# EDGAR Filing Document

**Accession Number:** 0001740742
**File Stem:** 0001829126-23-001980
**Filing Date:** 2023-3
**Character Count:** 54987
**Document Hash:** b27d7f3ab82693f8023978ced5c3f810
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001829126-23-001980.hdr.sgml**: 20230313

**ACCESSION NUMBER**: 0001829126-23-001980

**CONFORMED SUBMISSION TYPE**: 8-K

**PUBLIC DOCUMENT COUNT**: 15

**CONFORMED PERIOD OF REPORT**: 20201119

**ITEM INFORMATION**: Completion of Acquisition or Disposition of Assets

**ITEM INFORMATION**: Financial Statements and Exhibits

**FILED AS OF DATE**: 20230313

**DATE AS OF CHANGE**: 20230313

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** Unicoin Inc.
- **CENTRAL INDEX KEY:** 0001740742
- **STANDARD INDUSTRIAL CLASSIFICATION:** SERVICES-PREPACKAGED SOFTWARE [7372]
- **IRS NUMBER:** 474360035
- **STATE OF INCORPORATION:** DE
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 8-K
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 000-56276
- **FILM NUMBER:** 23725534

**BUSINESS ADDRESS:**
- **STREET 1:** 228 PARK AVE SOUTH 16065
- **CITY:** NEW YORK
- **STATE:** NY
- **ZIP:** 10003
- **BUSINESS PHONE:** 2122160001

**MAIL ADDRESS:**
- **STREET 1:** 228 PARK AVE SOUTH 16065
- **CITY:** NEW YORK
- **STATE:** NY
- **ZIP:** 10003

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** TransparentBusiness, Inc.
- **DATE OF NAME CHANGE:** 20180515

?xml version="1.0" encoding="utf-8"?

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

**FORM 8-K**

**CURRENT REPORT**

**Pursuant to Section 13 or 15(d)**

**of the Securities Exchange Act of 1934**

**Date of Report (Date of Earliest Event Reported): November 19, 2020**

**Unicoin Inc.**

**(Exact Name of Registrant as Specified in its Charter)**

---

| | | |
|:---|:---|:---|
| **Delaware** | **000-56276** | **47-4360035** |
| **(State or other jurisdiction<br> of incorporation)** | **(Commission<br> File Number)** | **(I.R.S. Employer<br> Identification No.)** |

---

---

| | |
|:---|:---|
| **228 Park Ave South 16065<br> New York, New York** | **10003** |
| **(Address of principal executive offices)** | **(Zip Code)** |

---

**Registrant's telephone number including area code: (212)** **216-0001**

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

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

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company ☒

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

---

| | |
|:---|:---|
| **Item 2.01** | **Completion of Acquisition or Disposition of Assets.** |

---

On November 19, 2020, Unicoin Inc. (formerly known as TransparentBusiness, Inc.) (the "Company") acquired ITSQuest, Inc. ("ITSQuest). The foregoing description in this Item 2.01 of the ITSQuest business acquisition does not purport to be complete and is qualified in its entirety by reference to the discussion and accounting considerations disclosed in Note 4 Business Acquisition of "Notes to Consolidated Financial Statements," included in Item 13 of the Company's registration statement on Form 10-12G/A.

Generally, Item 2.01 of Form 8-K requires registrants to disclose an acquisition within four business days of the completion of the acquisition. Audited financial statements required by Rule 8-04 and pro forma financial information required by Article 11 of Regulation S-X must then be filed within 71 calendar days of the original Item 2.01 Form 8-K filing. As of November 19, 2020, the Company had not filed a registration statement on Form 10-12G. Upon the automatic effectiveness of the Company's registration statement on Form 10-12G, 60 days after being filed on April 30, 2021, the Company became subject to the requirement of Rule 8-04 and Article 11. Accordingly, based on the significance of the ITSQuest acquisition, the Company was required to include two years of audited financial statements pursuant to Rule 8-04 and the pro forma information required by Article 11 in its Form 10-12G filed in April 2021. This Form 8-K is being submitted to provide this previously required information related to the ITSQuest acquisition.

The historical audited financial statements and the unaudited pro forma condensed combined statement of operations and comprehensive loss described below in Item 9.01(a) and Item 9.02(b), respectively, should be read in conjunction with the Company's registration statement on Form 10-12G/A filed on October 24, 2022.

---

| | |
|:---|:---|
| **Item 9.01.** | **Financial Statements and Exhibits.** |

---

(a) Financial
Statements of Business Acquired.

The audited consolidated financial statements of ITSQuest, which comprise the consolidated balance sheets as of November 26, 2020 and December 31, 2019, and the related consolidated statements of operations, changes in stockholders' deficit, and cash flows for the period from January 1, 2020 through November 26, 2020 and the year ended December 31, 2019, and the related notes to the consolidated financial statements and Report of Independent Auditors thereto are attached hereto as Exhibit 99.1 and incorporated herein by reference. As permitted by Rule 3-06 of Regulation S-X the audited period from January 1, 2020 through November 26, 2020 was used to satisfy one of the two year audited financial statement requirements.

(b) Pro forma financial information.

The unaudited pro forma condensed combined consolidated statement of operations and comprehensive loss of the Company for the year ended December 31, 2020 and related notes thereto, are attached hereto as Exhibit 99.2 and incorporated herein by reference.

(d) Exhibits.

