INDEX Page No. Independent Auditor's Report 1-2 Consolidated Financial Statements Balance Sheet 3 Statement of Operations 4 Statement of Members' Equity (Deficit) 5 Statement of Cash Flows 6 Notes to Consolidated Financi

Independent Auditor's Report

To the Board of Directors

Europa Partners Holdings, LLC and Subsidiaries

We have audited the consolidated financial statements of Europa Partners Holdings, LLC and Subsidiaries (the Company ), which comprise the consolidated balance sheet as of December 31, 2023 and 2022 (as adjusted) and the related consolidated statements of operations, members' equity (deficit), and cash flows for the years then ended, and the related notes to the consolidated financial statements.

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

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

As described in Note 2 to the consolidated financial statements, the Company previously adopted certain accounting alternatives for private companies developed by the Private Company Council. The Company has elected to adopt accounting principles generally accepted in the United States of America for a public business entity (PBE), which required retrospective application to previously reported amounts. Our opinion is not modified with respect to this matter.

Responsibilities of Management for the Consolidated Financial Statements

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

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

Auditor's Responsibilities for the Audits of the Consolidated Financial Statements

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

In performing audits in accordance with GAAS, we

Exercise professional judgment and maintain professional skepticism throughout the audits.

Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

Obtain an understanding of internal control relevant to the audits in order to design audit procedures that are appropriate in the circumstances but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control. Accordingly, no such opinion is expressed.

Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the consolidated financial statements.

Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company's ability to continue as a going concern for a reasonable period of time.

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

s Plante Moran, PLLC

Europa Partners Holdings, LLC and Subsidiaries

Consolidated Balance Sheet

December 31, 2023 and 2022

See notes to consolidated financial statements.

Europa Partners Holdings, LLC and Subsidiaries

Consolidated Statement of Operations

Years Ended December 31, 2023 and 2022

See notes to consolidated financial statements.

Europa Partners Holdings, LLC and Subsidiaries

Consolidated Statement of Members' Equity(Deficit)

See notes to consolidated financial statements.

Europa Partners Holdings, LLC and Subsidiaries

Consolidated Statement of Cash Flows

Years Ended December 31, 2023 and 2022

See notes to consolidated financial statements.

Europa Partners Holdings, LLC and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2023 and 2022

Note 1 - Nature of Business

Europa Partners Holdings, LLC (Holdings) was formed on April 26, 2021 as a limited liability company under the laws of the State of Delaware for the purpose of holding 100 percent of the equity interests in Europa Sports Partners, LLC (ESP) and Hubmatrix Partners, LLC (Hubmatrix). On May 20, 2021, ESP acquired certain assets and assumed certain liabilities of Thor Holdings Company, Inc. Europa Sports Holdings, LLC Europa Sports Products LLC Hubmatrix LLC and Lone Star Distributions, LLC. On June 16, 2021, Holdings formed Europa Sports Investments, LLC (Investments) to hold the equity interests in ESP and Hubmatrix. Holdings, along with ESP, Hubmatrix, and Investments (collectively, the Company ), is engaged in the distribution of vitamins, health supplements, active wear, and fitness accessories to health clubs and health food stores throughout the United States. The Company is headquartered in Charlotte, North Carolina with satellite warehouses in Texas, Nevada, and Florida.

Note 2 - Change in Accounting Principle

The Company previously adopted certain accounting alternatives for private companies developed by the Private Company Council (PCC), including the accounting alternative for certain identifiable intangible assets acquired in a business combination and the use of the risk-free rate as the discount rate for calculating the right-of-use asset and lease liability in place of the incremental borrowing rate for all classes of leases. On January 1, 2023, the Company elected to apply accounting principles generally accepted in the United States of America for public business entities (PBE), which required certain amounts accounted for using the PCC alternatives to be adjusted retrospectively. Also, as a result of adopting the PBE standards, the Company was required to implement ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326) Measurement of Credit Losses on Financial Instruments in 2021 rather than as of January 1, 2023, the effective date for non-PBE entities. Topic 326 replaces the incurred methodology with an expected loss methodology that is referred to as the current expected credit loss (CECL) methodology. The measurement of expected credit losses under the CECL methodology is applicable to financial assets measured at amortized cost, including accounts receivable. The ASU also requires additional disclosures about the credit risk inherent in the Company's financial asset portfolio and how management monitors the credit quality of those financial assets, the Company's expected credit losses, and changes in the estimate of expected credit losses that have taken place during the period. The adoption of Topic 326 guidance did not significantly impact the Company's consolidated financial statements, including previously reported amounts.

