(Table of Contents) 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10

 

GENERAL FORM FOR REGISTRATION OF SECURITIES

Pursuant to Section 12(b) or (g) of the Securities Exchange Act of 1934

 

Aureus, Inc.

(Exact Name of Registrant as Specified in Charter)

 

Nevada   47-1893698

(State or Other Jurisdiction of

Incorporation or Organization)

 

(I.R.S. Employer

Identification No.)

     
One Glenlake Parkway #650, Atlanta, GA   30328
(Address of Principal Executive Offices)   (Zip Code)

 

Registrant’s telephone number, including area code:      (404) 805-6044

 

With a copy to:

Philip Magri, Esq.

Carmel, Milazzo & Feil LLP

55 W 39th Street, 18th Floor

New York, NY 10018

Tel: 212-658-0458

Fax: 646-838-1314

 

Securities to be registered under Section 12(g) of the Exchange Act:

 

Common Stock, par value $0.001 per share

(Title of class)

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting 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
Non-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.

 

 

 

     

 

 

EXPLANATORY NOTE

 

Aureus, Inc. is filing this General Form for Registration of Securities on Form 10 (the “Registration Statement”) to register its common stock, par value $0.001 per share, pursuant to Section 12(g) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Unless otherwise mentioned or unless the context requires otherwise, when used in this Registration Statement, the terms “Aureus,” “Company,” “we,” “us,” and “our” refer to Aureus, Inc., a Nevada corporation, and its subsidiaries.

 

This Registration Statement will become effective as a matter of law 60 days after filing with the U.S. Securities Exchange Commission (the “SEC”). Once effective, we will be subject to the requirements of Section 13(a) under the Exchange Act, which will require us to file annual, quarterly, and current reports and proxy or information statements with the SEC, and we will be required to comply with all other obligations of the Exchange Act applicable to issuers filing registration statements under Section 12(g) of the Exchange Act. Our executive officers, directors, and stockholders beneficially owning 10% or more of our common stock will become subject to Section 16 of the Exchange Act and will be required to file Forms 3, 4, and 5with the SEC. Stockholders beneficially owning more than 5% of our common stock will be required to file Schedules 13D/G with the SEC pursuant to Sections 13(d) or (g) of the Exchange Act.

 

You may read and copy reports we filed with the SEC, for a copying fee, at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for more information on its Public Reference Room. Our SEC filings will also be available free of charge by visiting the Company’s filing page on the SEC’s website at http://www.sec.gov.

 

FORWARD-LOOKING STATEMENTS

 

This Registration Statement contains forward-looking statements that involve substantial risks and uncertainties. Other than statements of historical fact, all statements in this Registration Statement, including statements regarding our strategy, future operations, future financial position, future revenues, projected costs, prospects, plans, and management objectives, are forward-looking statements. The words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” “target,” “potential,” “would,” “could,” “should,” “continue,” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words.

 

We may not achieve the plans, intentions, or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions, and expectations disclosed in the forward-looking statements we make. We have included important cautionary statements in this Registration Statement that we believe could cause actual results or events to differ materially from the forward-looking statements we make. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures, or investments we may make.

 

You should read this Registration Statement and the documents that we have filed as exhibits to this Registration Statement with the understanding that our actual future results may be materially different from what we expect. The forward-looking statements in this Registration Statement are made as of the date of this Registration Statement, and we do not assume any obligation to update any forward-looking statements except as required by applicable law.

 

WHERE YOU CAN FIND MORE INFORMATION ABOUT US

 

When this Registration Statement becomes effective, we will begin to file reports, proxy statements, information statements, and other information with the United States Securities and Exchange Commission (the “SEC”). You may read and copy this information, for a copying fee, at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for more information on its Public Reference Room. Our SEC filings will also be available to the public from commercial document retrieval services and at the website maintained by the SEC at http://www.sec.gov.

 

Our Internet website address is http://www.aureusnow.com. Information contained on the website does not constitute part of this Registration Statement. We have included our website address in this Registration Statement solely as an inactive textual reference. When this Registration Statement is effective, we will make available, through a link to the SEC’s website, electronic copies of the materials we file with the SEC, including Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, the Section 16 reports filed by our executive officers, directors, and 10% stockholders and amendments to those reports.

 

 

 

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AUREUS, INC.

FORM 10

TABLE OF CONTENTS

 

 

ITEM 1. BUSINESS. 1
ITEM 1A. RISK FACTORS. 9
ITEM 2. FINANCIAL INFORMATION. 17
ITEM 3. PROPERTIES. 23
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT. 23
ITEM 5. DIRECTORS AND EXECUTIVE OFFICERS. 24
ITEM 6. EXECUTIVE COMPENSATION. 27
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE. 29
ITEM 8. LEGAL PROCEEDINGS. 29
ITEM 9. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANTS COMMON EQUITY AND RELATED STOCKHOLDER MATTERS. 29
ITEM 10. RECENT SALES OF UNREGISTERED SECURITIES. 30
ITEM 11. DESCRIPTION OF REGISTRANT’S SECURITIES TO BE REGISTERED. 32
ITEM 12. INDEMNIFICATION OF DIRECTORS AND OFFICERS. 34
ITEM 13. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. 37
ITEM 14. CHANGES IN AND DISAGREEEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES. 38
ITEM 15. FINANCIAL STATEMENTS AND EXHIBITS. 38

 

 

 

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ITEM 1. BUSINESS.

 

Overview

 

Aureus, Inc. (“Aureus,” “ARSN,” “we,” “us,” or the “Company”) was incorporated in Nevada on April 19, 2013. Our offices are located at One Glenlake Parkway #650, Atlanta, GA 30328. Our telephone number is (404) 885-6045, and our email address is aureus.now@gmail.com. Our website is www.aureusnow.com. We do not incorporate the information on or accessible through our website into this Registration Statement, and you should not consider any information on, or that can be accessed through, our website a part of this Registration Statement.

 

We are a food brand development company that builds and represents popular food concepts throughout the United States and international markets. Management is highly experienced at business integration and re-branding potential. With little territory available for the older brands, we intend to bring fresh, innovative brands with great potential. Our brands will be unique as we focus on niche markets that are still in need of development.

 

We operate two lines of business. Through our subsidiary, YIC Acquisitions Corp. (“YICA”), which we acquired in June 2019, we produce and sell high-quality ice cream without artificial colors, flavoring, or preservatives and no added hormones. In September 2020, we entered into the micro-market segment and launched our second business line, Aureus Micro-Markets (“AMM”). Closely tied to the vending machine industry, micro-markets look and feel like modern convenience stores while functioning with the ease and efficiency of vending food service and refreshment services. They provide an improved customer experience and greater product variety, with a proven track record of increasing sales at vending locations while keeping labor costs down and improving operating efficiencies. Micro-markets are a hybrid form of vending, food service, coffee service, and convenience stores that provide an improved customer experience, exponentially greater product variety, and increased sales within a single location while keeping labor costs down and improving operational efficiencies. The expanded product variety, open flow, and cashless payment options mean that consumers spend less time in line fumbling with cash/change, can purchase multiple items with one transaction, and buy more items per transaction than with cash transactions.

  

History

 

We were incorporated in the State of Nevada on April 19, 2013, under the name “Aureus Incorporated.” We were initially organized to develop and explore mineral properties in the State of Nevada. Effective December 15, 2017, we changed our name to “Hohme, Inc.,” and, effective February 7, 2019, we changed our name to “Aureus, Inc.” We are currently active in the State of Nevada.

 

We are a food brand development company focused on acquiring and growing well-established food brands. We have and plan to continue to acquire operating businesses that produce revenue. These businesses will generally be in the food production and food service space.

 

Facilities

 

We do not own or lease any property. We currently have an agreement for a virtual office. Our business mailing address is One Glenlake Parkway #650, Atlanta, GA 30328. Our primary phone number is (404) 885-6045.

 

Employees

 

We currently have two full-time employees, including officers and directors. We believe that we have been successful in attracting experienced and capable personnel. Mr. Dickson’s employment agreement prohibits him from competing with us or disclosing our proprietary information to non-authorized third parties. Our employees are not represented by any labor union.

 

 

 

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Governmental Regulation

 

We are subject to regulation by various governmental agencies, including the U.S. Food and Drug Administration (the “FDA”) and the U.S. Department of Agriculture. Our manufacturer must comply with federal and local environmental laws and regulations relating to air quality, waste management, and other related land use matters. The FDA also regulates finished products by requiring disclosure of ingredients and nutritional information. The FDA can audit our manufacturer or us to determine the accuracy of our disclosure. State laws may also impose additional health and cleanliness regulations on our manufacturers.

 

We believe that our manufacturer and we are currently in compliance with these laws and regulations and have passed all regulatory inspections necessary to sell our product in our current markets. We believe that the cost of compliance with applicable governmental laws and regulations is not materially adverse to our business.

 

Intellectual Property

 

In May 2016, we were granted a trademark for “Black & Tan” for the ice cream category, and in September 2016 we were granted a trademark for “Butterbeer” for the ice cream category. In May 2014, we were granted a trademark for “Yuengling’s Ice Cream” for the ice cream category.

 

We own the recipes to various proprietary ice cream flavors.

 

Our websites are www.aureusnow.com, www.yuenglingsicecream.com, and www.atlantamicromarketvending.com.

 

YUENGLING’S ICE CREAM

 

 

The Yuengling Family began making ice cream in 1920 when Frank D. Yuengling, President of D.G. Yuengling & Sons Brewery, started a separate company–Yuengling’s Ice Cream–to keep the Yuengling Brewery solvent despite the onset of prohibition. In 1935, upon the repeal of prohibition, Frank transferred ownership to son, Frederick G. Yuengling, and, from 1963 to 1985, Frederick’s eldest son, Frederick G. Yuengling, Jr., proudly produced ice cream, serving up generations of memories for folks in and around Pennsylvania.

 

In 2014, after a nearly 30-year absence from store shelves, Frederick G. Yuengling Jr.’s son, David Yuengling, and Rob Bohorad relaunched the Yuengling’s Super-premium Ice Cream brand through regionally focused retail, wholesale, and food service channels in and around Pennsylvania. Yuengling’s Ice Cream has a strong tradition of making exceptional gourmet ice cream products in central Pennsylvania. This fan-favorite brand continues advancing its legacy and its renowned dairy quality by using locally sourced dairy ingredients that contain no added hormones.

 

In 2019, we agreed to acquire Yuengling’s Ice Cream Corp’s assets (“YIC”). All of YIC’s activities are managed and overseen by our C-level corporate finance team and turnaround, marketing, logistics, and transport specialists to help guide this nationally recognized, award-winning, high-value, artisan ice cream brand to expected future profitability.

 

 

 

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Acquisition of Yuengling’s Ice Cream

 

On June 18, 2019, YIC Acquisitions Corp., a Nevada corporation and a subsidiary of the Company (“YICA”) purchased all of the assets of YIC substantially under the PA UCC Article 9 Default, Foreclosure and Private Sale Agreement (the “Private Sale Agreement”) with Mid Penn Bank, a Pennsylvania banking corporation (the “Lender”), and David Yuengling, Robert C. Bohorad, and Dacell, LLC (the “Guarantors”). On June 18, 2019, YICA also entered into the Secured Creditor Asset Sale and Purchase Agreement with the Lender and YIC (the “Asset Sale and Purchase Agreement”). Due to previous defaults on secured debt owed to the Lender by the Guarantors, the Lender exercised its right to take possession of and sold the assets of YIC to YICA in exchange for the assumption of all secured debt owed to the Lender by the Guarantors and with the Guarantors remaining as guarantors of the secured debt under the Private Sale Agreement and the Asset Sale and Purchase Agreement. The aggregate amount of secured debt owed to the Lender at the time of the acquisition was $1,889,011 (the “Secured Debt”). As the year ended October 31, 2020, the amount of Secured Debt (including principal and interest) was $1,691,428.

 

Since the closing of the acquisition, YICA has assumed three loans. The first loan was an SBA loan with a principal balance of $1,061,077 and an annual interest of 5.25%. As of October 31, 2020, there was $891,428 in principal and interest. The loan requires monthly payments and matures on March 13, 2026. The second loan is a credit line with a principal balance of $816,831 and an annual interest rate of 4.25%. As of October 31, 2020, there was $ $800,000 in principal and interest. Monthly payments are required under this line of credit. The third loan is for a truck with a principal balance of $17,944 and an annual interest rate of 4.95%. On June 30, 2020, the truck was sold, and the outstanding balance of the loan was paid in full.

 

On July 2, 2019, and effective June 18, 2019, the parties to the Private Sale Agreement and the Asset Sale and Purchase Agreement entered into the Post-Closing Agreement (the “Post-Closing Agreement”), YICA was allowed to transfer $50,000 to the Lender as security post-closing (within 60 days of July 2, 2019).

 

On July 30, 2020, and effective June 18, 2019, the parties to the Post-Closing Agreement entered into the First Amendment to the Post-Closing Agreement (the “First Amendment”) under which YICA was allowed to transfer $50,000 to the Lender by December 31, 2020. The Second Amendment later amended the First Amendment to the Post-Closing Agreement (the “Second Amendment”), dated December 30, 2020, to extend the First Amendment’s transfer period to March 31, 2021.

 

Yuengling’s Mission Statement

 

YICA’s mission is to provide the highest quality ice cream and dairy-related products to its consumers, offer an enjoyable work environment for its employees, establish lasting relationships with its customers and vendors that are centered on trust, strive to surpass its customers’ expectations, always act ethically, and give back to the communities that support it.

