harm our reputation, compel us to comply with breach notification laws, cause us to incur significant costs for remediation, fines, penalties, notification to individuals and for measures intended to repair or replace systems or technology and to prevent future occurrences, potential increases in insurance premiums, and require us to verify the accuracy of database contents, resulting in increased costs or loss of revenue. If we are unable to prevent such security breaches or privacy violations or implement satisfactory remedial measures, or if it is perceived that we have been unable to do so, our operations could be disrupted, we may be unable to provide access to our platform, and could suffer a loss of customers or users or a decrease in the use of our platform, and we may suffer loss of reputation, adverse impacts on customer, user and investor confidence, financial loss, governmental investigations or other actions, regulatory or contractual penalties, and other claims and liability. In addition, security breaches and other inappropriate access to, or acquisition or processing of, information can be difficult to detect, and any delay in identifying such incidents or in providing any notification of such incidents may lead to increased harm.

Any such breach or interruption of our systems, or those of any of our third-party information technology partners, could compromise our networks or data security processes and sensitive information could be inaccessible or could be accessed by unauthorized parties, publicly disclosed, lost or stolen. Any such interruption in access, improper access, disclosure or other loss of information could result in legal claims or proceedings, liability under laws and regulations that protect the privacy of member information or other personal information, such as HIPAA, the CCPA, other state data breach laws and regulatory penalties. Unauthorized access, loss or dissemination could also disrupt our operations, including our ability to perform our services, provide member assistance services, conduct research and development activities, collect, process, and prepare company financial information, provide information about our current and future solutions and engage in other user and clinician education and outreach efforts. Any such breach could also result in the compromise of our trade secrets and other proprietary information, which could materially and adversely affect our business and competitive position. While we maintain insurance covering certain security and privacy damages and claim expenses, we may not carry insurance or maintain coverage sufficient to compensate for all liability and in any event, insurance coverage would not address the reputational damage that could result from a security incident.

***International privacy and data security concerns and laws could result in additional costs and may prevent us from successfully expanding our business internationally.***

Internationally, virtually every major jurisdiction has established its own data security and privacy legal framework. For instance, in May 2018, the European General Data Protection Regulation, or GDPR, came into effect and established requirements applicable to the handling of personal data and may result in fines up to €20 million (approximately $21.4 million based on current exchange rates) or up to 4% of annual global revenue in the preceding financial year, whichever is higher, and other administrative penalties. In many European jurisdictions enforcement actions and consequences for non-compliance are also rising. Our approach with respect to the GDPR and other data protection legislation may be subject to further evaluation and change, our compliance measures may not be fully adequate and may require modification, we may expend significant time and cost in developing

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 86

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

and maintaining a privacy governance program, data transfer or localization mechanisms, or other processes or measures to comply with these legal frameworks when looking to expand or business outside of the US.

Jurisdictions outside of the US and Europe are also considering and/or enacting comprehensive data protection legislation. Cross-border data transfers and other future developments regarding local data residency could increase the cost and complexity of delivering our services in some markets and may lead to governmental enforcement actions, litigation, fines, and penalties or adverse publicity, which could adversely affect our business and financial position, could greatly increase our cost of providing our products and services, require significant changes to our operations, or even prevent us from offering certain services in specific jurisdictions.

We also continue to see jurisdictions imposing data localization laws, which may require personal information of citizens of a jurisdiction to be, among other data processing operations, initially collected, stored, and modified locally within such jurisdiction. These regulations may inhibit our ability to expand into those markets without significant additional costs.

Because of the breadth of these data protection laws and the narrowness of their exceptions and safe harbors, it is possible that international expansion could subject our business or data protection policies to challenge under one or more of such laws. The scope and enforcement of each of these laws is uncertain and subject to rapid change in the current environment of heightened regulatory focus on data privacy and security issues. If our operations are found to be in violation of any of the data protection laws described above or any other laws that apply to us, we may be subject to penalties, including, but not limited to, criminal, civil and administrative penalties, damages, fines, disgorgement, individual imprisonment, possible exclusion from participation in government healthcare programs, injunctions, private qui tam actions brought by individual whistleblowers in the name of the government, class action litigation and the curtailment or restructuring of our operations, as well as additional reporting obligations and oversight if we become subject to a corrective action plan or other agreement to resolve allegations of non-compliance with these laws, any of which could adversely affect our ability to operate our business and our results of operations.

***Our PearConnect platform may not operate properly, which could damage our reputation, subject us to claims, or require us to divert application of our resources from other purposes, any of which could harm our business and growth.***

Our PearConnect platform provides patients and physicians with the ability to, among other things, provide (i) access to the PearMD Clinician Dashboard; (ii) an end-to-end patient service center; and (iii) a data analytics system configured to aggregate patient engagement, adherence, and clinical outcome data for insight generation. Proprietary software development is time-consuming, expensive, complex, and may involve unforeseen difficulties. We may encounter technical obstacles, and it is possible that we may discover additional problems that prevent PearConnect from operating properly. We continue to implement software with respect to a number of new applications and services. The operation of our technology also depends in part on the performance of third-party service providers. If our technology platform does not function reliably or fails to achieve provider, partner or payor expectations in terms of performance, we may be required to divert resources allocated for other business purposes to address these issues, may suffer reputational harm, lose or fail to grow our customer base, and may be subject to liability claims.

***Our patient service center uses text and voice calls to communicate with healthcare providers, patients and prospective patients, and we are subject to various marketing and advertising laws including the Telephone Consumer Protection Act of 1991 ("<u>TCPA</u>"). If we fail to comply with applicable laws, including the TCPA, we may be subject to significant liabilities.***

Our patient service center uses short message service ("<u>SMS</u>"), text messages and telephone calls to communicate with healthcare providers, patients and prospective patients. The actual or perceived improper sending of text messages or the making of telephone calls may subject us to potential risks, including liabilities or claims relating to consumer protection laws. Numerous class-action suits under federal and state laws have been filed in recent years against companies who conduct SMS texting programs or make unwanted telephone calls, with many resulting in multi-million-dollar settlements to the plaintiffs. Any future such litigation against us could be costly

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 87

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

and time-consuming to defend. For example, the TCPA, a federal statute that protects consumers from unwanted telephone calls, faxes, and text messages, restricts telemarketing and the use of automated SMS text messages without proper consent. Additionally, state regulators may determine that telephone calls to our patients are subject to state telemarketing regulations. Federal or state regulatory authorities or private litigants may claim that the notices and disclosures we provide, form of consents we obtain, or our SMS texting practices are not adequate or violate applicable law. This may in the future result in civil claims against us. The scope and interpretation of the laws that are or may be applicable to the delivery of text messages are continuously evolving and developing. If we do not comply with these laws or regulations or if we become liable under these laws or regulations, we could face direct liability, could be required to change some portions of our business model, could face negative publicity, and our business, financial condition, and results of operations could be materially and adversely affected. Even an unsuccessful challenge of our SMS texting or telephone calling practices by our customers, regulatory authorities, or other third parties could result in negative publicity and could require a costly response from and defense by us.

***We may be subject to governmental investigation, litigation and other proceedings, including intellectual property disputes, which are costly to defend and could materially harm our business and results of operations.***

We may be party to government investigations, lawsuits and legal proceedings in the normal course of business. These matters are often expensive and disruptive to normal business operations. We may face allegations, lawsuits and regulatory inquiries, audits and investigations regarding data privacy, security, labor and employment, consumer protection and intellectual property infringement, including claims related to privacy, patents, publicity, trademarks, copyrights and other rights. A portion of the technologies we use incorporates open source software, and we may face claims claiming ownership of open source software or patents related to that software, rights to our intellectual property or breach of open source license terms, including a demand to release material portions of our source code or otherwise seeking to enforce the terms of the applicable open source license. We may also face allegations or litigation related to our acquisitions, securities issuances or business practices, including public disclosures about our business. Litigation and regulatory proceedings, and particularly the patent infringement and class action matters we could face, may be protracted and expensive, and the results are difficult to predict. Certain of these matters may include speculative claims for substantial or indeterminate amounts of damages and include claims for injunctive relief. Additionally, our litigation costs could be significant. Adverse outcomes with respect to litigation or any of these legal proceedings may result in significant settlement costs or judgments, penalties and fines, or require us to modify our solution or require us to stop offering certain features, all of which could negatively impact our business. We may also become subject to periodic audits, which would likely increase our regulatory compliance costs and may require us to change our business practices, which could negatively impact our results of operations. Managing legal proceedings, litigation and audits, even if we achieve favorable outcomes, is time-consuming and diverts management's attention from our business.

The results of regulatory proceedings, litigation, claims, and audits cannot be predicted with certainty, and determining reserves for pending litigation and other legal, regulatory and audit matters requires significant judgment. There can be no assurance that our expectations will prove correct, and even if these matters are resolved in our favor or without significant cash settlements, these matters, and the time and resources necessary to litigate or resolve them, could harm our reputation, business, financial condition, results of operations and the market price of our Class A common stock.

***Our commercialization efforts to date have focused almost exclusively on the US. Our ability to enter other foreign markets will depend, among other things, on our ability to navigate various regulatory regimes with which we do not have experience, which could delay or prevent the growth of our operations outside of the US.***

To date, our commercialization efforts have focused almost exclusively on the US. Expanding our business to attract customers in countries other than the US is an element of our long-term business strategy. Our ability to continue to expand our business and to attract talented employees and customers in various international markets will require considerable management attention and resources and is subject to the particular challenges of supporting a rapidly growing business in an environment of multiple languages, cultures, customs, legal systems, alternative dispute resolution systems, regulatory systems and commercial infrastructures. Entering new international markets will be expensive, our ability to successfully gain market acceptance in any particular market

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 88

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

is uncertain and the distraction of our senior management team could harm our business, financial condition and results of operation.

Sales of our products outside of the US are subject to foreign regulatory requirements that vary widely from country to country. In addition, the FDA regulates exports of medical devices from the US. While the regulations of some countries may not impose barriers to marketing and selling our products or only require notification, others require that we obtain the marketing authorization of a specified regulatory body. Complying with foreign regulatory requirements, including obtaining registrations or marketing authorizations, can be expensive and time-consuming, and we may not receive regulatory authorizations, clearances or approvals in each country in which we may plan to market our products or we may be unable to do so on a timely basis. The time required to obtain registrations or marketing authorizations, if required by other countries, may be longer than that required for FDA clearance, authorization, or approval, and requirements for such registrations and marketing authorizations may significantly differ from FDA requirements. If we modify our products, we may need to apply for additional regulatory authorizations before we are permitted to sell the modified product. In addition, we may not continue to meet the quality and safety standards required to maintain the authorizations that we have received. If we are unable to maintain our authorizations in a particular country, we will no longer be able to sell the applicable product in that country. Regulatory de novo classification, clearance or approval by the FDA does not ensure registration or marketing authorization by regulatory authorities in other countries, and registration or marketing authorization by one or more foreign regulatory authorities does not ensure registration or marketing authorization by regulatory authorities in other foreign countries or by the FDA. A failure or delay in obtaining registration or marketing authorization in one country may have a negative effect on the regulatory process in others.

Doing business internationally involves a number of additional risks, including:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• converting our products as well as the accompanying instructional and marketing materials to conform to the language and customs of different countries;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• complexities associated with managing multiple payor reimbursement regimes, and government payors; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• regulatory and compliance risks that relate to maintaining accurate information and control over activities subject to regulation under the US Foreign Corrupt Practices Act (the "<u>FCPA</u>"), and comparable laws and regulations in other countries.

These risks and uncertainties may impact our ability to enter foreign markets, which could delay or prevent the growth of our operations outside of the US, and have a material adverse effect on our business, prospects, results of operations and financial condition.

***The regulatory framework for digital health products is constantly evolving. Increasingly stringent regulatory requirements could create barriers to our development and introduction of new products. Conversely, in the event that regulatory requirements are lowered, competitors could potentially enter the prescription digital therapeutic market and compete with us more easily. Either of the foregoing could materially harm our business.***

Our PDTs are novel and represent a new category of therapeutics for which the regulatory framework continues to evolve. Our ability to develop and introduce new products will depend, in part, on our ability to comply with these complex requirements, which include regulations related to product design, development and manufacturing; testing, labeling, content and language of instructions for use; clinical trials; product safety; pre market clearance, authorization, and approval; establishment registration and device listing; and marketing, sales and distribution. If, however, the regulatory framework for digital health products simplifies and the requirements that we and others are required to comply with are lowered, it could result in the increased competition and the introduction by competitors of products that are or claim to be superior to our products. For example, due to the COVID-19 public health emergency, the FDA issued, "Enforcement Policy for Digital Health Devices For Treating Psychiatric Disorders During the Coronavirus Disease 2019 (COVID-19) Public Health Emergency," which allows for marketing of certain digital therapeutics without premarket clearance, authorization, or approval so long as certain criteria are met. FDA is considering their treatment of digital health devices once the COVID-19 emergency declarations

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 89

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

end. Actions could include the requirement to submit documentation to obtain FDA authorization, reduced documentation to obtain authorization based on market experience, or market withdrawal. A number of these actions could adversely affect our business. Similarly, competitors using our products as predicates for 510(k)s may successfully argue that they should be required to submit substantially less data to support approval of their product than was required for our products based on FDA's growing familiarity with the technology. As a result, we are subject to risks related to the developing regulatory landscape applicable to our PDTs that could have a material adverse effect on our business and results of operations.

***Our products may face competition from digital health products that are marketed without regulatory clearance, authorization, or approval. Regulators have broad discretion in determining whether to enforce regulatory requirements, and may decide not to remove uncleared or unapproved products that compete with our products, which could materially and adversely impact our business.***

Our PDTs, reSET, reSET-O and Somryst, have been authorized or cleared by the FDA after completion of clinical trials and related regulatory review. The FDA and other regulators have broad discretion in determining whether to enforce these requirements, however, which could result in uncleared or unapproved products entering the marketplace. If uncleared or unapproved products are allowed to compete with our products, we will face increased competition from parties who have fewer barriers to enter our industry. This increased competition could have a material, adverse effect on our business, results of operations and financial condition.

***Premarket clearances, authorizations, and approvals for new or significantly modified devices could be denied or significantly delayed.***

Under FDA regulations, unless exempt, a new medical device may only be commercially distributed after it has received 510(k) clearance, is authorized through the de novo classification process, or is the subject of a premarket approval ("<u>PMA</u>"). The FDA will clear marketing of a medical device through the 510(k) process if it is demonstrated that the new product is substantially equivalent to another legally marketed product not subject to a PMA. Sometimes, premarket submissions must be supported by clinical data. Our ability to enroll patients in clinical trials could be impacted by the COVID-19 outbreak, as many patients are electing or being asked to delay procedures at this time. The PMA process typically is more costly, lengthy and stringent than the 510(k) process and usually requires more substantial clinical studies.

The FDA may not authorize marketing via de novo classification or clear our 510(k) applications on a timely basis or at all. Such delays or refusals, regardless of the cause, could have a material adverse effect on our business, financial condition, and results of operations. The FDA may also change its clearance and authorization policies, adopt additional regulations or revise existing regulations, or take other actions which may prevent or delay authorization or clearance of our products.

***Material modifications to our devices may require new 510(k) clearance, de novo classification, PMA approval, or PMA supplement approval, or may require us to cease marketing or recall the modified devices until clearances, authorizations, or approvals are obtained.***

Material modifications to the intended use or technological characteristics of our devices may require new 510(k) clearance, de novo classification, PMA approval, or PMA supplement approval, or may require us to cease marketing or recall the modified devices until clearances, authorizations, or approvals are obtained. Any modification to a 510(k)-cleared device that could significantly affect its safety or effectiveness, or that would constitute a major change in its intended use, design, or manufacture, requires a new 510(k) clearance or, possibly, a de novo or a PMA. The FDA requires every manufacturer to make and document this determination in the first instance. A manufacturer may determine that a modification could not significantly affect safety or effectiveness and does not represent a major change in its intended use, so that no new 510(k) clearance is necessary. The FDA may review any manufacturer's decision and may not agree with our decisions regarding whether new clearances, authorization, or approvals are necessary. The FDA may also on its own initiative determine that a new clearance, authorization, or approval is required.

We have modified some of our cleared and authorized devices and have determined based on our review and interpretation of the applicable FDA guidance that in certain instances new 510(k) clearances are not required. If

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 90

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

the FDA disagrees with our determination and requires us to submit new 510(k) clearances for modifications to our previously cleared or authorized products for which we have concluded that new clearances are unnecessary, we may be required to cease marketing or to recall the modified product until we obtain clearance, authorization, or approval. In these circumstances, we may be subject to significant enforcement actions, regulatory fines, or penalties, which could require us to redesign our products and harm our operating results. In addition, unlike traditional hardware devices, we are exposed to this risk more frequently based on the number of changes associated with software to improve performance, introduce new features, and correct issues.

***Products may be subject to product recalls. A recall of our products, either voluntarily or at the direction of the FDA or another governmental authority, or the discovery of serious safety issues with our products, could materially and adversely affect us.***

The FDA and similar foreign governmental authorities have the authority to require the recall of commercialized products in the event of material deficiencies or defects in their design or manufacture or in the event that a product poses an unacceptable risk to health.

The FDA's authority to require a recall for medical devices must be based on a finding that there is reasonable probability that the device would cause serious injury or death. We may also decide to voluntarily recall our products. A government-mandated or voluntary recall could occur as a result of an unacceptable risk to health, component failures, malfunctions, manufacturing errors, design or labeling defects or other deficiencies and issues. For example, on May 20, 2021, we initiated a voluntary correction of reSET and reSET-O due to a software defect related to contingency management. This recall was reportable to the FDA and is in-process as of the date of this filing. Recalls of any of our products would divert managerial and financial resources and could materially and adversely affect our reputation and business, which could impair our ability to produce our products in a cost-effective and timely manner in order to meet our customers' demands. We may also be subject to liability claims, be required to bear other costs, or take other actions that could materially and adversely affect our business, results of operations and financial condition.

Companies are required to maintain certain records of recalls and corrections, even if they are not reportable to the FDA. We may initiate voluntary recalls or corrections for our products in the future that we determine do not require notification of the FDA. If the FDA disagrees with our determinations, they could require us to report those actions as recalls and we may be subject to enforcement action.

***We are required to report certain malfunctions, deaths, and serious injuries associated with our products, which can result in voluntary corrective actions or agency enforcement actions.***

Under the FDA's medical device reporting ("<u>MDR</u>") regulations, we are required to report to the FDA when information from any source suggests that our product may have caused or contributed to a death or serious injury or that our product has malfunctioned and, if the malfunction were to recur, would likely cause or contribute to death or serious injury. In November 2022, we reported our first MDR incident in which a patient suffered a relapse. If we fail to report these events to the FDA within the required timeframes, or at all, the FDA could take enforcement action against us.

Any adverse event involving our products, whether in the US or abroad, could result in future voluntary corrective actions, such as recalls, including corrections or customer notifications, or agency action, such as inspection or enforcement actions. If malfunctions do occur, we may be unable to correct the malfunctions adequately or prevent further malfunctions, in which case we may need to cease manufacture and distribution of the affected products, initiate voluntary recalls, and redesign the products. Regulatory authorities may also take actions against us, such as ordering recalls, imposing fines, or seizing the affected products. Any corrective action, whether voluntary or involuntary, will require the dedication of our time and capital, distract management from operating our business, and may harm our reputation and financial results.

If we fail to comply with the FDA's Quality System Regulation ("<u>QSR</u>"), or any applicable foreign equivalent, our operations could be interrupted, and our potential product sales and operating results could suffer.

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 91

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

We are required to comply with the FDA's QSR, which delineates, among other things, the design controls, document controls, purchasing controls, identification and traceability, production and process controls, acceptance activities, nonconforming product requirements, corrective and preventive action requirements, labeling and packaging controls, handling, storage, distribution and installation requirements, complaint handling, records requirements, servicing requirements, and statistical techniques potentially applicable to the production of our medical devices. We are also subject to the regulations of foreign jurisdictions if we market products overseas.

The FDA enforces the QSR through periodic and announced or unannounced inspections of manufacturing facilities. Both our San Francisco and Boston facilities have been inspected by the FDA and other designated auditing organizations, and we anticipate that we will be subject to additional future inspections. If our facilities or processes are found to be in non-compliance or fail to take satisfactory corrective action in response to adverse QSR inspectional findings, the FDA could take legal or regulatory enforcement actions against us and/or our products, including but not limited to the cessation of sales or the initiation of a recall of distributed products, which could impair our ability to produce our products in a cost-effective and timely manner in order to meet our customers' demands. We may also be required to bear other costs or take other actions that may have a negative impact on our future sales and our ability to generate profits.

The FDA's, other comparable state governmental agencies', and non-US regulatory agencies' statutes, regulations, policies or interpretations may change, and additional government regulation or statutes may be enacted, which could increase regulatory requirements, or delay, suspend, prevent marketing of any cleared, authorized, or approved products or necessitate the recall of distributed products. We cannot predict the likelihood, nature or extent of adverse governmental regulation that might arise from future legislative or administrative action, either in the US or abroad.

The medical device industry has been under heightened FDA scrutiny as the subject of government investigations and enforcement actions. If our operations and activities are found to be in violation of any FDA regulations or any other governmental regulations that apply to us, we may be subject to penalties, including civil and criminal penalties, damages, fines and other legal and/or agency enforcement actions. Any penalties, damages, fines, or curtailment or restructuring of our operations or activities could materially and adversely affect our ability to operate our business and our financial results. The risk of us being found in violation of FDA regulations is increased by the fact that many of these regulations are broad and their provisions are open to a variety of interpretations. Any action against us for violation of these regulations, even if we successfully defend ourselves against that action and its underlying allegations, could cause us to incur significant legal expenses and divert management's attention from the operation of our business. Where there is a dispute with a federal or state governmental agency that cannot be resolved to the mutual satisfaction of all relevant parties, we may determine that the costs, both real and contingent, are not justified by the commercial returns to us from maintaining the dispute or the product.

Various claims, design features, or performance characteristics of our products that we regarded as permitted by the FDA without new marketing clearance, authorization, or approval may be challenged by the FDA or state or foreign regulators. The FDA or state or foreign regulatory authorities may find that certain claims, design features, or performance characteristics, in order to be made or included in the products, may have to be supported by further clinical studies and marketing clearances, authorizations, or approvals, which could be lengthy, costly, and possibly unobtainable.

**Risks Related to Our Financial Reporting** 

***We rely on assumptions, estimates, internally developed software, and data from third parties to calculate our key performance indicators and other business metrics to deliver timely and accurate information in order to accurately report our financial results in the timeframe and manner required by law, and real or perceived inaccuracies in these metrics may harm our reputation and negatively affect our business.***

We need to receive timely, accurate, and complete information from our internal company data that has not been independently verified utilizing internally developed software and third party software in order to accurately report our financial results on a timely basis. If the information that we receive is not accurate, our consolidated

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 92

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

financial statements may be materially incorrect and may require restatement. While these numbers are based on what we believe to be reasonable calculations for the applicable period of measurement, there are inherent challenges in measuring such information. In addition, our measurement of certain metrics may differ from estimates published by third parties or from similarly-titled metrics of our competitors due to differences in methodology and as a result our results may not be comparable to our competitors. As a result, we may have difficulty completing accurate and timely financial disclosures, which could have an adverse effect on our business.

***Our results of operations and financial condition are subject to management's accounting judgments and estimates, as well as changes in accounting policies.***

The preparation of our financial statements requires us to make estimates and assumptions affecting the reported amounts of our assets, liabilities, revenues, expenses and earnings. If these estimates or assumptions are incorrect, it could have a material adverse effect on our results of operations or financial condition. We have identified several accounting policies as being critical to the fair presentation of our financial condition and results of operations because they involve major aspects of our business and require us to make judgments about matters that are inherently uncertain. These policies are described under the section entitled "*Management's Discussion and Analysis of Financial Conditions and Results of Operations*" and should be considered in conjunction with our audited consolidated financial statements and notes thereto included in Part II, Item 8, *Financial Statements*, of this Form 10-K. The implementation of new accounting requirements or other changes to Generally Accepted Accounting Principles in the US, or GAAP, could have a material adverse effect on our reported results of operations and financial condition.

***As a public reporting company, we are subject to rules and regulations established from time to time by the SEC regarding our internal control over financial reporting. If we fail to maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results or prevent fraud. As a result, investors may lose confidence in the accuracy of our financial reports, which would harm our business and the trading price of our common stock. Our management is required to evaluate the effectiveness of our internal control over financial reporting.***

As a public reporting company, we are subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act of 2002 (the "<u>Sarbanes-Oxley Act</u>"), the Dodd-Frank Wall Street Reform and Consumer Protection Act, and the rules and regulations established by the SEC and Nasdaq. These rules and regulations require, among other things, that we establish and periodically evaluate procedures with respect to our internal control over financial reporting. Reporting obligations as a public company place a considerable strain on our financial and management systems, processes and controls, as well as on our personnel, including senior management. In addition, as a public company, we are required to document and test our internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act so that our management can certify as to the effectiveness of our internal control over financial reporting. Management's certification under Section 404 of the Sarbanes-Oxley Act is included in Part II, Item 9A, *Controls and Procedures*, of this Form 10-K.

In support of such certifications, we have documented and make significant changes and enhancements, including hiring additional personnel, to improve our internal control over financial reporting. Likewise, our independent registered public accounting firm will not be required to attest to the effectiveness of our internal control over financial reporting until our first annual report is required to be filed with the SEC following the date we are no longer an emerging growth company.

To achieve compliance with Section 404 within the prescribed period, and in order to maintain and improve the effectiveness of our internal controls over financial reporting, we have expended, and anticipate we will continue to expend, significant resources, including accounting-related costs and significant management oversight. If any of these new or improved controls and systems do not perform as expected, we may experience further deficiencies in our controls.

We have identified gaps in our internal control environment in the past and cannot provide assurances that there will not be material weaknesses or significant deficiencies in our internal control over financial reporting in the future. Any failure to maintain internal control over financial reporting could severely inhibit our ability to

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 93

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

accurately report our financial condition or results of operations. If we are unable to conclude that our internal control over financial reporting is effective or if our independent registered public accounting firm determines we have a material weakness or significant deficiency in our internal control over financial reporting, we could lose investor confidence in the accuracy and completeness of our financial reports, the market price of shares of our common stock could decline, and we could be subject to sanctions or investigations by Nasdaq, the SEC, or other regulatory authorities. Failure to remedy any material weakness in our internal control over financial reporting, or to implement or maintain other effective control systems required of public companies, could also restrict our future access to the capital markets.

***Our management has identified certain internal control deficiencies that constitute material weaknesses. If we fail to maintain an effective system of disclosure controls and internal control over financial reporting, our ability to produce timely and accurate financial statements or comply with applicable regulations could be impaired.***

We have identified material weaknesses in our internal control over financial reporting. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. If we are unable to remediate these material weaknesses, or if we identify additional material weaknesses in the future or otherwise fail to maintain an effective system of internal controls, we may not be able to accurately or timely report our financial condition or results of operations, which may adversely affect investor confidence in us and, as a result, our stock price.

As of December 31, 2022, we did not design or maintain an effective control environment as we did not maintain a sufficient complement of accounting and financial reporting resources commensurate with our financial reporting requirements. As a result, we did not design, implement and maintain effective control activities to ensure the accurate and timely reporting of transactions including revenue and capitalized software transactions.

These control deficiencies could result in a misstatement in our accounts or disclosures that would result in a material misstatement to our financial statements that would not be prevented or detected. Accordingly, we determined that these control deficiencies constitute material weaknesses.

In addition, it could cause us to fail to meet our reporting obligations or may result in a restatement of our financial statements for prior periods. Any failure to implement and maintain effective internal control over financial reporting also could materially and adversely affect the results of periodic management evaluations and annual independent registered public accounting firm attestation reports regarding the effectiveness of our internal control over financial reporting that we will eventually be required to include in our periodic reports that will be filed with the SEC.

These material weaknesses will not be considered remediated until management designs and implements effective controls that operate for a sufficient period of time and management has concluded, through testing, that these controls are effective. Our management is in the process of developing a remediation plan, and we cannot assure you that the measures that we implement will fully address the material weaknesses and deficiencies in our internal control over financial reporting or that we may conclude that they have been fully remediated.

We are continuing to develop and refine our disclosure controls and other procedures that are designed to ensure information required to be disclosed by us in the reports we will file with the SEC is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and that information required to be disclosed in reports under the Exchange Act is accumulated and communicated to our principal executive and financial officers. Any failure to develop or maintain effective controls or any difficulties encountered as a result of the implementation or improvements could harm our results of operations or cause us to fail to meet our reporting obligations and may result in a restatement of our financial statements for prior periods. Any failure to implement and maintain effective internal control over financial reporting also could materially and adversely affect the results of periodic management evaluations and annual independent registered public accounting firm attestation reports regarding the effectiveness of our internal control over financial reporting that we will eventually be required to include in our periodic reports that will be filed with the SEC.

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 94

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

We are continuing to develop and refine our disclosure controls and other procedures that are designed to ensure information required to be disclosed by us in the reports we will file with the SEC is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and that information required to be disclosed in reports under the Exchange Act is accumulated and communicated to our principal executive and financial officers. For example, we hired additional personnel in our finance group, including a Vice President, Chief Accounting Officer and staff with adequate US GAAP and SEC reporting experience to address complex US GAAP technical accounting issues and to prepare and review the financial statements and related disclosures in accordance with US GAAP and SEC reporting requirements. In addition, we implemented a new enterprise resource planning system to replace the former general ledger package. Any failure to develop or maintain effective controls or any difficulties encountered as a result of the implementation or improvements could harm our results of operations or cause us to fail to meet our reporting obligations and may result in a restatement of our financial statements for prior periods. Any failure to implement and maintain effective internal control over financial reporting also could materially and adversely affect the results of periodic management evaluations and annual independent registered public accounting firm attestation reports regarding the effectiveness of our internal control over financial reporting that we will eventually be required to include in our periodic reports that will be filed with the SEC.

***As a former shell company, we will face certain disadvantages relative to companies that pursue a traditional initial public offering.***

THMA was a special purpose acquisition company ("<u>SPAC</u>"), a form of shell company under the SEC rules. Shell companies are more highly regulated than non-shell operating companies and face significant additional restrictions on their activities under federal securities laws. As a result of the Business Combination, we ceased to be a shell company. However, companies that were formerly shell companies continue to face disadvantages under SEC rules, including (a) the inability to qualify as a "well-known seasoned issuer" and file automatically effective registration statements for three years after ceasing to be a shell company, (b) the inability to "incorporate by reference" information in certain registration statements filed under the Securities Act of 1933, as amended (the "<u>Securities Act</u>") for a period of three years after ceasing to be a shell company, (c) the inability to use most free writing prospectuses until at least three years after a qualifying business combination, and (d) exclusion from certain safe harbors for offering-related communications under the Securities Act for three years after ceasing to be a shell company, including for research reports and certain communications in connection with business combinations. We expect that these disadvantages will make it more challenging and expensive, and create greater risks and delays, for both us and our stockholders to offer securities. These challenges may make our securities less attractive than those of companies that are not former shell companies and may raise our relative cost of capital.

***Some members of our management team have limited experience in operating a public company.***

Some of our executive officers have limited experience in the management of a publicly traded company. Our management team may not successfully or effectively manage our transition to a public company that will be subject to significant regulatory oversight and reporting obligations under federal securities laws. Certain executives' limited experience in dealing with the increasingly complex laws pertaining to public companies could be a significant disadvantage as they will likely need to devote an increasing amount of their time to these activities, resulting in less time being devoted to the management and growth of our business. We may not have adequate personnel with the appropriate level of knowledge, experience, and training in the accounting policies, practices or internal controls over financial reporting required of public companies.

***We could be subject to additional tax liabilities and our ability to use our net operating loss carryforwards and other tax attributes may be limited.***

We have incurred net operating losses ("<u>NOLs</u>") since our inception and may never achieve or sustain profitability. Generally, for US federal income tax purposes, unused NOLs will carry forward. However, NOL carryforwards generated prior to January 1, 2018, are subject to expiration for US federal income tax purposes. As of December 31, 2022, we had federal NOL carryforwards of approximately $294.6 million, of which $17.4 million will begin to expire in 2034. In addition, under the Internal Revenue Code of 1986, as amended, or the Code, limits the

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 95

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

ability to deduct NOL carryforward generated after December 31, 2017, and all future NOL carryforwards to 80% of taxable income. These NOL limitations may limit or delay in part the use of NOL carryforwards, if or, when we cease operating at a loss. It is uncertain whether and to what extent applicable state tax laws will conform to this rule. As of December 31, 2022, we also had research and development tax credits of $8.3 million, which may be available to offset future income tax liabilities. The research and development tax credit carryforwards would begin to expire in 2037. As of December 31, 2022, we also had state research and development tax credits of $1.9 million, which may be available to offset future income tax liabilities. The state research and development tax credit carryforwards would begin to expire in 2030.

In general, under Code Sections 382 and 383, if a corporation undergoes an "ownership change" (generally defined as a greater than 50% change by value in its equity ownership by certain stockholders over a three-year period), the corporation's ability to use its pre-ownership change NOLs, carryforwards and other pre-ownership change tax attributes, such as research tax credits, to offset its post-ownership change income or taxes may be limited. Similar provisions of state tax law may also apply to limit the use of our state NOL carryforwards and other state tax attributes. We have not performed an analysis to determine whether our past issuances of stock and other changes in our stock ownership may have resulted in one or more "ownership changes" under these rules. In addition, future changes in our stock ownership may materially limit our ability to utilize our NOL carryforwards and other tax attributes under these rules. As a result, even if we earn net taxable income in the future, we may be unable to use a material portion of our NOL carryforwards and other tax attributes, which could materially and adversely affect our future cash flows.

There is also a risk that regulatory changes, such as suspensions on the use of NOL or other unforeseen reasons, may result in our existing NOL carryforwards expiring or otherwise becoming unavailable to offset future taxable income. For these reasons, we may not be able to utilize all or a material portion of our NOL carryforwards and other tax attributes, even if we attain profitability. For example, a temporary suspension of the use of certain net operating losses and tax credits has been enacted in California and Illinois. Other states may enact suspensions as well. If we are limited in our ability to use our NOLs in future years in which we have taxable income, we will pay more taxes than if we were able to fully utilize our NOLs. This could materially and adversely affect our results of operations.

The rules dealing with US federal, state, and local income taxation are constantly under review by persons involved in the legislative process and by the Internal Revenue Service and the US Treasury Department. Changes to tax laws (which changes may have retroactive application) could adversely affect us or holders of our common stock. In recent years, many such changes have been made and changes are likely to continue to occur in the future. Future changes in tax laws could have a material adverse effect on our business, cash flow, financial condition or results of operations. We urge investors to consult with their legal and tax advisers regarding the implications of potential changes in tax laws on an investment in our common stock.

**Risks Related to Ownership of our Class A common stock and Warrants**

***Our stock price is currently trading below $1.00 per share and, if it continues to trade below $1.00 per share, our Class A common stock may be subject to delisting from the Nasdaq Capital Market.***

Our Class A common stock is currently trading at below $1.00 per share. Pursuant to Nasdaq Listing Rule 5550(a)(2) listed securities must maintain a minimum bid price of $1.00 per share, and Nasdaq Listing Rule 5810(c)(3)(A) provides that a failure to meet the minimum bid price requirement exists if the deficiency continues for a period of 30 consecutive business days. If our stock price remains below $1.00 for 30 consecutive business days we will receive a deficiency notice from Nasdaq and will be provided a period of 180 calendar days to regain compliance with the minimum bid price requirement. To regain compliance, the closing bid price of our Class A common stock must meet or exceed $1.00 per share for a minimum of ten consecutive business days during this 180-day period.

If we do not regain compliance within the allotted compliance period, including any extensions that may be granted by Nasdaq, Nasdaq will provide notice that the Company's common stock will be subject to delisting. The Company would then be entitled to appeal Nasdaq's determination, but there can be no assurance that Nasdaq would grant the Company's request for continued listing.

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 96

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

Such a delisting would likely have a negative effect on the price of the securities and would impair your ability to sell or purchase the securities when you wish to do so. In the event of a delisting, we can provide no assurance that any action taken by us to restore compliance with listing requirements would allow our securities to become listed again, stabilize the market price or improve the liquidity of our securities, prevent our securities from dropping below the Nasdaq minimum bid price requirement or prevent future non-compliance with Nasdaq's listing requirements.

Additionally, if our securities are not listed on, or become delisted from, Nasdaq for any reason, trading our common stock could be conducted only in the over-the-counter ("OTC") market or on an electronic bulletin board established for unlisted securities such as the OTC Bulletin Board, an inter-dealer automated quotation system for equity securities that is not a national securities exchange, the liquidity and price of our securities may be more limited than if we were quoted or listed on Nasdaq or another national securities exchange. You may be unable to sell your securities unless a market can be established or sustained. As a delisted security, our common stock would be subject to SEC rules as a "penny stock," which impose additional disclosure requirements on broker-dealers. The regulations relating to penny stocks, coupled with the typically higher cost per trade to the investor of penny stocks due to factors such as broker commissions generally representing a higher percentage of the price of a penny stock than of a higher-priced stock, would further limit the ability of investors to trade in our common stock. In addition, delisting could harm our ability to raise capital through alternative financing sources on terms acceptable to us, or at all, and may result in the potential loss of confidence by investors, suppliers, customers and employees and fewer business development opportunities. For these reasons and others, delisting would adversely affect the liquidity, trading volume and price of our common stock, causing the value of an investment in us to decrease and having an adverse effect on our business, financial condition and results of operations, including our ability to attract and retain qualified employees and to raise capital.

We intend to monitor the closing bid price of our Class A common stock and consider options to resolve the noncompliance with the minimum bid price requirement, including by seeking approval from our stockholders to effect a reverse stock split of the issued and outstanding shares of our Class A common stock.

There can be no assurance that the Company will be able to comply with the minimum bid price requirement or will otherwise be in compliance with other Nasdaq listing criteria.

***If we implement a reverse stock split, liquidity of our stock may be adversely affected.***

We may seek approval from our stockholders to effect a reverse stock split of the issued and outstanding shares of our Class A common stock. However, there can be no assurance that the reverse stock split would be approved by our stockholders. Further, there can be no assurance that the market price per new share of common stock after the reverse stock split will remain unchanged or increase in proportion to the reduction in the number of old shares of common stock outstanding before the reverse stock split. The liquidity of the shares of our common stock may be affected adversely by any reverse stock split given the reduced number of shares of common stock that will be outstanding following the reverse stock split, especially if the market price of our common stock does not increase as a result of the reverse stock split.

Following any reverse stock split, the resulting market price of our common stock may not attract new investors and may not satisfy the investing requirements of those investors. Although we believe that a higher market price of common stock may help generate greater or broader investor interest, there can be no assurance that a reverse stock split will result in a share price that will attract new investors, including institutional investors. In addition, there can be no assurance that the market price of our common stock will satisfy the investing requirements of those investors. As a result, the trading liquidity of our common stock may not necessarily improve.

***The terms of the Warrants may be amended in a manner adverse to a holder if holders of at least 50% of the then outstanding Public Warrants approve of such amendment.***

The Private Placement Warrants and Public Warrants were issued in registered form under the Warrant Agreement, between us and Continental Stock Transfer & Trust Company, our warrant and transfer agent ("<u>Continental</u>"). The Warrant Agreement provides that the terms of the Warrants may be amended without the consent of any holder to cure any ambiguity or correct any defective provision, but requires the approval by the

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 97

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

holders of at least 50% of the then outstanding Public Warrants to make any change that adversely affects the interests of the registered holders of Public Warrants. Accordingly, we may amend the terms of the Public Warrants in a manner adverse to a holder if holders of at least 50% of the then outstanding Public Warrants approve of such amendment. Although our ability to amend the terms of the Public Warrants with the consent of at least 50% of the then outstanding Public Warrants is unlimited, examples of such amendments could be amendments to, among other things, increase the exercise price of the Warrants, shorten the exercise period or decrease the number of our Class A common stock purchasable upon exercise of a Warrant.

***The exercise of Warrants for our stock would increase the number of shares eligible for future resale in the public market and result in dilution to our stockholders. Such dilution will increase if more of our shares are redeemed.***

As of December 31, 2022, we had Warrants to purchase an aggregate of 14,213,267 shares of our Class A common stock outstanding, comprising 9,199,934 Public Warrants sold as part of the units in the closing of the initial public offering of THMA, which closed on February 4, 2021 (the "<u>Initial Public Offering</u>"), and 5,013,333 Private Placement Warrants issued to LJ10 LLC, a Delaware limited liability company (the "<u>Sponsor</u>") in a private placement simultaneously with the Initial Public Offering. These Warrants are exercisable at any time through December 4, 2026. The likelihood that the Warrants will be exercised increases if the trading price of shares of our stock exceeds the exercise price of the Warrants. The exercise price of these Warrants is $11.50 per share.

There is no guarantee that the Warrants will ever be in the money after they become exercisable and prior to their expiration, and as such, the Warrants may expire worthless.

To the extent the Warrants are exercised, additional Class A common stock will be issued, which will result in dilution to the holders of our stock and increase the number of shares eligible for resale in the public market. Holders of Warrants do not have a right to redeem the Warrants. Sales of substantial numbers of shares issued upon the exercise of Warrants in the public market or the potential that such Warrants may be exercised could also adversely affect the market price of our stock.