The following financial statement line items for the year ended December 31, 2022 were affected by the change in accounting principle

Consolidated Statement of Operations

Note 2 - Change in Accounting Principle (Continued)

Consolidated Balance Sheet

Previously, under the PCC alternative, customer-related intangibles were not separately recognized. As a result of applying the PBE accounting principles, as further detailed above, there was no significant impact on the fair value of acquired intangible assets in connection with a previous business acquisition completed on May 20, 2021 (the acquisition date ).

On January 1, 2022, the Company adopted Financial Accounting Standards Board (FASB) Accounting Standards Update (ASU) No. 2016-02, Leases. The ASU required lessees to recognize a right-of-use asset and related lease liability for all leases, with limited exceptions. The Company elected to adopt the ASU using the modified retrospective method as of January 1, 2022. As noted above, upon adopting the PBE standards, the Company was required to measure the right-of-use assets and lease liabilities associated with operating leases using the lessee's incremental borrowing rate rather than the risk-free rate utilized under the PCC standards. As as result, the right-of-use operating lease assets and operating lease liabilities as of December 31, 2022 decreased by $866,076 and $865,879, respectively, which also increased operating expenses for 2022 by $197 from previously reported amounts.

The application of PBE accounting standards did not impact cash flows from operating, investing, and financing activities for the year ended December 31, 2022 from previously reported amounts.

Note 3 - Significant Accounting Policies

The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for PBEs (U.S. GAAP). The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect amounts reported in the consolidated financial statements. Actual results could differ from those estimates.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. The Company has negative working capital and incurred significant net losses and generated negative cash flows since inception. These trends have impacted the Company's ability to adhere to certain covenants required by its debt agreements, as further described in Note 7, which provides the lender the right to call the debt due. These events raise substantial doubt about the Company's ability to meet its obligations as they come due for a reasonable period of time. Subsequent to year end, the Company obtained additional debt borrowings from a related party and refinanced its existing credit agreement with a third party, as further detailed in Note 7. Additionally, the members of the Company entered into an Unit Purchase Agreement with a third party to sell all of the outstanding membership units of Holdings, as further detailed in Note 14.

Principles of Consolidation

The consolidated financial statements include the accounts of Holdings and all of its wholly owned subsidiaries (Investments, ESP, and Hubmatrix). All material intercompany accounts and transactions have been eliminated in consolidation.

Note 3 - Significant Accounting Policies (Continued)

Accounts receivable are stated at net invoice amounts. An allowance for credit losses is established for amounts expected to be uncollectible over the contractual life of the receivables.

The adequacy of the Company's allowance for credit losses is reviewed on a periodic basis and adjusted accordingly using historical payment trends and write-off experience by customer, which are pooled into categories based on their end markets and length of customer relationship. Additionally, the Company considers the customer's current payment status, current economic conditions, and reasonable and supportable forecasts. The Company considers expected future economic conditions and industry and market trends when making adjustments for reasonable and supportable forecasts and the related impact on future collections. Uncollectible amounts are written off against the allowance for credit losses in the period they are determined to be uncollectible. Recoveries of amounts previously written off are recognized when received. The allowance for credit losses on accounts receivable balances was $45,958 and $47,847 as of December 31, 2023 and 2022, respectively.

Inventory is stated at the lower of cost or net realizable value, with cost determined on the first-in, first-out (FIFO) method. Inventory includes goods available for sale.

Property and Equipment

Property and equipment acquired as part of a business combination are recorded at their estimated acquisition-date fair value. All other property and equipment acquired are recorded at cost. The straight- line method is used for computing depreciation. Assets are depreciated over their estimated useful lives. The costs of leasehold improvements are amortized over the lesser of the length of the related lease or the estimated useful lives of the assets. Costs of maintenance and repairs are charged to expense when incurred.

The Company purchases refrigerated coolers for resale, for use in warehousing the Company's products prior to sale, and to store and display customer-owned product at customer locations. When purchased, coolers are classified as inventory and transferred to property and equipment when placed into service, which is typically when the coolers are sent to a customer location, and depreciated based on their remaining useful lives. As of December 31, 2023 and 2022, the Company has coolers in service at various customer locations with a net book value of approximately $511,000 and $674,000, respectively.

Acquired intangible assets subject to amortization are stated at cost and are amortized using the straight- line method over the estimated useful lives of the assets. Intangible assets that are subject to amortization are reviewed for potential impairment whenever events or circumstances indicate that carrying amounts may not be recoverable. Assets not subject to amortization are tested for impairment at least annually. The intangible assets are amortized over a 10-year period.