 

Brand Strengths

 

Yuengling’s is an American and family-owned company with high brand recognition & loyalty. Its products are considered in the super-premium category and are all-natural. Yuengling’s exceeds Whole Foods Market® Ingredient Quality Standards. Its products are kosher with no added growth hormones, steroids, or antibiotics.

 

Yuengling’s is a strong, recognized brand with a long, positive family history, an experienced management team, and a Board of Directors. We are smaller and more responsive than larger competitors.

 

When national brands continue to reduce the quality of their offerings and downsize their products, Yuengling’s products compare favorably, provide good “value” to our customers, and regularly out-perform competitors in samplings. We offer innovative new products and flavors.

 

 

 

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Operating Strategy

 

Yuengling’s operating strategy is three-phased, centering on development, acceptance in a defined core area, and expanding once specific volume and metrics are attained. We believe we have accomplished Phases One and Two and, since mid-2015, have been executing Phase Three.

 

Marketing

 

Yuengling’s core marketing area is defined as the area from Scranton, Pennsylvania in the North, central Virginia in the South, Pittsburgh, Pennsylvania to the West, and the New Jersey shore to the East. We believe we offer higher than average overall margins for retailers.

 

We initially focused on forming an ongoing relationship with a strong local super-premium ice cream manufacturer and utilization of certain industry contacts that allowed initial platform development and flavor testing. Then we established critical mass distribution and specific consumer acceptance levels in the defined core marketing area. This was accomplished through brand promotion at the store level and top-of-mind-focused marketing programs, including large-scale and small-scale direct consumer product sampling. We are now expanding and establishing the brand outside the core marketing area. Our first expansion was in New England, Western Pennsylvania/Ohio, North Carolina, South Carolina, and Georgia.

 

Development Strategy

 

Our development strategy began with market entry in February 2014. The target was to establish distribution in retail grocery stores within the core marketing area with six-quart flavors of ice cream per store. Distribution is warehouse-based.

 

We believe our products are a slight bargain compared to super-premium brands such as Ben & Jerry’s and Haagen-Dazs and on par with other brands such as Gifford’s. Our promotional pricing strategy depends upon the retailer, with brand positioning as a super-premium offering. We sometimes engage in short-term Everyday Low Price (“EDLP”) program pricing to undermine the existing premium and super-premium players.

 

Production

 

Production is currently conducted at Totally Cool, Inc, in Owings Mills, Maryland. Totally Cool is a smaller ice cream production facility that produces ice cream and other frozen desserts for other local, regional, and national brands. Totally Cool’s size allows for smaller and more flexible production runs.

 

Product Specifications

 

Our packaging consists of six quarts to a case and eight pints to a case. We offer super-premium butterfat (14%) basis with super-premium flavorings and super-premium ingredients. Our products have high solids, and mid-range weight (50% overrun/air) for a super-premium mouth feel.

 

 

 

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Product History

 

In February 2014, Yuengling’s brand was launched in quart containers in 10 flavors. Quarts were the best way to gain access to shelf space without displacing an existing 48oz or 16oz products. In October 2014, we launched two seasonal flavors, and we added four new flavors in February 2015. In July 2015, we launched six-pint flavors in 800 Ahold stores and began 3-gallon tub food service sales. In May 2016, we were granted a trademark for “Black & Tan” for the ice cream category, and in September 2016, we were granted a trademark for “Butterbeer” for the ice cream category.

 

At the national level, our primary retail competitors are Ben & Jerry’s and Häagen-Dazs. At the regional level, our direct retail competitors are Giffords (Maine), Graeter’s (Ohio), and Turkey Hill (Pennsylvania).

 

Primary Advantages

 

We believe we have a higher quality than most national brands, comparable to Ben & Jerry’s and Häagen-Dazs. We have new and different flavors. We also believe we have better value to consumers in cost per ounce, strong brand loyalty, and close relationships with retailers.

 

American Sourced

 

· Yuengling’s Ice Cream uses a high super-premium butterfat (14%) base-paired with America’s finest artisan flavorings and inclusions (12%).

 

· Yuengling’s Ice Cream contains no added growth hormones, steroids, or antibiotics.

 

· Yuengling’s Ice Cream is rBST / rBGH free, kosher, and 11 of our 13 flavors are gluten-free.

 

American Made

 

Yuengling’s Ice Cream is currently produced by Totally Cool at a high quality, modern, FDA-compliant facility in Maryland. Yuengling’s recipe contains high solids and mid-range weight (50% overrun / air) for a gourmet mouth feel. We believe Yuengling’s Ice Cream is a Pennsylvania preferred brand and exceeds the Whole Foods Market® Ingredient Quality Standards.

 

American Served

 

Yuengling’s Ice Cream is offered at select universities, restaurants, professional stadiums, local grocers, and upscale convenience stores. We offer packaging for a range of consumers, including three Gallon Tubs (food service), six quarts per case (food service + Retail + Online), and 8-Pints per case (Universities, Stadiums + Retail + Online).

 

 

 

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THE BRAND LINE UP: Current Flavors–PINTS & TUBS

 

Yuengling’s Ice Cream uses a super-premium butterfat (14%) basis, combined with American-sourced ingredients, no added growth hormones, steroids, antibiotics, and mid-range weight (50% overrun / air) to produce a super-premium palette taste and feel. All of our super-premium ice cream flavors are kosher, and Yuengling’s Super-premium Ice Cream is American-made, and proudly American served.

 

· Black and Tan –a swirl of rich Belgian chocolate ice cream & salty caramel ice cream;

 

· Butterbeer –buttercream ice cream and butterscotch ice cream with a butterscotch swirl;

 

· Vanilla Fudge Chunk With Pretzels –Madagascar vanilla ice cream, fudge swirl, chocolate chips & chocolate-covered pretzels;

 

· Vanilla– creamy and sweet Madagascar vanilla;

 

· Original Sea Salt Caramel Swirl –sea salt caramel ice cream with creamy caramel swirls;

 

· Peanut Butter Cup– rich Belgian chocolate + peanut butter ice creams with peanut butter swirls & peanut butter cup pieces;

 

· Root Beer Float –traditional old-fashioned root beer float;

 

· Espresso Chocolate Chip –dark coffee ice cream with rich espresso chocolate chips;

 

· Cherry Vanilla Chunk –cherry vanilla ice cream with cherry chunks and large dark chocolate chips;

 

· Cookies & Cream– vanilla ice cream with old-fashioned dark chocolate cookie pieces;

 

· Cinnamon Churro –Madagascar vanilla ice cream with baked churro pieces and a cinnamon swirl;

 

· Teaberry –a mountainous teaberry plant yields bright pink, sweet, tart, and minty old-fashioned ice cream; and

 

· Strawberry –strawberry ice cream with fresh strawberry pieces.

 

* Denotes product is gluten-free.

 

 

 

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Brand & Flavor Awards

 

Yuengling’s Madagascar Vanilla super-premium ice cream received the 2016 Gold Medal at the L.A. International Dairy Competition in the “Premium Vanilla Ice Cream” category.

 

Yuengling’s Cinnamon Churro super-premium ice cream was selected by the Supermarket Guru–one of America’s most trusted food critics and influencers–a Hit Product Seal™ and was appointed “Pick of the Week” with a score of 94/100.

 

Yuengling’s Cherry Vanilla Chunk super-premium ice cream received the Wisconsin Dairy Products Association–1st Place Award at the World Dairy Expo Championship in the “Dairy Products–Open Class: Flavored Fruit and or Nut Ice Cream” category and earned a near-perfect score of 99.8.

 

In 2018, Yuengling’s Ice Cream had nine of its 14 flavors selected as part of a distribution partnership with Goldbelly, the largest online purveyor of artisan, gourmet, and specialty foods in the U.S.

 

Sources and Availability of Raw Materials and Principal Suppliers

 

YICA outsources its production to third-party manufacturers. These manufacturers have multiple sources for the main raw ingredients for the production of ice cream. The primary ingredient sourced by a production facility is the mix, which consists of milk, cream/butterfat, emulsifiers, egg yolks, and other items. The production facility or YICA may order additional supplies and ingredients such as packaging (e.g., cups and lids), flavorings (e.g., mint), inclusions (chocolate chips), and variegates (e.g., fudge). While there is more than one source of packaging, the primary supplier is Stanpac Inc. The waiting period could be 2-6 weeks, but packaging from Stanpac is always available. The flavorings, inclusions, and variegates Yuengling’s uses are standard products available from several sources. These materials have always been readily available.

 

AUREUS MICRO-MARKETS

 

 

Aureus Micro-Markets (“AMM”) was launched in September 2020 and provides vending services to small and medium-sized businesses. AMM provides flexibility in the products it offers together with the addition of fresh, healthy choices. Lines are eliminated with a cashless, app-based payment system which further increases sales. Net return on investment (ROI) is dramatically higher due to the much lower capital investment costs. A micro-market layout can be customized to suit different workplaces, and therefore no space is wasted. They can be installed in a corner or take up an entire room.

 

Operating Strategy

 

AMM’s operating strategy is focused on developing its business in one area. Once key systems have been established, such as warehousing, purchasing, inventory-keeping, deliveries, and sales, the Company will expand into other geographic regions. The company plans to replicate its model in each location. We will customize when needed, but we prefer to keep the model consistent as much as possible. The company plans to continually review and improve on its processes and procedures.

 

 

 

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Sales & Marketing

 

AMM targets businesses that have between 50 and 250 employees, starting in the Atlanta Metro area. Our contact salespeople call on these businesses to gain their consent to allow us to install and service the micro-market at no cost or no obligation to the Company. As such, there are no contracts. We make our revenue by providing drinks and snacks to those employees that we purchase from vendors at wholesale prices. Once we feel comfortable with our operation in the Atlanta Metro area, we plan on expansion. As of December 31, 2020, we had received seven businesses’ consent to install our equipment with several other customers in the later stages of the approval process.

 

Suppliers

 

AMM has relationships with numerous suppliers for the racks, coolers, and freezers necessary to supply its customers. The equipment is lightweight and not permanently affixed, making it easy to install and re-locate, if necessary. We started the business by purchasing equipment for the first ten micro-markets on October 5, 2020, from Healthy Smart Marts. We have since purchased an additional two sets of micro-markets from a Texas-based supplier, Graphics That Pop (“GTP”). GTP not only provides the equipment but also provides the graphics that surround them.

 

AMM also has lined up product vendors, such as Vistar, to provide the products stocked at the customer locations.

 

 

Products

 

Products offered to customers are generally snacks, drinks, and refrigerated foods. Snacks may include chips, pretzels, candy bars, and nuts. Drinks may have soda, water, and juices. Refrigerated foods may consist of items such as yogurt, cheese, salads, and sandwiches.

 

Payment Processing and Inventory Management

 

For payment, consumers utilize GrabScanGo’s app-based payment system. This no-touch technology eliminates the need for a payment kiosk and checkout lines. In addition to our accounting system, GrabScanGo’s robust inventory system helps AMM track products’ consumption in real-time and service the business more effectively, making sure the customer is always stocked.

 

 

 

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Competition

 

There is significant competition in the food and vending services business from local, regional, national, and international companies of varying sizes, many of which have substantial financial resources. Our ability to successfully compete depends on our ability to provide quality services at a reasonable price and to provide value to our customers and consumers. Certain of our competitors have been and may in the future be willing to underbid us or accept a lower profit margin or expend more capital to obtain or retain business. Certain regional and local service providers may be better established than we are within a specific geographic region. Also, existing or potential customers may elect to self-operate their food and vending services, eliminating the opportunity for us to serve them or compete for the account. Several of our competitors have more extensive portfolios of services and a broader geographic footprint than we do. Therefore, we may be placed at a competitive disadvantage for customers who require multiservice or multi-geographic bids.

 

Seasonality

 

We typically experience higher demand for our ice cream products during the spring and summer seasons. Our micro-market business line is not anticipated to be seasonal in nature.

 

ITEM 1A. RISK FACTORS.

 

The following is only a summary of the risks pertaining to our Company. Investment in our securities involves risks. You should carefully consider the following risk factors in addition to other information contained in this Registration Statement. The occurrence of any of the following risks might cause you to lose all or part of your investment. Some statements in this Registration Statement, including statements in the following risk factors, constitute “forward-looking statements.”

 

Risks Relating to Operations

 

Our results could be materially and adversely affected by the impact of the COVID-19 pandemic.

 

The continuing spread of COVID-19 across the United States could materially and adversely impact our business, including as a result of the loss of adequate labor, whether as a result of high absenteeism or challenges in recruiting and retention or otherwise, prolonged closures, or series of temporary closures, of one or more fulfillment centers as a result of a COVID-19 outbreak, a government order or otherwise, or supply chain or carrier interruptions or delays. Further, the COVID-19 pandemic has had and could continue to have a negative impact on economic conditions, which may adversely impact consumer demand for our products, which may have a material adverse effect on our business, financial condition, and operating results. To the extent any of these events occur, our business, financial condition, and operating results could be materially and adversely affected. The extent to which the COVID-19 pandemic impacts our business will depend on future developments not within our control, including the duration and severity of the COVID-19 pandemic and surges, the timing of widespread availability of a COVID-19 vaccine in the United States, the length of time COVID-19 related restrictions on dining options stay in effect and for economic and operating conditions to return to pre-pandemic levels, together with resulting consumer behaviors, and numerous other uncertainties, all of which remain uncertain.

 

We have a going concern opinion from our auditors, indicating the possibility that we may not continue to operate. If we cannot continue as a viable entity, our stockholders may lose some or all of their investment in us.