---

| | |
|:---|:---|
| **Exhibit Number** | **Description** |
| 99.1 | [Audited consolidated financial statements of ITSQuest, which comprise the consolidated balance sheets as of November 26, 2020 and December 31, 2019, and the related consolidated statements of operations, changes in stockholders' deficit, and cash flows for the period from January 1, 2020 through November 26, 2020 and the year ended December 31, 2019 and accompanying notes thereto.](unicoininc_ex99-1.htm) |
| 99.2 | [Unaudited pro forma condensed combined statement of operations and comprehensive loss of the Company for the year ended December 31, 2020, and the notes related thereto.](unicoininc_ex99-2.htm) |

---

**SIGNATURES** 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

---

| | |
|:---|:---|
| UNICOIN INC. | UNICOIN INC. |
| By: | /s/ Richard Devlin |
| Name: | Richard Devlin |
| Title: | Senior Vice President and General Counsel |

---

Dated: March 13, 2023

## Exhibit 99.1

**Exhibit 99.1**

**ITSQuest, Inc.**

**TABLE OF CONTENTS**

---

| | |
|:---|:---|
|  | **Page** |
| **REPORT** |  |
| [INDEPENDENT AUDITOR'S REPORT](#d_001) | 1 |
| **FINANCIAL STATEMENTS** |  |
| [Consolidated Balance Sheets](#d_002) | 3 |
| [Consolidated Statements of Operations](#d_003) | 4 |
| [Consolidated Statements of Changes in Stockholders' Deficit](#d_004) | 5 |
| [Consolidated Statements of Cash Flows](#d_005) | 6 |
| [Notes to Consolidated Financial Statements](#d_006) | 7 |

---

i

![](ex99-1_001.jpg)

**INDEPENDENT AUDITOR'S REPORT**

To the Board of Directors and Stockholders

of ITSQuest, Inc.

**Opinion**

We have audited the accompanying consolidated financial statements of ITSQuest, Inc. (a New Mexico corporation) and Affiliates (collectively, the Company), which comprise the consolidated balance sheets as of November 26, 2020 and December 31, 2019, and the related consolidated statements of operations, changes in stockholders' deficit, and cash flows for the period from January 1, 2020 through November 26, 2020 and the year ended December 31, 2019, and the related notes to the consolidated financial statements.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of November 26, 2020 and December 31, 2019, and the results of their operations and their cash flows for the period from January 1, 2020 through November 26, 2020 and the year ended December 31, 2019, in accordance with accounting principles generally accepted in the United States of America.

**Basis for Opinion**

We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Our responsibilities under those standards are further described in the Auditors' Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the Company and to meet our other 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.

**Responsibilities of Management for the 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 available to be issued.

**Auditor's Responsibilities for the Audit of the 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 an audit conducted in accordance with generally accepted auditing standards 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, including omissions, 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 an audit in accordance with generally accepted auditing standards, we:

● Exercise professional judgment and maintain professional skepticism throughout the audit.

● 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 audit 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 audit, significant audit findings, and certain internal control related matters that we identified during the audit.

/s/ Carr, Riggs & Ingram, LLC

Albuquerque, New Mexico

March 2, 2022

**ITSQuest, Inc.**

**Consolidated Balance Sheets**

---

| | | |
|:---|:---|:---|
|  | **November 26,**<br>**2020** | **December 31,**<br>**2019** |
| **Assets** |  |  |
| Current assets |  |  |
| &nbsp;&nbsp;&nbsp;Cash and cash equivalents | $**349895** | $264364 |
| &nbsp;&nbsp;&nbsp;Accounts receivable - trade, net | **937442** | 1193154 |
| &nbsp;&nbsp;&nbsp;Prepaid expenses | **6325** | 36450 |
| &nbsp;&nbsp;&nbsp;Total current assets | **1293662** | 1493968 |
| Noncurrent assets |  |  |
| &nbsp;&nbsp;&nbsp;Property and equipment, net | **54375** |  |
| &nbsp;&nbsp;&nbsp;Other assets | **50455** | 20051 |
| &nbsp;&nbsp;&nbsp;Total noncurrent assets | **104830** | 20051 |
| Total assets | $**1398492** | $1514019 |
| **Liabilities and Stockholders' Deficit** |  |  |
| Current liabilities |  |  |
| &nbsp;&nbsp;&nbsp;Accounts payable - trade | $**7635** | $2292 |
| &nbsp;&nbsp;&nbsp;Accrued liabilities | **138358** | 155887 |
| &nbsp;&nbsp;&nbsp;Total current liabilities | **145993** | 158179 |
| Non-current liabilities |  |  |
| &nbsp;&nbsp;&nbsp;Long-term liabilities | **4472421** | 4311594 |
| Total liabilities | **4618414** | 4469773 |
| Stockholders' deficit |  |  |
| &nbsp;&nbsp;&nbsp;Common stock - no par value, authorized 100,000 shares, issued 100,000 shares, and outstanding 100,000 shares | **11500** | 11500 |
| &nbsp;&nbsp;&nbsp;Additional paid-in capital | **205073** | 205073 |
| &nbsp;&nbsp;&nbsp;Accumulated deficit | **(2978480)** | (2669205) |
| &nbsp;&nbsp;&nbsp;Non-controlling interest | **(458015)** | (503122) |
| Total stockholders' deficit | **(3219922)** | (2955754) |
| Total liabilities and stockholders' deficit | $**1398492** | $1514019 |

---

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

**ITSQuest, Inc.**

**Consolidated Statements of Operations**

---

| | | |
|:---|:---|:---|
|  | **For the Period from January 1, 2020 through<br> November 26,<br> 2020** | **For the Year Ended<br> December 31,<br> 2019** |
| **Revenue** | $**11486125** | $14795860 |
| Cost of services | **8242889** | 10753384 |
| Gross profit | **3243236** | 4042476 |
| **Operating Expenses** |  |  |
| &nbsp;&nbsp;&nbsp;Salaries and wages | **1092622** | 1147720 |
| &nbsp;&nbsp;&nbsp;General and administrative | **2231356** | 2553181 |
| Total operating expenses | **3323978** | 3700901 |
| Operating profit (loss) | **(80742)** | 341575 |
| **Other Expense** |  |  |
| &nbsp;&nbsp;&nbsp;Interest expense | **(57139)** | (84268) |
| Income (loss) before income tax expense | **(137881)** | 257307 |
| Income tax expense | **134716** | 198013 |
| Net income (loss) | **(272597)** | 59294 |
| Less: Net income (loss) attributable to non-controlling interest | **33700** | (111657) |
| Net income (loss) attributable to common stockholders | $**(306297)** | $170951 |

