Independent Auditor’s Report

Financial Statements

Consolidated balance sheets

Consolidated statements of income and comprehensive income

Consolidated statements of member’s equity

Consolidated statements of cash flows

Notes to financial statements

December 31,

ASSETS

Current assets

Cash and cash equivalents

Accounts receivable, net of allowances for doubtful accounts of $206,000 and $167,000 in 2016 and 2015, respectively

Unbilled revenues

Prepaid and other current assets

Total current assets

Property and equipment, net

Total assets

LIABILITIES AND MEMBER’S EQUITY

Current liabilities

Accounts payable

Accrued payroll and commissions

Income tax payable

Other current liabilities

Total current liabilities

Deferred income taxes

Total liabilities

Commitments and contingencies (Note 3)

Member’s equity

Total liabilities and Member’s equity

Years Ended December 31,

Revenue

Operating expenses

Cost of revenue

General and administrative

Information technology

Sales and marketing

Total operating expenses

Operating income

Other income (expense)

Loss on foreign currency transactions

Interest income

Interest expense

Other income (expenses), net

Total other expenses, net

Income before income taxes

Foreign income tax expense

Net income

Other comprehensive income

Foreign currency translation adjustment

Total comprehensive income

Balances, January 1, 2015

Member’s distribution

Foreign currency translation

Net income

Balances, December 31, 2015

Member’s distribution

Foreign currency translation

Net income

Balances, December 31, 2016

Years Ended December 31,

Cash flows from operating activities

Net income

Adjustments to reconcile net income to net cash provided by operating activities

Depreciation expense

Deferred taxes

Gain on sale of property and equipment

Bad debt expense

Foreign exchange losses (gains)

Net change in operating assets and liabilities

Accounts receivable

Unbilled revenues

Prepaid and other current assets

Accounts payable

Accrued payroll and commissions

Other current liabilities

Income tax payable

Net cash flows provided by operating activities

Cash flows from investing activities

Purchase of property and equipment

Disposition of property and equipment

Net cash flows used in investing activities

Cash flows from financing activities

Payments notes payable

Member distributions

Net cash flows used in financing activities

Net increase in cash and cash equivalents

Effect of foreign currency translation adjustment

Cash, beginning of year

Cash, end of year

Supplemental cash flow information

Cash paid during the year for interest

Cash paid during the year for foreign taxes

Description of Business

Cost & Compliance Associates, LLC (C&CA or the Company), a Georgia limited liability company, was formed on November 13, 2012 and commenced operations on December 27, 2012. C&CA consists of Cost & Compliance Associates, LLC, a U.S. limited liability company and its wholly owned subsidiary, Cost & Compliance Associates, LTD, a U.K. entity.

The Company is a recovery audit and contract compliance firm with operations that serve clients from offices within North America and Europe. Specifically, the Company specializes in accounts payable recovery auditing and compliance variances, based in transactional auditing, analyzing high volume transactions to identify audit opportunities, and helping clients improve contract structure, supplier sourcing and strengthen internal processes and controls. All audits are conducted through formal contract assignments and novation agreements.

Revenue related to the Company’s North American and European operations were $11,487,221 and $3,295,443, respectively, for fiscal 2016. For fiscal 2015, revenue related to the Company’s North American and European operations were $9,125,315 and $4,262,705, respectively.

Principles of Consolidation

The consolidated financial statements include the financial statements of the Company and its wholly owned subsidiary Cost & Compliance Associates Limited. All significant intercompany balances and transactions have been eliminated in consolidation.

Use of Estimates

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

Revenue Recognition and Unbilled Revenue

The Company bases its revenue on specific contracts with its clients. These contracts generally specify: (a) time periods covered by the audit; (b) nature and extent of audit services provided; (c) the client’s duties in assisting and cooperating with the Company; and (d) fees payable to the Company expressed as a specified percentage of the amounts recovered by the client resulting from overpayment claims identified (contingency fees), in the form of a fee per hour, a flat fee, or a combination thereof.

Summary of Significant

Accounting Policies (cont.)

Revenue Recognition and Unbilled Revenue (cont.)

Regarding contingency fees, clients generally recover claims either by taking credits against outstanding payables or future purchases from the involved vendors, or receiving refund checks directly from those vendors. The manner in which a claim is recovered by a client often is dictated by industry practice. In addition, many clients establish specific procedural guidelines that the Company must satisfy prior to submitting claims for client approval, and these guidelines are unique to each client.

The Company recognizes revenue for a contractually specific percentage of amounts recovered when the Company has determined that the client has received economic value (generally through credits taken against existing accounts payable due to the involved vendors or refund checks received from those vendors) and when the Company has met the following criteria (1) persuasive evidence of an arrangement exists, (2) services have been rendered, (3) the fee billed to the client is fixed and determinable and (4) collectibility is reasonably assured.

The Company derives a portion of revenue on a “fee-for-service” basis whereby billing is based upon a fee per hour. The Company recognizes revenue for these types of services as provided and when the above criteria has been met. To the extent these fees are earned before they are invoiced, the Company records unbilled revenue.

Cash and Cash Equivalents

The Company considers all short-term, highly liquid investments with original maturities at the purchase date of three months or less to be cash equivalents. Cash consists of demand deposits with high credit quality financial institutions.

Concentration of Credit Risks

The Company maintains cash in bank accounts that at times may be in excess of the Federal Deposit Insurance Corporation (“FDIC”) insurance limit or otherwise may not be covered by FDIC insurance. In addition, as of December 31, 2016 and 2015, $2,890,947 and $2,053,729, respectively, in cash and cash equivalents were held in foreign bank accounts.

