NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
OCTOBER 31, 2022
NOTE 1 – ORGANIZATION AND BUSINESS
Yuengling’s
Ice Cream Corporation, (f/k/a Aureus, Inc.) (“Yuengling’s,” “YCRM,” “we,”
“us,” or the “Company”) was incorporated in Nevada on April 19, 2013, under the name “Aureus
Incorporated.” We were initially organized to develop and explore mineral properties in the state of Nevada. Effective December 15,
2017, we changed our name to “Hohme, Inc.,” and, effective February 7, 2019, we changed our name to “Aureus, Inc.
and on September 14, 2021, the Company changed their name to Yuengling’s Ice Cream Corporation”. We are currently active in
the state of Nevada.
We are a food brand development company that builds
and represents popular food concepts throughout the United States and international markets. Management is highly experienced at business
integration and re-branding potential. With little territory available for the older brands, we intend to bring to our customers fresh
innovative brands that have great potential. All of our brands will be unique in nature as we focus on niche markets that are still in
need of development.
We operate two lines of business. Through our
subsidiary, YIC Acquisitions Corp. (“YICA”), we acquired the assets of Yuengling’s Ice Cream in June 2019. YICA
produces and sells high-quality ice cream without artificial colors, flavoring, or preservatives and no added hormones.
In September 2020, we entered into the micro market
segment and launched our second business line, Aureus Micro Markets (“AMM”). Closely tied to the vending machine industry,
Micro Markets look and feel like modern convenience stores while functioning with the ease and efficiency of vending foodservice and refreshment
services.
NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES
Basis
of presentation
The Company’s financial statements have
been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).
Use
of Estimates
The preparation
of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Concentrations of Credit Risk
We maintain our cash in bank deposit accounts,
the balances of which at times may exceed federally insured limits. We continually monitor our banking relationships and consequently
have not experienced any losses in our accounts. We believe we are not exposed to any significant credit risk on cash.
Cash Equivalents
The Company considers all highly liquid investments
with a maturity of three months or less when purchased to be cash equivalents. There were no cash equivalents for the years ended October
31, 2022 or 2021.
Restricted Cash
The Company has an obligation to transfer $50,000
to Mid Penn Bank as security pursuant to the Agreement of Sale and Security Agreement with Mid Penn Bank and Yuengling Ice Cream Corp,
by February 28, 2023. If the funds are not transferred by February 28, 2023, the Bank the has option to call the loan and to require the
Company to pay any attorney’s fees incurred.
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 October 31, 2022.
Principles of Consolidation
The accompanying consolidated financial statements
include the accounts of the Company and its wholly owned subsidiary YIC Acquisitions Corp. All material transactions and balances have
been eliminated on consolidation.
Inventory
Inventories
are stated at the lower of cost or market. 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 October 31, 2022 and 2021 were $56,212 and $56,212, respectively. Inventory
consists of lids for pint size containers. They are stored in plastic bags inside of sealed cardboard boxes so are considered usable.
The company’s plan is to run production and use them in the next 6-9 months.
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 and Diluted Earnings Per Share
Net income (loss) per common share is computed
pursuant to section 260-10-45 of the FASB Accounting Standards Codification. Basic net income (loss) per common share is computed
by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period. Diluted net
income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock and
potentially outstanding shares of common stock during the period. The weighted average number of common shares outstanding and potentially
outstanding common shares assumes that the Company incorporated as of the beginning of the first period presented. As of October 31, 2022
and 2021, there are 44,490,234 and 20,472,145 potentially dilutive shares, respectively, if the Preferred A were to be converted. As of
October 31, 2022 and 2021, the Company’s diluted loss per share is the same as the basic loss per share, as the inclusion of any
potential shares would have had an anti-dilutive effect due to the Company generating a loss.
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 nonemployee 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.
