Frequency Holdings, Inc 10-Q for FY2022 Q1
Frequency Holdings, Inc (FRQN)
About this 10-Q
Frequency Holdings, Inc filed this 10-Q on June 14, 2022, covering the quarter ended April 30, 2022 (FY2022 Q1).
Headline figures
Quarter ended April 30, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $0
- compared with $230 a year earlier
- Net loss
- $100.68K
- compared with a net loss of $121.85K a year earlier
- Diluted EPS
- $0.00
- compared with $0.00 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For the quarterly period ended
or
For the transition period from _____________ to __________
Commission File Number:
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) | |
| (Address of principal executive offices) | (Zip Code) |
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether
the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Indicate by check mark whether
the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T
(§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit
such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer ☐ | Accelerated filer ☐ |
| Smaller reporting company | |
| Emerging growth company |
If an emerging growth company,
indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial
accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether
the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of as of June 13, 2022, there were shares of common stock outstanding.
TABLE OF CONTENTS
| Page No. | ||
| PART I. - FINANCIAL INFORMATION | ||
| Item 1. | Financial Statements. | 3 |
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Plan of Operations. | 13 |
| Item 3. | Quantitative and Qualitative Disclosures About Market Risk. | 16 |
| Item 4 | Controls and Procedures. | 16 |
| PART II - OTHER INFORMATION | ||
| Item 1. | Legal Proceedings. | 17 |
| Item 1A. | Risk Factors. | 17 |
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds. | 17 |
| Item 3. | Defaults Upon Senior Securities. | 17 |
| Item 4. | Mine Safety Disclosures. | 17 |
| Item 5. | Other Information. | 17 |
| Item 6. | Exhibits. | 17 |
| Signatures | 18 | |
| 2 |
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
YUENGLING’S ICE CREAM CORPORATION
| 3 |
YUENGLING’S ICE CREAM CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
| April 30, 2022 | October 31, 2021 | |||||||
| ASSETS | ||||||||
| Current Assets: | ||||||||
| Cash | $ | $ | ||||||
| Inventory | ||||||||
| Loan receivable | ||||||||
| Other receivable – related party | ||||||||
| Total Current Assets | ||||||||
| Other Assets: | ||||||||
| Property and equipment, net | ||||||||
| Total Assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS' DEFICIT | ||||||||
| Current Liabilities: | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued interest | ||||||||
| Accrued compensation | ||||||||
| Notes payable | ||||||||
| Loans payable | ||||||||
| Convertible note payable, net of $ | ||||||||
| Line of credit | ||||||||
| Total Current Liabilities | ||||||||
| Long Term Liabilities | ||||||||
| Loan payable, net of current portion | ||||||||
| Total Liabilities | ||||||||
| Commitments and contingencies | ||||||||
| Mezzanine Equity | ||||||||
| Preferred stock to be issued | ||||||||
| Total mezzanine equity | ||||||||
| Stockholders' Deficit: | ||||||||
| Preferred stock, Series A; par value $; shares authorized, shares issued and outstanding | ||||||||
| Common stock: $par value; shares authorized; and shares issued and outstanding, respectively | ||||||||
| Discount to common stock | ( | ) | ( | ) | ||||
| Common stock to be issued | ||||||||
| Additional paid in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total Stockholders' Deficit | ( | ) | ( | ) | ||||
| TOTAL LIABILITIES & STOCKHOLDERS' DEFICIT | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| 4 |
YUENGLING’S ICE CREAM CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
| For the Three Months Ended April 30, | For the Six Months Ended April 30, | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Revenue | $ | $ | $ | $ | ||||||||||||
| Cost of goods sold | ||||||||||||||||
| Gross margin | ( | ) | ( | ) | ||||||||||||
| Operating Expenses: | ||||||||||||||||
| General and administrative expenses | ||||||||||||||||
| Consulting – related party | ||||||||||||||||
| Officer compensation | ||||||||||||||||
| Professional fees | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income (expense): | ||||||||||||||||
| Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Interest income | ||||||||||||||||
| Gain on forgiveness of debt | ||||||||||||||||
| Gain on disposal of fixed assets | ||||||||||||||||
| Loss on conversion of debt | ( | ) | ||||||||||||||
| Total other income (expense) | ( | ) | ( | ) | ( | ) | ||||||||||
| Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Basic loss per share | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Diluted loss per share | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Basic weighted average shares | ||||||||||||||||
| Diluted weighted average shares | ||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| 5 |
YUENGLING’S ICE CREAM CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT
FOR THE THREE AND SIX MONTHS ENDED APRIL 30, 2021 AND 2022
(Unaudited)
| Common Stock | Discount to Common | Preferred Stock | Additional Paid in | Preferred Stock To Be | Common Stock To Be | Accumulated | Total Stockholders’ | |||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Stock | Shares | Amount | Capital | Issued | Issued | Deficit | Deficit | |||||||||||||||||||||||||||||||||||||||
| Balance October 31, 2020 | $ | $ | ( | ) | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||||||||||||||
| Stock issued for conversion of debt | ( | ) | – | – | ||||||||||||||||||||||||||||||||||||||||||||
| Stock issued for cash | – | – | ||||||||||||||||||||||||||||||||||||||||||||||
| Net Loss | – | – | – | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||||||
| Balance January 31, 2021 | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||
| Stock issued for cash | – | – | ||||||||||||||||||||||||||||||||||||||||||||||
| Stock issued for conversion of debt | ( | ) | – | |||||||||||||||||||||||||||||||||||||||||||||
| Net Loss | – | – | – | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||||||
| Balance April 30, 2021 | $ | $ | ( | ) | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||||||||||||||
| Common Stock | Discount to Common | Series A Preferred Stock | Additional Paid in | Common Stock To Be | Accumulated | Total Stockholders’ | ||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Stock | Shares | Amount | Capital | Issued | Deficit | Deficit | ||||||||||||||||||||||||||||||||||||||||
| Balance October 31, 2021 | $ | $ | ( | ) | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||||||||||||||
| Stock issued for cash | ( | ) | – | ( | ) | |||||||||||||||||||||||||||||||||||||||||||
| Net Loss | – | – | – | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||||||
| Balance January 31, 2022 | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||
| Net Loss | – | – | – | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||||||
| Balance April 30, 2022 | $ | $ | ( | ) | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| 6 |
YUENGLING’S ICE CREAM CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| For the Six Months Ended | ||||||||
| April 30, | ||||||||
| 2022 | 2021 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Gain on extinguishment of debt | ||||||||
| Gain on sale of fixed asset | ( | ) | ||||||
| Debt discount amortization | ||||||||
| Changes in assets and liabilities: | ||||||||
| Accounts receivable | ||||||||
| Inventory | ||||||||
| Other receivable – related party | ( | ) | ||||||
| Accounts payable | ( | ) | ||||||
| Accrued compensation – related party | ||||||||
| Accrued liabilities | ||||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash flows from investing activities: | ||||||||
| Proceeds from the sales of property and equipment | ||||||||
| Issuance of note receivable | ( | ) | ||||||
| Net cash (used) provided by investing activities | ( | ) | ||||||
| Cash flows from financing activities: | ||||||||
| Net (payments) proceeds from the sale of preferred stock | ( | ) | ||||||
| Sale of common stock | ||||||||
| Payment on LOC | ( | ) | ||||||
| Proceeds from notes payable | ||||||||
| Proceeds from convertible notes payable | ||||||||
| Payments on notes payable | ( | ) | ( | ) | ||||
| Proceeds – related party loans | ||||||||
| Net cash (used) provided by financing activities | ( | ) | ||||||
| Net change in cash | ( | ) | ||||||
| Cash, beginning of period | ||||||||
| Cash, end of period | $ | $ | ||||||
| Cash paid during the period for: | ||||||||
| Interest | $ | $ | ||||||
| Income taxes | $ | $ | ||||||
| Supplemental Disclosure of Non-Cash Activity: | ||||||||
| Conversion of principal and interest into common stock | $ | $ | ||||||
The accompanying notes are an integral part of these condensed consolidated financial statements
| 7 |
YUENGLING’S ICE CREAM CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 2022
(Unaudited)
NOTE 1 – ORGANIZATION AND BUSINESS
Yuengling’s Ice Cream Corporation, (f/k/a Aureus, Inc.) (“Yuengling’s,” “ARSN,” “we,” “us,” or the “Company”) was incorporated in Nevada on April 19, 2013, under the name “Aureus Incorporated.” We were initially organized to develop and explore mineral properties in the state of Nevada. Effective December 15, 2017, we changed our name to “Hohme, Inc.,” and, effective February 7, 2019, we changed our name to “Aureus, Inc. and on September 14, 2021, the Company changed their name to Yuengling’s Ice Cream Corporation”. We are currently active in the state of Nevada.