***We may redeem unexpired Warrants prior to their exercise at a time that is disadvantageous to you, thereby making your Warrants worthless.***

We will have the ability to redeem the Public Warrants in whole and not in part at any time prior to their expiration, at a price of $0.01 per Warrant, if, and only if, the last reported sales price of the Class A common stock equals or exceeds $18.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within a 30 trading-day period ending on the third trading day prior to the date we send the notice of redemption to the Warrant holders. If and when the Warrants become redeemable by us, we may exercise our redemption right even if we are unable to register or qualify the underlying securities for sale under all applicable state securities laws. Redemption of the outstanding Warrants as described above could force you to: (1) exercise your Warrants and pay the exercise price therefor at a time when it may be disadvantageous for you to do so; (2) sell your Warrants at the then-current market price when you might otherwise wish to hold your Warrants; or (3) accept the nominal redemption price which, at the time the outstanding Warrants are called for redemption, we expect would be substantially less than the market value of your Warrants. The Private Placement Warrants are not redeemable by us in such a case so long as they are held by the Sponsor or its permitted transferees. The Sponsor, or its permitted transferees, has the option to exercise the Private Placement Warrants on a cashless basis and has certain registration rights.

In addition, we will have the ability to redeem the outstanding Warrants in whole and not in part for shares of our stock at any time after they become exercisable and prior to their expiration, at a price of $0.10 per warrant if, among other things, (i) the closing price of our Class A common stock equals or exceeds $10.00 per public share (as adjusted for adjustments to the number of shares issuable upon exercise or the exercise price of a Warrant) on the trading day prior to the date on which we send the notice of redemption to the Warrant holders and (ii) the closing price of our Class A common stock (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within a 30-trading day period ending on the third trading day prior to the date on which we send the notice of redemption to the Warrant holders is less than $18.00 per share (as adjusted for share splits, share dividends, reorganizations, recapitalizations and the like). If this occurs, then the Private

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 98

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

Placement Warrants must also concurrently be called for redemption on the same terms (except with respect to a holder's ability to cashless exercise its Warrants) as the outstanding Public Warrants. In such a case, the holders will be able to exercise their Warrants prior to redemption for a number of Class A common stock determined based on the redemption date and the fair market value of the Class A common stock. The value received upon exercise of the Warrants (1) may be less than the value the holders would have received if they had exercised their Warrants at a later time where the underlying share price is higher and (2) may not compensate the holders for the value of the Warrants.

***Future resales of our Class A common stock may cause the market price of our securities to drop significantly, even if our business is doing well.***

Subject to customary exceptions, the Sponsor, parties to the Registration Rights Agreement as amended and restated as of December 3, 2021, certain holders of PIPE Shares and certain other holders of our Class A common stock were subject to lock-up provisions in which they agreed not to sell or otherwise dispose of any our Class A common stock or any other equity securities of Pear convertible into or exercisable or exchangeable for our Class A common stock for a certain period of time.

Now since these lock-up periods have expired, the applicable stockholders are not restricted from selling our Class A common stock held by them, other than by applicable securities laws. As such, sales of a substantial number of shares of our common stock in the public market could occur at any time. These sales, or the perception in the market that the holders of a large number of shares intend to sell shares, could reduce the market price of the Class A common stock.

As restrictions on resale end and registration statements are available for use, the sale or possibility of sale of these shares could have the effect of increasing the volatility in our share price or the market price of our stock could decline if the holders of currently restricted shares sell them or are perceived by the market as intending to sell them.

***The market price and trading volume of our Class A common stock may be volatile and you could lose all or part of your investment.***

The trading price of our common stock is likely to be highly volatile and could be subject to wide fluctuations in response to various factors, some of which are beyond our control, including limited trading volume. Since our common stock began trading on The Nasdaq Capital Market, our stock price has traded at prices as low as $0.20 per share and as high as $14.60 per share through March 30, 2023.

The stock markets, including Nasdaq on which we list the Class A common stock, have from time to time experienced significant price and volume fluctuations. Even if an active, liquid and orderly trading market develops and is sustained for our stock, the market price of our stock may be volatile and could decline significantly. In addition, the trading volume in our stock may fluctuate and cause significant price variations to occur. If the market price of our stock declines further, you may be unable to resell your shares at an attractive price (or at all). We cannot assure you that the market price of our stock will not fluctuate widely or decline significantly in the future in response to a number of factors, including, among others, the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the realization of any of the risk factors presented in this Form 10-K;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our announcement seeking strategic alternatives, and a potential transaction;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• failure to comply with the requirements of Nasdaq;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the inclusion, exclusion or removal of our common stock from any stock market indices;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• additions and departures of key personnel;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• changes in the industries in which we operate;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• developments involving our competitors;

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 99

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• changes in laws and regulations affecting our business;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• actual or anticipated differences in our estimates, or in the estimates of analysts, for our revenues, Adjusted EBITDA, results of operations, level of indebtedness, liquidity, or financial condition;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• failure to comply with the Sarbanes-Oxley Act or other laws or regulations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• future issuances, sales, resales or repurchases or anticipated issuances, sales, resales or repurchases, of our securities;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• publication of research reports by securities analysts about us or our competitors or our industry;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the public's reaction to our press releases, our other public announcements and our filings with the SEC;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• actions by stockholders, including the sale by the PIPE investors of any of their shares of our stock;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the performance and market valuations of other similar companies;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• commencement of, or involvement in, litigation involving us;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• broad disruptions in the financial markets, including sudden disruptions in the credit markets;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• speculation in the press or investment community;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• actual, potential or perceived control, accounting, or reporting problems;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• changes in accounting principles, policies, and guidelines;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• other events or factors, including those resulting from infectious diseases, health epidemics and pandemics (including the ongoing COVID-19 public health emergency), natural disasters, war, acts of terrorism, or responses to these events;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• actual or anticipated fluctuations in our quarterly financial results or the quarterly financial results of companies perceived to be similar to us;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• changes in the market's expectations about our results of operations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our results of operations failing to meet the expectation of securities analysts or investors in a particular period;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• any major change in our Board of Directors or management;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• sales of substantial amounts of the shares of common stock by our directors, executive officers or significant stockholders or the perception that such sales could occur; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• general economic and political conditions such as recessions, interest rates, fuel prices, international currency fluctuations, and acts of war or terrorism.

The stock market has recently experienced extreme price and volume fluctuations. The market prices of securities have experienced fluctuations that often have been unrelated or disproportionate to their companies' operating results. We believe that the recent volatility and our current market price in part reflect market and trading dynamics unrelated to our underlying business, and we do not know how long these dynamics will last. In the past, securities class-action litigation has often been instituted against companies following periods of volatility in the market price of their shares. This type of litigation could result in substantial costs and divert our management's attention and resources, which could have a material adverse effect on us.

Our stock price may be exposed to additional risks because our business became a public company through a "de-SPAC" transaction. There has been increased focus by government agencies on transactions such as the Business Combination in the last year, and we expect that increased focus to continue. As a result, we may be subject to

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 100

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

increased scrutiny by the SEC and other government agencies and holders of our securities, which could adversely affect the price of our Class A common stock. Broad market and industry factors may materially harm the market price of our securities irrespective of our operating performance. The stock market in general, and Nasdaq in particular, have experienced price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of the particular companies affected. The trading prices and valuations of these stocks, and of our securities, may not be predictable. A loss of investor confidence in the market for retail stocks or the stocks of other companies which investors perceive to be similar to us could materially and adversely affect our business, prospects, financial condition and results of operations. A decline in the market price of our securities also could adversely affect our ability to issue additional securities and our ability to obtain additional financing in the future.

***The requirements of being a public company may strain our resources and divert management's attention, and the increases in legal, accounting and compliance expenses may be greater than we anticipate.***

As a public company we will incur significant legal, accounting, and other expenses that we did not incur as a private company. We are subject to the reporting requirements of the Exchange Act and are required to comply with the applicable requirements of the Sarbanes-Oxley Act and the Dodd-Frank Wall Street Reform and Consumer Protection Act, as well as the rules and regulations subsequently implemented by the SEC and the listing standards of Nasdaq, including changes in corporate governance practices and the establishment and maintenance of effective disclosure and financial controls. Compliance with these rules and regulations can be burdensome. Our management and other personnel devote a substantial amount of time to these compliance initiatives. Moreover, these rules and regulations increased our legal and financial compliance costs and make some activities more time-consuming and costly. In particular, we have incurred and expect to continue to incur significant expenses and devote substantial management effort toward ensuring compliance with the requirements of Section 404 of the Sarbanes-Oxley Act, which will increase when we are no longer an "emerging growth company." We cannot predict or estimate the amount of additional costs we may incur or the timing of such costs.

***We are an emerging growth company within the meaning of the Securities Act, and if we take advantage of certain exemptions from disclosure requirements available to emerging growth companies, this could make our securities less attractive to investors and may make it more difficult to compare our performance with other public companies.***

We are an "emerging growth company" within the meaning of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the "<u>JOBS Act</u>"), and may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies for as long as we continue to be an emerging growth company, including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. As a result, our stockholders may not have access to certain information they may deem important. We will remain an emerging growth company until the earliest of (i) the day we are deemed to be a large accelerated filer, which, in addition to certain other criteria, means the market value of our common equity that is held by non-affiliates exceeds $700 million as of the end of the prior fiscal year's second fiscal quarter, (ii) the last day of the fiscal year in which we have total annual gross revenue of $1.07 billion or more during such fiscal year, (iii) the date on which we have issued more than $1 billion in non-convertible debt in the prior three-year period and (iv) December 31, 2026 (the last day of the fiscal year ending after the fifth anniversary of the THMA Initial Public Offering). Investors may find our securities less attractive because we will rely on these exemptions. If some investors find our securities less attractive as a result of our reliance on these exemptions, the trading prices of our securities may be lower than they otherwise would be, there may be a less active trading market for our securities and the trading prices of our securities may be more volatile.

In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the exemption from complying with new or revised accounting standards provided in Section 7(a)(2)(B) of the Securities Act as long as we are an emerging growth company. An emerging growth company can therefore delay

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 101

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected not to opt out of such an extended transition period and, therefore, we may not be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies. This may make comparison of our financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.

***The exclusive forum provision in our Certificate of Incorporation may have the effect of discouraging lawsuits against our directors and officers.***

Our Second Amended and Restated Certificate of Incorporation (our "<u>Certificate of Incorporation</u>") provides that unless we consent to the selection of an alternative forum, the Court of Chancery of the State of Delaware will, to the fullest extent permitted by applicable law, be the sole and exclusive forum for (i) any derivative action brought by a stockholder on behalf of us, (ii) any claim of breach of a fiduciary duty owed by any of our directors, officers, stockholders, or employees, (iii) any claim against us arising under our Certificate of Incorporation, our Amended and Restated Bylaws (the "<u>Bylaws</u>") or the Delaware General Corporation Law, as may be amended from time to time (the "<u>DGCL</u>") and (iv) any claim against us governed by the internal affairs doctrine. The Certificate of Incorporation designates the US District Court for the District of Delaware as the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act of 1933, as amended.

Although we believe this provision benefits us by providing increased consistency in the application of Delaware law in the types of lawsuits to which it applies, this choice of forum provision may have the effect of increasing costs for investors to bring a claim against us and our directors and officers and of limiting a stockholder's ability to bring a claim in a judicial forum that it finds favorable for disputes with us or any of our directors, officers, other employees or stockholders, which may discourage (but not prevent) lawsuits with respect to such claims.

***Provisions in our Certificate of Incorporation and Delaware law may inhibit a takeover of us, which could limit the price investors might be willing to pay in the future for the Class A common stock and could entrench management.***

Our Certificate of Incorporation contains provisions that may discourage unsolicited takeover proposals that stockholders may consider to be in their best interests. These provisions include three-year director terms and the ability of our Board of Directors to designate the terms of and issue new series of preferred shares, which may make more difficult the removal of management and may discourage transactions that otherwise could involve payment of a premium over prevailing market prices for our securities.

Section 203 of the DGCL affects the ability of an "interested stockholder" to engage in certain business combinations, for a period of three years following the time that the stockholder becomes an "interested stockholder." We elected in our Certificate of Incorporation not to be subject to Section 203 of the DGCL. Nevertheless, our Certificate of Incorporation contains provisions that have the same effect as Section 203 of the DGCL, except that it provides that affiliates of our Sponsor and their transferees will not be deemed to be "interested stockholders," regardless of the percentage of our voting stock owned by them, and will therefore not be subject to such restrictions. These Certificate of Incorporation provisions may limit the ability of third parties to acquire control of our company.

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 102

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

***Claims for indemnification by our directors and officers may reduce our available funds to satisfy successful third-party claims against us and may reduce the amount of money available to us.***

Our Certificate of Incorporation and Bylaws provide that we will indemnify our directors and officers, in each case to the fullest extent permitted by Delaware law. In addition, as permitted by Section 145 of the DGCL, our Bylaws and the indemnification agreements that we entered into with our directors and officers provide that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We will indemnify our directors and officers for serving in those capacities or for serving other business enterprises at our request, to the fullest extent permitted by Delaware law. Delaware law provides that a corporation may indemnify such person if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the registrant and, with respect to any criminal proceeding, had no reasonable cause to believe such person's conduct was unlawful;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We may, in our discretion, indemnify employees and agents in those circumstances where indemnification is permitted by applicable law;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We are required to advance expenses, as incurred, to our directors and officers in connection with defending a proceeding, except that such directors or officers shall undertake to repay such advances if it is ultimately determined that such person is not entitled to indemnification;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We are not obligated pursuant to our Bylaws to indemnify a person with respect to proceedings initiated by that person against us or our other indemnitees, except with respect to proceedings authorized by our Board of Directors or brought to enforce a right to indemnification;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the rights conferred in our Bylaws are not exclusive, and we are authorized to enter into indemnification agreements with our directors, officers, employees and agents and to obtain insurance to indemnify such persons; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We may not retroactively amend provisions of our Bylaws to amend our indemnification obligations to directors, officers, employees and agents.

***We do not intend to pay dividends for the foreseeable future, if ever.***

We have never declared or paid any cash dividends on our capital stock and do not intend to pay any cash dividends in the foreseeable future. We expect to retain future earnings, if any, to fund the development and growth of our business. Any future determination to pay dividends on our capital stock will be at the discretion of our Board of Directors. Accordingly, investors must rely on sales of the Class A common stock after price appreciation, which may never occur, as the only way to realize any future gains on their investments.

***If securities or industry analysts do not publish or cease publishing research or reports about us, our business, or the market in which we operate, or if they change their recommendations regarding our securities adversely, the price and trading volume of our securities could decline.***

The trading market for our securities will be influenced by the research and reports that industry or securities analysts may publish about us, our business, market or competitors. If any of the analysts who may cover us change their recommendation regarding our shares of common stock adversely, or provide more favorable relative recommendations about our competitors, the price of our common stock would likely decline. If any analyst who may cover us were to cease our coverage of us or fail to regularly publish reports on it, we could lose visibility in the financial markets, which in turn could cause our share price or trading volume to decline.

***Future issuances of debt securities and equity securities may adversely affect us, including the market price of our stock and may be dilutive to existing stockholders.***

In the future, we may incur debt or issue equity ranking senior to our Class A common stock. Those securities will generally have priority upon liquidation. Such securities also may be governed by an indenture or other instrument containing covenants restricting its operating flexibility. Additionally, any convertible or exchangeable securities that we issue in the future may have rights, preferences and privileges more favorable than those of the Class A

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 103

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

common stock. Because our decision to issue debt or equity in the future will depend on market conditions and other factors beyond our control, we cannot predict or estimate the amount, timing, nature or success of our future capital raising efforts. As a result, future capital raising efforts may reduce the market price of our stock and be dilutive to existing stockholders.

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 104

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

**ITEM 1B. UNRESOLVED STAFF COMMENTS**

None.

**ITEM 2. PROPERTIES**

Our corporate headquarters is located in Boston, Massachusetts, where we lease approximately 19,000 square feet pursuant to a lease that expires on June 1, 2028. Effective January 1, 2023, the Company entered into a sublease agreement with a third party to sublease 7,218 square feet of office space. The sublease term is for one year with an option to renew for two additional years in one-year increments.

We also lease approximately 17,000 square feet of office space in San Francisco, California pursuant to a lease that expires on July 31, 2025. Our San Francisco office space is currently available to sublease as we continue consolidating our footprint.

We use the Boston facility for our executive and principal offices for sales, marketing, engineering, product, finance, legal, human resources, information technology, and other administrative functions and we use the San Francisco facility for primarily engineering and product activities.

In addition, we lease approximately 7,700 square feet of office space in Raleigh, North Carolina, pursuant to a lease that expires on May 31, 2026. Effective January 6, 2023, the Company subleased the entirety of the Raleigh, North Carolina office. The term of the sublease arrangement commenced on January 6, 2023, and expire twelve months thereafter, with an option to renew for one twelve-month period.

The Company believes its existing facilities are adequate for its current requirements.

See Note 8, *Leases*, in the accompanying notes to the consolidated financial statements included in Part II, Item 8 of this Form 10-K for additional information regarding our specific leaseholds.

**ITEM 3. LEGAL PROCEEDINGS**

We are not currently subject to any material legal proceedings, nor, to our knowledge, is any material legal proceeding threatened against us or any of our officers or directors in their corporate capacity. From time to time, we may become involved in litigation or legal proceedings relating to claims arising from the ordinary course of business. Although the outcomes of these legal proceedings are inherently difficult to predict, we do not expect the resolution of these proceedings to have a material adverse effect on our financial position, results of operations, or cash flow.

**ITEM 4. MINE SAFETY DISCLOSURES**

Not Applicable.

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 105

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

**PART II**

**ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES**

**Market Information**

Our Class A common stock and Public Warrants trade on The Nasdaq Stock Market LLC under the symbols PEAR and PEARW, respectively (formerly THMA and THMAW, respectively).

**Holders**

As of March 30, 2023, there were approximately 168 shareholders of record of our Class A common stock and two warrant holders of record.

The number of record holders is based upon the actual number of holders registered on our books at such date and does not include holders of shares in street name or persons, partnerships, associations, corporations, or other entities identified in security position listings maintained by depository trust companies.

**Dividends** 

We have never declared or paid any cash dividends on our Class A common stock, and we do not anticipate paying cash dividends in the foreseeable future.

**Purchases of Equity Securities by the Issuer and Affiliated Purchasers**

None.

**Stock performance graph**

We are a smaller reporting company, as defined by Rule 12b-2 of the Exchange act, and are not required to provide a performance graph.

**ITEM 6. Reserved** 

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 106

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

**ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS**

*This Annual Report on Form 10-K ("<u>Form 10-K</u>") contains forward-looking statements based upon current expectations that involve risks and uncertainties. Pear's actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth in the "Risk Factors" section included in Part I, Item 1A of this Form 10-K. All references to years, unless otherwise noted, refer to our fiscal years, which end on December 31. For purposes of this section, all references to "we," "us," "our," "Pear," or the "Company" refer to Pear Therapeutics, Inc. and its consolidated subsidiaries.*

*The following discussion and analysis should also be read in conjunction with the accompanying consolidated financial statements included in Part II, Item 8 of this Form 10-K. This section discusses 2022 and 2021 financial condition, and results of operations and year-to-year comparisons between 2022 and 2021. For discussion of 2021 items and year-over-year comparisons between 2021 and 2020 that are not included in this 2022 Form 10-K, refer to "Item 7. – Management's Discussion and Analysis of Financial Condition and Results of Operations" found in our Form 10-K for the year ended December 31, 2021, that was filed with the Securities and Exchange Commission on March 29, 2022.*

**Overview**

**Due to the fact that we were unable to generate sufficient cash flows from operations, obtain funding to sustain operations, or reduce or stabilize expenses to the point where we could have realized a net positive cash flow, management and our board of directors determined that it was in the best interests of the stockholders to seek a strategic alternative so that we could continue to operate. If the strategic process is unsuccessful, our Board may decide to pursue a liquidation or obtain relief under the US Bankruptcy Code. The Company has hired advisors to explore strategic alternatives including, if needed, filing for bankruptcy protection.** 

**Further, Perceptive has alleged that certain defaults or events of default have occurred and are continuing under the terms of our Perceptive Credit Facility. Perceptive has not delivered any formal notice of Default or Event of Default. To the extent that any such allegations are valid, Perceptive would have certain rights and remedies under the Perceptive Credit Facility. The Company disputes the allegations and is in discussions with Perceptive to resolve this dispute and otherwise to address the Company's obligations under the Perceptive Credit Facility. There can be no assurances that such discussions will result in any resolution, and any resolution, or the lack of any resolution, may result in Perceptive exercising remedies under the Perceptive Credit Facility.**

**The Company cautions that trading in the Company's securities is highly speculative and poses substantial risks. Trading prices for the Company's securities may bear little or no relationship to the actual value realized, if any, by holders of the Company's securities. In the event of liquidation, bankruptcy or other wind-down event, holders of our securities will likely suffer a total loss of their investment. Accordingly, the Company urges extreme caution with respect to existing and future investments in its securities.** 

Pear is a commercial-stage healthcare company pioneering a new class of medicine, referred to as PDTs, which use software to treat disease. Our vision is to advance healthcare through the widespread use of PDTs.

Two of our FDA-authorized PDTs are for the treatment of addiction. Our first product, reSET, is indicated for the treatment of substance use disorder ("<u>SUD</u>") as a monotherapy. Our second product, reSET-O, is indicated for the treatment of opioid use disorder ("<u>OUD</u>") in combination with buprenorphine.

Our third product, Somryst, is indicated for the treatment of chronic insomnia. The Company has deprioritized commercialization efforts regarding Somryst while focusing available resources on the commercialization of reSET and reSET-O and therefore recorded an impairment expense of $0.8 million related to the acquired technology, which is included in cost of revenue in the Company's consolidated statement of operations, during the year ended December 31, 2022.

See "*Recent Events*" below for further details.

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 107

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

**Operating Segments**

We operate our business in a single segment and as one reporting unit, which is how our chief operating decision maker (who is our president and chief executive officer) reviews financial performance and allocates resources.

**Factors Affecting Our Performance and Results of Operations**

We believe that our performance and future success depend on many factors that present significant opportunities for us but also pose risks and challenges, including those discussed more fully under the heading "*Risk Factors*" in Part I, Item 1A of this Form 10-K.

**In February 2023, our strategic focus shifted to identifying and evaluating of a range of potential strategic alternatives designed to maximize stockholder value while we continue to operate the Company and serve our patients.**

**Key Business Metrics** 

We monitor the key non-financial operating performance metrics to help us evaluate our business, identify trends affecting our business, formulate business plans, and make strategic decisions. The metrics include the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A.**Total Prescriptions** in a given period is (a) the imputed number of prescriptions based on revenue recognized under Access Agreements, plus (b) the number of prescriptions written which are not imputed under Access Agreements.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B.**Fulfillment Rate** in a given period is (a) the number of prescriptions for which either a patient commences therapy or there is a contractual payment obligation and revenue has been recognized divided by (b) Total Prescriptions. (Total Prescriptions times Fulfillment Rate equals Fulfilled Prescriptions.)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;C.**Payment Rate** in a given period is (a) the number of prescriptions for which the company receives payment divided by (b) Fulfilled Prescriptions. (Fulfilled Prescriptions times Payment Rate equals Paid Prescriptions.)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;D.**Average Selling Price**, or "**<u>ASP</u>"**, in a given period is the average price received by the Company per script for which the Company receives payment.

---

| | |
|:---|:---|
| **Key Performance Operating Metric** | **Year Ended December 31, 2022** |
| Total Prescriptions | 45,000+ |
| Fulfillment Rate | 53% |
| Payment Rate | 41% |
| Average Selling Price (ASP) | $1195 |

---

***Product Revenue***

We generate product revenue from the sale of our three FDA-authorized PDTs: reSET, reSET-O, and Somryst. We began our efforts to self-commercialize reSET and reSET-O in Q4 2019 and Somryst in Q4 2020. Sales of reSET and reSET-O are expected to reduce our net operating losses over time, but we cannot predict when we will achieve profitability. While we continue to support Somryst, our primary focus is on reSET and reSET-O.

We enter into agreements with health care providers and payors and state and local governments to provide prescriptions which provide for volume-based discounts and other discounts, and in certain circumstances, value-based rebates ("<u>Access Agreement</u>"). We also enter into arrangements with health care providers and payors that provide for government-mandated and/or privately negotiated rebates and discounts with respect to the purchase of our products. A portion of the product revenue is recognized when the products are made available to the customer (via Access Agreements) or when a prescription is fulfilled (via third-party reimbursement), and the portion of the product revenue related to the clinician's access to our proprietary clinician dashboard, PearMD, is deferred and recognized ratably over the remaining term of the contract (if purchased via an Access Agreement) or

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 108

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

the prescription duration (if purchased via third party reimbursement). When sold under an Access Agreement and implementation services are included, we recognize the implementation services as control is transferred to the customer, generally over the remaining term of the contract.

Product revenue from our existing three FDA-authorized PDTs is and will be impacted by many factors, including the following variables: coverage and reimbursement by payors, patient and clinician adoption of PDTs, pricing, contingency management (related only to reSET and reSET-O), and product mix. In the future, if we obtain additional financing, sales from future product candidates are expected to be impacted by similar variables.

Although we provide products and services to many different types of customers, a significant portion of our product revenue is generated from awards under various US government, state, and local governments programs or grants. As a result of long sales cycle and the dependency on government or external funding, our product revenue can be unpredictable and fluctuate materially from period to period. We cannot predict the future level of demand for our products and services that will be generated by these customers or the future demand for our products in the end-user marketplace. Our customer concentration exposes us to the risk of changes in the business condition of any of our major customers or broader changes in US government spending for opioid and substance abuse treatments.

*Coverage and Reimbursement by Payors—*Our payor strategy focuses across all major payor channels, including employers, Integrated Delivery Networks ("<u>IDNs</u>"), pharmacy benefit managers ("<u>PBMs</u>"), commercial payors, and government payors, including Medicaid and Medicare. We expect to increase our number of payors, and the pricing for such payors may vary as net prices for our products may be reduced by mandatory discounts or rebates required by government healthcare programs or private payors and can be subject to customary discounts and rebates. In addition, some of our products may be subject to certain customer incentive programs. Even if coverage is provided, the approved reimbursement amount may not be high enough to allow us to establish or maintain pricing sufficient to achieve profitability. In the future, as our market access team educates payors on the clinical attributes of our products, we expect our products to secure favorable coverage policies and to maximize the covered lives that have reimbursement for our products.

*Patient and Clinician Adoption of PDTs*—To continue to grow our business, we need additional funding and once obtained we will need to execute our current business strategy of achieving and maintaining broad market acceptance of our PDTs by patients and physicians. Market acceptance and adoption of our PDTs depend on educating patients, self-insured employers, commercial and government payors, health plans and physicians, and other government entities, as to the distinct features, therapeutic benefits, cost savings, and other advantages of our PDTs as compared to competitive products or other currently available treatment options.

*Pricing*—In the future, assuming that we have sufficient operating capital, we expect to grow the number of commercially available PDTs in our product portfolio, offering a broad range of PDTs spanning multiple price points. PDTs may be subject to competition, which may impact our pricing, and in certain circumstances, we have offered significant discounted pricing in connection with pilot programs. In addition, our products may be subject to legislative prescription-pricing practices. Further, we continue to collect additional data to enhance product performance and bolster health economics and outcomes research ("<u>HEOR</u>") and associated cost savings for payors. Our average selling price could decline over time as we engage in larger volume transactions that extend over multiple years and provide for larger volume discounts.

*Contingency Management*—Costs related to clinically-validated rewards patients earn as they complete treatment goals within our reSET and reSET-O PDTs are recorded as contra revenue.

*Revenue Mix—*Sales of certain products and subscription, support, and professional services have, or are expected to have, higher gross margins than others. As a result, our financial performance depends, in part, on the mix of products and subscription, support, and professional services that we sell during a given period.

***Cost of Revenue***

Cost of revenue consists primarily of costs closely correlated or directly related to the delivery of our products, including pharmacy costs, royalties paid under license agreements related to our commercialized products,

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 109

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

amortization of milestone payments capitalized related to commercialized products, hosting costs, and personnel-related costs, including salaries and bonuses, employee benefits, and stock-based compensation attributable to employees in a particular function and associated with our implementation services. In addition, it includes subcontracted costs such as software license fees, technology, and service fees directly related to our subscription and service fee revenue.

During the quarter ended December 31, 2022, the Company's forecasted future revenue and expense cash flow projections for Somryst indicated the carrying amounts of the intangible asset for Somryst was not fully recoverable, and therefore the Company recorded impairment expense of $0.8 million, which is included in cost of revenue in the Company's consolidated statement of operations, during the year ended December 31, 2022.

We expect the cost of revenue to increase as we further commercialize our products and increase the volume of prescriptions filled. However, we expect our cost of revenue to decrease as a percentage of total revenue over the longer-term, subject to the expected revenue growth. The majority of our cost of revenue does not fluctuate directly with increases or decreases in revenue.

***Research and Development Expenses***

As of July 25, 2022, we paused most investments in our pipeline in order to conserve cash. In addition, we anticipate that our personnel costs will decline as a result of the reductions in workforce that occurred in July and November 2022. We expect our R&D expenses will decrease substantially in 2023 in connection with our continued cost cutting measures.

R&D expenses consist of costs incurred in performing R&D activities, which include:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• expenses incurred in connection with the development of our pipeline of PDTs;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• expenses incurred to enhance our products;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• costs in connection with third-party licensing agreements, including development and regulatory milestones;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• personnel-related expenses, including salaries, bonuses, benefits, and stock-based compensation for employees engaged in R&D functions;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• cost of clinical trials and studies;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• expenses incurred in connection with the discovery and development of our PDTs, including under agreements with third parties, such as consultants;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• expenses incurred under agreements with consultants who supplement our internal capabilities, including software development; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• facilities, depreciation, and other expenses, which include direct and allocated expenses, such as rent and maintenance of facilities, insurance, and other operating costs for space and costs directly related to R&D functions;

Due to the worsening macroeconomic environment and the longer-term outlook of the general markets and limited cash to fund further development of our product candidates we wrote off $2.1 million of intangible assets related to acquired technology, in the year ended December 31, 2022.

We expense R&D costs as incurred and do not track the costs at a project level. Advance payments made for goods or services to be received in the future for use in R&D activities are recorded as prepaid expenses. The prepaid amounts are expensed as the benefits are consumed. In the early phases of development, our R&D costs are often devoted to product platform and proof-of-concept studies that are not necessarily allocable to a specific product. The process of conducting the necessary clinical research to obtain regulatory approval is costly and time-consuming, and the successful development of our product candidates is highly uncertain. As a result, we are

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 110

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

unable to determine the duration and completion costs of our R&D projects, the costs of related clinical development, or when and to what extent, we will generate revenue from the commercialization and sale of any of our product candidates.

At this time we have paused all investment in our product candidates and delayed certain enhancements to our PearConnect platform. Each of our product candidates has technical, clinical, regulatory, and commercial risk, including those discussed more fully under the heading "*Risk Factors*" in Part I, Item 1A of this Form 10-K.

***Selling, General, and Administrative Expenses***

Selling, general, and administrative, or SG&A, expenses consist primarily of compensation for personnel, including stock-based compensation related to commercial, marketing, executive, finance and accounting, information technology, corporate and business development, and human resource functions. Other SG&A expenses include marketing initiatives, market research and analysis, conferences and trade shows, travel expenses, professional services fees (including legal, patent, accounting, audit, tax, and consulting fees), insurance costs, amortization of certain internal-use software, general corporate expenses, and allocated facilities-related expenses, including rent and maintenance of facilities.

We expect SG&A expenses to decrease as we reduce spending primarily on personnel-related expenses and certain commercial efforts in connection with our restructuring activities, including the reductions in workforce that occurred in July and November 2022.

***Interest and Other Income (Expense), net***

Interest expense includes interest due under our secured Amended and Restated Credit Agreement and Guaranty with Perceptive Credit Holdings III, LP (the "<u>Perceptive Credit Facility</u>"), as administrative agent for the lenders, which we refer to as the Perceptive Credit Facility, and accretion of the debt discount on the Perceptive Credit Facility as well as the change in the fair value of our derivative liabilities and earn-out liabilities that occurred during the period. We expect interest expense to increase as interest rates such as the London Interbank Offered Rate ("<u>LIBOR</u>") and the Secured Overnight Financing Rate ("<u>SOFR</u>") increase.

Interest income consists of interest earned on cash balances held in interest-bearing accounts. We expect our interest income will fluctuate based on rising interest rates, our cash balances on hand, the timing and ability to raise additional funds, as well as the amount of expenditures for our commercial products, and R&D for our product candidates and ongoing business operations.

**Financial Highlights**

Year-over-year product revenue grew by approximately 178% to $10.4 million from $3.7 million primarily due to an increase in sales of reSET and reSET-O under Access Agreements. Year-over-year collaboration revenue grew by approximately 90% to $0.9 million from $0.5 million primarily due to the development work completed on a Japanese-language digital therapeutic for the treatment of sleep/wake disorders for the Japanese market in collaboration with SoftBank Corp. that was completed in 2022. We also recognized subscription, support, and professional services revenue of $1.4 million for the year ended December 31, 2022, under a new product offering under a pilot offering of a new product by the Medicaid program of a state government .

We incurred net losses of $75.5 million and $65.1 million for the year ended December 31, 2022 and 2021, respectively, representing a period-over-period increase in our net loss of $10.3 million or 15.9%. This increase in the net loss was primarily due to a $22.7 million increase in personnel-related expenses related to increased headcount during the first half of 2022 compared to 2021, and severance costs associated with the July and November 2022 reductions in workforce, partially offset by $8.5 million increase in total revenue period over period and a gain related to the change in fair value of the Public Warrants and the Private Placement Warrants of $6.4 million for the year ended December 31, 2022, compared to a $0.3 million loss for the year ended December 31, 2021. We had an average of 245 full-time employees for the year ended December 31, 2021, and an average of 267 full-time employees for the year ended December 31, 2022. We had a $3.4 million increase in costs related to being a public company period over period, primarily related to our directors' and officers' insurance.

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 111

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

To date, we have funded our operations primarily with proceeds from sales of Legacy Pear's convertible preferred stock, proceeds as a result of the Business Combination, payments received in connection with our revenue contracts and proceeds from borrowings under various credit facilities. We have received gross cash proceeds of $175.3 million as a result of the Business Combination (see Note 3, B*usiness Combination*, in the accompanying notes to the consolidated financial statements included in Part II, Item 8 of this Form 10-K) and gross cash proceeds of $268.2 million from sales of our Legacy Pear's convertible preferred stock; we currently have $30.0 million of debt outstanding under the Perceptive Credit Facility.

**Recent Events**

***Exploring Strategic Alternatives***

We have engaged MTS Health Partners, L.P. ("<u>MTS</u>") as our advisor to assist with the exploration of strategic alternatives. MTS is providing a range of advisory services aimed to enhance stockholder value. The alternatives to be considered may include, but are not limited to, the sale of all or substantially all of our assets; a strategic merger or other business combination transaction; or another change of control transaction between us and a third party. If the strategic process is unsuccessful, our Board may decide to pursue a liquidation or obtain relief under the US Bankruptcy Code. The Company has hired advisors to explore strategic alternatives including, if needed, filing for bankruptcy protection. In the event of such liquidation, bankruptcy case, or other wind-down event, holders of our securities will likely suffer a total loss of their investment.

***Waiver of Debt Covenants and Negotiations with Lender***

The Company was not in compliance with the minimum revenue covenant for the quarter ending December 31, 2022, of $18.0 million and was in compliance with the minimum cash balance covenant requirement of $5.0 million. The Company obtained a waiver of the minimum trailing twelve (12) month revenue requirement for the quarter ended December 31, 2022 and March 31, 2023, respectively. The Company also obtained a waiver pertaining to the existence of a "going concern" qualification in the accompanying opinion of the Company's auditors in its Annual Report on Form 10-K and any resulting event of default.

However, as of the date of this filing, Perceptive has alleged that certain defaults or events of default have occurred and are continuing under the terms of the Perceptive Credit Facility. Perceptive has not delivered any formal notice of Default or Event of Default. To the extent that any such allegations are valid, Perceptive would have certain rights and remedies under the Perceptive Credit Facility. The Company disputes the allegations and is in discussions with Perceptive to resolve this dispute and otherwise to address the Company's obligations under the Perceptive Credit Facility. There can be no assurances that such discussions will result in any resolution, and any resolution, or the lack of any resolution, may result in Perceptive exercising remedies under the Perceptive Credit Facility. If the acceleration of the debt were to occur, we could also be required to pay a prepayment penalty of $3.6 million.

***At-the-Market (ATM) Offering***

On January 3, 2023, the Company entered into an ATM offering agreement (the "<u>ATM Agreement</u>") with H.C. Wainwright & Co., LLC ("<u>Wainwright</u>") and Virtu Americas LLC ("<u>Virtu</u>" and, collectively with Wainwright, the "<u>Managers</u>" and each, a "<u>Manager</u>"), pursuant to which the Company may offer and sell, from time to time through the Managers, shares of the Company's Class A common stock. The ATM Agreement authorized an aggregate gross proceeds of up to $150.0 million. Sales of common stock through the Manager could be made by any method that is deemed an "at-the-market" offering as defined in Rule 415 promulgated under the Securities Act of 1933, as amended, including by means of ordinary brokers' transactions at market prices, in block transactions or as otherwise agreed by the Company and the Managers. The Company will pay the designated Manager a commission of up to 3.0% of the aggregate gross proceeds from any Shares sold by the designated Manager and provide the Managers with customary indemnification and contribution rights, including for liabilities under the Securities Act. The Company also will reimburse the Managers for certain specified expenses in connection with entering into the ATM Agreement.

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 112

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

As of March 31, 2023, the Company has sold 843,281 shares of its Class A common stock under the ATM Agreement resulting in proceeds to the Company of $1.0 million, net of offering costs.

***Restructuring, Reductions in Workforce, and Paused Investment in our Pipeline Product Candidates***

On July 25, 2022, the Company restructured its operations to narrow its near-term business focus and reduce its workforce due to the macroeconomic environment. As a result of the restructuring, the Company incurred a charge of $0.9 million primarily associated with the severance and health insurance expenses related to 25 full-time employees, representing approximately 9% of full-time employee at the time of the restructuring and reduction in workforce. In connection with this restructuring, we reduced spending on our pipeline candidates, discovery programs, business development, and the Company's dual platform in order to prioritize certain of its commercial efforts and will continue to reduce costs in each of these areas. The direct costs associated with the first restructuring and reduction in workforce were recorded in the quarter ended September 30, 2022.

On November 14, 2022, we announced a second reduction in workforce, further reducing our headcount by approximately 59 employees, or approximately 22% of our full-time employees as of September 30, 2022, due to the worsening macroeconomic environment. The Company recorded $2.5 million in severance charges in connection with the second reduction in workforce, related to severance payments, employee benefits, and related costs, in the fourth quarter of 2022. In addition, the Company recorded a stock-based compensation and corresponding payroll tax expense benefit of $0.1 million related to modifications of equity awards for employees impacted by the reduction in workforce.

The estimated costs that the Company expects to incur in connection with the reduction in forces and cost saving initiatives are subject to a number of assumptions, and actual results may differ significantly from these estimates. The Company may also incur additional costs not currently contemplated due to events that may occur as a result of, or that are associated with, the reductions in workforce and cost saving initiatives. In the future, there may also be incremental one-time charges associated with non-work force related cost savings actions.

**Economic Conditions (Impact of COVID-19)**

On January 30, 2023, the Biden Administration announced it will end the public health emergency (and national emergency) declarations related to COVID-19 on May 11, 2023. While the COVID-19 pandemic has not materially adversely affected our financial results and business operations through December 31, 2022, COVID-19 continues to present risks to the Company, and we continue to closely monitor the impact of the pandemic on all aspects of our business. We are unable to predict the impact that COVID-19 (including the emergence of new variants) will have on our financial position and operating results in the future.

**Impact of Inflation**

We are experiencing rising costs for certain inflation-sensitive operating expenses, such as labor, and certain service providers that are heavily dependent on labor. We do not believe these impacts were material to net income during the year ended December 31, 2022. However, significant sustained inflation driven by the macroeconomic environment or other factors could negatively impact our margins, profitability, and results of operations in future periods.

**FL Medicaid Coverage** 

Effective January 1, 2023, reSET® and reSET-O® were added to Florida Medicaid Preferred Drug List (PDL). reSET and reSET-O, the only FDA-authorized PDTs for the treatment of substance use disorder and opioid use disorder, respectively.

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 113

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

**Results of Operations**

The tables and discussion below present the results for the periods indicated:

---

| | | | |
|:---|:---|:---|:---|
| | **Year Ended December 31,** | **Year Ended December 31,** | **Change** |
|<br>***(in thousands, except percentages)*** | **2022** | **2021** | $**%** |
| Revenues |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Product revenue | $10417 | $3748 | *178 %* |
| &nbsp;&nbsp;&nbsp;&nbsp;Collaboration and license revenue | 872 | 460 | *90 %* |
| &nbsp;&nbsp;&nbsp;&nbsp;Subscription, support, and professional services revenue | $1405 | $— | *\** |
| **Total revenues** | **12694** | **4208** | ***202*** *%*** |
| Cost and operating expenses: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Cost of revenue | 8182 | 5233 | *56 %* |
| &nbsp;&nbsp;&nbsp;&nbsp;Research and development | 48311 | 37041 | *30 %* |
| &nbsp;&nbsp;&nbsp;&nbsp;Selling, general, and administrative | 79551 | 67619 | *18 %* |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total cost and operating expenses | 136044 | 109893 | *24 %* |
| **Loss from operations**  | **(123350)** | **(105685)** | ***(17)*** *%*** |
| Other income (expenses): |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Interest and other expenses, net | $(3892) | (4144) | *6 %* |
| &nbsp;&nbsp;&nbsp;&nbsp;Change in estimated fair value of earn-out liability | 45339 | 47038 | *(4) %* |
| &nbsp;&nbsp;&nbsp;&nbsp;Change in estimated fair value of warrant liabilities | 6412 | (298) | *\** |
| &nbsp;&nbsp;&nbsp;&nbsp;Loss on issuance of Legacy Pear convertible preferred stock | $— | (2053) | *\** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total other income (expense) | 47859 | 40543 | *18 %* |
| **Net loss** | $**(75491)** | $**(65142)** | ***16*** *%*** |

---

__________________

\* Percentage change not meaningful.