---

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

 

**ITSQuest, Inc.**

**Consolidated Statements of Changes in Stockholders' Deficit**

*For the period from January 1, 2020 through November 26, 2020 and the year ended December 31, 2019*

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Common**<br>**Stock** | **Additional Paid-in**<br>**Capital** | **Accumulated**<br>**Deficit** | **Non-<br> controlling**<br>**interest** | **Total Stockholders'**<br>**Deficit** |
| **Balance at January 1, 2019** | $**11500** | $**205073** | $**(2791348)** | $**(410393)** | $**(2985168)** |
| Non-controlling interest contributions |  |  |  | 18928 | 18928 |
| Common stockholder distributions |  |  | (48808) |  | (48808) |
| Net income (loss) | - | - | 170951 | (111657) | 59294 |
| **Balance at December 31, 2019** | **11500** | **205073** | **(2669205)** | **(503122)** | **(2955754)** |
| Non-controlling interest contributions |  |  |  | 11407 | 11407 |
| Common stockholder distributions |  |  | (2978) |  | (2978) |
| Net income (loss) | - | - | (306297) | 33700 | (272597) |
| **Balance at November 26, 2020** | $**11500** | $**205073** | $**(2978480)** | $**(458015)** | $**(3219922)** |

---

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

 

**ITSQuest, Inc.**

**Consolidated Statements of Cash Flows**

---

| | | |
|:---|:---|:---|
|  | **For the Period from January 1, 2020 through<br> **November 26,<br> 2020** | **For the Year Ended<br> December 31,<br> 2019** |
| **Operating Activities** |  |  |
| Net income (loss) | $**(272597)** | $59294 |
| Adjustments to reconcile net income (loss) to net cash used in operating activities: |  |  |
| &nbsp;&nbsp;&nbsp;Bad debt expense | **65570** | 69457 |
| &nbsp;&nbsp;&nbsp;Changes in operating assets and liabilities |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts receivable - trade | **190142** | (425263) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prepaid expenses | **30125** | (22647) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other assets | **(30404)** | 6483 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts payable - trade | **5343** | (6988) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accrued liabilities | **(17529)** | 1986 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash used in operating activities | **(29350)** | (317678) |
| **Investing Activities** |  |  |
| &nbsp;&nbsp;&nbsp;Capital expenditures | **(54375)** | - |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash used in investing activities | **(54375)** |  |
| **Financing Activities** |  |  |
| &nbsp;&nbsp;&nbsp;Contributions by non-controlling interests | **11407** | 18928 |
| &nbsp;&nbsp;&nbsp;Common stockholder distributions paid | **(2978)** | (48808) |
| &nbsp;&nbsp;&nbsp;Tax assessments and other long-term liabilities | **160827** | 194284 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash provided by financing activities | **169256** | 164404 |
| Net change in cash and cash equivalents | **85531** | (153274) |
| Cash and cash equivalents at beginning of year | **264364** | 417638 |
| Cash and cash equivalents at end of year | $**349895** | $264364 |
| **Schedule of Certain Cash Flow Information** |  |  |
| Interest paid | $**57139** | $84268 |

---

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

 

**ITSQuest, Inc.**

**Notes to Consolidated Financial Statements**

**NOTE 1: DESCRIPTION OF THE BUSINESS**

ITSQuest, Inc. (formerly Haldeman and Hoogestraat, Inc.) was organized in September 1994 in the state of New Mexico. In September 2002, an amendment to the Articles of Incorporation was filed thereby changing the legal name to ITSQuest, Inc.

ITSQuest, Inc. and the affiliates it controls (collectively, the Company) operates as a professional staffing agency. The Company offers human resource outsourcing, pre and post-employment, industry specific assessments, testing, vetting, training, recruiting, and contract project management services. The Company has 12 locations serving customers in the States of Texas and New Mexico.

In November 2020, a Share Exchange Agreement (the SEA) was entered into by TransparentBusiness, Inc. (Transparent) and ITSQuest, Inc., whereby Transparent acquired shares of ITSQuest, Inc., subject to satisfaction of various closing conditions set forth in the SEA, resulting in ITSQuest Inc. becoming a 51% owned subsidiary of Transparent. As of the acquisition date, November 27, 2020, Transparent will consolidate ITSQuest, Inc.

**NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**

***Principles of Consolidation and Periods Presented***

The consolidated financial statements include the accounts of ITSQuest, Inc., and variable interest entities (VIE) (collectively, the Company). The Company consolidates an entity if the Company has a controlling financial interest in the entity. VIEs are consolidated if the Company has the power to direct the significant economic activities of the VIE that impact financial performance and has the obligation to absorb losses or the right to receive benefits that could potentially be significant (i.e., the Company is the primary beneficiary). The assessment of whether or not the Company is the primary beneficiary of a VIE is performed on an ongoing basis. This assessment includes both qualitative and quantitative reviews. Qualitative analysis is based on an evaluation of the design of the entity, its organizational structure including decision making ability, and financial agreements. Quantitative analysis is based on the Company's forecasted cash flows.

The consolidated financial statements present the operating results and cash flows for the period from January 1, 2020 through November 26, 2020, and the year ended December 31, 2019.

All significant intercompany balances and transactions have been eliminated.

***Basis of Accounting***

The accompanying consolidated financial statements have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP). The Financial Accounting Standards Board (FASB) provides authoritative guidance regarding U.S. GAAP through the Accounting Standards Codification (ASC) and related Accounting Standards Updates (ASUs).

