Notes to the Financial Statements
March 31, 2017
(Unaudited)
NOTE 1 - ORGANIZATION AND DESCRIPTION
OF BUSINESS
Vican Resources, Inc. (the “Company”)
was incorporated under the laws of the State of Nevada on September 5, 2002 under the name of “Tremont Fair, Inc.”
From July 2009 until May 2011, the Company operated as a real estate services firm, seeking to capitalize on the real estate opportunities
resulting from the dislocation in the credit markets, and by extension, the multifamily housing market, by acquiring, rehabilitating,
stabilizing and selling distressed multifamily properties in the southern United States, predominantly in Texas. On May 26, 2011,
the Company changed its name to Vican Resources, Inc. and changed its business model when it sold the real estate services division
and acquired all of the outstanding shares of Vican Trading, Inc., a Montreal-based purchaser and seller of metals, ores, and other
commodities (hereafter, “Vican Trading”). Upon the acquisition of Vican Trading, there was an implied option for either
party to rescind the original acquisition. During the year that option was exercised and on December 20, 2011, the Company again
changed its business when it unwound the acquisition of Vican Trading and acquired all of the assets of Med Ex Direct, Inc., a
Florida-based provider of management services in respect of the distribution of diabetic supplies, principally to Hispanic patients
(hereafter, “Med Ex Florida”). On March 22, 2012, the Company again changed its business to become an oil and gas exploration,
development and distribution company when we unwound the purchase of the assets of Med Ex Florida and acquired three separate working
interests in two oil and gas wells located in Jefferson County, Mississippi. In consideration of the assignments the Company is
to pay all costs and expenses associated with the development of the working interests. To date there have been no costs incurred
or required.
NOTE 2 - BASIS OF PRESENTATION
The accompanying unaudited interim
financial statements of Vican Resources, Inc. ("the Company") have been prepared in accordance with accounting principles
generally accepted in the United States of America and the rules of the Securities and Exchange Commission, and should be read
in conjunction with the audited financial statements and notes thereto contained in the Company’s annual report filed with
the SEC on Form 10-K for the year ended December 31, 2016. In the opinion of management, all adjustments, consisting of normal
recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods
presented have been reflected herein. Operating results for the three months ended March 31, 2017 are not necessarily indicative
of the results to be expected for the year ending December 31, 2017. Notes to the financial statements which would substantially
duplicate the disclosures contained in the audited financial statements for the most recent year 2016 as reported in Form 10-K
have been omitted.
NOTE 3 - BASIC AND DILUTED NET
LOSS PER SHARE
The Company follows ASC Topic
260 to account for the earnings per share. Basic earnings (loss) per common share (“EPS”) calculations are determined
by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the year. Diluted earnings
(loss) per common share calculations are determined by dividing net income (loss) by the weighted average number of common shares
and dilutive common share equivalents (if dilutive) outstanding.
VICAN RESOURCES, INC.
Notes to the Financial Statements
March 31, 2017
(Unaudited)
NOTE 4 - ACCOUNTS PAYABLE AND
ACCRUED LIABILITIES
Accounts payable and accrued liabilities consist of the following:
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|
|
|
|
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March 31,
2017
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|
December 31,
2016
|
Kenneth I. Denos, P.C. – legal services
|
|
$
|
—
|
|
|
$
|
292,500
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|
Chene C. Gardner & Associates, Inc. - accounting services
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|
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—
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|
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195,000
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Rent
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|
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—
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|
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|
19,500
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Other vendors
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|
|
—
|
|
|
|
50,981
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|
Accrued interest on notes payable to related parties
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|
|
305,760
|
|
|
|
284,211
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|
Total
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$
|
305,760
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|
|
$
|
842,192
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|
Kenneth I. Denos, P.C. is the
majority common stockholder of the Company and is controlled by Kenneth I. Denos, director of the Company from December 20, 2011
to May 27, 2014. Under a verbal agreement commencing January 2012, Kenneth I. Denos, P.C. provided legal services to the Company
for accrued compensation of $7,500 per month through February 2017.
Chene C. Gardner & Associates
Inc. is controlled by Chene C. Gardner, Chief Financial Officer of the Company from May 31, 2011 to May 27, 2014 and sole officer
and director of the Company from August 18, 2014 to April 5, 2017. Under a verbal agreement commencing June 2011, Chene C. Gardner
& Associates, Inc. provided accounting services to the Company for accrued compensation of $5,000 per month through February
2017.
In March 2017, in connection
with negotiations relating to the change in control transaction on April 5, 2017 (see Note 11), Kenneth I. Denos P.C., Chene C.
Gardner & Associates, Inc., and 5 other vendors agreed to waive accounts payable due them totaling $584,110. See Note 8.
NOTE 5 - ADVANCES FROM RELATED PARTIES
Advances from related parties, which are all non-interest bearing and due on demand, consist of the following:
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March 31,
2017
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December 31,
2016
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Cumbria Capital, L.P.
