Frequency Holdings, Inc 10-K for FY2024
Frequency Holdings, Inc (FRQN)
About this 10-K
Frequency Holdings, Inc filed this 10-K on April 15, 2025, covering the fiscal year ended December 31, 2024 (FY2024).
Headline figures
Fiscal year ended December 31, 2024, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $4.81M
- up 27.4% from $3.78M a year earlier
- Net income
- $4.4M
- compared with a net loss of $22.91M a year earlier
- Diluted EPS
- $0.01
- compared with -$0.07 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For the Fiscal Year Ended
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 if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant
included in the filing reflect the correction of an error to previously issued financial statements.
Check whether the issuer is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act. Yes ☐
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 ☐
State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed fiscal quarter. $
There were shares of common stock outstanding as of March 31, 2025.
TABLE OF CONTENTS
i
Forward Looking Statements
Except for statements of historical fact, the information presented herein constitutes forward-looking statements. These forward-looking statements generally can be identified by phrases such as “anticipates,” “believes,” “estimates,” “expects,” “forecasts,” “foresees,” “intends,” “plans,” or other words of similar import. Similarly, statements herein that describe our business strategy, outlook, objectives, plans, intentions or goals also are forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, but are not limited to, our ability to: successfully commercialize our technology; generate revenues and achieve profitability in an intensely competitive industry; compete in products and prices with substantially larger and better capitalized competitors; secure, maintain and enforce a strong intellectual property portfolio; attract additional capital sufficient to finance our working capital requirements, as well as any investment of plant, property and equipment; develop a sales and marketing infrastructure; identify and maintain relationships with third party suppliers who can provide us a reliable source of raw materials; acquire, develop, or identify for our own use, a manufacturing capability; attract and retain talented individuals; continue operations during periods of uncertain general economic or market conditions, and; other events, factors and risks previously and from time to time disclosed in our filings with the Securities and Exchange Commission, including, specifically, the “Risk Factors” enumerated herein. Although we believe the expectations reflected in our forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. You should not place undue reliance on our forward-looking statements, which speak only as of the date of this report. Except as required by law, we do not undertake to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.
ii
PART I
ITEM 1. DESCRIPTION OF BUSINESS
Overview
Yuengling’s Ice Cream Corporation (OTC: YCRM), currently undergoing a name and symbol change pending FINRA approval, is transitioning into a diversified technology holding company. This transformation draws inspiration from the models of Berkshire Hathaway and Alphabet, aiming to build a portfolio of synergistic, high-growth technology subsidiaries.
Our flagship operating company, ReachOut, is at the forefront of this strategy. Founded in 2010 by cybersecurity expert Rick Jordan, ReachOut has evolved from a regional IT services provider into a national leader in cybersecurity solutions for small to medium-sized businesses (SMBs). The company offers comprehensive services, including 24/7 threat monitoring, compliance support, and AI-driven automation, all delivered through a subscription-based model that ensures predictable, recurring revenue.
Strategic Evolution
Post-acquisition, ReachOut has shifted its growth strategy from acquiring larger entities to targeting smaller, high-potential firms. This approach allows for faster integration and scalability, leveraging ReachOut's robust platform to enhance service offerings and operational efficiency. The company's focus on AI and automation has streamlined operations, reduced costs, and improved service delivery, positioning ReachOut as a disruptive force in the cybersecurity industry.
In line with our holding company model, we are expanding our portfolio beyond traditional IT services. Our upcoming venture, TRUSTLESS, exemplifies this direction. TRUSTLESS is a blockchain-based identity management platform designed to address the growing need for secure, decentralized identity solutions. By investing in such innovative technologies, we aim to diversify our revenue streams and capitalize on emerging market opportunities.
Market Positioning
Our strategy is to emulate the customer-centric approach of companies like T-Mobile, offering accessible, high-quality cybersecurity services to underserved SMBs across the nation. By combining this approach with the structural advantages of a holding company, we aim to create a scalable, resilient business model capable of delivering substantial value to shareholders.
With a strong leadership team, a clear strategic vision, and a commitment to innovation, we are well-positioned to execute our growth plans and achieve a successful uplisting to NASDAQ.
1
Competitive Landscape
The cybersecurity and IT services industry serving small to medium-sized businesses (SMBs) remains highly fragmented, with thousands of regional providers competing for localized market share. Traditional Managed Service Providers (MSPs) often lack specialization in advanced cybersecurity, operate without brand distinction, and struggle to scale beyond their geographic footprint. Meanwhile, enterprise-focused firms overlook the SMB sector entirely, creating a significant gap in the market. ReachOut is positioning to fill that gap by building a nationally recognized brand offering enterprise-grade cybersecurity tailored for SMBs. The Company competes based on service depth, speed of response, AI-powered scalability, and a media-driven awareness strategy uncommon in the sector.
Core Differentiators
ReachOut’s platform is built on recurring revenue, subscription-based services, and proprietary operational processes designed for scale. The Company leverages AI to improve ticket resolution time and reduce labor reliance, unlocking better margins and faster acquisition integration. Its leadership team—anchored by CEO Rick Jordan and supported by board member Kevin Harrington—brings a unique blend of cybersecurity, operational, M&A, and public market expertise. In addition, ReachOut’s transformation into a holding company enables investment in high-upside, synergistic ventures like TRUSTLESS, a blockchain-based identity platform expected to contribute long-term balance sheet growth via the equity method. The Company’s acquisition strategy targets high-ROI, under-optimized SMB providers in underserved U.S. markets identified through search-intent data.
Risks & Challenges
As with any acquisition-driven growth strategy, ReachOut faces risks related to integration, cultural alignment, and operational scalability. The Company has mitigated this by shifting focus from larger, complex acquisitions to smaller, more agile targets with faster onboarding potential. The technology landscape evolves rapidly, particularly in AI and cybersecurity, requiring continuous innovation and investment to maintain service relevance. Market volatility, macroeconomic fluctuations, and capital availability may also impact the pace of acquisitions and expansion. Additionally, the Company’s high-growth profile and media-forward leadership may attract increased public scrutiny, which it manages through proactive governance and transparency.
2
The Broken MSP Model vs. ReachOut’s Scalable Platform Approach
The traditional Managed Service Provider (MSP) model is outdated, fragmented, and fundamentally ill-equipped to scale. Most regional IT providers suffer from long response times, underqualified support teams, and surface-level cybersecurity offerings—leaving SMBs exposed to increasing cyber threats without strategic guidance or enterprise-grade protection.
Common Weaknesses in Traditional IT Providers:
| ● | Delayed Response & Resolution: Ticket triaging systems are slow and arbitrary, often delaying help for critical issues. |
| ● | Inefficient Frontline Support: Non-technical dispatchers create bottlenecks before a qualified technician is even looped in. |
| ● | Limited Cyber Talent: Most small IT providers lack advanced cybersecurity capabilities or compliance readiness support. |
| ● | Basic Security Tools: Antivirus and firewalls are not enough—many providers leave clients vulnerable to ransomware, phishing, and regulatory fines. |
ReachOut’s Differentiated, Scalable Approach:
| ● | Sub-Minute Response Times: Client calls are answered live by trained technicians within 60 seconds—most issues are resolved in under 15 minutes. |
| ● | AI-Augmented Service Delivery: Intelligent copilots are deployed to automate L1 support, reduce labor costs, and scale support across acquisitions without bloating headcount. |
| ● | Proactive Strategic Engagement: Clients receive dedicated vCIOs and vCISOs, quarterly business reviews, and continuous cybersecurity posture analysis—supporting growth, compliance, and risk mitigation. |
| ● | Advanced Security Infrastructure: ReachOut delivers 24/7 SOC-backed protection, anti-phishing training, ransomware mitigation, custom audits, and compliance solutions for HIPAA, CMMC, NIST 800-171, and more. |
ReachOut isn't just improving MSP operations—it’s replacing them. By reimagining IT and cybersecurity as a national, AI-powered, subscription-based platform with media-fueled brand recognition, ReachOut is positioned to lead this $700B+ market into its next evolution—while creating massive long-term value for shareholders.
3
ReachOut Technology’s Future Growth Strategy
1. Holding Company Expansion with a Berkshire Model & Alphabet Playbook
ReachOut’s parent company is executing a strategic shift into a modern holding company structure—modeled after Berkshire Hathaway’s capital efficiency and Alphabet’s innovation strategy. This structure allows for the acquisition and development of independently operated, high-growth subsidiaries across cybersecurity, AI, and blockchain—positioning ReachOut not just as an IT company, but as a scalable technology platform holding company with NASDAQ ambitions.
2. Building the T-Mobile of Cybersecurity & IT
We are establishing the first nationally recognized brand in cybersecurity and IT for SMBs—combining aggressive market presence, media dominance, and a bold personality with enterprise-grade service. Just as T-Mobile disrupted telecom by turning a commodity into a brand experience, ReachOut is creating visibility, trust, and loyalty in an industry dominated by forgettable local providers.
3. High-Velocity, High-Margin Rollups
Our acquisition strategy has shifted from large, slow-to-integrate MSPs to nimble, $500k–$2M topline firms in underserved markets. We will integrate them rapidly using AI, operational playbooks, and centralized support infrastructure, growing each acquired location 2–5X within 24 months. With 4–10 acquisitions annually planned and targeting markets with high-demand and low competition, ReachOut is building a national footprint without sacrificing efficiency or margin.
4. Launching & Scaling Disruptive Platforms (e.g., TRUSTLESS)
TRUSTLESS, our blockchain-based identity and data security platform, is the first of several vertically independent, equity-holding ventures ReachOut will launch. These subsidiaries operate with their own branding, management, and financial roadmap, while allowing ReachOut to book long-term value via the equity method—creating asymmetric upside that outpaces traditional service firm multiples.
5. AI-First Operations for Scalable Margin
Through the integration of AI copilots and intelligent automation, ReachOut reduces headcount pressure while increasing client satisfaction, response time, and issue resolution. This enables aggressive acquisition without bloated overhead—scaling revenue without scaling cost, improving margins across the portfolio.
6. Organic Growth Through Media, Search, and Strategy
Rick Jordan’s personal brand, bolstered by a podcast downloaded in 70+ countries and a reach of over 1.6M followers, fuels inbound demand and elevates ReachOut’s media presence. Our go-to-market strategy is powered by intent-driven search data, geo-targeted content, and a direct-response engine that creates outsized lead volume and customer conversion in every acquired market.
7.Compliance-Driven Market Penetration
ReachOut continues to build industry-specific offerings for high-demand, regulation-heavy sectors like education, defense, and healthcare—where compliance frameworks like CMMC, HIPAA, and NIST SP 800-171 create both a barrier to entry and a premium service need. This aligns with our security-first, recurring revenue foundation.
4
Emerging Growth Company
We are and we will remain an “emerging growth company” as defined under The Jumpstart Our Business Startups Act (the “JOBS Act”), until the earliest to occur of (i) the last day of the fiscal year during which our total annual revenues equal or exceed $1 billion (subject to adjustment for inflation), (ii) the last day of the fiscal year following the fifth anniversary of our initial public offering, (iii) the date on which we have, during the previous three-year period, issued more than $1 billion in non-convertible debt securities, or (iv) the date on which we are deemed a “large accelerated filer” (with at least $700 million in public float) under the Securities and Exchange Act of 1934, as amended (the “Exchange Act”).
As an “emerging growth company”, we may take advantage of specified reduced disclosure and other requirements that are otherwise applicable generally to public companies. These provisions include:
| ● | only two years of audited financial statements in addition to any required unaudited interim financial statements with correspondingly reduced “Management’s Discussion and Analysis” disclosure; |
| ● | reduced disclosure about our executive compensation arrangements; |
| ● | no requirement that we hold non-binding advisory votes on executive compensation or golden parachute arrangements; and |
| ● | exemption from the auditor attestation requirement in the assessment of our internal control over financial reporting. |
We have taken advantage of some of these reduced burdens, and thus the information we provide stockholders may be different from what you might receive from other public companies in which you hold shares.
In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. However, we are choosing to “opt out” of such extended transition period, and as a result, we will comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. Section 107 of the JOBS Act provides that our decision to opt out of the extended transition period for complying with new or revised accounting standards is irrevocable.
Notwithstanding the above, we are also currently a “smaller reporting company”, meaning that we are not an investment company, an asset-backed issuer, or a majority-owned subsidiary of a parent company that is not a smaller reporting company and have a public float of less than $250 million and annual revenues of less than $100 million during the most recently completed fiscal year. In the event that we are still considered a “smaller reporting company”, at such time as we cease being an “emerging growth company”, the disclosure we will be required to provide in our SEC filings will increase, but will still be less than it would be if we were not considered either an “emerging growth company” or a “smaller reporting company”. Specifically, similar to “emerging growth companies”, “smaller reporting companies” are able to provide simplified executive compensation disclosures in their filings; are exempt from the provisions of Section 404(b) of the Sarbanes-Oxley Act (“SOX”) requiring that independent registered public accounting firms provide an attestation report on the effectiveness of internal control over financial reporting; and have certain other decreased disclosure obligations in their SEC filings, including, among other things, only being required to provide two years of audited financial statements in annual reports.
Employees
The Company currently has approximately twenty full-time and part-time employees, including officers and directors. Our employees are not represented by any labor union.
5
ITEM 1A. RISK FACTORS
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and, as such, are not required to provide the information under this Item.
Item 1C. CYBERSECURITY
Our cybersecurity program is integrated into our overall risk management framework and is aligned with industry standards and best practices. It includes regular risk assessments, vulnerability scans, penetration testing, and employee training programs. We use a layered approach to cybersecurity, leveraging firewalls, encryption, multi-factor authentication, and endpoint protection technologies to safeguard our systems and data.
We have established an incident response plan that outlines the procedures for detecting, responding to, and recovering from cybersecurity events. This plan is tested periodically through tabletop exercises and simulations to ensure readiness. In the event of a material cybersecurity incident, we are prepared to notify stakeholders and comply with all applicable regulatory requirements.
ITEM 2. PROPERTIES
The Company currently leases property at the following location:
8910 West 192nd St North, Mokena, Illinois 60448
Our business mailing address is 8910 West 192nd St North, Mokena, Illinois 60448.
Our primary phone number is 312-288-8000.
