Exhibit 99.2
POLOMAR SPECIALTY PHARMACY LLC
INTERIM UNAUDITED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED
JUNE 30, 2024
Table of Contents
| 1 |
POLOMAR SPECIALTY PHARMACY LLC
BALANCE SHEET
| June 30, 2024 | December 31, 2023 | |||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash | $ | 19,563 | $ | 8,564 | ||||
| Inventory | 108,109 | 3,460 | ||||||
| Total current assets | 127,672 | 12,024 | ||||||
| Property, plant and equipment at cost | 41,458 | - | ||||||
| Leasehold improvements | 38,774 | - | ||||||
| Net property and equipment | 80,232 | - | ||||||
| Other assets | ||||||||
| Operating lease - right-of-use asset, net | 65,645 | 81,664 | ||||||
| Non-compete agreement, net | - | 4,167 | ||||||
| Security deposit | 9,000 | 9,000 | ||||||
| Total other assets | 74,645 | 90,664 | ||||||
| Total assets | $ | 282,549 | $ | 106,855 | ||||
| LIABILITIES AND MEMBERS’ DEFICIT | ||||||||
| Current liabilities | ||||||||
| Accounts payable | $ | 55,683 | $ | 25,681 | ||||
| Operating lease - current liability | 33,388 | 32,484 | ||||||
| Short-term debt due related parties | 454,288 | 30,507 | ||||||
| Total current liabilities | 543,359 | 88,672 | ||||||
| Long-term liabilities | ||||||||
| Operating lease - long-term liability | 32,257 | 49,180 | ||||||
| Total liabilities | 575,616 | 137,852 | ||||||
| Members’ deficit | ||||||||
| Members’ deficit | 140,500 | 140,500 | ||||||
| Accumulated deficit | (433,567 | ) | (171,497 | ) | ||||
| Total members’ deficit | (293,067 | ) | (30,997 | ) | ||||
| Total liabilities and members’ deficit | $ | 282,549 | $ | 106,855 | ||||
The accompanying notes are an integral part of the financial statements.
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POLOMAR SPECIALTY PHARMACY LLC
STATEMENT OF OPERATIONS
For the six months ended June 30, 2024
| For the three months ended | For the six months ended | |||||||||||||||
| June 30, 2024 | June 30, 2023 | June 30, 2024 | June 30, 2023 | |||||||||||||
| Revenue | $ | 13,610 | $ | 3,099 | $ | 28,105 | $ | 3,099 | ||||||||
| Cost of Goods Sold | 3,184 | 535 | 15,136 | 535 | ||||||||||||
| Gross Profit | 10,426 | 2,564 | 12,969 | 2,564 | ||||||||||||
| Operating expenses | ||||||||||||||||
| General and administrative | 84,543 | 30,369 | 235,879 | 30,369 | ||||||||||||
| Sales and marketing | 16,968 | 2,470 | 38,583 | 2,470 | ||||||||||||
| Total operating expenses | 101,511 | 32,839 | 274,462 | 32,839 | ||||||||||||
| Loss from operations | (91,085 | ) | (30,275 | ) | (261,493 | ) | (30,275 | ) | ||||||||
| Total other expense | (360 | ) | (577 | ) | (577 | ) | (577 | ) | ||||||||
| Net loss | $ | (91,445 | ) | $ | (30,852 | ) | $ | (262,070 | ) | $ | (30,852 | ) | ||||
The accompanying notes are an integral part of the financial statements.
