UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For the quarterly period ended
or
For the transition period from __________ to __________
Commission File Number:
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
| (Address of principal executive offices) | (Zip Code) |
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒
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 ☐ No ☒
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). Yes ☐
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 second fiscal quarter. $756,108
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of as of May 20, 2025 there, were shares of common stock outstanding.
TABLE OF CONTENTS
i
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-five full-time and part-time employees, including officers and directors. Our employees are not represented by any labor union.
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.
ii
Use of Social Media
The Company does use social media channels as a means of disclosing material non-public information and for complying with its disclosure obligations under Regulation FD. Accordingly, investors and others should monitor the following accounts in addition to reviewing the Company’s SEC filings, press releases, and official website:
Parent Company (YCRM):
Twitter: @FrequencyHub
Subsidiary – ReachOut
Twitter: @ReachOutIT
LinkedIn: linkedin.com/company/reachoutit
CEO (Richard “Rick” Jordan):
Twitter: @mrrickjordan
LinkedIn: linkedin.com/in/mrrickjordan
The Company will also continue to use traditional channels, including press releases and filings with the SEC, to publicly disclose material information as required.
iii
PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
YUENGLING’S ICE CREAM CORPORATION
Index to Financial Statements
1
YUENGLING’S ICE CREAM CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
| March 31, 2025 |
December 31, 2024 |
|||||||
| ASSETS | ||||||||
| Current Assets: | ||||||||
| Cash | $ | $ | ||||||
| Accounts receivable | ||||||||
| Prepaid expenses | ||||||||
| Loans to related parties | ||||||||
| Inventory | ||||||||
| Total Current Assets | ||||||||
| Other Assets: | ||||||||
| Deposits | ||||||||
| Furniture and fixed assets, net | ||||||||
| Goodwill | ||||||||
| Right of use asset | ||||||||
| Total non-current assets | ||||||||
| Total Assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
| Current Liabilities: | ||||||||
| Accounts payable and accrued expenses | $ | $ | ||||||
| Accrued interest | $ | $ | ||||||
| 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 March 31, 2025 and December 31, 2024 | ||||||||
| Preferred stock, Series C and D, par value $, shares authorized, shares issued and outstanding at March 31, 2025 and December 31, 2024 | ||||||||
| Common stock: $ par value; shares authorized; and shares issued and outstanding at March 31, 2025 and December 31, 2024 | ||||||||
| 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.
2
YUENGLING’S ICE CREAM CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
| For the three months ended March 31, |
||||||||
| 2025 | 2024 | |||||||
| Revenue | $ | $ | ||||||
| Cost of goods sold | ||||||||
| Gross profit | ||||||||
| Operating Expenses: | ||||||||
| Impairment loss | ||||||||
| General and administrative expenses | ||||||||
| Stock compensation | ||||||||
| Compensation | ||||||||
| Professional fees | ||||||||
| Total operating expenses | ||||||||
| Loss from operations | ( |
) | ( |
) | ||||
| Other income (expense): | ||||||||
| Other (losses)/gains | ||||||||
| Gain (loss) on disposal | ||||||||
| Derivative: expense, gains and (losses) from issuances | ( |
) | ( |
) | ||||
| Derivative: expense, gains and (losses) upon conversion | ( |
) | ||||||
| Changes in fair market value | ||||||||
| Gain on debt extinguishment | ||||||||
| Interest expense | ( |
) | ( |
) | ||||
| Total other income (expense) | ( |
) | ||||||
| Income (loss) before provision for income tax | ( |
) | ||||||
| Provision for income tax | - | - | ||||||
| Net Income (loss) | $ | $ | ( |
) | ||||
| Preferred Dividends | ||||||||
| Net income (loss) available to common shareholders | ||||||||
| Basic and Diluted loss per share | $ | $ | ) | |||||
| Basic and Diluted weighted average shares | ||||||||
The accompanying notes are an integral part of these consolidated financial statements.