**ITSQuest, Inc.**

**Notes to Consolidated Financial Statements**

**NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)**

***Use of Estimates***

The preparation of U.S. GAAP financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and changes therein, and disclosure of contingent assets and liabilities. Actual results could differ from those estimates. Estimates that are particularly susceptible to significant change in the near term are related to the allowance for doubtful accounts.

***Cash and Cash Equivalents***

Cash and cash equivalents include cash and all highly-liquid debt instruments with an original maturity of 90 days or less.

***Accounts Receivable***

Accounts receivable represent amounts owed to the Company which are expected to be collected within twelve months and are presented in the balance sheets net of the allowance for doubtful accounts.

***Allowance for Doubtful Accounts***

Management evaluates its receivables on an ongoing basis by analyzing customer relationships and previous payment histories. The allowance for doubtful accounts is management's best estimate of the amount of probable credit losses in the existing accounts based on current market conditions. Historically, losses on uncollectible accounts have been within management's expectations. The allowance for doubtful accounts is reviewed on a periodic basis to ensure there is sufficient reserve to cover any potential credit losses. When receivables are considered uncollectible, they are charged against the allowance for doubtful accounts. Collections on accounts previously written off are included in income as received. The allowance for doubtful accounts was $436,519 and $393,128 at November 26, 2020 and December 31, 2019, respectively.

***Property and Equipment***

Property and equipment are stated at cost less accumulated depreciation. Expenditures for additions, major renewals, and betterments are capitalized and repairs and maintenance are charged to operations as incurred. Depreciation expense is recognized over the estimated useful lives of the property and equipment using the straight-line method.

**ITSQuest, Inc.**

**Notes to Consolidated Financial Statements**

**NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)**

***Revenue Recognition***

The Company enters into service agreements with customers for human resources support services. The Company's agreements vary in duration having a legally enforceable term of generally one year or less. Effective January 1, 2019, the Company adopted FASB ASC 606, *Revenue from Contracts with Customers,* using the modified retrospective approach. Prior to the adoption of FASB ASC 606, the Company recognized revenue when persuasive evidence of an arrangement existed, delivery of services had occurred, the rate charged was fixed or determinable, and collectability was reasonably assured. Under FASB ASC 606, revenue is recognized when the performance obligation under the terms of the contract with customers is satisfied in an amount that reflects the consideration the Company expects to be entitled to receive in exchange for those services. For substantially all of the Company's customer arrangements, the performance obligations in the agreements are satisfied over time because the customer simultaneously receives and consumes the benefits provided as the Company performs services. The Company uses the output method based on a fixed rate per employee by type of service provided to recognize revenue, as the value to the customer of the services transferred to date appropriately depicts the performance towards complete satisfaction of the performance obligation. Customer billing typically occurs in the period in which services are performed. Customer receivables are included in the balance sheet less an allowance for doubtful accounts. The Company has elected the practical expedient permitting it to disregard financing components, which may be deemed to be part of its transaction price as its customary payment terms are less than one year. As a result, there was no material impact to the recognition of revenue from providing human resources support services to the Company's customers. Accordingly, the adoption of ASC 606 had no significant effect on the Company's consolidated financial statements and there was no cumulative-effect adjustment recognized.

***Income Taxes***

The Company and its stockholders have elected to be taxed under the provisions of Subchapter "S" of the Internal Revenue Code and have elected similar provisions available in the states. Under those provisions, the Company does not pay federal and state corporate income taxes on its taxable income. Instead, the stockholders are liable for individual federal and state income taxes for their respective shares of the Company's taxable income.

Tax positions are recognized only if it is "more likely than not" that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount that is greater than 50% likely of being realized on examination. For tax positions not meeting the "more likely than not" test, no tax position is recorded. The Company is subject to routine audits by taxing jurisdictions; however, there are currently no audits for any tax periods in progress.

The Company recognizes interest and/or penalties related to income tax matters in income tax expense.

***Interest***

Interest costs are charged to expense as incurred.

**ITSQuest, Inc.**

**Notes to Consolidated Financial Statements**

**NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)**

***Advertising***

Advertising costs are charged to operations as incurred. Advertising expense totaled approximately $12,243 and $24,888 for the period from January 1, 2020 through November 26, 2020 and the year ended December 31, 2019, respectively.

***Subsequent Events***

Management has evaluated subsequent events through the date that the consolidated financial statements were available to be issued, March 2, 2022. See Note 10 for relevant disclosure(s). No subsequent events occurring after this date have been evaluated for inclusion in these consolidated financial statements.

***Accounting Guidance Not Yet Adopted***

In February 2016, the Financial Accounting Standards Board (FASB) issued ASU 2016-02, "*Leases*", which establishes a comprehensive lease standard under Generally Accepted Accounting Standards (GAAP) for virtually all industries. The FASB issues additional amendments related to ASU 2016-02: (1) *ASU 2018-01"Leases (Topic 842): Land Easement Practical Expedient for Transition to Topic 842"; (2) ASU 2018-10, "Codification Improvements of Topic 842, Leases"; and (3) ASU 2018-11, "Leases (Topic 842): Targeted Improvements".* The new standard and related amendments require lessees to recognize a right of use asset and a lease liability for virtually all of their leases, other than leases that meet the definition of short-term leases. ASU 2019-10 was issued due to the transition challenges of public companies, which are often more significant in small private and nonprofit entities. Further, ASC 842-10-S65 states the SEC would not object to a public business entity (PBE) that would otherwise not meet the PBE definition except for the inclusion of its financial statements in another entity's filing with the SEC adopting ASC 842 in fiscal year 2021. As amended by ASU 2020-05, the effective date for ASU 2016-02 is for annual periods beginning after December 15, 2021, including interim periods therein. As a result, the Company has not adopted ASU 2016-02. The Company is still evaluating the potential impact on the Company's consolidated financial statements.

