Forward-looking Statements
There are "forward-looking statements" contained in this quarterly report. All
statements that express expectations, estimates, forecasts or projections are
forward-looking statements. In addition, other written or oral statements which
constitute forward-looking statements may be made by us or on our behalf. Words
such as "expect," "anticipate," "intend," "plan," "believe," "seek," "estimate,"
"project," "forecast," "may," "should," and variations of such words and similar
expressions are intended to identify such forward-looking statements. These
statements are not guarantees of future performance and involve risks,
uncertainties and assumptions which are difficult to predict. Therefore, actual
outcomes and results may differ materially from what is expressed or forecasted
in or suggested by such forward-looking statements. We undertake no obligation
to update or revise any of the forward-looking statements after the date of this
quarterly report to conform forward-looking statements to actual results.
Important factors on which such statements are based are assumptions concerning
uncertainties, including but not limited to, uncertainties associated with the
following:
· Inadequate capital and barriers to raising the additional capital or to
obtaining the financing needed to implement our business plans;
· Our failure to earn revenues or profits;
· Inadequate capital to continue business;
· Volatility or decline of our stock price;
· Potential fluctuation in quarterly results;
· Rapid and significant changes in markets;
· Litigation with or legal claims and allegations by outside parties; and
· Insufficient revenues to cover operating costs.
The following discussion should be read in conjunction with the financial
statements and the notes thereto which are included in this quarterly report.
This discussion contains forward-looking statements that involve risks,
uncertainties and assumptions. Our actual results may differ substantially from
those anticipated in any forward-looking statements included in this discussion
as a result of various factors.
Overview
Yuengling's Ice Cream Corporation, (f/k/a Aureus, Inc.) ("Yuengling's," "ARSN,"
"we," "us," or the "Company") was incorporated in Nevada on April 19, 2013. Our
offices are located at One Glenlake Parkway #650, Atlanta, GA 30328. Our
telephone number is (404) 885-6045, and our email address is
aureus.now@gmail.com. Our website is www.aureusnow.com.
We are a food brand development company that builds and represents popular food
concepts throughout the United States and international markets. Management is
highly experienced at business integration and re-branding potential. With
little territory available for the older brands, we intend to bring fresh,
innovative brands with great potential. Our brands will be unique as we focus on
niche markets that are still in need of development.
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We operate two lines of business. Through our subsidiary, YIC Acquisitions Corp.
("YICA"), we acquired the assets of Yuengling's Ice Cream ("YIC" or
"Yuengling's") in June 2019. Yuengling's sells high-quality ice cream without
artificial colors, flavoring, or preservatives and no added hormones.
Yuengling's is currently sold in select retailers and convenience stores in
eastern Pennsylvania. In September 2020, we entered into the micro-market
segment and launched our second business line, Aureus Micro-Markets ("AMM").
Closely tied to the vending machine industry, micro-markets look and feel like
modern convenience stores while functioning with the ease and efficiency of
vending food service and refreshment services. They provide an improved customer
experience and greater product variety, with a proven track record of increasing
sales at vending locations while keeping labor costs down and improving
operating efficiencies. Micro-markets are a hybrid form of vending, food
service, coffee service, and convenience stores that provide an improved
customer experience, exponentially greater product variety, and increased sales
within a single location while keeping labor costs down and improving
operational efficiencies. The expanded product variety, open flow, and cashless
payment options mean that consumers spend less time in line fumbling with
cash/change, can purchase multiple items with one transaction, and buy more
items per transaction than with cash transactions.
In January 2022, the company signed a non-binding Letter of Intent ("LOI") to
acquire a production facility. The LOI expired with no further taken by either
party.
In February 2022, the Company signed a binding Letter of Intent to acquire
Revolution Desserts ("Revolution"). Revolution owns or licenses the Gelato
Fiasco, Sweet Scoops, Art Cream, and SoCo Creamery brands. Revolution was
founded by Robert Carlson and Luciano Alves. Mr. Carlson and Charles Green run
the day-to-day operations of the company.
On May 17, 2022, the Company and Revolution terminated the Definitive Agreement
entered into on April 30, 2022. The primary reason for the termination is the
regulatory delays in qualifying the Company's Reg 1-A.
Results of Operations
The three months ended April 30, 2022 compared to the three months ended April
30, 2021
Revenue
We had $0 in revenue for the three months ended April 30, 2022, compared to $230
for the three months ended April 30, 2021. The decrease in revenue is due to a
loss in retail food service customers.
Cost of Goods Sold
We incurred $0 in costs of goods sold for the three months ended April 30, 2022,
compared to $20,600 for the three months ended April 30, 2021. In the prior
period we had large a write down of our inventory due to expired or goods sold
below cost.
