Exhibit 99.3
RxCompoundStore.com, LLC.
Financial Statements for the Period from
April 1, 2020, to March 31, 2022
RxCompoundStore.com, LLC.
FINANCIAL STATEMENTS
TABLE OF CONTENTS
| Page | |
| Auditor’s Report | F-1 |
| Balance Sheet | F-2 |
| Statement of Operations | F-3 |
| Statement of Changes in Member’s Equity | F-4 |
| Statement of Cash Flow | F-5 |
| Notes to Financial Statements | F-6 |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Managing Member of RXcompoundstore.com, LLC.
Opinion on the Financial Statements
We have audited the accompanying balance sheet of RXcompoundstore.com, LLC, (the Company) as of March 31, 2022, and the related statements of operations, Members deficit and cash flows for the six months period then ended, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of March 31, 2022 and the results of its operations and its cash flows for the six month period then ended in conformity with accounting principles generally accepted in the United States of America.
The Company’s Ability to Continue as a Going Concern
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 10 to the financial statements, the Company has incurred recurring operating losses, has negative cash flows from operating activities, and has stated that substantial doubt exists about the Company’s ability to continue as a going concern. Management’s evaluation of the events and conditions and management’s plans regarding these matters are also described in Note 10. The consolidated financial statements do not include any adjustments result from the outcome of this uncertainty. Our opinion has not changed as a result of this matter.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/ Bolko & Company
We have served as the Company’s auditor since 2022.
Boca Raton, Florida
February 3, 2023
| F-1 |
Balance Sheet
March 31, 2022
| ASSETS | ||||
| Current assets | ||||
| Cash and cash equivalents | $ | 4,829 | ||
| Inventory | 10,260 | |||
| Total current assets | 15,089 | |||
| Other asset | ||||
| Goodwill | 138,312 | |||
| Accum Amortization Goodwill | (21,907 | ) | ||
| Total other assets | 116,405 | |||
| TOTAL ASSETS | $ | 131,494 | ||
| LIABILITIES AND MEMBERS DEFICIT | ||||
| Current liabilities | | |||
| Accounts payable and accrued expenses | 17,807 | |||
| Loan payable | 6,360 | |||
| Advance from parent company | 30,000 | |||
| Total current liabilities | 54,167 | |||
| Long-term liabilities | ||||
| Loan payable | 102,340 | |||
| Total long-term liability | 102,340 | |||
| TOTAL LIABILITIES | 156,507 | |||
| MEMBERS’ DEFECIT | ||||
| Membership units | 67,511 | |||
| Accumulated Deficit | (92,524) | |||
| Total Membered Deficit | (25,013) | |||
| TOTAL LIABILITIES AND MEMBERS’ Deficit | $ | 131,494 |
See accompanying notes to these financial statements.
| F-2 |
Statement of Operations
For the 2 Year Periods April 1, 2020, to March 31, 2022
| Revenues | $ | 533,507 | ||
| Cost of goods | $ | 167,323 | ||
| Gross profit | $ | 366,184 | ||
| Operating expenses | ||||
| Amortization | 6,918 | |||
| Professional fees | 6,199 | |||
| Payroll | 188,432 | |||
| Travel | 2,350 | |||
| Rent expense | 18,643 | |||
| General and Administration | 218,260 | |||
| Total operating expenses | $ | 438,452 | ||
| Net income (loss) | $ | (72,267 | ) |
See accompanying notes to these financial statements.