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, 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
Fair value is defined as the exchange price that
would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset
or liability in an orderly transaction between market participants on the measurement date. ASC Topic No. 820 establishes a fair value
hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels, as described below:
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 following table classifies the Company’s
liabilities measured at fair value on a recurring basis into the fair value hierarchy as of October 31, 2022 and 2021:
| Schedule of liabilities measured at fair value |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Description |
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total Gains |
|
| Derivative |
|
$ |
– |
|
|
$ |
– |
|
|
$ |
247,034 |
|
|
$ |
73,670 |
|
| Total |
|
$ |
– |
|
|
$ |
– |
|
|
$ |
247,034 |
|
|
$ |
73,670 |
|
The following table classifies the Company’s
liabilities measured at fair value on a recurring basis into the fair value hierarchy as of October 31, 2021:
| Description |
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total Gains |
|
| Derivative |
|
$ |
– |
|
|
$ |
– |
|
|
$ |
– |
|
|
$ |
14,875 |
|
| Total |
|
$ |
– |
|
|
$ |
– |
|
|
$ |
– |
|
|
$ |
14,875 |
|
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 October 31, 2022, and 2021, no liability for unrecognized tax benefits was required to be reported.
Revenue recognition
Revenue is recognized when a customer obtains
control of promised goods or services and is recognized in an amount that reflects the consideration that an entity expects to receive
in exchange for those goods or services. In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty
of revenue and cash flows arising from contracts with customers. The amount of revenue that is recorded reflects the consideration that
the Company expects to receive in exchange for those goods. The Company applies the following five-step model in order to determine this
amount: (i) identification of the promised goods in the contract; (ii) determination of whether the promised goods are performance
obligations, including whether they are distinct in the context of the contract; (iii) measurement of the transaction price, including
the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations; and (v) recognition
of revenue when (or as) the Company satisfies each performance obligation.
The Company only applies the five-step model to contracts
when it is probable that the entity will collect the consideration it is entitled to in exchange for the goods or services it transfers
to the customer. Once a contract is determined to be within the scope of ASC 606 at contract inception, the Company reviews the contract
to determine which performance obligations the Company must deliver and which of these performance obligations are distinct. The Company
recognizes as revenues the amount of the transaction price that is allocated to the respective performance obligation when the performance
obligation is satisfied or as it is satisfied. Generally, the Company's performance obligations are transferred to customers at a point
in time, typically upon delivery. YIC Acquisitions Corp (Yuengling’s Ice Cream) generates
its revenue through the sale of pints to retailers, through the online sales of pints directly to consumers, and through the sale of 3
gallon tubs to food service establishments, such as restaurants, stadiums, and universities. Revenue is recognized at the time of delivery
or, for online sales, at the time of the transaction. Retailers and food service customers’ terms are generally 15 or 30 days. Online
sales are paid via credit card and funds are generally received within 30 days.
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 a convertible note in
the amount of $87,222. The full amount would have been recognized as interest expense as of October 31, 2022, as the loan was exchanged
for a new convertible note in October 2022.
The Company has implemented all new accounting
pronouncements that are in effect. These pronouncements did not have any material impact on the consolidated financial statements unless
otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that
might have a material impact on our financial position or results of operations.
NOTE 3 – GOING CONCERN
The accompanying consolidated financial statements
have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal
course of business. The Company has an accumulated deficit of $4,032,125, had a net loss of $481,352, and net cash used in operating activities
of $268,238 for the year ended October 31, 2022. The Company’s ability to raise additional capital through the future issuances
of common stock and/or debt financing is unknown. The obtainment of additional financing, the successful development of the Company’s
contemplated plan of operations, and its transition, ultimately, to the attainment of profitable operations are necessary for the Company
to continue operations. These conditions and the ability to successfully resolve these factors raise substantial doubt about the Company’s
ability to continue as a going concern. The financial statements of the Company do not include any adjustments that may result from the
outcome of these aforementioned uncertainties.