During 2023, the Company determined that, based on estimated future cash flows, the carrying amount of the trade name exceeds its fair value by $283,453 accordingly, an impairment loss of that amount was recognized and is included in operating expenses. No impairment charge was recognized in 2022.

Debt issuance costs of $194,560 and $50,000 were incurred by the Company for the years ended December 31, 2023 and 2022, respectively, in connection with obtaining the credit facilities further described in Note 7. The debt issuance costs related to the line of credit are recorded as a long-term asset on the accompanying consolidated balance sheet. The costs are amortized over the term of the related debt and reported as a component of interest expense on the consolidated statement of operations. Included in interest expense for the years ended December 31, 2023 and 2022 is amortization expense totaling $247,635 and $121,854, respectively, which includes approximately $135,000 of expense related to the write-off of unamortized debt issuance costs associated with the credit facility refinanced, as further described in Note 7.

Note 3 - Significant Accounting Policies (Continued)

The Company has operating leases for different office and warehouse locations described in Note 10. The Company recognizes expense for operating leases on a straight-line basis over the lease term. The Company made a policy election not to separate lease and nonlease components. Therefore, the full amount of the fixed-lease payment is included in the recorded right-of-use asset and lease liability. Lease expense excludes variable lease payments, which are not dependent on an index or rate and are estimated or actual charges for reimbursement from the lessor. Included in these variable lease payments are payments for real estate taxes.

The Company has operating leases for delivery vehicles with a lease term of one year or less that the Company elected to account for as short-term leases. As a result, these leases are not included in the right-of-use asset and lease liability. Total expense related to short-term leases was approximately $79,000 and $328,000 for the years ended December 31, 2023 and 2022, respectively.

ESP distributes vitamins, health supplements, sports drinks, active wear, and fitness accessories to health clubs, sporting good outlets, retailers, and grocery and health food stores throughout the United States, as well as through online platforms. Hubmatrix provides fulfillment and distribution services to third parties primarily in end markets similar to ESP customers. Results of operations are substantially affected by personal wellness and fitness trends, as well as economic conditions that impact consumer disposable income levels and spending habits.

During 2023, the Company recognized revenue from contracts with customers of $51,110,058. Of the 2023 recognized revenue from contracts with customers, $48,244,640 is from ESP and $2,865,418 is from Hubmatrix. During 2022, the Company recognized revenue from contracts with customers of $73,426,692. Of the 2022 recognized revenue from contracts with customers, $72,426,714 is from ESP and $999,978 is from Hubmatrix. See Note 4 for additional details on disaggregated revenue.

Trade accounts receivable from contracts with customers totaled $1,552,711, $2,953,949 and $2,459,452 at December 31, 2023 December 31, 2022 and January 1, 2022, respectively. The Company did not recognize any other contract assets or contract liabilities at December 31, 2023. See Note 4 for additional details on accounts receivable.

Timing of Satisfaction

The goods supplied by ESP are homogeneous and have an alternative use in that they can be supplied to another customer, and, as a result, revenue is recognized at a point in time. ESP typically satisfies its performance obligations for sales of goods as goods are delivered and control of the goods transfers to the customer. Sales of products by ESP may include fees for shipping and handling. ESP has elected to treat shipping and handling activities related to contracts with customers for the sale of products as costs to fulfill the promise to transfer the associated products and not as separate performance obligations and includes such costs in cost of sales at the time of shipment. ESP also enters into drop ship arrangements with customers whereby merchandise is shipped directly from a third-party supplier to a customer. Under these arrangements, ESP records revenue and related costs on a gross basis. ESP is the principal in these transactions because ESP ultimately is responsible for fulfilling the performance obligation, and the customer never interacts with the manufacturer. ESP also has complete discretion in establishing the price charged to the end customer. ESP satisfies its performance obligations for drop ship arrangements as goods are delivered and control of the goods transfers to the customer.

Hubmatrix satisfies its performance obligations for fulfillment and distribution services at a point in time, typically when the customer's goods are delivered to the named destination. Hubmatrix also provides services for storage, packaging, receiving, and in-bound freight management and satisfies those performance obligations over time. Revenue recognized over time for Hubmatrix was approximately $356,000 and $75,000 for the years ended December 31, 2023 and 2022, respectively.

Note 3 - Significant Accounting Policies (Continued)

Allocating the Transaction Price

The transaction price is the amount of consideration to which the Company expects to be entitled in exchange for transferring goods and services to the customer. Revenue on sales of products is recorded based on the transaction price, which includes fixed consideration less an estimate of variable consideration related primarily to early payment discounts, volume discounts or rebates, and other sales- related discounts. Variable consideration for these costs is estimated using the expected value method based on review of specific transactions, historical experience, and market and economic conditions. The amount of variable consideration included in the transaction price is constrained and is included only to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. Revenue from fulfillment and distribution services performed by Hubmatrix is recorded based on the transaction price, which primarily includes fixed consideration.