General and administrative expenses
We had $30,862 of general and administrative expenses ("G&A") for the three
months ended April 30, 2022, compared to $16,366 for the three months ended
April 30, 2021, an increase of $14,496 or 88.6%. The increase is primarily due
to increased consulting expense during the current period
Consulting - related party
We had $0 of related party consulting expenses for the three months ended April
30, 2022, compared to $80,000 for the three months ended April 30, 2021. In the
prior period we made a payment of $40,000 to Everett Dickson, our former CEO and
$40,000 to Robert Bohorad, YICA's former Chief Operating Officer and our current
CEO.
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Officer Compensation
We incurred $15,000 of officer compensation for the three months ended April 30,
2022. The Company is compensating Robert Bohorad, CEO, $5,000 per month. In the
prior periods this was classified as related party consulting.
Professional fees
We incurred $31,342 of professional fees for the three months ended April 30,
2022, compared to $19,200 for the three months ended April 30, 2021, an increase
of $12,142 or 63.2%. Professional fees generally consist of audit, legal,
accounting and investor relation service fees. The increase is primarily due to
an increase in investor relation expense and audit fees.
Other income (expense)
For the three months ended April 30, 2022, we had total other expense of
$23,473, compared to total other income of $14,084 for the three months ended
April 30, 2021. In the current period we incurred $23,473 of interest expense,
which includes $2,287 of debt discount amortization. In the prior period we
recognized a loss on conversion of debt of $26,000, a gain on forgiveness of
debt of $33,536, interest income of $372 and interest expense of $19,824.
Net loss
We incurred a net loss of $100,677 for the three months ended April 30, 2022,
compared to a net loss of $121,852 for the three months ended April 30, 2021.
The six months ended April 30, 2022 compared to the six months ended April 30,
2021
Revenue
We had $0 in revenue for the six months ended April 30, 2022, compared to $3,616
for the six months ended April 30, 2021. The decrease in revenue is due to a
loss in retail food service customers.
Cost of Goods Sold
We incurred $0 in costs of goods sold for the six months ended April 30, 2022,
compared to $53,051 for the six months ended April 30, 2021. In the prior period
we had large a write down of our inventory due to expired or goods sold below
cost.
General and administrative expenses
We had $68,486 of G&A for the six months ended April 30, 2022, compared to
$90,031 for the six months ended April 30, 2021, a decrease of $21,545 or 23.9%.
The decrease is primarily due to a decrease in promotional expense during the
current period.
Consulting - related party
We had $0 of related party consulting expenses for the six months ended April
30, 2022, compared to $85,000 for the six months ended April 30, 2021. In the
prior period we made a payment of $40,000 to Everett Dickson, our former CEO and
$45,000 to Robert Bohorad, YICA's former Chief Operating Officer and our current
CEO.
Officer compensation
We had $33,000 of officer compensation for the six months ended April 30, 2022,
compared to $0 for the six months ended April 30, 2021. In the current period we
began to compensate Mr. Bohorad, CEO, $5,000 per month.
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Professional fees
We incurred $75,145 of professional fees for the six months ended April 30,
2022, compared to $24,200 for the six months ended April 30, 2021, an increase
of $50,945 or 210.5%. Professional fees generally consist of audit, legal,
accounting and investor relation service fees. The increase is primarily due to
an increase in investor relation expense and audit fees.
Other income (expense)
For the six months ended April 30, 2022, we had total other expense of $43,831,
compared to total other expense of $27,124 for the six months ended April 30,
2021. In the current period we incurred $44,005 of interest expense, which
includes $2,287 of debt discount amortization, and $174 of interest income. In
the prior period we recognized a gain on the sale of an asset of $1,000, a loss
on conversion of debt of $26,000, a gain on forgiveness of debt of $33,536 and
interest expense of $36,032.
Net loss
We incurred a net loss of $220,462 for the six months ended April 30, 2022,
compared to a net loss of $275,790 for the six months ended April 30, 2021.
Liquidity and Capital Resources
Cash flow from operations
Cash used in operating activities for the six months ended April 30, 2022 was
$197,750 compared to $219,138 of cash used in operating activities for the six
months ended April 30, 2021.
Cash Flows from Investing
We used $80,000 for investing activities for the six months ended April 30,
2022, which was paid to Revolution Desserts (Note 5). We received $1,000 in the
prior period from the sale of a piece of equipment.
Cash Flows from Financing
For the six months ended April 30, 2022, $66,131 was used by financing
activities. We received $96,000 from proceeds from the sale of common stock and
$73,500 for the issuance of a convertible promissory note. We repaid $90,102 on
our notes payable and $106,201 towards our LOC. For the six months ended April
30, 2021, we netted $218,434 from financing activities. We received $188,600
from the sale of preferred stock and $30,584 from other notes payable. We repaid
$5,000 of notes payable.
