|To the Board of Directors of

Wrightspeed, Inc.

Alameda, California |            
|-------------------------------------------------------------------- | -----------
|                                                                     | Certified  
|                                                                     | Public     
|                                                                     | Accountants



INDEPENDENT AUDITORS' REPORT



We have audited the accompanying financial
statements of Wrightspeed, Inc. (the Company), a Delaware Corporation, which comprise the balance sheet as of December 31, 2020, and the
related statements of operations, stockholders’ deficit and cash flows for the year then ended, and the related notes to the financial
statements.



Management’s Responsibility for
the Financial Statements



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



Auditors’ Responsibility



Our responsibility is to express an opinion
on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the
United States of America. Those standards require we plan and perform the audit to obtain reasonable assurance about whether the financial
statements are free from material misstatement.



An audit involves performing procedures to
obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors’
judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In
making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation
of the financial statements 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 entity’s internal control. Accordingly, we express no such opinion. An audit also
includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by
management, as well as evaluating the overall presentation of the financial statements.



60 South Market
Street, Suite 500 San Jose, California 95113 t 408.279.5566 www.frankrimerman.com



|An independent member of
                         Baker Tilly International | Frank Rimerman + Co. LLP is a member of the global network of Baker Tilly International Ltd.,
                                             the members of which are separate and independent legal entities.
|--------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





-1-







We believe the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our audit opinion.



Opinion



In our opinion, the financial statements
referred to above present fairly, in all material respects, the financial position of Wrightspeed, Inc. as of December 31, 2020, and the
results of its operations and its cash flows for the year then ended in accordance with accounting principles generally accepted in the
United States of America.





| | 
| | 



San Francisco, California January 5, 2022



-2-







Wrightspeed, Inc.

Balance Sheet

December 31, 2020








ASSETS

|Current Assets                            |  |   |          
|----------------------------------------- |  | - | ---------
|Cash and cash equivalents                 |  | $ | 2,037,974
|Prepaid expenses and other current assets |  |   | 3,097,344
|Total current assets                      |  |   | 5,135,318
|Property and Equipment, net               |  |   | 1,187,179
|Total assets                              |  | $ | 6,322,497



LIABILITIES AND STOCKHOLDERS' DEFICIT



|Current Liabilities                                       |  |   |            
|--------------------------------------------------------- |  | - | -----------
|Accounts payable                                          |  | $ | 1,298,681  
|Accrued expenses and other current liabilities            |  |   | 197,951    
|Deferred rent, current                                    |  |   | 86,333     
|Government note payable                                   |  |   | 726,143    
|Notes payable, net of discount                            |  |   | 16,532,252 
|Total current liabilities                                 |  |   | 18,841,360 
|Customer Deposits                                         |  |   | 764,895    
|Preferred Stock Warrant Liability                         |  |   | 134,311    
|Deferred Rent                                             |  |   | 348,600    
|Commitments and Contingencies (Notes 4, 7, 9 and 11)      |  |   |            
|Stockholders' Deficit                                     |  |   |            
|Series AA convertible preferred stock, $0.00001 par value |  |   |            
|(aggregate liquidation preference of $18,408,451)         |  |   | 641        
|Common stock, $0.00001 par value                          |  |   | 29         
|Additional paid-in capital                                |  |   | 19,310,494 
|Accumulated deficit                                       |  |   | (33,077,833
|Total stockholders' deficit                               |  |   | (13,766,669
|Total liabilities and stockholders' deficit               |  | $ | 6,322,497  



See Notes to Financial Statements



-3-









Wrightspeed, Inc.

Statement of Operations

December 31, 2020








|Operating Expenses          |  |   |            
|--------------------------- |  | - | -----------
|Research and development    |  | $ | 8,204,505  
|Sales and marketing         |  |   | 232,307    
|General and administrative  |  |   | 679,097    
|Total operating expenses    |  |   | 9,115,909  
|Loss from Operations        |  |   | (9,115,909 
|Interest Expense            |  |   | (1,225,573 
|Other Income (Expense), net |  |   | 42,198     
|Loss before Income Taxes    |  |   | (10,299,284
|Income Taxes                |  |   | (800       
|Net Loss                    |  | $ | (10,300,084



See
Notes to Financial Statements





-4-





Wrightspeed, Inc.