**NOTE 3: CONCENTRATIONS**

Financial instruments that subject the Company to concentrations of credit risk consist principally of cash and cash equivalents and accounts receivable. At various times during the year, the Company may have bank deposits significantly in excess of Federal Deposit Insurance Corporation insurance limits. Management believes any credit risk is low due to the overall financial strength of the financial institution. Concentrations of credit risk with respect to accounts receivable is limited due to the number of customers comprising the Company's customer base and their dispersion across different geographic regions. To reduce risk, the Company routinely assesses the financial strength of its customers and, as a consequence, believes that its accounts receivable credit risk exposure is limited.

Revenue from 1 customer represented approximately 14 percent and 17 percent of total revenue for the period from January 1, 2020 through November 26, 2020 and the year ended December 31, 2019, respectively. At November 26, 2020 and December 31, 2019, the Company had accounts receivable of $71,590 and $211,832, respectively, due from this customer.

**ITSQuest, Inc.**

**Notes to Consolidated Financial Statements**

**NOTE 4: PROPERTY AND EQUIPMENT**

The components of property and equipment at November 26, 2020 and December 31, 2019, are as follows:

---

| | | | |
|:---|:---|:---|:---|
|  | **Estimated<br> Useful Lives<br> (in years)** | **November 26,<br> 2020** | **December 31,<br> 2019** |
| Vehicles | 5 | $**54375** | $- |
| Less accumulated depreciation |  | **-** | - |
| Total |  | $**54375** | $- |

---

Depreciation expense for the period from January 1, 2020 through November 26, 2020 and the year ended December 31, 2019 amounted to $0 as the additions were purchased at the end of the period from January 1, 2020 through November 26, 2020.

**NOTE 5: LONG TERM LIABILITIES**

In recent years, the Company has been notified of an outstanding liability due to the New Mexico Taxation and Revenue Department for gross tax receipts, penalties and interest totaling approximately $4,380,000. This amount covers assessments for the period from January 31, 2011 to April 30, 2018. The Company has recognized the full amount on the consolidated balance sheets as a long term liability as a payment plan has not yet been finalized.

Income tax expense related to the assessment liability for the period from January 1, 2020 through November 26, 2020 and the year ended December 31, 2019, was $134,716 and $198,013, respectively.

**NOTE 6: COMMITMENTS AND CONTINGENCIES**

***Lease Commitments***

The Company leases certain facilities under non-cancelable lease agreements which expire at various dates through October 2023. Rent expense totaled approximately $216,500 and $235,700 for the period from January 1, 2020 through November 26, 2020 and the year ended December 31, 2019, respectively. These lease agreements have been classified as operating leases.

The following is a schedule of future minimum lease payments under the non-cancelable operating lease agreements subsequent to November 26, 2020:

---

| | |
|:---|:---|
| *For the years ending December 31,* |  |
| 2021 | $102300 |
| 2022 | 68200 |
| 2023 | 24000 |
| Total | $194500 |

---

**ITSQuest, Inc.**

**Notes to Consolidated Financial Statements**

**NOTE 6: COMMITMENTS AND CONTINGENCIES (Continued)**

***Contingencies***

From time to time, the Company may have asserted and unasserted claims arising in the normal course of business. The Company does not expect losses, if any, arising from these asserted and unasserted claims to have a material effect on the consolidated financial statements.

**NOTE 7: REVENUE**

Revenues are recognized when promised services are delivered to customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those services. Service revenues as presented on the consolidated statements of operations represent services rendered to customers less variable consideration, such as sales adjustments and allowances. Reimbursements, including those related to travel and out-of-pocket expenses, are also included in service revenues, and equivalent amounts of reimbursable expenses are included in costs of services.

Management consulting and temporary staffing revenue from contracts with customers are recognized in the amount to which the Company has a right to invoice, when the services are rendered by the Company's engagement professionals. The substantial majority of engagement professionals placed on assignment by the Company are the Company's legal employees while they are working on assignments. The Company pays all related costs of employment, including workers' compensation insurance, state and federal unemployment taxes, social security and certain fringe benefits. The Company assumes the risk of acceptability of its employees to its customers.

The Company records management consulting and temporary staffing revenue on a gross basis as a principal versus on a net basis as an agent in the presentation of revenues and expenses. The Company has concluded that gross reporting is appropriate because the Company (i) has the risk of identifying and hiring qualified employees, (ii) has the discretion to select the employees and establish their price and duties and (iii) bears the risk for services that are not fully paid for by customers.

***Disaggregated Revenue***

---

| | | |
|:---|:---|:---|
|  | **For the Period from January 1, 2020 through November 26,<br> 2020** | **For the Year Ended<br> December 31,<br> 2019** |
| Light industrial | $**2089305** | $7796592 |
| Clerical administrative | **820328** | 1295275 |
| Government | **8290607** | 5541355 |
| Healthcare | **52724** | 31272 |
| Miscellaneous revenue | **233161** | 131366 |
| Total revenue | $**11486125** | $14795860 |

---

The Company serves governmental entities across various service lines.

**ITSQuest, Inc.**

**Notes to Consolidated Financial Statements**

**NOTE 7: REVENUE (Continued)**

***Contract Balances***

---

| | | |
|:---|:---|:---|
|  | **For the Period from January 1, 2020 through November 26,<br> 2020** | **For the Year Ended<br> December 31,<br> 2019** |
| Net receivable from contracts, beginning of year | $**1193154** | $656658 |
| Net receivable from contracts, end of year | $**937442** | $1193154 |

---

**NOTE 8: EMPLOYEE BENEFIT PLAN**

The Company has a 401(k) Plan (the Plan), which covers all full-time employees meeting eligibility requirements. Matching contributions are half of employee contributions up to 4% of their compensation. Matching contributions are subject to vesting percentages as outlined in the Plan. The Company's matching contributions were approximately $6,300 and $6,100 for the period from January 1, 2020 through November 26, 2020 and the year ended December 31, 2019, respectively.