We are a food brand development company that builds and represents popular food concepts throughout the United States and international markets. Management is highly experienced at business integration and re-branding potential. With little territory available for the older brands, we intend to bring to our customers fresh innovative brands that have great potential. All of our brands will be unique in nature as we focus on niche markets that are still in need of development.
We operate two lines of business. Through our subsidiary, YIC Acquisitions Corp. (“YICA”), we acquired the assets of Yuengling’s Ice Cream in June 2019. YICA produces and sells high-quality ice cream without artificial colors, flavoring, or preservatives and no added hormones.
In September 2020, we entered into the micro market segment and launched our second business line, Aureus Micro Markets (“AMM”). Closely tied to the vending machine industry, Micro Markets look and feel like modern convenience stores while functioning with the ease and efficiency of vending foodservice and refreshment services.
NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation
The Company’s unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The accompanying unaudited condensed consolidated financial statements reflect all adjustments, consisting of only normal recurring items, which, in the opinion of management, are necessary for a fair statement of the results of operations for the periods shown and are not necessarily indicative of the results to be expected for the full year ending October 31, 2022. These unaudited condensed consolidated financial statements should be read in conjunction with the financial statements and related notes included in the Company’s financial statements for the year ended October 31, 2021.
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles 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 revenues and expenses during the reporting period. Actual results could differ from those estimates.
Concentrations of Credit Risk
We maintain our cash in bank deposit accounts, the balances of which at times may exceed federally insured limits. We continually monitor our banking relationships and consequently have not experienced any losses in our accounts. We believe we are not exposed to any significant credit risk on cash.
| 8 |
Restricted Cash
The Company has an obligation to transfer $
Net income (loss) per common share is computed pursuant to section 260-10-45 of the FASB Accounting Standards Codification. Basic net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period. Diluted net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock and potentially outstanding shares of common stock during the period. The weighted average number of common shares outstanding and potentially outstanding common shares assumes that the Company incorporated as of the beginning of the first period presented. As of April 30, 2022 and 2021, there are and potentially dilutive shares, respectively, if the Preferred A were to be converted. As of April 30, 2022 and 2021, the Company’s diluted loss per share is the same as the basic loss per share, as the inclusion of any potential shares would have had an anti-dilutive effect due to the Company generating a loss.
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiary YIC Acquisitions Corp. All material transactions and balances have been eliminated on consolidation.
Recent Accounting Pronouncements
In August 2020, the FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40)—Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. ASU 2020-06 reduces the number of accounting models for convertible debt instruments and convertible preferred stock. For convertible instruments with conversion features that are not required to be accounted for as derivatives under Topic 815, Derivatives and Hedging, or that do not result in substantial premiums accounted for as paid-in capital, the embedded conversion features no longer are separated from the host contract. ASU 2020-06 also removes certain conditions that should be considered in the derivatives scope exception evaluation under Subtopic 815-40, Derivatives and Hedging—Contracts in Entity’s Own Equity, and clarify the scope and certain requirements under Subtopic 815-40. In addition, ASU 2020-06 improves the guidance related to the disclosures and earnings-per-share (EPS) for convertible instruments and contract in entity’s own equity. ASU 2020-06 is effective for public business entities that meet the definition of a Securities and Exchange Commission (SEC) filer, excluding entities eligible to be smaller reporting companies as defined by the SEC, for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. The Board specified that an entity should adopt the guidance as of the beginning of its annual fiscal year. The Company has chosen the early adoption of ASU 2020-06. The adoption of ASU 2020-06 had a material effect on the Company’s financial statements. If the standard was not early adopted the Company would have had to recognize a beneficial conversion feature on its convertible note payable.
The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the condensed consolidated financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on our financial position or results of operations.
| 9 |
NOTE 3 – GOING CONCERN
The accompanying unaudited condensed consolidated
financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of
liabilities in the normal course of business. The Company has an accumulated deficit of $
NOTE 4 - PROPERTY & EQUIPMENT
Property and Equipment are first recorded at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the various classes of assets as follows between three and five years.