6
ITEM 3. LEGAL PROCEEDINGS
On April 26, 2024, ReachOut Technology Corp. (“ReachOut”), a wholly-owned subsidiary of the Company filed a lawsuit (Case No. 1:24-cv-03408) in the United States District Court for the Northern District of Illinois, against the former members of RedGear, LLC (“RedGear”) related to certain representations and warranties made by the Defendants, Luciano Aguayo and Armando Gonzalez, in the Membership Interest Purchase Agreement, dated September 29, 2023 and closing on October 2, 2023, under which ReachOut acquired 100% of RedGear. The lawsuit was served on the defendants on April 30, 2024, and the amended complaint, below, was served in June 2024.
In June 2024, ReachOut amended its complaint in the above case including fraud, post-closing misappropriation of funds and opportunities, tortious interference, breach of fiduciary duty, and post-termination illegal activities in violation of the Computer Fraud and Abuse Act (CFAA) attempting to take control of RedGear systems.
On July 2, 2024, the United States District Court for the Northern District of Illinois entered a Temporary Restraining Order against the Defendants in the above case, based on the federal Computer Fraud and Abuse Act, a statute designed to protect against computer hacking.
Under the terms of the RedGear LLC membership interest purchase agreement, there is a clause for set-off. The Buyer shall have the right to recover, and to set-off and apply against, all amounts otherwise due and owing to Sellers, or any of them, all sums in respect of which they may be liable to Buyer, including, but not limited to, as a result of a breach of any representation or warranty of Sellers. As a result of a breach of any of the covenants, or pursuant to the indemnification provisions, such right of set-off shall be in addition to, and not in lieu of, or an election against, any and all other remedies available to Buyer at law or in equity. Management is in discussion with counsel to determine whether the set-off right can be applied prior to judicial determination. As of the filing date of this report no probable outcome has been determined in the above case.
Based on the aforementioned set-off clause and the continuing dispute with the former members of RedGear, management has obtained assurances from legal counsel that, the Company may refute certain liabilities recognized as acquisition related. As such, the Company has refuted certain liabilities owed to the former owners of the membership interest in RedGear which have been discussed above relating to the acquisition or RedGear, Related Party transactions and below related to certain lease liabilities.
While the Company is working with legal counsel to minimize the impact to the business, the exit of the Defendants has led to a material reduction in RedGear business customers and revenue.
On December 10, 2024, IND Holding, Inc. filed a lawsuit in the United States District Court for the District of Delaware against ReachOut Technology NE Holdings, LLC and ReachOut Technology Corp., alleging breach of contract related to a prior acquisition. The Company promptly filed a Motion to Dismiss on the grounds that the claims were brought in an improper venue and are contractually barred. In opposition, Plaintiff made a conditional request to amend—only if the motion were granted against them—then declined the Company’s offer to amend voluntarily before a ruling. The Company’s reply brief notified the Court of this refusal, and the matter is currently awaiting a decision. Management believes the case is procedurally and substantively flawed, expects dismissal, and does not view this matter as having any material impact on its financial position, results of operations, or strategic plans
ITEM 4. MINE SAFETY DISCLOSURES
None.
7
PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Market Information
Our Common Stock is quoted on the Over-the-Counter (OTC) Markets Pink Current Information under the symbol “YCRM.”
The range of reported high and reported low sales prices per share for our common stock for each fiscal quarter during fiscal year 2024 and 2023, as reported, is set forth below.
Quarterly common stock Price Ranges
| Fiscal Year 2024, Quarter Ended: | High | Low | ||||||
| March 31, 2024 | $ | 0.0067 | $ | 0.0062 | ||||
| June 30, 2024 | $ | 0.0054 | $ | 0.0052 | ||||
| September 30, 2024 | $ | 0.0023 | $ | 0.0023 | ||||
| December 31, 2024 | $ | 0.0021 | $ | 0.0009 | ||||
| Fiscal Year 2023, Quarter Ended: | High | Low | ||||||
| March 31, 2023 | $ | 0.0088 | $ | 0.0014 | ||||
| June 30, 2023 | $ | 0.0017 | $ | 0.0006 | ||||
| September 30, 2023 | $ | 0.008 | $ | 0.0006 | ||||
| December 31, 2023 | $ | 0.0209 | $ | 0.0013 | ||||
(a) Holders
At April 15, 2025 there were approximately 998 active holders of record of our common stock, although we believe that there are other persons who are beneficial owners of our common stock held in street name.
Transfer Agent
The transfer agent and registrar for our common stock is Pacific Stock Transfer Company, 6725 Via Austi Pkwy, Suite 300, Las Vegas, Nevada 89119. Their telephone number is (800) 785-7782.
(b) Dividends.
We have not paid any cash dividends on common stock to date and do not anticipate or contemplate paying dividends in the foreseeable future. It is the present intention of management to utilize all available funds for the development of the Registrant’s business.
(c) Securities authorized for issuance under equity compensation plans
None
8
Recent Issuances of Unregistered Securities
On October 1, 2024, YCRM issued a convertible note payable to Frondeur Partners LLC. The convertible note has principal of $10,000, bears interest at 12%, matures on June 30, 2025 and may be converted to common shares at or 50% of the lowest traded price during the thirty days prior to conversion. The principal amount was charged to professional services. Due to the notes fixed conversion price, it is treated as stock settled debt under ASC 480, a put premium of $10,000 was charged to interest expense on issuance.
On November 1, 2024, YCRM issued a convertible note payable to Frondeur Partners LLC. The convertible note has principal of $10,000, bears interest at 12%, matures on July 31, 2025 and may be converted to common shares at or 50% of the lowest traded price during the thirty days prior to conversion. The principal amount was charged to professional services. Due to the notes fixed conversion price, it is treated as stock settled debt under ASC 480, a put premium of $10,000 was charged to interest expense on issuance.
On December 1, 2024, YCRM issued a convertible note payable to Frondeur Partners LLC. The convertible note has principal of $10,000, bears interest at 12%, matures on August 31, 2025 and may be converted to common shares at or 50% of the lowest traded price during the thirty days prior to conversion. The principal amount was charged to professional services. Due to the notes fixed conversion price, it is treated as stock settled debt under ASC 480, a put premium of $10,000 was charged to interest expense on issuance.
On January 1, 2025, YCRM issued a convertible note payable to Frondeur Partners LLC. The convertible note has principal of $10,000, bears interest at 12%, matures on September 30, 2025 and may be converted to common shares at or 50% of the lowest traded price during the thirty days prior to conversion. The principal amount was charged to professional services. Due to the notes fixed conversion price, it is treated as stock settled debt under ASC 480, a put premium of $10,000 was charged to interest expense on issuance.
On February 1, 2025, YCRM issued a convertible note payable to Frondeur Partners LLC. The convertible note has principal of $10,000, bears interest at 12%, matures on October 31, 2025 and may be converted to common shares at or 50% of the lowest traded price during the thirty days prior to conversion. The principal amount was charged to professional services. Due to the notes fixed conversion price, it is treated as stock settled debt under ASC 480, a put premium of $10,000 was charged to interest expense on issuance.
On March 1, 2025, YCRM issued a convertible note payable to Frondeur Partners LLC. The convertible note has principal of $10,000, bears interest at 12%, matures on November 30, 2025 and may be converted to common shares at or 50% of the lowest traded price during the thirty days prior to conversion. The principal amount was charged to professional services. Due to the notes fixed conversion price, it is treated as stock settled debt under ASC 480, a put premium of $10,000 was charged to interest expense on issuance.
On April 1, 2025, YCRM issued a convertible note payable to Frondeur Partners LLC. The convertible note has principal of $10,000, bears interest at 12%, matures on December 31, 2025 and may be converted to common shares at or 50% of the lowest traded price during the thirty days prior to conversion. The principal amount was charged to professional services. Due to the notes fixed conversion price, it is treated as stock settled debt under ASC 480, a put premium of $10,000 was charged to interest expense on issuance.
Under the terms of the Singer Asset Purchase Agreement outlined above, the Company is obligated to designate a new series of preferred stock having a conversion feature of one share of the to be designated preferred stock for one share of restricted common stock. The obligation is recorded as stock to be issued at fair market value of the common stock on the grant date
On December 27, 2024 the board of directors approved the Debt Cancellation and Exchange Agreement in satisfaction of liabilities owed to the CEO and a private company he controlled for an aggregate amount of $2,440,950, and authorized the creation of a new series of preferred stock to be issued to First Portfolio Management LLC. The proposed Certificate of Designation authorizes the new shares of which 1,561,068 are to be issued to First Portfolio Management LLC. The shares have a par value of $0.0001 and a stated value of $1.00. The stock has a 2% annual dividend on the aggregate stated value of $2,440,950, each share is convertible into 385 common shares of stock. The dividend is payable quarterly in either cash or shares of the same series of preferred. The new preferred stock will rank senior to all other preferred stock in liquidation
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Issuer Purchases of Equity Securities
None.
ITEM 6. [Reserved]
Not applicable since we are a smaller reporting company as defined under the applicable SEC rules.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations for the Year Ended December 31, 2024, compared to the Year Ended December 31, 2023
Revenue
We had $4,811,040 in revenue for the year ended December 31, 2024, compared to $3,775,142 for the year ended December 31, 2023. The increase in revenue is due to the acquisition of RedGear in October, 2023 and the asset acquisition of Singer Networks in April, 2024.
Cost of Goods Sold
We incurred $1,835,859 in costs of goods sold for the year ended December 31, 2024, compared to $2,564,093 for the year ended December 31, 2023. This decrease is due to improved efficiency, reduced costs, and more automated software-based solutions.
Intangibles impairment
We incurred $3,464,930 in Intangibles impairment for the year ended December 31, 2024, compared to $4,136,746 for the year ended December 31, 2023.
General and administrative expenses
We had $1,170,891 of general and administrative expenses (“G&A”) for the year ended December 31, 2024, compared to $1,097,111 for the year ended December 31, 2023, an increase of $73,780 or 6.72%.
Compensation
We had $3,421,052 in compensation for the year ended December 31, 2024 compared to $1,547,935 in compensation for the year ended December 31, 2023. Stock compensation expense was $0 and $1,690,791, for the years ended December 31, 2024 and 2023, respectively.
Professional expenses
We incurred $576,986 of professional fees for the year ended December 31, 2024, compared to $421,883 for the year ended December 31, 2023, an increase of $155,103 or 36.76%. Professional fees generally consist of audit, legal, accounting and investor relation service fees.
Other income (expense)
For the year ended December 31, 2024, we had total other expense of $10,053,812, compared to total other expenses of $15,095,860 for the year ended December 31, 2023. In the current period we incurred $1,753,453 of interest expense. We also incurred a loss of $9,177,239 for initial derivative expense and change in the fair value of derivatives.
In the prior period we incurred $752,526 of interest expense and $14,343,334 for initial derivative expense and change in the fair value of derivatives.
Net Profit (loss)
We incurred a net profit of $4,395,134 for the year ended December 31, 2024, compared to a net loss of $22,906,015 for the year ended December 31, 2023. Our net profit/loss was primarily due to a large fair market value change and gain on debt extinguishment.
10
Liquidity and Capital Resources
Cash flow from operations
Cash used in operating activities for the year ended December 31, 2024 was $927,998 compared to $762,097 of cash used in operating activities for the year ended December 31, 2023.
Cash Flows from Investing
We used $121,413 for investing activities for the year ended December 31, 2024, compared to netting $1,181,514 for investing activities for the year ended December 31, 2023.
Cash Flows from Financing
For the year ended December 31, 2024, we netted $964,030 from financing activities. We received $287,705 from proceeds from a loan and $662,500 from the issuance of convertible notes. We repaid $190,763 on lines of credit and to other financial institutions and $113,177 on payment of seller notes. We received $580,526 on proceeds from related party loans.
For the year ended December 31, 2023, we netted $1,732,706 from financing activities. We received $1,225,000 from proceeds from a loan (Fora) and $436,000 from the issuance of convertible notes. We repaid $399,750 on lines of credit and to other financial institutions and $321,008 on payment of seller notes. We received $1,128,354 on proceeds from related party loans.
Critical Accounting Policies
Critical accounting policies and estimates are the specific accounting principles and assumptions that companies use to prepare their financial statements, and they often require significant judgment and estimation. These policies typically involve areas that are highly complex or subjective, such as revenue recognition, valuation of inventory, impairment of goodwill and long-lived assets, allowance for doubtful accounts, deferred tax assets, stock-based compensation, convertible notes and derivative financial instruments, business combinations, related party transactions, and fair value measurements. Because these estimates can have a material impact on a company's financial condition and results of operations, they are closely monitored and disclosed to ensure transparency for investors and other stakeholders. Please refer to NOTE 3 of our financial statements contained elsewhere in this Form 10-K for more details of our critical accounting policies and estimates.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable to smaller reporting companies.
11
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
YUENGLING’S ICE CREAM CORPORATION
Index to Financial Statements
F-1
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Shareholders of Yuengling’s Ice Cream Corporation
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Yuengling’s Ice Cream Corporation and subsidiaries (“the Company”) as of December 31, 2024 and 2023, and the related consolidated statements of operations, stockholders’ deficit, and cash flows for each of the years in the two-year period ended December 31, 2024, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023 and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.
Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has not generated profits since inception, has sustained operating losses, and has incurred negative cash flows from operations. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that there were no critical audit matters.
We have served as the Company’s auditor since 2019.
