Exhibit 99.1

PeriShip, LLC

Audited Financial Statements

As of and For the Years Ended December 31, 2021 and 2020

PeriShip, LLC

Table of Contents

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Members of

PeriShip, LLC

Opinion on the Financial Statements

We have audited the accompanying balance sheets of PeriShip, LLC ( the “Company”) as of December 31, 2021 and 2020, and the related statements of operations, members’ equity, and cash flows for the years then ended, 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, 2021 and 2020, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

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 and in accordance with auditing standards generally accepted in the United States of America. 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.

Critical Audit Matters

Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that there are no critical audit matters.

/s/ MaloneBailey, LLP

www.malonebailey.com

We have served as the Company's auditor since 2022.

Houston, Texas

June 23, 2022

PeriShip, LLC

Balance Sheets

In thousands

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

PeriShip, LLC

Statements of Operations

In thousands

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

PeriShip, LLC

Statements of Cash Flows

In thousands

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

PeriShip, LLC

Statements of Members' Equity

In thousands

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

PeriShip, LLC

Notes to Financial Statements

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of the Business

PeriShip, LLC (“PeriShip,” or the “Company”) is a value-added service provider for time and temperature sensitive parcel management.  PeriShip provides shipping and logistics services utilizing its proprietary predictive analytics software and supporting call center services.  Using its proprietary IT platform, the Company provides real-time information and analysis to mitigate supply chain flow interruption, delivering last-mile resolution for key markets, including the perishable healthcare and food industries.

Basis of Presentation

The Company prepares its financial statements in accordance with accounting principles generally accepted in the United States of America (“GAAP”).

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.

Fair Value of Financial Instruments

The Company’s financial instruments consist of accounts receivable, accounts payable, and accrued expenses and line of credit. The carrying value of accounts receivable, accounts payable, accrued expenses and a line of credit, approximate their fair value because of their short maturities. 

The Company follows FASB ASC 820, “Fair Value Measurements and Disclosures,” and applies it to all assets and liabilities that are being measured and reported on a fair value basis. The statement requires that assets and liabilities carried at fair value will be classified and disclosed in one of the following three categories:

Level 1: Quoted market prices in active markets for identical assets or liabilities

Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data

Level 3: Unobservable inputs that are not corroborated by market data

The level in the fair value within which a fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. As of December 31, 2021 and 2020, the Company has no financial assets or liabilities that are required to be fair valued on a recurring basis.

Revenue Recognition

The Company accounts for revenues according to Accounting Standards Codification (“ASC”) Topic 606, “Revenue from Contracts with Customers” which establishes principles for reporting information about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity's contracts to provide goods or services to customers. 

The Company applies the following five steps in order to determine the appropriate amount of revenue to be recognized as it fulfills its obligations under each of its agreements:

During the years ended December 31, 2021 and 2020, the Company’s revenues primarily consisted of its two service lines, premium and proactive services. Premium services are a value-added service for the Company’s strategic transportation partner, specializing in the pharmaceutical and the healthcare space. The Company’s proactive services are performed for end user customers and include usage of the Company’s web-based proprietary software technology-led solutions and client-centric service team for support throughout the delivery of a package in addition to customer service post-delivery.

The Company partners with a third-party carrier for execution of the delivery of shipments. The Company evaluates under ASC 606 in determining if it is the principal or the agent in executing its performance obligations. The Company determined it acts as the principal for its transportation services performance obligation since it is in control of establishing the prices for the specified services, manages all aspects of the shipments process and assumes risk in the loss of delivery through non-collection of revenues. Such transportation services revenue is presented on a gross basis in the Statements of Operations.

Cash and Cash Equivalents

For purposes of reporting cash flows, the Company considers all cash accounts, which are not subject to withdrawal restrictions or penalties, and certificates of deposit and commercial paper with original maturities of 90 days or less to be cash or cash equivalents.

Accounts Receivable

Accounts receivable consists of outstanding amounts due from the performance of our services. Accounts receivable are written off when they are determined to be uncollectible and recorded as bad debt expense included in General and administrative expenses in the accompanying Statements of Operations. The Company recorded bad debt expense of $0 thousand and $34 thousand for the years ended December 31, 2021 and December 21, 2020, respectively.