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 | |
| | |
| |
| | |
October 31,
2022 | | |
October 31,
2021 | |
| Property and equipment | |
$ | 30,300 | | |
$ | 30,300 | |
| Less: accumulated depreciation | |
| – | | |
| – | |
| Property and equipment, net | |
$ | 30,300 | | |
$ | 30,300 | |
Depreciation Expense
Property and equipment
consist of shelving and racks purchased for the Aureus Micro Markets business, which has been temporarily put on hold. As of October 31,
2022, the Company’s fixed assets have not yet been placed in service. Depreciation will begin on the date the assets are placed
into service. If the Company does not pursue the Micro Markets business it may be able to use the shelving and racks in its current business.
NOTE 5 – LOAN
RECEIVABLE
On May 17,
2022, the Company and Revolution Desserts, LLC (“Revolution”) terminated the Definitive Agreement entered into on April 30,
2022. The primary reason for the termination is the regulatory delays in qualifying the Company’s Reg 1-A. Per the terms
of the original agreement, the Company has advanced Revolution $80,000, which has been accounted for as a note receivable. No loan terms
have been established as of October 31, 2022. Due to the uncertainty of the collection of this receivable the Company has written the
receivable off and recognized $80,000 of bad debt expense.
NOTE 6 – NOTES PAYABLE
On September 9, 2015, the Company issued to Backenald
Corp. a promissory note in the principal amount of $20,000, bearing interest at the rate of 5% per annum and maturing on the first anniversary
of the date of issuance. This note is in default and its interest rate has been increased to 10%. As of October 31, 2022, accrued interest
amounted to $13,151.
On February 23, 2017, the Company issued Travel
Data Solutions a promissory note in the principal amount of $17,500, bearing interest at the rate of 8% per annum, compounded annually,
and maturing on the first anniversary of the date of issuance. This note is in default. As of October 31, 2022, accrued interest amounted
to $9,982.
On March 27, 2017, the Company issued Craigstone
Ltd. a promissory note in the principal amount of $12,465, bearing interest at the rate of 8% per annum, compounded annually, and maturing
on the first anniversary of the date of issuance. This note is in default. As of October 31, 2022, accrued interest amounted to $6,729.
On May 16, 2017, the Company issued Travel Data
Solutions a promissory note in the principal amount of $4,500, bearing interest at the rate of 8% per annum, compounded annually, and
maturing on the first anniversary of the date of issuance. This note is in default. As of October 31, 2022, accrued interest amounted
to $2,357.
On July 28, 2017, we issued Backenald Trading
Ltd. a promissory note in the principal amount of $20,000, bearing interest at the rate of 8% per annum, compounded annually, and maturing
on the first anniversary of the date of issuance. This note is in default. As of October 31, 2022, accrued interest amounted to $10,005.
On January 24, 2020, the company issued a third
party a promissory note in the principal amount of $15,000, bearing interest at the rate of 10% per annum, and maturing on April 30, 2020.
As of October 31, 2022, there is $0 and $1,155, principal and interest, respectively, due on this note.
On March 24, 2020, the company issued a third
party a promissory note in the principal amount of $20,000, bearing interest at the rate of 10% per annum, and maturing on May 30, 2020.
As of October 31, 2022, the balance due on this note for principal and interest is $5,000 and $4,975, respectively. This note is in default.
On April 10, 2020, the Company issued a convertible
promissory note to Device Corp., in the principal amount of $49,328, bearing interest at the rate of 10% per annum, and maturing on April
10, 2021. The note is convertible into shares of common stock at $0.0001 per share. The note was issued pursuant to the terms of the Debt
Purchase and assignment agreement between Tiger Trout Capital Puerto Rico LLC and Device Corp, whereby Device purchased from Tiger Trout
debt in the amount of $49,328 plus any accrued interest. As of October 31, 2022, the balance due on this note is $0.
As of October 31, 2022, the Company was also indebted
to another third party for a total of $24,656. This note is non-interest bearing and currently past due and in default.
NOTE 7 – LOANS PAYABLE
The Company has an SBA loan with monthly payments
that matures on March 13, 2026. The balance due on this loan as of October 31, 2022 and 2021, is $659,092 and $735,502, respectively.