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$
|
—
|
|
|
$
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37,278
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|
Kenneth I. Denos, P.C.
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|
|
—
|
|
|
|
26,861
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John D. Thomas, P.C.
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|
|
—
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|
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16,471
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|
Total
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$
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—
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|
|
$
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80,610
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|
VICAN RESOURCES, INC.
Notes to the Financial Statements
March 31, 2017
(Unaudited)
Cumbria Capital, L.P. is a Texas
limited partnership controlled by Cyrus Boga, director of the Company from December 15, 2011 to May 27, 2014. Through its ownership
of 100 shares of the Series A Preferred Stock (10,000,000 votes per share), Cumbria Capital, L.P. had voting control of the Company.
John D. Thomas, P.C. is controlled
by John D. Thomas, former director of the Company.
In March 2017, in connection
with negotiations relating to the change in control transaction on April 5, 2017 (see Note 11), Cumbria Capital, L.P., Kenneth
I. Denos P.C., and John D. Thomas, P.C. agreed to waive advances payable to them totaling $80,610. See Note 8.
NOTE 6 - NOTES PAYABLE TO RELATED
PARTIES
Notes payable to related parties consist of the following:
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March 31,
2017
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|
December 31,
2016
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Kenneth I. Denos, P.C., interest at 10%, due March 29, 2014 (in default)
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$
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402,500
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$
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402,500
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Kenneth I. Denos, P.C., interest at 10%, due March 29, 2014 (in default)
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311,973
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311,973
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Chene C. Gardner & Associates, Inc., interest at 10%, due March 29, 2014 (in default)
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140,000
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140,000
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Due other entities affiliated with Kenneth I. Denos, P.C., interest at 10%, due March 29, 2014 (in default)
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19,471
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19,471
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Total
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$
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873,944
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$
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873,944
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NOTE 7 - COMMON AND PREFERRED STOCK
TRANSACTIONS
On September 24, 2013, the Company
converted a certain promissory note, in the original principal amount of $400,000 held by Cumbria Capital, L.P. (“Cumbria”),
into 100 shares of Series A Preferred Stock. Cumbria is a Texas limited partnership owned and controlled by Cyrus Boga, a director
of the Company from December 15, 2011 to May 27, 2014. Although the Preferred Stock carries no dividend, distribution, or liquidation
rights, and is not convertible into common stock, each share of Series A Preferred Stock carries 10,000,000 votes per share and
is entitled to vote with the Company’s common stockholders on all matters upon which common stockholders may vote. As a result,
Cumbria held a controlling voting interest in the Company to April 5, 2017 and Mr. Boga could unilaterally determine the election
of the Board and other substantive matters requiring approval of the Company’s stockholders.
On September 24, 2013, the Company
converted 1,825,000 shares of our Series C Preferred Stock (“Series C Conversion”), which amount represented all of
the issued and outstanding shares of Series C Preferred Stock, into 1,825,000,000 shares of our Class A common stock. As a result
of this conversion, there are no shares of Series C Preferred Stock outstanding. Immediately following the Series C Conversion,
the Board of Directors of the Company approved the Plan of Share Exchange (the "Plan"). The Plan allowed for the conversion
of 1,914,840,019 shares of Class A common stock, which amount represented all of the outstanding shares of common stock
VICAN RESOURCES, INC.
Notes to the Financial Statements
March 31, 2017
(Unaudited)
of the Company, into 1,943,634 shares
of Class B common stock. As a result, the Company has no shares of Class A Common stock outstanding, and 1,943,634 shares of Class
B common stock outstanding.
NOTE 8 – GAIN ON SETTLEMENT OF DEBT
As discussed in Notes 4 and 5
above, certain vendors and creditors in March 2017 agreed to waive amounts due them in connection with negotiations relating to
the change in control transaction on April 5, 2017 (see Note 11). The gain on settlement of debt of $671,585 for the three months
ended March 31, 2017 consists of:
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Accounts payable and accrued liabilities
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$
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584,110
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Advances from related parties
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80,610
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Advances from third party
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6,865
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Total gain on settlement of debt
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$
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671,585
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NOTE 9 - INCOME TAXES
The Financial Accounting Standards
Board (FASB) has issued FASB ASC 740-10. FASB ASC 740-10 clarifies the accounting for uncertainty in income taxes recognized
in an enterprise's financial statements. This standard requires a company to determine whether it is more likely than not
that a tax position will be sustained upon examination based upon the technical merits of the position. If the more-likely-than-
not threshold is met, a company must measure the tax position to determine the amount to recognize in the financial statements.
As a result of the implementation of this standard, the Company performed a review of its material tax positions in accordance
with recognition and measurement standards established by FASB ASC 740-10.
Deferred taxes are provided on
a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit
carryforwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the
differences between the reported amounts of assets and liabilities and their tax basis. Deferred tax assets are reduced by
a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax
assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and
rates on the date of enactment.