Statement of Stockholders' Deficit Year Ended December 31,
2020







|                                                                                              |  | Convertible Preferred Stock |            |  | Common Stock |   |     | Additional Paid-In |  |  | Accumulated |  |  | Total Stockholders' |   
|--------------------------------------------------------------------------------------------- |  | --------------------------- | ---------- |  | ------------ | - | --- | ------------------ |  |  | ----------- |  |  | ------------------- | --
|                                                                                              |  | Shares                      |            |  | Amount       |   |     | Shares             |  |  | Amount      |  |  | Capital             |   
|Balances, December 31, 2019                                                                   |  |                             | 50,548,305 |  |              | $ | 505 |                    |  |  | 2,404,944   |  |  | $                   | 23
|Issuance of Series AA convertible preferred stock in exchange for cash, net of issuance costs |  |                             | 13,592,639 |  |              |   | 136 |                    |  |  | -           |  |  |                     | - 
|Issuance of common stock upon exercise of stock options                                       |  |                             | -          |  |              |   | -   |                    |  |  | 602,221     |  |  |                     | 6 
|Stock-based compensation                                                                      |  |                             | -          |  |              |   | -   |                    |  |  | -           |  |  |                     | - 
|Net loss                                                                                      |  |                             | -          |  |              |   | -   |                    |  |  | -           |  |  |                     | - 
|Balances, December 31, 2020                                                                   |  |                             | 64,140,944 |  |              | $ | 641 |                    |  |  | 3,007,165   |  |  | $                   | 29





See Notes to Financial Statements



-5-







Wrightspeed, Inc.

Statement of Cash Flows

Year Ended December 31, 2020












|Cash Flows from Operating Activities                                                   |  |   |            
|-------------------------------------------------------------------------------------- |  | - | -----------
|Net loss                                                                               |  | $ | (10,300,084
|Adjustments to reconcile net loss to net cash used in operating activities:            |  |   |            
|Depreciation and amortization                                                          |  |   | 943,549    
|Non-cash interest expense                                                              |  |   | 1,220,858  
|Stock-based compensation                                                               |  |   | 57,579     
|Revaluation of preferred stock warrant liability                                       |  |   | (42,826    
|Changes in operating assets and liabilities, net of effects from sale of subsidiaries: |  |   |            
|Prepaid expenses and other current assets                                              |  |   | (181,046   
|Accounts payable                                                                       |  |   | (43,534    
|Accrued expenses and other current liabilities                                         |  |   | 79,504     
|Deferred rent                                                                          |  |   | (327,495   
|Net cash used in operating activities                                                  |  |   | (8,593,495 





|Cash Flows from Investing Activities  |  |  |         
|------------------------------------- |  |  | --------
|Purchase of property and equipment    |  |  | (296,900
|Net cash used in investing activities |  |  | (296,900







|Cash Flows from Financing Activities                           |  |   |           
|-------------------------------------------------------------- |  | - | ----------
|Proceeds from note payable, net of issuance costs              |  |   | 6,249,565 
|Proceeds from govnernment note payable                         |  |   | 721,419   
|Proceeds from the exercise of common stock options             |  |   | 17,617    
|Proceeds from the issuance of convertible preferred stock, net |  |   | 3,841,183 
|Net cash provided by financing activities                      |  |   | 10,829,784
|Net Increase in Cash and Cash Equivalents                      |  |   | 1,939,389 
|Cash and Cash Equivalents, December 31, 2019                   |  |   | 98,585    
|Cash and Cash Equivalents, December 31, 2020                   |  | $ | 2,037,974 










|Supplemental Disclosure of Cash Flow Information |  |   |    
|------------------------------------------------ |  | - | ---
|Cash paid for interest                           |  | $ | -  
|Cash paid for income taxes                       |  | $ | 800



(continued)



-6-





Wrightspeed, Inc.

Notes to Financial Statements








|1. | Nature of Business and Management’s Plans Regarding Financing
Future Operations
|-- | -------------------------------------------------------------------------------



Nature of Business



Wrightspeed, Inc. (the Company) was incorporated
in the state of Delaware in 2005. The Company produces a novel and patented, high-power electric vehicle powertrain with optional onboard
power generation to eliminate or substantially reduce the emissions of medium and heavy-duty commercial trucks and busses while increasing
their performance, efficiency, and range.