Concentration of Credit Risk Involving Cash and Cash Equivalents

The Company’s cash and cash equivalents are held at one financial institution. At times, the Company’s deposits may exceed Federal Deposit Insurance Corporation (FDIC) coverage limits. The Company has not experienced any losses from maintaining cash accounts in excess of federally insured limits.

Property and Equipment

Property and equipment are stated at cost, less accumulated depreciation. Replacements and major improvements are capitalized; maintenance and repairs are charged to expense as incurred.

Depreciation is calculated using the straight-line method over the estimated useful lives of the related assets. Furniture, Fixtures and Equipment have a useful life between five and seven years. Leasehold Improvements are depreciated over the lower of the asset's estimated useful life or the lease term.

Income Taxes

The Company has elected under the Internal Revenue Code and related state provisions to be an S-Corporation. In lieu of corporate income taxes, the stockholders of an S-Corporation are taxed at their proportionate share of the Company’s taxable income. Therefore, no provision or liability for Federal income taxes has been included in the financial statements.

Related Parties

Related parties, which can be a corporation or individual, are considered to be related if the Company has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operational decisions. Companies are also considered to be related parties if they are subject to common control or common significant influence. During the year ended December 31, 2021, and December 31, 2020, the Company incurred expenses of gross salaries in relation to the owner at the time, and to his immediate family for $460 thousand and $692 thousand, respectively. Additionally, the premises rented by the Company are owned by the owner of the Company at the time, and hence considered a related party transaction. The total charges for rent during the year ended December 31, 2021 and 2020 were $141 thousand and $158 thousand, respectively. Additionally, the Company matched contributions to its retirement plan for its related parties, see Note 9 – Employee Benefit Plan. From time to time, the Company pays various fees such as property taxes and insurance on behalf of the owner at the time, and his immediate family. As of December 31, 2021 and 2020, receivables from related parties were $90 thousand and $46 thousand, respectively.

Advertising

The Company expenses advertising costs as they are incurred. Advertising expense was $1 thousand and $2 thousand for the years ended December 31, 2021 and 2020, respectively.

NOTE 2 – UNBILLED REVENUE AND OTHER CURRENT ASSETS

Unbilled revenue and other current assets as of December 31, 2021 and 2020 consist of the following:

NOTE 3 – PROPERTY AND EQUIPMENT

Property and equipment as of December 31, 2021 and 2020 consist of the following:

Depreciation expense for the years ended December 31, 2021 and 2020 were $15 thousand and $24 thousand, respectively, included in General and administrative in the accompanying Statements of Operations.

NOTE 4 – ACCOUNTS PAYABLE AND OTHER ACCRUED EXPENSES

Accounts Payable and Other Accrued Expenses as of December 31, 2021 and 2020 consist of the following:

NOTE 5 – LINE OF CREDIT

The Company maintains a secured revolving short-term line of credit of up to $1,000 thousand bearing a variable interest indexed to the lending bank’s prime rate plus 50 basis points, with a minimum of 4%, callable upon demand. During the year ended December 31, 2021, the Company borrowed $750 thousand, accrued and paid interest of $14 thousand, and repaid $573 thousand in principal. During the year ended December 31, 2020, the Company accrued and paid interest of $5 thousand, and repaid $51 thousand in principal. As of December 31, 2021 and 2020, there was $260 thousand and $84 thousand outstanding, respectively. During the years ended December 31, 2021 and 2020, the Company expensed $14 thousand and $5 thousand, respectively, related to interest expense, included in Interest expenses, net, in the accompanying Statements of Operations. The interest rate as of December 31, 2021 and 2020, was 4.00%.

