Freestone Resources 8-K/A Financial Statements and Exhibits

Exhibit 99.3

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholder of

C.C. Crawford Retreading Company, Inc.

Ennis, Texas

We have audited the accompanying balance sheets of C.C. Crawford Retreading Company, Inc. (the "Company") as of June 30, 2014 and 2015 and the related statements of operations, changes in stockholder’s equity and cash flows for each of the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform an audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing 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 over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of C.C. Crawford Retreading Company as of June 30, 2014 and 2015 and the results of its operations and its cash flows for each of the years then ended, in conformity with accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that C.C. Crawford Retreading Company, Inc. will continue as a going concern. As discussed in Note 9 to the financial statements, C.C. Crawford Retreading Company, Inc. has negative working capital and an accumulated deficit, which raises substantial doubt about its ability to continue as a going concern. Management’s plans regarding those matters also are described in Note 9. The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the outcome of this uncertainty.

/s/MaloneBailey, LLP

www.malonebailey.com

Houston, Texas

September 8, 2015

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C.C. Crawford Retreading Co., Inc.
Balance Sheets
As of June 30, 2015 and 2014
	June 30,
	2015			2014
ASSETS
Current Assets
Cash	$	18,225		$	30,465
Accounts receivable		97,908			123,889
Inventory		24,576			26,544
Prepaid and Other Assets		49,000			48,473
Total Current Assets		189,709			229,371
Property, plant and equipment, net of accumulated depreciation of
$787,754 and $727,102		592,268			652,920
TOTAL ASSETS	$	781,977		$	882,291
LIABILITIES AND STOCKHOLDER'S EQUITY
Current Liabilities
Accounts payable and accrued liabilities	$	103,379		$	75,579
Accrued bonus payable		209,964			264,964
Environmental liability		320,000			320,000
Current portion of long term debt		56,051			52,577
Total Current Liabilities		689,394			713,120
Long term debt, less current portion		84,913			140,964
TOTAL LIABILITIES		774,307			854,084
STOCKHOLDERS' EQUITY
Common stock, $10 par value, 100,000 and 100,000 shares
authorized and outstanding		1,000,000			1,000,000
Additional paid in capital		(557,816	)		(557,816	)
Accumulated deficit		(434,514	)		(413,977	)
		7,670			28,207
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY	$	781,977		$	882,291
The Accompanying Notes Are An Integral Part of These Financial Statements

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C.C. Crawford Retreading Co., Inc.
Statements of Operations
Years Ended June 30, 2015 and 2014
	2015			2014
REVENUE
Tipping Fee Revenue	$	463,537		$	358,946
Tire Repair Revenue		432,039			377,459
Used Tire Sales		161,445			415,395
Scrap Material Sales		57,999			80,880
Total Revenue		1,115,020			1,232,680
COSTS OF REVENUE
Tipping Fee Operations		255,345			278,786
Tire Repair and Sales		163,011			207,924
Tire Disposal		161,721			146,167
Total Cost of Revenue		580,077			632,877
GROSS PROFIT		534,943			599,803
OPERATING EXPENSES
Selling		154,842			141,825
General and Administrative		329,456			345,375
Depreciation and Amortization		60,652			74,099
Total Operating Expense		544,950			561,299
INCOME (LOSS) FROM OPERATIONS		(10,007	)		38,504
OTHER EXPENSES
Interest Expense, net		(10,530	)		(13,474	)
		(10,530	)		(13,474	)
INCOME (LOSS) BEFORE TAXES		(20,537	)		25,030
PROVISION FOR INCOME TAXES		—			—
NET INCOME(LOSS)	$	(20,537	)	$	25,030
The Accompanying Notes Are An Integral Part of These Financial Statements

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C.C. CRAWFORD TIRE RETREADING CO., INC.
Statement of Changes in Stockholder's Equity
Years Ended June 30, 2015 and 2014
		Common Stock				Paid-In		Accumulated
		Shares		Amount		Capital		Deficit		Totals
Balance, June 30, 2013		100,000	$	1,000,000	$	(557,816)	$	(439,007)	$	3,177
	Net  Income							25,030		25,030
Balance, June 30, 2014		100,000		1,000,000		(557,816)		(413,977)		28,207
	Net  Loss							(20,537)		(20,537)
Balance, June 30, 2015		100,000	$	1,000,000	$	(557,816)	$	(434,514)	$	7,670
The Accompanying Notes Are An Integral Part of These Financial Statements