April 15, 2025
F-2
YUENGLING’S ICE CREAM CORPORATION
CONSOLIDATED BALANCE SHEETS
| December 31, 2024 |
December 31, 2023 |
|||||||
| ASSETS | ||||||||
| Current Assets: | ||||||||
| Cash | $ | $ | ||||||
| Accounts receivable | ||||||||
| Prepaid expenses | ||||||||
| Total Current Assets | ||||||||
| Other Assets: | ||||||||
| Deposits | ||||||||
| Furniture and fixed assets, net | ||||||||
| Goodwill | ||||||||
| Customer list acquired | ||||||||
| Right of use asset | ||||||||
| Total non-current assets | ||||||||
| Total Assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
| Current Liabilities: | ||||||||
| Accounts payable and accrued expenses | $ | $ | ||||||
| Deferred Revenues | ||||||||
| Due to officers | ||||||||
| Due to Affiliate | ||||||||
| Due to financial institutions | ||||||||
| Seller notes and loans payable, related parties current | ||||||||
| SBA loan payable | ||||||||
| Vehicle and equipment loans | ||||||||
| Term note payable, related parties | ||||||||
| Other loans and notes payable | ||||||||
| Officer life insurance liability, current portion | ||||||||
| Convertible notes payable, third parties, net of put premiums | ||||||||
| Derivative liability | ||||||||
| Lease liability, current portion | ||||||||
| Equipment lease, current | ||||||||
| Total Current Liabilities | ||||||||
| Non-Current Liabilities: | ||||||||
| Seller notes payable, non-current portion related parties | ||||||||
| Convertible notes payable, third parties, net of discounts | ||||||||
| Officer life insurance premium, non-current portion | ||||||||
| Dividend payable, preferred stock Series C & D | ||||||||
| Equipment lease, non-current | ||||||||
| Lease liability, non-current portion | ||||||||
| Total Non-Current Liabilities | ||||||||
| Total Liabilities | $ | $ | ||||||
| Commitments and contingencies | ||||||||
| Temporary Equity - Preferred Series A stock to be issued | ||||||||
| Stockholders’ Deficit: | ||||||||
| Common stock to be issued | ||||||||
| Preferred stock to be issued | ||||||||
| Preferred stock, Series A; par value $; shares authorized, shares issued and outstanding at December 31, 2024 and December 31, 2023 | ||||||||
| Preferred stock, Series C and D, par value $, shares authorized, shares issued and outstanding at December 31, 2024 and December 31, 2023 | ||||||||
| Common stock: $ par value; shares authorized; and shares issued and outstanding at December 31, 2024 and December 31, 2023, respectively | ||||||||
| Additional paid in capital | ||||||||
| Accumulated deficit | ( |
) | ( |
) | ||||
| Total Stockholders’ Deficit | ( |
) | ( |
) | ||||
| TOTAL LIABILITIES & STOCKHOLDERS’ DEFICIT | $ | $ | ||||||
The accompanying notes are an integral part of these consolidated financial statements.
F-3
YUENGLING’S ICE CREAM CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
| For the Years Ended December 31, |
||||||||
| 2024 | 2023 | |||||||
| Revenue | $ | $ | ||||||
| Cost of goods sold | ||||||||
| Gross profit | ||||||||
| Operating Expenses: | ||||||||
| Intangibles impairment | ||||||||
| Loss on disposition | ||||||||
| General and administrative expenses | ||||||||
| Stock compensation | ||||||||
| Compensation | ||||||||
| Professional fees | ||||||||
| Total operating expenses | ||||||||
| Loss from operations | ( |
) | ( |
) | ||||
| Other income (expense): | ||||||||
| Other gains | ||||||||
| Loss on disposal | ( |
) | ||||||
| Interest expense | ( |
) | ( |
) | ||||
| Derivative: expense, gains and losses | ( |
) | ( |
) | ||||
| Derivative: losses upon conversion | ( |
) | ||||||
| Change in fair market value | ( |
) | ||||||
| Gain on debt extinguishment | ||||||||
| Total other income (expense) | ( |
) | ||||||
| Income (Loss) before provision for income tax | ( |
) | ||||||
| Provision for income tax | ||||||||
| Net Income (loss) | $ | $ | ( |
) | ||||
| Basic Income (loss) per share | $ | $ | ( |
) | ||||
| Diluted Income (loss) per share | $ | $ | ( |
) | ||||
| Basic weighted average shares | ||||||||
| Diluted weighted average shares | ||||||||
The accompanying notes are an integral part of these consolidated financial statements.
F-4
YUENGLING’S ICE CREAM CORPORATION
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ DEFICIT
FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023
| Series A | Series C & D | To Be Issued Common | Additional | |||||||||||||||||||||||||||||||||||||
| Preferred Stock | Preferred Stock | Common Stock | Stock | Paid in | Accumulated | |||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Amount | Capital | Deficit | Total | |||||||||||||||||||||||||||||||
| Balance at December 31, 2023 | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||||||||
| Value of preferred shares to be issued | ||||||||||||||||||||||||||||||||||||||||
| Cancellation of shares to be issued to former officer | ( | ) | ||||||||||||||||||||||||||||||||||||||
| Conversion of convertible note interest to common stock | ||||||||||||||||||||||||||||||||||||||||
| Warrants issued to investors | - | - | - | |||||||||||||||||||||||||||||||||||||
| Preferred stock dividends Series C & D | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||
| Net Income (loss) for year ended December 31, 2024 | - | - | - | |||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2024 | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||||||||
| Series A | Series C & D | To Be Issued Common | Additional | |||||||||||||||||||||||||||||||||||||
| Preferred Stock | Preferred Stock | Common Stock | Stock | Paid in | Accumulated | |||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Amount | Capital | Deficit | Total | |||||||||||||||||||||||||||||||
| Balance at December 31, 2022 | $ | $ | $ | $ | $ | $ | ( |
) | $ | ( |
) | |||||||||||||||||||||||||||||
| Recapitalization adjustment, shares issued pre-merger | - | - | ( |
) | ( |
) | ||||||||||||||||||||||||||||||||||
| Incentive on future financing | - | - | - | |||||||||||||||||||||||||||||||||||||
| Compensation, non-employees | - | - | - | |||||||||||||||||||||||||||||||||||||
| Dividends on preferred shares | - | - | - | ( |
) | ( |
) | |||||||||||||||||||||||||||||||||
| Warrants issued to investors | - | - | - | |||||||||||||||||||||||||||||||||||||
| Net loss for the year ended December 31, 2023 | - | - | - | ( |
) | ( |
) | |||||||||||||||||||||||||||||||||
| Balance at December 31, 2023 | $ | $ | $ | $ | $ | $ | ( |
) | $ | ( |
) | |||||||||||||||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
F-5
YUENGLING’S ICE CREAM CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
| For the Years Ended December 31, |
||||||||
| 2024 | 2023 | |||||||
| Cash flows from operating activities: | ||||||||
| Net Income (loss) | $ | $ | ( |
) | ||||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Shares issued for compensation and services | ||||||||
| Debt discounts charged to interest expense | ||||||||
| Depreciation | ||||||||
| Vesting of Restricted Stock Units | ||||||||
| Gain on extinguishment | ( |
) | ||||||
| Bad debt expense | ||||||||
| Put premiums charged to interest expense, stock settled debt | ||||||||
| Fee notes issued | ||||||||
| Intangibles impairment | ||||||||
| Derivative expense | ||||||||
| Gain (Loss) on conversion of liability to common stock | ||||||||
| Changes in fair market values | ( |
) | ||||||
| Other gains and losses, net | ( |
) | ||||||
| Related party advances funding operations | ||||||||
| Changes in assets and liabilities: | ||||||||
| Accounts receivable | ( |
) | ( |
) | ||||
| Prepaid expense | ||||||||
| Inventory | ||||||||
| Right of use asset net of liability | ||||||||
| A/P & Accrued liabilities | ||||||||
| Customer deposits | ( |
) | ||||||
| Finance Lease | ( |
) | ( |
) | ||||
| Other current liabilities | ||||||||
| Net cash used in operating activities | ( |
) | ( |
) | ||||
| Cash flows from investing activities: | ||||||||
| Cash acquired in acquisition | ||||||||
| Cash paid in acquisition | ( |
) | ||||||
| Fixed assets purchased | ( |
) | ||||||
| Cash paid for Singer asset purchase | ( |
) | ||||||
| Net cash used in investing activities | ( |
) | ( |
) | ||||
| Cash flows from financing activities: | ||||||||
| Loan proceeds | ||||||||
| Repayments Fox loan | ( |
) | ( |
) | ||||
| Repayment of Fora | ( |
) | ||||||
| Repayments seller notes | ( |
) | ||||||
| Note issued | ||||||||
| Repayment of notes | ( |
) | ( |
) | ||||
| Other loan repayments | ||||||||
| Vehicle loan | ( |
) | ||||||
| Repayment of vehicle loans | ( |
) | ||||||
| Convertible notes issued for service | ||||||||
| Proceeds from affiliate advances | ||||||||
| Repayments of affiliate advances | ||||||||
| Proceeds from issuance of convertible notes | ||||||||
| Repayments – Related party advances | ||||||||
| Net cash provided by financing activities | ||||||||
| Net change in cash | ( |
) | ( |
) | ||||
| Cash, beginning of year | ||||||||
| Cash, end of year | $ | $ | ||||||
| Cash paid during the period for: | ||||||||
| Interest | $ | $ | ||||||
| Income taxes | $ | $ | ||||||
| Supplemental Disclosure of Non-Cash Activity: | ||||||||
| Shares to be issued for acquisition | $ | $ | ||||||
| Debt Discounts | ||||||||
| Preferred dividends | ||||||||
| Conversion of accrued interest and conversion expenses | ||||||||
| Convertible preferred shares to be issued | ||||||||
| Right-of-use asset and lease liability – ASC 842 | $ | $ | ||||||
The accompanying notes are an integral part of these consolidated financial statements.
F-6
YUENGLING’S ICE CREAM CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2024
NOTE 1 – ORGANIZATION AND BUSINESS
Yuengling’s Ice Cream Corporation, (f/k/a Aureus, Inc.) (“Yuengling’s,” “YCRM,” or the “Company”) was incorporated in Nevada on April 19, 2013, under the name “Aureus Incorporated.” The Company was initially organized to develop and explore mineral properties in the state of Nevada. Effective December 15, 2017, the name was changed to “Hohme, Inc.,” and, effective February 7, 2019, the Company changed its name to “Aureus, Inc. and on September 14, 2021, the Company changed their name to Yuengling’s Ice Cream Corporation”. The Company is currently active in the state of Nevada.
In November, 2023, YCRM completed its acquisition of ReachOut Technology Corp. (“ReachOut”). ReachOut is a Managed Service Provider (MSP) that provides cybersecurity and IT services to Small to Medium Sized Businesses (SMBs). Management is highly experienced with business operation as well as acquisition and integration. After the closing of the ReachOut transaction, the Company agreed to assign the ice cream assets to Mid Penn Bank in return for the cancellation of the bank debt. The Company also ceased its Aureus Micro Markets operations at the time the ReachOut agreement was signed.
Reverse Merger/Acquisition of ReachOut Technology Corp.
On November 9, 2023, the Yuengling’s Ice Cream Corporation closed the Share Exchange and Control Block Transfer Agreements with ReachOut Technology Corp. (“ReachOut”) whereby
The Share Exchange is intended to constitute a reorganization with the meaning of Section 368 of the Internal Revenue Code of 1986 (as amended).
As a result of the transaction, ReachOut became a subsidiary of the Company.
The Company evaluated the substance of the merger transaction and found it met the criteria for the accounting and reporting treatment of a reverse acquisition under ASC 805 (Business Combinations)-40-45 (Reverse Acquisition and Other Presentation Matters) and accordingly will consolidate the operations of ReachOut and the Company and the financial condition from the closing date of the transaction. The historic results of operations will reflect those of ReachOut. As such, ReachOut is treated as the acquirer while the Company is treated as the acquired entity for accounting and financial reporting purposes.
Under reverse merger accounting, the comparative historical financial statements of the Company, as the legal acquirer, are those of the accounting acquirer, ReachOut, the Company’s financial statements prior to the closing of the reverse acquisition; reflect only the business of ReachOut and its subsidiaries.
For accounting purposes, ReachOut is considered the acquirer of YCRM. based upon the terms of the Merger as well as other factors including; (i) RO former shareholders own approximately 87.5% of the combined Company’s outstanding common shares (giving effect to the conversion of the preferred Series C shares ReachOut stockholders received in exchange for the ReachOut stock) immediately following the closing of the Merger, and (ii ReachOut management hold key management positions of the combined Company. The Merger has therefore recorded as a reverse acquisition. The figures described in the notes and financial statements are a continuation of the figures of the legal subsidiary or accounting acquirer (ReachOut). However, the equity reflects the legal acquirer, or accounting acquiree (YCRM) equity structure. The acquisition value is recorded to reflect the par value of the outstanding shares of the Company, including the number of shares issued in the reverse acquisition and has been recast to reflect the merger transactions as if it had occurred as of the earliest period presented. Any difference is recognized as an adjustment to the additional paid in capital to the extent available, and then as a retained earnings adjustment.
F-7
Under the terms of the Control Block Transfer Agreement, Everett Dickson (former CEO) sold all his remaining Series A Preferred Stock to Richard Jordan (new CEO) for $
Following the closing of the agreements, Robert Bohorad and Everett Dickson resigned their positions as CEO and Chairman of the Board of Directors, respectively and Richard Jordan was appointed to those positions.
The Company has authorized Series C Preferred Shares of Stock, effective December 13, 2023. The shares have a stated value of $ per share, earns a 2% dividend on the stated value, which is cumulative and payable solely upon redemption. The stock has voting rights equal to the number of common shares into which the preferred shares may be converted. At any time following 180 days from the date of issuance the preferred stock in aggregate can be converted into 87.5% of the outstanding common stock for a period of twenty-four months from the date of issuance of the Series C Preferred Stock.
Under the terms of the Share Exchange Agreement the Company issued shares of Series C Preferred Stock to the owners of ReachOut. in exchange for
ReachOut Technology Corp.
Reachout Technology, Corp. (“ReachOut”) is a corporation formed on February 13, 2020 under the laws of the State of Delaware. ReachOut provides cybersecurity and IT management solutions to businesses to protect their complete operating landscape and data secrets. ReachOut is headquartered in Chicago, Illinois.
From formation until the acquisition of Innovative Design Networks, LLC (“IND”) on September 2, 2022, ReachOut had no principal operations or revenue. ReachOut’s activities during this period primarily consisted of formation activities, acquisition research and preparations to raise capital.
ReachOut Corp. Acquisition – Innovative Network Designs LLC
IND is a New Jersey limited liability company and ReachOut acquired 100% of the member’s interest of IND in exchange for cash, notes payable, commitment to purchase universal life insurance policies for the principals and restricted shares of ReachOut’s common stock. The transaction was deemed to be a business combination and applied acquisition accounting under ASC 805.
Innovative Network Designs LLC – New Jersey
IND Corporation (“IND”) provides information technology services. IND offers cybersecurity, risk assessment, network security, cloud performance, remote management, migration support, and monitoring solutions for businesses, as well as provides consulting and maintenance services. IND serves clients in the States of New York, New Jersey, and Pennsylvania. IND can either manage and support a client’s entire technology infrastructure or complement to the existing internal IT personnel. IND’s unique service model is designed to reduce client costs, increase client profits and mitigate client’s business risks.