NOTE 6 – TERM NOTE

On April 23, 2020, the Company entered into a paycheck protection program term note for $486 thousand (the “SBA Loan”) with People’s United Bank, National Association, under the enacted Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) pursuant to the Paycheck Protection Program (the “PPP”), which is administered by the U.S. Small Business Administration. The SBA Loan is scheduled to mature on April 23, 2022, bears interest at a rate of 1.00% per annum and is subject to the terms and conditions applicable to loans administered by the U.S. Small Business Administration under the CARES Act. Pursuant to the CARES Act and the PPP, all or a portion of the principal amount of the SBA Loan is subject to forgiveness so long as, over the eight-week period following the receipt of the SBA Loan, the Company used those proceeds for payroll costs, payment on rent obligations, utility costs, and costs of certain employee benefits as per Section 1106 of the CARES Act. As of December 31, 2020, the amount outstanding on the SBA Loan was $486 thousand classified as Long-Term Liabilities and included in Term Note in the accompanying Balance Sheets.

The Company applied for and was notified on April 5, 2021 that $490 thousand in eligible payroll expenditures as described in the CARES Act, has been forgiven. Loan forgiveness is reflected in Other Income (Expenses) in the accompanying Statement of Operations. The forgiveness recognized during the year ended December 31, 2021, included principal of $486 thousand, and interest payable of $4 thousand.

NOTE 7 – REVENUE

Revenue by major service lines for the years ended December 31, 2021 and 2020 are as follows:

NOTE 8 – INCOME TAXES

The Company has elected to be taxed as an S-Corporation under the provisions of the Internal Revenue Code and comparable state income tax law. As a result, the Company is not subject to Federal income taxes in the years ended December 31, 2021 and 2020. Consequently, the members are liable for individual Federal and State income taxes on their proportionate shares of the Company’s taxable income.

Accounting for Income Taxes, prescribes guidance regarding the minimum recognition threshold an income tax position is required to meet before being recognized in the financial statements and applies to all income tax positions. Each income tax position is assessed using a two-step process. A determination is first made as to whether it is more-likely-than-not that the income tax position will be sustained, based upon technical merits, upon examination by the taxing authorities. If the income tax position is expected to meet the more-likely-than-not criteria, the benefit recorded in the financial statements equals the largest amount that is greater than 50% likely to be realized upon its ultimate settlement. The Company records income tax related interest and penalties as a component of the provision for income tax expense.

The income tax position taken by the Company for the years 2018 through 2021 remaining open under the various statutes of limitations is that the Company continues to be exempt from income taxes by virtue of its being an S-Corporation pass-through entity. Management believes this tax position meets the more-likely-than-not threshold and, accordingly, the tax benefits of this income tax position (no Federal income tax expense or liability) has been recognized for the years ended on or before December 31, 2021.

The Company operates in the state of Connecticut and is required to pay 6.99% income tax on net income. The tax provision for the years ended December 31, 2021 and 2020, was $178 thousand and $280 thousand, respectively.

NOTE 9 – EMPLOYEE BENEFIT PLANS

The Company sponsors a 401(k) plan for eligible employees. The Company matches 100% of the first 3% of eligible compensation that is deferred by employees and 50% of the next 2% the employees defer. Employees are fully vested in matching contributions. During the years ended December 31, 2021 and 2020, the Company matched contributions totaling $57 thousand and $62 thousand, respectively, of which $19 thousand and $27 thousand were to related parties. The Company also reserves the right to provide a discretionary bonus by contribution through its 401(k) plan. The vesting on the discretionary bonus is on a graded scale over a period of 6 years. The Company did not make a discretionary contribution during the year ended December 31, 2021. During the year ended December 31, 2020, the Company made a discretionary contribution of $102 thousand, of which $55 thousand were to related parties.

NOTE 10 – CONCENTRATION RISK

During the year ended December 31, 2021, one customer accounted for 16% of total sales. During the year ended December 31, 2020, one customer accounted for 15% of total sales and one customer accounted for 10% of total sales.

During the year ended December 31, 2021 and 2020, one vendor accounted for 98% and 99% of transportation cost, respectively.

As of December 31, 2021, two customers accounted for 26% of total accounts receivable. As of December 31, 2020, one customer accounted for 17% of total account receivables, and one customer accounted for 10% of total account receivables.

 NOTE 11 – SUSBEQUENT EVETNS

The Company evaluated events occurring after December 31, 2021, and through the date the financial statements were issued, June 23, 2022, and identified no events or transactions that require disclosure in these financial statements

F-10

Exhibit 99.2

PeriShip, LLC

Unaudited Financial Statements

As of and For the Three Months Ended March 31, 2022 and 2021

PeriShip, LLC

Table of Contents

PeriShip, LLC

Balance Sheets

In thousands

The accompanying notes are an integral part of these unaudited financial statements.