Management’s Plans Regarding Financing
of Future Operations



The Company has incurred losses and negative
cash flows from operations since inception and has relied on equity and debt financing to sustain operations. At December 31, 2020, the
Company had not generated revenue from operations and had an accumulated deficit of $33,077,833. Management expects losses and negative
cash flows from operations to continue for the foreseeable future, primarily as a result of continued product development. At December
31, 2020, the Company had $2,037,974 in available cash and cash equivalents. Subsequent to year end (Note 11), the Company raised additional
capital totaling $9,600,000 through the issuance of convertible notes payable. Management believes the Company’s additional debt
financing in 2021 will allow the Company to continue as a going concern through at least January 5, 2023; however, the Company may be
unable to raise additional funding to meet its working capital needs over the longer term.



|2. | Significant Accounting Policies
|-- | -------------------------------



Basis of Presentation:



The financial statements have been prepared
on the accrual method of accounting in accordance with accounting principles generally accepted in the United States of America.



Risks and Uncertainties:



The Company is subject to a number of business
risks including, but not limited to, competition from other companies entering this industry, the ability to obtain adequate funding,
dependence on key employees, and the ability to attract and retain qualified employees.



The global outbreak of the novel coronavirus
continues to be an evolving situation. The virus has disrupted much of society, impacted global travel and supply chains, and adversely
impacted global commercial activity in most industries. The rapid development and fluidity of this situation precludes any prediction
as to its ultimate impact, which may impact the Company’s operating performance in the near term.



-7-







Wrightspeed, Inc.

Notes to Financial Statements








|2. | Significant Accounting Policies (continued)
|-- | -------------------------------------------



Use of Estimates:



The preparation of financial statement
in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and
assumptions that affect the amounts of reported assets and liabilities and disclosure of contingent assets and liabilities at the date
of the financial statements and reported amounts of revenue and expenses during the reporting period. Actual results could differ from
those estimates.



Revenue Recognition:



The Company has adopted Financial Accounting
Standards Board (FASB) Accounting Standards Codification (ASC) Topic 606, Revenue from Contracts with Customers(Topic 606) to
account for revenue form the future sale of its products. The Company has had no product sales through December 31, 2020. The Company
expects to begin selling its powertrains directly to manufacturers in early 2022. The Company may also provide installation services or
installation training, as needed.



The Company will determine revenue recognition
through the following steps:



| | · | Identification of the contract, or contracts, with a customer
| | - | -------------------------------------------------------------

| | · | Identification of the performance obligations in the contract
| | - | -------------------------------------------------------------

| | · | Determination of the transaction price
| | - | --------------------------------------

| | · | Allocation of the transaction price to the performance obligations
in the contract
| | - | ----------------------------------------------------------------------------------

| | · | Recognition of revenue when, or as, the Company satisfies a
performance obligation
| | - | ----------------------------------------------------------------------------------



Cost of Revenue:



Cost of revenue will consist of all direct
costs and indirect costs to construct the Company’s primary powertrain product, including supplies, parts and manufacturing overhead.



Customer Deposits:



The Company has entered into several long-term
and research and development arrangements with customers to develop and install powertrains on specified vehicles. The Company has not
delivered on these agreements and, as a result, all customer prepayments have been recorded as customer deposits at December 31, 2020.



-8-







Wrightspeed, Inc.

Notes to Financial Statements








|2. | Significant Accounting Policies (continued)
|-- | -------------------------------------------



Cash Equivalents:



Cash equivalents include all cash balances
and highly liquid investments purchased with a remaining maturity of three months or less.



Concentration of Credit Risk:



Financial instruments that potentially
subject the Company to concentration of credit risk consist of cash and cash equivalents. The Company maintains a significant portion
of its cash and cash equivalents at one financial institution. Deposits exceeded the amount insured by the Federal Deposit Insurance Corporation
at December 31, 2020. The Company has not experienced any losses on its cash and cash equivalent deposits through December 31, 2020.



Property and Equipment:



Property and equipment is stated at cost,
less accumulated depreciation and amortization. The Company depreciates property and equipment using the straight-line method over their
estimated useful lives, generally two to five years. Leasehold improvements are amortized over the shorter of the remaining lease term
or the estimated useful life of the asset.



Accounting for Impairment of Long-Lived
Assets:



The Company reviews its long-lived assets
for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Recoverability
of assets held and used is measured by comparison of the carrying amount of an asset to future 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 assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of their carrying cost amount
or fair value less cost to sell. The Company has not recorded an impairment loss through December 31, 2020.