ReachOut Corp. Acquisition – RedGear LLC
ReachOut entered into a Membership Interest
Purchase Agreement on September 29, 2023 with RedGear, LLC, a Texas limited liability company and acquired
F-8
RedGear LLC – Texas
RedGear LLC (“RedGear”) provides professional technology services, structured cabling, equipment, and consulting in the Southwest US region. RedGear’s entire culture is built around supporting business infrastructures, while building relationships and delivering an exceptional customer service experience and always keeping customers’ best interest a top priority. RedGear has built its success by reputation, quality of work, professionalism, and always being there for clients every step of the way whenever needed. RedGear’s services, certifications, experience, and expertise cover the entire spectrum of Information Technology that no other regional technology service provider can match.
NOTE 2 – GOING CONCERN
The Company has evaluated whether there are certain conditions and events, considered in the aggregate, that raise substantial doubt and the Company’s ability to continue as a going concern within one year after the date that the financial statements are issued.
The accompanying 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 not generated profits until the year ended December 31, 2024 when non-cash changes in fair
market value of derivatives, produced net income of $
NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation and Principles of Consolidation
The Company prepares its consolidated financial statements in accordance with U.S. generally accepted accounting principles (“GAAP”). The accompanying consolidated financial statements include the accounts of ReachOut Technology Corp. and its wholly-owned subsidiaries, ReachOut IND and RedGear. All significant intercompany accounts and transactions have been eliminated in consolidation. Since September 2, 2022, following the purchase of 100% of the membership interests in Innovative Network Designs LLC, (now ReachOut IND) and RedGear, LLC on October 2, 2023, the operations, assets, and liabilities have been consolidated into the Company.
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, YIC Acquisitions Corp., ReachOut (and its subsidiaries). All material intercompany transactions and balances have been eliminated on consolidation. ReachOut’s wholly-owned subsidiaries, ReachOut IND and RedGear were acquired on September 2, 2022 (purchase of
Under reverse merger accounting, the comparative historical financial statements of the Company, as the legal acquirer, are those of the accounting acquirer, ReachOut, the Company’s financial statements prior to the closing of the reverse acquisition; reflect only the business of ReachOut and its subsidiaries.
F-9
Use of Estimates
The preparation of the Company’s financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the 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. Significant estimates and assumptions reflected in these financial statements include, but are not limited to, inventory, revenue recognition and the valuations of common and preferred stock, valuations of derivative liabilities and intangible assets. The Company bases its estimates on historical experience, known trends, analysis and other market-specific or other relevant factors that it believes to be reasonable under the circumstances. On an ongoing basis, management evaluates its estimates when there are changes in circumstances, facts, and experience. Changes in estimates are recorded in the period in which they become known. Actual results could differ from those estimates.
Segment Reporting
The Company uses “the management approach” in determining reportable operating segments. The management approach considers the internal organization and reporting used by the Company’s chief operating decision maker for making operating decisions and assessing performance as the source for determining the Company’s reportable segments. The Company’s chief operating decision maker is the chief executive officer of the Company, who reviews operating results to make decisions about allocating resources and assessing performance for the entire Company. As of December 31, 2024, the Company has two regional operating entities which comprises one segment. IND provides technological services from New Jersey and Illinois IND generated 62% of the consolidated sales which includes some former customers from RedGear. Redgear provided technological services in Texas and Arizona and generated 38% of sales primarily to municipal government authorities.
Management decisions about allocation of working capital and other assets are based on sales, inventory and operating costs, with no formal processes in place.
No single customer generates 10% of annual consolidated sales, however a private entity owned by the CEO uses the resources of the Company and the related billings (as adjusted) totaled 9% of consolidated sales.
Concentrations of Credit Risk
Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents.
The Company generally maintains balances in various operating accounts at financial institutions that management believes to be of high
credit quality, in amounts that may exceed federally insured limits. The Company has not experienced any losses related to its cash and
cash equivalents and does not believe that it is subject to unusual credit risk beyond the normal credit risk associated with commercial
banking relationships. At December 31, 2024 and 2023, all of the Company’s cash and cash equivalents were held at accredited financial
institutions. As of December 31, 2024, the Company had $
The Company’s subsidiary, Innovative Design
Networks, has two clients with outstanding unpaid accounts representing a total of
Cash Equivalents
The Company considers all highly liquid
investments with a maturity of a year or less when purchased to be cash equivalents. There were
Reclassifications
Certain reclassifications have been made to the prior period financial information to conform to the presentation used in the financial statements for the year ended December 31, 2024. These reclassifications did not have any effect on the results of operations.
F-10
Accounts Receivable
Trade receivables are recorded at net realizable
value consisting of the carrying amount less the allowance for credit losses. Factors used to establish an allowance include the credit
quality of the customer and other factors. The Company may also use the direct write-off method to account for uncollectible accounts
that are not received. Using the direct write-off method, trade receivable balances are written off to bad debt expense when an account
balance is deemed to be uncollectible. The Company maintains an allowance for credit losses primarily for estimated losses resulting
from the inability or failure of individual customers to make required payments. The Company maintains an allowance under Accounting
Standards Codification (“ASC”) 326 based on historical losses, changes in payment history, customer-specific information,
current economic conditions, and reasonable and supportable forecasts of future economic conditions. The allowance under ASC 326 is updated
as additional losses are incurred or information becomes available related to the customer or economic conditions. As of December 31,
2024, the calculated and recognized allowance for credit losses was $
Deferred Financing Costs
Any unamortized deferred financing costs related
to the Company borrowings are presented in the consolidated balance sheets as a direct deduction from the related debt. As of December
31, 2024, there are
Inventory
Inventory is stated at the lower of cost and net
realizable value on a first-in, first-out basis. Cost is principally determined using the last-in, first-out (LIFO) method. The
Company periodically assesses if any of the inventory has expired or if the value has fallen below cost. When this occurs, the
Company recognizes an expense for inventory write down. Total inventories at December 31, 2024 and December 31, 2023 were
$
Property and Equipment
Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation of property and equipment is calculated using the straight-line method over the estimated useful lives of the assets, which range from three to seven years. Leasehold improvements are amortized over the lesser of the remaining term of the lease or the estimated useful life of the asset. Expenditures for repairs and maintenance are expensed as incurred.
Basic loss per share is calculated by dividing
the loss attributable to stockholders by the weighted-average number of shares outstanding for the period. Diluted loss per share
reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted
into common stock or resulted in the issuance of common stock that shared in the earnings (loss) of the Company. Diluted loss per
share is computed by dividing the loss available to stockholders by the weighted average number of shares outstanding for the period
and dilutive potential shares outstanding unless such dilutive potential shares would result in anti-dilution. The total potentially
dilutive shares calculated is
at December 31, 2024. As of December 31, 2024: there are obligations to issue Series A Preferred Stock which are
convertible into
shares of common stock; the Series A Preferred shares outstanding convertible into
of common shares; the Series C Preferred shares outstanding may convert into
common shares; the Series D Preferred shares outstanding may convert into
common shares; the Company is obligated to issue a new series of preferred stock will be convertible into shares of common
stock; the warrants outstanding may convert into 333,696,913
common shares; and there are
potentially dilutive shares arising from the conversion value of the convertible notes payable. There are
F-11
| Schedule of antidilutive shares | ||||||||
| December 31, 2024 |
December 31, 2023 |
|||||||
| Series A Preferred Stock Payable | ||||||||
| Series A Preferred Stock outstanding | ||||||||
| Series C Preferred Stock outstanding | ||||||||
| Series D Preferred Stock outstanding | ||||||||
| New Series of Preferred to be issued | ||||||||
| Warrants | ||||||||
| Third party convertible debt | ||||||||
| Common shares to be issued | ||||||||
| Common stock options | ||||||||
| Total | ||||||||
Stock-based Compensation
In June 2018, the FASB issued ASU 2018-07, Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting. ASU 2018-07 allows companies to account for non-employee awards in the same manner as employee awards. The guidance is effective for fiscal years beginning after December 15, 2018, and interim periods within those annual periods. We adopted this ASU on January 1, 2019. The adoption of ASU 2018-07 did not have a material impact on our consolidated financial statements.
Convertible Notes with Fixed Rate Conversion Options
The Company may enter into convertible notes, some of which contain, predominantly, fixed rate conversion features, whereby the outstanding principal and accrued interest may be converted by the holder, into common shares at a fixed rate to the market price of the common stock at the time of conversion. This results in a fair value of the convertible note being equal to a fixed monetary amount. The Company records the convertible note liability at its fixed monetary amount by measuring and recording a premium, as applicable, on the Note date with a charge to interest expense in accordance with ASC 480 - “Distinguishing Liabilities from Equity”.
Derivative Financial Instruments
The Company evaluates its convertible notes to determine if such instruments have derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date using a binomial model, with changes in the fair value reported in the statements of operations. For stock-based derivative financial instruments, the Company uses a weighted-average Black-Scholes-Merton option pricing model to value the derivative instruments at inception and on subsequent valuation dates. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period.
Fair Value Measurements
The Company follows the FASB Fair Value Measurements standard, as they apply to its financial instruments. This standard defines fair value, outlines a framework for measuring fair value, and details the required disclosures about fair value measurements.
Fair value is defined as the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date. The standard establishes a hierarchy in determining the fair value of an asset or liability. The fair value hierarchy has three levels of inputs, both observable and unobservable. Level 1 inputs include quoted market prices for identical assets or liabilities in an active market that the Company has the ability to access at the measurement date. Level 2 inputs are market data, other than Level 1, that are observable either directly or indirectly. Level 2 inputs include quoted market prices for similar assets or liabilities, quoted market prices in an inactive market, and other observable information that can be corroborated by market data. Level 3 inputs are unobservable and corroborated by little or no market data. The standard requires the utilization of the lowest possible level of input to determine fair value and carrying amounts of current liabilities approximate fair value due to their short-term nature.
F-12
The estimated fair value of certain financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and accrued expenses are carried at historical cost basis, which approximates their fair values because of the short-term nature of these instruments.
The Company’s non-financial assets, such as property and equipment, are adjusted to fair value only when an impairment is recognized. Such fair value measurements are based predominantly on Level 3 inputs.
Level 1: Level 1 inputs are unadjusted quoted prices in active markets for identical assets or liabilities.
Level 2: Level 2 inputs are inputs other than quoted prices included in Level 1 that are observable, either directly or indirectly.
Level 2 inputs include quoted prices for similar assets, quoted prices in markets that are not considered to be active, and observable inputs other than quoted prices such as interest rates.
Level 3: Level 3 inputs are unobservable inputs.
The following required disclosure of the estimated fair value of financial instruments has been determined by the Company using available market information and appropriate valuation methodologies. However, considerable judgment is required to interpret market data to develop the estimates of fair value. Accordingly, the use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts.
The methods and assumptions used to estimate the fair values of each class of financial instruments are as follows: Cash and Cash Equivalents, Accounts Receivable, and Accounts Payable. The items are generally short-term in nature, and accordingly, the carrying amounts reported on the consolidated balance sheets are reasonable approximations of their fair values.
The carrying amounts of notes payable approximate the fair value as the notes bear interest rates that are consistent with current market rates.
The table below classifies the Company’s liabilities measured at fair value on a recurring basis into the fair value hierarchy as of December 31, 2024 and December 31, 2023.
| Schedule of liabilities measured at fair value | ||||||||||||||||||||||||
| At December 31, 2024 | At December 31, 2023 | |||||||||||||||||||||||
| Description | Level 1 | Level 2 | Level 3 | Level 1 | Level 2 | Level 3 | ||||||||||||||||||
| Derivative Liability | $ | $ | ||||||||||||||||||||||
A roll-forward of the level 3 valuation financial instruments is as follows
| Schedule of fair value measurements roll-forward | ||||
| Derivative Liabilities |
||||
| Balance at December 31, 2023 | $ | |||
| Charged to derivative expense upon issuance of related note | ||||
| Charged as loss on debt conversion | ||||
| Classified as initial debt discount upon issuance of related note | ||||
| Fair Value adjustments - convertible notes | ( |
) | ||
| Balance at December 31, 2024 | $ | |||
F-13
A summary of quantitative information about significant unobservable inputs (Level 3 inputs) used in measuring the Company’s derivative liability that are categorized within Level 3 of the fair value hierarchy for the year ended December 31, 2024 is as follows:
| Schedule of derivative liabilities | ||||
| Inputs | December 31, 2024 |
|||
| Stock price | $ | |||
| Conversion price (note below) | $ | |||
| Volatility (annual) | % | |||
| Risk-free rate | % | |||
| Dividend rate | ||||
$
An additional $
Income Taxes
Income taxes are provided for the tax effects of the transactions reported in the financial statements and consist of taxes currently due plus deferred taxes related primarily to tax net operating loss carryforwards. The deferred tax assets and liabilities represent the future tax return consequences of these differences, which will either be taxable or deductible when assets and liabilities are recovered or settled, as well as operating loss carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is established against deferred tax assets when in the judgment of management, it is more likely than not that such deferred tax assets will not become available. Because the judgment about the level of future taxable income is dependent to a great extent on matters that may, at least in part, be beyond the Company’s control, it is at least reasonably possible that management’s judgment about the need for a valuation allowance for deferred taxes could change in the near term.
Tax benefits are recognized only for tax positions that are more likely than not to be sustained upon examination by tax authorities. The amount recognized is measured as the largest amount of benefit that is greater than 50 percent likely to be realized upon settlement. A liability for “unrecognized tax benefits” is recorded for any tax benefits claimed in the Company’s tax returns that do not meet these recognition and measurement standards. As of December 31, 2024 and December 31, 2023,
Revenue recognition
The Company adopted Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers, and its related amendments (collectively known as “ASC 606”), effective January 1, 2018. The Company determines revenue recognition through the following steps:
Identification of a contract with a customer;
Identification of the performance obligations in the contract;
Determination of the transaction price;
Allocation of the transaction price to the performance obligations in the contract; and
Recognition of revenue when or as the performance obligations are satisfied.
F-14
For the year ended December 31, 2024 and the year ended December 31, 2023, the Company deferred revenue of $
The Company and its wholly owned subsidiaries (“Operating Companies”) are not selling or leasing software to customers. The operating companies provide managed IT services (managing customers networks including security, support user needs and network infrastructure), and installation (cabling and network hardware and third-party software set up). Agreements such as the Master Consulting Services Agreement are entered into by the operating companies and their clients. These agreements provide the general terms of service and the legal matters essential to the agreement. The agreements are supplemented by Statements of Work (SOW) which spell specific services and any hardware to be provided. Invoices are prepared based on the terms of the SOW either monthly for services to be rendered for the coming month or based on installation progress estimates, collectively the billings are based on performance obligations. Revenue from invoiced billings is recognized when performance obligations are satisfied through the transfer of control of promised goods to the Company’s customers in an amount that reflects the consideration expected to be received in exchange for transferring goods or services to customers. Control transfers once a customer has the ability to direct the use of, and obtain substantially all of the benefits from, the product. This includes the transfer of legal title, physical possession, the risks and rewards of ownership, and customer acceptance.