Long lived assets, including property and equipment, to be held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of the assets may not be recoverable. Impairment losses are recognized if expected future cash flows of the related assets are less than their carrying values. Measurement of an impairment loss is based on the fair value of the asset. Long-lived assets to be disposed of are reported at the lower of carrying amount or fair value less cost to sell.
Maintenance and repair expenses, as incurred, are charged to expense. Betterments and renewals are capitalized in plant and equipment accounts. Cost and accumulated depreciation applicable to items replaced or retired are eliminated from the related accounts with any gain or loss on the disposition included as income.
Property and equipment stated at cost, less accumulated depreciation consisted of the following:
| Schedule of property and equipment | ||||||||
| April 30, 2022 | October 31, 2021 | |||||||
| Property and equipment | $ | $ | ||||||
| Less: accumulated depreciation | ||||||||
| Property and equipment, net | $ | $ | ||||||
Depreciation Expense
As of April 30, 2022,
the Company’s fixed asset have
| 10 |
NOTE 5 – LOAN RECEIVABLE
On May
17, 2022, the Company and Revolution Desserts, LLC (“Revolution”) terminated the Definitive Agreement entered into on
April 30, 2022. The primary reason for the termination is the regulatory delays in qualifying the Company’s Reg 1-A. Per
the terms of the original agreement, the Company has advanced Revolution $
NOTE 6 – NOTES PAYABLE
On
On
On
On
On
On
On
On
As of April 30, 2022, the Company was also indebted
to another third party for a total of $
| 11 |
NOTE 7 – LOANS PAYABLE
YIC Acquisition assumed two loans that the Company
still has. The first loan was an SBA loan with a balance of $
On March 16, 2021, the Company received a
Paycheck Protection Program loan under the CARES Act for $
NOTE 8 – CONVERTIBLE NOTE PAYABLE
On March 2, 2022, the Company issued a convertible
promissory note to Quick Capital, LLC in the amount of $
NOTE 9 – RELATED PARTY TRANSACTIONS
During the six months ended April 30, 2022,
a $
During the six months ended April 30, 2022, the
Company paid Robert Bohorad, YICA’s Chief Operating Officer, $
NOTE 10 – COMMON STOCK
During the six months ended April 30, 2022, the Company issued the shares of common stock that was sold in the prior period, but not yet issued as of October 31, 2021.
During the
six months ended April 30, 2022, the Company sold shares of common stock
at $0.0008, for total cash proceeds of $
On January 21, 2022, the Company increased its authorized common stock from (1.75 billion) to (2 billion) shares.
| 12 |
NOTE 11 – PREFERRED STOCK
Series A Preferred
The Company has designated Ten Million () shares of Preferred Stock the Series A Convertible Preferred Stock with a par and stated value of $ per share. The holders of the Series A Convertible Preferred Stock are not entitled to receive any dividends.
Except as otherwise required by law or by the Articles of Incorporation and except as set forth below, the outstanding shares of Series A Convertible Preferred Stock shall vote together with the shares of Common Stock and other voting securities of the Corporation as a single class and, regardless of the number of shares of Series A Convertible Preferred Stock outstanding and as long as at least one of such shares of Series A Convertible Preferred Stock is outstanding shall represent Sixty Six and Two Thirds Percent (66 2/3%) of all votes entitled to be voted at any annual or special meeting of shareholders of the Corporation or action by written consent of shareholders. Each outstanding share of the Series A Convertible Preferred Stock shall represent its proportionate share of the 66 2/3% which is allocated to the outstanding shares of Series A Convertible Preferred Stock.
The entirety of the shares of Series A Convertible Preferred Stock outstanding as such time shall be convertible, at the option of the holder thereof, at any time and from time to time, and without the payment of additional consideration by the holder thereof, into two thirds of the after conversion outstanding fully paid and non-assessable shares of Common Stock. Each individual share of Series A Convertible Preferred Stock shall be convertible into Common Stock at a ratio determined by dividing the number of shares of Series A Convertible Stock to be converted by the number of shares of outstanding pre-conversion Series A Convertible Preferred Stock. Such initial Conversion Ratio, and the rate at which shares of Series A Convertible Preferred Stock may be converted into shares of Common Stock. As of April 30, 2022, there are shares of Series A preferred stock owned by the CEO.