*Product revenue*—Product revenue for the year ended December 31, 2022, was $10.4 million, compared to $3.7 million for the year ended December 31, 2021. The increase was primarily driven by increased sales of reSET and reSET-O under Access Agreements.

*Collaboration and license revenue*—Collaboration and license revenue for the year ended December 31, 2022, was $0.9 million, compared to $0.5 million for the year ended December 31, 2021, primarily due to the development work completed on a Japanese-language digital therapeutic for the treatment of sleep/wake disorders for the Japanese market in collaboration with SoftBank Corp. that was completed in 2022. See Part III Item 13, "*Certain Relationships and Related Transactions, and Director Independence*" below for information regarding the related party nature of the agreement.

*Subscription, support, and professional services revenue -* Subscription, support, and professional services revenue for the year ended December 31, 2022, was $1.4 million, under a pilot offering of a new product by the Medicaid program of a state government.

*Cost of revenue*—Cost of revenue for the year ended December 31, 2022, was $8.2 million, compared to $5.2 million for the year ended December 31, 2021. This increase of $2.9 million was primarily due to an increased number of customers and clinics served associated with our Access Agreements, and minimum royalties related to licensing agreements for commercialized products, pharmacy, and hosting costs for our PDTs. Additionally, we recorded $0.8 million of impairment expense on the intangible assets related to acquired technology used in our Somryst commercial product for the year ended December 31, 2022. Several factors positively contributed to an increased efficiency of implementing our products in clinics during 2022, including economies of scale and focused

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 114

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

go-to market efforts resulting in increased productivity of our implementation team. Cost of revenue represented 64.5% and 124.4% of total revenue for the years ended December 31, 2022 and 2021, respectively. We expect cost of revenue in 2023 to decrease as a percentage of revenue as revenue increases from further economies of scale.

*Research and development*—R&D expenses for the year ended December 31, 2022, were $48.3 million, compared to $37.0 million for the year ended December 31, 2021. The increase of $11.3 million was primarily due to an increase of $8.7 million of personnel-related costs from higher average headcount during the first half of 2022 and subsequent severance costs from the July and November 2022 reductions in workforce, and $2.1 million of impairment of a previously acquired intangible asset. We anticipate decreases in R&D costs compared to prior periods as a result of the restructuring and reductions in workforce as well as us pausing any further investment in our pipeline of product candidates.

*Selling, general, and administrative*—SG&A expenses for the year ended December 31, 2022, were $79.6 million, compared to $67.6 million for the year ended December 31, 2021. The increase of $11.9 million was primarily due to an increase of $12.1 million in personnel-related costs from higher average headcount during the first half of 2022 and subsequent severance costs from the July and November 2022 reductions in workforce. These increases were offset by reduction in our marketing spend. We anticipate decreases in SG&A costs compared to prior periods as a result of the restructuring and reductions in workforce, reduced marketing spend as well as reductions in our travel expenses and cost savings related to the departure of our Chief Commercial Officer .

*Interest and other (expense) income, net*—Interest and other income (expense), net, for the year ended December 31, 2022, was an expense of $3.9 million compared to an expense of $4.1 million for the year ended December 31, 2021. This decrease is mainly the result of $1.1 million of interest income on cash equivalents and short-term investments as a result of higher investment balances due to the proceeds of the Business Combination that closed in December 2021 and a $0.6 million gain from the change in the fair value of the embedded debt derivative recorded during year ended December 31, 2022.

*Change in fair value of earn-out liabilities*—For the year ended December 31, 2022, we recognized a $45.3 million gain as a result of the change in fair value of the earn-out liabilities, compared to a gain of $47.0 million for the year ended December 31, 2021 primarily as a result of the fluctuations in the underlying share price of our Class A common stock.

*Change in fair value of warrant liabilities*—For the year ended December 31, 2022, we recognized a gain of $6.4 million related to the Public Warrants and the Private Placement Warrants. We recognized a $0.3 million loss for the year ended December 31, 2021, related to the Legacy Pear Warrants, which were exercised in 2021 prior to the Business Combination.

*Loss on issuance of Legacy Pear convertible preferred stock*—In February 2021, the Company issued shares of Legacy Pear Series D-1 Preferred Stock. The shares were recorded at their estimated fair market value on the date of issuance. In connection with the Legacy Pear Series D-1 Preferred Stock, we recorded a loss of $2.1 million for the year ended December 31, 2021, which represents the amount by which the estimated fair value of the shares exceeded the sale price, net of issuance costs.

*Income tax*—We did not incur income tax expenses for the year ended December 31, 2022 and 2021. Given our lack of prior earnings history, we have a full valuation allowance primarily related to our net operating loss and R&D credit carryforwards that we do not consider more likely than not to be realized.

**Liquidity and Capital Resources**

***Exploring Strategic Alternatives***

We require substantial additional capital to sustain our operations and pursue our growth strategy, including the development of our product candidates. The Company has engaged MTS as our investment bank to assist with the exploration of strategic alternatives that may include, but are not limited to, the sale of all or substantially all of our assets; a strategic merger or other business combination transaction; or another change of control transaction between us and a third party. If a strategic process is unsuccessful, our Board may decide to pursue a liquidation or

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 115

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

obtain relief under the US Bankruptcy Code. The Company has hired advisors to explore strategic alternatives including, if needed, filing for bankruptcy protection. These factors raise substantial doubt about our ability to continue as a going concern. For more information, refer to "—Liquidity and Capital Resources" below and Note 1, *Nature of the Business*, in the accompanying notes to the consolidated financial statements included in Part II, Item 8 of this Form 10-K.

***Sources of Liquidity***

Since our inception, our primary sources of capital have been proceeds from sales of Legacy Pear convertible preferred stock, payments received in connection with collaboration agreements, payments received on our revenue contracts, include the sale of our products,, proceeds from borrowings under various credit facilities, and the Business Combination. See Note 3, *Business Combination*, in the accompanying notes to the consolidated financial statements included in Part II, Item 8 of this Form 10-K for further information.

Our cash flows may fluctuate and are difficult to forecast and will depend on many factors. As of December 31, 2022 and December 31, 2021, we had cash and cash equivalents of $48.3 million and $169.6 million, respectively. Based on our current operating plans inclusive of the July 2022 restructuring plan and reduction in force, the November 2022 reduction in force and further cost saving initiatives as well as strategic review process, we have sufficient cash and cash equivalents to fund our operating expenses and capital expenditures into the second quarter of 2023.

*Debt Financing and Covenants*—On June 30, 2020, the Company entered into the Perceptive Credit Facility with Perceptive. Outstanding borrowings under our secured Perceptive Credit Facility were $30.0 million as of December 31, 2022 and December 31, 2021. The Perceptive Credit Facility matures in June 2025. Prior to February 1, 2023, the Perceptive Credit Facility bore interest through maturity at a variable rate based upon the one-month LIBOR rate plus 11.0%, subject to a LIBOR floor of 1.0%. As of December 31, 2022, the interest rate was 15.1%. On January 13, 2023, the Company and Perceptive executed the First Amendment to the Perceptive Credit Facility, which replaced LIBOR with the Secured Overnight Financing Rate ("SOFR"), effective February 1, 2023. As of and for the year ended December 31, 2022, the effect of switching from LIBOR to SOFR would not have been material to the Company's consolidated financial statements. The Company is required to make interest-only payments until May 31, 2024, after which point the Company will be required to make monthly payments of principal equal to 3.0% of the then outstanding principal until maturity on June 30, 2025.

The Perceptive Credit Facility is secured by substantially all of the assets of the Company, including our intellectual property. The Perceptive Credit Facility requires the Company to (i) maintain a minimum aggregate cash balance of $5.0 million in one or more controlled accounts, and (ii) as of the last day of each fiscal quarter commencing with the fiscal quarter ending March 31, 2022, report revenues for the trailing 12-month period that exceed the amounts that range from $18.0 million for the fiscal quarter ending March 31, 2022, to $125.0 million for the fiscal quarter ending March 31, 2025. For the quarter ending December 31, 2022, the trailing 12-month period revenue requirement was $18.0 million. The Perceptive Credit Facility contains various affirmative and negative covenants that limit the Company's ability to engage in specified types of transactions. The Company was not in compliance with the trailing twelve month revenue covenant under the Perceptive Credit Facility as of December 31, 2022, however we requested and were granted a waiver on the trailing 12-month revenue requirement for both the quarter ended December 31, 2022 and March 31, 2023, respectively. In addition, on February 28, 2023, the Company obtained a waiver pertaining to the existence of a "going concern" qualification in the accompany opinion of the Company's auditors in this Form 10-K and any resulting event of default.

As of the date of this filing, Perceptive has alleged that certain defaults or events of default have occurred and are continuing under the terms of the Perceptive Credit Facility. Perceptive has not delivered any formal notice of Default or Event of Default. To the extent that any such allegations are valid, Perceptive would have certain rights and remedies under the Perceptive Credit Facility. The Company disputes the allegations and is in discussions with Perceptive to resolve this dispute and otherwise to address the Company's obligations under the Perceptive Credit Facility. There can be no assurances that such discussions will result in any resolution, and any resolution, or the lack of any resolution, may result in Perceptive exercising remedies under the Perceptive Credit Facility. As of the

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 116

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

date of this filing, if the acceleration of the debt were to occur, we could also be required to pay a prepayment penalty of $3.6 million.

As of December 31, 2022 and December 31, 2021, we had outstanding debt of $27.4 million and $27.0 million, net of debt issuance costs of $2.6 million and $3.0 million, respectively. See Note 7, *Indebtedness*, in the accompanying notes to the consolidated financial statements included in Part II, Item 8 of this Form 10-K for further information.

*Product Sales*—We have three commercial products: reSET, reSET-O, and Somryst. The revenue from the sale of these products at the present time is not sufficient to cover the operating costs incurred. Our ability to achieve sufficient revenue to cover our costs is highly dependent on our PDTs achieving and maintaining broad market acceptance by patients and physicians and obtaining reimbursement from third-party payors.

*Subscription, Support, and Profession Services Revenue*—In the fourth quarter of 2022, we entered into a 16-month pilot program to allow eligible Medicaid members in that state take part in a structured 24-week outpatient program that will be followed by at least six months of additional recovery support services. Under the pilot we will deliver, implement, and manage this program, specifically by managing the electronic tracking and distribution of incentives to the states Medicaid members who participate in this contingency management pilot. The contract is for an amount up to $4.0 million plus reimbursements for the contingency management. We recognized $1.4 million under the terms of this contract for year ended December 31, 2022.

*Employee Stock Purchase Plan*—Under the Company's 2021 Employee Stock Purchase Plan (the "<u>2021 ESPP</u>"), 359,910 shares of the Company's Class A common stock were issued for total consideration of $0.4 million during the year ended December 31, 2022.

*At-The-Market Equity Offering*—On January 3, 2023, the Company entered into an ATM Agreement with the Managers, pursuant to which the Company may offer and sell, from time to time through the Managers, shares of the Company's Class A common stock for aggregate gross proceeds of up to $150 million. As of March 31, 2023, the Company has sold 843,281 shares of its Class A common stock under the ATM Agreement resulting in proceeds to the Company of $1.0 million, net of offering costs.

In the future, we may seek to obtain other additional sources of financing, including incurring term debt or issuing equity or debt securities.

***Historical Cash Flows***

We have incurred recurring losses from inception and anticipate net losses and negative operating cash flows for the near future. For the year ended December 31, 2022 and 2021, we incurred net operating losses of $75.5 million and $65.1 million, respectively.

As of December 31, 2022 and December 31, 2021, we had an accumulated deficit of $323.5 million and $248.0 million, respectively.

**Capital Resources**

Our primary uses of capital are, and we expect will continue to be for the near future, funding operating activities. We have in the past and we expect in the future to capitalize labor costs related to the development of our internal-use software.

We need to raise additional capital to pursue our growth strategy and support continuing operations. Until such time as we can generate significant revenue to fund operations, we expect to seek additional capital from the issuance of equity, debt, or other capital transactions or a strategic transaction. On July 25, 2022, we restructured our business operations to narrow our near-term business focus and decreased our workforce to reduce our operating expenses. We announced a further reduction in workforce on November 14, 2022. Despite our recent restructuring, we need to raise capital to support our operations absent a strategic transaction. In February 2023, we hired an investment bank to explore strategic alternatives. We may be unable to complete a strategic transaction, increase our revenue, raise additional funds, or enter into such other agreements or arrangements

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 117

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

when needed on favorable terms, or at all, our Board may decide to pursue a liquidation or obtain relief under the US Bankruptcy Code. The Company has hired advisors to explore strategic alternatives including, if needed, filing for bankruptcy protection.

As of the date of this filing, Perceptive has alleged that certain defaults or events of default have occurred and are continuing under the terms of the Perceptive Credit Facility. Perceptive has not delivered any formal notice of Default or Event of Default. To the extent that any such allegations are valid, Perceptive would have certain rights and remedies under the Perceptive Credit Facility. The Company disputes the allegations and is in discussions with Perceptive to resolve this dispute and otherwise to address the Company's obligations under the Perceptive Credit Facility. There can be no assurances that such discussions will result in any resolution, and any resolution, or the lack of any resolution, may result in Perceptive exercising remedies under the Perceptive Credit Facility.

We are also subject to various covenants related to the Perceptive Credit Facility, as well as the material adverse clause there is substantial doubt about our ability to continue as a going concern. As of December 31, 2022, we concluded that the above circumstances raise substantial doubt about our ability to continue as a going concern. See Note 7, *Indebtedness*, in the accompanying notes to the consolidated financial statements included in Part II, Item 8 of this Form 10-K for further information.

***Cash and Cash Equivalents***

As of December 31, 2022, we had $48.3 million of cash and cash equivalents. In July 2022 and November 2022 we completed reductions in force and took measures to significantly reduce our operating costs, including suspension of the development of our pipeline product candidates. As noted elsewhere in this report, including Note 1, *Nature of the Business*, in the accompanying notes to the consolidated financial statements included in Part II, Item 8 of this Form 10-K there is substantial doubt as to our ability to fund our planned operations for the next twelve months and to continue to operate as a going concern.

***Liquidity Risks***

We will require additional capital in order to pursue our strategic objectives and for the Company to survive. We have hired an investment bank to assist with the exploration of a strategic alternatives. We expect to incur substantial additional expenditures in the near term to support our ongoing activities, including costs related to being a public company. Further, we expect to continue to incur net losses for the foreseeable future and have sufficient cash on hand to fund operations into the second quarter of 2023. Our ability to fund our product development and clinical operations as well as commercialization of our product candidates will depend on the amount and timing of cash available to fund operations. Our future liquidity and capital funding requirements will depend on numerous factors, including:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our ability to retain our current employees;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our revenue growth;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the ability to obtain third-party payor reimbursement for our current products;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• debt service requirements;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our commercial activities, including sales and marketing;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our ability to reduce or contain certain costs and expenses;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the emergence and effect of competing or complementary products;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the outcome, timing, and cost of meeting regulatory requirements established by the FDA, or comparable foreign regulatory authorities;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the cash requirements of developing our programs and our ability and willingness to finance their continued development;

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 118

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the time and cost necessary to respond to technological and market developments, including other products that may compete with one or more of our product candidates;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the impact of the macroeconomic environment; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the impact of the COVID-19 pandemic.

Our operating plans may change in the future, and we will need additional funds to meet operational needs and capital requirements associated with such operating plans.

If we fail to obtain additional capital when needed, our ability to operate as a going concern will be harmed, and we may be required to delay, scale back or eliminate some or all of our research and development programs and commercialization efforts and/or reduce our selling, general and administrative expenses, be unable to attract and retain highly-qualified personnel, be unable to obtain and maintain contracts necessary to continue our operations and at affordable rates with competitive terms, refrain from making our contractually required payments when due (including debt payments) and/or be forced to cease operations, liquidate our assets and possibly seek bankruptcy protection.

See the information under the heading "*Risk Factors*" included in Part I, Item 1A this Form 10-K for risks related to our financial condition.

***Funding Requirements***

Please see the risks associated with our substantial capital requirements explained more fully under the heading "*Risk Factors — If we are unable to successfully complete a strategic acquisition, we may be forced to cease operations altogether or file for bankruptcy protection*.***" in Part I, Item 1A of this Form 10-K.

***Contractual Obligations, Commitments, and Contingencies other than Debt Obligations***

We are party to contractual obligations involving commitments to make payments to third parties in the future. Certain contractual obligations are reflected on our Consolidated Balance Sheet as of December 31, 2022, while others are considered future obligations. Our material cash requirements as of December 31, 2022, include the following contractual obligations and commitments arising in the normal course of business, including leases, purchases commitments, and purchase obligations described in more detail below.

*Leases*

We lease our headquarters in Boston, Massachusetts, under a non-cancelable operating lease with an expiration date of June 1, 2028. We also lease office space in San Francisco, California, under a non-cancelable operating lease that expires on July 31, 2025, and office space in Raleigh, North Carolina, under a non-cancelable operating lease that expires on May 31, 2026.

Effective January 1, 2023, the Company subleased 7,218 square feet of space in Boston, Massachusetts with a stated term of one year and renewal options for two additional years in one year increments. Effective January 6, 2023, the Company subleased the entirety of its 7,654 sq feet of rentable space in Raleigh, North Carolina with a stated term of one year and an option to renew for one twelve-month period, at which time a 3% rate increase will apply.

See Note 8, *Leases*, in the accompanying notes to the consolidated financial statements included in Part II, Item 8 of this Form 10-K for further information.

*Unconditional purchase commitments* 

We enter into agreements in the normal course of business with various vendors, which are generally cancellable upon notice. Payments due upon cancellation consist only of payments for services provided or expenses incurred, including non-cancellable obligations of service providers, up to the date of cancellation.

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 119

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

On June 17, 2021, and as amended on August 3, 2021, July 29, 2022 and December 12, 2022 we entered into a non-cancelable purchase obligation for a subscription to the Palantir Foundry cloud platform, including support services, updates, and related professional services with Palantir for $9.3 million payable over three years. As of December 31, 2022, we have paid $4.4 million and have amounts due under the terms of the agreement for the years ended December 31, 2023 and 2024 of $2.3 million and $2.5 million, respectively.

*License Agreements*

We have various licensing agreements to which we are a party and we are obligated to pay annual license maintenance fees under. In addition, we may be required to make milestone payments and to pay royalties and other amounts to third parties. Some of the payment obligations under these agreements are contingent upon future events, such as our achievement of specified milestones or generating product revenue, and the amount, timing and likelihood of such payments are not known. Amounts related to contingent milestone payments are not considered contractual obligations as they are contingent on the successful achievement of certain milestones. These contingent milestones may not be achieved. We cannot estimate or predict when, or if, these amounts will become due. Other license agreements require us to pay minimum annual maintenance or royalty fees.

See Note 9, *Commitments and Contingencies*, in the accompanying notes to the consolidated financial statements included in Part II, Item 8 of this Form 10-K for further information.

***Off-Balance Sheet Arrangements***

As of December 31, 2022 and December 31, 2021, in connection with our leased property in San Francisco, California we had $0.4 million in a letter of credit outstanding. On March 10, 2023, the issuer of the landlord's letter of credit, Silicon Valley Bank, was placed into receivership with the FDIC. Since that date the obligations of Silicon Valley Bank have been assumed by First-Citizens Bank & Trust Company. The landlord has demanded a replacement letter of credit by no later than April 21, 2023.

***Director and Officer Indemnification***

We have entered into indemnification agreements with our directors and certain officers and employees that will require us, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors, officers, or employees. No demands have been made upon us to provide indemnification under such agreements and there are no claims that we are aware of that could have a material effect on our consolidated financial statements.

**Cash Flows** 

The following table provides a summary of cash flow data for each applicable period:

---

| | | |
|:---|:---|:---|
| | **Year Ended December 31,** | **Year Ended December 31,** |
|<br>**NET CASH PROVIDED BY/(USED IN)** *(in thousands)***:** | **2022** | **2021** |
| &nbsp;&nbsp;Operating activities | $(113895) | $(109043) |
| &nbsp;&nbsp;Investing activities | (9457) | 2883 |
| &nbsp;&nbsp;Financing activities | 2155 | 164077 |
| **Net (decrease) increase in cash, cash equivalents, and restricted cash** | $**(121197)** | $**57917** |
| Cash, cash equivalents and restricted cash—beginning of period | 169978 | 112061 |
| **Cash, cash equivalents and restricted cash—end of period**  | $**48781** | $**169978** |

---

***Operating Activities***

Net cash used in operating activities was $113.9 million for the year ended December 31, 2022. Net cash used in operating activities consists of a net loss of $75.5 million, adjusted for non-cash items and the effect of changes in working capital. Non-cash adjustments primarily include the change in fair value of earn-out liabilities of $45.3 million, the change in fair value of warrant liabilities of $6.4 million, and net increases in operating assets and

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 120

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

liabilities (working capital) of $9.8 million, partially offset by stock-based compensation of $13.5 million, depreciation of $3.3 million and an impairment of intangible assets of $2.9 million.

Our outstanding debt as of December 31, 2022, was $30.0 million. Cash interest paid for the years ended December 31, 2022, and 2021 were $3,560 and $3,709, respectively. In accordance with the lenders payment terms the December 2022 interest payment was paid in January 2023 resulting in only eleven monthly cash payments being made during the year ended December 31, 2022 as compared to twelve cash payments being made during the year ended December 31, 2021. As of December 31, 2022, we had $0.4 million of accrued interest included in accrued expenses and other current liabilities on the consolidated balance sheet related to the outstanding debt.

Net cash used in operating activities was $109.0 million for the year ended December 31, 2021. Net cash used in operating activities consists of a net loss of $65.1 million, adjusted for non-cash items and the effect of changes in working capital. Non-cash adjustments primarily include the change in fair value of earn-out liabilities of $47.0 million, depreciation of $1.7 million, and net changes in operating assets and liabilities (working capital) of $5.9 million, partially offset by stock-based compensation of $3.8 million, loss on issuance of convertible preferred stock of Legacy Pear of 2.1 million.

***Investing Activities***

Net cash used in investing activities was $9.5 million for the year ended December 31, 2022, and related primarily to the purchase of investments of $66.0 million and purchases of property and equipment of $3.5 million offset by proceeds from the maturity and sale of investments of $60.0 million.

Net cash provided by investing activities was $2.9 million for the year ended December 31, 2021, related primarily to the maturities of investments offset by the purchase of investments, $3.3 million investment in property and equipment which is primarily internal-use software, and $1.4 million in intangible assets, and a $1.0 million regulatory milestone payment.

***Financing Activities***

Net cash provided by financing activities was $2.2 million for the year ended December 31, 2022, and related primarily to proceeds from the exercise of stock options.

Net cash provided by financing activities was $164.1 million for 2021 and related to gross proceeds from the Business Combination of $175.0 million offset by associated transaction costs of $30.7 million, and proceeds of $19.9 million from the issuance of Legacy Pear convertible preferred stock.

**Related Party Transactions**

Effective March 15, 2022, we entered into a development agreement with SoftBank Corp., an entity under common control with SVF II Cobbler (DE) LLC (a greater than 5% shareholder of Pear), to develop a Japanese-language digital therapeutic for the treatment of sleep/wake disorders for the Japanese market. See Note 10, R*evenue and Contract Balances*, in the accompanying notes to the consolidated financial statements included in Part II, Item 8 of this Form 10-K for further information.

**Recent Accounting Pronouncements**

Refer to the accompanying notes to consolidated financial statements as of and for the years ended December 31, 2022 and 2021, included in Part I, Item 8 of this Form 10-K for more information regarding recently issued accounting pronouncements, the timing of their adoption, and its assessment, to the extent it has made one, of their potential impact on its financial condition and results of operations.

**Critical Accounting Policies and Estimates**

The preparation of our consolidated financial statements and related disclosures in conformity with US generally accepted accounting principles ('"<u>US GAAP</u>"), and the Company's discussion and analysis of its financial condition

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 121

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

and operating results require the Company's management to make judgments, assumptions and estimates that affect the amounts reported. These estimates and judgments affect the reported amounts of assets, liabilities, revenues and expenses, and the related disclosure of contingent assets and liabilities. Management bases these estimates on historical experience, known trends and events and various other assumptions that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying amounts of assets and liabilities. We monitor our estimates on an ongoing basis for changes in facts and circumstances, and material changes in these estimates could occur in the future. Actual results may differ materially from these estimates under different assumptions or conditions, or if past experience or other assumptions do not turn out to be substantially accurate. Changes in estimates are recorded in the period in which they become known.

While our significant accounting policies are described in more detail in Note 2, *Summary of Significant Accounting Policies*, to our consolidated financial statements in this Annual Report on Form 10-K, we believe that the following accounting policies are those most critical to the judgments and estimates used in the preparation of our financial statements.

***Revenue Recognition***

We determine product; and collaboration and license; and subscription, support, and professional services revenue recognition through the following five-step framework in accordance with ASU 2014-09, *Revenue from Contracts with Customers (Topic 606)* and its related amendments, or, collectively, ASC 606:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• identification of the contract, or contracts, with a customer;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• identification of the performance obligations in the contract;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• determination of the transaction price;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• allocation of the transaction price to the performance obligations in the contract; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• recognition of revenue when, or as, Pear satisfies a performance obligation.

Performance obligations promised in a contract are identified based on the goods and services that will be transferred to the customer that are both capable of being distinct and are distinct in the context of the contract. If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. To the extent a contract includes multiple promised goods and services, the Company applies judgment to determine whether promised goods and services are both capable of being distinct and distinct in the context of the contract. To the extent the goods and services are distinct, it requires an allocation of the transaction price to each performance obligation on a relative standalone selling price basis unless the transaction price is variable and meets the criteria to be allocated entirely to a performance obligation or to a distinct service that forms part of a single performance obligation. The consideration to be received is allocated among the separate performance obligations based on relative standalone selling prices. The Company typically determines standalone selling prices using an adjusted market assessment approach model, or based upon observable inputs.

The Company satisfies performance obligations either over time or at a point in time. Revenue is recognized over time if either (i) the customer simultaneously receives and consumes the benefits provided by the entity's performance, (ii) the entity's performance creates or enhances an asset that the customer controls as the asset is created or enhanced, or (iii) the entity's performance does not create an asset with an alternative use to the entity and the entity has an enforceable right to payment for performance completed to date. If the entity does not satisfy a performance obligation over time, the related performance obligation is satisfied at a point in time by transferring the control of a promised good or service to a customer.

To date, while we have recognized product revenue from the sale of our PDTs, reSET, reSET-O, and Somryst, and although we expect to continue to recognize revenue from the sale of these PDTs, we do not expect to generate significant revenue in the foreseeable future.

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 122

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

***Valuation of Earn-Out Liabilities***

As discussed in Notes 1, 3, and 4 in the accompanying notes to the consolidated financial statements included in Part II, Item 8 of this Form 10-K, on December 3, 2021, we completed a Business Combination. In connection with the Business Combination and pursuant to the Business Combination Agreement, eligible Legacy Pear Shareholders are entitled to receive an aggregate of 12,395,625 shares of the Company's Class A common stock ("<u>Earn-Out Shares</u>") upon the Company achieving certain earn-out triggering events. At the time of closing, the Company recorded the earn-out liabilities upon issuance at its then estimated fair value of the Earn-Out Shares. The fair value of the Earn-Out Shares was derived utilizing a Monte Carlo Simulation Method ("<u>MCSM</u>") to assess the likelihood of a triggering event occurring in the specified time frame. Under each scenario, the occurrence of a triggering event is tracked. If one of the thresholds is reached, then the underlying fair value of the common stock at the time of the trigger event is utilized to determine the fair value of the Earn-Out Shares that would be issued. The mean value of the shares estimated over the course of numerous iterations are calculated to arrive at the fair value of the Earn-Out shares. The MCSM utilizes a number of inputs which include the trading price and volatility of the underlying common stock, expected term, risk-free interest rates, expected date of a qualifying event, and qualifying traded share price within the specified time frame. The determination of the fair value of these financial instruments is complex and highly judgmental due to the significant estimation required. In particular, the fair value estimate was sensitive to certain assumptions, such as the volatility of underlying shares. The earn-out liabilities to the Legacy Pear shareholders are measured at the end of each reporting period at fair value with changes in fair value reported in our statement of operations. As of the Closing Date, a liability for fair value of the Earn-Out Shares was estimated and recorded at $95.4 million. As of December 31, 2022, the estimated fair value decreased to $3.0 million, mainly due to changes in the underlying value of the shares of Pear common stock, which was $1.18 on December 31, 2022.

If the applicable triggering event is achieved for a tranche, the Company will account for the Earn-Out Shares for such tranche as issued and outstanding common stock.

***Stock-Based Compensation***

Accounting for stock-based compensation is a critical accounting policy due to the broad-based equity awards provided to employees at all levels and the use of equity awards as part of the strategy to retain employees as a result of a change of control events. Pear issues stock-based compensation to employees and non-employees in restricted stock units, or RSUs. Compensation expenses for stock options are recognized on a straight-line basis over the requisite service period, which is generally the vesting period. Forfeitures are accounted for when they occur. The fair value of the stock options is measured on the grant date using the Black-Scholes model, which utilizes the following estimates as inputs:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• ***Expected volatility:*** determined based on an average of the historical volatility of a peer group of similar public companies;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• ***Expected term:*** as our employee stock options have "plain vanilla" characteristics, the expected term is determined using the simplified method, which represents the average of the contractual term of the option and the weighted average vesting period of the option; the contractual life of the option is used for the expected life of non-employee stock options;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• ***Risk-free interest rate:*** based upon the US Treasury yield curve in effect at the time of grant; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• ***Expected dividend yield:*** based on our history and current expectation of not paying dividends in the foreseeable future.

**ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK**

As a smaller reporting company as defined by Rule 12b-2 of the Exchange Act we are not required to provide information under this item.

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 123

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

**ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA**

---

| | |
|:---|:---|
| **Index to Consolidated Financial Statements** | **Page** |
| <u>[Report of Independent Registered Public Accounting Firm](#i314e5111d658400ab7dce73a0dda6c41_1666)</u> (PCAOB ID No. 34) | <u>[125](#i314e5111d658400ab7dce73a0dda6c41_1666)</u> |
| <u>[Consolidated Balance Sheets](#i314e5111d658400ab7dce73a0dda6c41_16)</u> | <u>[126](#i314e5111d658400ab7dce73a0dda6c41_16)</u> |
| <u>[Consolidated Statements of Operations and Comprehensive Loss](#i314e5111d658400ab7dce73a0dda6c41_19)</u> | <u>[127](#i314e5111d658400ab7dce73a0dda6c41_19)</u> |
| <u>[Consolidated Statements of Stockholders' Equity](#i314e5111d658400ab7dce73a0dda6c41_22)</u> | <u>[128](#i314e5111d658400ab7dce73a0dda6c41_22)</u> |
| <u>[Consolidated Statements of Cash Flows](#i314e5111d658400ab7dce73a0dda6c41_25)</u> | <u>[129](#i314e5111d658400ab7dce73a0dda6c41_25)</u> |
| <u>[Notes to Consolidated Financial Statements](#i314e5111d658400ab7dce73a0dda6c41_28)</u> | <u>[131](#i314e5111d658400ab7dce73a0dda6c41_28)</u> |

---

All financial statement schedules have been omitted, since the required information is not applicable or is not present in amounts sufficient to require submission of the schedule, or because the information required is included in the consolidated financial statements and accompanying notes.

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 124

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

**REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

The Stockholders and the Board of Directors of Pear Therapeutics, Inc.

**Opinion on the Financial Statements**

We have audited the accompanying consolidated balance sheets of Pear Therapeutics, Inc. and its subsidiaries (the "Company") as of December 31, 2022 and 2021, the related consolidated statements of operations and comprehensive loss, stockholders' equity, and cash flows, for each of the two years in the period ended December 31, 2022 and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America.

**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 experienced recurring losses from operations and recurring negative operating cash flows and may be unable to remain in compliance with certain financial covenants required under its credit facility which raises substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are described in Note 1. Management's plans include the potential sale of the Company, or all or a portion of the Company's assets; if management is unable to effect these plans, it may seek protection under bankruptcy or liquidation. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

**Basis for Opinion**

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ Deloitte & Touche LLP

Boston, Massachusetts

March 31, 2023

We have served as the Company's auditor since 2017.

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 125

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

**Pear Therapeutics, Inc.** 

**CONSOLIDATED BALANCE SHEETS**

---

| | | |
|:---|:---|:---|
| | **December 31,** | **December 31,** |
|<br>***(dollars in thousands, except per share amounts)*** | **2022** | **2021** |
| **Assets** |  |  |
| Current assets: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Cash and cash equivalents | $48301 | $169567 |
| &nbsp;&nbsp;&nbsp;&nbsp;Short-term investments | 10971 | 5004 |
| &nbsp;&nbsp;&nbsp;&nbsp;Restricted cash - short-term | 69 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Accounts receivable | 6943 | 1794 |
| &nbsp;&nbsp;&nbsp;&nbsp;Prepaid expenses and other current assets | 6675 | 8876 |
| **Total current assets**  | 72959 | 185241 |
| Property and equipment, net | 6076 | 6255 |
| Lease right-of-use assets | 8879 |  |
| Restricted cash - long-term | 411 | 411 |
| Other long-term assets | 6804 | 5253 |
| **Total assets**  | $**95129** | $**197160** |
| **Liabilities and stockholders' equity** |  |  |
| Current liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Accounts payable | $3263 | $1806 |
| &nbsp;&nbsp;&nbsp;&nbsp;Accrued expenses and other current liabilities | 16464 | 17946 |
| &nbsp;&nbsp;&nbsp;&nbsp;Operating lease liabilities - current  | 1984 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Deferred revenues | 284 | 421 |
| &nbsp;&nbsp;&nbsp;&nbsp;Debt | 27447 | 26993 |
| **Total current liabilities** | 49442 | 47166 |
| Operating lease liabilities - non-current | 8176 |  |
| Embedded debt derivative | 1245 | 675 |
| Warrant liabilities | 2116 | 8528 |
| Earn-out liabilities | 3024 | 48363 |
| Other long-term liabilities | 541 | 1994 |
| **Total liabilities**  | **64544** | **106726** |
| **Commitments and contingencies (Note 9)** |  |  |
| **Stockholders' equity:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Preferred stock, $0.0001 par value; 10,000,000 shares authorized as of December 31, 2022; and no shares issued and outstanding as of December 31, 2022 and December 31, 2021 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Common stock, $0.0001 par value; 690,000,000 shares authorized as of December 31, 2022; and 140,454,086 and 137,836,028 shares issued and outstanding as of December 31, 2022 and December 31, 2021, respectively | 14 | 14 |
| Additional paid-in capital | 354092 | 338404 |
| Accumulated deficit | (323474) | (247983) |
| Accumulated other comprehensive loss | (47) | (1) |
| **Total stockholders' equity** | **30585** | **90434** |
| **Total liabilities and stockholders' equity**  | $**95129** | $**197160** |

---

The accompanying notes are an integral part of these consolidated financial statements.

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 126

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

**Pear Therapeutics, Inc.** 

**CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS** 

---

| | | |
|:---|:---|:---|
| | **Year Ended December 31,** | **Year Ended December 31,** |
|<br>***(dollars in thousands, except per share amounts)*** | **2022** | **2021** |
| **Revenue** |  |  |
| &nbsp;&nbsp;&nbsp;Product revenue | $10417 | $3748 |
| &nbsp;&nbsp;&nbsp;Collaboration and license revenue | 872 | 460 |
| &nbsp;&nbsp;&nbsp;Subscription, support, and professional services revenue | 1405 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total revenue | 12694 | 4208 |
| **Cost and operating expenses** |  |  |
| &nbsp;&nbsp;&nbsp;Cost of revenue | 8182 | 5233 |
| &nbsp;&nbsp;&nbsp;Research and development | 48311 | 37041 |
| &nbsp;&nbsp;&nbsp;Selling, general, and administrative | 79551 | 67619 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total cost and operating expenses | 136044 | 109893 |
| **Loss from operations**  | **(123350)** | **(105685)** |
| Other income (expense): |  |  |
| &nbsp;&nbsp;&nbsp;Interest and other (expense) income, net | (3892) | (4144) |
| &nbsp;&nbsp;&nbsp;Change in estimated fair value of earn-out liabilities | 45339 | 47038 |
| &nbsp;&nbsp;&nbsp;Change in estimated fair value of warrant liabilities | 6412 | (298) |
| &nbsp;&nbsp;&nbsp;Loss on issuance of Legacy Pear convertible preferred stock |  | (2053) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total other income  | 47859 | 40543 |
| **Net loss** | $**(75491)** | $**(65142)** |
| Unrealized loss on short-term investments | $(46) | $(1) |
| **Comprehensive loss** | $**(75537)** | $**(65143)** |
| Net loss per share: |  |  |
| &nbsp;&nbsp;&nbsp;Basic and diluted | $(0.54) | $(0.57) |
| Weighted average common shares outstanding: |  |  |
| &nbsp;&nbsp;&nbsp;Basic and diluted | 138707278 | 113328450 |

---

The accompanying notes are an integral part of these consolidated financial statements.

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 127

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

**Pear Therapeutics, Inc.**

**CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY**

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| | **Common Stock** | **Common Stock** | **Additional** <br>**Paid-In Capital**  | **Accumulated Deficit**  | **Accumulated Other Comprehensive Loss** | **Total Stockholders' Equity**  |
|<br>***(dollars in thousands)*** | **Shares** | **Amount** | **Additional** <br>**Paid-In Capital**  | **Accumulated Deficit**  | **Accumulated Other Comprehensive Loss** | **Total Stockholders' Equity**  |
| **Balance at January 1, 2021** | 106721878 | $11 | $269946 | $(182841) | $— | $87116 |
| &nbsp;&nbsp;&nbsp;&nbsp;Issuance of Legacy Pear Series D convertible preferred stock, net of issuance costs of $83 | 4503618 |  | 21970 |  |  | 21970 |
| &nbsp;&nbsp;&nbsp;&nbsp;Exercise of common stock options | 1130921 |  | 859 |  |  | 859 |
| &nbsp;&nbsp;&nbsp;&nbsp;Stock-based compensation expense |  |  | 3810 |  |  | 3810 |
| &nbsp;&nbsp;&nbsp;&nbsp;Exercise of Legacy Pear warrants | 1079686 |  | 10907 |  |  | 10907 |
| &nbsp;&nbsp;&nbsp;&nbsp;Reverse recapitalization, net of transaction costs (Note 3) | 24399925 | 3 | 142800 |  |  | 142803 |
| &nbsp;&nbsp;&nbsp;&nbsp;Recognition of Warrant liabilities assumed in the Merger (Note 3) |  |  | (16487) |  |  | (16487) |
| &nbsp;&nbsp;&nbsp;&nbsp;Recognition of Earn-out liability (Note 3) |  |  | (95401) |  |  | (95401) |
| &nbsp;&nbsp;&nbsp;&nbsp;Other comprehensive loss |  |  |  |  | (1) | (1) |
| &nbsp;&nbsp;&nbsp;&nbsp;Net loss |  |  |  | (65142) |  | (65142) |
| **Balance at December 31, 2021** | **137836028** | $**14** | $**338404** | $**(247983)** | $**(1)** | $**90434** |
|  | **Common Stock**  | **Common Stock**  | **Additional** <br>**Paid-In Capital**  | **Accumulated Deficit**  | **Accumulated Other Comprehensive Loss** | **Total Stockholders' Equity**  |
| ***(dollars in thousands)*** | **Shares**  | **Amount**  | **Additional** <br>**Paid-In Capital**  | **Accumulated Deficit**  | **Accumulated Other Comprehensive Loss** | **Total Stockholders' Equity**  |
| **Balance at January 1, 2022** | 137836028 | $14 | $338404 | $(247983) | $(1) | $90434 |
| &nbsp;&nbsp;&nbsp;&nbsp;Exercise of common stock options | 2258138 |  | 1795 |  |  | 1795 |
| &nbsp;&nbsp;&nbsp;&nbsp;Exercise of common stock warrants | 10 |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Issuance of common stock under employee stock purchase plan | 359910 |  | 360 |  |  | 360 |
| &nbsp;&nbsp;&nbsp;&nbsp;Stock-based compensation expense |  |  | 13533 |  |  | 13533 |
| &nbsp;&nbsp;&nbsp;&nbsp;Other comprehensive loss |  |  |  |  | (46) | (46) |
| &nbsp;&nbsp;&nbsp;&nbsp;Net loss |  |  |  | (75491) |  | (75491) |
| **Balance at December 31, 2022** | **140454086** | $**14** | $**354092** | $**(323474)** | $**(47)** | $**30585** |

---

The accompanying notes are an integral part of these consolidated financial statements.