It is management’s practice to only invoice for services and goods to be provided within the coming month. While services may not be fully transferred the client is in fact obligated to pay the invoiced amount unless the contract is terminated with prior notice. The company may also have stand ready provisions in service agreements in which performance obligations is to be on call for support, updates and upgrades.
The Company manages its operating income on a regional basis at the present time. Revenue recognized for the Northeast region was $
Advertising Costs
Advertising costs are expensed as incurred and are included in General and Administrative expenses. The Company expensed approximately $
Deferred Offering Costs
The Company complies with the requirements of Accounting Standards Codification (“ASC”) 340, Other Assets and Deferred Costs, with regards to offering costs. Prior to the completion of an offering, offering costs are capitalized. The deferred offering costs are charged to additional paid-in capital or as a discount to debt, as applicable, upon the completion of an offering or to expense if the offering is not completed.
Stock-Based Compensation
The Company accounts for stock-based compensation costs under the provisions of ASC 718, Compensation — Stock Compensation, which requires the measurement and recognition of compensation expense related to the fair value of stock-based compensation awards that are ultimately expected to vest. Stock based compensation expense recognized includes the compensation cost for all stock-based payments granted to employees, officers, and directors based on the grant date fair value estimated in accordance with the provisions of ASC 718. ASC 718 is also applied to awards modified, repurchased, or cancelled during the periods reported. Stock-based compensation is recognized as an expense over the employee’s requisite vesting period and over the nonemployee’s period of providing goods or services. In accordance with ASU No. 2018-07, Compensation – Stock Compensation (Topic 718), Improvements to Nonemployee Share-Based Payment Accounting share-based payment transactions for acquiring goods and services from nonemployees are included. Consistent with the accounting requirement for employee share-based payment awards, nonemployee share-based payment awards within the scope of Topic 718 are measured at grant-date fair value of the equity instruments that an entity is obligated to issue when the good has been delivered or the service has been rendered and any other conditions necessary to earn the right to benefit from the instruments have been satisfied.
F-15
Business Combinations
In accordance with ASC 805-10, “Business Combinations”, we account for all business combinations using the acquisition method of accounting. Under this method, assets and liabilities, including any remaining non-controlling interests, are recognized at fair value at the date of acquisition. The excess of the purchase price over the fair value of assets acquired, net of liabilities assumed, and non-controlling interests is recognized as goodwill. Certain adjustments to the assessed fair values of the assets, liabilities, or non-controlling interests made subsequent to the acquisition date, but within the measurement period, which is up to one year, are recorded as adjustments to goodwill. Any adjustments subsequent to the measurement period are recorded in income. Any cost or equity method interest that we hold in the acquired company prior to the acquisition is re-measured to fair value at acquisition with a resulting gain or loss recognized in income for the difference between fair value and the existing book value. Results of operations of the acquired entity are included in our results from the date of the acquisition onward and include amortization expense arising from acquired tangible and intangible assets.
Related Party Transactions
The Company follows FASB ASC subtopic 850-10, “Related Party Transactions”, for the identification of related parties and disclosure of related party transactions.
Pursuant to ASC 850-10-20, related parties include: a) our affiliates; b) entities for which investments in their equity securities would be required, absent the election of the fair value option under the Fair Value Option Subsection of Section 825–10–15, to be accounted for by the equity method by the investing entity; c) trusts for the benefit of employees, such as pension and profit sharing trusts that are managed by or under the trusteeship of management; d) our principal owners; e) our management; f) other parties with which we may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests; and g) other parties that can significantly influence the management or operating policies of the transacting parties or that have an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests.
Material related party transactions are required to be disclosed in the consolidated financial statements, other than compensation arrangements, expense allowances, and other similar items in the ordinary course of business. However, disclosure of transactions that are eliminated in the preparation of consolidated or combined financial statements is not required in those statements. The disclosures shall include: a) the nature of the relationship(s) involved; b) a description of the transactions, including transactions to which no amounts or nominal amounts were ascribed, for each of the periods for which statements of operation are presented, and such other information deemed necessary to an understanding of the effects of the transactions on the financial statements; c) the dollar amounts of transactions for each of the periods for which statements of operations are presented and the effects of any change in the method of establishing the terms from that used in the preceding period; and d) amounts due from or to related parties as of the date of each balance sheet presented and, if not otherwise apparent, the terms and manner of settlement
Lease Accounting
In February 2016, the FASB issued ASU No. 2016-02, Leases, which requires lessees to report on their balance sheets a right-of-use asset and a lease liability in connection with most lease agreements classified as operating leases under the prior guidance (ASC Topic 840). Under the new guidance, codified as ASC Topic 842, the lease liability must be measured initially based on the present value of future lease payments, subject to certain conditions. The right-of-use asset must be measured initially based on the amount of the liability, plus certain initial direct costs. The new guidance further requires that leases be classified at inception as either (a) operating leases or (b) finance leases. For operating leases, periodic expense generally is flat (straight-line) throughout the life of the lease. For finance leases, periodic expense declines over the life of the lease. The new standard, as amended, provides an option for entities to use the cumulative-effect transition method. As permitted, the Company adopted ASC Topic 842 effective June 1, 2020. The adoption of ASC Topic 842 did not have a material impact on the Company’s consolidated financial statements.
F-16
The Company’s subsidiaries have recognized
the Right of Use assets and related liabilities for leases and sublease for the office facilities in New Jersey, Texas and Arizona during
the years ended December 31, 2023 and 2022, and following the acquisitions are accounted for under ASC 842. The corporate office
is an informal arrangement which provides for office space in a shared office environment with a company controlled by the CEO and has
not been charged for the office space during the periods ended December 31, 2024 and December 31, 2023. During the years ended December 31,
2024 and 2023, the Company recognized lease liabilities of $
Recently Adopted Accounting Pronouncements
The Company has reviewed the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) accounting pronouncements and interpretations thereof that have effectiveness dates during the periods reported and in future periods. We have carefully considered the new pronouncements that alter previous generally accepted accounting principles and do not believe that any new or modified principles will have a material impact on the Company’s reported financial position or operations in the near term. The applicability of any standard is subject to the formal review of the Company’s financial management.
In November 2023, the FASB issued ASU 2023-07, “Segment Reporting: Improvements to Reportable Segment Disclosures” (“ASU 2023-07”). ASU 2023-07 modifies the reportable segment disclosure requirements, primarily by requiring enhanced disclosures about significant segment expenses. In addition, ASU 2023-07: (i) enhances interim disclosure requirements, (ii) clarifies the circumstances in which an entity can disclose multiple measures of a segment’s profit or loss, (iii) provides new segment disclosure requirements for public entities with a single reportable segment, and (iv) requires that a public entity disclose the title and position of the chief operating decision maker (“CODM”) and an explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The amendments in ASU 2023-07 are to be applied retrospectively to all prior periods presented in the financial statements
In March 2022, the FASB issued ASU 2022-02, “Financial Instruments - Credit Losses (Topic 326)”, which is intended to address issues identified during the post-implementation review of ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments”. The amendment, among other things, eliminates the accounting guidance for troubled debt restructurings by creditors in Subtopic 310-40, “Receivables - Troubled Debt Restructurings by Creditors”, while enhancing disclosure requirements for certain loan refinancings and restructurings by creditors when a borrower is experiencing financial difficulty. The new guidance is effective for interim and annual periods beginning after December 15, 2022. This adoption did not have a material effect to the Company.
In August 2020, FASB issued ASU 2020-06, Accounting for Convertible Instruments and Contracts in an Entity; Own Equity (“ASU 2020-06”), as part of its overall simplification initiative to reduce costs and complexity of applying accounting standards while maintaining or improving the usefulness of the information provided to users of financial statements. Among other changes, the new guidance removes from GAAP separation models for convertible debt that require the convertible debt to be separated into a debt and equity component, unless the conversion feature is required to be bifurcated and accounted for as a derivative or the debt is issued at a substantial premium. As a result, after adopting the guidance, entities will no longer separately present such embedded conversion features in equity, and will instead account for the convertible debt wholly as debt. The new guidance also requires use of the “if-converted” method when calculating the dilutive impact of convertible debt on earnings per share, which is consistent with the Company’s current accounting treatment under the current guidance. The guidance is effective for financial statements issued for fiscal years beginning after December 15, 2021, and interim periods within those fiscal years, with early adoption permitted, but only at the beginning of the fiscal year. The Company adopted ASU 2020-06 on February 13, 2020 and the adoption did not have any impact on its financial statements.
Management does not believe that any other recently issued accounting standards could have a material effect on the accompanying financial statements. As new accounting pronouncements are issued, the Company will adopt those that are applicable under the circumstances.
F-17
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 | ||||||||
| December 31, 2024 |
December 31, 2023 |
|||||||
| Property and equipment | $ | $ | ||||||
| Less: accumulated depreciation | ( |
) | ||||||
| Property and equipment, net | $ | $ | ||||||
Property and equipment consisted of vehicles, leasehold improvements and computers and other network technology equipment, primarily located
in the RedGear office facilities. For the year ended December 31, 2024, the Depreciation Expense was $
Furniture, fixtures, leasehold improvements and machinery
and equipment totaling $
NOTE 5 – GOODWILL
The Company acquired the operations, assets and
liabilities of Innovative Network Designs, LLC (IND) during the year ended December 31, 2022. The Company recognized goodwill of
$
F-18
Membership Interest Purchase Agreement
Innovative Network Designs, LLC
The Company entered into a Membership Interest
Purchase Agreement on August 1, 2022 with Innovative Network Designs, LLC, a New Jersey limited liability company and acquired
Assets Acquired and Liabilities Assumed
| Schedule of assets acquired and liabilities assumed | ||||
| Assets Acquired | Fair Value | |||
| Cash | $ | |||
| Accounts Receivable | ||||
| Prepaid Expenses | ||||
| Right of Use Asset | ||||
| Total Assets | $ | |||
| Liabilities Assumed | ||||
| Accounts Payable | $ | |||
| Accrued Expenses | ||||
| Sales Tax Payable | ||||
| Lease Liabilities | ||||
| Total Liabilities | $ | |||
| Consideration Value | ||||
| Cash | $ | |||
| Convertible Note | ||||
| Universal Life Insurance Commitment | ||||
| Promissory Note | ||||
| Common Stock | ||||
| Total Purchase Price | ||||
| Less, net asset value | ||||
| Less impairment charge - 2023 | ( |
) | ||
| Value of intangible assets | $ | |||
F-19
Acquisition – RedGear LLC
The Company entered into a Membership Interest Purchase
Agreement on September 29, 2023 with RedGear, LLC, a Texas limited liability company and acquired
During the year ended December 31, 2024, the
Company was notified by the lessors that the leases for two Texas locations were terminated. These Texas leased facilities were
owned by former related parties which were the former members of RedGear LLC. A third Texas facility lease was also terminated by
its third-party lessor. The lease for the office facilities in Pheonix, AZ was also terminated, however the related right of use
asset and related liabilities remain on the books at December 31, 2024. In the cases for the Texas facilities, the fixed assets
(Furniture, Fixtures, Equipment and Leasehold Improvements) were no longer accessible by the Company and therefore the Company
wrote-off the value of the fixed assets and right of use assets, recognizing a loss on disposition of $
Due to the current litigation with the former
RedGear LLC members regarding misrepresentation in the Membership Interest Purchase Agreement the promissory note having a current
balance of $
Assets Acquired and Liabilities Assumed
| Schedule of assets acquired and liabilities assumed | ||||
| Assets Acquired | Fair Value | |||
| Cash | $ | |||
| Accounts Receivable | ||||
| Fixed Assets, | ||||
| Right of Use Asset | ||||
| Total Assets | $ | |||
| Liabilities Assumed | ||||
| Accounts payable | $ | |||
| Accrued Expenses | ||||
| Bank line of credit | ||||
| Vehicle and equipment loans payable | ||||
| SBA Loan | ||||
| Lease Liabilities | ||||
| Total Liabilities | $ | |||
| Consideration Value | ||||
| Cash | $ | |||
| Promissory Note | ||||
| Total Purchase Price | ||||
| Less Net Liabilities (exclusive of ROU and related lease liabilities) | ||||
| Impairment charge 2024 | ( |
) | ||
| Value of intangible assets | $ | |||
F-20
Asset Acquisition – Singer Networks, LLC
On April 8, 2024, ReachOut Technology acquired
the majority of the assets of Singer Networks, LLC in exchange for $
Following the closing of the transaction, ReachOut began servicing the clients through its wholly owned subsidiary Innovative Network Design (“IND”), using former employees of Singer as well as resources controlled by IND. Former employees of Singer were offered employment with IND under its terms (as per the agreement). No liabilities of any form were assumed as per the Asset Purchase Agreement and Singer is obligated for any compensation or employment benefits owed and accruing under its tenure for all employees. The seller entered into a 6-month contractual Transition Services Agreement without management responsibilities.
Due to the clarity of the Asset Purchase Agreements language regarding termination of Singer’s management control, employees, rights to client services and IND’s control over all staff service providers, the purchase is treated as an asset purchase and not a business combination.