3
YUENGLING’S ICE CREAM CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ DEFICIT
FOR THE THREE MONTHS ENDED MARCH 31, 2025 AND 2024
| Series A Preferred Stock |
Series C & D Preferred Stock |
Common Stock | To Be Issued Common Stock |
Additional Paid in |
Accumulated | |||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Amount | Capital | Deficit | Total | |||||||||||||||||||||||||||||||
| Balance at December 31, 2024 | $ | $ | $ | $ | $ | $ | ( |
) | $ | ( |
) | |||||||||||||||||||||||||||||
| Sale of ReachOut including obligation to issue shares | - | - | - | ( |
) | ( |
) | |||||||||||||||||||||||||||||||||
| Retained earnings effect of sale of ReachOut | - | - | - | |||||||||||||||||||||||||||||||||||||
| Loss on Conversion | - | - | - | |||||||||||||||||||||||||||||||||||||
| Conversion of convertible note interest to common stock | - | - | ( |
) | ||||||||||||||||||||||||||||||||||||
| Warrants issued to investors | - | - | - | |||||||||||||||||||||||||||||||||||||
| Preferred stock dividends Series C & D | - | - | - | ( |
) | ( |
) | |||||||||||||||||||||||||||||||||
| Net income (loss) for three months ending March 31, 2025 | - | - | - | |||||||||||||||||||||||||||||||||||||
| Balance at March 31, 2025 | $ | $ | $ | $ | $ | $ | ( |
) | $ | ( |
) | |||||||||||||||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
4
YUENGLING’S ICE CREAM CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
| For the Three Months Ended March 31, |
||||||||
| 2025 | 2024 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
| NET INCOME (LOSS) | $ | $ | ( |
) | ||||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Amortization & depreciation | ||||||||
| Amortization of debt discounts | ||||||||
| Other gains and losses | ( |
) | ||||||
| Investment write off | ||||||||
| Derivative expense | ||||||||
| Loss on conversion of liability to common stock | ||||||||
| Changes in fair market value of derivatives | ( |
) | ( |
) | ||||
| Affiliate funding of expenses | ||||||||
| Gain on extinguishment | ( |
|||||||
| Fee notes issued | ||||||||
| Intangibles impairment | ||||||||
| Changes in assets and liabilities: | ||||||||
| Accounts receivable | ( |
) | ||||||
| Prepaids and Other | ||||||||
| A/P and accrued liabilities | ||||||||
| Equipment lease | ( |
) | ||||||
| Right of use asset net of liability | ( |
) | ||||||
| Customer deposits | ( |
) | ||||||
| Other current liabilities | ||||||||
| NET CASH USED IN OPERATING ACTIVITIES | ( |
) | ( |
) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
| Fixed assets acquired | ( |
) | ||||||
| NET CASH USED IN INVESTING ACTIVITIES | ( |
) | ||||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
| Proceeds from Fox loan | ||||||||
| Repayments Fox loan | ( |
) | ||||||
| Repayment of Fora loan | ( |
) | ||||||
| Repayments seller notes | ( |
) | ||||||
| Proceeds from note issued | ||||||||
| New vehicle loan | ||||||||
| Repayments vehicle loans | ( |
) | ||||||
| Repayments of affiliate advances | ( |
) | ||||||
| Proceeds – convertible notes payable | ||||||||
| NET CASH PROVIDED BY FINANCING ACTIVITIES | ||||||||
| EFFECT OF EXCHANGE RATE CHANGES ON CASH | ||||||||
| NET INCREASE (DECREASE) 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: | ||||||||
| Debt discounts | $ | $ | ||||||
| Preferred stock dividends | $ | $ | ||||||
| Conversion of accrued interest and conversion expenses | $ | $ | ||||||
| Convertible preferred shares to be issued - Singer | $ | ( |
) | $ | ||||
The accompanying notes are an integral part of these consolidated financial statements.
5
YUENGLING’S ICE CREAM CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2024
(Unaudited)
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 100% of the membership interests of ReachOut were exchanged for Series C Preferred Stock which is convertible into 87.5% of the total issued and outstanding shares of common stock of the Company (fully diluted basis) as determined at the consummation of the acquisition.
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.
6
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
Innovative Network Designs LLC (“IND”) is a New Jersey limited liability company and ReachOut acquired
Operations of Innovative Network Designs LLC - New Jersey
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 - Red Gear LLC
ReachOut entered into a Membership Interest Purchase Agreement on September 29, 2023 with RedGear, LLC, (“RedGear”) a Texas limited liability company and acquired 100% of the members’ interest of RedGear, in exchange for cash, a note payable and the assumption of certain liabilities of RedGear. The transaction was deemed to be a business combination and applied acquisition accounting under ASC 805.
7
Operations of RedGear LLC – Texas and Arizona
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.
These are pre-acquisition descriptions. Post-acquisition, ReachOut Technology Corp. will re-brand its subsidiaries to ReachOut, add any unique revenue streams to ReachOut’s portfolio and standardize program offerings.