Going Concern
As of April 30, 2022, there is substantial doubt regarding our ability to
continue as a going concern as we have not generated sufficient cash flow to
fund our operations.
We have suffered recurring losses from operations and have not yet generated any
revenue. As a result of these and other factors, our independent auditor has
expressed substantial doubt about our ability to continue as a going concern.
Our future success and viability, therefore, are dependent upon our ability to
generate capital financing. The failure to generate sufficient revenues or raise
additional capital may have a material and adverse effect upon us and our
shareholders.
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Management's plans with regard to these matters encompass the following actions:
(i) obtaining funding from new investors to alleviate our working capital
deficiency, and (ii) implementing our plan of operation to generate sales. Our
continued existence is dependent upon our ability to resolve our liquidity
problems and increase profitability in our business operations. However, the
outcome of management's plans cannot be ascertained with any degree of
certainty. Our financial statements do not include any adjustments that might
result from the outcome of these risks and uncertainties.
Off Balance Sheet Arrangements
We have no off-balance sheet arrangements that have or are reasonably likely to
have a current or future effect on our financial condition, changes in financial
condition, revenues or expenses, results of operations, liquidity, capital
expenditures or capital resources that are material to investors.
Critical Accounting Policies
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and the disclosure of contingent assets and liabilities of the date
of the financial statements and the reported amounts of revenues and expenses
during the reporting period. Note 2 to the Financial Statements describes the
significant accounting policies and methods used in the preparation of the
Financial Statements. Estimates are used for, but not limited to, contingencies
and taxes. Actual results could differ materially from those estimates. The
following critical accounting policies are impacted significantly by judgments,
assumptions, and estimates used in the preparation of the Financial Statements.
We are subject to various loss contingencies arising in the ordinary course of
business. We consider the likelihood of loss or impairment of an asset or the
incurrence of a liability, as well as our ability to reasonably estimate the
amount of loss in determining loss contingencies. An estimated loss contingency
is accrued when management concludes that it is probable that an asset has been
impaired, or a liability has been incurred and the amount of the loss can be
reasonably estimated. We regularly evaluate current information available to us
to determine whether such accruals should be adjusted.
We recognize deferred tax assets (future tax benefits) and liabilities for the
expected future tax consequences of temporary differences between the book
carrying amounts and the tax basis of assets and liabilities. The deferred tax
assets and liabilities represent the expected future tax return consequences of
those differences, which are expected to be either deductible or taxable when
the assets and liabilities are recovered or settled. Future tax benefits have
been fully offset by a 100% valuation allowance as management is unable to
determine that it is more likely than not that this deferred tax asset will be
realized.
Recent Accounting Pronouncements
In August 2020, the FASB issued ASU 2020-06, Debt-Debt with Conversion and Other
Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity's Own
Equity (Subtopic 815-40)-Accounting for Convertible Instruments and Contracts in
an Entity's Own Equity. ASU 2020-06 reduces the number of accounting models for
convertible debt instruments and convertible preferred stock. For convertible
instruments with conversion features that are not required to be accounted for
as derivatives under Topic 815, Derivatives and Hedging, or that do not result
in substantial premiums accounted for as paid-in capital, the embedded
conversion features no longer are separated from the host contract. ASU 2020-06
also removes certain conditions that should be considered in the derivatives
scope exception evaluation under Subtopic 815-40, Derivatives and
Hedging-Contracts in Entity's Own Equity, and clarify the scope and certain
requirements under Subtopic 815-40. In addition, ASU 2020-06 improves the
guidance related to the disclosures and earnings-per-share (EPS) for convertible
instruments and contract in entity's own equity. ASU 2020-06 is effective for
public business entities that meet the definition of a Securities and Exchange
Commission (SEC) filer, excluding entities eligible to be smaller reporting
companies as defined by the SEC, for fiscal years beginning after December 15,
2021, including interim periods within those fiscal years. For all other
entities, the amendments are effective for fiscal years beginning after December
15, 2023, including interim periods within those fiscal years. Early adoption is
permitted, but no earlier than fiscal years beginning after December 15, 2020,
including interim periods within those fiscal years. The Board specified that an
entity should adopt the guidance as of the beginning of its annual fiscal year.
The Company has chosen the early adoption of ASU 2020-06. The adoption of ASU
2020-06 had a material effect on the Company's financial statements. If the
standard was not early adopted the Company would have had to recognize a
beneficial conversion feature on its convertible note payable.
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