Software Development Costs:



The Company expenses all development costs
for internal use software incurred that relate to the planning and post-implementation phases of development. Costs incurred in the development
phase, including upgrades and enhancements, if it is probable such expenditures will result in additional functionality, are subject to
capitalization and amortization over an estimated useful life. The Company has not capitalized any software development costs related
to internal use software as the Company has determined the impact on the financial statements would not be material.



-9-







Wrightspeed, Inc.

Notes to Financial Statements








|2. | Significant Accounting Policies (continued)
|-- | -------------------------------------------



Research and Development Costs:



Research and development costs are expensed
as incurred. Research and development costs consist primarily of supplies, parts, depreciation of equipment and salaries, benefits and
allocated overhead attributable to research and development personnel.



Convertible Preferred Stock Warrants:



Freestanding warrants that are either puttable
or warrants and are redeemable for shares of convertible preferred stock are classified as liabilities at their fair value (Note 7). The
Company’s preferred stock warrants have been measured and recognized at fair value and are subject to re-measurement at each balance
sheet date. At the end of each reporting period, the change in fair value during the period is recognized as a component of other income
(expense). The Company will continue to adjust the warrant liability for changes in fair value until the earlier of the exercise or expiration
of the preferred stock warrants or the completion of a liquidation event, including completion of an initial public offering, at which
time the preferred stock warrants will be converted into warrants to purchase common stock, and the warrant liability will be reclassified
to additional paid-in capital.



Fair Value Measurement:



In August 2018, the FASB issued Accounting
Standards Update (ASU) 2018-13, Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement,
which modifies the disclosure requirements for fair value measurement. The Company adopted ASU 2018-13 on a retrospective basis as of
January 1, 2020. The adoption of this accounting guidance resulted in the removal or modification of certain fair value measurement disclosures
presented in the Company’s notes to the financial statements.



The Company uses a three-level hierarchy
for fair value measurement based on the nature of inputs used in the valuation of an asset or liability as of the measurement date. The
three-level hierarchy prioritizes within the measurement of fair value, the use of market-based information over entity-specific information.
Fair value focuses on an exit price and is defined as the price that would be received to sell an asset or paid to transfer a liability
in an orderly transaction between market participants at the measurement date. The inputs or methodology used for valuing financial instruments
are not necessarily an indication of the risk associated within those financial instruments.



The three-level hierarchy for fair value
measurement is defined as follows:



Level I:Inputs to the
valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.



-10-







Wrightspeed, Inc.

Notes to Financial Statements








| | 2. | Significant Accounting Policies (continued)
| | -- | -------------------------------------------



Fair Value Measurement (continued):



Level II: Inputs
to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable
for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.



Level III:Inputs
to the valuation methodology, which are significant to the fair value measurement, are unobservable.



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. The Company’s
preferred stock warrant liability has been valued using the Black-Scholes option pricing model and is classified within Level III of the
fair value hierarchy at December 31, 2020. The inputs used to determine fair value are summarized in Note 7. The Company recorded a $42,826
gain to other income and expense on the statement of operations related to the re-valuation of its warrant liability in 2020.



Stock-Based Compensation:



In June 2018, the FASB issued ASU 2018-07,
Improvements to Nonemployee Share-Based Payment Accounting. ASU 2018-07 simplifies the accounting for share-based payments to nonemployees
by aligning it with the accounting for share-based payments to employees, with certain exceptions. The main provision of ASU 2018-07 requires
the measurement of all share-based equity classified awards be fixed at the grant date. Effective January 1, 2020, the Company adopted
the requirements of ASU 2018-07 using the modified retrospective transition method. The effect of applying the new standard did not result
in a material adjustment to accumulated deficit at January 1, 2020, as stock-based compensation for nonemployees has not been significant
for the Company.



The Company generally grants stock options
for a fixed number of shares with an exercise price equal to the fair value of the shares at date of grant. The Company accounts for all
stock option grants using the fair value method on the date of issuance and stock-based compensation is recognized as the underlying options
vest.



-11-







Wrightspeed, Inc.