On March 31, 2025, the Company assigned ReachOut Technology Corp. to a third party for a nominal amount. It was also determined that the client service sharing with the CEO’s privately owned corporation will be formally transferred into a newly created subsidiary of the Company. This transfer will bring a higher level of revenues than did ReachOut Technology Corp’s subsidiaries did in the three months ended March 31, 2025.
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 since inception, has sustained 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
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 upon consolidation. ReachOut’s wholly-owned subsidiaries, ReachOut IND and RedGear were acquired on September 2, 2022 (purchase of
8
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.
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.
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 March 31, 2025 and 2024, all of the Company’s cash and cash equivalents were held at accredited financial institutions. As of March 31, 2025, the Company had $
Cash Equivalents
The Company considers all highly liquid investments with a maturity of 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 three months ended March 31, 2025. These reclassifications did not have any effect on the results of operations.
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.
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 March 31, 2025, there are unamortized deferred financing fees recognized. Amortization of such costs is reported as interest and financing costs included in the consolidated statement of operations.
9
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 March 31, 2025 and December 31, 2024 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 March 31, 2025. As of March 31, 2025: there are obligations to issue Series A Preferred Stock which are convertible into 1,020,062,029 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; there are common share equivalents for a new class of preferred stock to be issued; the warrants outstanding my convert into
| March 31, 2025 |
March 31, 2024 |
|||||||
| Series A Preferred Stock Payable | ||||||||
| Series A Preferred Stock outstanding | ||||||||
| Series C Preferred Stock outstanding | ||||||||
| Series D Preferred Stock outstanding | ||||||||
| New Series of Preferred Stock to be issued | ||||||||
| Warrants | ||||||||
| Third party convertible debt | ||||||||
| Common shares to be issued | ||||||||
| Common stock options | ||||||||
| Total | ||||||||
10
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.
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.
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. |
11
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 March 31, 2025 and December 31, 2024.
| At March 31, 2025 | At December 31, 2024 | |||||||||||||||||||||||
| 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
| Derivative Liabilities |
||||
| Balance at December 31, 2024 | $ | |||
| Charged to derivative expense upon issuance of related note | ||||
| Classified as initial debt discount upon issuance of related note | ||||
| Fair Value adjustments - convertible notes | ( |
) | ||
| Balance at March 31, 2025 | $ | |||
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 March 31, 2025 is as follows:
| Inputs | March 31, 2025 |
|||
| Stock price | $ | |||
| Conversion price (note below) | $ | |||
| Volatility (annual) | % | |||
| Risk-free rate | % | |||
| Dividend rate | ||||
| Years to maturity | ||||
$
An additional $
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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 March 31, 2024 and December 31, 2023, no liability for unrecognized tax benefits was required to be reported.
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.
For the three months ended March 31, 2025 and the year ended December 31, 2024, 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 manages its operating income on a regional basis at the present time. Revenue recognized for the Northeast region was $413,312, and $0 for the Southeast region for the three months ended March 31, 2025.
13
Advertising Costs
Advertising costs are expensed as incurred and are included in General and Administrative expenses. The Company expensed less than $
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 non-employee’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.
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.
14
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.
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 March 31, 2025 and December 31, 2024. During the three months ended March 31, 2025 and year ended December 31, 2024, 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.
15
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.
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:
| March 31, 2025 |
December 31, 2024 |
|||||||
| 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 three months ended March 31, 2025, the Depreciation Expense was $
NOTE 5 – GOODWILL
The Company acquired the operations, assets and liabilities of Innovative Network Designs, LLC during the year ended December 31, 2022. The Company recognized goodwill of $
16
Innovative Network Designs, LLC
The Company entered into an assignment of its Membership Interest in Innovative Network Designs, LLC, whereby it accepted a nominal payment for the entire entity.
Assets and Liabilities Assigned
| Assets Assigned | Fair Value | |||
| Cash | $ | |||
| Accounts Receivable | ||||
| Other Assets | ||||
| Total Assets | $ | |||
| Liabilities Assigned | ||||
| Due to Financial Institutions | ||||
| Total Liabilities | $ | |||
| Consideration Value | ||||
| Cash | $ | |||
| Gain Recognized on Assignment of Net liabilities | ||||
| Value of assignment | $ | |||
Acquisition - Red Gear LLC
The Company entered into an assignment of its Membership Interest in RedGear, LLC, whereby it accepted a nominal payment for the entire entity.