NOTE 6 – BANK NOTES AND LOANS
The Company has an SBA loan with monthly
payments that matures on March 13, 2026. The balance due on this loan as of December 31, 2023, is $
The Company has a line of credit requiring
monthly payments. On December 24, 2021, $
NOTE 7 – SELLERS’ TERM AND SECURED NOTES PAYABLE
On October 1, 2022 the Company’s
subsidiary ReachOut issued a term promissory note to the sellers of the membership interest in Innovative Network Designs LLC. Under
the option selected by the holder of the note, a ballon payment of principal is due on October 1, 2024. The note principal is $
On October 1, 2022 the Company issued a
secured promissory note to the sellers of the membership interest in Innovative Network Designs LLC. The original (as adjusted for
purchase contingencies) note principal was $
On September 29, 2023, the Company issued a
promissory note to the former members of RedGear, LLC as partial payment for the RedGear acquisition. During the year ended December
31, 2024 the note principal of $
F-21
Schedule of promissory notes payable:
| Schedule of secured note payable | ||||
| Period Ended: | Principal | |||
| March 31, 2025 | $ | |||
| Totals | $ | |||
NOTE 8 – DUE TO OFFICERS
$
NOTE 9 – DUE TO AND FROM AFFILIATIATED COMPANYS
The balances as of December 31, 2024 and 2023, $
NOTE 10 – DUE TO FINANCIAL INSTITUTIONS
The Company has taken loans from financial
institutions in the form of sales of future receivables, had outstanding balance of principal (net of unamortized debt discounts) of
$
The Company, through its wholly owned subsidiary
IND, engaged PIPE Technologies Inc. for financing. The financing arrangement was in the form of a sale of future revenues, whereby
PIPE advanced a net amount of $
The Company arranged a similar financing
transaction with Fora Financial for which it received cash of $
On January 30, 2024, the Company arranged another financing (Future Sale of Receivables) with Fox Funding Group LLC for which it received
cash of $
Choice Financial Group is owed $
There was approximately $
F-22
NOTE 11 – THIRD PARTY NOTES PAYABLE
| Schedule of third party notes payable | ||||||||
| December 31, 2024 |
December 31, 2023 |
|||||||
| Note principal (net of debt discount) | $ | $ | ||||||
The Company has issued various notes to investors to fund operations prior to the reverse merger on November 9, 2023. Below is basic information about each of these legacy financings.
During the year ended December 31, 2023, $
On
On
On
On
On
On
On
On
At December 31, 2024, the Company was also
indebted to a third party for a total of $
On May 20, 2024 the Company issued a promissory note to 1800 Diagonal Lending LLC for the principal amount of $
F-23
NOTE 12 – CONVERTIBLE NOTES PAYABLE
Post Reverse Merger Issuances
On November 10, 2023, YCRM issued a
convertible note payable, warrants to purchase to the Company’s common stock and Series D Preferred Shares to Trillium
Partners, L.P. The convertible note has principal of $
On December 1, 2023, YCRM issued a convertible
note payable to Frondeur Partners LLC. The convertible note has principal of $
On January 1, 2024, YCRM issued a convertible
note payable to Frondeur Partners LLC. The convertible note has principal of $
On
January 11, 2024, YCRM issued a convertible note payable and
On
February 1, 2024, YCRM issued a convertible note payable to Frondeur Partners LLC. The convertible note has principal of $
On
March 1, 2024, YCRM issued a convertible note payable to Frondeur Partners LLC. The convertible note has principal of $
F-24
On
April 1, 2024, YCRM issued a convertible note payable to Frondeur Partners LLC. The convertible note has principal of $
On
April 3, 2024, YCRM issued a convertible note payable and warrants to purchase to the Company’s common stock to Trillium Partners,
L.P. The convertible note has principal of $
On
May 1, 2024, YCRM issued a convertible note payable to Frondeur Partners LLC. The convertible note has principal of $
On
May 31, 2024, YCRM issued a convertible note payable and warrants to purchase to the Company’s common stock to Trillium Partners,
L.P. The convertible note has principal of $
On
June 1, 2024, YCRM issued a convertible note payable to Frondeur Partners LLC. The convertible note has principal of $
On
July 1, 2024, YCRM issued a convertible note payable to Frondeur Partners LLC. The convertible note has principal of $
On
August 1, 2024, YCRM issued a convertible note payable to Frondeur Partners LLC. The convertible note has principal of $
On
September 1, 2024, YCRM issued a convertible note payable to Frondeur Partners LLC. The convertible note has principal of $
F-25
On
October 1, 2024, YCRM issued a convertible note payable to Frondeur Partners LLC. The convertible note has principal of $
On
November 1, 2024, YCRM issued a convertible note payable to Frondeur Partners LLC. The convertible note has principal of $
On
December 1, 2024, YCRM issued a convertible note payable to Frondeur Partners LLC. The convertible note has principal of $
NOTE 13 – SMALL BUSINESS LOANS PAYABLE
The Company’s subsidiary ReachOut Technology Corporation assumed two SBA notes payable originally issued by RedGear, as part of
the acquisition. The first note was issued May 26, 2020 for $
NOTE 14 – OFFICER LIFE INSURANCE PREMIUMS PAYABLE
On October 1, 2022, the Company committed to paying life insurance with the sellers of the membership interest in Innovative Network Designs LLC. The total amount of the liability was $
| Schedule of life Insurance Payable | ||||
| Year Ended December 31: | Insurance Premiums Due |
|||
| 2024 | ||||
| 2025 | ||||
| 2026 | ||||
| 2027 - 2029 | ||||
| Total | $ | |||
F-26
NOTE 15 – RELATED PARTY TRANSACTIONS
During the year ended December 31, 2024, the Company and a private company controlled by the CEO shared services and customer responsibilities.
The private company provides low level technical assistance to clients of both companies using the infrastructure of the private company.
The Company provides higher levels of technical support for clients of both companies with employees of the Company using the technical
infrastructure of the private company (hardware and software). As such the Company invoiced the private company $
During the years ended December 31, 2022 and 2021, the Company’s CEO advanced the Company funds for operating expenses. At December 31, 2024 and December 31, 2023, the outstanding balances owed were settled for preferred stock to be designated and issued and $
During the years ended December 31, 2023 and 2022, an entity controlled by the CEO advanced (net of repayments) the Company $
During the year ended December 31, 2022,
the Company issued notes to former owners of the membership interest in Innovative Network Designs, LLC (now ReachOut IND) and committed
to purchase universal life insurance for officers of ReachOut IND. The notes issued were a term promissory note for $
During the year ended December 31, 2023,
the Company issued notes totaling $
Compensation due to former officers of RedGear
amounts to $
RedGear is obligated under office leases to a company controlled by
the former owners of the RedGear membership interests. The office space is in two locations in the city of El Paso, Texas and covers approximately
10,000 square feet in total. The remaining liability as calculated for the right to use asset (under ASC 842) of $
The
On May 3, 2024, the
During the year ended December 31, 2023 and 2022, the Company
paid Robert C. Bohorad, President and CEO, $
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NOTE 16 – TEMPORARY EQUITY
Commitment to Purchase Series A Convertible Preferred Stock
On January 18, 2019, The Company entered into a Series A Preferred Stock Purchase Agreement with Device Corp. (“the Agreement”), of up to $
As of December 31, 2024, the Company has preferred stock to be issued in the amount of $
On January 26, 2024, Everett Dickson (former CEO and Chairman of the Board of Directors) acquired the preferred series A shares formerly held by Device Corp.
Series B Preferred Stock
On August 25, 2023, the Company Amended its Articles of Incorporation, to designate of the Authorized preferred stock, par value $, as Series B Preferred Stock (“Series B”). The Series B is convertible into shares of common stock at the average price of the previous five trading days. The Series B shares are not entitled to dividends and have no voting rights.
Following the amendment above the Series B preferred stock is convertible into shares of common stock at the option of the holder at a 50% discount to the average price for the five trading days prior to conversion. As of the balance sheet date and the date of this report, these shares have not been issued to the Purchaser. S99-3A(2) ASR 268 requires preferred securities that are redeemable for cash or other assets to be classified outside of permanent equity if they are redeemable (1) at a fixed or determinable price on a fixed or determinable date, (2) at the option of the holder, or (3) upon the occurrence of an event that is not solely within the control of the issuer. Given that there is an unknown number of preferred shares to be issued and the preferred shares are convertible at the option of the holder, the Company determined that the shares to be issued shall be treated as temporary equity.
On August 25, 2023, the Company and Device Corp amended the January 18, 2019, and the May 1, 2023 Series A Preferred Stock Purchase Agreements, so that any purchased Series A preferred stock is now Series B preferred stock.
NOTE 17 – STOCKHOLDERS’ DEFICIT
Preferred Stock
Series A Preferred Stock
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.
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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 Certificate of Designation was amended on September 12, 2023, among other changes the Series A Convertible Preferred Stock must be held for one year following issuance or reissuance prior to conversion.
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. On August 25, 2023, Everett Dickson, Chairman of the Board, agreed to return 4,525,000 shares of Series A preferred Stock to the Company. The shares will be retired by the Company. His remaining shares were sold to Mr. Richard Jordan for $, during the year ended December 31, 2023.
Series C Preferred Stock
The Company has authorized Series C Preferred Shares of Stock, effective December 13, 2023. The shares have a stated value of $3.00 per share, earns a 2% dividend on the stated value, which is cumulative and payable solely upon redemption. The stock has voting rights equal to the number of common shares into which the preferred shares may be converted. At any time following 180 days from the date of issuance the preferred stock in aggregate can be converted into 87.5% of the outstanding common stock for a period of twenty-four months from the date of issuance of the Series C Preferred Stock.
Under the terms of the Share Exchange Agreement the Company issued shares of Series C Preferred Stock to the owners of ReachOut common stock in exchange for 100% of the shares of ReachOut.
Using a Black-Scholes model the preferred Series
C stock was valued at $2,910,984 and $ was charged to stock compensation for service providers and $ was charged to investment
in ReachOut. The accrued dividend of 2% of the stated value ($ per share) was calculated to be $
Series D Preferred Stock
The Company has authorized Series D Preferred Shares of Stock, effective December 13, 2023. The shares have a stated value of $ per share, earns a 2% dividend on the stated value, which is cumulative and payable solely upon redemption. The stock has voting rights equal to the number of common shares into which the preferred shares may be converted. At any time following 180 days from the date of issuance the preferred stock in aggregate can be converted into 12.5% of the outstanding common stock for a period of twenty-four months from the date of issuance of the Series D Preferred Stock.
Under the terms of the
Using a Black-Scholes model the preferred Series
D stock was valued at $
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Obligations to Issue Newly Designated Series of Preferred Stock
The total obligation to issue newly designated convertible preferred shares is $ at December 31, 2024. The obligation is outlined below.
Under the terms of the Singer Asset Purchase Agreement
outlined above, the Company is obligated to designate a new series of preferred stock having a conversion feature of one share of the
to be designated preferred stock for one share of restricted common stock. The total value of this series of to be designated and issued
preferred stock is $
The obligation is recorded as stock to be issued at fair market value of the common stock on the grant date.
On December 27, 2024 the board of directors approved the Debt Cancellation and Exchange Agreement in satisfaction of liabilities owed to the CEO and a private company he controlled for an aggregate amount of $2,440,950, and authorized the creation of a new series of preferred stock to be issued to First Portfolio Management LLC.
The dividend is payable quarterly in either cash or shares of the same series of preferred. The new preferred stock will rank senior to all other preferred stock in liquidation.
Common Stock
On December 31, 2024 and December 31, 2023, the Company had and shares of common stock authorized respectively. There were and common shares of stock outstanding on December 31, 2024 and December 31, 2023, respectively.
On May 15, 2024, a convertible note holder was
issued shares of common stock in conversion of $
During the year ended December 31, 2024,
The Company has charged the dividends on Series C and D preferred stock
to accumulated deficit ($
Warrants Issued
For the year ended December 31, 2024 and year ended December 31, 2023, a summary of the Company’s warrant activity is as follows:
| Schedule of warrant activity | ||||||||||||||||||||
| Number of Warrants | Weighted- Average Exercise Price | Weighted- Average Remaining Contractual Term (Years) | Weighted- Average Grant-Date Fair Value | Aggregate Intrinsic Value | ||||||||||||||||
| Outstanding and exercisable at December 31, 2023 | $ | $ | $ | |||||||||||||||||
| Issued and exercisable during the year ended December 31, 2024 | ||||||||||||||||||||
| Outstanding and exercisable at December 31, 2024 | $ | $ | $ | |||||||||||||||||
All warrants were issued as an incentive to an investor for future investment.
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Stock Options Issued
For the year ended December 31, 2024 and the year ended December 31, 2023, a summary of the Company’s stock options activity is as follows:
| Schedule of stock option activity | ||||||||||||||||||||
| Number
of Options |
Weighted- Average Exercise Price |
Weighted- Average Remaining Contractual Term (Years) |
Weighted- Average Grant-Date Fair Value |
Aggregate Intrinsic Value |
||||||||||||||||
| Outstanding and exercisable at December 31, 2023 | $ | $ | $ | |||||||||||||||||
| Issued during the year ended December 31, 2024 | - | |||||||||||||||||||
| Outstanding and exercisable at December 31, 2024 | $ | $ | $ | |||||||||||||||||
All options were issued as compensation to key employees.
During the year ended December 31, 2023,
the Company’s subsidiary issued
The inputs for the Black-Scholes model calculation of the options model were:
Stock (YCRM) price - $0.0045 midmarket price on the grant date;
Annualized volatility of ;
Discount rate .
NOTE 18 – INCOME TAX
The Company recognizes deferred tax assets and liabilities for the tax effects of differences between the financial statement and tax basis of assets and liabilities. A valuation allowance is established to reduce the deferred tax assets if it is more likely than not that a deferred tax asset will not be realized.
As of December 31, 2024, the Company has
net operating loss carryforwards of approximately $
A reconciliation of the provision for income taxes at the federal and state statutory rates of
| Schedule of provision for income tax | ||||||||
| Year Ended December 31, |
||||||||
| 2024 | 2023 | |||||||
| U.S. Federal (tax benefit) provision at statutory rate | $ | $ | ( |
) | ||||
| State (tax benefit) income taxes, net of federal benefit | ( |
) | ||||||
| Permanent differences | ( |
) | ||||||
| Temporary differences | ||||||||
| Changes in valuation allowance | ||||||||
| Total | $ | $ | ||||||
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Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The following table presents the significant components of the Company’s deferred tax assets and liabilities for the periods presented:
| Schedule of deferred tax amount net | ||||||||
| Year Ended December 31, |
||||||||
| 2024 | 2023 | |||||||
| Deferred Tax Assets | ||||||||
| Net operating losses | ||||||||
| Total deferred tax assets | ||||||||
| Valuation allowance | ( |
) | ( |
) | ||||
| Net deferred tax assets | ||||||||
| Deferred Tax Liabilities | ||||||||
| Total deferred tax liabilities | ||||||||
| Net deferred tax | $ | $ | ||||||
The Company determines its valuation allowance on deferred tax assets by considering both positive and negative evidence in order to ascertain whether it is more likely than not that deferred tax assets will be realized. Realization of deferred tax assets is dependent upon the generation of future taxable income, if any, the timing and amount of which are uncertain. Due to the history of losses the Company has generated in the past, the Company believes that it is not more likely than not that all of the deferred tax assets in the U.S. can be realized as of December 31, 2024 and 2023, accordingly, the Company has recorded a full valuation allowance on its deferred tax assets.