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 128

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)[&nbsp;&nbsp;&nbsp;&nbsp;](#i314e5111d658400ab7dce73a0dda6c41_7)[&nbsp;&nbsp;&nbsp;&nbsp;](#i314e5111d658400ab7dce73a0dda6c41_7)[&nbsp;&nbsp;&nbsp;&nbsp;](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

**Pear Therapeutics, Inc.**

**CONSOLIDATED STATEMENTS OF CASH FLOWS** 

---

| | | |
|:---|:---|:---|
| | **Year Ended December 31,** | **Year Ended December 31,** |
|<br>***(dollars in thousands)*** | **2022** | **2021** |
| **Operating Activities:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Net loss | $(75491) | $(65142) |
| &nbsp;&nbsp;&nbsp;&nbsp;Adjustments to reconcile net loss to net cash used in operating activities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Depreciation expense | 3347 | 1689 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Impairment of intangible asset | 2879 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amortization of intangible asset | 620 | 563 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amortization of debt discount | 453 | 648 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amortization of right-of-use asset | 1735 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accretion and amortization of interest income | (26) | 22 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Stock-based compensation expense&nbsp;&nbsp;&nbsp;&nbsp; | 13533 | 3810 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Loss on issuance of Legacy Pear convertible preferred stock |  | 2053 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Change in fair value of warrants | (6412) | 298 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Change in fair value of earn-out liabilities | (45339) | (47038) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Change in fair value of embedded derivative | 569 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Changes in operating assets and liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts receivable | (5150) | (1192) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prepaid expenses and other assets | (930) | (8979) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Lease liabilities | (1700) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts payable | 4 | (3094) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accrued expenses, other liabilities and non-current liabilities | (1841) | 7144 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Deferred revenues | (146) | 175 |
| **Net cash used in operating activities** | **(113895)** | **(109043)** |
| **Investing Activities:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Proceeds from maturities of short-term investments | 60048 | 16525 |
| &nbsp;&nbsp;&nbsp;&nbsp;Purchases of short-term investments | (66035) | (8014) |
| &nbsp;&nbsp;&nbsp;&nbsp;Purchases of property and equipment | (3470) | (3278) |
| &nbsp;&nbsp;&nbsp;&nbsp;Purchases of intangible assets |  | (1350) |
| &nbsp;&nbsp;&nbsp;&nbsp;Milestone based license fee payment |  | (1000) |
| **Net cash (used in) provided by investing activities** | **(9457)** | **2883** |
| **Financing Activities:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Proceeds from issuance of Legacy Pear convertible preferred stock, net |  | 19917 |
| &nbsp;&nbsp;&nbsp;&nbsp;Proceeds from Business Combination, net of transactions costs paid |  | 144301 |
| &nbsp;&nbsp;&nbsp;&nbsp;Repayment of note assumed in the Business Combination |  | (1000) |
| &nbsp;&nbsp;&nbsp;&nbsp;Proceeds from exercise of stock options | 1795 | 859 |
| &nbsp;&nbsp;&nbsp;&nbsp;Proceeds from employee stock purchase plan | 360 |  |
| **Net cash provided by financing activities** | **2155** | **164077** |
| &nbsp;&nbsp;Net (decrease) increase in cash, cash equivalents and restricted cash | (121197) | 57917 |
| &nbsp;&nbsp;Cash, cash equivalents and restricted cash—beginning of period | 169978 | 112061 |
| **Cash, cash equivalents and restricted cash—end of period**  | $48781 | $169978 |
| **Supplemental disclosure of cash flow information:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Cash paid for interest | $3560 | $3709 |
| **Supplemental disclosure of non-cash investing and financing information:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Issuance of stock upon exercise of Legacy Pear warrants | $— | $10907 |

---

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 129

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)[&nbsp;&nbsp;&nbsp;&nbsp;](#i314e5111d658400ab7dce73a0dda6c41_7)[&nbsp;&nbsp;&nbsp;&nbsp;](#i314e5111d658400ab7dce73a0dda6c41_7)[&nbsp;&nbsp;&nbsp;&nbsp;](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

**Pear Therapeutics, Inc.**

**CONSOLIDATED STATEMENTS OF CASH FLOWS** 

---

| | | |
|:---|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;Recognition of warrant liability | $— | $16487 |
| &nbsp;&nbsp;&nbsp;&nbsp;Recognition of earn-out liabilities | $— | $95401 |
| &nbsp;&nbsp;&nbsp;&nbsp;Note payable and net liabilities assumed in the Business Combination (excluding warrant liabilities) | $— | $1147 |
| &nbsp;&nbsp;&nbsp;&nbsp;Deferred offering and equity issuance costs included in accounts payable and accrued expenses&nbsp;&nbsp;&nbsp;&nbsp; | $163 | $700 |
| &nbsp;&nbsp;&nbsp;&nbsp;Purchase of intangible asset with seller financing | $— | $1011 |
| &nbsp;&nbsp;&nbsp;&nbsp;Purchases of property and equipment in accounts payable and accrued expenses | $86 | $388 |
| &nbsp;&nbsp;&nbsp;&nbsp;Purchases of other assets in accounts payable and accrued expenses | $1755 | $— |

---

The accompanying notes are an integral part of these consolidated financial statements.

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 130

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

**Pear Therapeutics, Inc.**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**

**(dollars in thousands, except per share amounts)**

**1. NATURE OF THE BUSINESS** 

***Organization***

Pear is a leader in prescription digital therapeutics, or PDTs. The Company's PDTs treat diseases with clinically validated software. The Company obtained FDA marketing authorization for its three products, reSET® (2017), reSET-O® (2018), and Somryst® (2020), all of which are sold as an integrated product with access to our proprietary clinician facing dashboard, PearMD®.

On December 3, 2021, (the "<u>Closing Date</u>"), we consummated a business combination, or the "<u>Business Combination</u>", pursuant to the terms of the business combination agreement, or "<u>Business Combination Agreement</u>", dated June 21, 2021, by and among the Company (formerly known as Thimble Point Acquisition Corp., or "<u>THMA</u>"), Pear Therapeutics (US), Inc., a Delaware corporation incorporated on August 14, 2013 ("<u>Pear US</u>" or "<u>Legacy Pea</u>r") (formerly known as Pear Therapeutics, Inc.) and Oz Merger Sub, Inc., pursuant to which Oz Merger Sub, Inc. (a Delaware corporation and wholly-owned subsidiary of THMA, or "<u>Merger Sub</u>") merged with and into Pear US, with Pear US surviving as our wholly owned subsidiary. Upon the closing of the Business Combination, THMA changed its name to Pear Therapeutics, Inc. ("<u>Pear</u>" or the "<u>Company</u>"). See Note 3, *Business Combination,* for further information.

References throughout this Form 10-K to "we," "us," the "Company," "Pear" or "our company" are to Pear Therapeutics, Inc. (formerly known as Thimble Point Acquisition Corp.) and its subsidiaries, and "Legacy Pear" refers to Pear Therapeutics (US), Inc. prior to the Business Combination, unless otherwise noted or the context otherwise indicates. References to Thimble Point Acquisition, Corp. ("<u>THMA</u>") refer to the Company prior to the consummation of the Business Combination.

THMA, now Pear Therapeutics, Inc., a Delaware corporation, was incorporated on December 1, 2020. Pear Therapeutics (US), Inc., previously known as Pear Therapeutics, Inc., is a Delaware corporation incorporated on August 14, 2013. The Company is headquartered in Boston, Massachusetts.

***Going Concern***

The Company is subject to a number of risks and uncertainties common to early-stage technology-based companies, including, but not limited to, rapid technological changes, protection of its proprietary technology and intellectual property, commercialization of existing and new products, development by competitors of competing products, dependence on key personnel, compliance with government regulations, including compliance with the US Food and Drug Administration ("<u>FDA</u>"), and the ability to secure additional capital to fund operations.

For the year ended December 31, 2022, the Company had a net loss of $75,491 and, as of December 31, 2022, had an accumulated deficit of $323,474. As of December 31, 2022, the Company had $59,272 of cash and cash equivalents and short-term investments. Management believes the Company has sufficient cash and cash equivalents to fund operating expenses and capital expenditures into the second quarter of 2023.

While the Company has recorded revenue, revenues have been insufficient to fund operations. We require additional capital in order to pursue our strategic objectives. In February 2023, we initiated a process to explore a range of strategic alternatives to maximize shareholder value and engaged an investment bank. Potential strategic alternatives that may be evaluated include a sale or merger of the Company, the sale of all or a portion of the Company's assets and/or intellectual property, or securing additional financing or partnerships that would enable further development of our programs. There is no set timetable for this process, and there can be no assurance that this strategic review process will result in our pursuing any transaction or that any transaction, if pursued, will be completed. Additionally, there can be no assurances that any particular course of action, business arrangement or transaction, or series of transactions, will be pursued, successfully consummated or lead to increased stockholder value. If the strategic process is unsuccessful, our Board may decide to pursue a liquidation or obtain

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 131

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

**Pear Therapeutics, Inc.**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**

**(dollars in thousands, except per share amounts)**

relief under the US Bankruptcy Code. The Company has hired a financial advisor, if needed, to assist with filing for bankruptcy protection.

As of the date of this filing, Perceptive Credit Holdings III, LP, as administrative agent and lender ("<u>Perceptive</u>") has alleged that certain defaults or events of default have occurred and are continuing under the terms of the Amended and Restated Credit Agreement and Guaranty with Perceptive Credit Holdings III, LP, ("<u>Perceptive Credit Facility</u>"). Perceptive has not delivered any formal notice of Default or Event of Default. To the extent that any such allegations are valid, Perceptive would have certain rights and remedies under the Perceptive Credit Facility. The Company disputes the allegations and is in discussions with Perceptive to resolve this dispute and otherwise to address the Company's obligations under the Perceptive Credit Facility. There can be no assurances that such discussions will result in any resolution, and any resolution, or the lack of any resolution, may result in Perceptive exercising remedies under the Perceptive Credit Facility. The lender has not invoked the material adverse change clause as of the date of issuance of these financial statements. The Company is subject to various covenants related to the Perceptive Credit Facility, as defined in Note 7, *Indebtedness*, entered into on June 30, 2020. A breach of any of these covenants, including a material adverse change in our business, operations, or condition (financial or otherwise), could result in an event of default under the Perceptive Credit Facility, which could cause all of the outstanding indebtedness under the facility to become immediately due and payable. If the acceleration of the debt were to occur, we could also be required to pay a prepayment penalty at the time of the acceleration. As of March 31, 2023, the prepayment penalty is approximately $3.6 million under the terms of the Perceptive Credit Facility.

Based on its recurring losses from operations incurred since inception, our expectation of continuing operating losses for the foreseeable future, negative operating cash flows for the foreseeable future, and the need to raise additional capital to finance its future operations, as well as the risk that the Company's ability to comply with covenants under Perceptive Credit Facility may be affected by events beyond its control, and it may not be able to meet those covenants as well as the material adverse change clause in the Perceptive Credit Facility, the Company has concluded that there is substantial doubt regarding the Company's ability to continue as a going concern within one year after the date that these consolidated financial statements are issued. Because of these uncertainties, the accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. As such, the amounts due under the Perceptive Credit Facility as of December 31, 2022, have been classified as current in the consolidated balance sheet. The accompanying consolidated financial statements do not reflect any other adjustments relating to the recoverability and reclassification of assets and liabilities that might be necessary if the Company is unable to continue as a going concern.

***COVID-19 Related Significant Risks and Uncertainties***

On January 30, 2023, the Biden Administration announced it will end the public health emergency (and national emergency) declarations related to COVID-19 on May 11, 2023. While the COVID-19 pandemic has not materially adversely affected our financial results and business operations through December 31, 2022, COVID-19 continues to present risks to the Company, and we continue to closely monitor the impact of the pandemic on all aspects of our business. We are unable to predict the impact that COVID-19 (including the emergence of new variants) will have on our financial position and operating results in the future.

In response to the COVID-19 pandemic, Congress passed the Coronavirus Aid, Relief and Economic Security Act of 2020, or the "<u>CARES Act</u>", which was signed into law on March 27, 2020. Under the CARES Act the Company deferred payment of the employer portion of social security taxes through the end of 2020 in the amount of $854. The Company paid 50% or $427 during the year ended December 31, 2021, and included $427 in accrued expenses and other liabilities within the consolidated balance sheet as of December 31, 2021. The Company paid the remaining balance of $427 during the year ended December 31, 2022.

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 132

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

**Pear Therapeutics, Inc.**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**

**(dollars in thousands, except per share amounts)**

**2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES** 

***Basis of Presentation and Principles of Consolidation***

The accompanying consolidated financial statements have been prepared in accordance with US generally accepted accounting principles, or "<u>GAAP</u>". Any reference in these notes to applicable guidance is meant to refer to the authoritative GAAP as found in the Accounting Standards Codification, or "<u>ASC</u>", and Accounting Standards Update, or "<u>ASU</u>", of the Financial Accounting Standards Board, or "<u>FASB</u>".

The consolidated financial statements as of December 31, 2022 and 2021, and for the years ended December 31, 2022 and 2021, include the accounts of Pear and its wholly owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in the consolidated financial statements herein.

Certain monetary amounts, percentages, and other figures included elsewhere in these consolidated financial statements have been subject to rounding adjustments. Accordingly, figures shown as totals in certain tables may not be the arithmetic aggregation of the figures that precede them, and figures expressed as percentages in the text may not total 100% or, as applicable, when aggregated may not be the arithmetic aggregation of the percentages that precede them. Certain prior year amounts have been reclassified for consistency with the current year presentation. These reclassifications had no effect on the reported results of operations.

***Use of Estimates***

The preparation of the consolidated financial statements in conformity with GAAP, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of expenses during the reporting periods. On an ongoing basis, the Company evaluates its estimates. The Company bases its estimates on historical experience and various other assumptions that the Company 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 that are not readily apparent from other sources. Actual results may differ from those estimates and changes in estimates are reflected in reported results in the period in which they become known.

***Cash, Cash Equivalents, and Restricted Cash***

The Company considers only those highly liquid investments, readily convertible to cash, that mature within 90 days from the date of purchase to be cash equivalents. The Company's cash equivalents include money market funds, commercial paper, and overnight deposits.

The following table reconciles cash, cash equivalents, and restricted cash reported within the Company's consolidated balance sheets to the total amounts shown in the consolidated statements of cash flows:

---

| | | |
|:---|:---|:---|
| | **December 31,** | **December 31,** |
|<br>**Reconciliation of cash, cash equivalents, and restricted cash:** | **2022** | **2021** |
| &nbsp;&nbsp;&nbsp;&nbsp;Cash and cash equivalents | $48301 | $169567 |
| &nbsp;&nbsp;&nbsp;&nbsp;Restricted cash - short-term | 69 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Restricted cash - long-term  | 411 | 411 |
| Total cash, cash equivalents, and restricted cash | $48781 | $169978 |

---

***Investments***

Investments include marketable securities with maturities of less than one year or where management's intent is to use the investments to fund current operations or to make them available for current operations. All investments in marketable securities are classified as available for sale and are reported at fair value with unrealized gains and losses excluded from earnings and reported net of tax in accumulated other comprehensive loss, which is a component of stockholders' equity. Unrealized losses that are determined to be other than

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 133

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

**Pear Therapeutics, Inc.**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**

**(dollars in thousands, except per share amounts)**

temporary, based on current and expected market conditions, are recognized in earnings. Declines in fair value determined to be credit-related are charged to earnings. The cost of marketable securities sold is determined by the specific identification method.

***Concentration of Credit Risk***

Financial instruments that are potentially subject to a significant concentration of credit risk consist primarily of cash, cash equivalents, investments, restricted cash and accounts receivable. The Company attempts to minimize the risk related to investments by working with highly rated financial institutions that invest in a broad and diverse range of financial instruments as defined by the Company. The Company has established guidelines relative to credit ratings and maturities intended to safeguard principal balances and maintain liquidity. The Company maintains its funds in accordance with its investment policy, which defines allowable investments, specifies credit quality standards and is designed to limit credit exposure to any single issuer. Through December 31, 2022, and the date of this filing, the Company has not experienced any losses on such deposits.

***Fair Value Measurements***

Fair value is defined as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and considers assumptions that market participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions and risk of non-performance. The accounting standard establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. To the extent the valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair values requires more judgment. A financial instrument's categorization 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 that may be used to measure fair value are:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• ***Level 1:*** Unadjusted quoted prices in active markets for identical assets or liabilities accessible to the reporting entity at the measurement date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• ***Level 2:*** Other than quoted prices included in Level 1 inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• ***Level 3*:** Unobservable inputs for the asset or liability used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at the measurement date.

***Property and Equipment***

Property and equipment are recorded at cost less accumulated depreciation. Expenditures for repairs and maintenance are expensed as incurred. Depreciation expense is recognized using the straight-line method over the estimated useful lives, which are typically:

---

| | |
|:---|:---|
| **Asset Category** | **Estimated Useful Life** |
| Equipment | 3 years |
| Internal-use software | 3 - 5 years |
| Furniture and fixtures | 5 years |
| Leasehold improvements | Shorter of economic useful life or<br>the remaining lease term |

---

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 134

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

**Pear Therapeutics, Inc.**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**

**(dollars in thousands, except per share amounts)**

The Company capitalizes costs incurred to develop internal-use software during the application development stage. Costs related to preliminary project activities and post-implementation activities are expensed as incurred. Internal and external costs incurred in connection with the development of upgrades or enhancements that result in additional functionality are also capitalized. Amortization commences when the software is available for its intended use and is amortized on a straight-line basis over the software's estimated useful life, calculated using a mid-quarter convention.

Upon retirement or sale, the cost of the assets disposed of and the related accumulated depreciation and amortization are removed from the accounts and any resulting gain or loss is included in other income (expense) in the consolidated statements of operations and other comprehensive loss. Major replacements and improvements are capitalized. Expenditures for repairs and maintenance are expensed as incurred.

***Intangible Assets***

Intangible assets consist of identifiable intangible assets, including developed technology, resulting from the Company's acquisitions. Acquired identifiable finite-lived intangible assets are amortized on a straight-line basis over the estimated useful lives of the assets. The basis of amortization approximates the pattern in which the assets are utilized, over their estimated useful lives.

***Impairment of Long-Lived Assets and Intangible Assets Subject to Amortization***

Long-lived assets primarily include property and equipment and intangible assets, which are included in other long-term assets on the consolidated balance sheets. The Company evaluates its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. The recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds the fair value of the asset. Based upon this analysis, due to events occurring in the fourth quarter of 2022, the Company determined that the carrying value of certain intangible assets was not recoverable and recorded a loss on impairment of $2,879, which included $788 in cost of revenue and $2,091 in research and development in the Company's consolidated statement of operations for the year ended December 31, 2022. See Note 9, *Commitments and Contingencies*, for more information. The Company did not recognize any impairment losses on long-lived assets for the year ended December 31, 2021.

***Leases***

The Company adopted the leasing standard effective January 1, 2022, using the revised modified retrospective transition method, with comparative periods continuing to be reported under ASC 840 as it was the accounting standard in effect for such period. In the adoption of *ASU 2016-02*, the Company carried forward the assessment from *ASC 840* of whether its contracts contain or are leases, the classification of its leases, and remaining lease terms. The Company did not elect the hindsight practical expedient upon adoption of the new standard.

The most significant impact resulting from the adoption of this new standard was the recognition of $10,614 of an operating right-of-use ("<u>ROU</u>") assets and $11,860 of operating lease liabilities on the adoption date, January 1, 2022. The difference between the ROU assets and lease liabilities on the accompanying consolidated balance sheet is primarily due to the accrual for lease payments as a result of straight-line lease expense and unamortized tenant incentive liability balances. Existing deferred rent and prepaid rent amounts were removed from the consolidated balance sheets at the date of adoption. The adoption did not have a material impact to the Company's consolidated statements of operations or statement of cash flows.

The Company has made an accounting policy election to keep leases with an initial term of 12 months or less off of the balance sheet and recognize those lease payments in the consolidated statements of income on a straight-line basis over the lease term. The Company has also elected the practical expedient to not separate lease and non-lease components for all of its leases as the non-lease components are not significant to the overall lease costs. If

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 135

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

**Pear Therapeutics, Inc.**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**

**(dollars in thousands, except per share amounts)**

an interest rate is not implicit in a lease, the Company utilizes its incremental borrowing rate for a period closely matching the lease term. Prior to the adoption of ASC 842, the Company recorded rent expense on a straight-line basis over the term of the related lease.

Refer to Note 8, *Leases*, for further information.

***Derivative Liabilities***

The Company accounts for derivative financial instruments as either equity or liabilities in accordance with ASC Topic 815, *Derivatives and Hedging*, or ASC 815, based on the characteristics and provisions of each instrument. Embedded derivatives are required to be bifurcated from the host instruments and recorded at fair value if the derivatives are not clearly and closely related to the host instruments on the date of issuance. Derivative instrument liabilities are classified in the consolidated balance sheets as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within 12 months of the balance sheet date.

The Company's Perceptive Credit Facility contains certain features that, in accordance with ASC 815, are not clearly and closely related to the host instrument and represent derivatives liabilities that are required to be re-measured at fair value each reporting period. See Note 4, *Fair Value Measurements*, and Note 7, *Indebtedness*, for more information.

***Warrant Liabilities***

Management evaluates all of the Company's financial instruments, including issued Warrants to purchase its Class A common stock, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives, pursuant to ASC 480 and ASC 815-15. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period.

As of December 31, 2022, there are 5,013,333 Private Placement Warrants that are exercisable to purchase shares of Class A common stock to investors as well as 9,199,934 Public Warrants (see Note 3, *Business Combination*, for definition). All of the Company's outstanding Warrants are recognized as assets or liabilities in accordance with ASC 815-40 and adjusts the warrant asset or liability to fair value at each reporting period. The assets or liabilities are subject to re-measurement at each balance sheet date until exercised, and any change in fair value is recognized in the statement of operations. The Public Warrants are traded on the Nasdaq and are recorded at fair value using the closing warrant price (Ticker: PEARW) as of the measurement date. The Private Placement Warrants, which have a single holder, have similar terms and are subject to substantially the same redemption features as the Public Warrants. Accordingly, the most advantageous market for the Private Placement Warrants is determined from the perspective of the holder of such warrants as an asset. Since any transfer to a non-permitted transferee (i.e., to a market participant) would cause the Private Placement Warrants to become public warrants, the fair value of the Private Placement Warrants is based on the quoted price of the Public Warrants.

***Earn-Out Liabilities***

In connection with the Business Combination, holders of Legacy Pear Common Shares and Legacy Pear Preferred Shares received the contingent right to receive additional Class A common stock (the "<u>Earn-Out Shares</u>") upon the achievement of certain earn-out targets. As the contingent earn-out consideration contains a settlement provision that precludes it from being indexed to the Company's stock, it is classified as a liability under ASC 480. The fair value of the contingent earn-out consideration is estimated as of the acquisition date at the present value of the expected contingent payments using a Monte Carlo simulation. The fair value estimates use unobservable inputs that reflect our own assumptions as to the Company's ability to meet the earn-out targets and discount rates used in the calculations. The unobservable inputs are defined in ASC Topic 820, "Fair Value Measurements and Disclosures," as Level 3 inputs.

We review the probabilities of achievement of the earn-out targets to determine the impact on the fair value of the earn-out consideration on a quarterly basis over the earn-out period. Actual results are compared to the

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 136

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

**Pear Therapeutics, Inc.**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**

**(dollars in thousands, except per share amounts)**

estimates and probabilities of achievement used in our forecasts. Should actual results of the business increase or decrease as compared to our estimates and assumptions, the estimated fair value of the contingent earn-out consideration liability will increase or decrease, up to the contractual limit, as applicable. Changes in the estimated fair value of the contingent earn-out consideration are recorded in other (expense) income in the Consolidated Statements of Operations and Comprehensive Loss and are reflected in the period in which they are identified. Changes in the estimated fair value of the contingent earn-out consideration may materially impact or cause volatility in our operating results.

***Revenue Recognition***

The Company recognizes revenue in accordance with ASU 2014-09, Revenue from Contracts with Customers (Topic 606) and its related amendments, or, collectively, "<u>ASC 606</u>". At inception, the Company determines whether contracts are within the scope of ASC 606 or other topics. For contracts that are determined to be within the scope of ASC 606, revenue is recognized when a customer obtains control of promised goods or services. The amount of revenue recognized reflects the consideration to which the Company expects to be entitled to receive in exchange for these goods and services. To achieve this core principle, the Company applies the following five steps:

(i) identify the contract with the customer;

(ii) identify the performance obligations in the contract;

(iii) determine the transaction price;

(iv) allocate the transaction price to the performance obligations in the contract; and

(v) recognize revenue when the performance obligation is satisfied.

The Company only applies the five-step model to contracts when it determines that collection of substantially all consideration for goods or services that are transferred is probable based on the customer's intent and ability to pay the promised consideration. Performance obligations promised in a contract are identified based on the goods and services that will be transferred to the customer that are both capable of being distinct and are distinct in the context of the contract. If these criteria are not met, the promised goods and services are accounted for as a combined performance obligation.

The transaction price is determined based on the consideration to which the Company will be entitled in exchange for transferring goods and services to the customer. To the extent the transaction price includes variable consideration, the Company estimates the amount of variable consideration that should be included in the transaction price utilizing either the expected value method or the most likely amount method, depending on the nature of the variable consideration. Variable consideration is included in the transaction price if, in management's judgment, it is probable that a significant future reversal of cumulative revenue under the contract will not occur. Any estimates, including the effect of the constraint on variable consideration, are evaluated at each reporting period for any changes. Consideration payable to customers is recorded as a reduction of the transaction price. None of the Company's contracts as of December 31, 2022 or 2021 contained a significant financing component.

The Company satisfies performance obligations either over time or at a point in time. Revenue is recognized over time if either (i) the customer simultaneously receives and consumes the benefits provided by the entity's performance, (ii) the entity's performance creates or enhances an asset that the customer controls as the asset is created or enhanced, or (iii) the entity's performance does not create an asset with an alternative use to the entity and the entity has an enforceable right to payment for performance completed to date. If the entity does not satisfy a performance obligation over time, the related performance obligation is satisfied at a point in time by transferring the control of a promised good or service to a customer.

*Product Revenue Recognition*—Product revenue includes sales of the Company's products, reSET, reSET-O and Somryst, all of which are PDTs that have received marketing authorization by the FDA. reSET and reSET-O are FDA-authorized, 12-week, prescription-only therapeutics for substance use disorder, or "<u>SUD</u>", and opioid use disorder, or "<u>OUD</u>", respectively, to be used as adjuncts to standard outpatient treatment. Somryst achieved FDA marketing authorization in March 2020 for the treatment of chronic insomnia and the Company began to commercialize Somryst in October 2020. Each PDT is sold as an integrated product which includes the patient prescription-only

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 137

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

**Pear Therapeutics, Inc.**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**

**(dollars in thousands, except per share amounts)**

therapeutics and clinician access to our proprietary clinician dashboard, PearMD, to track the patient's progress. We enter into agreements with state and local governments, health care providers and payors, to provide prescriptions which typically provide for volume-based discounts and other discounts (collectively "<u>Access Agreements</u>"). We also enter into arrangements with health care providers and payors that provide for government-mandated and/or privately negotiated rebates and discounts with respect to the purchase of our products. The products can be sold with and without training and implementation services.

*Licenses of Intellectual Property*—If the license to the Company's intellectual property is determined to be distinct from the other performance obligations identified in the arrangement, the Company recognizes revenue from consideration allocated to the license when the license is transferred to the customer and the customer is able to use and benefit from the licenses. The portion of the product revenue for PDT's is recognized when the products are made available to the customer (via Access Agreements) or when a prescription is fulfilled (via third party reimbursement), and the portion of the product revenue related to the clinician's access to our proprietary clinician dashboard is deferred and recognized ratably over the remaining term of the contract (if purchased via an Access Agreement) or the prescription duration (if purchased via third party reimbursement). Our proprietary clinician dashboard does not meet the definition of a license to intellectual property as the customer is not able to take possession of the underlying software or contract with a third party to host the dashboard.

*Training, Implementation, and Other Professional Services*—Training, implementation, and professional services revenue is recognized as control of these services is transferred to customers.

*Subscription and Support Revenue Recognition*—Subscription and support revenues are comprised of fees that provide customers with access to software licenses and related support and updates during the term of the arrangement. Subscription and support revenues are recognized ratably over the contract terms beginning on the commencement date of each contract, which is the date the Company's service is made available to the customer and the customer is able to use and benefit from the service.

*Multiple Deliverable Arrangements*—If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. To the extent a contract includes multiple promised goods and services, the Company applies judgment to determine whether promised goods and services are both capable of being distinct and distinct in the context of the contract. If these criteria are not met, the promised goods and services are accounted for as a combined performance obligation. Contracts that contain multiple performance obligations require an allocation of the transaction price to each performance obligation on a relative standalone selling price ("<u>SSP</u>") basis unless the transaction price is variable and meets the criteria to be allocated entirely to a performance obligation or to a distinct service that forms part of a single performance obligation. When goods and services are sold separately, the Company determines SSP based on observable prices, when available. When observable prices are not available, the Company determines SSP based on overall pricing objectives, which take into consideration observable data, market conditions and entity-specific factors. The Company typically determines standalone selling prices using an adjusted market assessment approach model, a cost-plus margin approach, or based upon observable prices.

*Changes in the Estimated Transaction Price*—The Company may occasionally recognize an adjustment in revenue in the current period for performance obligations partially or fully satisfied in the previous periods resulting from changes in estimates for the transaction price, including any changes to the Company's assessment of whether an estimate of variable consideration is constrained. For the years ended December 31, 2022 and 2021, the impact on revenue recognized in the current period, from performance obligations partially or fully satisfied in the previous period, was not material.

*Customer Concentration*—For the year ended December 31, 2022, the majority of our revenue was generated through Access Agreements. For the year ended December 31, 2022, three customers a state government agency, a state department and a state, represented 18%, 14%, and 11%, respectively of total revenue. Additionally all of our subscription, support and professional services revenue, which represented 11% of total revenue, under a pilot offering of a new program by the Medicaid program of a state government. For the year ended December 31,

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 138

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

**Pear Therapeutics, Inc.**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**

**(dollars in thousands, except per share amounts)**

2021, three customers, a state division, and two state departments, represented 34%, 23%, and 10%, respectively of total revenue.

*Deferred Revenue*—In general, deferred revenue arises from amounts received or invoiced in advance of the culmination of the earnings process and is recognized as revenue in future periods as performance obligations are satisfied. Deferred revenue expected to be recognized within the next twelve months is classified as a current liability.

*Commissions*—During the years ended December 31, 2022 and 2021, the Company paid commissions to its internal sales team. The Company acts as a principal in the contracts with their partners as the Company controls the product, establishes the price, and bears the risk of non-performance. The Company records the revenue on a gross basis and commissions are recorded as a sales and marketing expense in the consolidated statements of operations and comprehensive loss. The Company recognizes its commission expense as a point-in-time expense as contract obligations are primarily completed within a one-year contract period and commissions are only paid on revenue recognized, not the total value of the contract.

*Accounts Receivable and Allowance for Doubtful Accounts*—In general, accounts receivable consists of amounts due from customers, net of customer allowances for cash discounts and chargebacks. Our contracts with customers have standard payment terms that generally require payment within 30 days. We analyze accounts that are past due for collectability and periodically evaluate the creditworthiness of our customers. As of December 31, 2022 and 2021, we determined an allowance for doubtful accounts was not required based upon our review of contractual payment terms and individual customer circumstances. As of December 31, 2022, four customers, represented 33%, 21%, 20%, and 11% of accounts receivable and were a state government agency, a state, and two different Medicaid programs of state governments, respectively. As of December 31, 2021, two customers, each of whom were a state department, represented 33% and 32% of accounts receivable.

***Stock-Based Compensation***

The Company's stock-based compensation program allows for grants of common stock options, restricted stock awards, and restricted stock units. Grants are awarded to employees and non-employees, including directors.

The Company accounts for stock-based compensation in accordance with ASC Topic 718, *Compensation-Stock Compensation*, or "<u>ASC 718</u>". ASC 718 requires all stock-based payments to employees and non-employees to be recognized as an expense in the consolidated statements of operations and comprehensive loss based on their fair values. The Company estimates the fair value of options granted using the Black-Scholes option pricing model, or "<u>Black-Scholes</u>". The fair value of the Company's common stock is used to determine the fair value of restricted stock awards.

Stock-based compensation awards are subject to service-based vesting periods. Compensation expense related to awards to employees and non-employees with service-based vesting conditions are recognized on a straight-line basis based on the grant date fair value over the associated service period of the award, which is generally the vesting term. The Company classifies stock-based compensation expense in the consolidated statements of operations and comprehensive loss in the same manner in which the award recipient's payroll costs are classified or in which the award recipient's service payments are classified. See Note 12, *Stock-Based Compensation*, for a description of the types of stock-based awards granted, the compensation expense related to such awards and detail of equity-based awards outstanding.

Black-Scholes requires inputs based on certain subjective assumptions, including (i) the expected stock price volatility, (ii) the expected term of the award, (iii) the risk-free interest rate, and (iv) expected dividends. Due to the lack of a public market for the Company's common stock and continued lack of sufficient company-specific historical and implied volatility data, the Company has based its computation of expected volatility on the historical volatility of a representative group of public companies with similar characteristics to the Company. The historical volatility is calculated based on a period of time commensurate with the expected term assumption. The Company uses the simplified method as prescribed by the SEC Staff Accounting Bulletin No. 107, *Share-Based* 

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 139

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

**Pear Therapeutics, Inc.**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**

**(dollars in thousands, except per share amounts)**

*Payment*, to calculate the expected term for options granted to employees and non-employees, whereby the expected term equals the arithmetic average of the vesting term and the original contractual term of the options due to its lack of sufficient historical data. The risk-free interest rate is based on US Treasury securities with a maturity date commensurate with the expected term of the associated award. The expected dividend yield is assumed to be zero as the Company has never paid dividends and has no current plans to pay any dividends on its common stock. The Company recognizes forfeitures as they occur.

Due to the absence of an active market for the Company's common stock prior to the Business Combination, the Company utilized methodologies in accordance with the framework of the American Institute of Certified Public Accountants Technical Practice Aid, Valuation of Privately-Held Company Equity Securities Issued as Compensation, to estimate the fair value of its common stock. In determining the exercise prices for stock options granted, the Company considered the estimated fair value of the common stock as of the measurement date. The estimated fair value of the common stock has been determined at each grant date based upon a variety of factors, including the illiquid nature of the common stock, arm's-length sales of the Company's capital stock (including convertible preferred stock), the effect of the rights and preferences of the preferred shareholders and the prospects of a liquidity event. Among other factors are the Company's financial position and historical financial performance, the status of technological developments within the Company's research, the composition, and ability of the current research and management team, an evaluation or benchmark of the Company's competition, and the current business climate in the marketplace. Significant changes to the key assumptions underlying the factors used could result in different fair values of common stock at each valuation date.

***Cost of Revenue***

Cost of revenue consists primarily of costs closely correlated or directly related to the delivery of the Company's products, including pharmacy costs, royalties paid under license agreements related to our commercialized products, amortization of milestone payments capitalized related to commercialized products, hosting costs, third party purchased software and services, and personnel-related costs, including salaries and bonuses, employee benefits, and stock-compensation. In addition, it includes the costs directly related to the delivery of our Subscription, service, and professional Services revenue, such as third party software and third party call center.

***Research and Development Costs***

Research and development costs are expensed as incurred. Research and development expense primarily consists of expenses incurred in performing research and development activities, including salaries and bonuses, employee benefits, stock-based compensation, facility costs, depreciation, contract services and other outside vendors engaged in conducting development activities and clinical trials, as well as the cost of licensing technology and costs related to collaboration arrangements.

We also include in research and development expenses the costs associated with software development of PDTs to support future commercial opportunities. Development costs of software to be sold, leased, or otherwise marketed are subject to capitalization, beginning when technological feasibility for the product has been established and ending when the product is available for general release. Such costs have not been significant to date as the time lapse between technological feasibility and release is typically short and thus has been included in research and development costs. Costs incurred to enhance our existing products after the general release of the product are expensed in the period they are incurred and included in research and development costs in the accompanying consolidated statements of operations and comprehensive loss.

***Milestone Payments***

The Company, from time to time, will enter into strategic agreements with third parties, which give the Company rights to develop, market and/or sell PDTs, the rights to which are owned by such third parties. As a result of these agreements, the Company may be obligated to make payments to these third parties contingent upon the achievement of certain pre-determined criteria. For milestones achieved prior to marketing approval of the product, such payments are expensed as research and development. After marketing approval, any additional

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 140

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

**Pear Therapeutics, Inc.**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**

**(dollars in thousands, except per share amounts)**

milestone payments are capitalized and amortized to cost of revenue over the remaining useful life of the asset. All capitalized milestone payments are tested for recoverability whenever events or changes in circumstances indicate that the carrying amounts may not be recoverable.

***Selling, General, and Administrative Expenses***

Selling, general, and administrative expenses consist primarily of personnel-related expenses, including salaries and bonuses, employee benefits, stock-based compensation and marketing expenses, costs to support the commercialization of our products, allocated facilities expenses, depreciation expenses, insurance, executive management travel and professional services expenses, including legal, talent acquisition, audit, accounting, and tax-related services. Facilities costs consist of rent and maintenance of facilities. Costs associated with advertising are expensed in the period incurred and are included in selling, general, and administrative expenses. Advertising expenses were $3,334 and $5,693 for the years ended December 31, 2022 and 2021, respectively.

***Patent Costs***

All patent-related costs incurred in connection with the filing and prosecuting patent applications are expensed as incurred due to the uncertainty about the recovery of the expenditure. Such amounts incurred are classified as selling, general, and administrative expenses in the accompanying consolidated statements of operations and comprehensive loss.

***Income Taxes***

The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the Company's financial statements and tax returns. Deferred tax assets and liabilities are determined based upon the differences between the financial statement carrying amounts, and the tax bases of existing assets and liabilities for the loss and credit carryforwards using enacted tax rates expected to be in effect in the year in which the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance if it is more likely than not that these assets may not be realized. The Company determines whether a tax position will be sustained upon examination. If it is not more likely than not that a position will be sustained, none of the benefit attributable to the position is recognized. The tax benefit to be recognized for any tax position that meets the more likely than not recognition threshold is calculated as the largest amount that is more than 50% likely of being realized upon resolution of the contingency. The Company accounts for interest and penalties related to uncertain tax positions as part of its provision for income taxes.

***Comprehensive Loss***

For the years ended December 31, 2022 and 2021, the Company's comprehensive loss consists of its net loss and unrealized gains and losses from investments.

***Net Loss Per Share***

The Company follows the two-class method when computing net loss per share, or "<u>EPS</u>", as the Company has issued shares that meet the definition of participating securities. The two-class method determines net loss per share for each class of common and participating securities according to dividends declared or accumulated and participation rights in undistributed earnings. The two-class method requires income available to common stockholders for the period to be allocated between common and participating securities based upon their respective rights to receive dividends as if all income for the period had been distributed.

Basic net loss per share attributable to common stockholders is computed by dividing the net loss attributable to common stockholders by the weighted average number of common shares outstanding for the period. Diluted net loss attributable to common stockholders is computed by adjusting net loss attributable to common stockholders to reallocate undistributed earnings based on the potential impact of dilutive securities. Diluted net loss per share attributable to common stockholders is computed by dividing the diluted net loss attributable to common stockholders by the weighted average number of common shares outstanding for the period, including potential

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 141

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

**Pear Therapeutics, Inc.**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**

**(dollars in thousands, except per share amounts)**

dilutive common shares assuming the dilutive effect of common stock equivalents. The Company reported a net loss attributable to common stockholders for the years ended December 31, 2022 and 2021.

As the Merger has been accounted for as a reverse recapitalization, the consolidated financial statements of the merged entity reflect the continuation of the pre-merger Pear Therapeutics, Inc. financial statements; Pear Therapeutics, Inc. equity has been retroactively adjusted to the earliest period presented to reflect the legal capital of the legal acquirer, THMA. As a result, net loss per share was also retrospectively adjusted for periods ended prior to the Merger. See Note 3, "*Business Combination*", for details of this recapitalization and Note 14, *Net Loss Per Share,* for discussion of the retrospective adjustment of net loss per share.

***Segment and Geographic Information***

Operating segments are components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision-maker, or decision-making group, in deciding how to allocate resources and in assessing performance. The Company's chief operating decision maker is its President and Chief Executive Officer, or "<u>CEO</u>". The Company views its operations as and manages its business in one operating segment operating exclusively in the US.

***Emerging Growth Company Status***

The Jumpstart Our Business Startups Act of 2012 permits an emerging growth company, or "<u>EGC</u>", such as us to take advantage of an extended transition period to comply with the new or revised accounting standards applicable to public companies until those standards would otherwise apply to private companies. The Company has elected to use this extended transition period under the JOBS Act until such time the Company is no longer considered to be an EGC, which means that when a standard is issued or revised, it has different applications for public or private companies, we will adopt the new or revised standard at the time private companies adopt the new or revised standard and will do so until such time that we either (i) irrevocably elect to "opt-out" of such extended transition period or (ii) no longer qualify as an EGC.

***Recently Adopted Accounting Pronouncements***

In February 2016, the FASB, issued ASU 2016-02, *Leases (Topic 842)*, as subsequently amended, which provides guidance requiring lessees to recognize a right-of-use asset ("<u>ROU</u>") and a lease liability on the balance sheet for substantially all leases, with the exception of short-term leases. Leases are classified as either finance or operating, with classification affecting the pattern of expense recognition in the statements of operations. The Company's adoption of the standard effective January 1, 2022. See Leases above and Note 8, *Leases*, for further information.