Significant Payment Terms

Payments for the Company's products and services are typically due in accordance with payment terms on invoiced amounts, which is typically within 30 to 90 days depending on the customer's creditworthiness. At times, the Company requires payment upon shipment. In instances where the timing of revenue recognition differs from the timing of the right to invoice, the Company has determined that a significant financing component does not exist. The primary purpose of the Company's invoicing terms is to provide customers with simplified and predictable ways of purchasing the products and services and not to receive financing from, or provide financing to, the customer. Additionally, the Company has elected the practical expedient that permits an entity not to recognize a significant financing component if the time between the transfer of a good or service and payment is one year or less.

Nature of Promises to Transfer

For a majority of customer contracts, the products that ESP contracts to transfer to customers are purchased by the Company for resale. Hubmatrix acts as an agent and provides fulfillment services for select brands. Under these customer contracts, Hubmatrix does not take title or accept risk of loss associated with the product delivered to the end customer. Additionally, Hubmatrix does not have any involvement or discretion in establishing the price of the goods that are delivered to the end customer.

ESP allows for returns for products sent to customers. Products that are returned without damage are returned to inventory for sale. Expired products are oftentimes returned to the vendor, and, in these situations, ESP does not absorb the loss from expiration. At the time revenue is recognized, ESP estimates expected returns and excludes those amounts from revenue. ESP also maintains appropriate accounts to reflect the effects of expected returns on ESP's financial position and periodically adjusts those accounts to reflect its actual return experience.

Accounting Policy Elections

The Company has elected the practical expedient that permits it to exclude sales taxes and other similar taxes from the transaction price. Accordingly, these taxes are not included in gross revenue on the consolidated statement of operations.

The Company pays a commission to certain salespeople and brokers, which is based on a percentage of net sales and earned at the time of sale. As a practical expedient, the Company recognizes the incremental costs of obtaining contracts (e.g., commissions) as an expense when incurred if the amortization period of the assets that the Company otherwise would have recognized would have been one year or less. The amount expensed for the years ended December 31, 2023 and 2022 was approximately $612,000 and $1,039,000, respectively. No commissions have been capitalized.

Advertising expense is charged to income during the year in which it is incurred. Advertising expense for the years ended December 31, 2023 and 2022 was approximately $190,000 and $142,000, respectively.

Holdings is treated as a partnership for federal income tax purposes. Consequently, federal income taxes are not payable or provided for by Holdings. Members are taxed individually on their pro rata ownership shares of Holdings' earnings. Holdings net income or loss is allocated among the members in accordance with Holdings' operating agreement.

On June 10, 2021, Investments made an election to be treated as a corporation for federal and state income tax purposes. A current tax liability or asset is recognized for the estimated taxes payable or refundable on tax returns for the year. Deferred tax liabilities or assets are recognized for the estimated future tax effects of temporary differences between financial reporting and tax accounting. Previous to this election, Investments elected to be treated as a partnership for federal and state income tax purposes.

ESP and Hubmatrix are single-member limited liability companies and are disregarded for federal and state income tax purposes. Income and loss from these entities are reported in the income and loss of Investments.

Credit Risk, Major Customers, and Suppliers

Sales are predominately to sports and nutritional retailers, health clubs, and gyms located throughout the United States. The Company extends trade credit to its customers on terms that are generally practiced in the industry. The Company had no individual customers accounting for more than 10 percent of total revenue for the years ended December 31, 2023 or 2022. As of December 31, 2023, two customers made up approximately 34 percent of total accounts receivable. As of December 31, 2022, two customers made up approximately 37 percent of total accounts receivable.

The Company has cash on deposit in financial institutions in amounts that at times may exceed federally insured limits. The Company has not experienced any losses in such accounts. As of December 31, 2023, the Company held $98,261 at financial institutions that exceeded the federally insured limit.

As of December 31, 2023, there was one vendor who represented approximately 56 percent of the outstanding balance of accounts payable on the accompanying consolidated balance sheet. As of December 31, 2022, four vendors represented approximately 48 percent of the outstanding balance of accounts payable on the accompanying consolidated balance sheet. No similar concentrations existed in inventory purchases for the years ended December 31, 2023 or 2022.

The financial statements and related disclosures include evaluation of events up through and including September 25, 2024, which is the date the consolidated financial statements were available to be issued.