As of October 31, 2022, the interest rate on this loan has increased to 8.25% from its original 5.25%.
The Company has a line of credit requiring monthly
payments. On December 24, 2021, $106,201 from a CD was applied to the Line of Credit balance. The balance due on this loan as of October
31, 2022 and 2021 is $693,799 and $800,000, respectively. As of October 31, 2022, the interest rate on this loan has increased to 7.25%
from its original 4.25%.
On March 16, 2021, the Company received a Paycheck
Protection Program loan under the CARES Act for $114,582 (the “PPP Loan”). The
Paycheck Protection Program provides that the use of PPP Loan proceeds are limited to certain qualifying expenses and may be partially
or wholly forgiven in accordance with the requirements set forth in the CARES Act. The Company has used the PPP Loan only for
permitted uses, although no assurance can be given that the Company will obtain forgiveness of all or any portion of amounts due
under the PPP Loan. If not forgiven the loan bears interest at 1% per annum and matures in five years. During year ended October
31, 2021, $34,582 of this loan was forgiven per the terms of the PPP loan. During year ended October
31, 2022, the remaining $80,000 of this loan and $637 of accrued interest were forgiven per the
terms of the PPP loan.
NOTE
8 – CONVERTIBLE NOTE PAYABLE
The following table summarizes the convertible
notes and related activity as of October 31, 2021:
| Schedule of convertible notes and related activity | |
| |
| |
| | | |
| | | |
| | | |
| | | |
| | |
| Note Holder | |
Date | |
Maturity Date | |
Interest | | |
Balance
October 31,
2020 | | |
Additions | | |
Repayments | | |
Balance
October 31, 2021 | |
| Geneva Roth Remark Holding Inc | |
| |
| |
| % | | |
| | |
| | |
| ) | |
| |
| Geneva Roth Remark Holding Inc | |
| |
| |
| % | | |
| | |
| | |
| ) | |
| |
| Total | |
| |
| |
| | | |
$ | | |
$ | | |
$ | ) | |
$ | |
On March 2, 2022, the Company issued a convertible
promissory note to Quick Capital, LLC in the amount of $87,222. The company received $73,500, after a 10% OID and transaction and legal
costs. The note bears interest at 12% and matures in one year. The difference of $13,722 was recorded as a debt discount. The note is
convertible into shares of common stock at $0.0005 per share. On October 21, 2022, the total principal and accrued interest of $93,818,
was exchanged for a new convertible note. The new note bears interest at 12% and matures on March 21, 2023. The note is convertible into
shares of common stock at 65% of the lowest trade price during the ten days prior to the date of conversion.
On September 7, 2022, the Company issued a convertible
promissory note to 1800 Diagonal Lending LLC in the amount of $44,250. The company received $40,000, after $4,250 of OID and transaction
and legal costs. The note bears interest at 12% and matures in one year. The difference of $4,250 was recorded as a debt discount. The
note is convertible into shares of common stock at 63% of the average of the two lowest trades during the fifteen days prior to the date
of conversion.