As of April 30,
2022, the Company has preferred stock to be issued in the amount of $
Series B Preferred
The Series B preferred stock is convertible into shares of common stock at the option of the holder at a 35% discount to the lowest closing price for the thirty days prior to conversion.
On August 21, 2020, the Company entered into a Stock Purchased Agreement with Kanno Group Holdings II Ltd.(“KGH”), in which KGH purchased $3,000 of Series B Preferred Stock. The Company rescinded its agreement with KGH, agreeing to return the $3,000 it had received for the preferred stock.
| 13 |
NOTE 12 – COMMITMENTS AND CONTINGENCIES
On January 20, 2022, the Company entered into
a Service Agreement with Desmond Partners, LLC for consulting services to be provided. The agreement is effective on February 1, 2022
for a term of three months. Per the terms of the agreement the consultant will receive a fee of $
NOTE 13 – SUBSEQUENT EVENTS
In accordance with SFAS 165 (ASC 855-10) management has performed an evaluation of subsequent events through the date that the financial statements were available to be issued and has determined that it does not have any material subsequent events to disclose in these financial statements other than the following.
On June 1, 2022, the Company sold 88,000,000 shares of common stock to Quick Capital LLC for $32,500.
| 14 |
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND PLAN OF OPERATIONS.
Forward-looking Statements
There are “forward-looking statements” contained in this quarterly report. All statements that express expectations, estimates, forecasts or projections are forward-looking statements. In addition, other written or oral statements which constitute forward-looking statements may be made by us or on our behalf. Words such as “expect,” “anticipate,” “intend,” “plan,” “believe,” “seek,” “estimate,” “project,” “forecast,” “may,” “should,” and variations of such words and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions which are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in or suggested by such forward-looking statements. We undertake no obligation to update or revise any of the forward-looking statements after the date of this quarterly report to conform forward-looking statements to actual results. Important factors on which such statements are based are assumptions concerning uncertainties, including but not limited to, uncertainties associated with the following:
| · | Inadequate capital and barriers to raising the additional capital or to obtaining the financing needed to implement our business plans; |
| · | Our failure to earn revenues or profits; |
| · | Inadequate capital to continue business; |
| · | Volatility or decline of our stock price; |
| · | Potential fluctuation in quarterly results; |
| · | Rapid and significant changes in markets; |
| · | Litigation with or legal claims and allegations by outside parties; and |
| · | Insufficient revenues to cover operating costs. |
The following discussion should be read in conjunction with the financial statements and the notes thereto which are included in this quarterly report. This discussion contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ substantially from those anticipated in any forward-looking statements included in this discussion as a result of various factors.
Overview
Yuengling’s Ice Cream Corporation, (f/k/a Aureus, Inc.) (“Yuengling’s,” “ARSN,” “we,” “us,” or the “Company”) was incorporated in Nevada on April 19, 2013. Our offices are located at One Glenlake Parkway #650, Atlanta, GA 30328. Our telephone number is (404) 885-6045, and our email address is aureus.now@gmail.com. Our website is www.aureusnow.com.
We are a food brand development company that builds and represents popular food concepts throughout the United States and international markets. Management is highly experienced at business integration and re-branding potential. With little territory available for the older brands, we intend to bring fresh, innovative brands with great potential. Our brands will be unique as we focus on niche markets that are still in need of development.
| 15 |
We operate two lines of business. Through our subsidiary, YIC Acquisitions Corp. (“YICA”), we acquired the assets of Yuengling’s Ice Cream (“YIC” or “Yuengling’s”) in June 2019. Yuengling’s sells high-quality ice cream without artificial colors, flavoring, or preservatives and no added hormones. Yuengling’s is currently sold in select retailers and convenience stores in eastern Pennsylvania. In September 2020, we entered into the micro-market segment and launched our second business line, Aureus Micro-Markets (“AMM”). Closely tied to the vending machine industry, micro-markets look and feel like modern convenience stores while functioning with the ease and efficiency of vending food service and refreshment services. They provide an improved customer experience and greater product variety, with a proven track record of increasing sales at vending locations while keeping labor costs down and improving operating efficiencies. Micro-markets are a hybrid form of vending, food service, coffee service, and convenience stores that provide an improved customer experience, exponentially greater product variety, and increased sales within a single location while keeping labor costs down and improving operational efficiencies. The expanded product variety, open flow, and cashless payment options mean that consumers spend less time in line fumbling with cash/change, can purchase multiple items with one transaction, and buy more items per transaction than with cash transactions.