The Company is not currently under any international or any United States federal, state and local income tax examinations for any taxable years. All of the Company’s net operating losses are subject to tax authority adjustment upon examination.
NOTE 19 – COMMITMENTS AND CONTINGENCIES
Legal Matters
IND - Purchase Dispute
On December 10, 2024, IND Holding, Inc. filed a lawsuit in the United States District Court for the District of Delaware against ReachOut Technology NE Holdings, LLC and ReachOut Technology Corp., alleging breach of contract related to a prior acquisition. The Company promptly filed a Motion to Dismiss on the grounds that the claims were brought in an improper venue and are contractually barred. In opposition, Plaintiff made a conditional request to amend—only if the motion were granted against them—then declined the Company’s offer to amend voluntarily before a ruling. The Company’s reply brief notified the Court of this refusal, and the matter is currently awaiting a decision. Management believes the case is procedurally and substantively flawed, expects dismissal, and does not view this matter as having any material impact on its financial position, results of operations, or strategic plans.
RedGear LLC – Purchase Dispute
On April 26, 2024, ReachOut Technology Corp. (“ReachOut”), a wholly-owned subsidiary of the Company filed a lawsuit (Case No. 1:24-cv-03408) in the United States District Court for the Northern District of Illinois, against the former members of RedGear related to certain representations and warranties made by the Defendants, Luciano Aguayo and Armando Gonzalez, in the Membership Interest Purchase Agreement, dated September 29, 2023 and closing on October 2, 2023, under which ReachOut acquired 100% of RedGear. The lawsuit was served on the defendants on April 30, 2024, and the amend below were served in June 2024.
In June 2024, ReachOut amended its complaint in the above case including fraud, post-closing misappropriation of funds and opportunities, tortious interference, breach of fiduciary duty, and post-termination illegal activities in violation of the Computer Fraud and Abuse Act (CFAA) attempting to take control of RedGear systems.
On July 2, 2024, the United States District Court for the Northern District of Illinois entered a Temporary Restraining Order against the Defendants in the above case, based on the federal Computer Fraud and Abuse Act, a statute designed to protect against computer hacking.
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Under the terms of the RedGear LLC membership interest purchase agreement, there is a clause for set-off. The Buyer shall have the right to recover, and to set-off and apply against, all amounts otherwise due and owing to Sellers, or any of them, all sums in respect of which they may be liable to Buyer, including, but not limited to, as a result of a breach of any representation or warranty of Sellers. As a result of a breach of any of the covenants, or pursuant to the indemnification provisions, such right of set-off shall be in addition to, and not in lieu of, or an election against, any and all other remedies available to Buyer at law or in equity. Management is in discussion with counsel to determine whether the set-off right can be applied prior to judicial determination. As of the filing date of this report no probable outcome has been determined in the above case.
Based on the aforementioned set-off clause and the continuing dispute with the former members of RedGear, management has obtained assurances from legal counsel that, the Company may refute certain liabilities recognized as acquisition related. As such, the Company has refuted certain liabilities owed to the former owners of the membership interest in RedGear which have been discussed above relating to the acquisition or RedGear, Related Party transactions and below related to certain lease liabilities.
While the Company is working with legal counsel to minimize the impact to the business, the exit of the Defendants has led to a material reduction in RedGear business customers and revenue Existing customers are being served through IND and will be offered new service agreements to replace legacy agreements under the RedGear name.
Settlements
Fox Funding Group LLC – Settlement Agreement
On December 19, 2024,
Other Contingencies
Tax Levy
In October, 2024, the Texas Comptroller’s office placed a hold on RedGear’s Chase and GECU bank accounts. As of December 16, 2024, the amount of the hold is $234,378.22. This hold is due to a sales audit conducted by the Texas Comptroller’s office from November, 2019 through April, 2023, which is prior to ReachOut Technology’s acquisition of RedGear’s in October, 2023. Additionally, the last extension to the audit was signed by the previous owners of Red Gear on September 8, 2023, less than a month prior to closing the transaction. This audit was not disclosed in the purchase agreement and violated the Representations and Warranties made by the sellers. This matter has been added to ReachOut’s lawsuit filed against the previous owners. The potential liability has been recognized by the Company as of December 31, 2024.
Fora Financial – Negotiation
The Company through its representative is in negotiation with Fora Financial (“Fora”) to settle it obligation under a sale of future accounts receivable having a carrying value of $753,275 as of December 31, 2024.
Default on Loan – PIPE Technologies Inc.
The Company, through its wholly owned subsidiary
IND, engaged PIPE Technologies Inc.(“PIPE”) for financing. The financing arrangement was in the form of a sale of future revenues,
whereby PIPE advanced a net amount of $
On February 7, 2024 PIPE sent a notice of default and demand for payment to IND. The notice and demand letter confirmed the balance due was $89,743 as recorded by the Company. This amount is disputed by the company believing there were duplicate payments and/or payments not applied during the Silicon Valley Bank collapse, the primary financial backing for PIPE.
As of the filing date of this report no probable outcome has been determined.
F-33
RedGear Vehicles and Related Loans
RedGear had a number of service technician vehicles purchased over several years. Most of the vehicles have financing loans. The company has sold several of the vehicles and paid off the loans associated. The Company also stopped servicing some of the loans where the liability was greater than the value of the asset when the office facilities under lease were abandoned following terminations in July 2024. The Company, through its legal counsel, is in negotiation with the lenders to surrender the vehicles under favorable terms with those lenders. The former members of RedGear had personally guaranteed the loans and given the scheduled mediation for misrepresentation of liabilities and other violations of the purchase agreement (RedGear Membership Interest Purchase Agreement) the primary obligor for these liabilities is in question.
Lease Obligations
Effective October 2020, the ReachOut’s
subsidiary (RedGear, LLC) renewed the lease for the principal offices at 123 West Mills Avenue, El Paso, Texas. The lease extends through
September 30, 2025, for $
Effective October 29, 2021, the
ReachOut’s subsidiary (RedGear, LLC) entered into a lease for office facilities at 3636 North Central Avenue, Phoenix,
Arizona. The lease extends through October 31, 2025, for $3,224.83
per month with annual escalation of
Effective September 29, 2023, the
ReachOut’s subsidiary (RedGear, LLC) entered into a lease for office facilities at 10033 Carnegie Avenue, El Paso, Texas. The
lease extends through September 28, 2028, for $
Effective September 29, 2023, the ReachOut’s
subsidiary (RedGear, LLC) entered into a lease for office facilities at 6713 Viscount Blvd. El Paso, Texas. The lease extends through
September 28, 2028, for $
On May 1, 2021, the ReachOut’s subsidiary
IND entered into a sublease for its office in Whippany, NJ for a term commencing on June 1, 2021 extending through February 28,
2025 at an initial monthly rent of approximately $
The Company recognized an initial right-of-use assets of and a related
lease liabilities of $
The offices for ReachOut are shared with a related party ReachOut IL (an S corporation), under an arrangement that is not formalized.
Right of use asset (ROU) is summarized below:
| Schedule of right of use asset | ||||||||
| December 31, 2024 |
December 31, 2023 |
|||||||
| Operating lease at inception | $ | $ | ||||||
| Less accumulated reduction (includes termination write-off) | ( |
) | ( |
) | ||||
| Balance ROU asset | $ | $ | ||||||
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Operating lease liability related to the ROU asset is summarized below:
| Schedule of operating lease liability | ||||||||
| Operating lease liabilities at inception | $ | $ | ||||||
| Reduction of lease liabilities (includes termination write-off) | ( |
) | ( |
) | ||||
| Total lease liabilities | $ | $ | ||||||
| Less: current portion | ( |
) | ( |
) | ||||
| Lease liabilities, non-current | $ | $ |
Non-cancellable operating lease total future payments are summarized below:
| Schedule of non-cancellable operating lease | ||||||||
| Total minimum operating lease payments | $ | $ | ||||||
| Discount to fair value | ( |
) | ||||||
| Total lease liability | $ | $ |
The future minimum lease payments under
non-cancellable operating leases at December 31, 2024, total $
For the year ended December 31, 2024 rent expense was for was $
Other Commitments
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 year. Per the terms of the agreement the consultant will receive a fee of $
An individual has asserted that the Company owes approximately $
On December 1, 2023, the Company entered into a service agreement with Frondeur Partners LLC (“Frondeur”). Frondeur will provide accounting, reporting and consulting services on a monthly basis. On December 1, 2023, the Company executed a corporate services agreement with Frondeur Partners LLC a Nevada limited liability company. Under the terms of the agreement the Company will receive accounting and reporting services. As compensation Frondeur will receive monthly payments of $5,000 in cash and a convertible promissory note for $10,000. The notes are convertible into the Company’s common stock at a 50% discount to the market price (defined in the notes). As of the date of issuance of this report the Company has issued thirteen such notes (December 1, 2023 through December 31, 2024), which are accounted for as notes with embedded derivatives to be bifurcated and recognized as derivative liabilities.
F-35
NOTE 20 – SUBSEQUENT EVENTS
In accordance with 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.
Sale of Subsidiaries
On March 31, 2025, the Company entered into
a transaction selling its wholly owned subsidiary ReachOut Technology Corp. (ReachOut) to an unrelated third party. ReachOut owns
Innovative Network Design LLC and RedGear LLC. The purpose for the business disposition is a financial restructuring Which provides
a relief of liabilities totaling $
Default on RedGear Purchase Note
The note issued to former members of RedGear matured on March 31, 2025, and therefore it is technically in default.
Securities Issued
On January 1, 2025, YCRM issued a convertible
note payable to Frondeur Partners LLC. The convertible note has principal of $
On February 1, 2025, YCRM issued a convertible
note payable to Frondeur Partners LLC. The convertible note has principal of $
On March 1, 2025, YCRM issued a convertible note
payable to Frondeur Partners LLC. The convertible note has principal of $
On April 1, 2025, YCRM issued a convertible note
payable to Frondeur Partners LLC. The convertible note has principal of $
F-36
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
Under the supervision and with the participation of our management, including the Chief Executive Officer who also acts as our principal financial officer, we have evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act) as of the end of the period covered by this report. The disclosure controls and procedures ensure that all information required to be disclosed by us in the reports that we file or submit under the Exchange Act is: (i) recorded, processed, summarized and reported, within the time periods specified in the SEC’s rule and forms; and (ii) accumulated and communicated to our management, including our Chief Executive Officer as appropriate to allow timely decisions regarding required disclosure. Based on that evaluation, the Chief Executive Officer concluded that, as of December 31, 2024, these disclosure controls and procedures were not effective.
Management’s Report on Internal Control Over Financial Reporting
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of our management, including the Chief Executive Officer who also acts as our principal financial officer, we have evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act) as of the end of the period covered by this report. The disclosure controls and procedures ensure that all information required to be disclosed by us in the reports that we file or submit under the Exchange Act is: (i) recorded, processed, summarized and reported, within the time periods specified in the SEC’s rule and forms; and (ii) accumulated and communicated to our management, including our Chief Executive Officer as appropriate to allow timely decisions regarding required disclosure. Based on that evaluation, the Chief Executive Officer concluded that, as of December 31, 2024, these disclosure controls and procedures were not effective.
Management’s Annual Report on Internal Control over Financial Reporting
Our management is responsible to establish and maintain adequate internal control over financial reporting. Our Chief Executive Officer is responsible to design or supervise a process that provides reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. The policies and procedures include:
| ● | maintenance of records in reasonable detail to accurately and fairly reflect the transactions and dispositions of assets, | |
| ● | reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorizations of management and directors, and | |
| ● | reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of assets that could have a material effect on our financial statements. |
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance of achieving their control objectives.
12
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our internal control over financial reporting as of the end of the period December 31, 2024. In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control – Integrated Framework (2013). Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the fiscal year December 31, 2024, our internal control over financial reporting was not effective at that reasonable assurance level. 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. |
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting that occurred during our most recent fiscal quarter that have materially affected, or reasonably likely to materially affect, our internal control over financial reporting.
Attestation Report of Independent Public Accounting Firm
This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting because as a smaller reporting company we are not subject to attestation by our independent registered public accounting firm pursuant to rules of the Securities and Exchange Commission that permit us to provide only management’s report in this annual report.
ITEM 9B. OTHER INFORMATION
ITEM 9C. DISCLOSURES REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
13
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Directors and Executive Officers
The names of our director and executive officers as of June 28, 2024, their ages, positions, and biographies are set forth below. Our executive officers are appointed by, and serve at the discretion of, our board of directors.
| Name | Age | Position(s) | ||
| Richard Jordan | 45 | Chairman, Chief Executive Officer, President, Secretary and Treasurer | ||
| Kevin Harrington | 66 | Director | ||
| Kingsley Charles | 58 | Director |
Rick Jordan, Chairman, Chief Executive Officer, President, Secretary and Treasurer
Rick Jordan, age 45, the CEO and Founder of ReachOut Technology, is a model of resilience, vision, and expertise in the cybersecurity and entrepreneurial arenas. His journey with ReachOut Technology, from its inception during a challenging personal and economic period to its evolution into a publicly held industry leader, is a true embodiment of the American dream. Rick has shaped his path through unwavering perseverance, a relentless ‘never-quit’ attitude.
Rick Jordan is emerging as a nationally recognized voice in business and cybersecurity. He is frequently featured on global networks such as Bloomberg, Newsmax, Cheddar, NewsNation, Reuters, Fox, and NBC for his expert insights in cybersecurity, business, and social topics. His expertise is so renowned that it has been sought after in the White House, highlighting his significant influence and authority in the cybersecurity sector.
Rick’s leadership style is deeply involved and motivational. He hosts a weekly “CEO Talk” every Monday, where he engages with and inspires the entire company, setting a positive tone for the week ahead. This approach not only fosters a strong company culture but also aligns the team with the company’s goals and vision.
Rick has a strategic mind with unique ability to foresee industry trends and futures, allowing him to be a disruptor in the space. A key milestone in Rick’s leadership was partnering with Kevin Harrington, the Original Shark from Shark Tank, to take ReachOut Technology public. This strategic partnership has been instrumental in the company’s growth trajectory, positioning it for greater success and market impact.
Rick is a master communicator and passionately shares his knowledge and inspiration through his podcast, “ALL IN with Rick Jordan.” The podcast, which enjoys a global audience in over 70 countries and ranks in the top 2.5% worldwide, explores the nuances of building successful businesses, fostering meaningful relationships, and leading a fulfilling life. Rick’s ability to connect with and motivate his audience is evident in the podcast’s widespread acclaim.