In December 2019, the FASB issued ASU No. 2019-12, *Income Taxes-Simplifying the Accounting for Income Taxes*. ASU 2019-12 eliminates certain exceptions related to the approach for intra-period tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. It also clarifies and simplifies other aspects of the accounting for income taxes. This standard is effective for annual reporting periods beginning after December 15, 2021, and interim periods within annual periods beginning after December 15, 2022. The Company's adoption of the standard effective January 1, 2022, did not have a material impact to its consolidated financial statements and related disclosures.

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments ("ASU 2016-13"). ASU 2016-13 amends the guidance on the impairment of financial instruments. This update adds an impairment model (known as the current expected credit losses model) that is based on expected losses rather than incurred losses. Under the new guidance, an entity recognizes, as an allowance, its estimate of expected credit losses. In November 2019, the FASB issued ASU No. 2019-10, Financial Instruments - Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842). ASU 2019-10 changes the effective date of the credit loss standard (ASU 2016-13) to fiscal years beginning after December 15, 2022, including interim periods within those fiscal years for smaller reporting companies. Further, the ASU clarifies that operating lease receivables are not within the scope of ASC 326-20 and should instead be accounted for under

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 142

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

**Pear Therapeutics, Inc.**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**

**(dollars in thousands, except per share amounts)**

the new leasing standard, ASC 842. The Company adopted ASU 2016-13 on January 1, 2022, and has determined that the adoption of this guidance did not have a material impact on its consolidated financial statements.

**3. Business Combination**

On December 3, 2021, the Company consummated a business combination pursuant to the Business Combination Agreement. The Business Combination was accounted for as a reverse recapitalization in accordance with GAAP. Accordingly, THMA who was the legal acquirer, is treated as the "acquired" company for financial reporting purposes; in other words the equivalent of Legacy Pear issuing stock for the net assets of THMA, accompanied by a recapitalization. In accordance with GAAP, Legacy Pear was deemed the accounting acquirer primarily based on Legacy Pear's stockholders prior to the Business Combination having a majority of the voting power in the combined company, Legacy Pear having the ability to appoint a majority of the Board of Directors of the combined company, Legacy Pear's existing management comprising the senior management of the combined company, Legacy Pear comprising the ongoing operations of the combined company, Legacy Pear being the larger entity based on historical revenues and business operations, and the combined company assuming Legacy Pear's name. Under this method of accounting, the net assets of THMA are stated at historical cost, with no goodwill or other intangible assets recorded.

Pursuant to the terms of the Business Combination Agreement, each share of Legacy Pear common stock, par value $0.0001 per share ("<u>Legacy Pear Common Shares</u>") issued and outstanding immediately prior to the closing of the Business Combination, after giving effect to the conversion of all issued and outstanding shares of Legacy Pear preferred stock, par value $0.0001 per share ("<u>Legacy Pear Preferred Shares</u>") to Legacy Pear Common Shares, were canceled and converted into the right to receive a number of shares of Class A common stock, par value $0.0001 per share ("<u>Class A common stock</u>") equal to the number of shares of Legacy Pear Common Shares multiplied by the exchange ratio of approximately 1.47 (the "<u>Exchange Ratio</u>") established in the Business Combination which was based on Legacy Pear's implied price per share prior to the Business Combination. Legacy Pear Preferred Shares previously classified as mezzanine were retroactively adjusted, converted into Class A common stock, and reclassified to permanent as a result of the reverse recapitalization. In addition, all outstanding equity awards of Legacy Pear were converted into equity awards with the option to purchase Class A common stock with the same terms and conditions adjusted by the exchange ratio of approximately 1.47. The equity structure has been restated in all comparative periods up to the Closing Date to reflect the number of shares of the Company's Class A common stock, $0.0001 par value per share, issued to Legacy Pear stockholders in connection with the Business Combination. For periods prior to the Business Combination, the reported share and per share amounts have been retroactively converted ("<u>Retroactive Conversion</u>") by applying the Exchange Ratio.

See Note 7, *Indebtedness*, for information on the Legacy Pear warrants that were exercised prior to the Business Combination.

In addition, holders of Legacy Pear Common Shares (and Legacy Pear Preferred Shares who converted their shares into Legacy Pear Common Shares in connection with the Merger) received the contingent right to receive up to 12,395,625 additional shares of Class A common stock (the "<u>Earn-Out Shares</u>") upon the achievement of certain earn-out targets. The holders of Legacy Pear Common Shares are eligible to receive up to 12,395,625 shares in the aggregate of additional shares of Class A common stock in three equal tranches of 4,131,875 shares respectively, upon the Company achieving $12.50, $15.00, or $17.50, respectively, as its volume-weighted average price per share for any 20 trading days within a 30 consecutive trading day period (as adjusted for share splits, reverse share splits, share dividends, reorganizations, recapitalization, reclassifications, combination, exchange of shares, or the like) during the period ending on December 3, 2026.

Further, the Company assumed the outstanding warrants to purchase 9,199,944 shares of the Company's Class A common stock at $11.50 per share (the "<u>Public Warrants</u>") and the outstanding warrants (the "<u>Private Placement Warrants</u>") held by LJ10 LLC, (the "<u>Sponsor</u>") to purchase 5,013,333 shares of the Company's Class A common stock at $11.50 per share. The Public Warrants and Private Placement Warrants expire five years after the completion of the Business Combination.

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 143

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

**Pear Therapeutics, Inc.**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**

**(dollars in thousands, except per share amounts)**

In connection with the Business Combination, the Company incurred approximately $32,779 of equity issuance costs, consisting of underwriting, legal, and other professional fees, $31,400 of which were recorded to additional paid-in capital as a reduction of proceeds and $1,379 of which was recorded as an expense in selling, general, and administrative expenses on the consolidated statement of comprehensive income.

In connection with the Business Combination, THMA completed the sale and issuance of 10,280,000 shares of Class A common stock in a fully committed common stock private placement at a purchase price of $10.00 per share ("<u>PIPE Shares</u>") for an aggregate purchase price of $102,800 ("<u>PIPE Investment"</u>), and a Forward Purchase Agreement Assignment, dated as of December 2, 2021, by and among THMA, the Anchor Investor, and a PIPE investor (the "<u>Forward Purchase Assignmen</u>t"); which closed simultaneously with the consummation of the Business Combination. Upon the closing of the Business Combination, all of the remaining outstanding THMA Class A common shares were separated, pursuant to their terms, into one share of Class A common stock (which totaled 832,899 shares Class A common stock, "<u>Public Shares</u>") and one-third (1/3) of one redeemable warrant (and THMA's units ceased trading on the Nasdaq). Further, KLP SPAC 1 LLC (the "<u>Anchor Investor</u>") purchased 6,387,026 shares of Class A common stock at a purchase price of $10.00 per share in connection with the Forward Purchase Agreement, dated as of February 1, 2021, by and between THMA and the Anchor Investor (the "<u>Forward Purchase Agreement</u>"), as amended from time to time, including by the Amendment to Forward Purchase Agreement dated as of June 21, 2021, and the Second Amendment to Forward Purchase Agreement dated as of November 14, 2021 (the "<u>Amended Forward Purchase Agreement</u>"), entered into with THMA on February 1, 2021 ("<u>THMA Sponsor Shares</u>"). Gross proceeds from the Business Combination totaled approximately $175,001 which included funds held in THMA's trust account (after giving effect to redemptions). Transaction costs totaled approximately $32,779.

The following table reconciles the elements of the Business Combination to the consolidated statement of cash flows and the consolidated statement of changes in equity:

---

| | |
|:---|:---|
| | **Year Ended <br>December 31, 2021** |
| Cash - THMA trust and cash (net of redemptions) | $8331 |
| Cash - PIPE Investors and Forward Purchase Assignment | 102800 |
| Cash - Forward Purchase Agreement (Anchor Investor) | 63870 |
| Gross proceeds (excluding cash due at December 31, 2021 from the Trust Account) | 175001 |
| Less: transaction costs and advisory fees paid | (30700) |
| Net proceeds from the Business Combination | 144301 |
| Less: warrant liabilities assumed | (16487) |
| Less: repayment of note assumed in the Business Combination | (1000) |
| Less: accrued transaction costs at December 31, 2021 | (700) |
| Plus: cash receivable from Trust | 345 |
| Less: net liabilities assumed in the Business Combination | (146) |
| Reverse merger, net of transaction costs | $126313 |

---

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 144

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

**Pear Therapeutics, Inc.**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**

**(dollars in thousands, except per share amounts)**

The number of shares of common stock outstanding immediately following the consummation of the Business Combination was as follows:

---

| | |
|:---|:---|
| | **Class A <br>Common Stock** |
| THMA Public Shares | 832899 |
| THMA Initial Stockholders | 6900000 |
| Shares Issued pursuant to Forward Purchase Agreement to Anchor Investor | 6387026 |
| Shares Issued to PIPE Investors and Forward Purchase Assignment | 10280000 |
| Legacy Pear Equityholders <sup>(1)</sup> | 113399293 |
| Total shares of common stock immediately after Business Combination | 137799218 |

---

(1) &nbsp;&nbsp;&nbsp;&nbsp;The number of Legacy Pear shares was determined from the shares of Legacy Pear shares outstanding immediately prior to the closing of the Business Combination converted at the Exchange Ratio of approximately 1.47. All fractional shares were rounded down.

***Public Warrants and Private Placement Warrants***

As of the Closing Date, the total value of the liability associated with the Public and Private Placement Warrants was $16,487 measured at fair value based on the public warrant quoted price. The Company concluded the warrants met the definition of a liability and have been classified as such on the balance sheet. The fair value of the warrant liability was $2,116 and $8,528 at December 31, 2022 and December 31, 2021, respectively. See Notes 4, *Fair Value Measurements*, and 11, *Capital Stock*, for further information on the Public and Private Placement Warrants. &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

***Earn-Out Liabilities***

The Company accounts for the potential issuance of the Earn-Out Shares as a contingent consideration arrangement, a liability for which was initially valued and recorded at $95,401, which was estimated by using a Monte Carlo Simulation Method ("<u>MCSM</u>") for each earn out period. Key inputs and assumptions used in this were the Company's stock price, expected term, volatility, the risk-free rate, and dividend yield. Certain of these inputs are Level 3 assumptions that are updated each reporting period as the earn-out liabilities are recorded at fair value at each reporting date. The Company revalued the earn-out liabilities as of December 31, 2022 and December 31, 2021, and determined the fair value to be $3,024 and $48,363, respectively. The change in the fair value of the earn-out liabilities were recorded in other income (expense) on the statement of operations.

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 145

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

**Pear Therapeutics, Inc.**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**

**(dollars in thousands, except per share amounts)**

**4. FAIR VALUE MEASUREMENTS** 

The tables below present certain of our assets and liabilities measured at fair value categorized by the level of input used in the valuation of each asset and liability.

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** |
|<br>**Description** | **Total Fair Value** | **Level 1** | **Level 2** | **Level 3** |
| Cash equivalents: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Money market funds | $32921 | $32921 | $— | $— |
| Debt investments: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;US Treasury bills | 3995 | 3995 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Corporate bonds | 6976 |  | 6976 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total debt investments | 10971 | 3995 | 6976 |  |
| Total assets | $43892 | $36916 | $6976 | $— |
| Long-term liabilities: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Embedded debt derivative | $1245 | $— | $— | $1245 |
| &nbsp;&nbsp;&nbsp;&nbsp;Warrant liabilities | 2116 | 1370 | 746 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Earn-out liabilities | 3024 |  |  | 3024 |
| Total liabilities | $6385 | $1370 | $746 | $4269 |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** |
|<br>**Description** | **Total Fair Value** | **Level 1** | **Level 2** | **Level 3** |
| Cash equivalents: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Money market funds | $129184 | $129184 | $— | $— |
| Debt investments: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Corporate bonds | 1007 |  | 1007 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Commercial paper | 3998 |  | 3998 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total debt investments | 5005 |  | 5005 |  |
| Total assets | $134189 | $129184 | $5005 | $— |
| Long-term liabilities: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Embedded debt derivative | $675 | $— | $— | $675 |
| &nbsp;&nbsp;&nbsp;&nbsp;Warrant liabilities | 8528 | 5520 | 3008 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Earn-out liabilities | 48363 |  |  | 48363 |
| Total liabilities | $57566 | $5520 | $3008 | $49038 |

---

The Company evaluates transfers between levels at the end of each reporting period. There were no transfers of financial instruments between levels during the year ended December 31, 2022 and 2021.

*Cash equivalents*—Money market funds included within cash equivalents are classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices in active markets.

*Investments*—The Company measures its investments at fair value on a recurring basis and classifies those instruments within Level 1 and Level 2 of the fair value hierarchy. US Treasury bills are classified within Level 1 of the fair value hierarchy because pricing is based on quoted market prices for identical instruments in active markets of the reporting date. Marketable securities, including corporate bonds and commercial paper, are classified within Level 2 of the fair value hierarchy because pricing inputs are other than quoted prices in active markets, which are either directly or indirectly observable as of the reporting date, and fair value is determined using models or other valuation methodologies. The Company recorded unrealized losses of $46 and $1 for the

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 146

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

**Pear Therapeutics, Inc.**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**

**(dollars in thousands, except per share amounts)**

years ended December 31, 2022 and 2021, respectively, in other comprehensive income (loss) on short-term investments.

*Embedded debt derivative*—As described in Note 7, *Indebtedness*, the Company concluded that the contingent put options contained in the Perceptive Credit Facility that could require mandatory repayment upon the occurrence of an event of default, change of control, and certain other events represent an embedded derivative required to be bifurcated from the debt host instrument. The embedded debt derivative is measured at fair value using a probability-weighted cash flow valuation methodology. The change in estimated fair value of the embedded derivative resulted in an expense of $569 for the year ended December 31, 2022, which is recorded in Interest and other income in the consolidated statement of operations and comprehensive loss. The determination of the fair value of an embedded debt derivative includes inputs not observable in the market and as such, represents a Level 3 measurement. The methodology utilized requires inputs based on certain subjective assumptions, specifically, probabilities of mandatory debt repayment prior to maturity ranging between 0-50%.

*Warrant liabilities—A*s a result of the Business Combination on December 3, 2021, the Company recorded a liability for Public and Private Placement Warrants to purchase Class A common stock in the Company's consolidated financial statements. See Note 3, *Business Combination*, for further information. The Public Warrants are traded on Nasdaq and are recorded at fair value using the closing warrant price as of the measurement date. The Private Placement Warrants, which have a single holder, have similar terms and are subject to substantially the same redemption features as the Public Warrants. Accordingly, the most advantageous market for the Private Placement Warrants is determined from the perspective of the holder of such warrants as an asset. Since any transfer to a non-permitted transferee (i.e., to a market participant) would cause the Private Placement Warrants to become Public Warrants, the fair value of the Private Placement Warrants is based on the quoted price of the Public Warrants.

As of the Closing Date, the total value of the liability associated with the Public and Private Placement Warrants was $16,487 measured at fair value based on the Public Warrant quoted price on Nasdaq (Ticker: PEARW). The Company concluded that the warrants met the definition of a liability and have been classified as such on the balance sheet. At December 31, 2022, the fair value of the warrant liabilities were $2,116.

*Earn-out liabilities*—Upon the closing of the Business Combination, the Earn-Out Shares were accounted for as a liability because the triggering events that determine the number of shares to be earned included events that were indexed to the common stock of the Company, with the change fair value recognized in Change in the estimated fair value of earn-out liabilities in the consolidated statement of operations and comprehensive loss.

The estimated fair value of the Earn-out Shares was determined using a MCSM using the following assumptions at each valuation date:

---

| | | |
|:---|:---|:---|
| | **December 31,** | **December 31,** |
| | **2022** | **2021** |
| Stock price | $1.18 | $6.20 |
| Risk-free interest rate | 4.07% | 1.25% |
| Expected term (in years) | 3.92 | 4.92 |
| Expected volatility | 71.70% | 55.00% |
| Dividend yield | —% | —% |

---

Refer to Note 3, *Business Combination*, for more information on the triggering events of the Earn-Out Shares. The change in fair value of the earn-out liabilities resulted in other income of $45,339 recognized in the consolidated statement of operations and comprehensive loss for the year ended December 31, 2022.

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 147

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

**Pear Therapeutics, Inc.**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**

**(dollars in thousands, except per share amounts)**

The following table reconciles the change in the fair value of the earn-out liabilities valued using Level 3 inputs:

---

| | |
|:---|:---|
| | **Earn-Out Liabilities** |
| Fair value as of December 31, 2021 | $48363 |
| &nbsp;&nbsp;&nbsp;&nbsp;Change in fair value | (45339) |
| Fair value as of December 31, 2022 | $3024 |

---

**5. PROPERTY AND EQUIPMENT** 

Property and equipment, net consists of the following:

---

| | | |
|:---|:---|:---|
| | **December 31,** | **December 31,** |
| | **2022** | **2021** |
| Internal-use software | $9581 | $6591 |
| Equipment | 724 | 579 |
| Furniture and fixtures | 711 | 586 |
| Leasehold improvements | 779 | 509 |
| In process |  | 362 |
| Total property and equipment | 11795 | 8627 |
| Less: accumulated depreciation | (5719) | (2372) |
| Property and equipment, net | $6076 | $6255 |

---

Depreciation expense was $3,347 and $1,689 for the years ended December 31, 2022 and 2021, respectively.

**6. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES** 

Accrued expenses and other current liabilities consist of the following:

---

| | | |
|:---|:---|:---|
| | **December 31,** | **December 31,** |
| | **2022** | **2021** |
| Compensation and related benefits | $10075 | $11855 |
| Commercial and marketing related costs | 845 | 1821 |
| Professional services | 1242 | 1710 |
| Research and development costs | 708 | 781 |
| Amount due under non-cancelable purchase obligation | 1755 |  |
| Other | 1839 | 1779 |
| Total | $16464 | $17946 |

---

**7. INDEBTEDNESS** 

***Perceptive Credit Facility***

On June 30, 2020, the Company entered into the Perceptive Credit Facility with Perceptive. The Perceptive Credit Facility, as amended, consists of a secured term loan facility in an aggregate amount of up to $50,000, which will be made available under the following three tranches: (i) Tranche 1 - $30,000, available at the closing on June 30, 2020; (ii) Tranche 2 - $10,000, available no later than December 31, 2021; and (iii) Tranche 3 - $10,000, available no later than December 31, 2021. The Company did not draw down on the available borrowings under Tranche 2 or Tranche 3.

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 148

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

**Pear Therapeutics, Inc.**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**

**(dollars in thousands, except per share amounts)**

The Perceptive Credit Facility bears interest through maturity at a variable rate. Through January 31, 2023, this rate was based upon the one-month LIBOR rate plus 11.0%, subject to a LIBOR floor of 1.0%. As of December 31, 2022, the interest rate was 15.1%. On January 13, 2023, the Company and Perceptive executed the First Amendment to the Amended and Restated Credit Agreement and Guaranty, which replaced the LIBOR benchmark rate with the Secured Overnight Financing Rate ("<u>SOFR</u>"), effective February 1, 2023.

The Company is required to make interest-only payments under this facility until May 31, 2024, after which point the Company will be required to make monthly payments of principal equal to 3.0% of the then outstanding principal until maturity on June 30, 2025, or the "<u>Maturity Date</u>". If the Company prepays the loan prior to the Maturity Date, it will be required to pay a prepayment fee guaranteeing Perceptive a 1.5 times return on any prepaid amount. As of December 31, 2022, the prepayment penalty was $4,800. A change of control, which includes a new entity or group owning more than 35.0% of the Company's voting stock triggers a mandatory prepayment of the term loan. The Business Combination did not trigger this clause as existing holders retained greater than 35% of the combined Company's voting stock. The Company paid issuance costs of $750 in connection with its entry into the Perceptive Credit Facility.

The Company concluded the contingent put options that could require mandatory repayment upon the occurrence of an event of default, change of control, and certain other events represent an embedded derivative required to be bifurcated from the debt host instrument and accounted for separately and recorded an embedded debt derivative of $1,245 and $675 as of December 31, 2022 and December 31, 2021, respectively. Any changes to the derivative liability in future periods will be recognized as interest and other (expense) income, net in the consolidated statements of operations and comprehensive loss.

The Perceptive Credit Facility is secured by substantially all the assets of the Company, including its intellectual property. The Perceptive Credit Facility requires the Company to (i) maintain a minimum aggregate cash balance of $5,000 in one or more controlled accounts, and (ii) as of the last day of each fiscal quarter report revenue for the trailing twelve (12) month consecutive period that exceed the amounts set forth in the Perceptive Credit Facility which range from $18,000 for the fiscal quarter ending December 31, 2022, to $125,000 for the fiscal quarter ending March 31, 2025. The Company was not in compliance with the minimum revenue covenant for the quarter ending December 31, 2022, of $18,000 and was in compliance with the minimum cash balance covenant requirement of $5,000. The Perceptive Credit Facility contains various affirmative and negative covenants that limit the Company's ability to engage in specified types of transactions. The Company obtained a waiver of the minimum trailing twelve (12) month revenue requirement for the period ended December 31, 2022 and the period ending March 31, 2023. The Company also obtained a waiver pertaining to the existence of a "going concern" qualification in the accompany opinion of the Company's auditors in its Annual Report on Form 10-K and any resulting event of default.

As of the date of this filing, Perceptive has alleged that certain defaults or events of default have occurred and are continuing under the terms of the Perceptive Credit Facility. Perceptive has not delivered any formal notice of Default or Event of Default. To the extent that any such allegations are valid, Perceptive would have certain rights and remedies under the Perceptive Credit Facility. The Company disputes the allegations and is in discussions with Perceptive to resolve this dispute and otherwise to address the Company's obligations under the Perceptive Credit Facility. There can be no assurances that such discussions will result in any resolution, and any resolution, or the lack of any resolution, may result in Perceptive exercising remedies under the Perceptive Credit Facility.

The total minimum revenue covenant required for the next twelve months are as follows:

---

| | |
|:---|:---|
| **Twelve-Month Period Ended** | **Minimum Total Revenue** |
| March 31, 2023 | $26000 |
| June 30, 2023 | $44000 |
| September 30, 2023 | $69000 |
| December 31, 2023 | $100000 |

---

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 149

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

**Pear Therapeutics, Inc.**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**

**(dollars in thousands, except per share amounts)**

On June 30, 2020, Perceptive received a warrant exercisable into 775,000 shares of Legacy Pear Series C preferred stock. In the event the Company issued Legacy Pear Series D preferred stock, Perceptive had the right to convert the Legacy Pear Series C preferred stock warrant into a warrant to purchase Legacy Pear Series D preferred stock, and the exercise price would have been automatically adjusted to equal the original per share price for Legacy Pear Series D preferred stock. On June 30, 2020, the Company issued freestanding Legacy Pear Series C preferred stock warrants to Perceptive, which were converted to Legacy Pear Series D preferred stock warrants at the time of the Legacy Pear Series D funding round. The Legacy Pear Series D preferred stock warrants were exercisable for 1,012,672 shares of Legacy Pear Series D preferred stock. The Legacy Pear Series D preferred stock warrants have an exercise price of $5.51 per share and would have expired in 2030 and were exercisable at any time prior to June 30, 2030. At issuance, the Company determined that the warrants are liability-classified and remeasured at fair value each reporting period, with changes in fair value recorded in the consolidated statements of operations and comprehensive loss. On November 30, 2021, Perceptive net exercised 1,012,672 Legacy Pear Series D warrants pursuant to which Perceptive obtained 629,057 shares of Legacy Pear Series D-1 preferred stock in a cashless exercise, and subsequently converted the 629,057 shares of Legacy Pear Series D-1 preferred stock into 629,057 shares of Legacy Pear common stock which were then converted into 926,232 shares of Class A common stock as adjusted by the exchange ratio based on a per share price of $9.87 per share, the THMA closing price on June 22, 2021. See Notes 1 *Nature of the Business*, and 3, *Business Combination*, for more information.

On June 30, 2020, the Company received proceeds of $28,500, net of fees and expenses of $1,500. As of December 31, 2022, no further borrowings were taken under the Perceptive Credit Facility. The outstanding balance of the Perceptive Credit Facility was:

---

| | |
|:---|:---|
| **Perceptive Credit Facility** | **December 31, 2022** |
| Principal | $30000 |
| Less: Debt issuance costs and discount at issuance | (2553) |
| Net carrying amount | $27447 |

---

As discussed in Note 1, *Nature of the Business*, due to the substantial doubt about the Company's ability to continue operating as a going concern for twelve months from the issuance date of these financial statements, the amounts due as of December 31, 2022, have been classified as current in the consolidated balance sheet. Future minimum payments, including contractual interest, under the Perceptive Credit Facility as of December 31, 2022, are as follows:

---

| | |
|:---|:---|
| **Years ending December 31,** | **Amounts** |
| 2023 | $3650 |
| 2024 | 10603 |
| 2025 | 24039 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total | 38292 |
| *Less:* |  |
| Interest payable | (8292) |
| Unamortized debt issuance costs | (2553) |
| Current portion of long-term debt | (27447) |
| Long-term debt | $— |

---

**8. LEASES** 

As described in Note 2, *Summary of Signification Accounting Policies*, the Company adopted Topic 842, *Leases*, as of January 1, 2022. Prior period amounts have not been adjusted and continue to be reported in accordance with our historic accounting under Topic 840.

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 150

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

**Pear Therapeutics, Inc.**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**

**(dollars in thousands, except per share amounts)**

*Lessee Arrangements* 

As of December 31, 2022, the Company leases office space under non-cancelable operating leases in three cities: Boston, Massachusetts, consisting of approximately 19,000 square feet that will expire on June 1, 2028, including approximately 900 square feet that the Company took over on January 1, 2022, San Francisco, California, consisting of approximately 17,000 square feet that will expire on July 31, 2025, and Raleigh, North Carolina, consisting of approximately 7,700 square feet that will expire on May 31, 2026. We have the right and option to extend each of the Boston and Raleigh leases for a five year period. In addition to rent, certain leases require the Company to pay additional amounts for taxes, insurance, maintenance, and other operating expenses.

All of the Company's leases are classified as operating leases. The Company does not have finance leases. The components of Lease ROU assets and Lease liabilities are included in the consolidated balance sheets. Operating lease liabilities are based on the net present value of the remaining lease payments over the remaining lease term. In determining the present value of lease payments, the Company used its incremental borrowing rate when measuring operating lease liabilities. As of December 31, 2022, the weighted average remaining lease term is 4.4 years and the weighted average discount rate used to determine the operating lease liability is 10%.

Cash paid for amounts included in the measurement of operating lease liabilities was $2,848 for the year ended December 31, 2022. The Company recognized of rent expense of $2,878 for the year ended December 31, 2022.

Future commitments under non-cancelable lease agreements primarily related to office space are as follows:

---

| | |
|:---|:---|
| **Years ending December 31,** | **Lease Commitments** |
| 2023 | $2912 |
| 2024 | 3176 |
| 2025 | 2734 |
| 2026 | 1587 |
| 2027 | 1518 |
| 2028 and thereafter | 773 |
| Total lease payments | 12700 |
| &nbsp;&nbsp;&nbsp;&nbsp;Less: present value adjustment | (2540) |
| Present value of total lease liabilities | 10160 |
| &nbsp;&nbsp;&nbsp;&nbsp;Less: lease liabilities - current | (1984) |
| &nbsp;&nbsp;&nbsp;&nbsp; Lease liabilities non-current | $8176 |

---

*Disclosures related to periods prior to the adoption of ASC 842*

For the year ended December 31, 2021, rent expense was $2,798 recorded on a straight-line basis over the lease term. Deferred rent is the difference between cash payments for rent and the expense recorded. The Company had $1,007 in deferred rent recorded within other long-term liabilities in the consolidated balance sheet as of December 31, 2021. These balances were reclassified upon the adoption of ASC 842 and are included in the respective current and long-term portion of operating lease liabilities in the consolidated balance sheets.

As of December 31, 2021, prior to the adoption of ASC 842, the estimated minimum future lease payments for the next five years and thereafter were as follows:

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 151

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

**Pear Therapeutics, Inc.**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**

**(dollars in thousands, except per share amounts)**

---

| | |
|:---|:---|
| **Years ending December 31,** | **Lease Commitments** |
| 2022 | $2809 |
| 2023 | 2912 |
| 2024 | 3176 |
| 2025 | 2734 |
| 2026 and thereafter | 3879 |
| Total | $15510 |

---

*Subleases* 

Effective January 1, 2023, the Company subleased 7,218 square feet of office space in Boston, Massachusetts with a stated term of one year and renewal options for two additional years in one year increments. Future minimum lease payments under sublease agreements as of December 31, 2022 are $383, excluding options to extend. This amount is not included in the lease commitment table above.

Effective January 6, 2023, the Company subleased the entirety of its 7,654 square feet of rentable space in Raleigh, North Carolina. The term of the sublease arrangement commenced on January 6, 2023 and expires twelve months thereafter. Future minimum lease payments under sublease agreements at commencement of the lease are $134, excluding options to extend. This amount is not included in the lease commitment table above. The agreement includes an option to renew for one twelve-month period, at which time a 3% rate increase will apply.

**9. COMMITMENTS AND CONTINGENCIES** 

***Licenses Related to our Commercial Products***

As of December 31, 2022, the Company has four license agreements related to its commercialized products.

*The Invention Science Fund I, LLC*

The Company entered into a contribution and license agreement for Pharmaceutical Field of Use, or "<u>FOU</u>", with The Invention Science Fund I, LLC, or ISF, in February 2015, as amended on February 28, 2018, or ISF Contribution and License Agreement. The ISF Contribution and License Agreement superseded an original contribution and license agreement between the Company and ISF dated December 31, 2013. Under the ISF Contribution and License Agreement, ISF granted the Company certain licenses under specified patent rights to develop and commercialize licensed products either independently and/or with a drug combination product for use in connection with the treatment of central nervous system disorders. The ISF Contribution and License Agreement contains minimum annual royalty obligations. To the extent there are sales of a licensed product, the Company is required to pay low-single-digit royalties on net revenue. The Company recorded minimum annual royalty fees of $1,000 and $1,050 to ISF for the years ended December 31, 2022 and 2021, respectively.

*Red 5 Group, LLC*

In January 2015, the Company entered into a software license agreement with Red 5 Group, LLC, or Red 5, and in March 2018, the parties entered into an amended and restated software license agreement, or Amended Red 5 Group License. Under the original software license agreement, Red 5 licensed to the Company certain technology and materials relating to the treatment of psychological and substance use disorders, pursuant to which the Company, received, inter alia, an exclusive, worldwide, sublicensable, royalty-bearing license to develop and commercialize integrated products incorporating the licensed technology and materials. The Company agreed to use commercially reasonable efforts to develop integrated products in accordance with the development plan, to introduce any integrated products that gain regulatory approval into the commercial markets, to market integrated products that have gained regulatory approval following such introduction into the market, and to make integrated products that have gained regulatory approval reasonably available to the public.

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 152

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

**Pear Therapeutics, Inc.**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**

**(dollars in thousands, except per share amounts)**

In March 2018, pursuant to the Amended Red 5 Group License, the parties expanded the scope of exclusivity of the license, increased certain specified annual license maintenance fees, and required the Company to pay Red 5 an amendment fee, which was paid in April 2018. On July 1, 2021, the parties amended the Amended Red 5 Group License to further clarify certain terms and increase the royalty rate by a *de minimis* amount.

To the extent achieved, the Company is obligated to pay up to an aggregate of $400 if certain milestones related to product regulatory approval and commercial sales are achieved in respect to a software/drug combination, which is not currently being pursued by the Company. To the extent there are sales of an integrated product, the Company is required to pay single-digit royalties on net revenues. The Company is entitled to certain reductions and offsets against its royalty and milestone payment obligations, including the annual license maintenance fees.

The Company pays minimum annual maintenance fees to Red 5 in connection with reSET and reSET-O. The Company recorded minimum annual maintenance fees of $250 and $250 to Red 5 for the years ended December 31, 2022 and 2021, respectively.

*BeHealth Solutions, LLC and University of Virginia Patent Foundation*

In March 2018, the Company and BeHealth Solutions, LLC, or "<u>BeHealth</u>", entered into an assignment, license and services agreement, or the "<u>BeHealth Agreement</u>", as well as a consulting agreement. The BeHealth Agreement closed in June 2018 and the Company paid an up-front fee. Under the BeHealth Agreement, the Company obtained license rights to certain technology and materials relating to a therapeutic treatment for insomnia. The consulting agreement is for services to be charged on a time-and-materials basis.

During the year ended December 31, 2020, the Company paid a milestone payment to BeHealth of $750 upon the FDA's marketing authorization of Somryst, a PDT intended for use in the treatment of adults with chronic insomnia. During September 2021, a commercial milestone under the license agreement with BeHealth was achieved and the Company paid $1,000 during the year ended December 31, 2021. There were no additional milestones achieved or paid during the year ended December 31, 2022. The milestone payments were initially capitalized in other long-term assets and amortized on a straight-line basis to cost of revenue over the estimated useful life of five years. While the Company continues to sell Somryst, during the quarter ended December 31, 2022, the Company's forecasted future revenue and expense cash flow projections indicated the carrying amounts of this intangible asset may not be recoverable and therefore the Company recorded impairment expense of $788, which is included in cost of revenue in the Company's consolidated statement of operations, during the year ended December 31, 2022.

The BeHealth Agreement continues in force until the expiration of all milestone and royalty payment obligations, unless terminated earlier in accordance with its terms. The Company could be obligated to make payments of up to an additional $26,000 in the aggregate upon achievement of various commercial milestones and a mid-to-high-single-digit royalty on net sales.

The Company pays royalties based on net revenues of the sales of Somryst to BeHealth and the University of Virginia Patent Foundation, or "<u>UVPF</u>". The Company recorded *de minimis* royalties to BeHealth and UVPF for the years ended December 31, 2022 and 2021.

***Guarantees and Indemnifications*** 

As permitted under Delaware law, the Company indemnifies its officers, directors and employees for certain events or occurrences that happen by reason of the relationship with, or position held at, the Company. In addition, the indemnification agreements entered into with our former board members, Messrs. Schwab and Lynch, also provide certain indemnification rights to the entities with which they are affiliated. The Company maintains director and officer liability insurance coverage that would generally enable it to recover a portion of any future amounts paid. The Company may also be subject to indemnification obligations by law with respect to the actions of its employees under certain circumstances and in certain jurisdictions. Further, the Company is a party to a variety of agreements in the ordinary course of business under which it may be obligated to indemnify third

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 153

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

**Pear Therapeutics, Inc.**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**

**(dollars in thousands, except per share amounts)**

parties with respect to certain matters. For the years ended December 31, 2022 and 2021, the Company had not experienced any losses related to these indemnification obligations, and no claims were outstanding as of December 31, 2022. The Company does not expect significant claims related to these indemnification obligations and consequently concluded that the fair value of these obligations is negligible and no related accruals were recorded.

***Unconditional Purchase Commitment***

On June 17, 2021, and later amended on August 3, 2021 and December 12, 2022, the Company entered into a non-cancelable purchase obligation for a subscription to the Palantir Foundry cloud platform, including support services, updates, and related professional services with Palantir for $9,263 payable through September 30, 2024. As of December 31, 2022, under the terms of the agreement we have paid $4,438 and the Company has the following remaining unconditional purchase commit as detailed below:

---

| | |
|:---|:---|
| **For the year ending December 31,** | **Payments** |
| 2023 | $2325 |
| 2024 | 2500 |
| Total | $4825 |

---

***Assignment and License Agreement***

In November 2021, the Company and Waypoint Health Innovations, LLC ("<u>Waypoint</u>") entered into an Assignment Agreement and Intellectual Property License Agreement (collectively, the "<u>Waypoint Agreement</u>"). The Waypoint Agreement closed in December 2021, under which the Company obtained software, documentation, and other intellectual property rights relating to the therapeutic treatment of depression. At the same time, the Company entered into a consulting agreement with the Chief Executive Officer of Waypoint to provide certain services to Pear to be charged on a time-and-materials basis. The Company made an upfront payment of $1,350, and is required to make annual payments starting in the second half of 2022 of $250 per year through 2026 or until a commercial milestone payment is made under the agreement. The upfront payment and the net present value of the annual payments of $1,011 were initially capitalized and recorded as an intangible asset in consolidated balance sheet at closing, and were being amortized over five years. The net present value of the annual payments was recognized as a seller financing liability, and classified within accrued expenses and other current liabilities and other long-term liabilities on the balance sheet. Based upon the decision to pause development of its pipeline candidates indefinitely and our second reduction in our workforce, the Company recorded impairment expense of $2,091, which is included in research and development expenses in the Company's consolidated statement of operations related to this intangible asset during the year ended December 31, 2022.

The Company will be obligated to pay mid-single digit royalties on net revenues of any commercialized products that incorporate the assets obtained under the Waypoint Agreement. Additionally, the Company could be obligated to make payments of up to an additional $2,500 in the aggregate upon achievement of certain regulatory and commercial milestones. Through December 31, 2022, no royalties have been paid to Waypoint.

***Legal Proceedings***

The Company is also involved from time to time in various legal proceedings arising in the normal course of business. Although the outcomes of potential legal proceedings are inherently difficult to predict, the Company does not expect the resolution of these occasional legal proceedings to have a material adverse effect on its financial position, results of operations, or cash flow.

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 154

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

**Pear Therapeutics, Inc.**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**

**(dollars in thousands, except per share amounts)**

**10.&nbsp;&nbsp;&nbsp;&nbsp;REVENUE AND CONTRACT BALANCES**

***Contract Balances***

The timing of revenue recognition, invoicing, and cash collections results in trade accounts receivable and unbilled receivables (contract assets) and deferred revenue (contract liabilities). We invoice our Access Agreement customers in accordance with agreed-upon contractual terms, typically at the beginning of the agreement, or at periodic intervals throughout the contract term. Invoicing may occur subsequent to revenue recognition, resulting in unbilled receivables, or in advance of services being provided, resulting in deferred revenue. Deferred revenue that will be recognized during the twelve-month period from the balance sheet date is recorded as current deferred revenue and the remaining portion is recorded as non-current deferred revenue, which is included in Other long-term liabilities in the accompanying consolidated balance sheets. The following table summarizes the balances of our contract assets and liabilities:

---

| | | |
|:---|:---|:---|
| | **December 31,** | **December 31,** |
| | **2022** | **2021** |
| Contract assets |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Trade accounts receivable | $2425 | $555 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Unbilled receivables | 4518 | 1239 |
| Contract liabilities |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Deferred revenue - current | 284 | 421 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Deferred revenue - non-current | 12 | 22 |

---

During the year ended December 31, 2022, the Company recognized revenue of approximately $421 that was included in deferred revenue at December 31, 2021.

***Collaboration Arrangements***

On March 15, 2022, the Company entered into a proof of concept agreement with SoftBank Corp., an entity under common control with SVF II Cobbler (DE) LLC, a greater than 5% shareholder of the Company, to develop a Japanese-language digital therapeutic for the treatment of sleep/wake disorders for the Japanese market. The Company fulfilled all of its performance obligations during 2022 and recognized approximately $632 of collaboration revenue during the year ended December 31, 2022.

***Subscription, Support, and Professional Services Agreement***

In December, we entered into an agreement with one customer to provide, maintain, and support software to calculate, disburse, track and report incentives to the customer's participants and in accordance with the customer's protocols, including a call center and certain professional services. The subscription service arrangement is cancellable with three months' notice and fees paid to date are non-refundable. The transaction price for the subscription service arrangement, as of December 31, 2022, was $3,400, and does not include expected consideration related to professional services not yet performed, for which the Company elected to recognized revenue in the amount it has a right to invoice. The Company began performing under this agreement in December 2022, and recognized approximately $1,405 of subscription, support and professional service revenue during the year ended December 31, 2022.

**11.&nbsp;&nbsp;&nbsp;&nbsp;CAPITAL STOCK** 

The Company's authorized capital stock consists of (a) 690,000,000 shares of common stock, par value $0.0001 per share; and (b) 10,000,000 shares of preferred stock, par value $0.0001 per share. As of December 31, 2022, there were 140,454,086 shares of Class A common stock issued and outstanding and 14,213,267 Warrants to purchase the Company's Class A common stock outstanding. As of December 31, 2022, there were no shares of preferred stock issued or outstanding.

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 155

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

**Pear Therapeutics, Inc.**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**

**(dollars in thousands, except per share amounts)**

***Warrants to Purchase Class A Common Stock***

In THMA's initial public offering, it sold units at a price of $10.00 per unit, which consisted of one share of Class A Common Stock, $0.0001 par value, and one-half of a redeemable warrant (each, a "<u>Public Warrants</u>") that entitles the holders the right to purchase one share of our Class A common stock at a price of $11.50 per share and became exercisable as of 30 days from the date of the Business Combination. The Public Warrants are exercisable at any time and may only be exercised for a whole number of shares. A warrant holder may exercise its Public Warrants only for a whole number of Class A common stock. This means only a whole warrant may be exercised at a given time by a warrant holder. The Public Warrants expire five years after the completion of the Business Combination, or earlier upon redemption or liquidation.

The Company may redeem the outstanding Public Warrants in whole and not in part at a price of $0.01 per Pubic Warrant upon a minimum of 30 days' prior written notice of redemption, and only in the event that the last sale price of the closing price of the Company's Class A common stock equals or exceeds $18.00 per share for any 20 trading days within a 30-trading day period ending on the third trading day prior to the date on which notice of redemption is given. If the Company redeems the Public Warrants as described above, it will have the option to require all Public Warrant holders that wish to exercise to do so on a "<u>cashless basis</u>". As of December 31, 2021, the Company did not redeem the outstanding Public Warrants. As of December 31, 2022, there were 9,199,934 outstanding Public Warrants.