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POLOMAR SPECIALTY PHARMACY LLC
STATEMENTS OF MEMBERS’ DEFICIT
For the six months ended June 30, 2024
| Members’ | Accumulated | |||||||||||
| Equity | Deficit | Total | ||||||||||
| April 26, 2023 (inception) | ||||||||||||
| Capital contributions | 140,500 | 140,500 | ||||||||||
| Net loss | (30,852 | ) | (30,852 | ) | ||||||||
| Balance, June 30, 2023 | $ | 140,500 | $ | (30,852 | ) | $ | 109,648 | |||||
| Net loss | (140,645 | ) | (140,645 | ) | ||||||||
| Balance, December 31, 2023 | $ | 140,500 | $ | (171,497 | ) | $ | (30,997 | ) | ||||
| Net loss | (91,445 | ) | (91,445 | ) | ||||||||
| Balance, March 31, 2024 | $ | 140,500 | $ | (262,942 | ) | $ | (122,442 | ) | ||||
| Net loss | (170,625 | ) | (170,625 | ) | ||||||||
| Balance, June 30, 2024 | $ | 140,500 | $ | (433,567 | ) | $ | (293,067 | ) | ||||
The accompanying notes are an integral part of the financial statements.
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POLOMAR SPECIALTY PHARMACY LLC
STATEMENT OF CASH FLOWS
For the six months ended June 30, 2024
| June 30, 2024 | June 30, 2023 | |||||||
| Cash Flows from Operating Activities | ||||||||
| Net loss | $ | (262,070 | ) | $ | (30,852 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | - | - | ||||||
| Depreciation and amortization | 4,167 | - | ||||||
| Changes in assets and liabilities | ||||||||
| Inventory | (104,649 | ) | - | |||||
| Security deposit | - | (9,000 | ) | |||||
| Accounts payable | 30,002 | 94 | ||||||
| Net cash used in operating activities | (332,550 | ) | (39,758 | ) | ||||
| Cash flows from investing activities | ||||||||
| Purchases of property, plant and equipment | (80,232 | ) | (132,000 | ) | ||||
| Net cash used in investing activities | (80,232 | ) | (132,000 | ) | ||||
| Cash Flows from Financing Activities | ||||||||
| Proceeds from short-term borrowings | 423,781 | 33,000 | ||||||
| Proceeds from owner investment | - | 200,000 | ||||||
| Net cash from financing activities | 423,781 | 233,000 | ||||||
| Net increase in cash | 10,999 | 61,242 | ||||||
| Cash, beginning of period | 8,564 | - | ||||||
| Cash, end of period | $ | 19,563 | $ | 61,242 | ||||
| Supplemental disclosure of cash flow information | ||||||||
| Cash paid for interest | 577 | - | ||||||
The accompanying notes are an integral part of the financial statements.
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| 1. | The Company and Business Activities |
Polomar Specialty Pharmacy LLC, (the “Company”), was formed as a Florida corporation in April 2023. The Company is a compound pharmacy, licensed in several stores to sell and produce pharmaceuticals.
On June 28th, 2024, the Company entered into an agreement and plan of merger and reorganization with Trustfeed Corp., a Nevada corporation, as a Parent company, Polomar Acquisition, L.L.C., a Florida limited liability company, a Merger Sub and a wholly owned subsidiary of Parent.
This Agreement contemplates a merger of Merger Sub with and into the Company, with the Company remaining as the surviving entity after the merger, whereby the Company Members will receive Parent Common Stock in exchange for their Company Interests and the Company will become a wholly owned Subsidiary of Parent.
Wheras, the board of directors of the Company (i) has determined that the Merger is advisable and fair to, and in the best interests of, the Company and its stockholders, (ii) has approved this Agreement, the Merger and the other transactions contemplated by this Agreement and has deemed this Agreement and such transactions advisable and (iii) has determined to recommend that the Company Members vote to approve this Agreement, the Merger and the other transactions contemplated hereby.
| 2. | Liquidity and Going Concern Uncertainty |
As of June 30, 2024, cash totaled $19,563 and the Company had an accumulated deficit of $433,567. For the year ended June 30, 2024, the Company used $332,550 in operations.
Currently, the Company’s principal sources of cash have included proceeds from owners’ contributions and related party’s debts. The Company expects that the principal uses of cash in the future will be for continuing operations, sales and marketing and general working capital requirements. The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. 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 possible inability of the Company to continue as a going concern.