**NOTE 9: UNCERTAINTIES**

In March 2020, the World Health Organization made the assessment that the outbreak of a novel coronavirus (COVID-19) can be characterized as a pandemic. As a result, uncertainties have arisen that may have a significant negative impact on the operating activities and results of the Company. The occurrence and extent of such an impact will depend on future developments, including (i) the duration and spread of the virus, (ii) government quarantine measures, (iii) voluntary and precautionary restrictions on travel or meetings, (iv) the effects on the financial markets, and (v) the effects on the economy overall, all of which are uncertain.

**NOTE 10: SUBSEQUENT EVENTS**

Management evaluated all events or transactions that occurred after November 26, 2020 through March 2, 2022, the date the Company's consolidated financial statements were available to be issued. The following item occurred.

As described in Note 1, in November 2020, a Share Exchange Agreement (the SEA) was entered into by TransparentBusiness, Inc. and ITSQuest, Inc. The total purchase consideration was $3,800,000.

As of the date of the SEA Agreement, ITSQuest is responsible for the outstanding tax liability (Note 5).

## Exhibit 99.2

**Exhibit 99.2**

**UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS AND**

**COMPREHENSIVE LOSS**

On November 19, 2020, TransparentBusiness acquired ITSQuest, a regional staffing agency with twelve locations throughout New Mexico and Texas, by entering into a Share Exchange Agreement ("SEA") to acquire 51% of its issued and outstanding common stock. The acquisition was funded through the issuance of 10,000,000 shares of TransparentBusiness common stock and contingent consideration in the form of a contingent divestiture provision. As of the closing date, ITSQuest retained responsibility for an outstanding tax liability of $4,390 thousand and 3,500,000 of the 10,000,000 shares issued were placed in escrow pending final settlement of the tax liability. The following unaudited pro forma condensed combined statement of operations has been prepared based upon the historical statements of operations and comprehensive loss of TransparentBusiness and ITSQuest after giving effect to the acquisition. Pursuant to Rule 3-06 of Regulation S-X, the Company used an audited period between nine to twelve months (i.e. the period from January 1, 2020 through the November 26, 2020 acquisition date) to satisfy the requirements for one of the two audited annual periods required by Rule 8-04 of Regulation S-X. The accounting considerations relating to the ITSQuest acquisition has been included in Note 4 Business Acquisition of "Notes to Consolidated Financial Statements," included in Item 13 of this registration statement on Form 10-12G/A filed on October 24, 2020. More information about the basis for the pro forma presentation are included in Note 1 to the Unaudited Pro Forma Condensed Combined Statement of Operations and Comprehensive Loss below.

**TRANSPARENTBUSINESS, INC.**

**UNAUDITED PRO FORMA CONDENSED** 

**COMBINED STATEMENTS OF OPERATIONS**

**AND COMPREHENSIVE LOSS**

**FOR THE YEAR ENDED DECEMBER 31, 2020**

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Historical<br> Transparent<br> Business<br> Year Ended<br> December 31,<br> 2020** | <br> **Adjusted**<br> **ITSQuest<br> Period Ended<br> November 26,<br> 2020**<br> **(Note 2)** | **Pro Forma<br> Adjustments**<br> **(Note 5)** | **Pro Forma<br> Combined** |
| REVENUES | $1803851 | $10173407 | $- | $11977258 |
| COST OF REVENUES | 923342 | 8130095 | - | 9053437 |
| GROSS PROFIT (LOSS) | 880509 | 2043312 | - | 2923821 |
| OPERATING COSTS AND EXPENSES |  |  |  |  |
| &nbsp;&nbsp;&nbsp;General and administrative | 6325972 | 2331578 | - (a) | 8657550 |
| &nbsp;&nbsp;&nbsp;Sales and marketing | 5388028 | 242363 | 325172 (b) | 5955563 |
| &nbsp;&nbsp;&nbsp;Research and development | 228181 | - | - | 228181 |
| TOTAL OPERATING COSTS AND EXPENSES | 11942181 | 2573941 | 325172 | 14841294 |
| LOSS FROM OPERATIONS | (11061672) | (530629) | (325172) | (11917473) |
| &nbsp;&nbsp;&nbsp;Interest expense, net | (170670) |  |  | (170670) |
| &nbsp;&nbsp;&nbsp;Other expense, net | (8957) |  |  | (8957) |
| &nbsp;&nbsp;&nbsp;Change in fair value of derivatives, net | (803695) |  |  | (803695) |
| &nbsp;&nbsp;&nbsp;Loss on settlement of debt, net | (154590) | - | - | (154590) |
| LOSS BEFORE INCOME TAXES | (12199584) | (530629) | (325172) | (13055385) |
| &nbsp;&nbsp;&nbsp;Income tax expense | (79111) | - | 222941 (c) | 143830 |
| NET LOSS AND COMPREHENSIVE LOSS | $(12278695) | $(530629) | $(102231) | $(12911555) |
| Less: net loss attributable to the noncontrolling interest | (50487) | - | (310101)(d) | (360588) |
| NET LOSS ATTRIBUTABLE TO TRANSPARENTBUSINESS | $(12228208) | $(530629) | $207870 | $(12550967) |
| Net loss per share attributable to TransparentBusiness, basic and diluted | $(0.02) |  |  | $(0.02)(e) |
| Weighted average number of common shares outstanding, basic and diluted | 659931473 |  |  | 665809888 (e) |

---

*See accompanying notes which are an integral part of these unaudited pro forma condensed combined statements of operations and comprehensive loss*

**NOTES TO THE UNAUDITED PRO FORMA CONDENSED COMBINED<br> STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS**

**1. BASIS FOR PRO FORMA PRESENTATION**

The Company has not included a separate pro forma balance sheet presentation because the effect of the ITSQuest acquisition has already been reflected in the Company's consolidated historical balance sheet as of December 31, 2020 included in the Company's registration statement on Form 10-12G/A. The unaudited pro forma condensed combined statement of operations and comprehensive loss has been prepared using TransparentBusiness' and ITSQuest's historical consolidated statements of operations and comprehensive loss and presents the pro forma effects of the ITSQuest acquisition in accordance with Article 11 of Regulation S-X. The historical statements of operations and comprehensive loss of TransparentBusiness and ITSQuest have been prepared in accordance with accounting principles generally accepted in the United States.