The following table summarizes the convertible
notes outstanding as of October 31, 2022:
| Note Holder |
|
Date |
|
Maturity Date |
|
Interest |
|
|
Balance
October 31,
2021 |
|
|
Additions |
|
|
Repayments |
|
|
Balance
October 31, 2022 |
|
| Quick Capital, LLC |
|
10/21/2022 |
|
3/21/2023 |
|
|
12% |
|
|
|
– |
|
|
$ |
93,818 |
|
|
$ |
– |
|
|
$ |
93,818 |
|
| 1800 Diagonal Lending LLC |
|
9/7/2022 |
|
9/7/2023 |
|
|
12% |
|
|
|
– |
|
|
|
44,250 |
|
|
|
– |
|
|
|
44,250 |
|
| Total |
|
|
|
|
|
|
|
|
|
$ |
– |
|
|
$ |
138,068 |
|
|
$ |
– |
|
|
|
138,068 |
|
| Less Debt Discount |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(123,813 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
14,255 |
|
A summary of the activity of the derivative liability
for the notes above is as follows:
| Schedule of derivative liability | |
| |
| Balance at October 31, 2020 | |
$ | – | |
| Increase to derivative due to new issuances | |
| 145,278 | |
| Decrease to derivative due to repayments | |
| (130,403 | ) |
| Derivative loss due to mark to market adjustment | |
| (14,875 | ) |
| Balance at October 31, 2021 | |
| – | |
| Increase to derivative due to new issuances | |
| 320,704 | |
| Decrease to derivative due to repayments | |
| – | |
| Derivative loss due to mark to market adjustment | |
| (73,670 | ) |
| Balance at October 31, 2022 | |
$ | 247,034 | |
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 as of October 31, 2022 is as follows:
| Schedule of Derivative Liabilities at Fair Value |
|
|
|
|
|
|
|
|
| Inputs |
|
October 31, 2022 |
|
|
Initial
Valuation |
|
| Stock price |
|
$ |
0.01 |
|
|
$ |
0.01 - 0.026 |
|
| Conversion price |
|
$ |
0.0046 - 0.005 |
|
|
$ |
0.0046 - 0.0069 |
|
| Volatility (annual) |
|
|
272.4% – 352.9% |
|
|
|
222.7% - 250.6% |
|
| Risk-free rate |
|
|
3.6% - 4.3% |
|
|
|
3.6% - 4.3% |
|
| Dividend rate |
|
|
– |
|
|
|
– |
|
| Years to maturity |
|
|
0.39 – 0.85 |
|
|
|
0.41 - 1 |
|
NOTE 9 – RELATED PARTY TRANSACTIONS
During the year ended October 31, 2021, the officers
of the Company advanced the company $30,750 to pay for general operating expenses. As of October 31, 2021, all amounts have been repaid.
During the year ended October 31, 2021, the Company
paid Everett Dickson, CEO, $40,000 for compensation.
During the year ended October 31, 2021, the Company
paid Robert Bohorad, YICA’s Chief Operating Officer, $45,000 for compensation.
During the year ended October 31,
2022, a $5,500 payment was mistakenly made to a Company controlled by Everett Dickson. The amount is to be repaid.
In June 2022, Everett Dickson advanced the Company
$6,000 for a general operating expense. The $6,000 was repaid the following month.
During the year ended October 31,
2022, the Company paid Robert Bohorad, YICA’s Chief Operating Officer, $22,000 for compensation. As of October 31,
2022, there is $41,000 of accrued compensation due to Mr. Bohorad.
NOTE 10 – COMMON STOCK
During the year ended October 31, 2021,
the Company issued 3,000,000 shares of common stock for conversion of $45,000 of principal and interest.
During the year ended October 31, 2021,
the Company sold 3,233,333 shares of common stock for total cash proceeds of $540,000. As of October 31, 2021, 733,333 shares have
not yet been issued by the transfer agent, as such $165,000 was disclosed as common stock to be issued. The shares were issued in November
2021.
During the
year ended October 31, 2022,
the Company sold 2,560,000 shares of common stock, for total cash proceeds of $187,520.
On January 21, 2022, the Company increased its
authorized common stock from 1,750,000,000 (1.75 billion) to 2,000,000,000 (2 billion) shares.
On March 1, 2022, the Company increased its authorized
common stock from 2,000,000,000 (2 billion) to (2.5 billion) shares.
On August 5, 2022, the Company effectuated a reverse
stock split at a ratio of 1-for-150 common shares. All shares throughout these financial statements have been retroactively restated to
reflect the reverse split.
On October 3, 2022, Device Corp converted $6,500
of the amount due in Series A preferred stock to 1,300,000 shares of common stock.
NOTE 11 – PREFERRED STOCK
Series A Preferred
The Company has designated Ten Million (10,000,000)
shares of Preferred Stock the Series A Convertible Preferred Stock with a par and stated value of $0.001 per share. The holders of the
Series A Convertible Preferred Stock are not entitled to receive any dividends.