 

We have incurred a net loss of $192,888 for the year ended October 31, 2020, and a net loss of $153,938 for the quarter ended January 31, 2021. We anticipate generating losses for the next 12 months. We have generated only $57,460 in gross sales for the year ended October 31, 2020, and $3,386 in gross sales for the quarter ended January 31, 2021. Accordingly, we may be unable to continue operations in the future as a going concern. No adjustment has been made in the accompanying financial statements to the amounts and classification of assets and liabilities, which could result should we be unable to continue as a going concern. If we cannot continue as a viable entity, our stockholders may lose some or all of their investment in us.

 

 

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Since we have a limited operating history, it is difficult for potential investors to evaluate our business.

 

Our limited operating history makes it difficult for potential investors to evaluate our business or prospective operations. Since our formation in April 2013, we have not generated enough revenues to exceed our expenses. We acquired Yuengling’s Ice Cream Corp in July 2019 and entered the micro-market industry with Aureus Micro-Markets in September 2020. As a result of us recently entering into these business lines, we are subject to all the risks inherent in the initial organization, financing, expenditures, complications, and delays inherent in new business lines. Investors should evaluate an investment in us in light of the uncertainties encountered by developing companies in a competitive environment. Our business is dependent upon the implementation of our business plan. We may not be successful in implementing such a plan and cannot guarantee that, if implemented, we will ultimately be able to attain profitability.

 

We do not currently have sufficient cash flow to maintain our business.

 

We do not currently have enough cash flow to operate our business. Therefore we will be dependent upon additional capital in the form of either debt or equity to continue our operations and expand our products to new markets. At present, we do not have arrangements to raise all of the needed additional capital, and we will need to identify potential investors and negotiate appropriate arrangements with them. We may not be able to arrange enough investment within the time the investment is required or that if it is arranged, that it will be on favorable terms. If we cannot get the needed capital, we may not be able to become profitable and may have to curtail or cease our operations.

 

Our management has limited experience operating a public company and is subject to the risks commonly encountered by early-stage companies.

 

Although our management has experience in operating small companies, our current management has not managed expansion while being a public company. Many investors may treat us as an early-stage company. Also, our management has not overseen a company with considerable growth. Because we have a limited operating history, our operating prospects should be considered in light of the risks and uncertainties frequently encountered by early-stage companies in rapidly evolving markets.

 

We depend heavily on key personnel.

 

We believe our success depends heavily on the continued active participation of our current executive officers. If we were to lose our executive officers' services, the loss could have a material adverse effect on our business, financial condition, or operation results. Also, to achieve our future growth plans, we will need to recruit, hire, train, and retain other highly qualified technical and managerial personnel. Competition for qualified employees is intense, and if we cannot attract, retain and motivate these additional employees, their absence could have a materially adverse effect on our business, financial condition, or results of operations.

 

Increased operating costs and obstacles to cost recovery due to the pricing and cancellation terms of our food and support services contracts may constrain our ability to make a profit.

 

Our profitability can be adversely affected to the extent we are faced with cost increases for food, wages, other labor-related expenses, especially when we cannot recover such increased costs through increases in the prices for our products and services. In some cases, we will have to absorb any cost increases, which may adversely impact our operating results.

 

 

 

  10  

 

 

A failure to maintain food safety throughout our supply chain and food-borne illness concerns may result in reputational harm and claims of illness or injury that could negatively affect us.

 

Food safety is a top priority for us, and we dedicate substantial resources to ensuring that our consumers enjoy safe, quality food products. Claims of illness or injury relating to food quality or food handling are common in the food service industry, and a number of these claims may exist at any given time. Because food safety issues could be experienced at the source or by food manufacturers, food suppliers, or food distributors, food safety could, in part, be out of our control. Regardless of the origin or cause, any report of food-borne illness or other food safety issues such as food tampering or contamination at one of our locations could adversely impact our reputation, hindering our ability to renew contracts on favorable terms or to obtain new business and harm our sales. Even instances of food-borne illness, food tampering, or contamination at a location served by one of our competitors could result in negative publicity regarding the food service industry generally and could negatively impact our sales. Future food product recalls, and health concerns associated with food contamination may also increase our raw materials costs and disrupt our business from time to time.

 

Governmental regulations relating to food and beverages may subject us to significant liability.

 

The regulations relating to each of our food and support services segments are numerous and complex. A variety of rules and regulations at various governmental levels relating to the handling, preparation, and serving of food (including, in some cases, requirements relating to the temperature of food), and the cleanliness of food production facilities, and the hygiene of food-handling personnel are enforced primarily at the local public health department level. We cannot assure you that we are in full compliance with all applicable laws and regulations at all times or that we will be able to comply with any future laws and regulations. Furthermore, legislation and regulatory attention to food safety is very high. Additional or amended rules and regulations in this area may significantly increase the cost of compliance or expose us to liabilities.

 

If we fail to comply with applicable laws and regulations, including those referred to above, we may be subject to investigations, criminal sanctions, or civil remedies, including fines, penalties, damages, reimbursement, injunctions, seizures, or debarments from government contracts. The cost of compliance or the consequences of non-compliance, including debarments, could have a material adverse effect on our business and operations results. Also, governmental units may make changes in the regulatory frameworks within which we operate that may require either the Company as a whole or individual businesses to incur substantial increases in costs to comply with such laws and regulations.

 

If our relationship with key business suppliers and distributors were to be disrupted, we could experience disruptions to our operations and cost structure.

 

If critical suppliers to our business, such as Stanpac for ice cream packaging or Vistar for vending products, were disrupted, it would affect our ability to source necessary raw materials needed to produce ice cream or the sale of vending items. If our relationship with any of these key suppliers or distributors were disrupted, if it was not already arranged, we would have to source and engage alternative suppliers and distributors. This disruption could affect our operations and cost structure.

 

 

 

  11  

 

 

Risks Related to Our Indebtedness

 

We are highly leveraged.

 

As of January 31, 2021, our outstanding indebtedness was $1,936,587. Our leverage could adversely affect our ability to raise additional capital to fund our operations, limit our ability to react to changes in the economy or our industries, expose us to interest rate risk to the extent of our variable rate debt and prevent us from meeting our obligations. This degree of leverage could have significant consequences, including:

 

· exposing us to the risk of increased interest rates as certain of our borrowings, including borrowings under our senior secured credit facilities and our receivables facility, are at variable rates of interest;

 

· requiring a substantial portion of cash flow from operations to be dedicated to the payment of principal and interest our indebtedness, thereby reducing our ability to use our cash flow to fund our operations, capital expenditures, and future business opportunities;

 

· restricting us from making strategic acquisitions or causing us to make non-strategic divestitures;

 

· limiting our ability to obtain additional financing for working capital, capital expenditures, debt service requirements, acquisitions, and general corporate or other purposes; and

 

· limiting our ability to adjust to changing market conditions and placing us at a competitive disadvantage compared to our less highly leveraged competitors.

 

We could incur additional indebtedness in the future, subject to the restrictions contained in our current debt obligations. If new indebtedness is added to our current debt levels, the related risks we now face could increase.

 

If due to such a deterioration in our financial performance, our cash flows and capital resources were to be insufficient to fund our debt service obligations, we may be forced to reduce or delay investments and capital expenditures, or to sell assets, seek additional capital or restructure or refinance our indebtedness. These alternative measures may not be successful and may not permit us to meet our scheduled debt service obligations. In addition, if we were required to raise additional capital in the current financial markets, the terms of such financing, if available, could result in higher costs and greater restrictions on our business. If we were to need to refinance our existing indebtedness, the conditions in the financial markets at that time could make it difficult to refinance our existing indebtedness on acceptable terms or at all. If such alternative measures proved unsuccessful, we could face substantial liquidity problems.

 

Our debt agreements may contain restrictions that limit our flexibility in operating our business.

 

Our senior secured credit agreement and the indenture governing our senior notes contain covenants that limit our restricted subsidiaries’ and our ability to, among other things:

 

· incur additional indebtedness, refinance or restructure indebtedness or issue certain preferred shares;

 

· make certain investments;

 

· consolidate, merge, sell or otherwise dispose of all or substantially all of our assets.

 

 

 

  12  

 

 

Risks Related to Yuengling’s Ice Cream

 

Changes in consumer preferences or discretionary consumer spending could harm our performance.

 

The success of our business depends, in part, upon the continued popularity of our concepts, and shifts in these consumer preferences could negatively affect our future profitability. Negative publicity over certain food items' health aspects may adversely affect consumer demand for our products and could result in a decrease in our revenues, which could materially harm our business. Additionally, our success depends, in part, on a consumer preference for eating our products and to an extent on numerous factors affecting discretionary consumer spending, including economic conditions, disposable consumer income, and consumer confidence. A decline in consumer spending or economic conditions could reduce guest traffic or impose practical limits on pricing, either of which could harm our business, financial condition, operating results, or cash flow. We will be required to disclose calorie counts for our products or the third-party products we sell due to federal regulations, which may affect consumers’ eating habits. Shifts in consumer preferences could also be based on health concerns related to the cholesterol, carbohydrate, fat, calorie, sugar, or salt content of certain food items, including items featured on our menu.

 

We may be unable to compete effectively in the food industry.

 

The food industry is intensely competitive and heavily saturated. YICA primarily competes with ice cream products and other desert products. Also, independent owners of local or regional food companies or establishments may enter our markets without significant entry barriers, and such establishments may provide price competition for our products. Competition in the food industry's relevant segments is expected to remain intense with respect to price, quality, marketing, and the type and quality of food. We also face intense competition for qualified management personnel.

 

Yuengling’s Ice Cream is sold in a limited number of stores.

 

We sell Yuengling’s Ice Cream in a limited number of stores, and our products may be relatively unknown. Initial sales have been strong in stores where we currently have our products, but our products may not be accepted in other markets we will try to reach.

 

We may become subject to potential claims for product liability.

 

Our business could expose us to claims for personal injury from contamination of our products. We believe that our products' quality is carefully monitored through regular product testing, but we may be subject to liability as a result of customer or distributor misuse or storage. The Company maintains product liability insurance against certain types of claims in amounts which it believes to be adequate. The Company also maintains an umbrella insurance policy that it considers to be sufficient to cover claims made above its product liability insurance limits. Although no claims have been made against the Company or its distributors to date and the Company believes its current level of insurance to be adequate for its current business operations, it is possible that such claims will arise in the future, and the Company’s policies may not be sufficient to pay for such claims.

 

We rely on one production facility to produce our Yuengling ice cream. The loss of this manufacturer could cause an interruption to our operation and have a material adverse effect on our business if we cannot find a replacement facility.

 

Yuengling’s Ice Cream is currently produced by only one production facility, Totally Cool, Inc., a smaller ice cream production facility that makes ice cream and other frozen desserts for other local, regional and national brands. We currently do not have a written agreement with Totally Cool; but rather, we order our products as need pursuant purchase orders. The loss of this Totally Cool would interrupt our operations and have a material adverse effect on our business if we cannot find a replacement production facility quickly.

 

 

 

  13  

 

 

We must rely on several smaller ice cream distributors rather than large distributors to distribute our products.

 

We do not presently have any independent capability to distribute our product, and we do not believe it is feasible to develop our own distribution business. Consolidation within the ice cream industry has made it more challenging to distribute ice cream products not affiliated with large ice cream distributors. In some markets, the largest ice cream companies substantially control all of the ice cream distribution to supermarkets. Therefore, we must work with several independent ice cream distributors, rather than a few large distributors, to distribute our products regionally and nationally. Our need to rely upon smaller distributors limits our ability to distribute our products and makes that distribution more costly.

 

Increases in prices of commodities needed to manufacture our product could adversely affect profitability.

 

The ingredients and materials needed to manufacture and package our ice cream products are subject to the commodities markets’ normal price fluctuations. Any increase in the price of those ingredients and materials that cannot be passed along to the consumer will adversely affect our profitability. Any prolonged or permanent increase in the cost of the raw ingredients to manufacture our products may in the long term make it more difficult for us to earn a profit.

 

Risk Related to Aureus Micro-Markets

 

The micro-market industry in which we operate is highly competitive, and increased competition could reduce our sales and profitability.

 

The micro-market industry in which we operate is highly competitive, and increased competition could reduce our sales and profitability. We compete in different markets within the micro-market sector on the basis of the uniqueness of our product offerings, the quality of our products, customer service, price, and distribution. Our markets are highly competitive. Our competitors vary in size, and many may have greater financial and marketing resources than we do. Competitive conditions could result in our experiencing reduced revenues, gross margins, and operating results and could cause an investor to lose a substantial amount or all of their investment in our Company.

 

We face a variety of risks associated with our micro-markets operation, any of which could adversely affect our financial condition and operations results.

 

We are required to obtain approvals, permits, and licenses from state regulators and local municipalities to construct and operate micro-markets. We may face delays in obtaining the requisite approvals, permits, financing, and licenses to build and manage our micro-markets, or we may not be able to obtain them at all. If we encounter delays in obtaining or cannot get the requisite approvals, permits, financing, and licenses to construct and operate our micro-markets in desirable locations, our financial condition and operations results may be adversely affected.

 

Any interruption in delivery from our only micro-market suppliers could impair our ability to sell our products and generate revenues.

 

We started the business by purchasing equipment for the first ten micro-markets on October 5, 2020 from Healthy Smart Marts. We have since purchased an additional two sets of micro-markets from a Texas-based supplier, Graphics That Pop (“GTP”). GTP not only provides the equipment but also provides the graphics that surround them. Any interruption in delivery from our micro-market suppliers could impair our ability to sell our products and generate revenues. We issue purchase orders for equipment as needed, and neither we nor our manufacturers or authorized distributors are obligated to minimum purchases or deliveries in the future. We are aware of other suppliers that could fulfill our equipment requirements; however, any interruption in our current suppliers' distribution could affect our ability to obtain additional micro-markets and could have a material adverse impact on our revenues and operations results until we engage a replacement supplier.

