Forward-looking Statements
There are "forward-looking statements" contained in this quarterly report. All
statements that express expectations, estimates, forecasts or projections are
forward-looking statements. In addition, other written or oral statements which
constitute forward-looking statements may be made by us or on our behalf. Words
such as "expect," "anticipate," "intend," "plan," "believe," "seek," "estimate,"
"project," "forecast," "may," "should," and variations of such words and similar
expressions are intended to identify such forward-looking statements. These
statements are not guarantees of future performance and involve risks,
uncertainties and assumptions which are difficult to predict. Therefore, actual
outcomes and results may differ materially from what is expressed or forecasted
in or suggested by such forward-looking statements. We undertake no obligation
to update or revise any of the forward-looking statements after the date of this
quarterly report to conform forward-looking statements to actual results.
Important factors on which such statements are based are assumptions concerning
uncertainties, including but not limited to, uncertainties associated with the
following:
· Inadequate capital and barriers to raising the additional capital or to
obtaining the financing needed to implement our business plans;
· Our failure to earn revenues or profits;
· Inadequate capital to continue business;
· Volatility or decline of our stock price;
· Potential fluctuation in quarterly results;
· Rapid and significant changes in markets;
· Litigation with or legal claims and allegations by outside parties; and
· Insufficient revenues to cover operating costs.
The following discussion should be read in conjunction with the financial
statements and the notes thereto which are included in this quarterly report.
This discussion contains forward-looking statements that involve risks,
uncertainties and assumptions. Our actual results may differ substantially from
those anticipated in any forward-looking statements included in this discussion
as a result of various factors.
Overview
Aureus, Inc. ("Aureus," "ARSN," "we," "us," or the "Company") was incorporated
in Nevada on April 19, 2013. Our offices are located at One Glenlake Parkway
#650, Atlanta, GA 30328. Our telephone number is (404) 885-6045, and our email
address is aureus.now@gmail.com. Our website is www.aureusnow.com. We do not
incorporate the information on or accessible through our website into this
Registration Statement, and you should not consider any information on, or that
can be accessed through, our website a part of this Registration Statement.
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We are a food brand development company that builds and represents popular food
concepts throughout the United States and international markets. Management is
highly experienced at business integration and re-branding potential. With
little territory available for the older brands, we intend to bring fresh,
innovative brands with great potential. Our brands will be unique as we focus on
niche markets that are still in need of development.
We operate two lines of business. Through our subsidiary, YIC Acquisitions Corp.
("YICA"), we acquired the assets of Yuengling's Ice Cream ("YIC" or
"Yuengling's") in June 2019. Yuengling's sells high-quality ice cream without
artificial colors, flavoring, or preservatives and no added hormones.
Yuengling's is currently sold in select retailers and convenience stores in
eastern Pennsylvania. In September 2020, we entered into the micro-market
segment and launched our second business line, Aureus Micro-Markets ("AMM").
Closely tied to the vending machine industry, micro-markets look and feel like
modern convenience stores while functioning with the ease and efficiency of
vending food service and refreshment services. They provide an improved customer
experience and greater product variety, with a proven track record of increasing
sales at vending locations while keeping labor costs down and improving
operating efficiencies. Micro-markets are a hybrid form of vending, food
service, coffee service, and convenience stores that provide an improved
customer experience, exponentially greater product variety, and increased sales
within a single location while keeping labor costs down and improving
operational efficiencies. The expanded product variety, open flow, and cashless
payment options mean that consumers spend less time in line fumbling with
cash/change, can purchase multiple items with one transaction, and buy more
items per transaction than with cash transactions.
Results of Operations
The three months ended July 31, 2021 compared to the three months ended July 31,
2020
Revenue
We had $0 in revenue for the three months ended July 31, 2021, compared to
$1,134 for the three months ended July 31, 2020. The decrease in revenue is due
to a loss in retail food service customers.
Cost of Goods Sold
We incurred $0 in costs of goods sold for the three months ended July 31, 2021,
compared to $85,098 for the three months ended July 31, 2020. In the prior
period we had large a write down of our inventory due to expired or goods sold
below cost.
General and administrative expenses
We had $16,713 of general and administrative expenses ("G&A") for the three
months ended July 31, 2021, compared to $41,127 for the three months ended July
31, 2020, a decrease of $24,414 or 59.4%. The decrease is due to decreased
spending on investor relations and marketing during the current three-month
period compared to the prior period.
Professional fees
We incurred $37,735 of professional fees for the three months ended July 31,
2021, compared to $3,500 for the three months ended July 31, 2020, an increase
of $34,235 or 978%. Professional fees generally consist of audit, legal and
accounting fees. The increase is due to an increase of audit, legal and
accounting fees related to the filing of our Form 1-A and Form 10.
Other income (expense)
For the three months ended July 31, 2021, we had total other income of $67,422,
compared to total other expense of $186,748 for the three months ended July 31,
2020. In the current period we incurred $15,878 of interest expense and
recognized a gain on forgiveness of debt of $83,300. In the prior period we
recognized other income of $6,944, a gain on the sale of an asset of $16,000 and
a loss on conversion of debt of $208,500.
Net loss
We incurred a net income of $12,794 for the three months ended July 31, 2021,
compared to a net loss of $315,339 for the three months ended July 31, 2020.
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The nine months ended July 31, 2021 compared to the nine months ended July 31,
2020
Revenue
We had $3,568 in revenues for the nine months ended July 31, 2021, compared to
$54,231 for the nine months ended July 31, 2020, a decrease of $50,663 or 93.4%.