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C.C. Crawford Retreading Co., Inc.
Statements of Cash Flow
Years Ended June 30, 2015 and 2014
	2015			2014
CASH FLOW FROM OPERATING ACTIVITIES
Net Income (Loss)	$	(20,537	)	$	25,030
Adjustments to reconcile net income (loss) to net cash provided
by operating activities:
Depreciation		60,652			74,099
Loss on Disposal of Assets		—			510
Changes in operating assets and liabilities
Decrease in Accounts Receivable		25,981			3,086
Decrease in Inventory		1,968			18,807
Increase in Prepaid Expenses		(527	)		(19,342	)
Increase (Decrease) in Accounts Payable and Accrued Liabilities		27,800			(14,186	)
Decrease in Accrued Bonus Payable		(55,000	)		(5,000	)
Net Cash Provided by Operating Activities		40,337			83,004
CASH FLOW FROM INVESTING ACTIVITIES
Purchase of Fixed Assets		—			(19,339	)
Net Cash Used in Investing Activities		—			(19,339	)
CASH FLOW FROM FINANCING ACTIVITIES
Repayment of Debt		(52,577	)		(55,577	)
Net Cash Used In Financing Activities		(52,577	)		(55,577	)
Net Decrease in Cash		(12,240	)		8,088
Cash at Beginning of the Year		30,465			22,377
Cash at the End of the Year	$	18,225		$	30,465
Cash Transactions
Total Amount of Interest Paid in Cash	$	10,802		$	14,546
Total Income Taxes Paid in Cash	$	—		$	—
Non Cash financing and Investing Activities
Note Payabe for Purchase of Vehicle	$	—		$	15,114
Trade in of Vehecle and Note Payoff	$	—		$	5,942
The Accompanying Notes Are An Integral Part of These Financial Statements

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 C.C. Crawford Retreading Company, Inc.

Notes to Financial Statements

June 30, 2015 and 2014

NOTE 1 – NATURE OF ACTIVITIES AND SIGNIFICANT ACCOUNTING POLICIES

C.C. Crawford Retreading Company, Inc. (“CTR” or the “Company”) is an Off-The-Road (“OTR”) tire company located in Ennis, Texas and incorporated under the laws of the State of Texas. CTR’s primary business is to repair, recycle, dispose of and sell OTR tires, which are used on large, industrial equipment.

Basis of Presentation:

The accompanying financial statements are prepared in accordance with accounting principles generally accepted in the United States of America.  The application of accounting principles requires the estimating, matching and timing of revenue and expense.  It is also necessary for management to determine, measure and allocate resources and obligations within the financial process according to those principles.  The accounting policies used have been consistently applied in the preparation of these financial statements. The Company was sold to Freestone Resources, Inc. (“Freestone”) as of June 24, 2015. The statements are prepared as of June 30, 2015. The statements do not reflect any adjustments due to the acquisition based on management’s decision that any adjustments would be immaterial.

Use of Estimates:

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures.  Accordingly, actual results could differ from those estimates.

Recently Issued Accounting Pronouncements:

The Company does not expect the adoption of recently issued accounting pronouncements to have a significant impact on the Company’s results of operations, financial position or cash flows.

Income Taxes:

The Company has adopted ASC 740-10, which requires the use of the liability method in the computation of income tax expense and the current and deferred income taxes payable.    A valuation allowance is provided for the amount of deferred tax assets that, based on available evidence, are not expected to be realized.

Cash:

Cash and cash equivalents include cash in banks with original maturities of three months or less. CTR maintains deposits in a financial institution which provides Federal Deposit Insurance Corporation coverage for interest bearing and non-interest bearing transaction accounts of up to $250,000.  At June 30, 2015, none of the Company’s cash was in excess of federally insured limits.

Revenue Recognition:

CTR recognizes revenue from the sale of products in accordance with ASC 605.  Revenue will be recognized only when all of the following criteria have been met:

* Persuasive evidence of an arrangement exists;

* Ownership and all risks of loss have been transferred to buyer, which is generally upon delivery

* The price is fixed and determinable; and

* Collectability is reasonably assured.

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The three main sources of revenue are recognized as follows:

· Revenues associated with tire disposals are recognized upon receipt of the tire by CTR.

· Revenues associated with tire repairs are invoiced and recognized upon completion of repair and receipt of the tire by the customer.

· Revenue associated with used tires and scrap sales are recognized upon delivery of the product to the customer.

Accounts Receivable:

Accounts Receivable consists of accrued OTR tire repair, disposal, recycling and used tire sales receivables due from customers and are unsecured. The receivables are generally unsecured and such amounts are generally due within 30 to 45 days after the date of the invoice.  Accounts Receivable are carried at their face amount, less an allowance for doubtful accounts.   CTR’s policy is generally not to charge interest on receivables after the invoice becomes past due.  A receivable is considered past due if payments have not been received within agreed upon invoice terms.   Write offs are recorded at a time when a customer receivable is deemed uncollectible.  CTR had no bad debt accruals at June 30, 2015 and 2014.