 

 

 

  14  

 

 

Shortages or interruptions in the availability and delivery of third-party products we sell may increase costs or reduce revenues.

 

Possible shortages or interruptions in our supply of third-party products caused by conditions beyond our control could adversely affect the availability, quality, and cost of items we buy and sell. Our inability to effectively manage supply chain risk could increase our costs and limit the availability of products critical to our operations. We will also rely on vendors and suppliers to construct and operate portions of our micro-markets. If we are unable to maintain our relationship with our vendors and suppliers, or such vendors and suppliers cease to provide the services we need, or such vendors and suppliers are unable to deliver our services on-time and at pre-negotiated prices, and we cannot engage alternative vendors and suppliers, our ability to obtain new micro-markets or continue to operate existing micro-markets and our financial condition and operating results may be adversely affected

 

Defects, failures, or security breaches in and inadequate upgrades of, or changes to, our micro-markets and micro-markets and its accompanying software could harm our business.

 

Defects, failures, or security breaches in and inadequate upgrades of, or changes to, our micro-markets and their accompanying software could harm our business. Our micro-market business operation depends on sophisticated software, hardware, computer networking, and communication services that may contain undetected errors or may be subject to failures or complications. These errors, losses, or complications may arise when new, changed, or enhanced products or services are added. Future upgrades, improvements, or changes that may be necessary to expand and maintain our business could result in delays or disruptions or may not be timely or appropriately made, any of which could seriously harm our operations. Further, certain aspects of the operating systems relating to our business are provided by third parties, including telecommunications. Accordingly, the effectiveness of these operating systems is, to a certain degree, dependent on the actions and decisions of third parties over whom we may have limited control.

 

Vending sales are dependent on physical office locations and employees. If fewer employees are working at physical offices, our business could suffer.

 

The vending machine industry depends on the congregation of people and, in our case, in offices. With the onset of Covid-19 in March 2020, offices have been closing and more and more people are working from home and we cannot anticipate when people will resume working from offices and if, to what degree. A prolonged shift in employees working remotely, the market for our products would be significantly reduced, and our business could suffer.

 

There is a risk of theft of our products being sold in our vending machines and our vending machines themselves. If a material portion of our vending machines is stolen, our business could fail.

 

Our micro-markets are open and unlocked displays with a self-checkout feature and, although we intend micro-markets to be located in secure and controlled environments, such as corporate break rooms, hotel lobbies, and auto dealerships, there is no guarantee that consumers will take them without payment. Based on our vending machines’ current rack and cooler design, product theft at the vending machines is possible. We estimate a 5% theft factor; however, there is a risk this percentage could be more significant. Also, it is possible that one or some of our vending machines could be stolen. If a material amount of our vending machines are stolen, our business could fail.

 

Our vending machines require maintenance, repair, and replacement. If a material portion of our vending machines needs significant repairs, our business could be materially impacted.

 

Our vending machines require regular maintenance, repair, and replacement. Expenses for unanticipated repairs and replacements could materially affect our sales. If one of our vending machine’s cooler stops malfunctions or is damaged, it may require a repair or replacement, which could result in lost sales and the disposal of any products that are spoiled or not salable.

 

 

 

  15  

 

 

Expired/spoiled products must be monitored and removed.

 

Because we will be selling perishable items in our vending machines, if any products are beyond their expiration dates, they will have to be removed. The failure to timely remove an expired item from one of our vending machines may present a liability if a customer becomes ill from food purchased from one of our machines.

 

General Risks

 

The market for our common stock may be thinly traded, so you may be unable to sell at or near ask prices or at all if you need to sell your shares to raise money or otherwise desire to liquidate your shares.

 

The market for our common stock may be thinly traded on the Over-the-Counter (OTC) Markets, meaning that the number of persons interested in purchasing our shares at or near ask prices at any given time may be relatively small or non-existent. This situation is attributable to several factors, including the fact that we are a small company that is relatively unknown to stock analysts, stockbrokers, institutional investors, and others in the investment community. Even if we came to such persons' attention, they tend to be risk-averse and would be reluctant to follow an unproven company such as ours or purchase or recommend the purchase of our shares until we became more seasoned and viable. Consequently, there may be periods of several days or more when trading activity in our shares is minimal or non-existent compared to a seasoned issuer, which has a large and steady volume of trading activity that will generally support continuous sales without an adverse effect on our share price. We cannot assure you that a broader or more active public trading market for our common shares will develop or be sustained or that current trading levels will be maintained.

 

The availability of shares for sale in the future could reduce the market price of our common stock.

 

In the future, we may issue securities to raise cash for acquisitions or otherwise. We may also acquire interests in other companies by using a combination of cash and common stock or just common stock. We may also issue securities convertible into our common stock. Any of these events may dilute your ownership interest in our company and adversely impact our common stock’s price.

 

Also, sales of a substantial amount of our common stock in the public market or the perception that these sales may occur could reduce our common stock's market price and impair our ability to raise additional capital through the sale of our securities.

 

The indemnification provisions in our articles of incorporation and bylaws under Nevada law may result in substantial expenditures by our company and may discourage lawsuits against our directors, officers, and employees.

 

Our articles of incorporation contain provisions that eliminate our directors' liability for monetary damages to our company and stockholders. Our bylaws also require us to indemnify our officers and directors. We may also have contractual indemnification obligations under our agreements with our directors, officers, and employees. These indemnification obligations could result in our Company incurring substantial expenditures to cover the cost of settlement or damage awards against directors, officers, and employees that we may not recoup.

 

Our common stock will be deemed a “penny stock,” making it more difficult for our investors to sell their shares.

 

The SEC has adopted Rule 15g-9, which establishes the definition of a “penny stock,” for the purposes relevant to us, as any equity security that has a market price of less than $5.00 per share, subject to certain exceptions. For any transaction involving a penny stock, unless exempt, the rules require that a broker or dealer approve a person’s account for transactions in penny stocks, and the broker or dealer receive from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased. Generally, brokers may be less willing to execute transactions in securities subject to the “penny stock” rules, making it more difficult for investors to dispose of our common stock if and when such shares are eligible for sale and may cause a decline in the market value of its stock.

 

 

 

  16  

 

 

As an issuer of a “penny stock,” the federal securities laws' protection relating to forward-looking statements does not apply to us.

 

Although federal securities laws provide a safe harbor for forward-looking statements made by a public company that files reports under the federal securities laws, this safe harbor is not available to issuers of penny stocks. As a result, we will not have the benefit of this safe harbor protection in the event of any legal action based upon a claim that the material provided by us contained a material misstatement of fact or was misleading in any material respect because we failed to include any statements necessary to make the statements not misleading. Such an action could hurt our financial condition.

 

We are classified as a “smaller reporting company,” and we cannot be sure if the reduced disclosure requirements applicable to smaller reporting companies will make our common stock less attractive to investors.

 

We are currently a “smaller reporting company.” Specifically, “smaller reporting companies” may provide simplified executive compensation disclosures in their filings; are exempt from the provisions of Section 404(b) of the Sarbanes-Oxley Act 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. Reduced disclosures in our SEC filings due to our status as a “smaller reporting company” may make it harder for investors to analyze our results of operations and financial prospects.

 

Because directors and officers currently and for the foreseeable future will continue to control the Company, you will not likely be able to elect directors or have any say in the Company’s policies.

 

Our stockholders are not entitled to cumulative voting rights. Consequently, a majority vote will decide the election of directors and all other matters requiring stockholder approval. As long as at least one share of our Series A Preferred Stock is outstanding, the preferred stock will represent 66-2/3% of all votes entitled to be voted at any annual or special meeting of stockholders. Everett M. Dickson, our President, holds all outstanding shares of our Series A Preferred Stock and will continue to have, voting control of the Company.

 

We do not expect to pay dividends in the future; any return on investment may be limited to our common stock’s value.

 

We do not currently anticipate paying cash dividends in the foreseeable future. The payment of dividends on our common stock will depend on earnings, financial condition, and other business and economic factors affecting it at such time as the Board of Directors may consider relevant. Our current intention is to apply net earnings, if any, in the foreseeable future to increasing our capital base and development and marketing efforts. There can be no assurance that we will ever have sufficient earnings to declare and pay dividends to the holders of our common stock, and in any event, a decision to declare and pay dividends is at the sole discretion of our Board of Directors. If we do not pay dividends, our common stock may be less valuable because a return on your investment will only occur if our stock price appreciates.

 

ITEM 2. FINANCIAL INFORMATION.

 

Managements’ Discussion and Analysis of Financial Condition and Results of Operations

 

The following discussion summarizes the significant factors affecting the operating results, financial condition and liquidity, and cash flows of our company for the years ended October 31, 2020, and 2019. You should read this discussion together with the consolidated financial statements, related notes, and other financial information included in this Form 10. Except for historical information, the matters discussed in this Management’s Discussion and Analysis of Financial Condition and Results of Operations are forward-looking statements that involve risks and uncertainties and are based upon judgments concerning various factors beyond our control. These risks could cause our actual results to differ materially from any future performance suggested below.

 

 

 

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Overview

 

Aureus, Inc. (“Aureus,” “ARSN,” “we,” “us,” or the “Company”) was incorporated in Nevada on April 19, 2013. Our offices are located at One Glenlake Parkway #650, Atlanta, GA 30328. Our website is www.aureusnow.com. Our telephone number is (404) 885-6045, and our email address is aureus.now@gmail.com. We do not incorporate the information on or accessible through our website into this Registration Statement, and you should not consider any information on, or that can be accessed through, our website a part of this Registration Statement.

 

We are a food brand development company that builds and represents popular food concepts throughout the United States and international markets. Management is highly experienced at business integration and re-branding potential. With little territory available for the older brands, we intend to bring fresh innovative brands that have great potential to our customers. Our brands will be unique in nature as we focus on niche markets that are still in need of development.

 

History

 

We were incorporated in the State of Nevada on April 19, 2013, under the name “Aureus Incorporated.” We were initially organized to develop and explore mineral properties in the State of Nevada. Effective December 15, 2017, we changed our name to “Hohme, Inc.,” and, effective February 7, 2019, we changed our name to “Aureus, Inc.” We are currently active in the State of Nevada.

 

We are a food brand development company focused on acquiring and growing well-established food brands. We have and plan to continue to acquire operating businesses that produce revenue. These businesses will generally be in the food production and food service space.

 

Critical Accounting Policies

 

This “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section is based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The preparation of consolidated financial statements requires that we make estimates and judgments that affect the reported amounts of assets, liabilities, net sales and expenses, and related disclosures. On an ongoing basis, we evaluate our estimates, including, but not limited to, those related to inventories, income taxes, accounts receivable allowance, fair value derivatives, and reserve for warranty claims. We base our estimates on historical experience, performance metrics, and various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from others sources. Actual results will differ from these estimates under different assumptions or conditions. We apply the following critical accounting policies in the preparation of our consolidated financial statements:

 

Use of Estimates

 

Financial statements prepared under accounting principles generally accepted in the U.S. require management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Among other things, management estimates include the estimated collectability of its accounts receivable, the valuation of long-lived assets, warranty reserves, the assumptions used to calculate derivative liabilities, assumptions used to value equity instruments issued for financing and compensation, and the valuation of deferred tax assets. Actual results could differ from those estimates.

 

 

 

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Revenue Recognition

 

We recognize revenue under Accounting Standard Update (“ASU”) No. 2014-09. This standard provides authoritative guidance clarifying the principles for recognizing revenue and developing a common revenue standard for U.S. GAAP. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods and services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.

Under this guidance, revenue is recognized when control of promised goods or services is transferred to our customers in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. We review our sales transactions to identify contractual rights, performance obligations, and transaction prices, including the allocation of prices to separate performance obligations, if applicable. Revenue and costs of sales are recognized once products are delivered to the customer’s control, and performance obligations are satisfied.

 

Recent Accounting Pronouncements

 

See Note 1 of Notes to Consolidated Financial Statements in this Form 10 for management’s discussion of recent accounting pronouncements.

 

Results of Operations for the Fiscal Year Ended October 31, 2020, Compared to the Fiscal Year Ended October 31, 2019, and the quarter ended January 31, 2021, Compared to the Quarter Ended January 31, 2020.

Revenue

 

We had $57,460 in revenues for the fiscal year ended October 31, 2020, versus revenues of $83,632 for the fiscal year ended October 31, 2019. The $26,172 (31.29%) decrease was due to a loss of some retail and food service customers and reduced marketing.

 

We had $3,386 in revenues for the quarter ended January 31, 2021, versus $21,225 for the quarter ended January 31, 2020. The $17,839 (84.05%) decrease in revenue due to a loss in retail customers food service customers.

 

Cost of Sales

 

We incurred $45,168 in cost of sales for the fiscal year ended October 31, 2020, versus $41,588 for the fiscal year ended October 31, 2019. The $3,580 (8.61%) increase was due to increased production costs, storage costs, and transportation costs. We were responsible for sourcing most raw materials for smaller production runs on production, so we experienced higher costs with less purchasing power. Storage costs increased as we had additional costs associated with the storage of raw materials and finished products. Finally, we experienced higher transportation costs moving raw materials to production, and smaller orders meant higher overall and per unit transportation expenses.