In January 2022, the company signed a non-binding Letter of Intent (“LOI”) to acquire a production facility. The LOI expired with no further taken by either party.
In February 2022, the Company signed a binding Letter of Intent to acquire Revolution Desserts (“Revolution”). Revolution owns or licenses the Gelato Fiasco, Sweet Scoops, Art Cream, and SoCo Creamery brands. Revolution was founded by Robert Carlson and Luciano Alves. Mr. Carlson and Charles Green run the day-to-day operations of the company.
On May 17, 2022, the Company and Revolution terminated the Definitive Agreement entered into on April 30, 2022. The primary reason for the termination is the regulatory delays in qualifying the Company’s Reg 1-A.
Results of Operations
The three months ended April 30, 2022 compared to the three months ended April 30, 2021
Revenue
We had $0 in revenue for the three months ended April 30, 2022, compared to $230 for the three months ended April 30, 2021. The
decrease in revenue is due to a loss in retail food service customers.
Cost of Goods Sold
We incurred $0 in costs of goods sold for the three months ended April 30, 2022, compared to $20,600 for the three months ended April 30, 2021. In the prior period we had large a write down of our inventory due to expired or goods sold below cost.
General and administrative expenses
We had $30,862 of general and administrative expenses (“G&A”) for the three months ended April 30, 2022, compared to $16,366 for the three months ended April 30, 2021, an increase of $14,496 or 88.6%. The increase is primarily due to increased consulting expense during the current period
Consulting – related party
We had $0 of related party consulting expenses for the three months ended April 30, 2022, compared to $80,000 for the three months ended April 30, 2021. In the prior period we made a payment of $40,000 to Everett Dickson, our former CEO and $40,000 to Robert Bohorad, YICA’s former Chief Operating Officer and our current CEO.
| 16 |
Officer Compensation
We incurred $15,000 of officer compensation for the three months ended April 30, 2022. The Company is compensating Robert Bohorad, CEO, $5,000 per month. In the prior periods this was classified as related party consulting.
Professional fees
We incurred $31,342 of professional fees for the three months ended April 30, 2022, compared to $19,200 for the three months ended April 30, 2021, an increase of $12,142 or 63.2%. Professional fees generally consist of audit, legal, accounting and investor relation service fees. The increase is primarily due to an increase in investor relation expense and audit fees.
Other income (expense)
For the three months ended April 30, 2022, we had total other expense of $23,473, compared to total other income of $14,084 for the three months ended April 30, 2021. In the current period we incurred $23,473 of interest expense, which includes $2,287 of debt discount amortization. In the prior period we recognized a loss on conversion of debt of $26,000, a gain on forgiveness of debt of $33,536, interest income of $372 and interest expense of $19,824.
Net loss
We incurred a net loss of $100,677 for the three months ended April 30, 2022, compared to a net loss of $121,852 for the three months ended April 30, 2021.
The six months ended April 30, 2022 compared to the six months ended April 30, 2021
Revenue
We had $0 in revenue for the six months ended April 30, 2022, compared to $3,616 for the six months ended April 30, 2021. The
decrease in revenue is due to a loss in retail food service customers.
Cost of Goods Sold
We incurred $0 in costs of goods sold for the six months ended April 30, 2022, compared to $53,051 for the six months ended April 30, 2021. In the prior period we had large a write down of our inventory due to expired or goods sold below cost.
General and administrative expenses
We had $68,486 of G&A for the six months ended April 30, 2022, compared to $90,031 for the six months ended April 30, 2021, a decrease of $21,545 or 23.9%. The decrease is primarily due to a decrease in promotional expense during the current period.
Consulting – related party
We had $0 of related party consulting expenses for the six months ended April 30, 2022, compared to $85,000 for the six months ended April 30, 2021. In the prior period we made a payment of $40,000 to Everett Dickson, our former CEO and $45,000 to Robert Bohorad, YICA’s former Chief Operating Officer and our current CEO.