Notes to Financial Statements








| | 2. | Significant Accounting Policies (continued)
| | -- | -------------------------------------------



Income Taxes:



The Company accounts for income taxes
using the asset and liability method. Under this method, deferred income tax assets and liabilities are determined based on the difference
between the financial statement and income tax basis of existing assets and liabilities using enacted tax rates in effect for the year
in which the differences are expected to reverse. Deferred income tax assets and liabilities are recorded net and classified as noncurrent
on the balance sheet. A valuation allowance is provided when it is more likely than not that some or all of the deferred income tax assets
will not be realized.



The Company periodically reviews its operations
and significant income tax positions for uncertainties and areas of judgment in the application of complex tax regulations in several
tax jurisdictions and provides a liability for potential income taxes, where applicable.



Recent Accounting Pronouncement Not Yet
Effective:



In February 2016, the FASB issued ASC
Topic 842, Leases. This standard requires all entities that lease assets with terms of more than twelve months to capitalize the
assets and related liabilities on the balance sheet. The standard is effective for the Company as of January 1, 2022 and requires the
use of a modified retrospective transition approach for its adoption. The Company is currently evaluating the effect Topic 842 will have
on its financial statements and related disclosures. Management expects the assets leased under operating leases with terms greater than
twelve months, similar to the leases discussed in Note 9 to the financial statements, will be capitalized together with the related lease
obligations upon the adoption of Topic 842.



| | 3. | Balance Sheet Detail
| | -- | --------------------



Prepaid Expenses:



Prepaid expenses consists of the following
at December 31, 2020:



|Research and development supplies |  | $ | 2,696,644 | 
|--------------------------------- |  | - | --------- | 
|Prepaid expense, general          |  |   | 289,390   | 
|Prepaid insurance                 |  |   | 56,579    | 
|Prepaid rent                      |  |   | 54,731    | 
|                                  |  | $ | 3,097,344 | 



-12-







Wrightspeed, Inc.

Notes to Financial Statements








| | 3. | Balance Sheet Detail (continued)
| | -- | --------------------------------



Prepaid Expenses (continued):



The Company is in process of completing designs
for its powertrain product. Research and development supplies relate to purchased parts that will be used to assemble and perform testing
over the Company’s powertrain designs. The Company amortizes research and development supplies to research and development expense
on the statement of operations as the underlying supplies are consumed.



Property and Equipment:



Property and equipment consists of the following
at December 31, 2020:



|Leasehold improvements                         |  | $ | 4,219,210  |  
|---------------------------------------------- |  | - | ---------- | -
|Machinery and equipment                        |  |   | 1,522,011  |  
|Computer equipment                             |  |   | 144,150    |  
|                                               |  |   | 5,885,371  |  
|Less accumulated depreciation and amortization |  |   | (4,698,192 | )
|                                               |  | $ | 1,187,179  |  



| | 4. | Borrowings
| | -- | ----------



Convertible Notes Payable:



During 2018, 2019 and 2020 the Company
raised $14,551,389 through the issuance of convertible notes payable (the Notes). The Notes mature on December 31, 2021 and are
convertible upon the Company’s next qualified equity financing resulting in cash proceeds to the Company of at least
$20,000,000. The Notes are convertible at 80% of the price paid per security issued under the next qualified round, subject to
certain limitations. Outstanding borrowings under the Notes accrue annual interest at the rate of 12-15% per annum. The Company
accrued $1,210,611 of interest related to the Notes in 2020. Total outstanding borrowings, including accrued interest, were
$16,565,391 at December 31, 2020.



In connection with the Notes, the Company
capitalized $38,662 of legal fees associated with issuing the Notes as a debt discount. The Company is amortizing the debt discount over
the terms of the Notes. The Company recorded $5,523 of amortization related to the debt discount in 2020 and $33,139 remains unamortized
at December 31, 2020.



-13-







Wrightspeed, Inc.

Notes to Financial Statements








| | 4. | Borrowings (continued)
| | -- | ----------------------



Government Note Payable:



In July 2020, the Company received an
unsecured loan for $721,419 (the Note) from the U.S. Small Business Administration (the SBA) Paycheck Protection Program under the Coronavirus
Aid, Relief, and Economic Security Act. Outstanding borrowings under the Note bear interest at the rate of 1% per annum, with the first
six months of interest deferred. Monthly principal and interest payments are required thereafter through July 2022. Proceeds from the
Note were restricted to payment of employee salaries, rent and utility costs. Under the terms of the Note, if the Company satisfied certain
conditions set forth in the agreement, the SBA could agree to forgive all or a portion of the outstanding borrowings, along with any accrued
but unpaid interest ($4,724 of accrued interest at December 31, 2020). In 2020, no portion of the outstanding borrowings was repaid by
the Company. The Company believes it has satisfied the requirements necessary for the Note to be forgiven by the SBA and has requested
to have all borrowings forgiven. At December 31, 2020, the Note had yet to be forgiven and the related borrowings and accrued interest
of $726,143 remained outstanding.



| | 5. | Income Taxes
| | -- | ------------



The Company applies the provisions set forth
in FASB ASC Topic 740, Income Taxes, to account for the uncertainty in income taxes.