Assets and Liabilities Assigned
| Assets Acquired | Fair Value | |||
| Right of Use Asset | ||||
| Total Assets | $ | |||
| Lease Liabilities | ||||
| Total Liabilities | $ | |||
| Consideration Value | ||||
| Cash | $ | |||
| Gain Recognized on Assignment of Net liabilities | ||||
| Value of assignment | $ | |||
NOTE 6 – ASSIGNMENT OF ASSETS AND LIABILITIES
On March 31, 2025, the Company sold its interest in ReachOut Technology Corp. including its membership interests in its subsidiaries Innovative Network Designs LLC and RedGear LLC for a nominal amount. The sale/assignment was to a third party (“assignee or third-party assignee”) and includes 100% of the interest in the entities.
The Company recognized an impairment loss for the full value of its investment in ReachOut Technology Corp amounting to $
17
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 $
NOTE 8 – DUE TO AND FROM AFFILIATIATED COMPANYS
The affiliate (a private corporation controlled by the CEO) has funded certain expenses for the Company during the three months ended March 31, 2025 amounting to $
NOTE 9 – 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 $
18
NOTE 10 – THIRD PARTY NOTES PAYABLE
| March 31, 2025 |
December 31, 2024 |
|||||||
| 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 March 31, 2025, 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 $
On February 4, 2025 the Company issued a promissory note to Red Road Holdings Corporation for the principal amount of $
19
NOTE 11 – 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 $
On April 1, 2024, YCRM issued a convertible note payable to Frondeur Partners LLC. The convertible note has principal of $
20
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 $
On October 1, 2024, YCRM issued a convertible note payable to Frondeur Partners LLC. The convertible note has principal of $
21
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 $
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 $
NOTE 12 – 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 obligation was $
NOTE 13 – RELATED PARTY TRANSACTIONS
During the three months ended March 31, 2025, 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). At the end of the period it was determined that a more complete arrangement would be put in place during period to follow.
During the three months ended March 31, 2025, an entity controlled by the CEO advanced the Company $
22
NOTE 14 – 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 March 31, 2025, 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 15 – 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.
23
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 8,750,000 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 ($3.00 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 March 31, 2025 and December 31, 2024, the Company had and shares of common stock authorized respectively. There were and common shares of stock outstanding on March 31, 2025 and December 31, 2024.
On May 15, 2024, a convertible note holder was issued shares of common stock in conversion of $
During the three months ended March 31, 2025,
The Company has charged the dividends on Series C and D preferred stock to accumulated deficit ($
Warrants Issued
For the three months ended March 31, 2025 and year ended December 31, 2024, a summary of the Company’s warrant activity is as follows:
| 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, 2024 | $ | $ | $ | |||||||||||||||||
| Issued and exercisable during the three months ended March 31, 2025 | ||||||||||||||||||||
| Outstanding and exercisable at March 31, 2025 | $ | $ | $ | |||||||||||||||||
All warrants were issued as incentive to an investor for future investment.
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Stock Options Issued
For the three months ended March 31, 2025 and the year ended December 31, 2024, a summary of the Company’s stock options activity is as follows:
| 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, 2024 | $ | $ | $ | |||||||||||||||||
| Issued during the three months ended March 31, 2025 | - | |||||||||||||||||||
| Outstanding and exercisable at March 31, 2025 | $ | $ | $ | ( |
) | |||||||||||||||
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 - $ midmarket price on the grant date;
Annualized volatility of ;
Discount rate .
NOTE 16 – COMMITMENTS AND CONTINGENCIES
Legal Matters
IND - Purchase Dispute
With the disposition of ReachOut Technology Corp. and its subsidiaries on March 30, 2025, any benefits or obligations related to the dispute will accrue to the third party assignee.
RedGear LLC – Purchase Dispute
With the disposition of ReachOut Technology Corp. and its subsidiaries on March 30, 2025, any benefits or obligations related to the dispute will accrue to the third party assignee.
Other Contingencies
Tax Levy
With the disposition of ReachOut Technology Corp. and its subsidiaries on March 30, 2025, any benefits or obligations related to the dispute will accrue to the third party assignee.
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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. This obligation was assigned to a third party on March 31, 2025.
Default on Loan – PIPE Technologies Inc.
With the disposition of ReachOut Technology Corp. and its subsidiaries on March 30, 2025, any benefits or obligations related to the dispute will accrue to the third party assignee.