Officer compensation
We had $33,000 of officer compensation for the six months ended April 30, 2022, compared to $0 for the six months ended April 30, 2021. In the current period we began to compensate Mr. Bohorad, CEO, $5,000 per month.
| 17 |
Professional fees
We incurred $75,145 of professional fees for the six months ended April 30, 2022, compared to $24,200 for the six months ended April 30, 2021, an increase of $50,945 or 210.5%. Professional fees generally consist of audit, legal, accounting and investor relation service fees. The increase is primarily due to an increase in investor relation expense and audit fees.
Other income (expense)
For the six months ended April 30, 2022, we had total other expense of $43,831, compared to total other expense of $27,124 for the six months ended April 30, 2021. In the current period we incurred $44,005 of interest expense, which includes $2,287 of debt discount amortization, and $174 of interest income. In the prior period we recognized a gain on the sale of an asset of $1,000, a loss on conversion of debt of $26,000, a gain on forgiveness of debt of $33,536 and interest expense of $36,032.
Net loss
We incurred a net loss of $220,462 for the six months ended April 30, 2022, compared to a net loss of $275,790 for the six months ended April 30, 2021.
Liquidity and Capital Resources
Cash flow from operations
Cash used in operating activities for the six months ended April 30, 2022 was $197,750 compared to $219,138 of cash used in operating activities for the six months ended April 30, 2021.
Cash Flows from Investing
We used $80,000 for investing activities for the six months ended April 30, 2022, which was paid to Revolution Desserts (Note 5). We received $1,000 in the prior period from the sale of a piece of equipment.
Cash Flows from Financing
For the six months ended April 30, 2022, $66,131 was used by financing activities. We received $96,000 from proceeds from the sale of common stock and $73,500 for the issuance of a convertible promissory note. We repaid $90,102 on our notes payable and $106,201 towards our LOC. For the six months ended April 30, 2021, we netted $218,434 from financing activities. We received $188,600 from the sale of preferred stock and $30,584 from other notes payable. We repaid $5,000 of notes payable.
Going Concern
As of April 30, 2022, there is substantial doubt regarding our ability to continue as a going concern as we have not generated sufficient cash flow to fund our operations.
We have suffered recurring losses from operations and have not yet generated any revenue. As a result of these and other factors, our independent auditor has expressed substantial doubt about our ability to continue as a going concern. Our future success and viability, therefore, are dependent upon our ability to generate capital financing. The failure to generate sufficient revenues or raise additional capital may have a material and adverse effect upon us and our shareholders.
| 18 |
Management’s plans with regard to these matters encompass the following actions: (i) obtaining funding from new investors to alleviate our working capital deficiency, and (ii) implementing our plan of operation to generate sales. Our continued existence is dependent upon our ability to resolve our liquidity problems and increase profitability in our business operations. However, the outcome of management’s plans cannot be ascertained with any degree of certainty. Our financial statements do not include any adjustments that might result from the outcome of these risks and uncertainties.
Off Balance Sheet Arrangements
We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.
Critical Accounting Policies
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 and the disclosure of contingent assets and liabilities of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Note 2 to the Financial Statements describes the significant accounting policies and methods used in the preparation of the Financial Statements. Estimates are used for, but not limited to, contingencies and taxes. Actual results could differ materially from those estimates. The following critical accounting policies are impacted significantly by judgments, assumptions, and estimates used in the preparation of the Financial Statements.
We are subject to various loss contingencies arising in the ordinary course of business. We consider the likelihood of loss or impairment of an asset or the incurrence of a liability, as well as our ability to reasonably estimate the amount of loss in determining loss contingencies. An estimated loss contingency is accrued when management concludes that it is probable that an asset has been impaired, or a liability has been incurred and the amount of the loss can be reasonably estimated. We regularly evaluate current information available to us to determine whether such accruals should be adjusted.
We recognize deferred tax assets (future tax benefits) and liabilities for the expected future tax consequences of temporary differences between the book carrying amounts and the tax basis of assets and liabilities. The deferred tax assets and liabilities represent the expected future tax return consequences of those differences, which are expected to be either deductible or taxable when the assets and liabilities are recovered or settled. Future tax benefits have been fully offset by a 100% valuation allowance as management is unable to determine that it is more likely than not that this deferred tax asset will be realized.