 

We incurred $4,051 in costs of sales for the quarter ended January 31, 2021, versus $26,014 for the quarter ended January 31, 2020. The $21,963 (84.43%) decrease was due to a significant decline in sales. Also, production costs increased due to lower economies of scale (higher costs due to lower quantities produced). Storage costs increased as we had additional costs associated with the storage of raw materials and finished products. Finally, we experienced higher transportation costs moving raw materials to production, and smaller orders meant higher overall and per unit transportation expenses

 

 

 

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Operating Expenses

 

General & Administrative Expenses

 

General and administrative expenses include professional fees, costs associated with marketing, press releases, public relations, rent, sponsorships, and other expenses. We incurred general and administrative expenses of $232,388 for the fiscal year ended October 31, 2020, versus $413,825 for the fiscal year ended October 31, 2019, a decrease of $181,437 (43.84%). This decrease was due to no inventory write-down in 2020 and 2020 having significantly lower professional fees.

 

We incurred general and administrative expenses of $112,065 for the quarter ended January 31, 2021, versus $63,855 for the quarter ended January 31, 2020. The $48,210 (75.5%) increase was primarily due to increased legal and accounting fees connected with preparing this Form 10 but was offset by a write-down of $28,400 of inventory in January 2021.

 

Other Income (Expense)

 

Our other income and expenses include gain on loan forgiveness, loss on extinguishment of debt, change in fair value of derivative liabilities, and interest expense. We recognized other income of $27,208 for the fiscal year ended October 31, 2020, versus other expenses of ($1,626,138) for the fiscal year ended October 31, 2019. The decrease of $1,598,930 (98.33%) was due to lower interest expense, no 2020 loss on acquisition expense, a slight increase in interest income, a significant increase in the change in fair value of a derivative, a gain on the sale of an asset, and a gain on extinguishment of debt.

 

Our other income and expenses include gain on loan forgiveness, loss on extinguishment of debt, change in fair value of derivative liabilities, and interest expense. We incurred other expenses of $41,208 for the quarter ended January 31, 2021, versus income recognition of $125,401 for the quarter ended January 31, 2020. The decrease of $166,609 (132.86%) was primarily due to lower interest expense, a small gain on the disposal of a fixed asset, no change in fair value of derivative, no gain on extinguishment of debt, and a sizable loss on the conversion of debt.

 

Net Losses

 

We incurred a net loss of $192,888 for the fiscal year ended October 31, 2020, versus $1,997,919 for the fiscal year ended October 31, 2019, representing a $2,190,807 (109.65%) decrease. While revenue was lower and cost of sales were slightly higher in 2020 compared to 2019, we experienced lower operating expenses and significantly lower total other income (expenses) in 2020.

  

We incurred a net loss of $67,271 for the fiscal year ended October 31, 2020, versus $1,917,919 for the fiscal year ended October 31, 2019, representing a $1,850,648 (96.49%) decrease. While revenue was lower and cost of sales were slightly higher in 2020 compared to 2019, we experienced lower operating expenses and significantly lower total other income (expenses) in 2020.

 

We incurred a net loss of $153,938 for the quarter ended January 31, 2021, versus a recognition of $56,757 in net income for the quarter ended January 31, 2020, representing a decrease of $210,695 (371.22%). While revenue and cost of sales were lower in the first quarter of 2021 vs. 2020, we experienced higher operating expenses and other expenses in the quarter ending January 31, 2021.

 

 

 

  20  

 

 

Liquidity and Capital Resources

 

Liquidity and Capital Resources for the Fiscal Year Ended October 31, 2020, Compared to the Fiscal Year Ended October 31, 2019

 

    Fiscal Year Ended October 31,  
    2020     2019  
Summary of Cash Flows:            
Net cash used by operating activities   $ (259,135 )   $ (253,075 )
Net cash used by investing activities   $ (14,300 )   $  
Net cash provided by financing activities   $ 212,381     $ 426,317  
Net increase (decrease) in cash and cash equivalents   $ (61,054 )   $ 173,242  
Beginning cash and cash equivalents   $ 173,288     $ 46  
Ending cash and cash equivalents   $ 112,234     $ 173,288  

 

Liquidity and Capital Resources for the Quarter Ended January 31, 2021, Compared to the Quarter Ended January 31, 2020

 

    Quarter Ended January 31,  
    2021     2020  
Summary of Cash Flows:            
Net cash used by operating activities   $ (121,837 )   $ (81,273 )
Net cash used by investing activities   $ (1,000 )   $  
Net cash provided by financing activities   $ 119,338     $ 13,890  
Net increase (decrease) in cash and cash equivalents   $ (1,499 )   $ (67,383 )
Beginning cash and cash equivalents   $ 112,234     $ 173,288  
Ending cash and cash equivalents   $ 110,735     $ 105,905  

 

Operating Activities

 

Cash used in operations of ($259,135) during the fiscal year ended October 31, 2020, was primarily a result of working capital, overhead expenses, production. Cash used in operations of ($253,075) during the fiscal year ended October 31, 2019, was primarily a result of working capital, overhead expenses, and production.

 

Cash used in operations of ($121,837) during the quarter ended January 31, 2021, was primarily a result of working capital, overhead expenses, production. Cash used in operations of ($81,273) during the quarter ended January 31, 2020, was primarily a result of working capital, overhead expenses, and production.

 

Investing Activities

 

Net cash used in investing activities for the fiscal year ended October 31, 2020, of ($14,300) resulted from $30,300 from the purchase of equipment and $16,000 for the sale of a truck. Net cash used in investing activities for the fiscal year ended October 31, 2019, of $0 resulted from no activity.

 

Net cash used in investing activities for the quarter ended January 31, 2021, of ($1,000) resulted from the sale of property and equipment. Net cash used in investing activities for the quarter ended January 31, 2020, of $0 resulted from no activity.

 

 

 

  21  

 

 

Financing Activities

 

Net cash provided by financing activities was $212,381 for the fiscal year ended October 31, 2020, which consisted of proceeds from notes payable, net proceeds from the sale of preferred stock, common stock sale, minus payments on notes payable. Net cash provided by financing activities was $426,317 for the fiscal year ended October 31, 2019, which consisted of proceeds from notes payable, net proceeds from the sale of preferred stock, common stock sale, minus cash received in acquisition, and payments on notes payable.

 

Net cash provided by financing activities was $119,338 for the quarter ended January 31, 2021, which consisted of the net proceeds from the sale of preferred stock, minus payments on notes payable. Net cash provided by financing activities was $13,890 for the quarter ended January 31, 2020, which consisted of proceeds from notes payable, net proceeds from the sale of preferred stock, the sale of common stock, minus payments on notes payable.

 

Future Capital Requirements

 

Our current available cash and cash equivalents are insufficient to satisfy our liquidity requirements. Our capital requirements for the fiscal year ending October 31, 2021, will depend on numerous factors, including management’s evaluation of the timing of projects to pursue. Subject to our ability to generate revenues and cash flow from operations and our ability to raise additional capital (including through possible joint ventures or partnerships), we expect to incur substantial expenditures to carry out our business plan, as well as costs associated with our capital raising efforts and being a public company.

 

Our plans to finance our operations include seeking equity and debt financing, alliances or other partnership agreements, or other business transactions that would generate sufficient resources to ensure the continuation of our operations.

 

The sale of additional equity or debt securities may result in further dilution to our stockholders. If we raise additional funds through the issuance of debt securities or preferred stock, these securities could have rights senior to those of our common stock and could contain covenants that would restrict our operations. Any such required additional capital may not be available on reasonable terms, if at all. If we were unable to obtain additional financing, we may be required to reduce the scope of, delay or eliminate some or all of our planned activities and limit our operations, which could have a material adverse effect on our business, financial condition, and operations results.

 

Inflation

 

The amounts presented in our consolidated financial statements do not provide for the effect of inflation on our operations or financial position. The net operating losses shown would be greater than reported if the effects of inflation were reflected either by charging operations with amounts representing replacement costs or using other inflation adjustments.

 

Going Concern

 

The accompanying audited 2020 financial statements have been prepared on a going concern basis. For the fiscal year ended October 31, 2020, we had a net loss of $192,888, had net cash used in operating activities of ($259,135), had a negative working capital deficit of ($1,859,146), an accumulated deficit of ($2,948,321) and stockholders’ deficit of ($1,859,146). Our ability to continue as a going concern depends on our ability to obtain the necessary financing to meet our obligations and repay our liabilities arising from normal business operations when they come due, fund possible future acquisitions, and generate profitable operations in the future. Our management plans to provide for our capital requirements by continuing to issue additional equity and debt securities. The outcome of these matters cannot be predicted at this time, and there are no assurances that, if achieved, we will have sufficient funds to execute our business plan or generate positive operating results. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

The accompanying unaudited quarterly financial statements have been prepared on a going concern basis. For the quarter ended January 31, 2021, we had a net loss of $153,938, had net cash used in operating activities of ($121,837), had a negative working capital deficit of $1,844,084, an accumulated deficit of ($3,102,259) and a stockholders’ deficit of ($1,844,084). Our ability to continue as a going concern depends on our ability to obtain the necessary financing to meet our obligations and repay our liabilities arising from normal business operations when they come due, fund possible future acquisitions, and generate profitable operations in the future. Our management plans to provide for our capital requirements by continuing to issue additional equity and debt securities. The outcome of these matters cannot be predicted at this time, and there are no assurances that, if achieved, we will have sufficient funds to execute our business plan or generate positive operating results. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

 

 

  22  

 

 

Off-Balance Sheet Arrangements

 

We have no off-balance sheet arrangements.

 

Quantitative and Qualitative Disclosures about Market Risk

 

In the ordinary course of our business, we are not exposed to market risk of the sort that may arise from changes in interest rates or foreign currency exchange rates or that may otherwise arise from transactions in derivatives.

 

The preparation of financial statements in conformity with U.S. GAAP requires our management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Our significant estimates and assumptions include the fair value of our common stock, stock-based compensation, the recoverability and useful lives of long-lived assets, and the valuation allowance relating to our deferred tax assets.

 

Contingencies

 

Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company, but which will only be resolved when one or more future events occur or fail to occur. In consultation with its legal counsel as appropriate, our management assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against us or unasserted claims that may result in such proceedings, we, in consultation with legal counsel, evaluates the perceived merits of any legal proceedings or unasserted claims, as well as the perceived merits of the amount of relief sought or expected to be sought therein. If the assessment of a contingency indicates it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in our financial statements. If the assessment indicates a potentially material loss contingency is not probable, but is reasonably possible, or is likely, but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss, if determinable and material, would be disclosed. Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed.

 

ITEM 3. PROPERTIES.

 

We do not own or lease any property. We currently have an agreement for a virtual office. Our business mailing address is One Glenlake Parkway #650, Atlanta, GA 30328. We believe our facilities are adequate to meet our current and near-term needs.

 

ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

 

The following table and footnotes to it sets forth information regarding the number of shares of common stock beneficially owned by (i) each director and named executive officer of our Company, (ii) named executive officers, executive officers, and directors of the Company as a group, and (iii) each person known by us to be the beneficial owner of 5% or more of our issued and outstanding shares of common stock. In calculating any percentage in the following table of common stock beneficially owned by one or more persons named therein, the following table is based on 1,060,180,555 shares of common stock and 5,000,000 shares of Series A Preferred Stock outstanding as of the filing date of this Form 10 and any shares of common stock and Series A Preferred Stock the person has the right to acquire within the 60 days following the filing date of this Form 10. Unless otherwise further indicated in the following table, the footnotes to it or elsewhere in this report, the persons and entities named in the following table have sole voting and sole investment power concerning the shares set forth opposite the stockholder’s name, subject to community property laws, where applicable. Unless as otherwise indicated in the following table and the footnotes, our named executive officers and directors’ address in the following table is c/o Aureus Inc., One Glenlake Parkway #650, Atlanta, GA 30328.

 

 

 

  23  

 

 

Name and Address of

Beneficial Owner (1)

  Amount and Nature of
Beneficial Ownership (2)
  Percent of Class (3)  
Named Executive Officers and Directors            
Everett M. Dickson   5,000,000 Series A Convertible Preferred Stock     100%  
    0 Common Stock     0%  
All Executive Officers and Directors as a group (1 Person)   5,000,000 shares of Series A Convertible Preferred Stock     100%  
    0 shares of Common Stock      0%  
5% or more beneficial owners            
None            

 

(1) Unless as otherwise indicated in the following table and the footnotes, our named executive officers and directors’ address in the following table is c/o Aureus Inc., One Glenlake Parkway #650, Atlanta, GA 30328.
(2) Under Rule 13d-3 of the Exchange Act, a beneficial owner of a security includes any person who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise has or shares: (i) voting power, which includes the power to vote, or to direct the voting of shares; and (ii) investment power, which includes the power to dispose or direct the disposition of shares. Certain shares may be deemed to be beneficially owned by more than one person (if, for example, persons share the power to vote or dispose of the shares). In addition, shares are deemed to be beneficially owned by a person if the person has the right to acquire the shares (for example, upon exercise of an option) within 60 days of the date as of which the information is provided. In computing the percentage ownership of any person, the amount of shares outstanding is deemed to include the number of shares beneficially owned by such person (and only such person) because of these acquisition rights. As a result, the percentage of outstanding shares of any person as shown in the above table does not necessarily reflect the person’s actual ownership or voting power concerning the number of shares of common stock outstanding on the date of this Form 10.
(3) In calculating any percentage in the following table of common stock beneficially owned by one or more persons named therein, the following table is based on 1,060,180,555 shares of common stock and 5,000,000 shares of Series A Preferred Stock outstanding as of the filing date of this Form 10 and any shares of common stock and Series A Preferred Stock the person has the right to acquire within the 60 days following the filing date of this Form 10.