PeriShip, LLC

Statements of Operations

In thousands

(Unaudited)

The accompanying notes are an integral part of these unaudited financial statements.

PeriShip, LLC

Statements of Cash Flows

In thousands

(Unaudited)

The accompanying notes are an integral part of these unaudited financial statements.

PeriShip, LLC

Statements of Members' Equity

In thousands

(Unaudited)

The accompanying notes are an integral part of these unaudited financial statements.

PeriShip, LLC

Notes to Financial Statements

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of the Business

PeriShip, LLC (“PeriShip,” or the “Company”) is a value-added service provider for time and temperature sensitive parcel management.  PeriShip provides shipping and logistics services utilizing its proprietary predictive analytics software and supporting call center services.  Using its proprietary IT platform, the Company provides real-time information and analysis to mitigate supply chain flow interruption, delivering last-mile resolution for key markets, including the perishable healthcare and food industries.

Basis of Presentation

The unaudited financial statements were prepared by PeriShip, LLC, pursuant to the rules and regulations of the Securities Exchange Commission ("SEC"). The information furnished herein reflects all adjustments (consisting of normal recurring accruals and adjustments) which are, in the opinion of management, necessary to fairly present the operating results for the respective periods. Certain information and footnote disclosures normally present in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") were omitted pursuant to such rules and regulations. These financial statements should be read in conjunction with the audited financial statements and footnotes included within the 8K/A. The results for the three months ended March 31, 2022, are not necessarily indicative of the results to be expected for the year ending December 31, 2022

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.

Fair Value of Financial Instruments

The Company’s financial instruments consist of accounts receivable, accounts payable, accrued expenses, and line of credit. The carrying value of accounts receivable, accounts payable, accrued expenses and a line of credit, approximate their fair value because of their short maturities. 

The Company follows FASB ASC 820, “Fair Value Measurements and Disclosures,” and applies it to all assets and liabilities that are being measured and reported on a fair value basis. The statement requires that assets and liabilities carried at fair value will be classified and disclosed in one of the following three categories:

Level 1: Quoted market prices in active markets for identical assets or liabilities

Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data

Level 3: Unobservable inputs that are not corroborated by market data

The level in the fair value within which a fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. As of March 31, 2022 and December 31 2021, the Company has no financial assets or liabilities that are required to be fair valued on a recurring basis.

Revenue Recognition

The Company accounts for revenues according to Accounting Standards Codification (“ASC”) Topic 606, “Revenue from Contracts with Customers” which establishes principles for reporting information about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity's contracts to provide goods or services to customers. 

The Company applies the following five steps in order to determine the appropriate amount of revenue to be recognized as it fulfills its obligations under each of its agreements:

During the three months ended March 31, 2022 and 2021, the Company’s revenues primarily consisted of its two service lines, premium and proactive services. Premium services are a value-added service for the Company’s strategic transportation partner, specializing in the pharmaceutical and the healthcare space. The Company’s proactive services are performed for end user customers and include usage of the Company’s web-based proprietary software technology-led solutions and client-centric service team for support throughout the delivery of a package in addition to customer service post delivery.

The Company partners with a third-party carrier for execution of the delivery of shipments. The Company evaluates under ASC 606 in determining if it is the principal or the agent in executing its performance obligations. The Company determined it acts as the principal for its transportation services performance obligation since it is in control of establishing the prices for the specified services, manages all aspects of the shipments process and assumes risk in the loss of delivery through non-collection of revenues. Such transportation services revenue is presented on a gross basis in the Statements of Operations.

Cash and Cash Equivalents

For purposes of reporting cash flows, the Company considers all cash accounts, which are not subject to withdrawal restrictions or penalties, and certificates of deposit and commercial paper with original maturities of 90 days or less to be cash or cash equivalents.

Accounts Receivable

Accounts receivable consists of outstanding amounts due from the performance of our services. Accounts receivable are written off when they are determined to be uncollectible and recorded as bad debt expense included in General and administrative expenses in the accompanying Statements of Operations. The Company did not record bad debt expense for three months ended March 31, 2022 and 2021, respectively.