| F-3 |
Statement of Changes in Members’ Equity
For the Period from April 1, 2020, to March 31, 2022
| Common Units | Retained Surplus | |||||||||||||||
| Number | Value | (Deficit) | Total | |||||||||||||
| Balance April 1, 2020 | 1,000 | $ | 62,325 | $ | (49,063 | ) | $ | 13,262 | ||||||||
| Capital contributions | - | 5,186 | - | 5,186 | ||||||||||||
| Net loss | - | - | (43,461 | ) | (43,461 | ) | ||||||||||
| Balance March 31, 2022 | 1,000 | $ | 69,511 | $ | (92,524 | ) | $ | (25,013 | ) | |||||||
See accompanying notes to these financial statements
| F-4 |
Statement of Cash Flow
For the Period from April 1, 2020, to March 31, 2022
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||
| Net income | $ | (72,268 | ) | |
| Adjustments to reconcile net loss to net cash provided by operating activities: | ||||
| Increase in inventory | (10,260 | ) | ||
| Depreciation and amortization | 21,907 | |||
| Accrued expenses | 45,227 | |||
| Changes in operating assets and liabilities: | - | |||
| NET CASH USED BY OPERATING ACTIVITIES | $ | (15,394 | ) | |
| NET CASH PROVIDED BY OPERATING ACTIVITIES | ||||
| Goodwill | (138,312 | ) | ||
| NET CASH PROVIDED BY INVESTING ACTIVITIES | (138,312 | ) | ||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||
| Loans | $ | 155,460 | ||
| NET CASH PROVIDED BY FINANCING ACTIVITIES | $ | 155,460 | ||
| NET INCREASE IN CASH | $ | 1,754 | ||
| Cash, beginning of period | 3,075 | |||
| Cash, end of period | $ | 4,829 |
See accompanying notes to these financial statements.
| F-5 |
Notes to Financial Statements
NOTE 1. NATURE AND BACKGROUND OF BUSINESS
RxCompoundStore.com, LLC. (the “Company”), was formed in May 2016 as a Florida limited liability company (“LLC”), formed with the implementation of compounding medications headquartered in Miami, FL. The Company is a compounding pharmacy that mixes pharmaceutical products to meet the needs of its consumers. The Company’s compounding process allows it to deliver a drug in an exact dose (for a particular ingredient) or to change a pill to a gel or liquid. The Company is presently licensed to dispense in the state of Florida, New York, New Jersey, Delaware, Colorado, Rhode Island, and Arizona.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accounting and reporting policies of the Company conform to accounting principles generally accepted in the United States of America (“GAAP”).
Use of Estimates
The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that effect the amounts reported in the financial statements and the footnotes thereto. Actual results could differ from those estimates. It is reasonably possible that changes in estimates will occur in the near term.
Fiscal Year
The Company operates on a 52-week fiscal year ending on March 31. The period presented in these financial statements is the fiscal year for the period April 1, 2020 and ended March 31, 2022 (fiscal 2022).
Cash and Cash Equivalents
The Company considers short-term, highly liquid investment with original maturities of three months or less at the time of purchase to be cash equivalents. Cash consists of funds held in the Company’s checking account. As of March 31, 2022, the Company had cash on hand totaling $4,829.
Receivables and Credit Policy
Trade receivables from customers are uncollateralized customer obligations due under normal trade terms, primarily requiring payment before services are rendered. Trade receivables are stated at the amount billed to the customer. Payments of trade receivables are allocated to the specific invoices identified on the customer’s remittance advice or, if unspecified, are applied to the earliest unpaid invoice. The Company, by policy, routinely assesses the financial strength of its customer. As a result, the Company believes that its accounts receivable credit risk exposure is limited, and it has not experienced significant write-downs in its accounts receivable balances.
| F-6 |
RxCompoundStore.com, LLC.
Notes to Financial Statements
Intangible Asset
Intangible asset reflects the value of proprietary telemedicine website recorded at cost. The Company determines the appropriate useful life of intangible and is being amortized on a straight-line basis over a three-year life.
Inventories
Inventories stated at the lower of cost or market using the first in, first out (FIFO) method. A reserve will be established if necessary to reduce excess or obsolete inventories to their net realizable value.
Cost of Sales
Product costs and shipping costs to customers and any inventory adjustments.
Fair Value Measurements
The Company has determined the fair value of certain assets and liabilities in accordance with United States generally accepted accounting principles (“GAAP”), which provides a framework for measuring fair value.
Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques should maximize the use of observable inputs and minimize the use of unobservable inputs.
A fair value hierarchy has been established, which prioritizes the valuation inputs into three broad levels. Level 1 inputs consist of quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the related asset or liability. Level 3 inputs are unobservable inputs related to the asset or liability.
Property and Equipment
Property and equipment are recorded at cost net of accumulated depreciation. Depreciation is computed using the straight-line method based upon the estimated useful lives of the respective assets as follows:
| Leasehold improvements | Shorter of useful life or term of lease | |
| Signage | 5 years | |
| Furniture and equipment | 5 years | |
| Computer equipment | 5 years |
The cost of repairs and maintenance is expensed as incurred; major replacements and improvements are capitalized. When assets are retired or disposed of, the cost and accumulated depreciation are removed from accounts and any resulting gains or losses are included in operations.
| F-7 |
RxCompoundStore.com, LLC.
