Boss : 2021 FYE Audited Financials

Boss Holdings, Inc. and Subsidiaries

Consolidated Financial Statements December 25, 2021

Contents

Independent auditor's reportFinancial statements

1-2

Consolidated balance sheets 3

Consolidated statements of comprehensive income (loss) 4

Consolidated statements of stockholders' equity 5

Consolidated statements of cash flows 6-8

Notes to consolidated financial statements 9-23

Independent Auditor's Report

Board of Directors

Boss Holdings, Inc. and Subsidiaries

Opinion

We have audited the consolidated financial statements Boss Holdings, Inc. and Subsidiaries (the Company), which comprise the consolidated balance sheets as of December 25, 2021 and December 26, 2020, the related consolidated statements of comprehensive income (loss), stockholders' equity and cash flows for the periods ended December 25, 2021, December 26, 2020 and December 28, 2019, and the related notes to the consolidated financial statements (collectively, the financial statements).

In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Company as of December 25, 2021 and December 26, 2020, and the results of its operations and its cash flows for the periods ended December 25, 2021, December 26, 2020 and December 28, 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 (GAAS). Our responsibilities under those standards are further described in the Auditor's 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 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 financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the 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 financial statements are issued or 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 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 GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.

In performing an audit in accordance with GAAS, we:

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

• • Identify and assess the risks of material misstatement of the 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 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 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.

Davenport, Iowa

April 14, 2022

Boss Holdings, Inc. and Subsidiaries

Consolidated Balance Sheets

December 25, 2021 and December 26, 2020 (Dollars in Thousands, Except Per Share Data)

2021

2020

Assets

Current assets:

Cash and cash equivalents Accounts receivable, net Inventories

Prepaid expenses and other Other investment, cost method Income tax receivable

Total current assets

Property and equipment, net

$

32,981 $ 21,818

6,449 5,899

19,672 14,697

996 467

- 10,000

463

-

60,561 52,881

2,719 3,063

Finance lease right of use assets, net Operating lease right of use assets, net Marketable equity securities

Deferred tax asset

Intangibles, net of accumulated amortization Goodwill

Liabilities and Stockholders' Equity

Current liabilities:

Current portion of operating lease liabilities Current portion of finance lease liabilities Accounts payable

Accrued payroll and related expenses Income tax payable

Other accrued liabilities

Total current liabilities

Noncurrent liabilities:

Long-term operating lease liabilities Long-term finance lease liabilities Other long-term liabilities

Total noncurrent liabilities

Commitments and contingencies (Note 4)

Stockholders' equity:

Common stock, $0.25 par value; authorized 10,000,000 shares; issued and outstanding 1,986,296 shares in 2021 and 2020 Additional paid-in capital

Accumulated (deficit)

Accumulated other comprehensive (loss)

Total stockholders' equity

See notes to consolidated financial statements.

50 79

1,063 1,576

1,334 1,885

1,230 2,514

307 402

2,853 2,853

$

70,117

$

65,253

$

831 $ 818

19 27

5,488 2,833

2,165 1,454

- 3,376

2,665 2,024

11,168

10,532

277 853

33 54

7 317

- 907

497

497

64,814

64,835

(6,100)

(10,899)

(579)

(619)

58,632

53,814

$

70,117

$

65,253