Inventory:

Inventory is carried at lower of cost or market. The Company’s inventory consists of processed rubber from disposed tires carried at cost of processing and used tires for resale carried at the cost of repairs. As of June 30, 2015 and June 30, 2014 inventory consisted of:

	2015		2014
Crum Rubber for Processing	$	10,246	$	10,121
Used Tire for Resale		14,330		16,423
	$	24,576	$	26,544

Property, Plant and Equipment:

Property, Plant and Equipment is carried at the cost of acquisition or construction and depreciated over the estimated useful lives of the assets. Costs associated with repair and maintenance are expensed as incurred. Costs associated with improvements which extend the life, increase the capacity or improve the efficiency of our property and equipment are capitalized and depreciated over the remaining life of the related asset. Gains and losses on dispositions of equipment are in operating income. Depreciation and amortization are provided using the straight-line and accelerated methods over the estimated useful lives of the assets as follows:

Buildings and Improvements                10 - 39 Years

Machinery and Equipment                    7 Years

Automotive Equipment                         5-7 Years

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Impairment of Long-Lived Assets:

CTR evaluates, on a periodic basis, long-lived assets to be held and used for impairment in accordance with the reporting requirements of ASC 360-10. The evaluation is based on certain impairment indicators, such as the nature of the assets, the future economic benefit of the assets, any historical or future profitability measurements, as well as other external market conditions or factors that may be present. If these impairment indicators are present or other factors exist that indicate that the carrying amount of the asset may not be recoverable, then an estimate of the undiscounted value of expected future operating cash flows is used to determine whether the asset is recoverable and the amount of any impairment is measured as the difference between the carrying amount of the asset and its estimated fair value. The fair value is estimated using valuation techniques such as market prices for similar assets or discounted future operating cash flows.

Fair Value Measurements:

ASC Topic 820, defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and requires certain disclosures about fair value measurements.  In general, fair value of financial instruments are based upon quoted market prices, where available.  If such quoted market prices are not available, fair value is based upon internally developed models that primarily use, as inputs, observable market based parameters.  Valuation adjustments may be made to ensure that financial instruments are recorded at fair value.  These adjustments may include amounts to reflect counterparty credit quality and the Company’s credit worthiness, among other things, as well as unobservable parameters.

Cash, accounts receivable, accounts payable and other accrued expenses and other current assets and liabilities are carried at amounts which reasonably approximate their fair values because of the relatively short maturity of those instruments. 

NOTE – 2 ACCOUNTS RECEIVABLE AND CONCENTRATION OF CREDIT RISK

At June 30, 2015 and 2014 two customers made up 53% and one customer made up 50% of the company’s outstanding accounts receivable balance, respectively. For the years ending June 30, 2015 and 2014 one customer accounted for 49% and two customers accounted for 65% of the Company’s net revenue, respectively.

NOTE 3 – PROPERTY, PLANT AND EQUIPMENT

At June 30, 2015 and 2014 Property, Plant and Equipment was as follows:
		2015		2014
Land	$	104,612	$	104,612
Buildings and Improvements		599,754		599,754
Machinery and Equipment		468,061		468,061
Automotive Equipment		207,595		207,595
		1,380,022		1,380,022
Less Accumulated Depreciation		787,754		727,102
	$	592,268	$	652,920
For the years ended June 30, 2015 and 2014 depreciation expense was $60,652 and $74,099, respectively.

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NOTE 4 – ENVIRONMENTAL LIABILITY

The Company’s tire recycling permit requires the Company to ultimately dispose of all tires accepted for recycling.  Tire disposal occurs in the normal course of business however the Company always has tires stored at its facility that have not yet been disposed of. CTR has recorded liabilities totaling $320,000 and $320,000 at June 30, 2015 and June 30, 2014, respectively, for estimated costs related to dispose of all tires at its Ennis facility. The environmental liability was calculated by estimating the costs associated with the various disposal costs that would be necessary to remove the tires from the CTR permitted facility..