Concentration of Credit Risk Involving Cash and Cash Equivalents

The Company’s cash and cash equivalents are held at one financial institution. At times, the Company’s deposits may exceed Federal Deposit Insurance Corporation (FDIC) coverage limits. The Company has not experienced any losses from maintaining cash accounts in excess of federally insured limits.

Property and Equipment

Property and equipment are stated at cost, less accumulated depreciation. Replacements and major improvements are capitalized; maintenance and repairs are charged to expense as incurred.

Depreciation is calculated using the straight-line method over the estimated useful lives of the related assets. Furniture, Fixtures and Equipment have a useful life between five and seven years. Leasehold Improvements are depreciated over the lower of the asset's estimated useful life or the lease term.

Income Taxes

The Company has elected under the Internal Revenue Code and related state provisions to be an S-Corporation. In lieu of corporate income taxes, the stockholders of an S-Corporation are taxed at their proportionate share of the Company’s taxable income. Therefore, no provision or liability for Federal income taxes has been included in the financial statements.

Related Parties

Related parties, which can be a corporation or individual, are considered to be related if the Company has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operational decisions. Companies are also considered to be related parties if they are subject to common control or common significant influence. During the three months ended March 31, 2022 and 2021, the Company incurred expenses of gross salaries in relation to the owner at the time, and to his immediate family for $106 thousand and $106 thousand, respectively. Additionally, the premises rented by the Company are owned by the owner of the Company at the time, and hence considered a related party transaction. The total charges for rent during three months ended March 31, 2022 and 2021, were $32 thousand and $35 thousand, respectively. Additionally, during the three months ended March 31, 2022 and 2021, the Company matched contributions to its retirement plan for its related parties, see Note 8 – Employee Benefit Plan. From time to time, the Company pays various fees such as property taxes and insurance on behalf of the owner at the time, and his immediate family. As of March 31, 2022 and December 31, 2021, receivables from related parties were $95 thousand and $90 thousand, respectively.

Advertising

The Company expenses advertising costs as they are incurred. Advertising expense was less than $1 thousand for the three months ended March 31, 2022 and 2021, respectively.

NOTE 2 – UNBILLED REVENUE AND OTHER CURRENT ASSETS

Unbilled revenue and other current assets as of March 31, 2022 and December 31, 2021 consist of the following:

NOTE 3 – PROPERTY AND EQUIPMENT

Property and equipment as of March 31, 2022 and December 31, 2021 consist of the following:

Depreciation expense for the three months ended March 31, 2022 and 2021 was $4 thousand and $4 thousand, respectively, included in General and administrative in the accompanying Statements of Operations.

NOTE 4 – ACCOUNTS PAYABLE AND OTHER ACCRUED EXPENSES

Accounts Payable and Other Accrued Expenses as of March 31, 2022 and December 31, 2021 consist of the following:

NOTE 5 – LINE OF CREDIT

The Company maintains a secured revolving line of credit of up to $1,000 thousand bearing a variable interest indexed to the lending bank’s prime rate plus 50 basis points, with a minimum of 4%, callable upon demand. During the three months ended March 31, 2022, the Company borrowed $100 thousand, and repaid $75 thousand in principal. During the three months ended March 31, 2021, the Company borrowed $300 thousand, and repaid $59 thousand in principal. As of March 31, 2022 and December 31, 2021, there was $285 thousand and $260 thousand outstanding, respectively. The interest rate as of March 31, 2022 and December 31, 2021, was 4.00%.

NOTE 6 – REVENUE

Revenue by major service lines for the three months ended March 31, 2022 and 2021 are as follows:

NOTE 7 – INCOME TAXES

The Company has elected to be taxed as an S-Corporation under the provisions of the Internal Revenue Code and comparable state income tax law. As a result, the Company is not subject to Federal income taxes in the three months ended March 31, 2022 and 2021. Consequently, the members are liable for individual Federal and State income taxes on their proportionate shares of the Company’s taxable income.