Notes to Financial Statements
Leasing Agreement
The Company was leasing a 300 sq ft space located at 111 SW 3rd Street suite 302, Miami, FL 33130 for $1,751.50 a month up to June 2022.
Income Taxes
The Company is treated as a partnership for income tax purposes; accordingly, income taxes have not been provided for in the accompanying financial statements. All of the Company’s income or losses are passed through to its members.
Revenue Recognition
The Company recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the fee for the arrangement is fixed or determinable and collectability is reasonably assured.
Advertising Expenses
The Company expenses advertising costs as they are incurred.
Recent Accounting Pronouncements
The Company has considered all other recently issued accounting pronouncements during 2022 and do not believe the adoption of such pronouncements will have a material impact on its financial statements.
Note 3 — Goodwill Asset, Net
Goodwill for the year ended March 31, 2022, was $138,312 with an amortization expense of was $21,907.
Note 4 — Concentrations
Cash—Rx places its cash and cash equivalents on deposit with financial institutions in the United States. The Federal Deposit Insurance Corporation covers $250,000 for substantially all depository accounts. Rx from time to time may have amounts on deposit in excess of these insured limits.
Purchases—Two vendors accounted for 45% and 11%, respectively of inventory purchases for the six months ended March 31, 2022.
| F-8 |
RxCompoundStore.com, LLC.
Notes to Financial Statements
Note 5 — Notes Payable
On April 1, 2021, Rx received a $108,700 loan from the Small Business Administration (SBA). Installment payments of $530, including principal and interest of 3.75% annually, will begin on April 1, 2022, after a deferment of 12 months from the date of the note. The balance of principal and interest will be payable on April 1, 2052. The total principal balance and accrued interest as of March 31, 2022 is $108,700 and $4,147, respectively. The loan is secured by a lien on all of Rx’s assets.
The minimum principal payments of the loan payable at March 31, 2022 are as follows:
| FY 2023 | $ | 6,360 | ||
| FY 2024 | 6,360 | |||
| FY 2025 | 6,360 | |||
| FY 2026 | 6,360 | |||
| FY 2027 and thereafter | 83,260 | |||
| Total | $ | 108,700 |
Note 6 — Related Party
As of March 31, 2022 the Company received $30,000 as an advance from its parent company. The advances are unsecured and due on demand.
Note 7 — Members Deficit
As of March 31, 2022 the Company’s principle member contributed capital of $5,186.
Note 8 — Liquidity and Going Concern
The accompanying condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern. On March 31, 2022, the Company had negative working capital, a retained deficit of $72,267. These factors raise substantial doubt about the Company’s ability to continue as a going concern. During 2022 the Company plans to raise additional capital and/or seek additional financing for its operations.
The ability of the Company to continue as a going concern is dependent upon its ability to successfully raise additional capital and achieve profitable operations. However, management cannot provide any assurances that the Company will be successful in completing this financing or capital raise and accomplishing any of its plans. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
| F-9 |
RxCompoundStore.com, LLC.
Notes to Financial Statements
Note 9-Subsequent Events
On April 1, 2022, The Company received advances of $100,000 from the Parent Company. The advances are unsecured and canceled upon consummation of the merger on November 8, 2022.
On June 2022 the Company relocated to a 1,900 sq ft space located Miami, FL. The lease requires monthly payments of $7,057 for a term of 36-months plus the single lump sum payment of $40,000 upon execution.
The Company only has one managing member, Mario G. Tabraue, who purchased the LLC was appointed to Earth Science Tech, Inc. (“ETST”) an OTC-Pink Sheet listed company, as its President and a board of directors’ member on November 3, 2021, as part of a definitive agreement to be acquired by ETST (the “Agreement”). Pursuant to the Agreement the Company set terms for the transaction that was subsequently settled on November 8, 2022, for 53,700,000 of ETST’s restricted common stock along with the Company’s sister company, RxCompound. The shares issued consummated a merger, presently having the Company owned 100% by ETST.
| F-10 |