Except as otherwise required by law or by the
Articles of Incorporation and except as set forth below, the outstanding shares of Series A Convertible Preferred Stock shall vote together
with the shares of Common Stock and other voting securities of the Corporation as a single class and, regardless of the number of shares
of Series A Convertible Preferred Stock outstanding and as long as at least one of such shares of Series A Convertible Preferred Stock
is outstanding shall represent Sixty Six and Two Thirds Percent (66 2/3%) of all votes entitled to be voted at any annual or special meeting
of shareholders of the Corporation or action by written consent of shareholders. Each outstanding share of the Series A Convertible Preferred
Stock shall represent its proportionate share of the 66 2/3% which is allocated to the outstanding shares of Series A Convertible Preferred
Stock.
The entirety of the shares of Series A Convertible
Preferred Stock outstanding as such time shall be convertible, at the option of the holder thereof, at any time and from time to time,
and without the payment of additional consideration by the holder thereof, into two thirds of the after conversion outstanding fully paid
and non-assessable shares of Common Stock. Each individual share of Series A Convertible Preferred Stock shall be convertible into Common
Stock at a ratio determined by dividing the number of shares of Series A Convertible Stock to be converted by the number of shares of
outstanding pre-conversion Series A Convertible Preferred Stock. Such initial Conversion Ratio, and the rate at which shares of Series
A Convertible Preferred Stock may be converted into shares of Common Stock. As of October 31, 2022,
there are 5,000,000 shares of Series A preferred stock owned by the Mr. Dickson.
As of October 31,
2022, the Company has preferred stock to be issued in the amount of $392,022. As of October 31,
2022, the preferred Series A can be converted at $0.0044 per share, into 89,095,909 shares of common stock. 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 amount of preferred shares to be issued, cash
has been repaid and the preferred shares are convertible at the option of the holder, the Company determined that mezzanine treatment
appears appropriate. As such, the Company feels these securities should be classified as Mezzanine equity until they are fully issued.
Series B Preferred
The Series B preferred stock is convertible into
shares of common stock at the option of the holder at a 35% discount to the lowest closing price for the thirty days prior to conversion.
On August 21, 2020, the Company entered into a
Stock Purchased Agreement with Kanno Group Holdings II Ltd.(“KGH”), in which KGH purchased $3,000 of Series B Preferred Stock.
The Company rescinded its agreement with KGH, agreeing to return the $3,000 it had received for
the preferred stock.
NOTE
12 – COMMITMENTS AND CONTINGENCIES
On January 20, 2022, the Company entered into
a Service Agreement with Desmond Partners, LLC for consulting services to be provided. The agreement is effective on February 1, 2022
for a term of three months. Per the terms of the agreement the consultant will receive a fee of $10,000 per month and 5% equity in the
Company. The agreement has expired with no issuance of equity to date.
NOTE 13 – INCOME TAX
Deferred taxes are provided on a liability method
whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carry forwards and deferred
tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts
of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management,
it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities
are adjusted for the effects of changes in tax laws and rates on the date of enactment. The Company is using the U.S. federal income tax
rate of 21% and 5% estimated state tax.