RedGear Vehicles and Related Loans
With the disposition of ReachOut Technology Corp. and its subsidiaries on March 30, 2025, any benefits or obligations related to the dispute will accrue to the third party assignee.
Lease Obligations
Effective October 29, 2021, the ReachOut Technology Corp’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 $
The offices for the Company are shared with a related party ReachOut IL (an S corporation), under an arrangement that is not formalized.
| March 31, 2025 |
December 31, 2024 |
|||||||
| Operating lease at inception | $ | $ | ||||||
| Less accumulated reduction | ( |
) | ( |
) | ||||
| Balance ROU asset | $ | $ | ||||||
Operating lease liability related to the ROU asset is summarized below:
| 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:
| Total minimum operating lease payments | $ | $ | ||||||
| Less discount to fair value | ||||||||
| Total lease liability | $ | $ |
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For the three months ended March 31, 2025 rent expense was for was $
Other Commitments
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 sixteen such notes (December 1, 2023 through March 31, 2025), which are accounted for as notes with embedded derivatives to be bifurcated and recognized as derivative liabilities.
NOTE 17 – 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.
Agreement in Principle
An agreement is being negotiated whereby a newly created subsidiary of the Company with a private corporation owned by the CEO will exchange its entire customer base for a to be determined consideration. This exchange will bring revenues of approximately $750,000 per quarter into the Company. Additionally, services provided by the private company will then come under the Company’s control. The cost of services will not change in any material way and yield gross margins similar to those the Company earned during the year ended 2024.
Securities Issued
On April 1, 2025, YCRM issued a convertible note payable to Frondeur Partners LLC. The convertible note has principal of $
On April 22, 2025, interest and conversion fees were exchanged for common shares. Trillium LP the holder of a convertible note issued on November 9, 2023 converted accrued interest of $
On May 1, 2025, YCRM issued a convertible note payable to Frondeur Partners LLC. The convertible note has principal of $
On May 9, 2025, interest and conversion fees were exchanged for common shares. Trillium LP the holder of a convertible note issued on November 9, 2023 converted accrued interest of $
On May 15, 2025, interest and conversion fees were exchanged for common shares. Trillium LP the holder of a convertible note issued on November 9, 2023 converted accrued interest of $
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Cautionary Note Regarding Forward Looking Information and Factors That May Affect Future Results
This quarterly report on Form 10-Q contains forward-looking statements regarding our business, financial condition, results of operations and prospects. The Securities and Exchange Commission (the “SEC”) encourages companies to disclose forward-looking information so that investors can better understand a company’s future prospects and make informed investment decisions. This quarterly report on Form 10-Q and other written and oral statements that we make from time to time contain such forward-looking statements that set out anticipated results based on management’s plans and assumptions regarding future events or performance. We have tried, wherever possible, to identify such statements by using words such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe,” “will” and similar expressions in connection with any discussion of future operating or financial performance. In particular, these include statements relating to future actions, future performance or results of current and anticipated sales efforts, expenses, the outcome of contingencies, such as legal proceedings, and financial results. Factors that could cause our actual results of operations and financial condition to differ materially are set forth in the “Risk Factors” section of our annual report on Form 10-K for the year ended December 31, 2024 as filed with the SEC on April 15, 2025.
We caution that these factors could cause our actual results of operations and financial condition to differ materially from those expressed in any forward-looking statements we make and that investors should not place undue reliance on any such forward-looking statements. Further, any forward-looking statement speaks only as of the date on which such statement is made, and we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of anticipated or unanticipated events or circumstances. New factors emerge from time to time, and it is not possible for us to predict all such factors. Further, we cannot assess the impact of each such factor on our results of operations or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.
The following discussion should be read in conjunction with our condensed consolidated financial statements and the related notes that appear elsewhere in this quarterly report on Form 10-Q.
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.
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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.
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.
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. |
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| ● | 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.
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.
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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.
Going Concern
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 since inception, has sustained net income of $6,541,177, for the three months ended March 31, 2025, and has incurred negative cash flows from operations for the period. As of March 31, 2025, the working capital deficit, stockholders’ deficit, and accumulated deficit was $8,046,460, $9,164,441 and $14,419,225 respectively. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The Company’s ability to continue as a going concern for the next twelve months is dependent upon its ability to generate sufficient cash flows from operations to meet its obligations. In the event that the Company cannot generate sufficient revenue to sustain its operations, the Company will need to reduce expenses or obtain financing through the sale of debt and/or equity securities. The issuance of additional equity would result in dilution to existing shareholders. If the Company is unable to obtain additional funds when they are needed or if such funds cannot be obtained on terms acceptable to the Company, the Company would be unable to execute upon the business plan or pay costs and expenses as they are incurred, which would have a material, adverse effect on the business, financial condition, and results of operations. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities as a result of this uncertainty.