The unaudited pro forma condensed combined statement of operations and comprehensive loss for the year ended December 31, 2020 is presented as if the ITSQuest acquisition occurred on January 1, 2020. TransparentBusiness acquired ITSQuest on November 19, 2020. The unaudited pro forma condensed combined statement of operations and comprehensive loss for the year ended December 31, 2020 was derived from TransparentBusiness' audited consolidated statement of operations and comprehensive loss for the year ended December 31, 2020 and ITSQuest's unaudited consolidated statement of operations and comprehensive loss for the period from January 1, 2020 through November 26, 2020. For practical purposes, TransparentBusiness used November 30, 2020 as the acquisition date to record the purchase accounting. The operating results of ITSQuest for the period between November 19, 2020 (the SEA closing date), November 26, 2020 (the audit date for ITSQuest financial statements) and November 30, 2020 (the acquisition date used by management for practical purposes) were not material. Certain reclassification adjustments have been made to the ITSQuest financial statements to conform to the TransparentBusiness financial statement presentation, as described in Note 2.

The unaudited pro forma condensed combined statement of operations and comprehensive loss has been prepared using the acquisition method of accounting in accordance with Accounting Standards Codification 805, *Business Combinations*, (ASC 805) with TransparentBusiness deemed as the accounting acquirer.

The historical statement of operations and comprehensive loss has been adjusted to give effect to matters that are (i) directly attributable to the ITSQuest acquisition, (ii) factually supportable and (iii) expected to have a continuing impact on the operating results of the combined company.

The unaudited pro forma condensed combined statement of operations and comprehensive loss has been prepared for illustrative purposes only and is not necessarily indicative of what the combined company's results of operations would have been had the ITSQuest acquisition been completed as of January 1, 2020. In addition, the unaudited pro forma condensed combined statement of operations and comprehensive loss does not purport to project the future operating results of the combined company.

The unaudited pro forma condensed combined statement of operations and comprehensive loss does not include any realization of cost savings from operating efficiencies, revenue synergies or restructuring costs expected to result from the ITSQuest acquisition.

This unaudited pro forma condensed combined statement of operations and comprehensive loss should be read in conjunction with TransparentBusiness' and ITSQuest's historical consolidated financial statements noted below:

● the separate historical audited consolidated financial statements of TransparentBusiness as of and for the years ended December 31, 2021 and 2020 included in the Company's Form 10-K, filed on July 19, 2022;

● the separate historical audited consolidated financial statements of ITSQuest as of and for the eleven month period ended November 26, 2020 included as Exhibit 99.1 to this Form 8-K.

**2. CONSOLIDATION AND RECLASSIFICATION ADJUSTMENTS TO ITSQUEST'S HISTORICAL STATEMENT OF OPERATIONS**

The historical statement of operations of ITSQuest for the eleven months period ended November 26, 2020 reflects the following adjustments to conform to the TransparentBusiness financial statement presentation:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Historical ITSQuest** | **Consolidation** <br> **Adjustments**<br> **(a)** | **Reclassifications (b)** | **Adjusted ITSQuest** |
| REVENUES | $11486125 | $(1312718) | $- | $10173407 |
| COST OF REVENUES | 8242889 | (112794) | - | 8130095 |
| GROSS PROFIT (LOSS) | 3243236 | (1199924) | - | 2043312 |
| OPERATING COSTS AND EXPENSES |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Salaries and wages | 1092622 |  | (1092622) |  |
| &nbsp;&nbsp;&nbsp;General and administrative | 2231356 | (750037) | 850259 | 2331578 |
| &nbsp;&nbsp;&nbsp;Sales and marketing | - | - | 242363 | 242363 |
| TOTAL OPERATING COSTS AND EXPENSES | 3323978 | (750037) | - | 2573941 |
| LOSS FROM OPERATIONS | (80742) | (449887) |  | (530629) |
| Interest expense, net | (57139) | 57139 |  |  |
| LOSS BEFORE INCOME TAXES | (137881) | (392748) |  | (530629) |
| Income tax expense | (134716) | 134716 | - | - |
| NET LOSS AND COMPREHENSIVE LOSS | $(272597) | $(258032) | $- | $(530629) |
| Less: net loss attributable to the noncontrolling interest | 33700 | (33700) | - | - |
| NET LOSS ATTRIBUTABLE TO ITSQuest | $(306297) | $(224332) | $- | $(530629) |

---

(a) The
consolidated statement of operations of ITSQuest included the operations of ITSQuest and certain variable interest entities ("ITSQuest
VIEs"). These ITSQuest VIEs were not acquired by TransparentBusiness. TransparentBusiness is not considered the reporting entity
of the preacquisition ITSQuest VIEs and does not consolidate these entities. The consolidated statement of operations amounts corresponding
to the ITSQuest VIEs have been eliminated to align with the presentation used by TransparentBusiness.

(b) Certain items presented by ITSQuest have been reclassified to align with
the presentation used by TransparentBusiness. Specifically, the statement of operations and comprehensive loss has been changed to allocate
salaries and wages to their functional classifications (i.e. General and administrative and Sales and Marketing).

**3. PURCHASE CONSIDERATION AND PURCHASE PRICE ALLOCATION**

Under the terms of the Share Exchange Agreement ("SEA"), the acquisition of 51% of ITSQuest was funded by an exchange of 10,000,000 shares of TransparentBusiness' common stock and contingent consideration in the form of a contingent divestiture provision. The purchase price, which represents the Total Consideration was paid on the closing date and was approximately $3,800 thousand.