The provision for Federal income tax consists of the following October
31:
| Schedule of federal income tax | |
| | | |
| | |
| | |
2022 | | |
2021 | |
| Federal income tax benefit attributable to: | |
| | | |
| | |
| Book income | |
$ | (125,200 | ) | |
$ | (126,500 | ) |
| Related party accrual | |
| (10,700 | ) | |
| – | |
| Other nondeductible expenses | |
| (11,900 | ) | |
| – | |
| Less: valuation allowance | |
| 147,800 | | |
| 126,500 | |
| Net provision for Federal income taxes | |
$ | – | | |
$ | – | |
The cumulative tax effect at the expected rate of 21% of significant
items comprising our net deferred tax amount is as follows:
| Schedule of deferred tax amount net | |
| | | |
| | |
| | |
2022 | | |
2021 | |
| Deferred tax asset attributable to: | |
| | | |
| | |
| Net operating loss carryover | |
$ | (244,100 | ) | |
$ | (371,200 | ) |
| Related party accrual | |
| 10,700 | | |
| – | |
| Less: valuation allowance | |
| 233,400 | | |
| 371,200 | |
| Net deferred tax asset | |
$ | – | | |
$ | – | |
At October 31, 2022, the Company had net operating
loss carry forwards of approximately $939,000 that maybe offset against future taxable income. No tax benefit has been reported
in the October 31, 2022 or 2021 financial statements since the potential tax benefit is offset by a valuation allowance of the same amount.
On December 22, 2017, the U.S. government enacted
comprehensive tax legislation commonly referred to as the Tax Cut and Jobs Act (the “Tax Act”). The Tax Act establishes new
tax laws that affects 2018 and future years, including a reduction in the U.S. federal corporate income tax rate to 21% effective January
1, 2018.
Due to the change in ownership provisions of the
Tax Reform Act of 1986, net operating loss carry forwards for Federal income tax reporting purposes are subject to annual limitations. Should
a change in ownership occur, net operating loss carry forwards may be limited as to use in future years.
ASC Topic 740 provides guidance on the accounting
for uncertainty in income taxes recognized in a company’s financial statements. Topic 740 requires a company to determine whether
it is more likely than not that a tax position will be sustained upon examination based upon the technical merits of the position. If
the more-likely-than-not threshold is met, a company must measure the tax position to determine the amount to recognize in the financial
statements.
The Company includes interest and penalties arising
from the underpayment of income taxes in the statements of operations in the provision for income taxes. As of October 31, 2022, the Company
had no accrued interest or penalties related to uncertain tax positions. The Company files income tax returns in the U.S. federal jurisdiction,
Nevada.
NOTE 14 – SUBSEQUENT EVENTS
In accordance
with SFAS 165 (ASC 855-10) management has performed an evaluation of subsequent events through the date that the financial statements
were available to be issued and has determined that it does not have any material subsequent events to disclose in these financial statements
other than the following.
On December 8, 2022, the Company issued a Convertible
Promissory Note to 1800 Diagonal Lending LLC in the amount of $39,250. The Company received $35,000 with $4,250 retained for fees. The
Note bears interest at 12% and matures in one year.
On
December 9, 2022, the Company entered into an exclusive licensing agreement with GPO Plus, Inc. (OTCQB: GPOX). GPOX will
develop a full line of CBD and other hemp derived cannabinoid products based on the iconic flavors of Yuengling’s Ice
Cream. The initial term of the Agreement runs through November 30, 2027, with an option
to extend for an additional five years. In consideration for the trademark license, GPOX will pay the Company a royalty of 5% of all
gross wholesale revenue generated from the sale of Yuengling’s Ice Cream branded products. Additional details regarding
products, flavors, launch date and where the product will be sold will be provided in the near future.
Subsequent to October 31, 2022, Quick Capital
LLC, converted $33,827 and $4,034 of principal and interest, respectively, into 10,337,727 shares of common stock.
On January 14, 2023, the Company granted 30 million
restricted common shares to Charles Green and 30 million restricted common shares to Robert C. Bohorad. The Company signed a letter of
intent with Mr. Green and Mr. Bohorad on October 26, 2022, where Mr. Green will join the company as President and CEO and Mr. Bohorad
will become Chief Operating Officer and Chief Financial Officer. The purpose of the issuance is to retain and incentivize the individuals
in their efforts to manage the Company and foster its success.
On February 3, 2023, the Company issued
a convertible promissory note to Quick Capital, LLC in the amount of $25,555.55. The company received $20,000 after a 10% OID and transaction
and legal costs. The note bears interest at 12% and matures in one year. The note is convertible into shares of common stock at 65% of
the lowest trade price during the ten days prior to the date of conversion.