Results of Operations for the three months ended March 31, 2025 and 2024
Revenue
We had $413,312 in revenue for the three months ended March 31, 2025, compared to $2,097,229 for the three months ended March 31, 2024. The decrease in revenue is primarily due to the Company’s restructuring.
Cost of Goods Sold
We incurred $8,171 in costs of goods sold for the three months ended March 31, 2025, compared to $1,045,439 for the three months ended March 31, 2024. This decrease is primarily due to the Company’s restructuring.
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Impairment Loss
We incurred $3,505,069 in impairment loss for the three months ended March 31, 2025 compared to $2,117,502 for the three months ended March 31, 2024.
General and administrative expenses
We had $21,588 of general and administrative expenses (“G&A”) for the three months ended March 31, 2025, compared to $308,612 for the three months ended March 31, 2024, a decrease of $287,024 or 93%.
Compensation
We had $832,121 in compensation for the three months ended March 31, 2025 compared to $900,474 of compensation for the three months ended March 31, 2024. Stock compensation expense was $0 and $0 for the three months ended March 31, 2025 and 2024, respectively.
Professional expenses
We incurred $260,275 of professional fees for the three months ended March 31, 2024, compared to $335,258 for the three months ended March 31, 2024, a decrease of $74,983 or 22%. Professional fees generally consist of audit, legal, accounting and investor relation service fees.
Other income (expense)
For the three months ended March 31, 2025, we had total other income of $10,755,088, compared to total other expenses of $6,412,653 for the three months ended March 31, 2024.
In the current period we incurred a loss of $142,362 from securities issuances having embedded derivatives. In the most recent period, we had FMV changes of $65,380, Gain on disposal of $11,233,944, Gain on debt extinguishment of $0, and Interest Expense of $290,401.
In the previous period ended March 31, 2024, we incurred a loss of $16,613,323 from securities issuances having embedded derivatives, FMV changes of $9,418,088, Gain on debt extinguishment of $1,170,433, and Interest Expense of $387,851.
Net Profit (loss)
We incurred a net profit of $6,541,177 for the three months ended March 31, 2025, compared to a net loss of $9,022,709 for the three months ended March 31, 2024. Our net profit was primarily due to a gain on disposal.
Liquidity and Capital Resources
Cash flow from operations
Cash used in operating activities for the three months ended March 31, 2025 was $426,292 compared to $168,231 of cash used in operating activities for the three months ended March 31, 2024.
Cash Flows from Investing
We used $0 for investing activities for the three months ended March 31, 2025, compared to using $53,896 for investing activities for the three months ended March 31, 2024.
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Cash Flows from Financing
For the three months ended March 31, 2025, we netted $151,000 from financing activities. We received $0 from proceeds from a loan (Fox), $126,000 in proceeds from a note issued, and $25,000 from the issuance of convertible notes. We repaid $0 on the Fox loan, $0 on the Fora loan and $0 on repayment of seller notes. Finally, we had a new vehicle loan of $0, a repayment of vehicle loans of $0, and repayments of affiliate advances of $0.
For the three months ended March 31, 2024, we netted $254,635 from financing activities. We received $287,705 from proceeds from a loan (Fox) and $490,000 from the issuance of convertible notes. We repaid $92,295 on the Fox loan, $270,452 on the Fora loan and $113,177 on repayment of seller notes. Finally, we had a new vehicle loan of $53,896, a repayment of vehicle loans of $17,775, and repayments of affiliate advances of 83,267.
Critical Accounting Policies
Refer to Note 2 of our financial statements contained elsewhere in this Form 10-Q for a summary of our critical accounting policies and recently adopted and issued accounting standards.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable to smaller reporting companies.
ITEM 4. CONTROLS AND PROCEDURES
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, 2023, these disclosure controls and procedures were not effective.
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.
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PART II – OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 1A. RISK FACTORS
Not applicable to smaller reporting companies
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ITEM 2. 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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ITEM 3. Defaults Upon Senior Securities
None
ITEM 4. MINE SAFETY DISCLOSURES
None
ITEM 5. OTHER INFORMATION
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ITEM 6. 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 | May 20, 2025 | ||
| Richard Jordan |
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