Management’s Plan to Continue as a Going Concern
In order to continue as a going concern, the Company will need to grow sales and capital injections from holding company or borrowing from related parties. Until the Company can generate significant cash from operations, management’s plans to obtain such resources for the Company include revenue growth and expense reductions from synergy with holding company’s other subsidiaries, proceeds from offerings of the holding company’s equity securities or debt, or transactions involving product development, technology licensing or collaboration. Management can provide no assurance that any sources of a sufficient amount of financing will be available to the Company on favorable terms, if at all. Management is currently in the process of seeking additional equity financing, however management’s current plans do not alleviate substantial doubt about the Company’s ability to continue as a going concern.
| 3. | Summary of Significant Accounting Policies |
Basis of Presentation
The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) as found in the Accounting Standards Codification (“ASC”), the Accounting Standards Update (“ASU”) of the Financial Accounting Standards Board (“FASB”) and the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”).
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Emerging Growth Company
The Company is an “emerging growth company, with annual revenue less than $1.235 billion, as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved.
Further, section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that an emerging growth company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s financial statement with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.
Use of Estimates
The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of expenses during the reporting period. On an ongoing basis, management evaluates these estimates and judgments, including those related to useful lives of long-lived assets, accrued research and development expenses and estimated fair values of equity instruments. The Company bases its estimates on various assumptions that it believes are reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions.
Revenue Recognition
Revenue from the sale of goods is recognized when all the following conditions are satisfied:
Identification of the Contract: A contract exists with the customer that defines the rights and obligations of both parties.
Identification of Performance Obligations: The performance obligations under the contract are identified. A performance obligation is a promise to transfer goods to the customer. Determination of Transaction Price: The transaction price is determined based on the consideration to which the company expects to be entitled in exchange for transferring goods to the customer. Allocation of Transaction Price: The transaction price is allocated to each performance obligation based on its standalone selling price.
Recognition of Revenue: Revenue is recognized when control of the goods is transferred to the customer, which generally occurs at a point in time when the goods are shipped or delivered and the customer obtains legal title. For contracts that include multiple performance obligations, revenue is allocated to each performance obligation based on its relative standalone selling price. If the standalone selling price is not observable, the company estimates it using appropriate valuation techniques.
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Contract Balances
The company recognizes a contract liability when consideration is received or receivable from the customer before transferring goods. Contract liabilities are subsequently recognized as revenue when the company satisfies its performance obligations.
Sales Returns
Provisions for sales returns are recorded based on historical experience and are reflected as a reduction of revenue at the time of sale.
Cost of Goods Sold (COGS):
Recognition of Cost of Sales: Cost of Goods Sold includes all direct costs attributable to the production of goods sold during the reporting period. These costs comprise direct materials, direct labor, and overhead costs directly attributable to the production process.
Direct Costs: Direct materials and direct labor costs are recognized when the goods are manufactured or purchased and are included in the cost of inventory. Overhead costs are allocated based on a consistent and rational allocation method.
Recognition of Cost of Sales: Cost of goods sold is recognized when the related revenue is recognized.
General Expenses:
Recognition of Expenses: General expenses comprise all costs not directly attributable to the production of goods or services. These include administrative expenses, selling expenses, and other operating expenses necessary to support the business operations.
Recognition Principle: Expenses are recognized in the income statement in the period in which the goods or services are consumed or when the expense is incurred, regardless of when the related cash outflow occurs.
Depreciation and Amortization:
Depreciation of non-production assets, such as office equipment, and amortization of intangible assets not directly related to production, are recognized over their estimated useful lives using the straight-line method.
Interest and Taxes:
Interest expenses are recognized as incurred, using the effective interest rate method where applicable. Income taxes are recognized based on applicable tax laws and regulations.
Contingent Liabilities:
Contingent liabilities are recognized when it is probable that a liability has been incurred and the amount of the liability can be reasonably estimated.
Cash & Cash Equivalents
The Company places its cash with reputable financial institutions that are insured by the Federal Deposit Insurance Corporation, or FDIC. At times, deposits held may exceed the amount of insurance provided by the FDIC. The Company has not experienced any losses in its cash and believes they are not exposed to any significant credit risk.