The large decrease in revenue is due to a loss in retail food service customers.
Cost of Goods Sold
We incurred $53,051 in costs of goods sold for the nine months ended July 31,
2021, compared to $124,879 for the nine months ended July 31, 2020, a decrease
of $71,828 or 57.5%. Of the $53,051, approximately $47,500, was a write down of
our inventory due to expired or goods sold below cost.
General and administrative expenses
We had $106,696 of G&A expense for the nine months ended July 31, 2021, compared
to $178,117 for the nine months ended July 31, 2020, a decrease of $71,421 or
40.1%. The decrease is due to decreased spending on investor relations and
marketing during the current period compared to the prior period.
Consulting - related party
We had $85,000 of related party consulting expenses for the nine months ended
July 31, 2021, compared to $0 for the nine months ended July 31, 2020. In the
current period we made a payment of $40,000 to our CEO and two payments totaling
$45,000 to Robert Bohorad, YICA's Chief Operating Officer.
Professional fees
We incurred $61,935 of professional fees for the nine months ended July 31,
2021, compared to $43,440 for the nine months ended July 31, 2020, an increase
of $18,495 or 42.6%. Professional fees generally consist of audit, legal and
accounting fees. The increase is due to increased legal fees during the period.
Other income (expense)
For the nine months ended July 31, 2021, we had total other income of $40,298,
compared to total other expense of $278,767 for the nine months ended July 31,
2020. In the current period we incurred $51,910 of interest expense, earned $372
of interest income, recognized a gain on forgiveness of debt of $118,836 and a
loss on conversion of debt of $26,000. In the prior period we incurred $71,404
of interest expense, earned $1,037 of interest income and recognized a loss on
conversion of debt of $208,500.
Net loss
We incurred a net loss of $262,816 for the nine months ended July 31, 2021,
compared to $570,972 for the nine months ended July 31, 2020.
Liquidity and Capital Resources
Cash flow from operations
Cash used in operating activities for the nine months ended July 31, 2021 was
$291,396 compared to $80,673 of cash used in operating activities for the nine
months ended July 31, 2020.
Cash Flows from Investing
Cash used in investing activities for the purchase of equipment for the nine
months ended July 31, 2021 was $1,000 compared to $0 of cash used in investing
activities for the nine months ended July 31, 2020.
Cash Flows from Financing
For the nine months ended July 31, 2021, we received $284,627 from financing
activities. $114,582 from proceeds from notes payable, $198,600 from the sale of
preferred stock and $28,545 from related party loans. We repaid $57,100 of a
notes payable during the same period. For the nine months ended July 31, 2020,
we netted $11,314 from financing activities, mostly from $35,000 from proceeds
from notes payable, $77,500 from the sale of common stock and repayments of
$94,536 of notes payable.
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Going Concern
As of July 31, 2021, there is substantial doubt regarding our ability to
continue as a going concern as we have not generated sufficient cash flow to
fund our operations.
We have suffered recurring losses from operations and have not yet generated any
revenue. As a result of these and other factors, our independent auditor has
expressed substantial doubt about our ability to continue as a going concern.
Our future success and viability, therefore, are dependent upon our ability to
generate capital financing. The failure to generate sufficient revenues or raise
additional capital may have a material and adverse effect upon us and our
shareholders.
Management's plans with regard to these matters encompass the following actions:
(i) obtaining funding from new investors to alleviate our working capital
deficiency, and (ii) implementing our plan of operation to generate sales. Our
continued existence is dependent upon our ability to resolve our liquidity
problems and increase profitability in our business operations. However, the
outcome of management's plans cannot be ascertained with any degree of
certainty. Our financial statements do not include any adjustments that might
result from the outcome of these risks and uncertainties.
Off Balance Sheet Arrangements
We have no off-balance sheet arrangements that have or are reasonably likely to
have a current or future effect on our financial condition, changes in financial
condition, revenues or expenses, results of operations, liquidity, capital
expenditures or capital resources that are material to investors.
Critical Accounting Policies
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and the disclosure of contingent assets and liabilities of the date
of the financial statements and the reported amounts of revenues and expenses
during the reporting period. Note 2 to the Financial Statements describes the
significant accounting policies and methods used in the preparation of the
Financial Statements. Estimates are used for, but not limited to, contingencies
and taxes. Actual results could differ materially from those estimates. The
following critical accounting policies are impacted significantly by judgments,
assumptions, and estimates used in the preparation of the Financial Statements.
We are subject to various loss contingencies arising in the ordinary course of
business. We consider the likelihood of loss or impairment of an asset or the
incurrence of a liability, as well as our ability to reasonably estimate the
amount of loss in determining loss contingencies. An estimated loss contingency
is accrued when management concludes that it is probable that an asset has been
impaired, or a liability has been incurred and the amount of the loss can be
reasonably estimated. We regularly evaluate current information available to us
to determine whether such accruals should be adjusted.
We recognize deferred tax assets (future tax benefits) and liabilities for the
expected future tax consequences of temporary differences between the book
carrying amounts and the tax basis of assets and liabilities. The deferred tax
assets and liabilities represent the expected future tax return consequences of
those differences, which are expected to be either deductible or taxable when
the assets and liabilities are recovered or settled. Future tax benefits have
been fully offset by a 100% valuation allowance as management is unable to
determine that it is more likely than not that this deferred tax asset will be
realized.
Recent Accounting Pronouncements
We have reviewed other recently issued accounting pronouncements and plan to
adopt those that are applicable to us. We do not expect the adoption of any
other pronouncements to have an impact on our results of operations or financial
position.
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