The estimated fair values of the assets acquired, and liabilities assumed related to the acquisition, as well as the fair value of consideration transferred, approximate the following as of November 30, 2020:

---

| | |
|:---|:---|
| **Consideration Transferred:** | |
| &nbsp;&nbsp;&nbsp;Equity | $1900000 |
| &nbsp;&nbsp;&nbsp;Contingent Divestiture | 1900000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Fair Value of total Consideration Transferred | 3800000 |
| &nbsp;&nbsp;&nbsp;Fair Value of Non-Controlling Interest | 3730000 |
| &nbsp;&nbsp;&nbsp;**Total of consideration transferred and non-controlling interest** | $7530000 |

---

---

| | |
|:---|:---|
| **Assets acquired and liabilities assumed:** |  |
| &nbsp;&nbsp;&nbsp;Accounts Receivable (net) | $1256834 |
| &nbsp;&nbsp;&nbsp;Other Assets | 163584 |
| &nbsp;&nbsp;&nbsp;Property, Plant and equipment | 2978 |
| &nbsp;&nbsp;&nbsp;Trade Names\* | 770000 |
| &nbsp;&nbsp;&nbsp;Customer Relationships\* | 3011000 |
| &nbsp;&nbsp;&nbsp;Indemnification Asset for New Mexico Tax Liability | 4389727 |
| Total identifiable assets acquired excluding goodwill | 9594123 |
| &nbsp;&nbsp;&nbsp;Accounts Payable and Accrued Expenses | 16999 |
| &nbsp;&nbsp;&nbsp;Accrued Payroll Liabilities | 116682 |
| &nbsp;&nbsp;&nbsp;New Mexico Tax Liability | 4389727 |
| &nbsp;&nbsp;&nbsp;Deferred Income Taxes | 969940 |
| &nbsp;&nbsp;&nbsp;Current Liabilities | 436470 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total liabilities assumed | 5929818 |
| **Net identifiable assets acquired excluding goodwill** | 3664305 |
| Goodwill | 3865695 |
| **Net assets acquired** | $7530000 |

---

\* Finite-lived intangible assets are amortized on a straight-line basis over their estimated useful lives, generally 15 years for customer relationships and 5 years for trade names.

**4. NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS AND COMPREHENSIVE LOSS**

The ITSQuest acquisition pro forma adjustments included in the unaudited pro forma condensed combined statement of operations and comprehensive loss for the year ended December 31, 2020 are as follows:

(a) *Business acquisition costs.* ITSQuest's and TransparentBusiness' incurred acquisition costs that were immaterial. The pro forma adjustments to the
statement of operations and comprehensive loss reflect no adjustment for ITSQuest acquisition costs to the pro forma financial information
because the costs were expensed as incurred and do not have a continuing impact.

(b) *Intangible assets amortization expense.* Represents amortization expense adjustment recorded to incorporate additional intangible assets amortization
relating to the from the customer relationships and trade names recorded in the purchase price allocation at the Closing of the Business
Combination, which was assumed to have occurred on January 1, 2020.

(c) *Pro forma tax effect.* The income tax effects of ITSQuest as an entity owned by TransparentBusiness
 and the pro forma adjustments are reflected and calculated based on the statutory rate in
 effect during the periods for which the pro forma condensed combined statement of operations
 and comprehensive loss is being presented *.* 

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | | **Pro Forma Income Tax Benefit by Jurisdiction** | **Pro Forma Income Tax Benefit by Jurisdiction** | **Pro Forma Income Tax Benefit by Jurisdiction** | **Pro Forma Income Tax Benefit by Jurisdiction** |
| <br>**ITSQuest Pro Forma Tax Effect for the year ended December 31, 2020** |<br>**Pro Forma Impact to<br> PreTax Loss** | **Federal<br> (i)** | **New<br> Mexico<br> (ii)** | **Texas<br> (iii)** | **Total<br> Income<br> Tax Benefit** |
| Adjusted ITSQuest Period Ended November 26, 2020 | $(530629)(iv) | $111432 | $23178 | $3622 | $138232 |
| Pro Forma Adjustments | (325172)(iv) | 68286 | 14204 | 2219 | 84709 |
| **Totals** | $(855801) | $179718 | $37382 | $5841 | $222941 |

---

(i) Assumes
 a federal statutory tax rate of 21%

(ii) Assumes
 a New Mexico statutory tax rate of 4.8% and an apportionment rate of ITSQuest to New Mexico
 based on revenues of 91%

(iii) Assumes
 a Texas statutory tax rate of 0.75% and an apportionment rate of ITSQuest to Texas based
 on revenues of 9%

(iv) As
 noted on the Loss Before Income Taxes line item within the Unaudited Pro Forma Condensed Combined
 Statement of Operations and Comprehensive Loss for the Year Ended December 31, 2020

(d) *Non-controlling interest.* Non-controlling interest represents the adjustments for the Combined Company's
 non-controlling interest in the Business Combination.

---

| | | |
|:---|:---|:---|
| **ITSQuest Pro Forma NCI for the year ended December 31, 2020** | **Net Loss and<br> Comprehensive Loss (i)** | **Noncontrolling<br> Interest over<br> ITSQuest (49%)** |
| Adjusted ITSQuest Period Ended November 26, 2020 | $(530629) | $(260008) |
| Pro Forma Adjustments | (102231) | (50093) |
| **Totals** | $(632860) | $(310101) |

---

(i) As
 noted on the Net Loss and Comprehensive Loss line item within the Unaudited Pro Forma Condense
 Combined Statement of Operations and Comprehensive Loss for the Year Ended December 31, 2020

(e) *Net income (loss) per share.* Calculated based on the pro forma combined net loss and the
 weighted average outstanding common stock shares as if the 6.5 million non-contingent shares
 of common stock included in the purchase consideration would have been issued and outstanding
 as of January 1, 2020.