The Company may redeem the outstanding Public Warrants in whole and not in part at a price of $0.10 per Pubic Warrant once the Public Warrants become exercisable, in whole and not in part at $0.10 per Public Warrant upon a minimum of 30 days' prior written notice of redemption, provided that holders will be able to exercise their warrants on a cashless basis prior to redemption and receive that number of shares based on the redemption date and the fair market value of the shares of Class A common stock, and the closing price of the Class A common stock equals or exceeds $10.00 per share (as adjusted) on the trading day prior to the date on which the Company sends the notice of redemption to the warrant holders.

The exercise price and number of Class A common stock issuable upon exercise of the Public Warrants may be adjusted in certain circumstances including in the event of a share dividend, extraordinary dividend or recapitalization, reorganization, merger or consolidation. However, except as described below, the Public Warrants will not be adjusted for issuances of Class A common stock at a price below its exercise price.

Simultaneously with the consummation of THMA's initial public offering, THMA Sponsor LJ1, LLC (the "<u>Sponsor</u>") purchased an aggregate of 5,013,333 Private Placement Warrants to purchase one share of Class A common stock at an exercise price of $11.50 at a price of $1.50 per warrant, generating total proceeds of $7,520 in the aggregate in a private placement.

The Warrant Agreement, dated as of February 1, 2021, by and between the Company and Continental Stock Transfer & Trust Company also obligated the Company to use its best efforts to file with the SEC a registration statement for the registration, under the Securities Act of 1933, as amended (the "<u>Securities Act</u>"), of the issuance of the shares of Common Stock issuable upon exercise of the Public Warrants, and to cause the same to become effective and remain effective while the Public Warrants remain outstanding. On December 23, 2021, the Company's registration statement covering the registration of such shares became effective.

The Private Placement Warrants are identical to the Public Warrants underlying the Units sold in the Initial Public Offering, except that, so long as they are held by the Sponsor or its permitted transferees: (1) they will not be redeemable by the Company for $0.01 if the criteria listed above under "*Redemption of Warrants When the Price per Class A Ordinary Share Equals or Exceeds $18.00*"; (2) they (including the ordinary shares issuable upon exercise of these warrants) may not, subject to certain limited exceptions, be transferred, assigned or sold by the Sponsor until 30 days after the completion of the Business Combination; (3) they may be exercised by the holders on a cashless basis; and (4) they (including the ordinary shares issuable upon exercise of these warrants) are entitled to registration rights.

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 156

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

**Pear Therapeutics, Inc.**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**

**(dollars in thousands, except per share amounts)**

***At-the-Market (ATM) Offering***

On January 3, 2023, the Company entered into an ATM offering agreement (the "<u>ATM Agreement</u>") with H.C. Wainwright & Co., LLC ("<u>Wainwright</u>") and Virtu Americas LLC ("Virtu" and, collectively with Wainwright, the "Managers" and each, a "<u>Manager</u>"), pursuant to which the Company may offer and sell, from time to time through the Managers, shares of the Company's Class A common stock. The ATM Agreement authorized an aggregate gross proceeds of up to $150,000. Sales of common stock through the Manager could be made by any method that is deemed an "at-the-market" offering as defined in Rule 415 promulgated under the Securities Act of 1933, as amended, including by means of ordinary brokers' transactions at market prices, in block transactions or as otherwise agreed by the Company and the Managers. The Company will pay the designated Manager a commission of up to 3.0% of the aggregate gross proceeds from any Shares sold by the designated Manager and to provide the Managers with customary indemnification and contribution rights, including for liabilities under the Securities Act. The Company also will reimburse the Managers for certain specified expenses in connection with entering into the ATM Agreement. As of March 31, 2023, the Company has sold 843,281 shares of its Class A common stock under the ATM Agreement resulting in proceeds to the Company of $980, net of offering costs.

**12. STOCK-BASED COMPENSATION AND BENEFIT PLANS**

The Company incurred stock-based compensation expenses of $13,533 and $3,810 for the years ended December 31, 2022 and 2021, respectively

***Stock Incentive Plans***

On December 20, 2013, Legacy Pear's board of directors adopted the 2013 Stock Incentive Plan, or the 2013 Plan, which provided for the grant of stock options, both incentive stock options and nonqualified stock options and restricted stock, to be granted to officers, directors, consultants, and service providers. As last amended and approved by the board of directors on November 3, 2020, the Company was permitted to grant up to 16,727,451 incentive awards under the 2013 Plan.

In connection with the closing of the Business Combination, the Company adopted the 2021 Stock Option and Incentive Plan (the "<u>2021 Plan</u>") a shareholder-approved plan that provides for broad-based equity grants to employees and certain non-employees, including executive officers and permits the granting of restricted stock units ("<u>RSUs</u>"), stock grants, performance based awards, stock options and stock appreciation rights, as well as cash bonus awards. Each stock option from the 2013 Plan that was outstanding immediately prior to the Business Combination, whether vested or unvested, were cancelled and exchanged for a stock option to purchase our Class A common stock in the 2021 Plan at a ratio of approximately 1.47. The per share exercise price for each stock option was divided by the ratio of approximately 1.47.

As of December 31, 2022, a total of 38,891,801 shares of Class A common stock are reserved under the 2021 Plan, including a total of 32,000,000 shares initially reserved for issuance under the 2021 Plan. The 2021 Plan provides that the number of shares reserved and available for issuance under the 2021 Plan will automatically increase each January 1, beginning on January 1, 2022 and ending in 2031, by 5% of the outstanding number of Class A common stock on the immediately preceding December 31, or such lesser amount as determined by the plan administrator (the Company's board of directors or compensation committee). On January 1, 2023 and 2022, 7,004,708 shares and 6,891,801 shares, respectively were added as available for issuance to the 2021 Plan.

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 157

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

**Pear Therapeutics, Inc.**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**

**(dollars in thousands, except per share amounts)**

***Common Stock Options***

All stock-based awards are measured based on the grant date fair value and are generally recognized on a straight-line basis in the Company's consolidated statement of operations and comprehensive loss over the period during which the employee is required to perform services in exchange for the award, generally four-years.

During the years ended December 31, 2022 and 2021, the Company granted stock options to purchase 1,016,918 and 9,541,714 shares of common stock with aggregate grant date fair values of $2,461 and $30,205, respectively, calculated using the Black-Scholes option-pricing model with the following assumptions:

---

| | | |
|:---|:---|:---|
| | **Year Ended December 31,** | **Year Ended December 31,** |
| **Stock Options** | **2022** | **2021** |
| Risk-free interest rate | 1.86% | 1.01% |
| Expected volatility | 65.69% | 68.85% |
| Expected term (years) | 5.42-6.57 | 5.54-6.7 |
| Expected dividend yield | —% | —% |
| Weighted average fair value at grant date | $2.42 | $5.31 |

---

The risk-free interest rate assumption is based upon observed interest rates appropriate for the term of the related stock options. The expected volatility for the Common Stock was determined based on an average of the historical volatility of a peer group of similar public companies. The expected term of stock options was calculated using the average of the contractual term of the option and the weighted-average vesting period of the option, as the Company does not have sufficient history to use an alternative method to the simplified method to calculate an expected term for employees. The Company has not paid a dividend and is not expected to pay a dividend in the foreseeable future.

The fair value of stock options that vested during the years ended December 31, 2022 and 2021 was $9,258 and $1,852, respectively.

The combined stock option activity for the year ended December 31, 2022, is as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Stock Options** | **Weighted Average Exercise Price** | **Weighted-Average Remaining Contractual Life (years)** | **Aggregate Intrinsic Value** |
| Outstanding at December 31, 2021 | 19381975 | $3.02 | 8.16 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Granted | 1016918 | $4.14 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Exercised | (2258138) | $0.79 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Canceled and forfeited | (3288541) | $4.97 |  |  |
| Outstanding at December 31, 2022 | 14852214 | $3.01 | 7.40 | $1694 |
| Exercisable at December 31, 2022 | 9420481 | $2.07 | 6.72 | $1632 |

---

As of December 31, 2022, the total unrecognized compensation costs related to non-vested stock options were approximately $14,141 and are expected to be recognized over a weighted average period of 2.48 years.

***Restricted Stock Units***

RSUs granted under the 2021 Plan generally vest in three equal annual installments over three years, based on continued employment (service period), and are settled upon vesting in shares of the Company's Class A common stock on a one-for-one basis. The grant-date fair value of the RSUs is recognized as expense on a straight-line basis

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 158

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

**Pear Therapeutics, Inc.**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**

**(dollars in thousands, except per share amounts)**

over the requisite service period, which is generally the vesting period. The fair value of RSUs is equal to the closing price of its common stock on the date of the grant.

RSU activity under the 2021 Plan for the year ended December 31, 2022 is as follows:

---

| | | |
|:---|:---|:---|
| | **Number of Shares** | **Weighted Average Fair Value** |
| Outstanding as of December 31, 2021 |  |  |
| Granted | 8168128 | $2.98 |
| Forfeited and canceled | (1026583) | 3.30 |
| Outstanding as of December 31, 2022 | 7141545 | $2.93 |

---

As of December 31, 2022, there was $15,363 of unrecognized compensation cost related to time-based RSUs which is expected to be recognized over a weighted-average period of 2.26 years.

***Bonus Program Settled in RSUs***

In July 2022, management announced a bonus program where certain employees could receive a range of fixed dollar amounts based on the achievement of certain performance goals, to be settled in RSUs. We awarded 294,010 RSUs, which was determined using the closing price of the Company's Common Stock on November 12, 2022, the date of the Compensation Committee final certification of the Company's performance attainment and the number of awards to be issued to each eligible employee. The awards were classified as liabilities until the number of share awards became fixed once the performance metric was achieved and the grant was approved by the Compensation Committee of the Board of Directors. The awards vest equally over three years as subsequent service is provided to the Company, except for those granted to employees who were included in the reduction in workforce on November 14, 2022 whose terms were modified to allow the first tranche to vest.

***Modifications***

In conjunction with the reduction in workforce announced on November 14, 2022, the Company modified the terms of certain stock option and RSU awards for approximately 59 impacted employees. These modifications included removal of service conditions for the initial vesting installment of RSU awards, and extended exercise periods for stock options. As a result of these modifications, the Company recorded an $80 reduction in stock based compensation expense for the year ended December 31, 2022.

***Employee Stock Purchase Plan***

In connection with the closing of the Business Combination, the Company adopted the 2021 Employee Stock Purchase Plan (the "<u>2021 ESPP</u>"). The 2021 ESPP is a shareholder-approved plan under which substantially all employees may voluntarily enroll to purchase the Company's Class A common stock through payroll deductions at a price equal to 85% of the lower of the fair market values of the stock as of the beginning or the end of six-month offering periods. An employee's payroll deductions under the 2021 ESPP are limited to 15% of the employee's compensation and employees may not purchase more than $25,000 of stock during any calendar year.

There were 1,800,000 Class A common stock initially reserved under the 2021 ESPP. The number of Class A common stock available for issuance under the 2021 ESPP will automatically increase each January 1 of each calendar year beginning on January 1, 2022, and ending in 2031, by the lesser of 3,600,000 shares of the Company's Class A common stock, 5% of the outstanding number of shares of Class A common stock on the immediately preceding December 31, or such lesser amount as determined by the plan administrator. As of December 31, 2022, a total of 5,040,090 shares of Class A common stock are available for issuance under the 2021 ESPP. On January 1, 2023, there were 3,600,000 shares added to the 2021 ESPP. We recorded $65 of stock-based

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 159

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

**Pear Therapeutics, Inc.**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**

**(dollars in thousands, except per share amounts)**

compensation expense related to the 2021 ESPP as of December 31, 2022. There were 359,910 shares issued under the 2021 ESPP for the year ended December 31, 2022.

***Stock-Based Compensation Expense***

The Company has classified stock-based compensation in its consolidated statements of operations and comprehensive loss as follows:

---

| | | |
|:---|:---|:---|
| | **Year Ended December 31,** | **Year Ended December 31,** |
| | **2022** | **2021** |
| Cost of revenue | $375 | $133 |
| Research and development | 5079 | 1522 |
| Selling, general, and administrative | 8079 | 2155 |
| Total stock-based compensation expense | $13533 | $3810 |

---

**13. INCOME TAXES** 

***New Tax Legislation***

The Inflation Reduction Act was signed into law on August 16, 2022, imposing a 15% corporate alternative minimum tax on adjusted financial statement income and a 1% excise tax on stock repurchases after January 1, 2023. The Act did not have an impact on the Company's 2022 financial statements.

The Tax Cuts and Jobs Act ("<u>TCJA"</u>) requires taxpayers to capitalize and amortize research and experimental ("<u>R&D</u>") expenditures under section 174 for tax years beginning after December 31, 2021. This rule became effective for the Company during the year ended December 31, 2022, and resulted in the capitalization of R&D costs of $44,500 for tax purposes. The Company is amortizing these costs over 5 years if the R&D was performed in the US and over 15 years if the R&D was performed outside the US.

***Tax Rate***

A reconciliation of the US federal statutory income rate to the Company's effective income tax rate is as follows:

---

| | | |
|:---|:---|:---|
| | **Years Ended December 31,** | **Years Ended December 31,** |
| | **2022** | **2021** |
| Federal statutory income tax rate | 21.0% | 21.0% |
| State income taxes, net of federal benefit | 6.3% | 8.2% |
| Change in fair value of earn-out liability | 12.6% | 15.2% |
| Permanent differences | 1.2% | (2.6)% |
| Federal and state R&D tax credits | 3.7% | 3.0% |
| Other | (0.3)% | (1.0)% |
| Provision to return adjustment | (0.6)% | (3.2)% |
| Change in deferred tax asset valuation allowance | (43.9)% | (40.6)% |
| Effective income tax rate | —% | —% |

---

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 160

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

**Pear Therapeutics, Inc.**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**

**(dollars in thousands, except per share amounts)**

***Deferred Tax Assets and Liabilities***

The components of the Company's deferred tax assets and liabilities are as follows:

---

| | | |
|:---|:---|:---|
| | **December 31,** | **December 31,** |
| | **2022** | **2021** |
| Deferred tax assets: |  |  |
| Net operating loss carryforwards | $73853 | $55930 |
| Deferred revenues | 74 | 377 |
| R&D credit carryforwards | 9820 | 7258 |
| Accrued expenses and other | 3067 | 2796 |
| Stock-based compensation expense | 2833 | 576 |
| Lease liabilities | 2526 |  |
| Capitalized R&D expenses | 9513 |  |
| Depreciation | 48 |  |
| Other | 309 | 240 |
| Total deferred tax assets | 102043 | 67177 |
| Deferred tax liabilities: |  |  |
| Depreciation |  | (227) |
| Amortization | (62) | (277) |
| Lease right-of-use assets | (2208) |  |
| Less: valuation allowance | (99773) | (66673) |
| Net deferred taxes | $— | $— |

---

The Company had no income tax expense due to the operating loss incurred for the years ended December 31, 2022 and 2021. The Company's management has evaluated the positive and negative evidence bearing upon the realizability of its deferred tax assets and has determined that it is more likely than not that the Company will not recognize the benefits of the net deferred tax assets. As a result, the Company recorded a full valuation allowance at December 31, 2022 and 2021. The valuation allowance increased by $33,100 during the year ended December 31, 2022, due to the increase in deferred tax assets, primarily due to net operating loss carryforwards, R&D tax credits and capitalized R&D expenses. The valuation allowance increased by $26,423 for the year ended December 31, 2021.

As of December 31, 2022, the Company has unused federal and state net operating loss carryforwards ("<u>NOLs</u>"), available for carryforward of $294,620 and $223,584 respectively. The federal and state NOL carryforwards begin to expire after 2034. Approximately $277,250 of the federal NOLs have an indefinite carryover period. The Company also had available R&D credits for federal and state income tax purposes of $8,309 and $1,912, respectively. Utilization of the NOL, R&D credits and other tax attributes may be subject to a substantial annual limitation under Section 382 of the Internal Revenue Code of 1986 due to ownership change limitations that have occurred previously or could occur in the future. The Company has not yet completed an evaluation of the ownership changes through December 31, 2022.

As of December 31, 2022 and 2021, the Company had no uncertain tax positions. The Company recognizes both interest and penalties associated with unrecognized tax benefits as a component of income tax expense. The Company has not recorded any interest or penalties for unrecognized tax benefits since its inception.

In the normal course of business, the Company and its subsidiaries may be periodically examined by various taxing authorities. The Company files income tax returns in the US on a federal basis and in certain US states. The associated tax filings remain subject to examination by applicable tax authorities for a certain length of time

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 161

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

**Pear Therapeutics, Inc.**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**

**(dollars in thousands, except per share amounts)**

following the tax year to which those filings relate. With few exceptions, the Company is no longer subject to income tax examinations for years prior to 2019.

**14. NET LOSS PER SHARE** 

Potentially dilutive securities have been excluded from the computation of diluted net loss per share as their effects would be anti-dilutive. For periods in which the Company reports a net loss attributable to common stockholders, the weighted average number of common shares outstanding used to calculate both basic and diluted net loss per share attributable to common stockholders is the same. The Company excluded the following potential common shares, presented based on amounts outstanding at period end, from the computation of diluted net loss per share attributable to common stockholders because including them would have had an anti-dilutive effect:

---

| | | |
|:---|:---|:---|
| | **Year Ended December 31,** | **Year Ended December 31,** |
| | **2022** | **2021** |
| Outstanding common stock options | 14852214 | 19381975 |
| Unvested restricted stock units | 7141545 |  |
| Private placement warrants to purchase common stock | 5013333 | 5013333 |
| Public warrants to purchase common stock | 9199934 | 9199944 |
| Earn-Out Shares | 12395625 | 12395625 |
| Total | 48602651 | 45990877 |

---

The following table summarizes the computation of basic and diluted net loss per share attributable to common stockholders of the Company for the years ended December 31, 2022 and 2021:

---

| | | |
|:---|:---|:---|
| | **Year Ended December 31,** | **Year Ended December 31,** |
| | **2022** | **2021** |
| **Numerator:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net loss attributable to common shareholders | $(75491) | $(65142) |
| **Denominator:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Weighted-average common shares outstanding for basic net loss per share <sup>(1)</sup> | 138707278 | 113328450 |
| Basic and diluted net loss per share attributable to common stockholders <sup>(1)</sup> | $(0.54) | $(0.57) |

---

(1) &nbsp;&nbsp;&nbsp;&nbsp;The weighted-average common shares and thus the net loss per share calculations and potentially dilutive security amounts for all periods prior to the Business Combination have been retrospectively adjusted to the equivalent number of shares outstanding immediately after the Business Combination to effect the reverse recapitalization. Historically reported weighted average shares outstanding have been multiplied by the exchange ratio of approximately 1.47. See Note 3 for further information.

**15. RESTRUCTURING CHARGES**

On July 25, 2022, the Company restructuring of its operations and executed a reduction in workforce of 25 full-time employees. On November 14, 2022, the Company announced a second reduction in workforce further reducing our headcount by approximately 59 employees.

As a result of these reductions in workforce, the Company recorded the following expenses, primarily related to severance, employee benefits and related costs during the year ended December 31, 2022:

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 162

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

**Pear Therapeutics, Inc.**

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**

**(dollars in thousands, except per share amounts)**

---

| | |
|:---|:---|
| **Line Item in Consolidated Results of Operations** | **Amount** |
| &nbsp;&nbsp;&nbsp;Research and development | $1821 |
| &nbsp;&nbsp;&nbsp;Selling, general, and administrative | 1482 |
| **Total** | $3303 |

---

The following table is a reconciliation of the beginning and ending restructuring liability for the year ended December 31, 2022:

---

| | |
|:---|:---|
| Balance as of December 31, 2021 | $— |
| Accrual and accrual adjustments | 3303 |
| Cash payments | (2390) |
| Balance as of December 31, 2022 | $913 |

---

The accrued severance, benefits, and associated costs are reflected in accrued expenses and other current liabilities in the consolidated balance sheet as of December 31, 2022.

**16. SUBSEQUENT EVENTS**

We have evaluated events and transactions occurring after the balance sheet date through the date of our consolidated financial statements were issued and concluded that there were no events or transactions occurring during this period that required recognition or disclosure in our consolidated financial statements, except for matters described in Note 8, *Leases*, related to the sublease agreements, Note 7, *Indebtedness*, related to the alleged certain defaults or events of default that may have occurred and are continuing under the terms of the Perceptive Credit Facility, and Note 11, *Capital Stock*, related to the offerings under the ATM Agreement.

In addition, as described in Note 1, *Nature of the Business*, in February 2023, we initiated a process to explore a range of strategic alternatives to maximize shareholder value and have engaged professional advisors. Management can make no assurances that any particular course of action, business arrangement or transaction, or series of transactions, will be pursued, successfully consummated or lead to increased stockholder value. If the strategic process is unsuccessful, our Board may decide to pursue a liquidation or obtain relief under the US Bankruptcy Code. The Company has hired advisors to explore strategic alternatives including, if needed, filing for bankruptcy protection.

\* \* \* \* \* \*

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 163

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

**ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE** 

None.

**ITEM 9A. CONTROLS AND PROCEDURES**

**Evaluation of Disclosure Controls and Procedures**

"Disclosure controls and procedures", as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in company reports filed or submitted under the Exchange Act is accumulated and communicated to management, including our principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.

As required by Rules 13a-15 and 15d-15 under the Exchange Act, our management, with the participation of our principal executive officer and principal financial officer, carried out an evaluation of our disclosure controls and procedures as of December 31, 2022. Based upon their evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) were not effective.

**Management's Annual Report on Internal Control Over Financial Reporting**

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Exchange Act as a process designed by, or under the supervision of, the Company's principal executive officer and principal financial officer and effected by the Company's board of directors, management and other personnel to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America.

Management conducted the assessment of the effectiveness of the Company's internal control over financial reporting based on criteria established in Internal Control— Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013. As a result of this assessment, management concluded that, as of December 31, 2022, our internal control over financial reporting was ineffective due to the material weaknesses described below. As a result, the disclosure controls and procedures were ineffective in ensuring that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC's rules and forms and is accumulated and communicated to our management, including the chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding disclosure.

**Material Weaknesses in Internal Control Over Financial Reporting**

As of December 31, 2022, we did not design or maintain an effective control environment as we did not maintain a sufficient complement of accounting and financial reporting resources commensurate with our financial reporting requirements. As a result, we did not design, implement and maintain effective control activities to ensure the accurate and timely reporting of transactions including revenue and capitalized software transactions.

**Planned Remediation**

We are focused on designing and implementing effective internal controls and measures to improve our evaluation of disclosure controls and procedures, including internal control over financial reporting, and remediate the

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 164

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

material weaknesses. In order to remediate the material weaknesses, we have taken and plan to take the following actions:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Engage external accounting advisory consultants to provide additional depth and breadth in our technical accounting and financial reporting capabilities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Design and implement effective internal controls which address the review of supporting documentation and accounting conclusions reached for complex transactions.

As management continues to evaluate and work to improve our internal control over financial reporting, management may determine it is necessary to take additional measures to address the material weaknesses. However, we believe the above actions will be effective in remediating the material weaknesses and we will continue to devote significant time and attention to these remediation efforts. Until the controls have been operating for a sufficient period of time and management has concluded, through testing, that these controls are executed consistently and operating effectively, the material weaknesses described above will continue to exist

**Changes in Internal Control over Financial Reporting**

Except for controls modified in connection with the remediation of material weaknesses identified in 2021, there were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the year ended December 31, 2022, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

**Limitations of Effectiveness of Controls and Procedures**

In designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 165

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

**ITEM 9B. OTHER INFORMATION**

None

**ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS**

Not applicable.

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 166

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

**PART III**

**ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE**

The information required by this item is incorporated by reference to our Definitive Proxy Statement for our 2023 Annual Meeting of Stockholders which will be filed with the Securities and Exchange Commission no later than 120 days after the end of our fiscal year (the "<u>Proxy Statement</u>").

**ITEM 11. EXECUTIVE COMPENSATION** 

The information required by this item is incorporated by reference to our Proxy Statement.

**ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS**

The information required by this item is incorporated by reference to our Proxy Statement.

**ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE**

The information required by this item is incorporated by reference to our Proxy Statement.

**ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES**

The information required by this item is incorporated by reference to our Proxy Statement.

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 167

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

**PART IV**

**ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULE**

**(a) Documents filed as part of this report**

**(1) All financial statements**

---

| | |
|:---|:---|
| **Index to Consolidated Financial Statements** | **Page** |
| <u>[Report of Independent Registered Public Accounting Firm](#i314e5111d658400ab7dce73a0dda6c41_220)</u> (PCAOB ID No. 34) | [35](#i314e5111d658400ab7dce73a0dda6c41_220) |
| <u>[Consolidated Balance Sheets](#i314e5111d658400ab7dce73a0dda6c41_16)</u> | [126](#i314e5111d658400ab7dce73a0dda6c41_16) |
| <u>[Consolidated Statements of Operations and Comprehensive Loss](#i314e5111d658400ab7dce73a0dda6c41_19)</u> | [127](#i314e5111d658400ab7dce73a0dda6c41_19) |
| <u>[Consolidated Statements of Stockholder](#i314e5111d658400ab7dce73a0dda6c41_22)[s' Equity](#i314e5111d658400ab7dce73a0dda6c41_22)</u> | [128](#i314e5111d658400ab7dce73a0dda6c41_22) |
| <u>[Consolidated Statements of Cash Flows](#i314e5111d658400ab7dce73a0dda6c41_25)</u> | [129](#i314e5111d658400ab7dce73a0dda6c41_25) |
| <u>[Notes to Consolidated Financial Statements](#i314e5111d658400ab7dce73a0dda6c41_28)</u> | [131](#i314e5111d658400ab7dce73a0dda6c41_28) |

---

**(2) Financial Statement Schedules** 

All financial statement schedules have been omitted, since the required information is not applicable or is not present in amounts sufficient to require submission of the schedule, or because the information required is included in the consolidated financial statements and accompanying notes included in this Form 10-K.

(3) **Exhibits required by Item 601 of Regulation S-K**

**EXHIBIT INDEX**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | | **Incorporated by Reference** | **Incorporated by Reference** | **Incorporated by Reference** | **Incorporated by Reference** |
|<br>**Exhibit Number** |<br>**Exhibit Description** | **Schedule/<br>Form** | **File No.** | **Exhibit** | **Filed Date/<br>Period End Date** |
| 2.1 | <u>[Business Combination Agreement, dated as of June 21, 2021, by and among Thimble Point Acquisition Corp., Oz Merger Sub, Inc. and Pear Therapeutics, Inc.](https://www.sec.gov/Archives/edgar/data/1835567/000119312521195690/d138831dex21.htm)[\*](https://www.sec.gov/Archives/edgar/data/1835567/000119312521195690/d138831dex21.htm)[\*\*](https://www.sec.gov/Archives/edgar/data/1835567/000119312521195690/d138831dex21.htm)</u> | 8-K | 001-39969 | 2.1 | June 22, 2021 |
| 3.1 | <u>[Second Amended and Restated Certificate of Incorporation of Thimble Point Acquisition Corp.\*](https://www.sec.gov/Archives/edgar/data/1835567/000119312521350485/d229891dex31.htm)</u> | 8-K | 001-39969 | 3.1 | December 8, 2021 |
| 3.2 | <u>[Amended and Restated Bylaws of Pear Therapeutics, Inc.\*](https://www.sec.gov/Archives/edgar/data/1835567/000119312521350485/d229891dex32.htm)</u> | 8-K | 001-39969 | 3.2 | December 8, 2021 |
| 4.1 | <u>[Specimen Class A Common Stock Certificate\*](https://www.sec.gov/Archives/edgar/data/1835567/000119312521010101/d43982dex42.htm)</u> | S-1 | 333-252150 | 4.2 | January 15, 2021 |
| 4.2 | <u>[Specimen Warrant Certificate\*](https://www.sec.gov/Archives/edgar/data/1835567/000119312521010101/d43982dex43.htm)</u> | S-1 | 333-252150 | 4.3 | January 15, 2021 |
| 4.3 | <u>[Warrant Agreement, dated February 1, 2021, by and between the Registrant and Continental Stock Transfer & Trust Company, as warrant agent\*](https://www.sec.gov/Archives/edgar/data/1835567/000119312521028886/d25713dex41.htm)</u> | 8-K | 001-39969 | 4.1 | February 4, 2021 |
| 4.4 | <u>[Description of Securities registered pursuant to Section 12 of the Securities Exchange Act of 1934](https://www.sec.gov/Archives/edgar/data/1835567/000183556722000010/formxex4descriptionofsecur.htm)</u>\* | 10-K | 001-39969 | 4.4 | March 29, 2022 |
| 10.1 | <u>[Amended and Restated Registration Rights Agreement\*](https://www.sec.gov/Archives/edgar/data/1835567/000119312521350485/d229891dex101.htm)</u> | 8-K | 001-39969 | 10.1 | December 8, 2021 |

---

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 168

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| 10.2 | <u>[Sponsor Support Agreement, dated as of June 21, 2021, by and among LJ10 LLC, Thimble Point Acquisition Corp., Pear Therapeutics, Inc. and certain other parties thereto\*](https://www.sec.gov/Archives/edgar/data/1835567/000119312521195690/d138831dex101.htm)</u> | 8-K | 001-39969 | 10.1 | June 22, 2021 |
| 10.3 | <u>[Amendment to the Sponsor Support Agreement, dated as of November 14, 2021\*](https://www.sec.gov/Archives/edgar/data/1835567/000119312521329119/d261445dex102.htm)</u> | 8-K | 001-39969 | 10.2 | November 15, 2021 |
| 10.4 | <u>[Form of Subscription Agreement by and among Thimble Point Acquisition Corp., Pear Therapeutics, Inc. and the investor identified on the signature page thereto\*](https://www.sec.gov/Archives/edgar/data/1835567/000119312521195690/d138831dex104.htm)</u> | 8-K | 001-39969 | 10.4 | June 22, 2021 |
| 10.5 | <u>[Pear Therapeutics, Inc. 2021 Stock Option and Incentive Plan\*](https://www.sec.gov/Archives/edgar/data/1835567/000119312521350485/d229891dex108.htm)</u>‡ | 8-K | 001-39969 | 10.8 | December 8, 2021 |
| 10.6 | <u>[Pear Therapeutics, Inc. 2021 Employee Stock Purchase Plan\*](https://www.sec.gov/Archives/edgar/data/1835567/000119312521350485/d229891dex109.htm)</u>‡ | 8-K | 001-39969 | 10.9 | December 8, 2021 |
| 10.7 | <u>[Form of Incentive Stock Option Agreement under the Pear Therapeutics, Inc. 2021 Stock Option and Incentive Plan\*](https://www.sec.gov/Archives/edgar/data/1835567/000119312521350485/d229891dex1010.htm)</u>‡ | 8-K | 001-39969 | 10.10 | December 8, 2021 |
| 10.8 | <u>[Form of Restricted Stock Award Agreement under the Pear Therapeutics, Inc. 2021 Stock Option and Incentive Plan\*](https://www.sec.gov/Archives/edgar/data/1835567/000119312521350485/d229891dex1011.htm)</u>‡ | 8-K | 001-39969 | 10.11 | December 8, 2021 |
| 10.9 | <u>[Form of Restricted Stock Unit Award Agreement under the Pear Therapeutics, Inc. 2021 Stock Option and Incentive Plan\*](https://www.sec.gov/Archives/edgar/data/1835567/000119312521350485/d229891dex1012.htm)</u>‡ | 8-K | 001-39969 | 10.12 | December 8, 2021 |
| 10.10 | <u>[Form of Rollover Incentive Stock Option Agreement under the Pear Therapeutics, Inc. 2021 Stock Option and Incentive Plan\*](https://www.sec.gov/Archives/edgar/data/1835567/000119312521350485/d229891dex1013.htm)</u>‡ | 8-K | 001-39969 | 10.13 | December 8, 2021 |
| 10.11 | <u>[Form of Non-Qualified Stock Option Agreement Pear Therapeutics, Inc. 2021 Stock Option and Incentive Plan\*](https://www.sec.gov/Archives/edgar/data/1835567/000119312521350485/d229891dex1014.htm)</u>‡ | 8-K | 001-39969 | 10.14 | December 8, 2021 |
| 10.12 | <u>[Form of Rollover Non-Qualified Stock Option Agreement Pear Therapeutics, Inc. 2021 Stock Option and Incentive Plan\*](https://www.sec.gov/Archives/edgar/data/1835567/000119312521350485/d229891dex1015.htm)</u>‡ | 8-K | 001-39969 | 10.15 | December 8, 2021 |
| 10.13 | <u>[Form of Indemnification Agreement\*](https://www.sec.gov/Archives/edgar/data/0001835567/000119312521292413/d149785dex1019.htm)</u>‡ | S-4/A | 001-39969 | 10.19 | October 25, 2021 |
| 10.14 | <u>[Non-Employee Director Compensation Policy\*](https://www.sec.gov/Archives/edgar/data/1835567/000119312521350485/d229891dex1019.htm)</u>‡ | 8-K | 001-39969 | 10.19 | December 8, 2021 |
| 10.15 | <u>[Office Lease, dated as of April 10, 2018, by and between Pear Therapeutics, Inc. and CA-Mission Street Limited Partnership\*](https://www.sec.gov/Archives/edgar/data/1835567/000119312521217530/d149785dex1020.htm)</u> | S-4/A | 001-39969 | 10.20 | October 25, 2021 |
| 10.16 | <u>[First Amendment to Lease, dated as of July 5, 2019, by and between Pear Therapeutics, Inc. and CA Mission Street Limited Partnership\*](https://www.sec.gov/Archives/edgar/data/1835567/000119312521217530/d149785dex1021.htm)</u> | S-4/A | 001-39969 | 10.21 | October 25, 2021 |
| 10.17 | <u>[Office Lease, dated as of May 11, 2018, by and between Pear Therapeutics, Inc. and GLL 200 State Street, L.P.\*](https://www.sec.gov/Archives/edgar/data/1835567/000119312521217530/d149785dex1022.htm)</u> | S-4/A | 001-39969 | 10.22 | October 25, 2021 |
| 10.18 | <u>[First Amendment to Office Lease Agreement, dated as of January 17, 2020, by and between Pear Therapeutics, Inc. and CP 200 State LLC as successor-in-interest to GLL 200 State Street, L.P.\*](https://www.sec.gov/Archives/edgar/data/1835567/000119312521217530/d149785dex1023.htm)</u> | S-4/A | 001-39969 | 10.23 | October 25, 2021 |

---

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 169

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| 10.19 | <u>[Credit Agreement and Guaranty, dated as of June 30, 2020, by and between Pear Therapeutics, Inc., Perceptive Credit Holdings III, LP and the other parties thereto\*](https://www.sec.gov/Archives/edgar/data/1835567/000119312521217530/d149785dex1024.htm)</u> | S-4/A | 001-39969 | 10.24 | October 25, 2021 |
| 10.20 | <u>[Security Agreement, dated as of June 30, 2020, by and between Pear Therapeutics, Inc., Perceptive Credit Holdings III, LP and the other parties thereto\*](https://www.sec.gov/Archives/edgar/data/1835567/000119312521217530/d149785dex1028.htm)</u> | S-4/A | 001-39969 | 10.28 | October 25, 2021 |
| 10.21 | <u>[Second Amendment to Credit Agreement, dated as of December 3, 2021, by and among Pear Therapeutics, Inc., Perceptive Credit Holdings III, LP and the other parties thereto\*](https://www.sec.gov/Archives/edgar/data/1835567/000162828021025559/exhibit1026-sx1.htm)</u> | S-1 | 333-261876 | 10.26 | December 23, 2021 |
| 10.22 | <u>[Contribution and License Agreement for Pharmaceutical FOU, dated as of February 13, 2015, by and between Pear Therapeutics, Inc. and The Invention Science Fund I, L.L.C.+\*](https://www.sec.gov/Archives/edgar/data/0001835567/000119312521292413/d149785dex1031.htm)</u> | S-4/A | 001-39969 | 10.31 | October 25, 2021 |
| 10.23 | <u>[First Amendment to Contribution and License Agreement for Pharmaceutical FOU, dated as of February 28, 2018, by and between Pear Therapeutics, Inc. and The Invention Science Fund I, L.L.C.+\*](https://www.sec.gov/Archives/edgar/data/0001835567/000119312521292413/d149785dex1032.htm)</u> | S-4/A | 001-39969 | 10.32 | October 25, 2021 |
| 10.24 | <u>[Second Amended and Restated Software License Agreement, dated as of July 1, 2021, by and between Pear Therapeutics, Inc. and Red 5 Group, LLC+\*](https://www.sec.gov/Archives/edgar/data/0001835567/000119312521292413/d149785dex1033.htm)</u> | S-4/A | 001-39969 | 10.33 | October 25, 2021 |
| 10.25 | <u>[Assignment, License & Services Agreement, dated as of March 24, 2018, by and between Pear Therapeutics, Inc. and BeHealth Solutions, LLC+\*](https://www.sec.gov/Archives/edgar/data/0001835567/000119312521292413/d149785dex1034.htm)</u> | S-4/A | 001-39969 | 10.34 | October 25, 2021 |
| 10.26 | <u>[Form of Indemnification Agreement entered into by Andrew Schwab and Zack Lynch\*](https://www.sec.gov/Archives/edgar/data/1835567/000119312521350485/d229891dex1031.htm)</u>‡ | 8-K | 001-39969 | 10.31 | December 8, 2021 |
| 10.27 | <u>[Forward Purchase Agreement Assignment dated as of December 2, 2021\*](https://www.sec.gov/Archives/edgar/data/1835567/000119312521350485/d229891dex1032.htm)</u> | 8-K | 001-39969 | 10.32 | December 8, 2021 |
| 10.28 | <u>[Second Amendment to Office Lease Agreement, dated as of December 30, 2020, by and between Pear Therapeutics, Inc. and CP 200 State LLC as successor-in-interest to GLL 200 State Street, L.P.](https://www.sec.gov/Archives/edgar/data/1835567/000183556722000010/pear-ex103320201230seconda.htm)</u>\* | 10-K | 001-39969 | 10.33 | March 29, 2022 |
| 10.29 | <u>[Third Amendment to Credit Agreement and Guaranty, dated as of March 25, 2022, by and among Pear Therapeutics, Inc., Pear Therapeutics (US), Inc., Perceptive Credit Holdings III, LP and the other parties thereto](https://www.sec.gov/Archives/edgar/data/1835567/000183556722000010/exhibit1034-thirdamendment.htm)</u> (Amended and Restated Credit Agreement and Guaranty included as Exhibit A)\* | 10-K | 001-39969 | 10.34 | March 29, 2022 |
| 10.30 | <u>[Amended and Restated Security Agreement, dated as of March 25, 2022, by and among Pear Therapeutics, Inc., Pear Therapeutics (US), Inc., Perceptive Credit Holdings III, LP, as administrative agent, and the other parties thereto](https://www.sec.gov/Archives/edgar/data/1835567/000183556722000010/exhibit1035-arsecurityagre.htm)</u>\* | 10-K | 001-39969 | 10.35 | March 29, 2022 |

---

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 170

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| 10.31 | <u>[Amended and Restated Intercompany Subordination Agreement, dated as of March 25, 2022, by and among Pear Therapeutics, Inc., Pear Therapeutics (US), Inc., Perceptive Credit Holdings III, LP, as administrative agent, and the other parties thereto](https://www.sec.gov/Archives/edgar/data/1835567/000183556722000010/exhibit1036pear-arintercom.htm)</u>\* | 10-K | 001-39969 | 10.36 | March 29, 2022 |
| 10.32 | <u>[Pear Therapeutics, Inc. Severance and Change in Control Plan](https://www.sec.gov/Archives/edgar/data/1835567/000183556722000049/exhibit101peartherapeutics.htm)</u>\*‡ | 8-K | 001-39969 | 10.1 | June 15, 2022 |
| 10.33 | <u>[At the Market Offering Agreement by and among Pear Therapeu](https://www.sec.gov/Archives/edgar/data/1835567/000162828023000004/exhibit12-sx3.htm)[ti](https://www.sec.gov/Archives/edgar/data/1835567/000162828023000004/exhibit12-sx3.htm)[cs, Inc., H.C. Wainwright & Co., LLC and Virtu Americas LLC, dated January 3, 2023](https://www.sec.gov/Archives/edgar/data/1835567/000162828023000004/exhibit12-sx3.htm)</u>\* | 8-K | 001-39969 | 1.1 | January 3, 2023 |
| 10.34 | <u>[Separation Letter Agreement, dated as of December 17, 2022, by and between Pear Therapeutics, Inc. and Katherine](a20221219separationagreeme.htm)[Jeffery](a20221219separationagreeme.htm)</u>‡+ |  |  |  |  |
| 10.35 | <u>[First Amendment to Exclusive License Agreement date as of December 8, 2022, by and among Pear Therapeutics (US), Inc. and the University of Virginia Licensing & Ventures Group](ex1035finalpeartherapeutic.htm)</u> |  |  |  |  |
| 10.36 | <u>[First Amendment to Amended and Restated Credit Agreement and Guaranty](ex1036finalpear-amendmentt.htm)[, dat](ex1036finalpear-amendmentt.htm)[ed as](ex1036finalpear-amendmentt.htm)[of Januar](ex1036finalpear-amendmentt.htm)[y 13, 2023,](ex1036finalpear-amendmentt.htm)[by and among Pear Therapeutics, Inc., Pear Therapeutics (US), Inc., Perceptive Credit Holdings III, LP, as administrative agent, and the other parties thereto](ex1036finalpear-amendmentt.htm)</u> |  |  |  |  |
|  | First Amendment to Amended and Restated Credit Agreement and Guaranty |  |  |  |  |
| 21.1 | <u>[List of Subsidiaries\*](https://www.sec.gov/Archives/edgar/data/1835567/000119312521350485/d229891dex211.htm)</u>  | 8-K | 001-39969 | 21.1 | December 8, 2021 |
| 23.1 | <u>[Consent of Deloitte & Touche LLP](ex231draftdtconsent.htm)</u> |  |  |  |  |
| 31.1 | <u>[Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934](exhibit311certificationcmc.htm)</u> |  |  |  |  |
| 31.2 | <u>[Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934](exhibit312certificationcgu.htm)</u> |  |  |  |  |
| 32.1 | <u>[Certification of the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002](exhibit32jointcertificatio.htm)</u> |  |  |  |  |
| 101.INS | Inline XBRL Instance Document |  |  |  |  |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document |  |  |  |  |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document |  |  |  |  |
| 101.DEF | Inline XBRL Taxonomy Definition Linkbase Document |  |  |  |  |
| 101.LAB | Inline XBRL Taxonomy Label Linkbase Document |  |  |  |  |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document |  |  |  |  |

---

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 171

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

---

| | |
|:---|:---|
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |

---

__________________

\*Previously filed

\*\*Certain exhibits and schedules to this Exhibit have been omitted in accordance with Regulation S-K Item 601(b)(2). The Company agrees to furnish supplementally a copy of all omitted exhibits and schedules to the Securities and Exchange Commission upon its request.