 

Changes in Control

 

There are no arrangements known to us the operation of which may at a subsequent date result in a Change in Control of the Company.

 

ITEM 5. DIRECTORS AND EXECUTIVE OFFICERS.

 

The following table sets forth the names, positions, and ages of our current executive officers and directors. All directors serve until the next annual meeting of stockholders or until their successors are elected and qualified.

 

Directors are elected to serve until the next annual meeting of stockholders until their successors are elected and qualified. Directors are elected by a plurality of the votes cast at the annual meeting of stockholders and hold office until the expiration of the term for which they were elected and until a successor has been elected and qualified.

 

A majority of the authorized number of directors constitutes a quorum of the Board of Directors for the transaction of business. The directors must be present at the meeting to constitute a quorum. However, any action required or permitted to be taken by the Board of Directors may be taken without a meeting if all Board members individually or collectively consent in writing to the action.

 

Executive officers are appointed by and serve at the pleasure of the Company's Board of Directors, subject to any contractual arrangements.

 

Name   Age     Title
Everett M. Dickson     57     President, Chief Executive Officer, Treasurer, Secretary, and Chairman of the Board of Directors

 

 

 

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Professional Experience

 

Everett M. Dickson–President, CEO, and Chairman

 

On December 31, 2018, our Board of Directors appointed Everett M. Dickson as President, Chief Executive Officer, Treasurer, and Secretary. Since 2017, Mr. Dickson has served as CEO and Chief Financial Officer (CFO) at Cruzani, Inc., a publicly-traded food service Company (OTC Pink: CZNI). From 2012 until joining the Company in June 2017, Mr. Dickson worked in the moist tobacco and alternative fuels industry. From 2005 through 2011, Mr. Dickson worked in the alternative fuels industry. Mr. Dickson has extensive Board, Corporate Finance, Restructuring, and Capital Markets experience, having worked, most recently, in the food service and moist tobacco industries. From 2005 through 2011, Mr. Dickson’s work was focused on MBO / LBO opportunities in the restaurant sector and on assisting startup companies in the alternative fuels industry.

 

Executive Officers of YICA

 

Name   Age     Title
David Yuengling     58     Executive Vice President of Research and Development
Robert C. Bohorad     48     Chief Operating Officer

 

Professional Experience

 

David Yuengling–Executive Vice President of Research and Development

 

Mr. Yuengling was appointed as Executive Vice President of Research and Development of YICA on June 18, 2019, and is the founder of Yuengling’s Ice Cream. Before relaunching the family’s ice cream brand in 2014, Mr. Yuengling enjoyed a 30-year career in computer consulting specializing in computer programming, business analysis, and software design services for companies in the manufacturing, distribution, banking, insurance, and federal / State Government sectors. The former President of Yuengling Dairy Products, where he worked summers in high school and college, Mr. Yuengling is a proud graduate of Dickinson College (BS–Computer Science) and Philadelphia, PA-based St. Joseph’s University, where he earned his MBA.

 

Robert C. Bohorad–Chief Operating Officer

 

Mr. Bohorad was appointed as our Chief Operating Officer of YICA on June 18, 2019, and the co-founder of Yuengling’s Ice Cream. Mr. Bohorad has 20+ years of experience working for companies in various stages of their life cycles. Mr. Bohorad previously ran his own logistics, tracking, and security solutions consulting practice aside from mentoring several startups and early-stage companies. Throughout his career, Mr. Bohorad has worked in numerous capacities, including business + strategic development, marketing, finance, accounting, operations, and human resources (HR). Mr. Bohorad brings broad industry experience, with a particular focus on medical devices and software. Mr. Bohorad is a graduate of the University of Pennsylvania Wharton School and received his MBA from Fordham University.

 

Significant Employees

 

We do not have any significant employees other than our current director and executive officers named in this Registration Statement.

 

 

 

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Legal Proceedings

 

During the past ten years, none of the following events would apply to any of our directors or executive officers:

 

· A petition under the federal bankruptcy laws or any state insolvency law was filed by or against, or a receiver, fiscal agent or similar officer was appointed by a court for the business or property of such person, or any partnership in which he was a general partner at or within two years before the time of such filing, or any corporation or business association of which he was an executive officer at or within two years before the time of such filing;

 

· Such person was convicted in a criminal proceeding or is a named subject of a pending criminal proceeding (excluding traffic violations and other minor offenses);

 

· Such person was the subject of any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him from, or otherwise limiting, the following activities:

 

o Acting as a futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker, leverage transaction merchant, any other person regulated by the Commodity Futures Trading Commission, or an associated person of any of the foregoing, or as an investment adviser, underwriter, broker or dealer in securities, or as an affiliated person, director or employee of any investment company, bank, savings-and-loan association or insurance company, or engaging in or continuing any conduct or practice in connection with such activity;

 

o Engaging in any type of business practice; or

 

o Engaging in any activity in connection with the purchase or sale of any security or commodity or in connection with any violation of federal or State securities laws or federal commodities laws;

 

· Such person was the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any federal or State authority barring, suspending or otherwise limiting for more than 60 days the right of such person to engage in any activity described in paragraph (f)(3)(i) of this section, or to be associated with persons engaged in any such activity;

 

· Such person was found by a court of competent jurisdiction in a civil action or by the Commission to have violated any federal or State securities law, and the judgment in such civil action or finding by the Commission has not been subsequently reversed, suspended, or vacated;

 

· Such person was found by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated any federal commodities law, and the judgment in such civil action or finding by the Commodity Futures Trading Commission has not been subsequently reversed, suspended or vacated;

 

· Such person was the subject of, or a party to, any federal or State judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of:

 

o Any federal or State securities or commodities law or regulation; or

 

o Any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order; or

 

o Any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or

 

· Such person was the subject of, or a party to, any sanction or order, not subsequently reversed. suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26))), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29))), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.

 

 

 

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Director Independence

 

We are not currently subject to listing requirements of any national securities exchange or inter-dealer quotation system, which has requirements that a majority of the board of directors be “independent” and, as a result, we are not at this time required to have our board of directors comprised of a majority of “independent directors.”

 

Family Relationships

 

There are no familial relationships among any of our directors or officers.

 

Audit Committee

 

We currently do not have a separately standing Audit Committee due to our limited size, and our Board performs the functions that an Audit Committee would otherwise perform.

 

Compensation Committee

 

We do not have a Compensation Committee due to our limited size, and our Board performs the functions that a Compensation Committee would otherwise perform. Our Board intends to form a Compensation Committee when needed.

 

Other Committees

 

We do not currently have a separately-designated standing nominating committee. Further, we do not have a policy concerning the consideration of any director candidates recommended by security holders. To date, no security holders have made any such recommendations. Our board of directors performs all functions that committees would otherwise perform. Given our Board's present size, it is not practical for us to have committees other than those described above or to have more than two directors on such committees. If we can grow our business and increase our operations, we intend to expand the size of our Board and our committees and allocate responsibilities accordingly.

 

Potential Conflicts of Interest

 

Because we do not have an audit or Compensation Committee comprised of independent directors, the functions that such committees would have performed are performed by our directors. Our Board of Directors has not established an Audit Committee and does not have a financial expert, nor has our Board established a nominating committee. Our Board believes that such committees are not necessary since we only have one director, and to date, such director has been performing such committees' functions. Thus, there is a potential conflict of interest in that our director and officers have the authority to determine issues concerning management compensation, nominations, and audit issues that may affect management decisions. We are not aware of any other conflicts of interest with any of our executive officers or directors.

 

ITEM 6. EXECUTIVE COMPENSATION.

 

Executive Compensation

 

The following table and related footnotes show the compensation paid to our named executive officers during the last two completed fiscal years.

 

Name and Principal Position  

Year Ended

October 31,

   

Salary

($)

   

Stock
Awards

($)

   

All Other
Compensation

for ($)

   

Total

($)

 
Everett M. Dickson, President, CEO, and Chairman     2020       0       0       0       0  
      2019       0       0       0       0  

 

 

 

  27  

 

 

Employment Agreements

 

Effective May 20, 2019, we entered into an employment agreement with Mr. Dickson. The initial term of the agreement is five years, and the agreement is automatically extended for one additional year on the anniversary of the initial termination date and each subsequent anniversary of the initial termination date, unless either Mr. Dickson or we elect not to so extend the term of the agreement by notifying the other party, in writing, of such election not less than 60 days before the last day of the period as then in effect. Mr. Dickson has agreed to devote a substantial portion of his business and professional time and efforts to our business. The agreement provides that Mr. Dickson shall receive a salary determined by the board of directors commensurate with the Company’s development. At the sole discretion of our board of directors or a committee thereof, he may be entitled to receive bonuses based on the achievement (in whole or in part) by the Company of our business plan and achievement by him of fixed personal performance objectives.

 

The agreement provides for payments to be made due to any “Change in Control,” as defined in the agreement. If a “Change in Control” occurs during the term of the agreement and Mr. Dickson’s employment is terminated (a) by us without “Cause,” as defined in the agreement, or by Mr. Dickson for “Good Reason,” as defined in the agreement, in each case within two years after the effective date of the “Change in Control” or (b) by Mr. Dickson for any reason on or within 30 days after the first anniversary of the effective date of the “Change in Control,” then Mr. Dickson is entitled to the payments and benefits to be paid by us in the event Mr. Dickson is terminated without “Cause” or “Good Reason,” except that the severance multiple is three. Also, in the event of such a termination of Mr. Dickson’s employment, all outstanding stock options, restricted stock, and other equity awards granted to Mr. Dickson under any of our equity incentive plans shall become immediately vested and exercisable in full.

 

Outstanding Equity Awards at Fiscal Year-End

 

There were no outstanding equity awards awarded to our named executive officer as of January 31, 2021.

 

Director Compensation

 

At this time, our directors do not receive cash compensation for serving as members of our board of directors. The term of office for each director is one year or until his/her successor is elected at our annual meeting and qualified. The duration of office for each of our officers is at the pleasure of the board of directors. The board of directors has no nominating, auditing committee, or compensation committee. Therefore, the selection of a person or election to the board of directors was neither independently made nor negotiated at arm’s length.

 

During the fiscal year ended October 31, 2020, and quarter ended January 31, 2021, our sole director, Mr. Dickson, received no compensation for director services.

 

Equity Compensation Plan Information

 

Plan category   Number of securities to be issued upon exercise of outstanding options, warrants and rights   Weighted-average exercise price of outstanding options, warrants and rights   Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))  
    (a)   (b)   (c)  
Equity compensation plans approved by security holders   0      
Equity compensation plans not approved by security holders   0     110,000,000(1)(2)  
Total   0     110,000,000(1)(2)  

 

(1) There are 10,000,000 shares of common stock authorized for issuance under the Incentive Stock Option Plan.

 

(2) There are 100,000,000 shares of common stock authorized for issuance under the Management Stock Bonus Plan.

 

 

 

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ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE.

 

For transactions with our named executive officers, please see the disclosure under “Executive Compensation” above.

 

Other than as given below, since November 1, 2018, there have been no transactions, and there currently are no proposed transaction in which we were or are to be a participant and in which any related person has or will have a direct or indirect material interest involving the lesser of $120,000 or one percent (1%) of the average of our total assets as of the end of last two completed fiscal years. A related person is any executive officer, director, nominee for director, or holder of 5% or more of our common stock, or an immediate family member of any of those persons.

 

On December 21, 2018, under a Stock Purchase Agreement, dated December 20, 2018, between Everett M. Dickson and Hohme Holdings International, Inc. (the “Seller”), Mr. Dickson purchased 90,000,000 shares of our common stock from the Seller for a total of $15,000. Sadiq Shaikh had voting and dispositive control over the Seller. Simultaneous with the consummation of the Stock Purchase Agreement, on December 31, 2018, Sadiq Shaikh resigned as the President and Chief Executive Officer and from the Board of Directors of the Company; Deborah Engles resigned as the Secretary and Treasurer of the Company; and Everett M. Dickson was appointed as the President, Chief Executive Officer, Treasurer, and Secretary of the Company.

 

Mr. Dickson subsequently exchanged his common stock for 5,000,000 shares of the Company’s Series A Convertible Preferred Stock.

 

On May 14, 2019, we issued 250,000,000 shares of common stock to Mr. Dickson. These shares were returned to the Company and canceled on July 11, 2019.

 

ITEM 8. LEGAL PROCEEDINGS.

 

We anticipate that we (including any future subsidiaries) will become subject to claims and legal proceedings arising in the ordinary course of business from time to time. It is not feasible to predict the outcome of any such proceedings, and we cannot assure that their ultimate disposition will not have a materially adverse effect on our business, financial condition, cash flows, or results of operations. As of the filing of this Form 10, we are not a party to any pending legal proceedings, nor are we aware of any civil proceeding or government authority contemplating any legal proceeding.

 

ITEM 9. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANTS COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

 

Our common stock is quoted on the OTC Pink under the symbol “ARSN.” The table below sets forth for the periods indicated the quarterly high and low bid prices reported by OTC Markets. Limited trading volume has occurred during these periods. These quotations reflect inter-dealer prices without retail mark-up, mark-down, or commission and may not necessarily represent actual transactions.