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Fair Value Measurement
The Company uses a three-tier fair value hierarchy to prioritize the inputs used in the Company’s fair value measurements. These tiers include Level 1, defined as observable inputs such as quoted prices in active markets for identical assets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions. The Company believes the carrying amount of cash, accounts payable, accrued expenses and debt approximate their estimated fair values due to the short-term maturities of these financial instruments.
Inventory
Inventories are stated at the lower of cost or market, with cost determined on an average-cost basis. Inventory includes raw materials and finished goods of $108,109 as of June 30, 2024.
Fixed Assets
Fixed assets consist of furniture, fixtures and equipment. Fixed assets are stated at cost less accumulated depreciation. Additions, improvements, and major renewals are capitalized. Maintenance, repairs, and minor renewals are expensed as incurred. Depreciation is determined using the straight-line method over the estimated useful lives of the assets, which is primarily five years. As of June 30, 2024, fixed assets include leasehold improvements of $38,774 for building clean room and gummy machines with associated accessories and equipment of $41,458. Both of them have yet to depreciate since they are still undergoing building and testing.
Leases
The Company calculates operating lease liabilities with a risk-free discount rate, using a comparable period with the lease term. All lease and non-lease components are combined for all leases. Lease payments for leases with a term of 12 months or less are expensed on a straight-line basis over the term of the lease with no lease asset or liability recognized.
The following summarizes the line items in the balance sheet which include amounts for operating leases as of June 30, 2024.
| 2024 | ||||
| Operating lease right-of-use assets | $ | 99,806 | ||
| Accumulated amortization | (34,161 | ) | ||
| Net of operating lease right-of-use assets | $ | 65,645 | ||
| Operating lease - current liability | $ | 33,388 | ||
| Operating lease - long-term liability | 32,257 | |||
| Total Operating Lease Liabilities | $ | 65,645 | ||
The components of operating lease expenses that are included in operating expenses in the “Statement of Operations” for the year ended June 30, 2024 were as follows:
| Operating lease cost | $ | 16,999 |
Weighted average lease term and discount rate as of June 30, 2024 were as follows:
| Weighted average remaining lease term | 1.92 years | |||
| Weighted average discount rate | 5.50 | % | ||
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The maturities of operating lease liabilities as of June 30, 2024 were as follows:
| Year Ending June 30, | Amount | |||
| 2025 | $ | 36,000 | ||
| 2026 | 33,000 | |||
| Total Lease Payments | $ | 69,000 | ||
| Less, interest | 3,355 | |||
| Present Value of Lease Liability | $ | 65,645 | ||
Intangible Assets
Intangible assets consist of the 12-month non-compete agreement in the amount of $10,000. Amortization expense of intangible assets for the period ended June 30, 2024 was $10,000.
Related-party transactions
The entire amount of $454,288 for related-party borrowing is made by the Company from Daniel Gordon as of June 30, 2024. There is no interest charge or predefined repayment debt.
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.
Subsequent Events
On August 13, 2024, the Company enters a promissory note and loan agreement with Reprise Management, Inc., the Company’s related party, in the amount of $700,000, of which or less amount may be borrowed. This note (inclusive of all advances made) will bear interest on the outstanding principal amount at a fixed rate as follows (i) up to and including December 31, 2024 (the initial period), an interest rate equal to twelve percent per annum, simple interest and (ii) after the initial period and up to and including the date on which this note is paid in full, an interest rate equal to fifteen percent pr annum, simple interest. Interest shall be calculated on a year consisting of 365 days and the actual number of days elapsed. Interest shall accrue on a quarterly basis and shall be due and payable on the maturity date. The Company acknowledges receipt of an initial draw under the loan of $522,788 which funds shall be used to repay the lender all amounts due under a prior loan provided by lender to borrower. In connection with the issuance of this Note, the Company has issued a warrant to purchase 12 membership units in borrower equivalent to a twelve percent (12%) ownership in Company. The warrant price is $0.01 per unit with expiration date of July 31, 2029.
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