Accounting for Income Taxes, prescribes guidance regarding the minimum recognition threshold an income tax position is required to meet before being recognized in the financial statements and applies to all income tax positions. Each income tax position is assessed using a two-step process. A determination is first made as to whether it is more-likely-than-not that the income tax position will be sustained, based upon technical merits, upon examination by the taxing authorities. If the income tax position is expected to meet the more-likely-than-not criteria, the benefit recorded in the financial statements equals the largest amount that is greater than 50% likely to be realized upon its ultimate settlement. The Company records income tax related interest and penalties as a component of the provision for income tax expense.

The Company operates in the state of Connecticut and is required to pay 6.99% income tax on net income. The tax provision for the three months ended March 31, 2022 and 2021, was $16 thousand and $39 thousand, respectively.

NOTE 8 – EMPLOYEE BENEFIT PLANS

The Company sponsors a 401(k) plan for eligible employees. The Company matches 100% of the first 3% of eligible compensation that is deferred by employees and 50% of the next 2% the employees defer. Employees are fully vested in matching contributions. During the three months ended March 31, 2022 and 2021, the Company matched contributions totaling $14 thousand and $11 thousand, respectively, of which $4 thousand and $5 thousand were to related parties. The Company also reserves the right to provide a discretionary bonus by contribution through its 401(k) plan. The vesting on the discretionary bonus is on a graded scale over a period of 6 years. The Company did not make a discretionary contribution during the three months ended March 31, 2022 and 2021.

NOTE 9 – CONCENTRATION RISK

During the three months ended March 31, 2022, one customer accounted for 17% of total sales. During the three months ended March 31, 2021, one customer accounted for 17% of total sales.

During the three months ended March 31, 2022 and 2021, one vendor accounted for 99% and 98% of transportation costs respectively.

As of March 31, 2022, one customer accounted for 66% of total accounts receivable. As of December 31, 2021, one customer accounted for 10% of total accounts receivable and one customer accounted for 16% of total accounts receivable.

NOTE 10 – SUBSEQUENT EVENTS

The Company evaluated events occurring after March 31, 2022, and through the date the financial statements were issued, June 23, 2022, and identified no events or transactions that require disclosure in these financial statements

F-9

Exhibit 99.3

PeriShip, LLC

Unaudited Pro Forma Consolidated Balance Sheet

And

Unaudited Pro Forma Consolidated Statement of Operations 

 On April 22, 2022, VerifyMe, Inc. (the “Company”) entered into an Asset Purchase Agreement (the “Agreement”) by and among the Company, PeriShip Global, LLC, a Delaware limited liability company and wholly owned subsidiary of the Company (“PeriShip Global”), PeriShip, LLC, a Connecticut limited liability company (“PeriShip” or “Seller”) and Luciano Morra (“Founder”). Pursuant to the terms of the Agreement PeriShip Global agreed to purchase from PeriShip and PeriShip agreed to sell to PeriShip Global substantially all of the assets of PeriShip and certain specified liabilities (the “Transaction”). The Transaction closed simultaneously with the execution of the Agreement on April 22, 2022 (the “Closing”).

The total consideration paid to the Seller in connection with the Transaction was $10,500 thousand, which consisted of $7,500 thousand in cash (the “Cash Consideration”) paid by PeriShip Global; a promissory note issued by PeriShip Global payable to the Seller for $2,000 thousand (the “Promissory Note), with a fixed interest rate of 6% per annum on the unpaid principal balance, to be paid in three installments on the sixth, fifteenth, and eighteenth month anniversaries of the Closing and which was guaranteed by the Company (the “Guaranty”); and the issuance of 305,473 shares of restricted common stock of the Company at $3.2736 per share (the “Stock Consideration”) (representing $1,000 thousand in Stock Consideration) which was the volume weighted average price (VWAP) of the Company’s Common Stock as reported by Nasdaq for the fifteen (15) trading days ending on the Closing date, inclusive. The amounts due under the Promissory Note may be adjusted as a result of certain post-Closing adjustments or indemnity claims by PeriShip Global pursuant to the Agreement.