NOTE 5 – NOTES PAYABLE

At June 30, 2015 and 2014 Notes Payable were as follows:
			2015		2014
	Note payable to bank bearing interest at 4.5% with monthly payment of $390 maturing September, 2017.  The note is secured by an automobile	$	9,989	$	14,112
	Note payable to bank bearing interest at 6.5% with monthly payment of $4,892 maturing November, 2017.  The note is secured by machinery and equipment		130,975		179,429
			140,964		193,541
	Less current maturities		(56,051)		(52,577)
		$	84,913	$	140,964
At June 30, 2015 future maturities of long term debt were as follows:
	Year Ending June 30:
	2016	$	56,051
	2017		59,687
	2018		25,226
		$	140,964

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NOTE 6 – EQUITY

At June 30, 2015 and 2014 the Company had 100,000 shares of common stock issued and outstanding.

The Company has no stock options or warrants outstanding.

NOTE 7 – INCOME TAXES

As of June 30, 2015 and 2014 the components of the Company's deferred tax assets were as follows:
		2015			2014
Depreciation Expense	$	(21,000	)	$	(26,000	)
Capitalized Loan Fees		31,000			42,000
Accrued Management Bonus		71,000			90,000
Environmental Liability		109,000			109,000
Inventory Impairment		—			33,000
Other		—			(1,000	)
Total Deferred Tax Asset		190,000			247,000
Valuation Allowance		(190,00	)		(247,000	)
Net Deferred Tax Asset	$	—		$	—
Income tax expense for the periods ended June 24, 2015 and June 30, 2014 consisted of the following
		2015			2014
Current Tax Expense (Benefit)	$	(64,000	)	$	15,000
Deferred Tax Expense (Benefit)		57,000			(6,500	)
Use of NOL Carryforward		—			(8,500	)
Valuation Allowance		7,000			—
Net Tax Expense (Benefit)	$	—		$	—

At June 30, 2015 the Company had a net operating loss carryforward of approximately $265,000 which expire from 2032 through 2036. Under IRC Code Sec 382 future use of the NOL carryforwards may be limited due to CTR’s acquisition by Freestone.

NOTE 8 – EMPLOYEE BENEFITS AND AGREEMENTS

Officer Agreement:

On June 5, 2012 CTR entered into a three year Employment Agreement with Dirk Crawford (“Mr. Crawford”). For certain compensation, including a salary and signing bonus, Mr. Crawford would remain president of CTR for the term of his Employee Agreement. Mr. Crawford also received certain retirement and healthcare benefits relating to his Employee Agreement. No other employees have employment agreements at CTR, and they are at will employees.

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Accrued Compensation:

At June 24, 2015 and June 30, 2014 the Company’s liabilities included an accrued bonus due to Mr. Crawford as part of his Employee Agreement. The signing bonus due to Mr. Crawford at June 24, 2015 and June 30, 2014, was $209,964 and $264,964, respectively.

Retirement Plan Contribution:

During the years ending June 30, 2015 and 2014 the Company contributed $5,246 and $4,574 in matching contributions to the Company’s IRA plan.

NOTE 9 – GOING CONCERN

As of June 30, 2015 the Company had an accumulated deficit of $434,514 and negative working capital of $499,685. These conditions raise substantial doubt about CTR’s ability to continue as a going concern.  The financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might be necessary should CTR be unable to continue as a going concern.

At the acquisition of the Company by Freestone Resources, Inc. the accrued management bonus of $209,964 was settled as of the acquisition date as detailed in Note 8. In addition the agreement with FDEP detailed in Note 9 will allow the company to dispose its scrap tire inventory relieving the environmental liability of $320,000 without the use of working capital.

Our future success and viability, therefore, are dependent upon our ability to generate revenues sufficient to cover our operating costs and expenses.  The failure to generate sufficient revenues or raise additional capital may have a material and adverse effect upon the Company.

NOTE 10 – SUBSEQUENT EVENTS

Management has evaluated subsequent events through September 8, 2015 and has identified the following subsequent events:

CTR Acquisition:

On June 24, 2015 CTR 100% of the stock in CTR was purchased by Freestone, and CTR became a wholly owned subsidiary of Freestone.

Dirk Crawford Employee Agreement Extension:

On June 24, 2015 CTR agreed to an extension of Mr. Crawford’s Employee Agreement (“Employee Agreement Extension”). The Employee Agreement Extension included an increased yearly salary, as well as a commission for tires sold. The aforesaid tire sales commission is limited to $40,000. All other retirement and healthcare benefits remained the same, and no other changes were made to the Employee Agreement.

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Liability Settlement Related to Employee Agreement Bonus:

The Employee Agreement Extension, and the terms therein, eliminated the bonus owned to Mr. Crawford (see Note 9).

Major Agreements:

On June 24, 2015 CTR entered into an agreement with Freestone Dynamis Energy Products, LLC (“FDEP”) in order to provide tire derived fuel (TDF) and lease a warehouse to FDEP so that FDEP can pursue pyrolysis operation at the leased location.

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