Recent Accounting Pronouncements
In August 2020, the FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40)—Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. ASU 2020-06 reduces the number of accounting models for convertible debt instruments and convertible preferred stock. For convertible instruments with conversion features that are not required to be accounted for as derivatives under Topic 815, Derivatives and Hedging, or that do not result in substantial premiums accounted for as paid-in capital, the embedded conversion features no longer are separated from the host contract. ASU 2020-06 also removes certain conditions that should be considered in the derivatives scope exception evaluation under Subtopic 815-40, Derivatives and Hedging—Contracts in Entity’s Own Equity, and clarify the scope and certain requirements under Subtopic 815-40. In addition, ASU 2020-06 improves the guidance related to the disclosures and earnings-per-share (EPS) for convertible instruments and contract in entity’s own equity. ASU 2020-06 is effective for public business entities that meet the definition of a Securities and Exchange Commission (SEC) filer, excluding entities eligible to be smaller reporting companies as defined by the SEC, for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. The Board specified that an entity should adopt the guidance as of the beginning of its annual fiscal year. The Company has chosen the early adoption of ASU 2020-06. The adoption of ASU 2020-06 had a material effect on the Company’s financial statements. If the standard was not early adopted the Company would have had to recognize a beneficial conversion feature on its convertible note payable.
| 19 |
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and, as such, are not required to provide the information under this Item.
ITEM 4. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
Each of our principal executive and principal financial officer has evaluated the effectiveness of our disclosure controls and procedures, as defined in Rules 13a - 15(e) and 15d - 15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of the end of the period covered by this quarterly report. Based on their evaluation, each such person concluded that our disclosure controls and procedures were not effective as of April 30, 2022.
The following aspects of the Company were noted as potential material weaknesses:
| · | Due to our size and limited resources, we currently do not employ the appropriate accounting personnel to ensure (a) we maintain proper segregation of duties, (b) that all transactions are entered timely and accurately, and (c) we properly account for complex or unusual transactions; | |
| · | Due to our size and scope of operations, we currently do not have an independent audit committee in place; | |
| · | Due to our size and limited resources, we have not properly documented a complete assessment of the effectiveness of the design and operation of our internal control over financial reporting. |
In designing and evaluating disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable, not absolute assurance of achieving the desired objectives. Also, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs.
Changes in Internal Control over Financial Reporting.
Our management has evaluated whether any change in our internal control over financial reporting occurred during the last fiscal quarter. Based on that evaluation, management concluded that there has been no change in our internal control over financial reporting during the relevant period that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
| 20 |
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 1A. RISK FACTORS
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and, as such, are not required to provide the information under this Item.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS
(a) Documents furnished as exhibits hereto:
| Exhibit No. | Description | |
| 31.1 | Certification of the Chief Executive Officer and Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
| 32.1 | Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
| 101.INS | Inline XBRL Instance Document | |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document | |
| 101.CAL | Inline XBRL Taxonomy Calculation Linkbase Document | |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | |
| 101.LAB | Inline XBRL Taxonomy Label Linkbase Document | |
| 101.PRE | Inline XBRL Taxonomy Presentation Linkbase Document | |
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). |
| 21 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| YUENGLING’S ICE CREAM CORPORATION | ||
| Date: June 14, 2022 | By: | /s/ Robert C. Bohorad |
| Robert C. Bohorad | ||
| President and Chief Executive Officer | ||
| 22 |
Exhibit 31.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Robert C. Bohorad, Chief Executive of Yuengling’s Ice Cream Corporation (the “registrant”) certify that:
1. I have reviewed this quarterly report on Form 10-Q of the registrant;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Dated: June 14, 2022
| By: | /s/ Robert C. Bohorad | |
| Robert C. Bohorad Chief Executive Officer (Principal Executive Officer) Chief Financial Officer (Principal Financial Officer |
Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES—OXLEY ACT OF 2002
In connection with the Report of Yuengling’s Ice Cream Corporation (the “Company”) on Form 10-Q for the quarter ended April 30, 2022, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Robert C. Bohorad, Chief Executive Officer, certify, pursuant to 18 U.S.C. Sec. 1350, adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 that to my knowledge:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company at the dates and for the periods indicated.
Date: June 14, 2022
| By: | /s/ Robert C. Bohorad | |
| Robert C. Bohorad, Chief Executive Officer | ||
| (Principal Executive) |