 

Fiscal Year Ended October 31, 2020  
Quarter     High     Low  
First   $ 0.0062     $ 0.00195  
Second   $ 0.0021     $ 0.0005  
Third   $ 0.0016     $ 0.0004  
Fourth   $ 0.0065     $ 0.0007  

 

Fiscal Year Ended October 31, 2019  
Quarter     High     Low  
First   $ 0.03535     $ 0.0080  
Second   $ 0.029     $ 0.0060  
Third   $ 0.0117     $ 0.0022  
Fourth   $ 0.01085     $ 0.0034  

 

 

 

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Quarter Ended January 31, 2021  
Quarter     High     Low  
First   $ 0.0019     $ 0.0009  

 

Quarter Ended January 31, 2020  
Quarter     High     Low  
First   $ 0.0065     $ 0.0019  

 

Our common stock is considered to be “penny stock” under rules promulgated by the SEC. Under these rules, broker-dealers participating in transactions in these securities must first deliver a risk disclosure document which describes risks associated with these stocks, broker-dealers’ duties, customers’ rights and remedies, market and other information and make suitability determinations approving the customers for these stock transactions based on financial situation, investment experience, and objectives. Broker-dealers must also disclose these restrictions in writing, provide monthly account statements to customers, and obtain each customer's specific written consent. With these restrictions, the likely effect of designation as a penny stock is to decrease broker-dealers' willingness to make a market for the stock, reduce the liquidity of the stock, and increase the transaction cost of sales purchases of these stocks compared to other securities.

 

Dividend Policy

 

We have never declared a cash dividend on our common stock, and our board of directors does not anticipate that we will pay cash dividends in the foreseeable future. Any future determination to pay cash dividends will be at the discretion of our board of directors and depend upon our financial condition, operating results, capital requirements, restrictions in our agreements, and other factors that our board of directors deems relevant.

 

We are obligated to pay dividends to certain holders of our preferred stock, which we pay out of legally available funds from time to time, or reach arrangements with our holders of preferred stock to convert limited quantities of preferred stock at favorable conversion prices instead of dividend payments.

 

Holders of Record

 

As of March 26, 2021, an aggregate of 1,160,180,555 shares of our common stock was issued and outstanding and owned by approximately 13 record stockholders. The number of record holders was determined from our transfer agent's records and did not include beneficial owners of common stock whose shares are held in the names of various security brokers, dealers, and registered clearing agencies.

 

ITEM 10. RECENT SALES OF UNREGISTERED SECURITIES.

 

The table below sets forth all of the securities the Company has sold within the past three years that were not registered under the Securities Act, including sales of reacquired securities, new issues, securities issued in exchange for property, services, or other securities, new securities resulting from the modification of outstanding securities. No underwriters were involved in connection with these issuances, and the Company used any proceeds from such sales for working capital purposes.

 

 

 

  30  

 

 

Date of Transaction

 

(MM/DD/YYY)

Transaction type (e.g., new issuance, cancellation, shares returned to treasury) Amount of Securities Sold Title of Securities Value of shares issued ($/per share) at Issuance Individual/ Entity Shares were issued to (entities must have individual with voting / investment control disclosed). Consideration 1933 Securities Ac Registration Exemption

NOTE: There

are no

transactions

in 2018

             
1/28/2019 New 21,600,000 Common 0.002 Accredited Investor Cash Section 4(a)(2)
2/6/2019 New 12,000,000 Common 0.001 Debt Holder Debt Conversion Section 3(a)(9)
3/6/2019 New 12,000,000 Common 0.001 Debt Holder Debt Conversion Section 3(a)(9)
5/7/2019 New 8,200,000 Common 0.001 Debt Holder Debt Conversion Section 3(a)(9)
5/15/2019 New 8,000,000 Common 0.001 Debt Holder Debt Conversion Section 3(a)(9)
6/5/2019 New 8,000,000 Common 0.001 Debt Holder Debt Conversion Section 3(a)(9)
6/17/2019 New 10,000,000 Common 0.001 Debt Holder Debt Conversion Section 3(a)(9)
6/25/2019 New 15,000,000 Common 0.001 Debt Holder Debt Conversion Section 3(a)(9)
8/9/2019 New 12,000,000 Common 0.003 Accredited Investor Cash Section 4(a)(2)
8/8/2019 New 7,500,000 Common 0.003 Investor Cash Regulation A/Section 3(b)
8/12/2019 New 14,000,000 Common 0.003 Investor Cash Regulation A/Section 3(b)
9/10/2019 New 5,555,555 Common 0.0036 Investor Cash Regulation A/Section 3(b)
9/17/2019 New 11,111,111 Common 0.0036 Investor Cash Regulation A/Section 3(b)
10/1/2019 New 11,000,000 Common 0.0036 Investor Consulting Services Section 4(a)(2)
10/1/2019 New 8,333,334 Common 0.0036 Investor Cash Regulation A/Section 3(b)
10/25/2019 New 12,000,000 Common 0.0036 Investor Cash Regulation A/Section 3(b)
10/27/2019 New 15,000,000 Common 0.001 Debt Holder Debt Conversion Regulation A/Section 3(b)
10/31/2019 New 10,000,000 Common 0.0036 Investor Cash Regulation A/Section 3(b)
11/7/2019 New 13,888,889 Common 0.0036 Investor Cash Regulation A/Section 3(b)
11/19/2019 New 15,000,000 Common 0.0005 Debt Holder Debt Conversion Regulation A/Section 3(b)
1/13/2020 New 20,000,000 Common 0.0005 Debt Holder Debt Conversion Regulation A/Section 3(b)
3/20/2020 New 100,000,000 Common 0.0009 Executive Officer Services Section 4(a)(2)
3/27/2020 New 4,166,666 Common 0.0036 Investor Cash Regulation A/Section 3(b)
4/2/2020 New 35,000,000 Common 0.0002 Debt Holder Debt Conversion Section 3(a)(9)
4/8/2020 New 20,000,000 Common 0.0002 Debt Holder Debt Conversion Section 3(a)(9)
4/30/2020 New 44,000,000 Common 0.0002 Debt Holder Debt Conversion Section 3(a)(9)
4/30/2020 New 48,375,000 Common 0.0002 Debt Holder Debt Conversion Section 3(a)(9)
6/2/2020 New 70,000,000 Common 0.0001 Debt Holder Debt Conversion Section 3(a)(9)
6/3/2020 New 50,000,000 Common 0.0001 Debt Holder Debt Conversion Section 3(a)(9)
7/8/2020 New 55,000,000 Common 0.0001 Debt Holder Debt Conversion Section 3(a)(9)
7/22/2020 New 60,000,000 Common 0.0001 Debt Holder Debt Conversion Section 3(a)(9)
9/7/2020 New 60,000,000 Common 0.0001 Debt Holder Debt Conversion Section 3(a)(9)
11/23/2020 New 80,000,000 Common 0.0001 Debt Holder Debt Conversion Section 3(a)(9)
12/3/2020 New 80,000,000 Common 0.0001 Debt Holder Debt Conversion Section 3(a)(9)
12/12/2020 New 90,000,000 Common 0.0001 Debt Holder Debt Conversion Section 3(a)(9)
1/19/2021 New 100,000,000 Common 0.0001 Debt Holder Debt Conversion Section 3(a)(9)

 

 

 

  31  

 

 

ITEM 11. DESCRIPTION OF REGISTRANT’S SECURITIES TO BE REGISTERED.

 

Common Stock

 

We are authorized to issue 500,000,000 shares of common stock, $0.001 par value. The holders of common stock are entitled to equal dividends and distributions, with respect to the common stock when, as, and if declared by the board of directors from funds legally available for such dividends. No holder of common stock has any preemptive right to subscribe for any of our stock nor are any shares subject to redemption. Upon our liquidation, dissolution, or winding up, and after payment of creditors and any amounts payable to senior securities, the assets will be divided pro-rata on a share-for-share basis among the holders of the shares of common stock.

 

Holders of our common stock do not have cumulative voting rights so that the holders of more than 50% of the shares voting for the election of directors will be able to elect 100% of the directors if they choose to do so, and in that event, the holders of the remaining shares will not be able to elect any members to the board of directors. No holder of shares of capital stock possessing voting power shall have the right to cumulate their voting power in the election of directors.

 

At each meeting of holders of shares of capital stock for the election of directors at which a quorum is present, a nominee for election as a director in an uncontested election shall be elected to the board of directors if the number of votes cast for such nominee’s election exceeds the number of votes cast against such nominee’s election. Abstentions will not be considered votes cast for or against a nominee at the meeting. Notwithstanding the foregoing, if the number of candidates exceeds the number of directors to be elected, then, in that election, the nominees receiving the greatest number of votes shall be elected.

 

An “uncontested election” means any meeting of holders of shares of capital stock at which the number of nominees does not exceed the number of directors to be elected and with respect to which no holder of capital stock has submitted notice of an intent to nominate a candidate for election at such meeting in accordance with the bylaws, as they may be amended from time to time, or, if such a notice has been submitted with respect to such meeting, on or before the tenth day prior to the date that the Company files its definitive proxy statement relating to such meeting with the SEC (regardless of whether or not it is thereafter revised or supplemented), each such notice with respect to such meeting has been (a) withdrawn by its respective submitting stockholder in writing to the Secretary of the Company, (b) determined not to be a valid and effective notice of nomination (such determination to be made by the board of directors (or a designated committee thereof) pursuant’ to the bylaws, or, if challenged in court, by final court order) or (c) determined not to create a bona fide election contest by the board of directors (or a designated committee thereof).

 

No holder of shares of stock of the Company shall be entitled as of right to purchase or subscribe for any part of any unissued stock of this corporation or of any new or additional authorized stock of the Company of any class whatsoever, or any issue of securities of the Company convertible into stock, whether such stock or securities be issued for money or consideration other than money or by way of dividend, but any such unissued stock or such new or additional authorized stock or such securities convertible into stock may be issued and disposed of to such persons, firms, corporations and associations, and upon such terms as may be deemed advisable by the board of directors without offering to stockholders then of record or any class of stockholders any thereof upon the same terms or upon any terms.

 

We have never paid any dividends to stockholders of our common stock. The declaration in the future of any cash or stock dividends will depend upon our capital requirements and financial position, general economic conditions, and other pertinent factors. We presently intend not to pay any cash or stock dividends in the foreseeable future. Management intends to reinvest earnings, if any, in the development and expansion of our business. No dividend may be paid on the common stock until all preferred stock dividends are paid in full.

 

Preferred Stock

 

We are authorized to issue 10,000,000 shares of preferred stock, $0.001 par value.

 

The powers, preferences, rights, qualifications, limitations, and restrictions pertaining to the preferred stock, or any series thereof, shall be such as may be fixed, from time to time, by the Board in its sole discretion. Authority to do is expressly vested in the Board. The authority of the Board concerning each such series of preferred stock will include, without limiting the generality of the foregoing, the determination of any or all of the following:

 

 

 

  32  

 

 

The number of shares of any series and the designation to distinguish the shares of such series from the shares of all other series: (1) the voting powers, if any, of the shares of such series and whether such voting powers are full or limited: (2) the redemption provisions, if any, applicable to such series, including the redemption price or prices to be paid; (3) whether dividends, if any, will be cumulative or noncumulative, the dividend rate or rates of such series and the dates and preferences of dividends on such series: (4) the rights of such series upon the voluntary or involuntary dissolution of, or upon any distribution of the assets of, the Company: (5) the provisions, if any, pursuant to which the shares of such series are convertible into, or exchangeable for, shares of any other class or classes of any other series of the same other any other class or classes of stock or any other security, of the Company or any other corporation or entity, and the rates or other determinants of conversion or exchange applicable thereto; (6) the right, if any, to subscribe for or to purchase any securities of the Company or any other corporation or other entity; (7) the provisions, if any. of a sinking fund applicable to such series, and (8) any other relative, participating, optional or other powers, preferences or rights, and any qualifications, limitations or restrictions thereof of such series.

 

Series A Convertible Preferred Stock

 

We have designated 10,000,000 shares of preferred stock the Series A Convertible Preferred Stock with a par and stated value of $0.001 per share. On April 2, 2019, we issued 5,000,000 shares of Series A Convertible Preferred Stock to Mr. Everett M. Dickson, our President.

 

The holders of the Series A Convertible Preferred Stock are not be entitled to receive any dividends.

 

In the event of any voluntary or involuntary liquidation dissolution, or winding up of the Company, the holders of shares of the Series A Convertible Preferred Stock then outstanding shall be entitled to be paid, out of the assets of the Company available for distribution to its stockholders, whether from capital surplus or earnings, an amount equal to two-thirds (2/3) of the assets so distributed.

 

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 Company 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 stockholders of the Company or action by written consent of stockholders. Each outstanding share of the Series A Convertible Preferred Stock shall represent its proportionate share of the 66-2/3% allocated to the outstanding shares of Series A Convertible Preferred Stock.

 

The Company will not, by amendment of the articles of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issuance or sale of securities, or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms lo be observed or performed hereunder by the Company, but will at all times in good faith assist in the carrying out of all the provisions of this articles of incorporation and in the taking of all such action as may be necessary or appropriate to protect the rights of the holders of the Series A Convertible Preferred Stock against impairment.

 

The Series A Convertible Preferred Stock shall, with respect to distribution rights on liquidation, winding up, and dissolution, (i) rank senior to any of the shares of common stock of the Company, and any other class or series of stock of the Company which by its terms shall rank junior to the Series A Convertible Preferred Stock, and (ii) rank junior to any other series or class of preferred stock of the Company and any other class or series of stock of the Company which by its term shall rank senior to the Series A Convertible Preferred Stock.