The Promissory Note may be accelerated by the holder upon an event of default, as defined in the Promissory Note. Pursuant to the Guaranty, the Company unconditionally guaranteed to the Seller the prompt and unconditional payment of the Promissory Note and any interest thereon, whether at stated maturity, by acceleration or otherwise, any and all sums of money that, at the time, may have become due and payable under the provisions of the Promissory Note, and all expenses that may be paid or incurred by the Seller in the collection of any portion of the Promissory Note or enforcement thereof, including reasonable attorney’s fees.

The unaudited pro forma consolidated financial information presented below has been prepared on the basis set forth in the notes below and have been presented to illustrate the estimated effects of the PeriShip, LLC acquisition. The acquisition is being accounted for as a business combination using the acquisition method with the Company as the accounting acquirer in accordance with Financial Accounting Standards Board Accounting Standards Codification (“”ASC”) Topic 805, Business Combinations.

The historical financial information of the Company has been derived from the unaudited financial statements of the Company as of March 31, 2022, as found in Form 10Q which was filed with the Securities and Exchange Commission on May 11, 2022.

The historical financial information of PeriShip, LLC has been derived from the unaudited financial statements of the Seller as of and for the three months ended March 31, 2022, included in Exhibit 99.2 to the Company’s Form 8-K/A filed with the SEC on June 23, 2022.

The historical financial information of the Company has been derived from the audited financial statements of the Company as of December 31, 2021, as found in Form 10K which was filed with the Securities and Exchange Commission on March 14, 2022.

The historical financial information of PeriShip, LLC has been derived from the audited financial statements of the Seller for the year ended December 31, 2021, included in Exhibit 99.1 to the Company’s Form 8-K/A filed with the SEC on June 23, 2022.

The following unaudited pro forma consolidated balance sheet as of March 31, 2022, and the unaudited pro forma consolidated statement of operations for the three months ended March 31, 2022, and year ended December 31, 2021 (collectively, the “Pro Forma Statements”) have been prepared in compliance with the requirements of SEC Regulation S-X Article 11 using accounting policies in accordance with U.S. GAAP.

The pro forma adjustments presented below are based on preliminary estimates and currently available information and assumptions that management believes are reasonable and appropriate under the circumstances and are factually supported based on information currently available. The notes to the unaudited pro forma financial information provide a discussion of how such adjustments were derived and presented in the Pro Forma Statements. Changes in facts and circumstances or discovery of new information may result in revised estimates. As a result, there may be material adjustments to the Pro Forma Statements. Certain historical financial statement caption amounts for PeriShip, LLC have been reclassified or combined to conform to presentation and the disclosure requirements of the combined company.

VERIFYME, INC. AND PERISHIP, LLC

Unaudited Pro Forma Consolidated Balance Sheet

(In thousands)

As of March 31, 2022

The accompanying notes are an integral part of these unaudited financial statements.

VERIFYME, INC. AND PERISHIP, LLC
Unaudited Pro Forma Consolidated Statement of Operations
(in thousands except for per share amounts)
For the Three Months Ended March 31, 2022

VERIFYME, INC. AND PERISHIP, LLC
Unaudited Pro Forma Consolidated Statement of Operations
(in thousands except for per share amounts)
For the Year Ended December 31, 2021

Note 1 — Basis of Presentation and Description of Transactions

The unaudited pro forma consolidated financial statements were prepared in accordance with U.S. GAAP and pursuant to the rules and regulations of SEC Regulation S-X and presents the pro forma financial position and results of operations of the combined companies based upon the historical data of the Company and PeriShip, LLC.

Basis of Presentation

The historical financial information of the Company has been derived from the unaudited financial statements of the Company as of March 31, 2022, as found in Form 10Q which was filed with the Securities and Exchange Commission on May 11, 2022.

The historical financial information of PeriShip, LLC has been derived from the unaudited financial statements of the Seller as of and for the three months ended March 31, 2022, included in Exhibit 99.2 to the Company’s Form 8-K/A filed with the SEC on June 23, 2022.

The historical financial information of the Company has been derived from the audited financial statements of the Company as of December 31, 2021, as found in Form 10K which was filed with the Securities and Exchange Commission on March 14, 2022. 