The Company uses the “more likely
than not” criterion for recognizing the tax benefit of uncertain income tax positions and establishing measurement criteria for
income tax benefits. The Company has evaluated the impact of these tax positions and believes its income tax filing positions and deductions
will be sustained upon examination. Accordingly, no reserve for uncertain income tax positions or related accruals for interest and penalties
have been recorded at December 31, 2020. In the event the Company should need to recognize interest and penalties related to unrecognized
tax liabilities, this amount will be recorded as an accrued liability and an increase to income tax expense.



Deferred income taxes result from
the tax effect of transactions recognized in different periods for financial statement and income tax reporting purposes. The
Company’s net deferred income tax assets at December 31, 2020 were approximately $22,468,400, and have been fully offset by a
valuation allowance, as their realization is not assured. Deferred income tax assets consist principally of net operating losses and
income tax credits, which may be carried forward to offset future income tax liabilities. For federal and state, the Company has net
operation loss carryforwards of $67,946,008 and $67,393,768, respectively, at December 31, 2020, which expire beginning in 2030.
Additionally, the Company has federal and state business and research and development income tax credits totaling $1,605,674 and
$1,588,608, respectively, at December 31, 2020. The federal income tax credits may be carried forward until 2040. The state income
tax credits may be carried forward indefinitely.



-14-







Wrightspeed, Inc.

Notes to Financial Statements








| | 6. | Capital Stock
| | -- | -------------



Common Stock:



The Company is authorized to issue 89,532,251
shares of common stock with a par value of $0.00001 per share. At December 31, 2020, the Company had 3,007,165 shares issued and outstanding.
The holders of common stock have voting rights equal to one vote per share of common stock held.



The Company allows option holders to exercise
unvested options issued under the Company’s stock award plan. Shares received from such early exercises are also subject to a right
of repurchase at the issuance price. The Company's repurchase right with respect to these shares lapses as the options vest. At December
31, 2020 the repurchase liability for early exercised stock options was not significant.



Convertible Preferred Stock:



The Company is authorized to issue 65,807,580
shares of convertible preferred stock with a par value of $0.00001 per share. The Company’s Board of Directors has designated all
issuable convertible preferred shares as Series AA convertible preferred stock (Series AA). There were 64,140,944 shares of Series AA
issued and outstanding at December 31, 2020.



The rights, preferences, privileges and restrictions
of Series AA are as follows:



Dividends:



The holders of Series AA are entitled to
receive non-cumulative dividends, prior to and in preference to any declaration or payment of dividends on common stock, when and if declared
by the Company’s Board of Directors, at an annual rate of $0.03 per share, as adjusted for stock splits, dividends, reclassifications
or the like. After payment of preferred stock dividends, any additional dividends will be paid ratably among holders of common stock and
Series AA, on an as converted basis. The Company has not declared or paid any dividends through December 31, 2020.



Liquidation:



In the event of any liquidation, dissolution,
or winding up of the Company, the holders of Series AA will be entitled to be paid, prior and in preference to any payment or distribution
on any share of common stock, an amount equal to $0.2870, as adjusted for any stock dividends, combinations, splits, recapitalizations
or the like, plus all declared but unpaid dividends.



After the payment of the full liquidation
preference to the holders of Series AA any remaining assets of the Company legally available for distribution will be paid to the holders
of common stock, on a pro rata basis.



-15-







Wrightspeed, Inc.

Notes to Financial Statements








| | 6. | Capital Stock (continued)
| | -- | -------------------------



Convertible Preferred Stock (continued):



Conversion:



At the option of the holder, each share of
Series AA will be convertible at any time into such number of fully paid and nonassessable shares of common stock, as is determined by
dividing the original issue price for Series AA by the conversion price, at the time of conversion. Conversion is initially set at the
original issuance price per share.