At March 31, 2017 the Company
had net operating loss carryforwards of approximately $3,100,000 that may be offset against future taxable income through 2037.
No tax benefits have been reported in the financial statements, because the potential tax benefits of the net operating loss carry
forwards are offset by a valuation allowance of the same amount.
Due to the change in ownership
provisions of the Tax Reform Act of 1986, net operating loss carryforwards for Federal income tax reporting purposes are subject
to annual limitations. Therefore, net operating loss carryforwards may be limited as to use in the future.
VICAN RESOURCES, INC.
Notes to the Financial Statements
March 31, 2017
(Unaudited)
Net deferred
tax assets consist of the following components as of March 31, 2017 and December 31, 2016:
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March 31, 2017
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December 31, 2016
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Deferred tax assets:
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Net operating loss carryforwards
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$
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1,189,576
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$
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1,401,704
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Valuation allowance
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(1,189,576
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)
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(1,401,704
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)
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Net deferred tax asset
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$
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—
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$
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—
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The income tax provision (benefit) differs from the amount of income
tax determined by applying the U.S. federal income tax rate of 34% to pretax income for the three months ended March 31, 2017 and
2016 due to the following:
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Three Months Ended March 31,
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2017
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|
2016
|
Expected tax at 34%
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$
|
212,128
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$
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(25,627
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)
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Change in valuation allowance
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(212,128
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)
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25,627
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Provision for (benefit from) income taxes
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$
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—
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$
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—
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NOTE 10 - GOING CONCERN UNCERTAINTY
The accompanying financial statements
have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and
satisfaction of liabilities in the normal course of business. The Company has sustained significant net losses which have resulted
in an accumulated deficit at March 31, 2017 of $3,097,562, has negative working capital, and negative cash flows from operations,
all of which raise substantial doubt regarding the Company’s ability to continue as a going concern.
The Company believes these conditions
have resulted from the inherent risks associated with small companies. Such risks include, but are not limited to, the ability
to (i) generate revenues and sales of its products and services at levels sufficient to cover its costs and provide a return for
investors, (ii) attract additional capital in order to finance growth, (iii) further develop and successfully market commercial
products and services, and (iv) successfully compete with other comparable companies having financial, production and marketing
resources significantly greater than those of the Company.
On April 5, 2017 (see Note 11), there
was a change in control of the Company. We expect to be dependent on additional debt and equity financing to develop our new business
but we cannot assure you that any such financings will be available or will otherwise be made on terms acceptable to us, or that
our present shareholders might suffer substantial dilution as a result.
The financial statements do not include
any adjustments that might result from the outcome of this uncertainty.
VICAN RESOURCES, INC.
Notes to the Financial Statements
March 31, 2017
(Unaudited)
NOTE 11
- SUBSEQUENT EVENTS
On April 5, 2017, Ian Jenkins
acquired 1,830,000 shares of common stock of the Company, representing approximately 94.2% of the issued and outstanding shares
of common stock from the previous majority shareholders of the Company. Mr. Jenkins also acquired 100 shares of Series A Preferred
Stock, representing all of the issued and outstanding shares of Series A Preferred Stock of the Company. Consequently, Mr. Jenkins
unilaterally controls the election of the Company’s Board of Directors, all matters upon which shareholder approval is required,
and ultimately, the direction of the Company.
On April 11, 2017, the Company
issued a Convertible Promissory Note (“Note”) to an accredited investor. The Note has an aggregate principal amount
of $500,000, matures one year from the date of issuance (the “Maturity Date”), and bears an interest rate of 8% per
annum. The holder may convert the Note at any time up to the Maturity Date into shares of the Company’s common stock at a
conversion price equal to $1.00 per share. The Company may prepay the Note prior to the Maturity Date and/or the date of conversion
without penalty upon receiving the written consent of the holder.
On April 11, 2017, the Company
executed a Share Exchange Agreement with Unprescribed, LLC (“Unprescribed”) and the members of Unprescribed, including
Ian Jenkins, Chief Executive Officer and majority shareholder, Dr. Gregory Mongean and Christopher Dean (the “Members). Pursuant
to the Share Exchange Agreement, the Company agreed to exchange the outstanding membership interests of Unprescribed held by the
Members for an aggregate of 25,000,000 shares of common stock of the Company. Ian Jenkins, the holder of 1,830,000 shares of common
stock and 100 shares of Series A Preferred Stock, agreed to cancel such shares as of and at the Closing. Other than Mr. Jenkins,
shareholders of the Company’s common stock hold approximately 109,907 shares, which will remain unchanged by the Share Exchange
Agreement. In addition, at the Closing, the holders of an aggregate of approximately $1,357,000 of outstanding convertible notes
issued by the Company have agreed to limit conversion of such debt to a maximum of 8,500,000 shares of common stock and the remaining
debt will be cancelled.
The Share Exchange Agreement
is subject to completion of certain conditions precedent to closing, including Uprescribed’s delivery of audited financial
statements for the years ended December 31, 2015 and 2016.