The Company routinely assesses the financial strength of its customers and, as a consequence, believes that its accounts receivable credit risk exposure is limited. During 2016, revenue from the top five customers accounted for 56% of consolidated revenues. During 2015, revenue from the top five customers accounted for 38% of consolidated revenues. At December 31, 2016, two customers accounted for 36% of consolidated accounts receivable. At December 31, 2015, two customers accounted for 42% of consolidated accounts receivable.

Accounts Receivable

Accounts receivable are recorded at net realizable value and do not bear interest. If deemed necessary based upon an analysis of customer financial condition and credit history, an allowance for doubtful accounts is provided equal to the estimated collection losses that will be incurred in collection of all receivables. Estimated losses are based on a review of the current status of the receivables, historical collection experience and management’s evaluation of the effect of existing economic conditions. Normal trade receivables are due within 30 days after the issuance of the invoice. The Company had allowances for doubtful accounts of $206,000 and $167,000 as of December 31, 2016 and 2015, respectively.

Prepaid Assets

Prepaid assets consist of the prepayment for goods or services to be realized in future periods.

Property and Equipment

Property and equipment is stated at cost, net of accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives or the lease term, if shorter, of the related assets. The useful lives are generally as follows:

Expenditures for maintenance, repair and renewals of minor items are expensed as incurred. Major betterments are capitalized.

For long-lived assets to be held and used, an impairment loss is recognized only if the carrying amount is not recoverable through its undiscounted expected future cash flows and the impairment loss is measured based on the difference between the carrying amount and fair value. No impairment charges have been necessary.

Summary of Significant

Accounting Policies (cont.)

Internal Software Development Costs

The Company capitalizes costs incurred related to the internal development of software that the Company uses in its operations. Development costs are accumulated and capitalized until the related software applications or “modules” are placed into service. Once in-service, these costs are amortized using the straight-line method over the expected useful life. As of December, 31, 2016 and 2015, the Company has capitalized $687,150 in development costs with $401,257 and $263,827, respectively, recorded as accumulated depreciation. These costs are recorded within property and equipment on the consolidated balance sheets.

Data conversion, training, research and development costs are expensed as incurred.

Income Taxes

As a limited liability company, the Company is not subject to U.S. income taxes. All income and deductions of the Company flow through to its single member. Accordingly, no income tax provision has been provided in the financial statements for the Company’s U.S. entity.

The Company has made an entity classification election for its wholly owned U.K. subsidiary, Cost & Compliance Associates, LTD, whereby Cost & Compliance Associates, LTD is a disregarded entity for U.S. income tax purposes.

Summary of Significant

Accounting Policies (cont.)

Income Taxes (cont.)

Deferred tax assets are reduced by a valuation allowance if it is more likely than not that some portion or all of a deferred tax asset will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences are deductible. In determining the amount of valuation allowance to record, the Company considers all available positive and negative evidence affecting specific deferred tax assets, including our past and anticipated future performance, the reversal of deferred tax liabilities, the length of carry-back and carry-forward periods and the implementation of tax planning strategies. Objective positive evidence is necessary to support a conclusion that a valuation allowance is not needed for all or a portion of deferred tax assets when significant negative evidence exists. Cumulative losses for tax reporting purposes in recent years are the most compelling form of negative evidence the Company considers in this determination.

The Company applies a “more-likely-than-not” recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. Our policy for recording interest and penalties associated with tax positions is to record such items as a component of earnings before income taxes. The Company does not believe there are any material uncertain tax positions and, accordingly, has not recognized any liability for unrecognized tax benefits.

Foreign Currency

The Company uses the pound sterling (GBP) as the functional currency in the U.K. Assets and liabilities denominated in GBP are translated into U.S. dollars at the current rates of exchange at the balance sheet date. The Company includes the translation gains and losses as a separate component of Member’s equity and in the determination of comprehensive income (loss). Revenue and expenses in foreign currencies are translated at the average exchange rates for the period. The Company separately states the foreign currency transaction gains and losses on short-term intercompany balances in the consolidated statements of income and comprehensive income. All other realized and unrealized foreign currency transaction gains (losses) are included within “Other income (expenses)”.

Comprehensive Income and Accumulated Foreign Currency Translation Adjustments

Comprehensive income consists of consolidated net income and foreign currency translation adjustments.

2.

December 31,

3.

December 31,

4.

The Company entered into two note payable agreements in December 2012. One note payable agreement accrued interest at 4% for a period of two years at which time the accrued interest was added to the principal balance. Seven quarterly interest payments of $9,720 were payable beginning March 26, 2015. Principal and the remaining unpaid accrued interest was payable in full on December 26, 2017. The second note payable agreement accrued interest at 10% for a period of two years at which time the accrued interest was added to the principal balance. Seven quarterly interest payments of $7,500 were payable beginning March 31, 2015. Principal and the remaining unpaid accrued interest was payable in full on December 26, 2017.

These notes were paid in full in 2015 with no remaining obligation.

On February 23, 2017, PRGX Global, Inc., through its wholly owned subsidiaries PRGX USA, INC. and PRGX UK LTD. (collectively “PRGX”) acquired substantially all of the assets of the Company for $10 million in cash, subject to customary working capital adjustments and possible earnout consideration over a period of two years. The possible earnout consideration is based on certain performance measures and PRGX’s contract compliance business. The aggregate consideration that PRGX may be required to pay in connection with the acquisition of the Company cannot exceed $18.0 million.

Subsequent events have been evaluated through May 5, 2017, the date of this report.