The historical financial information of PeriShip, LLC has been derived from the audited financial statements of the Seller for the year ended December 31, 2021, included in Exhibit 99.1 to the Company’s Form 8-K/A filed with the SEC on June 23, 2022.

The historical financial statements have been adjusted in the unaudited pro forma consolidated financial statements to give effect to pro forma events that are (1) directly attributable to the PeriShip Acquisition, (2) factually supportable and (3) with respect to the unaudited pro forma consolidated statement of operations, expected to have a continuing impact on the combined results of the Company following the PeriShip Acquisition.

The PeriShip Acquisition is being accounted for as a business combination using the acquisition method with the Company as the accounting acquirer in accordance with ASC Topic 805, Business Combinations. As the accounting acquirer, the Company has estimated the fair value of PeriShip assets acquired and liabilities assumed and conformed the accounting policies of PeriShip to its own accounting policies.

The unaudited pro forma consolidated financial statements do not necessarily reflect what the combined company’s financial condition or results of operations would have been had the acquisition occurred on the dates indicated. They also may not be useful in predicting the future financial condition and results of operations of the combined company. The actual financial position and results of operations may differ significantly from the pro forma amounts reflected herein due to a variety of factors.

Note 2— Preliminary purchase price allocation

Description of Transaction

        On April 22, 2022, VerifyMe, Inc. (the “Company”) entered into an Asset Purchase Agreement (the “Agreement”) by and among the Company, PeriShip Global, LLC, a Delaware limited liability company and wholly owned subsidiary of the Company (“PeriShip Global”), PeriShip, LLC, a Connecticut limited liability company (“PeriShip” or “Seller”) and Luciano Morra (“Founder”). Pursuant to the terms of the Agreement PeriShip Global agreed to purchase from PeriShip and PeriShip agreed to sell to PeriShip Global substantially all of the assets of PeriShip and certain specified liabilities (the “Transaction”). The Transaction closed simultaneously with the execution of the Agreement on April 22, 2022 (the “Closing”).

The total consideration paid to the Seller in connection with the Transaction was $10,500 thousand, which consisted of $7,500 thousand in cash (the “Cash Consideration”) paid by PeriShip Global; a promissory note issued by PeriShip Global payable to the Seller for $2,000 thousand (the “Promissory Note), with a fixed interest rate of 6% per annum on the unpaid principal balance, to be paid in three installments on the sixth, fifteenth, and eighteenth month anniversaries of the Closing and which was guaranteed by the Company (the “Guaranty”); and the issuance of 305,473 shares of restricted common stock of the Company at $3.2736 per share (the “Stock Consideration”) (representing $1,000 thousand in Stock Consideration) which was the volume weighted average price (VWAP) of the Company’s Common Stock as reported by Nasdaq for the fifteen (15) trading days ending on the Closing date, inclusive. The amounts due under the Promissory Note may be adjusted as a result of certain post-Closing adjustments or indemnity claims by PeriShip Global pursuant to the Agreement.

The following table summarizes the allocation of the preliminary purchase price as if the acquisition closed on March 31, 2022:

The following table summarizes the cost of intangible assets related to the acquisition:

Note 3— Pro forma adjustments

The pro forma adjustments are based on preliminary estimates and assumptions that are subject to change. The following adjustments have been reflected in the unaudited pro forma consolidated financial statements:

Developed technology: The fair value of developed technology was determined using a relief from royalty method based upon management’s assessment of prospective financial information, a royalty rate selected from a range of comparable licensing transactions and a discount rate based upon the Company’s weighted average cost of capital.

Customer relationships: The fair value of the customer relationships was determined using a multiperiod excess earnings method based upon management’s assessment of prospective financial information and a discount rate based upon the Company’s weighted average cost of capital plus an additional five percent to account for the customer concentration risk.

Non-compete provisions: The fair value of the non-compete provisions, was determined using a with-and-without method based upon management’s assessment of prospective financial information, including an estimated impact of competition, and a discount rate based upon the Company’s weighted average cost of capital.

Trade Names and Trademarks: The fair value of the trade names and trademarks were determined using a relief from royalty method based upon management’s assessment of prospective revenues, a royalty rate selected from a range of comparable licensing transactions and a discount rate based upon the Company’s weighted average cost of capital.