+ Certain confidential portions (indicated by brackets and asterisks) have been omitted from this exhibit.

‡ &nbsp;&nbsp;&nbsp;&nbsp;Management contract or compensatory plan or arrangement.

**ITEM 16. FORM 10-K SUMMARY**

None.

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 172

------

**<u>[**Table of Contents**](#i314e5111d658400ab7dce73a0dda6c41_7)</u>**

**SIGNATURES** 

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

---

| | | | |
|:---|:---|:---|:---|
| | **PEAR THERAPEUTICS, INC.** | **PEAR THERAPEUTICS, INC.** | **PEAR THERAPEUTICS, INC.** |
| Date: March 31, 2023 | By: | /s/ Corey M. McCann | /s/ Corey M. McCann |
|  |  | Name: | Dr. Corey M. McCann |
|  |  | Title: | President and Chief Executive Officer |

---

Pursuant to the requirements of the Securities Exchange Act of 1934, this Annual Report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

---

| | | |
|:---|:---|:---|
| **<u>Signature</u>** | **<u>Title</u>** | **<u>Date</u>** |
| /s/ Dr. Corey M. McCann | <br>Chief Executive Officer | March 31, 2023 |
| Dr. Corey M. McCann | (Principal Executive Officer) |  |
| /s/ Christopher D.T. Guiffre | Chief Financial Officer and Chief Operating Officer | March 31, 2023 |
| Christopher D.T. Guiffre | (Principal Financial Officer) |  |
| /s/ Ellen E. Snow | Vice President, Chief Accounting Officer | March 31, 2023 |
| Ellen E. Snow | (Principal Accounting Officer) |  |
| /s/ Alison Bauerlein | Director | March 31, 2023 |
| Alison Bauerlein |  |  |
| /s/ Paul Mango | Director | March 31, 2023 |
| Paul Mango |  |  |
| /s/ Shivakumar Rajaraman | Director | March 31, 2023 |
| Shivakumar Rajaraman |  |  |
| /s/ Kirthiga Reddy | Director | March 31, 2023 |
| Kirthiga Reddy |  |  |
| /s/ Nancy M. Schlichting | Director | March 31, 2023 |
| Nancy M. Schlichting |  |  |
| /s/ Timothy A. Wicks | Director | March 31, 2023 |
| Timothy A. Wicks |  |  |

---

Pear Therapeutics, Inc. \| 2022 Form 10-K \|Page 173

## Exhibit 10.34

***Certain identified information has been omitted from this exhibit because it is not material and of the type that the registrant treats as private or confidential. [\*\*\*] indicates that information has been omitted.***

![image_0a.jpg](image_0a.jpg)

![image_1a.jpg](image_1a.jpg)

<br>200 State Street, 13th floor Boston, MA 02109

December 17, 2022

Katherine Jeffery

[\*\*\*]

[\*\*\*]

Dear Kathy,

The purpose of this letter agreement ("*Agreement*") is to confirm the terms of your separation of employment from Pear Therapeutics (US), Inc. ("*Pear*" or the "*Company*"), including Pear's offer to provide you with certain pay and benefits in exchange for your agreeing to the general release of claims and certain other commitments provided for below. This Agreement shall be effective on the eighth (8ᵗʰ) day after the date you sign it (the "*Effective Date*"), at which time it shall become final and binding on all parties, unless you revoke this Agreement as provided in Section 11(h). **You will have until 45 days after the Separation Date to consider whether to sign this Agreement.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.<u>Separation of Employment</u>. Your last day with the Company including your ability to access Company systems and software will be March 31, 2023, or your date of resignation, whichever occurs first (the "*Separation Date*"). So long as you remain an Executive Officer, the Company will continue to list you on the Company's website until the Separation Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.<u>Payments</u>. Regardless of whether you sign this Agreement or allow it to become effective, you will receive on the Separation Date:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)Payment reflecting pay for any time worked through the Separation Date that has not already been paid through Pear's regular payroll process; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)Payment of all accrued and unused Paid Time Off (PTO).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.<u>Separation Pay and Benefits</u>.

If you sign and allow this Agreement to become effective, comply with this Agreement (and with the agreement referenced in Section 9(b) below), Pear will provide you with the following (the "*Separation Pay and Benefits*"):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)a one-time lump-sum payment in the gross amount of Three Hundred Forty-Eight Thousand Five Hundred Dollars and 00/100 Cents ($348,500.00), subject to applicable taxes and other withholdings as required by law, to be paid within thirty days after the Effective Date;

------

*Separation Agreement*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)continued eligibility for the Company's health & dental insurance through the Separation Date, in addition to eligibility for the COBRA benefit described in Section 5(b) below; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)the right to receive additional vesting of any Restricted Stock Units ("*RSUs*") that were previously granted to you but have not currently vested, which RSUs will be amended to provide that: (i) the RSUs will remain outstanding through February 29, 2024, and will vest on any vesting date to occur prior to that date, notwithstanding your termination of employment, and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) the remaining portion of the RSUs that would not vest on or before February 29, 2024 will terminate on the Effective Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.<u>Change of Salary</u>. Notwithstanding your Separation Pay and Benefits described above, as of January 1, 2023, your salary will be Five Thousand Dollars and 00/100 Cents ($5,000.00) per month, subject to applicable taxes and other withholdings as required by law, payable bi-weekly in arrears.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.<u>Unemployment Insurance and COBRA</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)You may seek unemployment benefits following the separation of your employment from Pear. You acknowledge that any decision regarding eligibility for and amounts of unemployment benefits are made by the relevant government agency, not by Pear.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)Providing that you remain eligible under the provisions of Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA), and upon timely completion of the appropriate forms, for the period commencing on April 1, 2023, the Company will pay your COBRA group health insurance premiums (as such premiums are due) and your eligible dependents until the earlier of (i) March 31, 2024, or (ii) the date when you become eligible for substantially equivalent health insurance coverage in connection with new employment or self-employment. The "qualifying event" under COBRA shall be deemed to have occurred on March 31, 2023.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.<u>Equity.</u> You acknowledge that as of the Separation Date you are vested in that number of stock options, RSUs and/or shares of equity of Pear Therapeutics, Inc. pursuant to the 2021 Stock Option and Incentive Plan (the "*Plan*"), as set forth in your account with Shareworks/Morgan Stanley @ Work. Except as set forth herein, you further acknowledge that all vesting shall terminate immediately upon the Separation Date and any and all rights and obligations with respect to any vested shares, whether they are options or RSUs, shall be governed solely by the terms of the Plan and your stock option and/or restricted stock award agreement(s). Notwithstanding the foregoing, if you timely execute and return to Pear the Option Amendment Agreement attached hereto as <u>Exhibit D</u>, then (i) your stock options will continue to vest through February 29, 2024 (notwithstanding your termination of employment), (ii) the period for exercising your stock options, to the extent that they have vested as of February 29, 2024, will be extended until March 31, 2024, and (iii) as a result of such amendment, any stock options that were "incentive stock options" will no longer qualify as such and will automatically become non-statutory stock options. ***Please note that the executed Option Amendment Agreement must be returned to Pear by no later than one week after the date hereof, if you wish to have your stock options amended as***

2

------

*Separation Agreement*

***described in the preceding sentence.*** You acknowledge and agree that, except as specifically set forth in Section 3(c) of this Agreement, you do not now have, and will not in the future have, rights to vest in any other equity plans (of whatever name or kind) that you participated in or were eligible to participate in during your employment with the Company. In addition, in exchange for the consideration received hereunder, you hereby irrevocably waive any right to receive a Q3 Performance Bonus Award of RSUs for which you were otherwise eligible.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.<u>Second Severance</u>. In addition, after your Separation Date, you will be eligible for a second severance payment in a one-time lump-sum payment in the amount of One Thousand Dollars and 00/100 Cents ($1,000.00), subject to applicable taxes and other withholdings as required by law (the "*Second Severance*"), to be paid in exchange for a duly executed release agreement reasonably satisfactory to the Company (the "*Second Release*"). The Company shall pay you the Second Severance within fifteen days after you have signed and delivered the Second Release to the Company's General Counsel.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.<u>Acknowledgements</u>. You acknowledge and agree that this Agreement and the Separation Pay and Benefits to be provided to you herein are not intended to, and shall not constitute, a severance plan and shall confer no benefit on anyone other than Pear and you. You acknowledge and agree that the pay and benefits provided for herein are not otherwise due or owing to you under any offer letter or other agreement (oral or written) or any Pear policy or practice. You further acknowledge that, except for (i) any unpaid regular wages (including accrued and unused vacation) earned through the last day of employment, (ii) any expenses for which you submit required documentation within the timeframe requested by the Company and which will be paid consistent with the Company's usual practice, and (iii) any payments you may become eligible for pursuant to the terms of this Agreement, you have been paid and provided all wages, vacation pay, holiday pay, bonus, commission, equity, business expenses, and any other form of compensation or benefit that may be due to you now or which would have become due in the future in connection with your employment with or separation of employment from Pear. You hereby agree that this Agreement supersedes any rights you may have under any other severance agreement or policy with the Company including, without limitation, the Severance and Change in Control Plan, and you hereby waive any such rights. You affirm that you have no known workplace injuries or occupational diseases relating to your employment and that you have been provided and/or have not been denied any leave to which you were entitled under any family or medical leave law or otherwise.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.<u>Confidentiality; Non-Disparagement; Cooperation; Other Assurances.</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)You will return to Pear within five (5) days after the Separation Date, without modifying, damaging or disabling the same, and not retain any copies of: (i) all originals and copies of any proprietary or confidential information and trade secrets of the Company, whether in print, electronic or other form; (ii) all originals and copies of Company, customer, supplier and collaborator files, written materials, records and other documents, whether in print, electronic or other form, whether made by you or coming into your possession during the course of your employment with the Company; (iii) all identification cards, keys, security passes or other means of access to Company facilities; (iv) all credit cards, telephone cards, telephones, computer or other office equipment; (v) any other property of the Company in your possession, custody or control,

3

------

*Separation Agreement*

including all hardware (e.g., personal computers, laptops, thumb drives/CDs/DVDs, information stored on thumb drives/CDs/DVDs); and (vi) all usernames and passwords and any other access credentials maintained by you. You further agree that if you discover any other Company materials in your possession after the Separation Date, you immediately will return such materials to the Company. When you sign this Release, you shall also sign the Declaration attached as <u>Exhibit A</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)You hereby reaffirm your obligations set forth in the Employee Nondisclosure, Non-solicitation, and Assignment of Intellectual Property Agreement between Pear and you (the *"Covenants Agreement*"), in substantially the form attached hereto as <u>Exhibit</u>

<u>B</u>. The Company will provide a copy of your signed Covenants Agreement upon your request. You further agree to abide by any and all common law and/or statutory obligations relating to the protection and non-disclosure of Pear's trade secrets and/or confidential and proprietary documents and information. Consistent with the Defend Trade Secrets Act of 2016, Pear hereby notifies you of the following provisions of the DTSA: "(1) An individual shall not be held criminally or civilly liable under any Federal or State trade secret law for the disclosure of a trade secret that (A) is made (i) in confidence to a Federal, State, or local government official, either directly or indirectly, or to an attorney; and (ii) solely for the purpose of reporting or investigating a suspected violation of law; or (B) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal. (2) An individual who files a lawsuit for retaliation by an employer for reporting a suspected violation of law may disclose the trade secret to the attorney of the individual and use the trade secret information in the court proceeding, if the individual (A) files any document containing the trade secret under seal; and (B) does not disclose the trade secret, except pursuant to court order." Nothing in this Agreement shall be construed to authorize, or limit liability for, an act that is otherwise prohibited by law, such as the unlawful access of material by unauthorized means.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)Except as to your ongoing obligations, You agree that all information relating in any way to the subject matter of this Agreement, including the existence and provisions of this Agreement, will be held confidential by you and will not be publicized or disclosed to any person (other than an immediate member of your family or your legal counsel, accountant or financial advisor, provided that any such individual to whom disclosure is made shall be bound by these confidentiality obligations), other than a state or federal tax authority or government agency to which disclosure is mandated by applicable state or federal law. Furthermore, you agree that you will not discuss this Agreement with any other Pear employee, including your peers, except to notify individuals that you will be leaving Pear on the Separation Date. Notwithstanding the foregoing, if you are a California resident, nothing in this Agreement prevents you from discussing or disclosing information about unlawful acts in the workplace, such as harassment or discrimination or any other conduct that you have reason to believe is unlawful.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)You agree that you will not make any statements that are professionally or personally disparaging, defamatory or false about, or adverse to, the interests of Pear (including its officers, directors, advisors, investors and employees) including, but not limited to, any statements that disparage any person, product, service, finances, financial condition, capability or any other aspect of the business of Pear, and that you will not engage in any conduct which could reasonably be expected to result in professional or personal harm to the reputation of Pear (including its officers, directors, advisors, investors and employees). Nothing herein shall prohibit

4

------

*Separation Agreement*

or bar you from providing truthful testimony in any legal proceeding or in communicating with any governmental agency or representative or from making any truthful disclosure required, authorized or permitted under law; provided however that if you anticipate or are required to make disclosure pursuant to this subparagraph (iii), you shall inform the Company's General Counsel, in advance of any disclosure, at least ten (10) days prior to such disclosure whenever possible, and where not possible, with as much advance notice as practicable. Nothing in this Agreement shall limit the rights of any government agency or any party's right of access to, participation in or cooperation with any government agency or its actions. Notwithstanding the foregoing, if you are a California resident, and in accordance with applicable law, you acknowledge and agree that the foregoing does not prohibit the disclosure of factual information (except for the amount of financial consideration provided for herein) related to civil or administrative claims regarding sexual harassment, sex discrimination, sexual assault, discrimination or harassment on the basis of any other statutorily protected category, or retaliation relating to any of the foregoing. You also hereby acknowledge and agree that as of the Effective Date, no such civil or administrative action has been filed by you or anyone on your behalf against the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)You agree that you will make yourself reasonably available to Pear (including its attorneys), (either by telephone or videoconference or, if the Company believes necessary, in person) to assist the Company in any matter reasonably relating to the services performed by you during your employment with the Company including, but not limited to, transitioning your duties to others and ensuring all documentation is fully recorded.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f)You represent and warrant that there are no outstanding charges, complaints, claims, grievances or actions of any nature whatsoever previously filed or brought by you or on your behalf against any of the Released Parties pending before any federal, state or local court or administrative body. You also represent and warrant that you have provided Pear with written notice of any and all concerns regarding suspected ethical and compliance issues or violations including, without limitation, anything covered by the Code of Business Conduct and Ethics, on the part of Pear, other employees, or any Released Parties.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g)You acknowledge that the Separation Pay and Benefits provided for herein are being offered based on your representations that you have not engaged in any fraudulent or unlawful conduct, and that you have fully disclosed to the Company all material information relating to your job duties for the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h)Any breach of this Section 9 including, without limitation, your obligations under the Covenants Agreement, will constitute a material breach of this Agreement and, in addition to any other legal or equitable remedy available to Pear, will entitle Pear to withhold payment of or recover any monies or other consideration (including rights to a further tranche of vesting of RSUs) provided to you or expended on your behalf under Section 3 of this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.<u>Release of Claims</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)You hereby acknowledge and agree that by signing this Agreement and accepting the pay and benefits provided for in this Agreement, you are waiving your right to assert any Claim (as defined below) against the Company any and all of its investors, advisors, affiliates and

5

------

*Separation Agreement*

subsidiaries, and all entities related to any of the foregoing, and each of the directors, officers, employees, agents, successors and assigns of any of the foregoing (collectively, the "*Released Parties*") arising from acts or omissions that occurred on or before the date on which you sign this Agreement. You agree that you are making this release of Claims on behalf of yourself, your representatives, agents, estate, heirs, attorneys, insurers, servants, spouse, executors, administrators, successors, and assigns, and any other person, entity, and (to the extent allowed by law) government agency acting on your behalf. Your waiver and release is intended to bar any form of legal claim, lawsuit, charge, complaint or any other form of action (jointly referred to as "*Claims*") against the Released Parties seeking money or any other form of relief, including but not limited to equitable relief (whether declaratory, injunctive or otherwise), damages or any other form of monetary recovery (including but not limited to back pay, front pay, compensatory damages, emotional distress damages, punitive damages, attorneys' fees and any other costs). You understand that there could be unknown or unanticipated Claims resulting from your employment with Pear and the termination thereof and you agree that such Claims are intended to be, and are, included in this waiver and release. You also understand that your waiver and release includes all Claims under any statute, ordinance, regulation, executive order, common law, constitution and/or other source of law or any state, country and/or locality, including but not limited to the United States, the State of Nevada, the Commonwealth of Massachusetts, the State of California, the State of North Carolina, and/or any other state or locality where you worked for the Company (collectively and individually referred to as "*Law*").

Without limiting the foregoing general waiver and release, except for Claims resulting from the failure of the Company to perform its obligations under this Agreement, you specifically waive and release the Released Parties from any Claims arising from or related to your employment relationship with the Company or the termination thereof, including without limitation: (i) Claims under any Law concerning discrimination, harassment, retaliation, or other fair employment practices, including but not limited to the Massachusetts Anti-Discrimination and Anti- Harassment Law (M.G.L. Chapter 151B), the Massachusetts Sexual Harassment Law (M.G.L. c. 214 § 1C), the Massachusetts Equal Pay Act (M.G.L. c. 149 § 105A), the Massachusetts Civil Rights Act (M.G.L. c. 12, §§ 11H, 111), the Massachusetts Equal Rights Act (M.G.L, c. 93, §§ 102, 103), the California Fair Employment and Housing Act (Cal. Gov. Code, Title 2, Division 3, Part 2.8), the California Constitution, the California Labor Code (including all laws and regulations relating to payment of wages, overtime or any other compensation or benefit), the California Family Rights Act (Cal. Gov. Code §§ 12945.2 and 19702.3), the Age Discrimination in Employment Act (29 U.S.C. § 621 *et seq.*), Title VII of the Civil Rights Act of 1964 (42 U.S.C. § 2000e *et seq.*), 42 U.S.C. § 1981, the Americans with Disabilities Act (42 U.S.C. § 12101 *et seq.*), the Equal Pay Act of 1963, the Employee Retirement Income Security Act (ERISA), the Age Discrimination in Employment Act (ADEA), the Older Workers Benefit Protection Act (OWBPA), the Occupational Health and Safety Act of 1970 (OSHA), the Fair Credit Reporting Act (FCRA), the Worker Adjustment and Retraining Notification (WARN) Act, the Genetic Information Nondiscrimination Act (GINA), the Uniform Services Employment and Reemployment Rights Act (USERRA), each as they may have been amended through the date you sign this Agreement; (ii) Claims under any Law relating to wages, hours, whistleblowing, leaves of absence or any other terms and conditions of employment, including, but not limited to, the Massachusetts Payment of Wages Law (M.G.L. c. 149 §§ 148 and 150), Massachusetts General Laws Chapter 149 in its entirety, Massachusetts General Laws Chapter 151 in its entirety

6

------

*Separation Agreement*

(including but not limited to the minimum wage and overtime provisions), the California Labor Code (including all laws and regulations relating to payment of wages, overtime or any other compensation or benefit), the California Family Rights Act (Cal. Gov. Code §§ 12945.2), the Family and Medical Leave Act of 1993 (29 U.S.C. § 2601 *et seq.*), all applicable federal, state or local laws relating to sick time and/or other family or medical leave, each as they may have been amended through the date you sign this Agreement. You specifically acknowledge that you are waiving any Claims for unpaid wages under these and other Laws; (iii) Claims under any local, state or federal common law theory; (iv) Claims arising under the Company's policies or benefit plans, including, without limitation, any Claims under the Company's Severance and Change in Control Plan adopted by the Company's Board of Directors on June 14, 2022, and (v) Claims arising under other Law.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)In addition to the foregoing, you hereby agree that you are waiving all rights under section 1542 of the Civil Code of the State of California. Section 1542 provides that: "*A general release does not extend to claims that the creditor or releasing party does not know or suspect to exist in his or her favor at the time of executing the release and that, if known by him or her, would have materially affected his or her settlement to the debtor or released party.*" Pursuant to Section 1542, you acknowledge that you may hereafter discover facts different from or in addition to facts which you now know or believe to be true with regard to the released claims, and further agree that this Agreement shall remain effective in all respects notwithstanding such discovery of new or different facts, including any such facts which may give rise to currently unknown claims, including but not limited to any claims or rights which you may have under Section 1542 of the California Civil Code or similar law or doctrine of any other state.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)You acknowledge and agree that, but for providing this waiver and release, you would not be receiving the Separation Pay and Benefits provided for in this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)Because you are at least forty (40) years of age, you have specific rights under the federal Age Discrimination in Employment Act ("*ADEA*") and Older Workers Benefits Protection Act ("*OWBPA*"), which prohibit discrimination on the basis of age. The release in Section 10 is intended to release any Claim you may have against the Company alleging discrimination on the basis of age under the ADEA, OWBPA and other Laws. Notwithstanding anything to the contrary in this Agreement, the release in Section 10 does not cover rights or Claims under the ADEA that arise from acts or omissions that occur after the date you sign this Agreement. In addition, consistent with the ADEA and OWBPA, the Company is providing you with the time to review and accept this Agreement and the ability to revoke your acceptance as described in Section 11(h) below.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)This release does not apply to any claims concerning a breach of this Agreement, claims for any vested ERISA benefits under employee benefit plans of the Company, any rights to benefits under applicable workers' compensation statutes or government-provided unemployment benefits, or any claims wherein the cause of action arises after the date you sign this Agreement. Further, consistent with federal discrimination laws, nothing in this release shall be deemed to prohibit you from challenging the validity of this release under federal discrimination laws or from filing a charge or complaint of employment related discrimination with the Equal Employment Opportunity Commission ("*EEOC*"), or from participating in any investigation or proceeding

7

------

*Separation Agreement*

conducted by the EEOC. However, the release in Section 10 does prohibit you from seeking or receiving monetary damages or other individual-specific relief in connection with any such charge or complaint of work-related discrimination. Further, nothing in this release or Agreement shall be deemed to limit any Released Party's right to seek immediate dismissal of such charge or complaint on the basis that your signing of this Agreement constitutes a full release of any individual rights under federal discrimination laws, or any Released Party's right to seek restitution or other legal remedies to the extent permitted by law of the economic benefits provided to you under this Agreement in the event that you successfully challenge the validity of this release and prevail in any claim under federal discrimination laws.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.<u>Miscellaneous.</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)<u>Successors and Assigns</u>. This Agreement shall be binding upon the respective legal representatives, heirs and successors of the parties, to the extent permitted by law.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)<u>Notices</u>. Any notices required to be given in connection with this Agreement shall be given by certified mail to Ronan O'Brien, General Counsel, Pear Therapeutics, Inc., 200 State Street, Floor #13, Boston, MA 02109 with a copy via email to <u>ronan.obrien@peartherapeutics.com</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)<u>Entire Agreement</u>. You acknowledge that this Agreement sets forth the entire agreement between you and Pear concerning your separation and, except as expressly provided for herein (e.g., your obligations set forth in the agreement referenced in Section 9(b)), and except for the Plan, fully supersedes any and all prior agreements or understanding between you and Pear pertaining to the subject matter thereof. This Agreement may only be modified in a written document signed by you and an authorized representative of Pear. In the event any provision of this Agreement is held invalid, all remaining provisions of the Agreement shall remain in full force and effect.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)<u>Severability</u>. Should any provision of this Agreement be declared or be determined by any court of competent jurisdiction to be illegal or invalid, the validity of the remaining parts, terms or provisions shall not be affected thereby and said illegal or invalid part, term or provision shall be deemed not to be a part of this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)<u>Execution</u>. This Agreement may be executed in one or more counterparts, each of which when so executed shall be deemed to be an original, and all such counterparts together shall constitute but one and the same instrument. Your signature below reflects your understanding of, and agreement to, the terms and conditions set forth above.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f)<u>Modifications in writing</u>. No variations or modifications hereof shall be deemed valid unless reduced to writing and signed by Pear and you.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g)<u>Choice of Law; Forum; Jury Waiver</u>. The validity, interpretation and performance of this Agreement shall be governed by, and construed in accordance with, the internal laws of the Commonwealth of Massachusetts, without giving effect to conflict of law principles. Both parties agree that any action, demand, claim or counterclaim relating to the terms and provisions of this

8

------

*Separation Agreement*

Agreement or to its breach, shall be commenced in the Commonwealth of Massachusetts in a court of competent jurisdiction. Both parties agree that any action, demand, claim or counterclaim concerning your employment and separation of employment, and/or this Agreement, shall be tried by a judge alone, and both parties hereby waive and forever renounce the right to a trial before a civil jury.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h)<u>OWBPA</u>. It is Pear's desire and intent to make certain that you fully understand the provisions and effects of this Agreement. To that end, you acknowledge that you are hereby advised to consult with an attorney before signing this Agreement, particularly the release of ADEA claims, and that you have been given an opportunity to do so. You also acknowledge that, consistent with the OWBPA the Company has given you forty-five (45) days (the "*Review Period*") to consider signing this Agreement. You further acknowledge that the Review Period is not and will not be affected or extended by any revisions, whether material or immaterial, that might be made to this Agreement. In the event you sign this Agreement before the Review Period has expired, you acknowledge that it is your intent to voluntarily waive the remainder of the Review Period. This Agreement will become effective seven (7) days after it is signed by you (the "*Revocation Period*"). Also consistent with the OWBPA, you may revoke this Agreement within the Revocation Period, and you understand that it shall not become effective until the expiration of the Revocation Period. To be effective, such rescission must be hand delivered or postmarked within the Revocation Period and sent by certified mail, return receipt requested, to Pear Therapeutics, Inc., attn. Ronan O'Brien, 200 State Street, Boston, MA 02109 with a copy via email to <u>ronan.obrien@peartherapeutics.com</u>. If you choose to revoke this Agreement, you understand that the Agreement will become null and void and that the Company will have no obligation to provide you with the Separation Pay and Benefits as set forth in this Agreement.

In addition, in accordance with OWBPA, you are receiving with this Agreement a list of

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) the job titles and ages of all employees in the relevant decisional unit who were selected for the severance pay and benefits outlined in this Agreement; and (ii) the job titles and ages of all employees in the relevant decisional unit who were not selected for the severance pay and benefits as outlined in this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(i)You acknowledge that (a) your agreements and obligations under this Agreement are made voluntarily, knowingly and without duress; (b) neither Pear nor its agents or representatives have made any representations to you inconsistent with the provisions of this Agreement, and (c) in signing this Agreement, you are not relying on any other statements or explanations made to you by Pear that are not reflected in this Agreement.**

If the foregoing correctly sets forth our arrangement, please sign, date and return the enclosed copy of this Agreement to me within the timeframe set forth above.

Very truly yours,

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>/s/</u> <u>Christopher D.T. Guiffre</u> 

Christopher D.T. Guiffre

Chief Financial Officer & Chief Operating Officer

9

------

*Separation Agreement*

**Accepted and Agreed To: Katherine Jeffery**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>/s/ Katherine Jeffery</u> 

<u>Dated: 12/19/2022</u> 

10

------

*Separation Agreement*

**<u>EXHIBIT A</u>**

**<u>Declaration Regarding Return of Company Property</u>**

I, <u>Kathy Jeffery</u>, declare under penalty of perjury as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.I have returned to Pear all data (including work product, financial data, documents and computer data, regardless of form or medium), and all equipment (including keys, devices and computer software), in my possession, custody or control that relate to the business of Pear.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.This includes, but is not limited to, all things and data identified in Section 8, return of property, of my employee non-disclosure, non-solicitation and assignment of intellectual property agreement, which states:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7. ***Return of property.*** Upon termination of my employment with the company, or at any other time upon request of the company, I shall return promptly any and all customer or prospective customer or business partner or prospective business partner lists, other customer or prospective customer or business partner or prospective business partner information or related materials, computer programs, software, electronic data, specifications, drawings, blueprints, data storage devices, reproductions, sketches, notes, notebooks, memoranda, reports, records, proposals, business plans, or copies of them, other documents or materials, tools, equipment, or other property belonging to the company or its customers or business partners which I may then possess or have under my control, in any form, and including all copies of the same. I further agree that upon termination of employment I shall not take with me any documents or data in any form or of any description containing or pertaining to confidential information or inventions.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.I confirm that I have complied with that Section 9.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.I further agree that I have provided Pear with access to all usernames and passwords maintained by me on behalf of Pear.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.After returning all data that relate to the business of Pear, I deleted/destroyed all copies or abstracts of such data in my possession, custody or control. I also confirm that if I discover any other company materials in my possession after the Separation Date, I will immediately return such materials to Pear and thereafter delete the same.

***I declare under penalty of perjury that the foregoing is true and correct.***

Signature: <u>&nbsp;&nbsp;&nbsp;&nbsp; /s/ Katherine Jeffery</u> &nbsp;&nbsp;&nbsp;&nbsp;Dated: <u>02/21/2023&nbsp;&nbsp;&nbsp;&nbsp;</u>

Katherine Jeffery

11

------

*Separation Agreement*

**<u>EXHIBIT B</u>**

**<u>Employee Nondisclosure, Non-solicitation, and</u>**

**<u>Assignment of Intellectual Property</u> <u>Agreement</u>**

I, **Katherine Jeffery**, acknowledge and agree that in consideration and as a condition of my employment by Pear Therapeutics, Inc., a Delaware corporation (the "***Company***"), and of the compensation to be paid to me, and in recognition of the fact that as an employee of the Company I will have access to confidential information, trade secrets and goodwill belonging to the Company, I agree with the Company as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.Acknowledgments.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a.By signing this Agreement I confirm my understanding and acknowledgement that the Company has expended substantial time, expense and effort in developing and maintaining its trade secrets and other Confidential Information (as defined below) and its goodwill with its Customers, employees, contractors, and Business Partners, which goodwill I acknowledge and agree belongs exclusively to the Company. I specifically acknowledge and agree that the nature, scope and period of the covenants set forth in Section 6 below are reasonable and necessary to protect the Company's trade secrets and other Confidential Information and goodwill. I also acknowledge and agree that in my position with the Company, I will be performing services for and have access to and use in the performance of my duties the Company's Confidential Information and/or trade secrets regarding its products, processes, procedures, research and development, strategies and/or financial information. I further acknowledge that I have been offered substantial consideration for my agreements and covenants set forth in this Agreement, including my continued employment. ***"Customers"*** include, without limitation, current or prospective patients and/or users of the Company's products or product candidates. ***"Business Partners"*** include, without limitation, Alliance Partners, Channel Partners, Clinical Partners and Healthcare Providers. ***"Alliance Partners"*** include, without limitation, developers or commercialization partners that develop or commercialize the Company's products or product candidates. ***"Channel Partners"*** include, without limitation, any distribution platform or operator or other third party who is authorized to make the Company's products or product candidates available for sale or distribution. ***"Clinical Partners"*** include, without limitation, hospitals, clinics, practices, other medical groups or healthcare systems that have contracted with the Company. ***"Healthcare Providers"*** include, without limitation, physicians, patient advocates, counselors, practitioners, recovery coaches, or other persons who provide healthcare or related services to Customers.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a.I hereby represent, warrant and agree that (i) I have disclosed to the Company any and all continuing obligations to previous employers or others that do or may restrict or purport to restrict in any manner my ability to provide services to the Company and/or require me not to disclose any information to the Company, by providing a copy of all documents containing such continuing obligations to the Company; (ii) in the course of performing services for the Company, I will not infringe or wrongfully appropriate any patents, copyrights, trade secrets or other intellectual property rights of any person or entity anywhere in the world; and (iii) I have not and will not disclose or use during my employment by the Company any confidential information that I acquired as a result of any previous employment or consulting arrangement or under a previous obligation of confidentiality.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.***Confidential Information***. While employed by the Company and thereafter, I shall not, directly or indirectly, use any Confidential Information (as hereinafter defined) other than pursuant to my employment by and for the benefit of the Company, or disclose any Confidential Information to anyone outside of the Company,

12

------

*Separation Agreement*

whether by private communication, public address, publication or otherwise, or disclose any Confidential Information to anyone within the Company who has not been authorized to receive such information, in each case except as directed in writing by an authorized representative of the Company. The term "***Confidential Information***" as used throughout this Agreement shall mean all trade secrets, proprietary information, know-how, data, designs, specifications, processes, Customer lists, Business Partner lists, and other technical or business information (and any evidence, record or representation thereof, as well as all metadata associated with any electronic files that constitute or contain the same), whether prepared, conceived or developed by a consultant or employee of the Company (including myself) or received by the Company from an outside source, which is in the possession of the Company (whether or not the property of the Company), which in any way relates to the present or future business of the Company, which is maintained in confidence by the Company, or which might permit the Company or its Business Partners to obtain a competitive advantage over competitors who do not have access to such trade secrets, proprietary information, or other data or information. Without limiting the generality of the foregoing, Confidential Information shall include:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a.any idea, improvement, invention, innovation, development, technical data, design, formula, device, pattern, concept, art, method, process, procedure, form, strategy, technique, machine, manufacturing method, composition of matter, computer program, software, firmware, source code, object code, algorithm, subroutine, object module, schematic, model, diagram, flow chart, user manual, training or service manual, product specification, plan for a new or revised product, compilation of information, or work in process, and any and all revisions and improvements relating to any of the foregoing (in each case whether or not reduced to tangible form);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a.any sales or marketing material, plan, or survey, business plan or opportunity, product or development plan or specification, business proposal, budget, fee schedule, financial data or record, or business data or record, or other record or information relating to the present or proposed business of the Company or any Customer or Business Partner (or prospective Customer or Business Partner);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a.information in any form, whether in a list or otherwise, concerning Customers, prospective Customers, Business Partners, or prospective Business Partners, including but not limited to names or lists of names, personal or financial information, requirements, and financial data of any of the foregoing, and any and all contracts, agreements or other arrangements with the same; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a.the education and employment history, personal data and information, resumes, wages, compensation, and compensation and/or incentive plans of the Company's current, former or prospective employees, contractors or interns and any lists, directories or organizational charts listing the Company's employees, contractors or interns (to the extent the same are not made public in violation of any legal obligation).

Notwithstanding the foregoing, the term Confidential Information shall not apply to information which the Company has voluntarily disclosed to the public without restriction, or which has otherwise lawfully entered the public domain.

I understand that the Company from time to time has in its possession information (including product and development plans and specifications) which is claimed by Customers or Business Partners and others to be proprietary and which the Company has agreed to keep confidential. I agree that all such information shall be Confidential Information for purposes of this Agreement.

Consistent with applicable law, the Company is providing you with notice of the following provisions of the Defend Trade Secrets Act of 2016: "Immunity from Liability for Confidential Disclosure of a Trade Secret to the Government or in a Court Filing— (1) Immunity.—An individual shall not be held criminally or civilly liable under

13

------

*Separation Agreement*

any Federal or State trade secret law for the disclosure of a trade secret that—(A) is made –(i) in confidence to a Federal, State, or local government official, either directly or indirectly, or to an attorney; and (ii) solely for the purpose of reporting or investigating a suspected violation of law; or (B) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal. (2) Use of Trade Secret Information in Anti-Retaliation Lawsuit—An individual who files a lawsuit for retaliation by an employer for reporting a suspected violation of law may disclose the trade secret to the attorney of the individual and use the trade secret information in the court proceeding, if the individual— (A) files any document containing the trade secret under seal; and

(B) does not disclose the trade secret, except pursuant to court order."

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.Ownership and Assignment of Intellectual Property.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a.I agree that all originals and all copies of all manuscripts, drawings, prints, manuals, diagrams, letters, notes, notebooks, reports, models, records, files, memoranda, plans, sketches and all other documents and materials containing, representing, evidencing, recording, or constituting any Confidential Information (as defined in ***Section 2*** above), however and whenever produced (whether by myself or others) during the course of my employment, shall be the sole property of the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a.I agree that all Confidential Information and all other discoveries, inventions, ideas, concepts, trademarks, service marks, logos, processes, products, formulas, computer programs or software, source codes, object codes, algorithms, machines, apparatuses, items of manufacture or composition of matter, or any new uses therefor or improvements thereon, or any new designs or modifications or configurations of any kind, or works of authorship of any kind, including, without limitation, compilations and derivative works, whether or not patentable or copyrightable, conceived, developed, reduced to practice or otherwise made by me, either alone or with others, and in any way related to the business of the Company or to tasks assigned to me during the course of my employment, whether or not made during my regular working hours, whether or not conceived, developed, reduced to practice or made on the Company's premises and whether or not disclosed by me to the Company (collectively "***Inventions***"), and any and all services and products which embody, emulate or employ any such Invention or Confidential Information shall be the sole property of the Company and all copyrights, patents, patent rights, trademarks and reproduction rights to, and

other proprietary rights in, each such Invention or Confidential Information, whether or not patentable or copyrightable, shall belong exclusively to the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a.Subject to subsections (d) and, if applicable, (e) below, I agree to, and hereby do, assign to the Company all my right, title and interest throughout the world in and to all Inventions and to anything tangible which evidences, incorporates, constitutes, represents or records any Invention. I agree that all Inventions shall constitute works made for hire under the copyright laws of the United States and hereby assign and, to the extent any such assignment cannot be made at present, I hereby agree to assign to the Company all copyrights, patents and other proprietary rights I may have in any Inventions, together with the right to file for and/or own wholly without restriction United States and foreign patents, trademarks, and copyrights. I agree to waive, and hereby waive, all moral rights or proprietary rights in or to any Inventions and, to the extent that such rights may not be waived, agree not to assert such rights against the Company or its licensees, successors or assigns.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a.I hereby certify that ***Exhibit A*** sets forth any and all confidential information and intellectual property that I claim as my own or otherwise intend to exclude from this Agreement because it was developed by me prior to the date of this Agreement. I understand that after execution of this Agreement I shall have no right to exclude Confidential Information or Inventions from this Agreement.