Each share of Series AA will automatically
be converted into shares of common stock at the then-effective conversion rate immediately upon the closing of an underwritten public
offering of common stock under the Securities Act of 1933 sold to the public with a price of at least $16.54 per share (as adjusted for
dividends, stock splits, or other recapitalization) and with gross proceeds to the Company of at least $20,000,000.



Voting:



The holders of shares of Preferred Stock
are entitled to the number of votes equal to the number of whole shares of common stock into which Series AA is convertible. The holders
of Series AA, voting as a separate class, are entitled to elect two members of the Board of Directors. The holders of Series AA and common
stock, voting together as a single class on an as-converted basis, are entitled to elect one member of the Board of Directors.



Protective Provisions:



The holders of Series AA have certain protective
provisions.



As long as any shares of Series AA remain
issued and outstanding, the holders of a majority of the outstanding shares of Series AA must approve any liquidation event, dividend
declarations, issuance of new borrowings, any amendments or alterations to the Certificate of Incorporation or Bylaws, and any changes
to the authorized number of members of the Board of Directors.



-16-







Wrightspeed, Inc.

Notes to Financial Statements








| | 7. | Warrants
| | -- | --------



From time to time, the Company has issued
warrants to purchase the Company’s common stock in connection with its debt and equity financings. The warrants were immediately
exercisable and expire, if not exercised, two years from their respective issuance dates. Warrants to purchase 2,905 shares of the Company’s
common stock remain outstanding at December 31, 2020 with a weighted average exercise price of $551 per share. The fair value of these
warrants were determined to be insignificant at the time of issuance.



From time to time, the Company has issued
warrants to purchase the Company’s convertible preferred stock in connection with its debt and equity financings. At December 31,
2020, warrants to purchase 1,666,391 shares of Series AA for $0.287 per share remain outstanding. The warrants will be exercisable, at
the option of the holder, into shares issued under the Company’s next qualified preferred stock financing. Certain provisions of
the warrants allow for the number of shares issuable and the exercise price to be adjusted based on the provisions of the next qualified
preferred stock financing. As a result, the fair value of the warrants were recorded as preferred stock warrant liability and as financing
expenses at their time of issuance. At December 31, 2020, the Company valued the warrants using the Black-Scholes option pricing model
with the following weighted average assumptions: contractual life of 2.03 years; no dividends; expected volatility of 50%; and a risk-free
interest rate of 0.37%.



| | 8. | Equity Incentive Plan
| | -- | ---------------------



In 2010, the Company established the 2010
Equity Incentive Plan (the Plan). Under the Plan, incentive stock options may be granted to employees and non-qualified stock options
may be granted to employees, officers, directors, and consultants for the purchase of up to 12,170,371 shares of common stock.



Options under the Plan may be outstanding
for periods of up to ten years following the grant date. Options issued under the Plan are determined by the Board of Directors and must
be priced at no less than the fair value of the shares on the date of the grant provided, however, the exercise price of any option granted
to a stockholder owning greater than 10% of the Company’s outstanding capital stock cannot be less than 110% of the fair value of
the shares on the date of grant. Fair value is determined by the Board of Directors. Stock options generally vest over a period of four
years and expire, if not exercised, 10 years from the date of grant.



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Wrightspeed, Inc.

Notes to Financial Statements








| | 8. | Equity Incentive Plan (continued)
| | -- | ---------------------------------



Stock options granted to a stockholder
that owns greater than 10% of the Company’s capital stock expire, if not exercised, five years from the date of grant. The fair
value of each award in 2020 has been estimated on the date of grant using the Black-Scholes option pricing model with the following weighted
average assumptions: expected life of 6.05 years, risk-free interest rate of 0.27%, expected volatility of 50%, and no dividends during
the expected life. Expected volatility is based on historical volatilities of public companies operating in the Company’s industry.
The expected life of the options represents the period of time options are expected to be outstanding and is estimated considering vesting
terms and employees’ historical exercise and post-vesting employment termination behavior. The risk-free interest rate is based
on the U.S. Treasury yield curve in effect at the time of grant.



Stock-based compensation is allocated on
a departmental basis, based on the classification of the option holder or grant recipient. No income tax benefits have been recognized
in the consolidated statement of operations for stock-based compensation arrangements and no stock-based compensation has been capitalized
at December 31, 2020. Stock-based compensation related to options granted in 2020 was $57,579. Future stock-based compensation for unvested
options granted and outstanding at December 31, 2020 is $242,528 to be recognized over the remaining requisite service period of 4.25
years.