Rick Jordan’s skills and knowledge span a broad spectrum, making him a unique figure in the industry. Known for never shying away from a challenge and remaining steadfast in adversity, Rick lives life on his own terms. Whether tackling new challenges, disproving doubters, or enjoying a glass of his favored MaCallan Scotch, Rick Jordan is an inspiration, encouraging others to embrace life fully.
Follow Rick’s journey and get inspired by connecting with him on social media @MrRickJordan.
14
Kevin Harrington, Director
Kevin Harrington, age 66, is a Director of ReachOut Technology, a globally acclaimed entrepreneur and a pioneer in the realms of business and direct marketing, serves as a distinguished member of the Board of Directors at ReachOut Technology. His tenure at ReachOut Technology is marked by strategic guidance and visionary leadership, leveraging over four decades of entrepreneurial and investment expertise.
As an original “Shark” on ABC’s “Shark Tank,” Kevin Harrington gained fame for his sharp investment insights and his ability to identify and nurture promising business ventures. His tenure on the show cemented his status as a savvy investor and a fervent supporter of entrepreneurship.
Harrington’s entrepreneurial journey began in the early 1980s with the creation of the infomercial, a groundbreaking concept that revolutionized television marketing and direct response advertising. This innovation not only transformed product marketing but also democratized the way entrepreneurs and startups could reach global audiences.
Throughout his career, Harrington has launched over 20 businesses that have exceeded $100 million in revenue. His exceptional ability to spot market opportunities and convert them into successful enterprises is a testament to his entrepreneurial genius.
Harrington is also a respected author, with books like “Act Now: How I Turn Ideas into Million-Dollar Products” under his belt. His writings offer a wealth of knowledge and inspiration to aspiring entrepreneurs and established business leaders alike.
In his role at ReachOut Technology, Kevin Harrington plays a pivotal role in shaping the company’s strategic direction, particularly in the realms of technology and cybersecurity. His insights are instrumental in driving innovation and ensuring that ReachOut Technology stays at the forefront of its industry.
ReachOut Technology, renowned for its expertise in cybersecurity and IT services, benefits immensely from Harrington’s strategic foresight. The company specializes in providing top-tier cybersecurity solutions, IT management, and consulting services, helping businesses safeguard their digital assets and navigate the complexities of the modern technological landscape.
Kevin Harrington’s involvement with ReachOut Technology is not just a reflection of his illustrious career but also a commitment to driving the company towards new heights of innovation and success. His vision and leadership continue to be pivotal in the company’s journey towards becoming a leader in cybersecurity and technology solutions.
Kingsley Charles, Director
Kingsley Charles, age 58, Director of ReachOut Technology, brings to the Board of Directors of a rich tapestry of experience in business and financial consultancy, honed over more than fifteen years of dedicated service. His career is distinguished by his extensive work with a diverse range of private firms, regional entrepreneurs, and small business owners across the United States.
Charles’s professional journey is marked by significant achievements and contributions. He has been a pivotal consultant for dozens of start-ups and operating companies, with revenues scaling up to $200 million. His expertise was further sharpened by his tenure managing operations within a Fortune 500 company, where he gained invaluable insights into the workings of large-scale corporate environments.
A hallmark of Charles’s career has been his collaborative approach, working closely with a spectrum of professionals including Master of Taxation experts, CPAs, CFPs, accountants, valuation experts, and attorneys. This multidisciplinary engagement has been a cornerstone of his professional life for over two decades, enabling him to offer comprehensive and nuanced advice to his clients.
Under Kingsley Charles’s leadership, his team has established a robust network of legal partners and financial professionals. This network supports his firm’s commitment to providing clients with interactive, comprehensive financial and strategic management services. His approach is characterized by a keen focus on ‘eyes-wide-open’ strategies, ensuring that clients are fully informed and strategically positioned in their financial decisions.
At ReachOut Technology, Kingsley Charles leverages his extensive experience in financial and strategic management to provide invaluable guidance and oversight. His expertise is particularly crucial in steering the company through complex financial landscapes, ensuring robust financial health, and aligning strategic goals with market realities.
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Indemnification of Directors and Officers
Our Articles of Incorporation and Bylaws both provide for the indemnification of our officers and directors, to the fullest extent, permitted by Nevada law.
Compliance with Section 16(a) of the Exchange Act
Section 16(a) of the Securities Exchange Act of 1934 requires our directors, executive officers and persons who own more than ten percent of our common stock, to file with the SEC initial reports of ownership and reports of changes in ownership of common stock. Officers, directors and 10% or greater beneficial owners are required by SEC regulations to furnish us with copies of all Section 16(a) reports they file. Based upon a review of those forms and representations regarding the need for filing for the year ended December 31, 2024, we believe all necessary forms have been filed.
Involvement in Certain Legal Proceedings
Our directors and executive officers have not been personally involved in any of the following events during the past ten years:
| ● | any bankruptcy petition filed by or against such person or any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time; | |
| ● | any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); | |
| ● | being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him from or otherwise limiting his involvement in any type of business, securities or banking activities or to be associated with any person practicing in banking or securities activities; | |
| ● | being found by a court of competent jurisdiction in a civil action, the SEC or the Commodity Futures Trading Commission to have violated a Federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated; | |
| ● | being subject of, or a party to, any Federal or state judicial or administrative order, judgment decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of any Federal or state securities or commodities law or regulation, any law or regulation respecting financial institutions or insurance companies, or any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or | |
| ● | being subject of or party to any sanction or order, not subsequently reversed, suspended, or vacated, of any self-regulatory organization, any registered entity or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member. |
Family Relationships
There are no familial relationships among any of our directors or officers.
Director Independence
We are not currently subject to listing requirements of any national securities exchange or inter-dealer quotation system, which has requirements that a majority of the Board of Directors be “independent” and, as a result, we are not at this time required to have our Board of Directors comprised of a majority of “independent directors.”
Board Committees
Our board does not currently have a standing Audit Committee, Compensation Committee or Nominating/Corporate Governance Committee due the board’s limited size and the Company’s limited operations. The entire Board of Directors performs all functions that would otherwise be performed by committees. Given the present size of our Board, it is not practical for us to have committees other than those described above, or to have more than two directors on such committees. If we are able to grow our business and increase our operations, we intend to expand the size of our board and our committees and allocate responsibilities accordingly.
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ITEM 11. EXECUTIVE COMPENSATION
Summary Compensation
The following table provides information as to cash compensation of all executive officers of the Company, for each of the Company’s last two fiscal years.
| Name and principal position | Year | Salary ($) |
Bonus ($) |
Stock Awards ($) |
Option Awards ($) |
Non-Equity Incentive Plan Compensation ($) |
Nonqualified Deferred Compensation Earnings ($) |
All Other Compensation ($) |
Total ($) |
||||||||||||||||||||||||||
| Richard Jordan | 2024 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | ||||||||||||||||||
| President, CEO & Chairman | 2023 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | ||||||||||||||||||
| Everett M. Dickson | 2024 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | ||||||||||||||||||
| Former Chairman | 2023 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | ||||||||||||||||||
| Robert C. Bohorad | 2024 | $ | 63,710 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 63,710 | ||||||||||||||||||
| Former President and CEO | 2023 | $ | 50,000 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 50,000 | ||||||||||||||||||
Director Compensation
At this time, our directors do not receive cash compensation for serving as members of our Board of Directors. The term of office for each director is one year or until his/her successor is elected at our annual meeting and qualified. The duration of office for each of our officers is at the pleasure of the Board of Directors. The Board of Directors has no nominating, auditing committee, or compensation committee. Therefore, the selection of a person or election to the Board of Directors was neither independently made nor negotiated at arm’s length.
During the periods ending December 31, 2024, the company’s directors, Richard Jordan, Kevin Harrington, and Kingsley Charles, received no compensation for director services.
Outstanding Equity Awards at Fiscal Year End. There were no outstanding equity awards as of December 31, 2024.
Board Committees
We do not currently have any committees of the Board of Directors. Additionally, due to the nature of our intended business, the Board of Directors does not foresee a need for any committees in the foreseeable future.
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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The following table sets forth, as of December 31, 2024, certain information with respect to the beneficial ownership of shares of our common stock by: (i) each person known to us to be the beneficial owner of more than five percent (5%) of our outstanding shares of common stock, (ii) each director or nominee for director of our Company, (iii) each of the executives, and (iv) our directors and executive officers as a group. Unless otherwise indicated, the address of each shareholder is c/o our company at our principal office address:
| Name and Address of Beneficial Owner(1)(2) | Common Stock Beneficially Held |
Percent of Class |
||||||
| Named Executive Officers and Directors | ||||||||
| Richard Jordan – Series A(3) | 699,082,277 | (3) | 66.67 | % | ||||
| Richard Jordan – Series C(4) | 2,365,687,358 | 84.61 | % | |||||
| KHBH LLC – Series C(4) | 56,325,836 | 2.01 | % | |||||
| Kingsley Charles – Series C(4) | 24,407,776 | 0.87 | % | |||||
| All Executive Officers and Directors as a group | ||||||||
| 5% or More Stockholders | ||||||||
| Trillium Partners, LP – Series D(5) | 49,926,959 | 12.50 | % | |||||
| (1) | Unless as otherwise indicated in the following table and the footnotes, our named executive officers and directors’ address in the following table is c/o ReachOut Technology, 8910 W. 192nd St. Suite N, Mokena, IL 60448. | |
| (2) | Under Rule 13d-3 of the Exchange Act, a beneficial owner of a security includes any person who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise has or shares: (i) voting power, which includes the power to vote, or to direct the voting of shares; and (ii) investment power, which includes the power to dispose or direct the disposition of shares. Certain shares may be deemed to be beneficially owned by more than one person (if, for example, persons share the power to vote or dispose of the shares). In addition, shares are deemed to be beneficially owned by a person if the person has the right to acquire the shares (for example, upon exercise of an option) within 60 days of the date as of which the information is provided. In computing the percentage ownership of any person, the amount of shares outstanding is deemed to include the number of shares beneficially owned by such person (and only such person) because of these acquisition rights. As a result, the percentage of outstanding shares of any person as shown in the above table does not necessarily reflect the person’s actual ownership or voting power concerning the number of shares of common stock outstanding on the date of this Form 10. | |
| (3) | In calculating any percentage in the following table of common stock beneficially owned by one or more persons named therein, the following table is based on 349,488,710 shares of common stock, outstanding as of the filing date of this Form 10-K and 699,082,277 shares of common stock issuable upon the conversion of the 475,000 shares of Series A Preferred Stock held by Mr. Jordan. (The Shares A Preferred Stock are convertible into such number of shares of common stock resulting in two-thirds (66.67%) of the outstanding shares of common stock of the Company on a post-conversion basis.) | |
| (4) | In calculating any percentage in the following table of common stock beneficially owned by one or more persons named therein, the following table is based on 349,488,710 shares of common stock, outstanding as of the filing date of this Form 10-K. 2,365,687,358 shares of common stock issuable upon the conversion of the 7,338,079 shares of Series C Preferred Stock held by Richard Jordan, 24,407,776 shares of common stock issuable upon the conversion of the 75,710 shares of Series C Preferred Stock held by Kingsley Charles, and 56,325,836 shares of common stock issuable upon the conversion of the 174,716 shares of Series C Preferred Stock held by KHBH LLC (The Shares C Preferred Stock are convertible into such number of shares of common stock resulting in 87.50% of the outstanding shares of common stock of the Company on a post-conversion basis.) | |
| (5) | In calculating any percentage in the following table of common stock beneficially owned by one or more persons named therein, the following table is based on 349,488,710 shares of common stock, outstanding as of the filing date of this Form 10-K and 49,926,959 shares of common stock issuable upon the conversion of the 1,000,000 shares of Series D Preferred Stock held by Trillium Partners, LP. (The Shares D Preferred Stock are convertible into such number of shares of common stock resulting in 12.50% of the outstanding shares of common stock of the Company on a post-conversion basis.) |
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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
During the year ended December 31, 2024, Richard Jordan was owed $50,000 in accrued compensation and Robert C. Bohorad owed $35,000 in accrued compensation.
Director Independence
We currently do not have any independent directors, as the term “independent” is defined in Section 803A of the NYSE Amex LLC Company Guide. Since the OTC Markets does not have rules regarding director independence, the Board makes its determination as to director independence based on the definition of “independence” as defined under the rules of the New York Stock Exchange (“NYSE”) and American Stock Exchange (“Amex”).
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
Audit Fees
The aggregate fees billed for professional services rendered by our auditor Fruci & Associates II, PLLC for the audit and review of our financial statements for the fiscal years ended December 31, 2024 and 2023 amounted to $47,500 and $67,500, respectively.
Audit-Related Fees
During the fiscal years ended December 31, 2024 and 2023 our principal accountant rendered assurance and related services reasonably related to the performance of the audit or review of our financial statements in the amount of $0 and $0, respectively.
Tax Fees
The aggregate fees billed for professional services rendered by our principal accountant for the tax compliance for the years ended December 31, 2024 and 2023 was $0.
All Other Fees
During the fiscal years ended December 31, 2024 and 2023, there were no fees billed for products and services provided by the principal accountant other than those set forth above.
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PART IV
ITEM 15. EXHIBITS
The following documents have been filed as part of this report.
| Incorporated by reference | ||||||||||||
|
Exhibit Number |
Exhibit Description |
Filed herewith |
Form |
Period ending |
Exhibit | Filing date | ||||||
| 31.1 | Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act | X | ||||||||||
| 32.1 | Section 1350 Certification | X | ||||||||||
| 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 in iXBRL, and included in exhibit 101). | X | ||||||||||
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused the report to be signed on its behalf by the undersigned, thereunto duly authorized.
| Yuengling’s Ice Cream Corporation | ||||
| Name | Title | Date | ||
| /s/ Richard Jordan | President and Chief Executive Officer | April 15, 2025 | ||
| Richard Jordan | ||||
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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, Richard Jordan, Chief Executive of Yuengling’s Ice Cream Corporation (the “registrant”) certify that:
1. I have reviewed this annual report on Form 10-K 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: April 15, 2025
| By: | /s/ Richard Jordan | |
| Richard Jordan | ||
| Chief Executive Officer (Principal Executive) |
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 annual report of Yuengling’s Ice Cream Corporation (the “Company”) on Form 10-K for the year ended December 31, 2024 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Richard Jordan, 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: April 15, 2025
| By: | /s/ Richard Jordan | |
| Richard Jordan, Chief Executive Officer | ||
| (Principal Executive) |