14

------

*Separation Agreement*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a.***For California Employees Only:*** I understand that the provisions of this Agreement requiring assignment of Inventions to the Company do not apply to any invention which qualifies fully under the provisions of California Labor Code Section 2870, which states: "(a) Any provision in an employment agreement which provides that an employee shall assign, or offer to assign, any of his or her rights in an invention to his or her employer shall not apply to an invention that the employee developed entirely on his or her own time without using the employer's equipment, supplies, facilities, or trade secret information except for those inventions that either: (1) Relate at the time of conception or reduction to practice of the invention to the employer's business, or actual or demonstrably anticipated research or development of the employer; or (2) Result from any work performed by the employee for the employer." I will advise the Company promptly in writing of any inventions that I believe meet the criteria in California Labor Code Section 2870 and are not otherwise disclosed on ***Exhibit A***.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.***Employee's Obligation to Keep Records***. I shall make and maintain adequate and current written records of all Inventions, including notebooks and invention disclosures, which records shall be available to and remain the property of the Company at all times. I shall disclose all Inventions promptly, fully and in writing to the Company immediately upon production or development of the same and at any time upon request.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.***Employee's Obligation to Cooperate***. I will, at any time during my employment, or after it terminates, upon request of the Company, execute all documents and perform all lawful acts which the Company considers necessary or advisable to secure its rights hereunder and to carry out the intent of this Agreement. Without limiting the generality of the foregoing, I will assist the Company in any reasonable manner to obtain for its own benefit patents or copyrights in any and all countries with respect to all Inventions assigned pursuant to ***Section 3***, and I will execute, when requested, patent and other applications and assignments thereof to the Company,

or persons designated by it, and any other lawful documents deemed necessary by the Company to carry out the purposes of this Agreement, and I will further assist the Company in every way to enforce any patents and copyrights obtained, including, without limitation, testifying in any suit or proceeding involving any of said patents or copyrights or executing any documents deemed necessary by the Company, all without further consideration than provided for herein. It is understood that reasonable out-of-pocket expenses of my assistance incurred at the request of the Company under this Section will be reimbursed by the Company. In the event the Company is unable after reasonable effort to obtain my signature on any document which I may be required to sign pursuant to this Agreement, whether because of my physical or mental incapacity or for any other reason whatsoever, I hereby irrevocably appoint each of the President and the Secretary of the Company (whether now or hereafter in office) as my attorney-in-fact to execute any such document on my behalf.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.***Non-solicitation***. I acknowledge and agree that any and all "goodwill" associated with any Customers, Business Partners and employees of the Company belongs exclusively to the Company including, but not limited to, any goodwill created as a result of direct or indirect contacts or relationships between me and any Customers, Business Partners or employees of the Company. I also acknowledge and agree that my employment with and services for the Company will require the access to and use of Confidential Information. I further acknowledge and agree that the Company makes reasonable efforts to maintain the confidentiality of its Confidential Information, and that it derives independent economic value, actual or potential, from the Confidential Information not being generally known to the public or to others who can obtain economic value from its disclosure. I also acknowledge and agree that the Company would be irreparably damaged if I were to engage in the conduct described below using the Company's Confidential Information (including but not limited to its trade secrets). Accordingly, I hereby agree that:

15

------

*Separation Agreement*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a.During my employment with the Company and for a period of twelve (12) months after the termination of my employment with the Company for any reason, I shall not, directly or indirectly, for myself or for any other person or entity, solicit, induce, hire, or attempt to do any of the foregoing, any employee of the Company (or any person who may have been employed by the Company during the last twelve (12) months of my employment with the Company), or assist in such attempted or actual solicitation, inducement or hiring by any other person or entity or encourage any such employee to terminate his or her employment with the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a.I acknowledge that the Company has valuable Trade Secrets (as defined by applicable law from time to time) to which I will have access during the term of my employment with the Company. I understand that the Company intends to vigorously pursue its rights under applicable Trade Secrets law if, during a period of twelve (12) months immediately following the termination of my employment for any reason, whether with or without cause, I solicit or influence or attempt to influence any Customer, Business Partner or other person either directly or indirectly, to direct any purchase of products and/or services to any person, firm, corporation, institution or other entity in competition with the business of the Company. Thereafter, the Company intends to vigorously pursue its rights under applicable Trade Secrets law as the circumstances warrant.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a.***For Non-California Employees Only:*** During my employment with the Company and for a period of twelve (12) months after the termination of my employment with the Company for any reason, I shall not, for myself or for any other person or entity, within the geographic area within which the Company did business at any time during the preceding two

(2) years, directly or indirectly, encourage or induce (or attempt to encourage or induce) any Customer, prospective Customer, Business Partner, or prospective Business Partner of the Company to terminate, cease, or reduce the scope of its relationship with the Company, or to refrain from entering into a business relationship with the Company.

I expressly agree that in the event of my breach of any of the foregoing, the period of the restriction shall be extended by at least an amount of time reflecting the period of time during which I was in violation of any of the provisions set forth in this Section.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.***Return of Property***. Upon termination of my employment with the Company, or at any other time upon request of the Company, I shall return promptly any and all Customer or prospective Customer or Business Partner or Prospective Business Partner lists, other Customer or prospective Customer or Business Partner or prospective Business Partner information or related materials, computer programs, software, electronic data, specifications, drawings, blueprints, data storage devices, reproductions, sketches, notes, notebooks, memoranda, reports, records, proposals, business plans, or copies of them, other documents or materials, tools, equipment, or other property belonging to the Company or its Customers or Business Partners which I may then possess or have under my control, in any form, and including all copies of the same. I further agree that upon termination of employment I shall not take with me any documents or data in any form or of any description containing or pertaining to Confidential Information or Inventions.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.***Other Obligations***. I acknowledge that the Company from time to time may have agreements with other persons, including other corporations, the government of the United States or other countries and agencies thereof, which impose obligations or restrictions on the Company regarding inventions made during the course of work thereunder or regarding the confidential nature of such work or the confidential nature of information disclosed to the Company by such persons. I agree to be bound by all such obligations and restrictions and to take all action necessary to discharge the obligations of the Company thereunder.

16

------

*Separation Agreement*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.***Enforcement.*** I acknowledge and agree that (i) the provisions of Sections 2 and 6 are necessary and reasonable to protect the Company's Confidential Information (including trade secrets) and goodwill; (ii) the specific time, geography and scope provisions set forth in Section 6 are reasonable and necessary to protect the Company's business interests; and (iii) violation of this Agreement by me would cause irreparable harm to the Company not adequately compensable by money damages alone. In recognition of the foregoing, I agree that, in addition to all other remedies available to the Company at law, in equity or otherwise, the Company shall be entitled to specific performance, or temporary, preliminary or permanent injunctive relief, or any other equitable remedy which then may be available, to prevent an actual or threatened violation of this Agreement and to enforce the provisions hereof, without showing or proving any actual damage to the Company or posting any bond in connection therewith. The seeking of such injunction or order shall not affect the Company's right to seek and obtain damages or other equitable relief on account of any such actual or threatened breach. I further agree that the

Company shall be entitled to its costs and fees, including attorneys' fees, incurred by it should it prevail in enforcing the provisions of this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.Miscellaneous

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a.This Agreement contains the entire and only agreement between me and the Company with respect to the subject matter hereof, superseding any previous oral or written communications, representations, understandings, or agreements with the Company or any officer or representative thereof. In the event of any inconsistency between this Agreement and any other contract between me and the Company, the provisions of this Agreement shall prevail.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a.My obligations under this Agreement shall survive the termination of my employment with the Company regardless of the manner of or reasons for such termination, and regardless of whether such termination constitutes a breach of any other agreement I may have with the Company. My obligations under this Agreement also shall continue should I be promoted or reassigned to functions other than my present functions, or should my compensation and benefit package change, or should I be transferred between or among Company offices or any Company affiliates that may exist. My obligations under this Agreement shall be binding upon my heirs, assigns, executors, administrators and representatives, and the provisions of this Agreement shall inure to the benefit of and be binding on the successors and assigns of the Company, and the Company shall have the right to assign this Agreement to another party, whether by agreement or by operation of law, and whether resulting from a merger, sale (of assets or securities or otherwise), or any other transaction or event.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a.If any provision of this Agreement shall be determined to be unenforceable by any court of competent jurisdiction by reason of its extending for too great a period of time or over too large a geographic area or over too great a range of activities, it shall be interpreted to extend only over the maximum period of time, geographic area or range of activities as to which it may be enforceable. If, after application of the immediately preceding sentence, any provision of this Agreement shall be determined to be invalid, illegal or otherwise unenforceable by any court of competent jurisdiction, the validity, legality and enforceability of the other provisions of this Agreement shall not be affected thereby. Except as otherwise provided in this paragraph, any invalid, illegal or unenforceable provision of this Agreement shall be severable, and after any such severance, all other provisions hereof shall remain in full force and effect.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a.No failure by the Company to insist upon strict compliance with any of the terms, covenants, or conditions hereof, and no delay or omission by the Company in exercising any right under this Agreement, will operate as a waiver of such terms, covenants, conditions or rights. A waiver or

17

------

*Separation Agreement*

consent given by the Company on any one occasion is effective only in that instance and will not be construed as a bar to or waiver of any right on any other occasion.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a.This Agreement may not be changed, modified, released, discharged, abandoned, or otherwise amended, in whole or in part, except by an instrument in writing signed by me and the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a.This Agreement shall be governed by, and construed and enforced in accordance with, the laws of state in which I reside and primarily provide services to the Company, without regard to the principles of conflicts of laws of such state. This Agreement is executed under seal.

BY PLACING MY SIGNATURE HEREUNDER, I ACKNOWLEDGE AND AGREE THAT I HAVE READ ALL THE PROVISIONS OF THIS EMPLOYEE NON-DISCLOSURE, NON- SOLICITATION AND ASSIGNMENT OF INTELLECTUAL PROPERTY AGREEMENT, THAT I HAVE HAD ADEQUATE OPPORTUNITY TO REVIEW THE TERMS HEREIN AND REFLECT UPON AND CONSIDER THE SAME, AND TO CONSULT A LAWYER REGARDING THE SAME, AND THAT I FULLY UNDERSTAND AND VOLUNTARILY AGREE TO ALL OF ITS TERMS.

Effective Date is Start Date: **<u>June 10, 2019</u>**

EMPLOYEE:

/s/ <u>Katherine Jeffery</u> 

Employee's Signature

Name: Katherine Jeffery

Address:

&nbsp;&nbsp;&nbsp;&nbsp;[\*\*\*]

Accepted and Agreed:

PEAR THERAPEUTICS, INC.

By: <u>/s/ Christopher Guiffre</u> 

Title: CFO & COO

18

------

*Separation Agreement*

**EXHIBIT A**

Excluded Confidential Information and Inventions

---

| | | |
|:---|:---|:---|
| **Title** | **Date** | **Identifying Number or Brief Description** |
| n/a | n/a | n/a |

---

x No inventions or improvements <br>  Additional Sheets Attached

Signature: <u>&nbsp;&nbsp;&nbsp;&nbsp; /s/ Katherine Jeffery</u> &nbsp;&nbsp;&nbsp;&nbsp;Dated: <u>02/21/2023&nbsp;&nbsp;&nbsp;&nbsp;</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Katherine Jeffery

19

------

*Separation Agreement*

**<u>EXHIBIT C</u>**

**<u>OLDER WORKERS BENEFIT PROTECTION ACT NOTICE</u>**

Pear Therapeutics (US), Inc. (the "*Company*") has decided that to better align its operations and business plans, it needs to conduct a reduction in force that will affect some of its employees, effective November 15, 2022. This decision will impact your position and, as a result, you are being offered a separation package including Severance Pay in exchange for signing a Separation Agreement. In accordance with the Older Workers Benefit Protection Act, the Company is obligated to provide you with certain information, provided below, relating to individuals selected for termination in the appropriate decisional unit and therefore, eligible for the offered Severance Pay, and any individuals in the same decisional unit not selected. This information is confidential and should not be shared with anyone other than your spouse or legal advisor.

This group termination program is being undertaken following the Company's assessment of its business and financial needs and capabilities at present and going forward. Determination of which individuals would be terminated with eligibility for separation pay was made on the basis of a variety of factors, including (without limitation) whether individuals possess the necessary backgrounds, experiences and skills to meet the Company's needs and goals going forward, the scope of the work performed by the individuals, and in some cases, factors specific to an individual. The decisional unit for this program was all Pear Therapeutic employees, wherever located, in its three offices and remote locations.

Individuals eligible for Severance Pay who are 40 years of age or older are being given at least 45 days to consider the Agreement. Individuals eligible for Severance Pay who are less than 40 years of age are being given fourteen (14) days to consider the Agreement.

**Personnel Selected for Termination and Eligible for Severance Pay and Benefits in Exchange for a Release**

[\*\*\*]

**Personnel Not Selected for Termination and Not Eligible for Severance Pay and Benefits in Exchange for a Release**

[\*\*\*]

20

------

*Separation Agreement*

**<u>EXHIBIT D</u>**

**<u>Option Amendment Agreement</u>**

This Option Amendment Agreement (this "**Option Amendment Agreement**") is entered

into by Pear Therapeutics, Inc., (the "**Company**"), and Kathy Jeffery, an employee of the Company's subsidiary, Pear Therapeutics (US), Inc. (the "Holder"). In order to be effective, this Option Amendment Agreement must be signed by the Holder and returned to Ronan O'Brien via email (ronan.obrien@peartherapeutics.com) no later than December 24, 2022.

WHEREAS, the Company has granted to the Holder, under the Company's 2021 Stock Option and Incentive Plan (the "**Plan**"), one or more stock options (the "**Option"** or "**Options**") to purchase shares of the Company's class A common stock, pursuant to the terms of the Plan and the applicable option agreement granting the Options (the "**Option Agreements**");

WHEREAS, the parties now desire to amend the Options to provide for a longer period of time to exercise the Options following termination of the Holder's employment with the Company; and

WHEREAS, the Holder understands that as a result of this Option Amendment Agreement any Option that qualified as an Incentive Stock Option, or ISO, shall no longer qualify as an Incentive Stock Option, and shall as of the date of execution of this Option Amendment Agreement automatically become a non-statutory Option; and the Holder understands further that upon exercise of this Option they shall have an obligation to satisfy any tax withholding obligation of the Company with respect to such exercise, pursuant to the terms of the Plan.

NOW, THEREFORE, the parties agree as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.Notwithstanding anything to the contrary in the applicable Option Agreement or the Plan, (i) your stock options will continue to vest through February 29, 2024 (notwithstanding your termination of employment), (ii) the period for exercising your stock options, to the extent that they have vested as of February 29, 2024, will be extended until the earlier of March 31, 2024, or the expiration of the applicable Option, as stated in the applicable Option Agreement, and (iii) any of your remaining stock options that would not vest on or before February 29, 2024 will terminate immediately.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.Except as expressly amended by this Option Amendment Agreement, all other terms and conditions of the Options shall remain in full force and effect without any modification or amendment, *provided however* that as a result of this Option Amendment Agreement, any Option that was an Incentive Stock Option (as defined in the Plan) shall no longer qualify as an Incentive Stock Option, and shall as of the date of execution of this Option Amendment Agreement automatically become a non-statutory Option.

IN WITNESS WHEREOF, the Company has caused this Option Amendment Agreement to be executed by its duly authorized officer.

Pear Therapeutics, Inc.

By: <u>/s/ Christopher D.T. Guiffre</u>

Name: <u>Christopher D.T. Guiffre</u>

Title: <u>CFO & COO</u>

21

------

*Separation Agreement*

Dated: <u>12/17/2022</u>

***The Holder understands that as a result of this Option Amendment Agreement any Option that qualified as an ISO shall no longer qualify as an ISO, and shall as of the date of execution of this Option Amendment Agreement automatically become a non-statutory Option. The Holder understands further that upon exercise of this Option they shall have an obligation to satisfy any tax withholding obligation of the Company with respect to such exercise, pursuant to the terms of the Plan.***

ACCEPTED AND AGREED:

Name: <u>/s/ Katherine Jeffery</u>

By: <u>Katherine Jeffery</u>

Date: <u>12/19/2022</u>

22

## Exhibit 10.35

**FIRST AMENDMENT TO EXCLUSIVE LICENSE AGREEMENT OF June 28, 2018**

**University of Virginia Licensing & Ventures Group – Pear Therapeutics (US), Inc.**

This First Amendment ("First Amendment") is made effective this [day] day of [month], 2022 ("First Amendment Date") by and between the University of Virginia Patent Foundation d/b/a University of Virginia Licensing & Ventures Group ("UVA LVG"), a Virginia non-profit corporation having a principal place of business at 722 Preston Avenue, Suite 107, Charlottesville, Virginia 22903, and Pear Therapeutics, Inc. n/k/a Pear Therapeutics (US), Inc., ("Pear"), a Delaware for-profit corporation with offices at 200 State Street, 13<sup>th</sup> Floor, Boston, MA 02109 (each a "Party", and collectively the "Parties").

***WITNESSETH***

***WHEREAS*,** UVA LVG and BeHealth Solutions, LLC ("BeHealth") entered into an Exclusive License Agreement dated April 1, 2011, previously amended on March 19, 2015 (collectively the "Prior Agreement");

***WHEREAS,*** UVA LVG and BeHealth previously agreed to supersede the Prior Agreement with an amended and reinstated license agreement, dated June 28, 2018, related to the UVA LVG Tech ID RITTERBAND-SHUTI ("SHUTI Amended and Restated Agreement");

***WHEREAS,*** as part of the Assignment, License & Services Agreement effective as of March 24, 2018, by and between BeHealth and Pear, BeHealth transferred to Pear, among other things, all of BeHealth's rights and obligations under the SHUTI Amended and Restated Agreement;

&nbsp;&nbsp;&nbsp;&nbsp;***WHEREAS***, the Parties agree to amend the SHUTI Amended and Restated Agreement to revise and update certain provisions in accordance with the terms and conditions set forth below; and

***NOW, THEREFORE***, in consideration of the premises set forth above and the mutual covenants set forth below, the Parties hereto agree as follows:

***AMENDMENT***

**1.**Section 5.3 of the SHUTI Amended and Restated Agreement shall be amended as follows:

The fifth sentence of Section 5.3 which states, "Any amounts due hereunder which are unpaid thirty (30) days after the end of the calendar quarter shall bear simple interest accrued at the annual rate of twelve percent (12%)." is replaced with the sentence, "Any amounts due hereunder which are unpaid sixty (60) days after the end of the calendar quarter shall bear simple interest accrued at the annual rate of twelve percent (12%)."

**2.**All other terms and conditions of the Agreement remain in full force and effect for the term of the Agreement.

**3.**All terms capitalized herein maintain their definition as set forth in the Agreement.

*(The Balance of This Page Intentionally Left Blank – Signature Page to Follow)*

------

***IN WITNESS WHEREOF***, the Parties hereto have caused this First Amendment to be duly executed in duplicate counterparts, each of which shall be deemed to constitute an original, effective as of the First Amendment Date.

&nbsp;&nbsp;&nbsp;&nbsp;The undersigned verify that they have the authority to bind to this First Amendment the party on behalf of which they are executing below.

---

| | | | |
|:---|:---|:---|:---|
| University of Virginia Patent Foundation<br>d/b/a University of Virginia Licensing & Ventures Group | University of Virginia Patent Foundation<br>d/b/a University of Virginia Licensing & Ventures Group | Pear Therapeutics (US), Inc. | Pear Therapeutics (US), Inc. |
| By: | /s/ Richard W. Chylla | <br>By: | <br>/s/ Corey McCann |
|  | Richard W. Chylla<br>Executive Director |  | Corey McCann, MD, PhD<br>President & CEO |
| Date: | 12/8/2022 | <br>Date: | <br>12/8/2022 |
| By: | /s/ Peter M. Grant, II |  |  |
|  | Peter M. Grant, II<br>Chair, Board of Directors |  |  |
| <br>Date: | <br>12/8/2022 |  |  |

---

## Exhibit 10.36

***Execution Version***

**<u>FIRST AMENDMENT TO AMENDED AND RESTATED<br>CREDIT AGREEMENT AND GUARANTY</u>**

This FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT AND GUARANTY, dated as of January 13, 2023 (this "***Amendment***"), is by and among PEAR THERAPETUICS, INC., a Delaware corporation (f/k/a THIMBLE POINT ACQUISITION CORP.) ("***Holdings***"), PEAR THERAPEUTICS (US), INC., a Delaware corporation (f/k/a PEAR THERAPEUTICS, INC.) (the "***Borrower***"), and PERCEPTIVE CREDIT HOLDINGS III, LP, a Delaware limited partnership, as administrative agent for the Lenders (in such capacity, together with its successors and assigns, the "***Administrative Agent***") and as the Majority Lender. Reference is made to the Amended and Restated Credit Agreement and Guaranty, dated as of March 25, 2022 (as amended, supplemented or otherwise modified and in effect prior to the date hereof, the "***Existing Credit Agreement***", and as further amended by this Amendment, the "***Credit Agreement***"), by and among the Borrower, certain subsidiaries of the Borrower from time to time party thereto, the Lenders (as defined therein) from time to time party thereto and the Administrative Agent. Capitalized terms used herein without definition shall have the same meanings as set forth in the Credit Agreement.

<u>RECITALS</u> 

WHEREAS, the Loans under the Existing Credit Agreement bear interest based on London interbank offered rate ("***LIBOR***") in accordance with the terms of the Existing Credit Agreement;

WHEREAS, on March 5, 2021, the U.K. Financial Conduct Authority confirmed the Governmental Authority having jurisdiction over the quotation or determination of LIBOR will either cease to supervise or sanction such rates for purposes of interest rates on loans or no longer be representative and the Administrative Agent has determined that One-Month LIBOR (as defined in the Existing Credit Agreement) can no longer be determined by the Administrative Agent; and

WHEREAS, the parties to the Existing Credit Agreement have agreed to establish an alternate rate of interest to One-Month LIBOR and to make such other related changes to the Existing Credit Agreement to reflect such alternate rate of interest;

NOW, THEREFORE, the parties hereto hereby agree as follows:

**ARTICLE I<br>AMENDMENTS TO THE EXISTING CREDIT AGREEMENT**

**SECTION 1.01. Amendments to the Existing Credit Agreement**. As of the Amendment Effective Date (defined below), the Existing Credit Agreement is hereby amended as set forth below:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)Section 1.01 of the Existing Credit Agreement is hereby amended by inserting the following new definitions in their respective alphabetically correct places:

"***Amendment No. 1***" means that certain First Amendment to Amended and Restated Credit Agreement and Guaranty, dated as of January 13, 2023.

"***Conforming Changes***" means, with respect to either the use or administration of One-Month Term SOFR, any technical, administrative or operational changes (including changes to the definition of "Business Day," the definition of "U.S. Government Securities Business Day," the definition of "Interest Period" or any

FH11231653.2

------

similar or analogous definition (or the addition of a concept of "interest period"), with respect to the timing and frequency of determining rates and making payments of interest, the timing of borrowing requests, prepayments or conversion or continuation notices, the applicability and length of lookback periods, the applicability of **Section 3.02(e)** and other technical, administrative or operational matters) that the Administrative Agent reasonably decides may be appropriate to reflect the adoption and implementation of such rate or to permit the use and administration thereof by the Administrative Agent in a manner substantially consistent with market practice (or, if the Administrative Agent decides that adoption of any portion of such market practice is not administratively feasible or if the Administrative Agent determines that no market practice for the administration of such rate exists, in such other manner of administration as the Administrative Agent reasonably decides is necessary in connection with the administration of this Agreement and the other Loan Documents).

"***One-Month Term SOFR***" means, the Term SOFR Reference Rate (expressed, as a decimal, rounded upwards, if necessary, to the nearest 1/100th of 1%) for a one month tenor on the day (such day, the "***Periodic Term SOFR Determination Day***") that is two (2) U.S. Government Securities Business Days prior to the first day of the applicable Interest Period, as such rate is published by the Term SOFR Administrator; <u>provided</u> that if as of 5:00 p.m. (New York City time) on any Periodic Term SOFR Determination Day the Term SOFR Reference Rate for the applicable tenor has not been published by the Term SOFR Administrator, then Term SOFR will be the Term SOFR Reference Rate for such tenor as published by the Term SOFR Administrator on the first preceding U.S. Government Securities Business Day for which such Term SOFR Reference Rate for such tenor was published by the Term SOFR Administrator so long as such first preceding U.S. Government Securities Business Day is not more than three (3) U.S. Government Securities Business Days prior to such Periodic Term SOFR Determination Day.

"***Periodic Term SOFR Determination Day***" has the meaning set forth in the definition of "One-Month Term SOFR".

"***Reference Rate Transition Event***" means the occurrence of one or more of the following events with respect to the Reference Rate then in effect:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;a public statement or publication of information by or on behalf of the administrator of such Reference Rate (or the published component used in the calculation thereof) stating that such administrator has ceased or will cease to provide such Reference Rate (or such component thereof), permanently or indefinitely; <u>provided</u> that, at the time of such statement or publication, there is no successor administrator that will continue to provide such Reference Rate (or such component thereof);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;a public statement or publication of information by the Governmental Authority governing or regulating the administrator of such Reference Rate (or the published component used in the calculation thereof), the U.S. Federal Reserve System, an insolvency official with jurisdiction over the then-current administrator for such Reference Rate (or such component thereof), a resolution authority with jurisdiction over the then-current administrator for such Reference Rate (or such component thereof) or a court or an entity with similar insolvency or resolution authority over the administrator for such Reference Rate (or such

FH11231653.2

------

component thereof), which in any case states that the then-current administrator of such Reference Rate (or such component thereof) has ceased or will cease to provide such Reference Rate (or such component thereof) permanently or indefinitely; <u>provided</u> that, at the time of such statement or publication, there is no successor administrator that will continue to provide such Reference Rate (or such component thereof); or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;a public statement or publication of information by the Governmental Authority governing or regulating the then-current administrator of such Reference Rate stating that such Reference Rate (or the published component used in the calculation thereof) is no longer, or as a of a specified future date will not be, representative.

A "Reference Rate Transition Event" will be deemed to have occurred with respect to any Reference Rate if a public statement or publication of information set forth above has occurred with respect to each then-current available tenor of such Reference Rate (or the published component used in the calculation thereof).

"***SOFR***" means a rate equal to the secured overnight financing rate as administered by the SOFR Administrator.

"***SOFR Administrator***" means the Federal Reserve Bank of New York (or a successor administrator of the secured overnight financing rate).

"***Term SOFR Administrator***" means CME Group Benchmark Administration Limited (CBA) (or a successor administrator of the Term SOFR Reference Rate selected by the Administrative Agent in its reasonable discretion).

"***Term SOFR Reference Rate***" means the forward-looking term rate based on SOFR.

"***U.S. Government Securities Business Day***" means any day except for (i) a Saturday, (ii) a Sunday or (iii) a day on which the Securities Industry and Financial Markets Association recommends that the fixed income departments of its members be closed for the entire day for purposes of trading in United States government securities."

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)The following defined term set forth in Section 1.01 of the Existing Credit Agreement is hereby amended and restated in its entirety to read as follows:

"***Reference Rate***" means One-Month Term SOFR; <u>provided</u> that if One-Month Term SOFR can no longer be determined by the Administrative Agent for any reason (in its sole discretion, which determination shall be conclusive absent manifest or demonstrable error), including as a result of the Term SOFR Reference Rate not being available or published on a current basis or as a result of the occurrence of a Reference Rate Transition Event, then the Administrative Agent and the Borrower shall endeavor, in good faith, to establish an alternate rate of interest to One-Month Term SOFR that gives due consideration to the then prevailing market convention for determining a rate of interest for middle-market loans in the United States at such time, and shall enter into an amendment to this Agreement to reflect such alternate rate of interest and such other related changes to this Agreement as may be applicable; <u>provided</u>, <u>further</u> that, until such alternate rate of interest is agreed upon by the Administrative Agent and the Borrower, the Reference Rate for purposes hereof and of each other Loan Document shall be the Wall Street Journal Prime Rate.

FH11231653.2

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)The following defined term set forth in Section 1.01 of the Existing Credit Agreement is hereby deleted in their entirety: "One-Month LIBOR".

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)Section 1 of the Existing Credit Agreement is hereby amended by inserting new Sections 1.05 and 1.06 at the end of such section, which shall read as follows:

**"1.05&nbsp;&nbsp;&nbsp;&nbsp;Reference Rate Replacement**. Upon the occurrence of an event of the type described in the first proviso of the definition of "Reference Rate", the Administrative Agent will promptly notify the Borrower thereof and, as set forth in such proviso, the Administrative Agent and the Borrower shall endeavor, in good faith, to establish an alternate rate of interest to One-Month Term SOFR, provided that there is no assurance that the composition or characteristics of any such alternative, successor or replacement Reference Rate will be similar to or produce the same value or economic equivalence as One-Month Term SOFR or that it will have the same volume or liquidity as did One-Month Term SOFR prior to its discontinuance or unavailability.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**1.06&nbsp;&nbsp;&nbsp;&nbsp;Rates.**

The Administrative Agent does not warrant or accept responsibility for, and shall not have any liability with respect to (i) the continuation of, administration of, submission of, calculation of or any other matter related to the Term SOFR Reference Rate or One-Month Term SOFR, or any component definition thereof or rates referred to in the definition thereof, or any alternative, successor or replacement rate thereto, including whether the composition or characteristics of any such alternative, successor or replacement rate will be similar to, or produce the same value or economic equivalence of, or have the same volume or liquidity as, the Term SOFR Reference Rate or One-Month Term SOFR prior to its discontinuance or unavailability, or (ii) the effect, implementation or composition of any Conforming Changes. The Administrative Agent and its Affiliates or other related entities may engage in transactions that affect the calculation of the Term SOFR Reference Rate or One-Month Term SOFR, any alternative, successor or replacement rate or any relevant adjustments thereto, in each case, in a manner adverse to the Borrower. The Administrative Agent may select information sources or services in its reasonable discretion to ascertain the Term SOFR Reference Rate or One-Month Term SOFR, in each case pursuant to the terms of this Agreement, and shall have no liability to the Borrower, any Lender or any other Person or entity for damages of any kind, including direct or indirect, special, punitive, incidental or consequential damages, costs, losses or expenses (whether in tort, contract or otherwise and whether at law or in equity), for any error or calculation of any such rate (or component thereof) provided by any such information source or service."

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)Section 3.02 of the Existing Credit Agreement is hereby amended by adding new clauses (d) and (e) at the end of such section, which shall read as follows:

"(d)&nbsp;&nbsp;&nbsp;&nbsp;**Conforming Changes**. In connection with the use or administration of One-Month Term SOFR, the Administrative Agent will have the right to make Conforming Changes from time to time and, notwithstanding anything to the contrary herein or in any other Loan Document, any amendments implementing such Conforming Changes will become effective without any further action or consent of any other party to this Agreement or any other Loan Document. The Administrative Agent will promptly notify the Borrower and the Lenders of the effectiveness of any Conforming Changes in connection with the use or administration of One-Month Term SOFR.

FH11231653.2

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;&nbsp;&nbsp;&nbsp;**Compensation for Losses**. In the event of the payment of any principal of any Loan other than on the last day of the Interest Period applicable thereto (including as a result of an Event of Default), then, in any such event, the Borrower shall compensate each Lender for any loss, cost or expense attributable to such event and actually incurred by such Lender, including any loss, cost or expense arising from the liquidation or redeployment of funds, but excluding lost profits or the loss of any Applicable Margin. A certificate of any Lender setting forth any amount or amounts that such Lender is entitled to receive pursuant to this **Section 3.02(e)** shall be delivered to the Borrower and shall be conclusive absent manifest error. The Borrower shall pay such Lender the amount shown as due on any such certificate within ten (10) days after receipt thereof. This **Section 3.02(e)** shall not apply with respect to Taxes other than any Taxes that represent Losses arising from any non-Tax loss, cost or expense."

**SECTION 1.02. Existing LIBOR Loans**. Notwithstanding the amendments contemplated by this Amendment, interest due and payable under the Credit Agreement on January 31, 2023, shall accrue and be payable as set forth in the Existing Credit Agreement without giving effect to the amendments contemplated by this Amendment.

**ARTICLE II**

**ACKNOWLEDGEMENT, AGREEMENT AND CONSENT AND <br>REPRESENTATIONS AND WARRANTIES**

**SECTION 1.01.** Each Obligor confirms, agrees, represents and warrants that, notwithstanding the effectiveness of this Amendment, the Obligations of such Obligor under the Credit Agreement and each other Loan Document to which such Obligor is a party shall not be and have not been impaired or limited and the Credit Agreement and each other Loan Document to which such Obligor is a party is, and shall continue to be, in full force and effect and is hereby confirmed and ratified in all respects by such Obligor.

**SECTION 1.02.** Each Obligor hereby acknowledges, agrees, represents and warrants that, except as expressly provided in this Amendment, no term or provision of the Existing Credit Agreement or any other Loan Document to which such Obligor is a party is amended or otherwise modified in any respect.

**SECTION 1.03.** To induce the Administrative Agent and the Lenders to execute and deliver this Amendment, each Obligor party hereto further represents and warrants to the Administrative Agent and the Lenders that as of the date hereof each of the following statements are true and correct:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)Such Obligor has full power, authority and legal right to enter into this Amendment and perform its obligations under this Amendment and each Loan Document to which it is a party as amended hereby.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)The transactions contemplated by this Amendment and the Credit Agreement are within such Obligor's corporate or other powers and have been duly authorized by all necessary corporate action including, if required, approval by all necessary holders of Equity Interests. This Amendment has been duly executed and delivered by such Obligor and this Amendment, the Credit Agreement and each other Loan Document to which such Obligor is a party each constitutes a legal, valid and binding obligation of such Obligor, enforceable against such Obligor in accordance with its terms, except as such enforceability may be limited by (i) bankruptcy, insolvency, reorganization, moratorium or similar laws of general applicability affecting the enforcement of creditors' rights and (ii) the application of general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).

FH11231653.2

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)No authorization or approval or other action by, and no notice to or filing with, any Governmental Authority or any other Person (other than those that have been duly obtained or made and which are in full force and effect as of the Amendment Effective Date) is required for the due execution or delivery by such Obligor of this Amendment, or performance by such Obligor of its obligations under this Amendment and each Loan Document to which it is a party as amended hereby. The execution, delivery and performance by such Obligor of this Amendment and the Loan Documents to which it is a party as amended hereby, will not (i) violate or conflict with any Law, (ii) violate or conflict with any Organic Document of any Obligor, (iii) violate or conflict with any Governmental Approval of any Governmental Authority, (iv) violate or result in a default under any Material Agreement binding upon an Obligor or any of its Subsidiaries that, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect or (v) result in the creation or imposition of any Lien (other than Permitted Liens) on any asset of such Obligor.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)Both immediately before and after giving effect to this Amendment, no Default or Event of Default shall have then occurred and be continuing, or could reasonably be expected to result from the execution, delivery and performance of this Amendment or the transactions contemplated hereby.

**ARTICLE III**

**CONDITIONS PRECEDENT**

**SECTION 1.01. Conditions to Effectiveness of this Amendment**. This Amendment shall become effective only upon, and shall be subject to, the prior or simultaneous satisfaction or waiver of each of the following conditions precedent in a manner reasonably satisfactory to the Administrative Agent (the date of satisfaction of such conditions being referred to as the "***Amendment Effective Date***"):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)**Executed Amendment**. The Administrative Agent shall have received this Amendment, duly executed by the Borrower, the Subsidiary Guarantors, the Administrative Agent and each of the Lenders party hereto.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)**Representations and Warranties**. The statements, representations and warranties contained in **Article II** above shall each be true and correct, both immediately before and after giving effect to this Amendment, and the Administrative Agent shall have received a certificate executed by a Responsible Officer of the Borrower, in form and substance reasonably satisfactory to the Administrative Agent, addressed to it and the Lenders and certifying as to the foregoing.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)**Costs and Expenses, Etc**. The Administrative Agent shall have received for its account and the account of each Lender all reasonable and documented fees, costs and expenses due and payable to them pursuant to Section 14.03 of the Credit Agreement (including the Administrative Agent's and each Lender's reasonable and documented legal fees and out-of-pocket expenses).

**ARTICLE IV<br>MISCELLANEOUS**

**SECTION 1.01. Governing Law; Jurisdiction; Jury Trial**. This Amendment and the rights and obligations of the parties hereunder shall be governed by, and construed in accordance with, the law of the State of New York. The jurisdiction and waiver of jury trial provisions set forth in Sections 14.10 and 14.11 of the Credit Agreement, respectively, are incorporated herein by reference *mutatis mutandis*.

FH11231653.2

------

**SECTION 1.02. Effect of this Amendment**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)On and after the Amendment Effective Date, each reference in any Loan Document (other than this Amendment) to the Credit Agreement shall mean and be a reference to the Existing Credit Agreement as amended by this Amendment.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)This Amendment shall constitute a Loan Document for all purposes of the Credit Agreement and each other Loan Documents. The Obligors party hereto agree that all of the representations, warranties, terms, covenants, conditions and other provisions of the Existing Credit Agreement and other Loan Documents shall, except as expressly set forth in this Amendment, remain unchanged and shall continue to be, and shall remain, in full force and effect in accordance with their respective terms. The amendments set forth herein shall be limited precisely as provided for herein to the provisions expressly amended herein and shall not be deemed to be an amendment to or modification of any other term or provision of the Existing Credit Agreement or any other Loan Document or of any transaction or further or future action on the part of any Obligor which would require the consent of the Lenders or the Administrative Agent under the Credit Agreement or any other Loan Document. Except as expressly amended by this Amendment, the Existing Credit Agreement and the other Loan Documents are and shall continue to be in full force and effect and are hereby in all respects ratified and confirmed.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)The execution, delivery and effectiveness of this Amendment shall not operate as a waiver of any right, power or remedy of any holder of the Administrative Agent or any Lender under any Loan Document or applicable Law, nor constitute a waiver of any provision of the Credit Agreement.

**SECTION 1.03. No Novation**. This Amendment is not intended by the parties to be, and shall not be construed to be, a novation of the Existing Credit Agreement, any other Loan Document or any Obligation thereunder.

**SECTION 1.04. Counterparts; Electronic Signatures**. This Amendment may be executed in any number of counterparts, all of which taken together shall constitute one and the same instrument and any of the parties hereto may execute this Amendment by signing any such counterpart. Delivery of an executed signature page of this Amendment by facsimile transmission or electronic transmission (in PDF format) shall be effective as delivery of a manually executed counterpart hereof. Any signature (including, without limitation, (x) any electronic symbol or process attached to, or associated with, a contract or other record and adopted by a person with the intent to sign, authenticate or accept such contract or record and (y) any facsimile or .pdf signature) hereto or to any other certificate, agreement or document related to this transaction, and any contract formation or record-keeping, in each case, through electronic means, shall have the same legal validity and enforceability as a manually executed signature or use of a paper-based record-keeping system to the fullest extent permitted by applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any similar state law based on the Uniform Electronic Transactions Act, and the parties hereto hereby waive any objection to the contrary.

**SECTION 1.05. Binding Nature**. The provisions of this Amendment shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and permitted assigns; <u>provided</u> that no Obligor may assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of the Administrative Agent.

**SECTION 1.06. Captions**. The captions and section headings appearing herein are included solely for convenience of reference and are not intended to affect the interpretation of any provision of this Amendment.

FH11231653.2

------

**SECTION 1.07. Severability**. If any provision hereof is found by a court to be invalid or unenforceable, to the fullest extent permitted by any applicable Law the parties agree that such invalidity or unenforceability shall not impair the validity or enforceability of any other provision hereof.

**SECTION 1.08. Integration**. This Amendment constitutes the entire agreement among the parties with respect to the subject matter hereof and supersedes any and all previous agreements and understanding, oral or written, relating to the subject matter hereof.

*[Signature pages to follow]*

FH11231653.2

------

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered as of the date hereof.

BORROWER:

**PEAR THERAPEUTICS (US), INC.**

---

| | |
|:---|:---|
| &nbsp;&nbsp;By | /s/ Ronan O'Brien |

---

Name: Ronan O'Brien

Title: General Counsel & Chief Compliance Officer

HOLDINGS:

**PEAR THERAPEUTICS, INC.**

---

| | |
|:---|:---|
| &nbsp;&nbsp;By | /s/ Ronan O'Brien |

---

Name: Ronan O'Brien

Title: Secretary

FH11231653.2

------

**PERCEPTIVE CREDIT HOLDINGS III, LP,** as the Administrative Agent and Majority Lender

By: PERCEPTIVE CREDIT OPPORTUNITIES GP, LLC, its general partner

---

| | |
|:---|:---|
| &nbsp;&nbsp;By | /s/ Sandeep Dixit |

---

Name: Sandeep Dixit

Title: Chief Credit Officer

---

| | |
|:---|:---|
| &nbsp;&nbsp;By | /s/ Sam Chawla |

---

Name: Sam Chawla

Title: Portfolio Manager

FH11231653.2

## Exhibit 23.1

**CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

We consent to the incorporation by reference in Registration Statement Nos. 333-261876 and 333-269097 on Form S-3 and Registration Statement Nos. 333-262568 and 333-269667 on Form S-8 of our report dated March 31, 2023, relating to the financial statements of Pear Therapeutics, Inc., appearing in this Annual Report on Form 10-K for the year ended December 31, 2022.

/s/

Boston, Massachusetts

March 31, 2023

## Exhibit 31.1

**CERTIFICATION PURSUANT TO**

**RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002**

I, Corey M. McCann, certify that:

&nbsp;&nbsp;&nbsp;&nbsp;1.I have reviewed this Annual Report on Form 10-K of Pear Therapeutics, Inc.;

&nbsp;&nbsp;&nbsp;&nbsp;2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

&nbsp;&nbsp;&nbsp;&nbsp;3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

&nbsp;&nbsp;&nbsp;&nbsp;4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

------

&nbsp;&nbsp;&nbsp;&nbsp;5.The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: March 31, 2023

---

| |
|:---|
| /s/ Corey M. McCann |
| Dr. Corey M. McCann |
| *Chief Executive Officer*<br>*(Principal Executive Officer)* |

---

## Exhibit 31.2

**CERTIFICATION PURSUANT TO**

**RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002**

I, Christopher D.T. Guiffre, certify that:

&nbsp;&nbsp;&nbsp;&nbsp;1.I have reviewed this Annual Report on Form 10-K of Pear Therapeutics, Inc.;

&nbsp;&nbsp;&nbsp;&nbsp;2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

&nbsp;&nbsp;&nbsp;&nbsp;3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

&nbsp;&nbsp;&nbsp;&nbsp;4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

------

&nbsp;&nbsp;&nbsp;&nbsp;5.The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: March 31, 2023

---

| |
|:---|
| /s/ Christopher D.T. Guiffre |
| Christopher D.T. Guiffre |
| *Chief Financial Officer*<br>*(Principal Financial Officer)* |

---

## Exhibit 32.1

**Certification of Periodic Financial Report**

**Pursuant to 18 U.S.C. Section 1350**

**as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002**

Each of the undersigned officers of Pear Therapeutics, Inc. (the "Company") certifies, to his knowledge and solely for the purposes of 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Annual Report on Form 10-K of the Company for the year ended December 31, 2022 complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in the Form 10-K fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: March 31, 2023

---

| |
|:---|
| /s/ Corey M. McCann |
| Dr. Corey M. McCann |
| *Chief Executive Officer*<br>*(Principal Executive Officer)* |

---

Dated: March 31, 2023

---

| |
|:---|
| /s/ Christopher D.T. Guiffre |
| Christopher D.T. Guiffre |
| *Chief Financial Officer*<br>*(Principal Financial Officer)* |

---

<br>