Stock option activity under the Plan is as
follows:



|                                      |                           | Options Outstanding |           
|------------------------------------- | ------------------------- | ------------------- | ----------
|                                      | Options
        Available |                     |           
|Balances, December 31, 201910,106,482 |                           |                     |           
|Granted                               |                           |                     | (1,160,000
|Cancelled                             |                           |                     | 500,001   
|Exercised                             |                           |                     | -         
|Balances, December 31, 2020           |                           |                     | 9,446,483 



At December 31, 2020, 1,379,792 options were
vested and exercisable with a weighted-average exercise price of $0.31 and weighted-average remaining contractual life of 8.66 years.
The total intrinsic value of options exercised in 2020 was not significant.



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Wrightspeed, Inc.

Notes to Financial Statements








| | 9. | Commitments and Contingencies
| | -- | -----------------------------



Leases:



The Company leases its office facilities
under non-cancelable operating lease agreements in Alameda, California, which expires in March 2022. The Company has an option to renew
its leases for two consecutive five-year renewal periods. Under the terms of the leases, the Company is responsible for certain insurance,
property taxes and maintenance expenses. The Company recognizes rent on a straight-line basis over the term of each lease. The difference
between required lease payments and rent expense has been recorded as deferred rent. Rent expense was $321,519 in 2020.



Future annual minimum lease payments under
the non-cancelable leases are $670,000 and $112,000 for the years ending December 31, 2021 and 2022, respectively.



Indemnification Agreements:



From time to time, in its normal course
of business, the Company may indemnify other parties, with which it enters into contractual relationships, including lessors and parties
to other transactions with the Company. The Company may agree to hold other parties harmless against specific losses, such as those that
could arise from a breach of representation, covenant or third-party infringement claims. It may not be possible to determine the maximum
potential amount of liability under such indemnification agreements due to the unique facts and circumstances that are likely to be involved
in each particular claim and indemnification provision. Historically, there have been no such indemnification claims. Management believes
any future liability arising from these agreements will not have a material effect on the financial statements.



Legal:



The Company may become a party to various
litigation matters and disputes considered routine and in the ordinary course of the business. The Company is not aware of any current
legal claims at December 31, 2020 and, in the opinion of management, the ultimate disposition of any future claims will not have a material
adverse effect on the consolidated financial statements.



| | 10. | Employee Benefit Plan
| | --- | ---------------------



The Company has a defined contribution
401(k) plan under which employees may contribute a portion of their compensation to the plan, subject to the limitations under the Code.
The Company’s contributions to the plan are at the discretion of the Board of Directors. The Company contributed

$63,983 to the plan in 2020.



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Wrightspeed, Inc.

Notes to Financial Statements








| | 11. | Subsequent Events
| | --- | -----------------



Convertible Notes Payable Issuance:



From February 2021 through November 2021,
the Company raised an additional $9,600,000 through the issuance of convertible notes payable (the Notes) to several of its current investors.
The Notes were originally set to mature on December 31, 2021 and are convertible upon the Company’s next qualified equity financing
resulting in cash proceeds to the Company of at least $20,000,000. The Notes are convertible at 80% of the price paid per security issued
under the next qualified round, subject to certain limitations. Outstanding borrowings under the Notes accrue annual interest at the rate
of 12% per annum. If the Company is acquired in an acquisition prior to its next qualified financing the Notes will become repayable at
a rate equal to 200% of the outstanding borrowings at that time.



As part of the additional Note raises, the
Company amended all its currently outstanding convertible notes to extend their maturities through December 31, 2022.



Operating Lease:



The Company exercised the first of its five-year
rental renewal options to extend its non-cancelable operating lease agreement for its Alameda headquarters (Note 9) through March 2027.



Equity Incentive Plan:



In October 2021, the Company amended its
equity incentive plan (Note 8) to extend the Plan through October 2031.



Government Funded Loan Payable:



In September 2021, the Company applied for forgiveness for its
government note payable (Note 4) of

$726,143.



Subsequent events have been evaluated through
(issuance date), which is the date of the financial statement were approved by management and available for issuance. No additional items
requiring disclosure in the financial statements have been identified by management.



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