So long as any shares of Series A Convertible Preferred Stock are outstanding, the Company shall not (i) alter or change any of the powers, preferences, privileges, or rights of the Series A Convertible Preferred Stock, or (ii) amend the provisions of this section; in each case, without first obtaining the approval by vote or written consent, in the manner provided by law, of the holders of at least a majority of the outstanding shares of Series A Convertible Preferred Stock, as to changes affecting the Series A Convertible Preferred Stock.

 

The shares of the Series A Convertible Preferred Stock are not redeemable.

 

 

 

  33  

 

 

So long as any shares of Series A Convertible Preferred Stock are outstanding, the Company shall not, without first obtaining the approval (by vote or written consent as provided by the Nevada Business company Act) of the Holders of at least a majority of the then outstanding shares of Series A Convertible Preferred Stock: (a) alter or change the rights, preferences or privileges of the Series A Convertible Preferred Stock; (b) alter or change the rights, preferences or privileges of any capital stock of the Company so as to affect adversely the Series A Convertible Preferred Stock; (c) create any new class or series of capital stock having a preference over the Series A Convertible Preferred Stock as to distribution of assets upon liquidation, dissolution or winding up of the Company (as previously defined, “Senior Securities”; (d) create any new class, or series of capital stock ranking pari passu with the Series A Convertible Preferred Stock as to distribution of assets upon liquidation, dissolution or winding up of the Company {as previously defined ‘‘Pari Passu Securities”); (e) increase the authorized number of shares of Series A Convertible Preferred Stock; (f) issue any shares of Series A Convertible Preferred Stock other than pursuant to the Securities Purchase Agreement with the original parties thereto; (g) issue any additional shares of Senior Securities; or (h) or declare or pay any cash dividend or distribution on any Junior Securities.

 

If holders of at least a majority of the then outstanding shares of Series A Convertible Preferred Stock agree to allow the Company to alter or change die rights, preferences, or privileges of the shares of Series A Convertible Preferred Stock, then the Company shall deliver notice of such approved change to the holders of the Series A Convertible Preferred Stock that did not agree to such alteration or change (the “Dissenting Stockholders”).

 

If at any time or from time to time there shall be (i) a merger or consolidation of the Company with or into another corporation, (ii) the sale of all or substantially all of the Company’s capital stock or assets to any other person, (iii) any other form of business combination or reorganization in which the Company shall not be the continuing or surviving entity of such business combination or reorganization, or (iv) any transaction or series of transactions by the Company in which more than 50 percent (50%) of the Company’s voting power is transferred (each a “Reorganization” then as a part of such Reorganization, the provision shall be made so that the holders of the Series A Convertible Preferred Stock shall thereafter be entitled to receive the same kind and amount of stock or other securities or property (including cash) of the Company, or the successor corporation resulting from such Reorganization.

 

The Company will not, by amendment of its articles of incorporation or through any reorganization, recapitalization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Company, but will at all times in good faith assist in the carrying out of all the provisions of this Certificate of Designation and in the taking of all such action as may be necessary or appropriate to protect the conversion rights of the holders of the Series A Convertible Preferred Stock against impairment.

 

The holders of the Series A Convertible Preferred Stock shall have conversion rights as follows (the “Conversion Rights”):

 

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 (2/3) of the after conversion outstanding fully paid and non-assessable shares of common stock. Each 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, shall be subject to adjustment.

 

ITEM 12. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

 

Nevada Revised Statutes (“NRS”) 78.138(7) provides that, subject to limited statutory exceptions and unless the articles of incorporation or an amendment thereto (in each case filed on or after October 1, 2003) provide for greater individual liability, a director or officer is not individually liable to a corporation or its stockholders or creditors for any damages as a result of any act or failure to act in his or her capacity as a director or officer unless it is proven that: (i) the act or failure to act constituted a breach of his or her fiduciary duties as a director or officer and (ii) the breach of those duties involved intentional misconduct, fraud or a knowing violation of law.

 

 

 

  34  

 

 

NRS 78.7502(1) provides that a corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Company), by reason of the fact that the person is or was a director, officer, employee or agent of the Company, or is or was serving at the request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses, including attorneys’ fees, judgments, fines and amounts paid in settlement actually and reasonably incurred by the person in connection with the action, suit or proceeding if the person (i) is not liable pursuant to NRS 78.138 or (ii) acted in good faith and in a manner which he or she reasonably believed to be in or not opposed to the best interests of the Company, and, with respect to any criminal action or proceeding, had no reasonable cause to believe the conduct was unlawful. NRS 78.7502(2) provides that a corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending, or completed action or suit by or in the right of the Company to procure a judgment in its favor by reason of the fact that the person is or was a director, officer, employee or agent of the Company, or is or was serving at the request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses, including amounts paid in settlement and attorneys’ fees actually and reasonably incurred by the person in connection with the defense or settlement of the action or suit if the person (a) is not liable according to NRS 78.138 or (ii) acted in good faith and in a manner which he or she reasonably believed to be in or not opposed to the best interests of the Company. To the extent that a director, officer, employee, or agent of a corporation has been successful on the merits or otherwise in defense of any such action, suit or proceeding, or defense of any claim, issue or matter therein, the Company shall indemnify him or her against expenses, including attorneys’ fees, actually and reasonably incurred by him or her in connection with the defense. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, does not, of itself, create a presumption that the person is liable according to NRS 78.138 or did not act in good faith and in a manner which he or she reasonably believed to be in or not opposed to the best interests of the Company, or that, with respect to any criminal action or proceeding, he or she had reasonable cause to believe that the conduct was unlawful. Indemnification may not be made for any claim, issue, or matter as to which such a person has been adjudged by a court of competent jurisdiction, after exhaustion of all appeals therefrom, to be liable to the Company or for amounts paid in settlement to the Company, unless and only to the extent that the court in which the action or suit was brought or other court of competent jurisdiction determines upon application that in view of all the circumstances of the case, the person is fairly and reasonably entitled to indemnity for such expenses as the court deems proper.

 

NRS 78.751(1) provides that any discretionary indemnification pursuant to NRS 78.7502 (unless ordered by a court or advanced pursuant to NRS 78.751(2)), may be made by the Company only as authorized in the specific case upon a determination that indemnification of the director, officer, employee or agent is proper in the circumstances. The determination must be made (i) by the stockholders; (ii) by the board of directors by a majority vote of a quorum consisting of directors who were not parties to the action, suit, or proceeding; (iii) if a majority vote of a quorum consisting of directors who were not parties to the action, suit or proceeding so orders, by independent legal counsel in a written opinion; or (iv) if a quorum consisting of directors who were not parties to the action, suit or proceeding cannot be obtained, by independent legal counsel in a written opinion. NRS 78.751(2) provides that the Company’s articles of incorporation or bylaws, or an agreement made by the Company, may provide that the expenses of officers and directors incurred in defending a civil or criminal action, suit, or proceeding must be paid by the Company as they are incurred and in advance of the final disposition of the action, suit or proceeding, upon receipt of an undertaking by or on behalf of the director or officer to repay the amount if it is ultimately determined by a court of competent jurisdiction that the director or officer is not entitled to be indemnified by the Company.

 

Under the NRS, the indemnification under NRS 78.7502 and advancement of expenses authorized in or ordered by a court pursuant to NRS 78.751:

 

· Does not exclude any other rights to which a person seeking indemnification or advancement of expenses may be entitled under the articles of incorporation or any bylaw, agreement, a vote of stockholders or disinterested directors or otherwise, for either action in the person’s official capacity or action in another capacity while holding office, except that indemnification, unless ordered by a court under NRS 78.7502 or for the advancement of expenses made pursuant to NRS 78.751(2), may not be made to or on behalf of any director or officer if a final adjudication establishes that the director’s or officer’s acts or omissions involved intentional misconduct, fraud or a knowing violation of the law and was material to the cause of action; and

 

· Continues for a person who has ceased to be a director, officer, employee or agent and inures to the benefit of the heirs, executors, and administrators of such a person.

 

 

 

  35  

 

 

A right to indemnification or the advancement of expenses arising under a provision of the articles of incorporation or any bylaw is not eliminated or impaired by an amendment to such provision after the occurrence of the act or omission that is the subject of the civil, criminal, administrative or investigative action, suit or proceeding for which indemnification or advancement of expenses is sought unless the provision in effect at the time of such act or omission explicitly authorizes such elimination or impairment after such action or omission has occurred.

 

According to our bylaws, we will indemnify a “Proper Person,” as defined in the bylaws, who was or is a party or is threatened to be made a party to any threatened, pending, or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, and whether formal or informal, because he is or was a director, officer, employee, fiduciary or agent of the Company, or is or was serving at the request of the Company as a director, officer, partner, trustee, employee, fiduciary or agent of any foreign or domestic profit or nonprofit corporation or of any partnership, joint venture, trust, profit or nonprofit unincorporated association, limited liability company, or other enterprise or employee benefit plan. We will indemnify any Proper Person against reasonably incurred expenses (including attorneys’ fees), judgments, penalties, fines (including any excise tax assessed with respect to an employee benefit plan), and amounts paid in settlement reasonably incurred by him in connection with such action, suit or proceeding if it is determined that he conducted himself in good faith and that he reasonably believed (i) in the case of conduct in his official capacity with the Company, that his conduct was in the Company’s best interests, or (ii) in all other cases (except criminal cases), that his conduct was at least not opposed to the Company’s best interests, or (iii) in the case of any criminal proceeding, that he had no reasonable cause to believe his conduct was unlawful. Official capacity means, when used with respect to a director, the office of director and, when used with respect to any other Proper Person, the office in a corporation held by the officer or the employment, fiduciary or agency relationship undertaken by the employee, fiduciary, or agent on behalf of the Company. Official capacity does not include service for any other domestic or foreign corporation or other person or employee benefit plan.

 

No indemnification will be made to a Proper Person with respect to any claim, issue or matter in connection with a proceeding by or in the right of a corporation in which the Proper Person was adjudged liable to the Company or in connection with any proceeding charging that the Proper Person derived an improper personal benefit, whether or not involving action in an official capacity, in which he was adjudged liable on the basis that he derived an improper personal benefit. Further, indemnification in connection with a proceeding brought by or in the right of the Company shall be limited to reasonable expenses, including attorneys’ fees, incurred in connection with the proceeding.

 

We will indemnify any Proper Person who was wholly successful, on the merits or otherwise, in defense of any action, suit, or proceeding as to which he was entitled to indemnification against expenses (including attorneys’ fees) reasonably incurred by him in connection with the proceeding without the necessity of any action by the Company other than the determination in good faith that the defense has been wholly successful.

 

Further, we have entered into indemnification agreements with each of our directors and executive officers that may be broader than the specific indemnification provisions in the NRS and our governing documents. Such agreements may require we, among other things, advance expenses and otherwise indemnify our executive officers and directors against certain liabilities that may arise by reason of their status or service as executive officers or directors, to the fullest extent permitted by law. We intend to enter into indemnification agreements with any new directors and executive officers in the future.

 

We expect to enter into customary indemnification agreements with our executive officers and directors that provide them, in general, with customary indemnification in connection with their service to us or on our behalf.

 

 

 

  36  

 

 

ITEM 13. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

 

Index to Consolidated Financial Statements

 

Report of Independent Registered Public Accounting Firm   F-1
     
Consolidated Balance Sheets as of October 1, 2020 and 2019   F-2
     
Consolidated Statements of Operations for the Fiscal Years Ended October 31, 2020 and 2019   F-3
     
Consolidated Statement of Stockholders’ Deficit for the Fiscal Years Ended October 31, 2020 and 2019   F-4
     
Consolidated Statements of Cash Flows for the Fiscal Years Ended October 31, 2020 and 2019   F-5
     
Notes to Consolidated Financial Statements   F-6

 

 

 

 

         
     
Consolidated Balance Sheets as of January 31, 2021   F-17
     
Consolidated Statements of Operations for the Quarter Ending January 31, 2021   F-18
     
Consolidated Statement of Stockholders’ Deficit for the Quarter Ending January 31, 2021   F-19
     
Consolidated Statements of Cash Flows for the Quarter Ending January 31, 2021   F-20
     
Notes to Consolidated Financial Statements  (for the Quarter Ending January 31, 2021)   F-21

 

 

 

  37  

 

 

 

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

 

To the Board of Directors and Shareholders of Aureus, Inc. 

 

 

Opinion on the Financial Statements

 

We have audited the accompanying balance sheets of Aureus, Inc. (“the Company”) as of October 31, 2020 and 2019, and the related statements of operations, changes in stockholders’ deficit, and cash flows for each of the years in the two-year period ended October 31, 2020, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of October 31, 2020 and 2019, and the results of its operations and its cash flows for each of the years in the two-year period ended October 31, 2020, in conformity with accounting principles generally accepted in the United States of America.

 

Going Concern

 

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the financial statements, the Company has an accumulated deficit and net losses. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 3. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

Basis for Opinion

 

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

 

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

 

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.

  

 

  

 

 We have served as the Company’s auditor since 2019. 

 

Spokane, Washington 

April 1, 2021  

 

 

  F- 1  

 

 

AUREUS INCORPORATED

CONSOLIDATED BALANCE SHEETS

 

 

    October 31, 2020     October 31, 2019  
ASSETS             (Restated)  
Current Assets:                
Cash   $ 112,234     $ 173,288  
Inventory     202,724       243,151  
Accounts receivable     5,587       6,942  
Total Current Assets     320,545       423,381  
                 
Other Assets:                
Property and equipment, net     30,300       19,250  
Total Assets   $ 350,845     $ 442,631  
LIABILITIES AND STOCKHOLDERS' DEFICIT                
Current Liabilities:                
Accounts payable     201,290       226,422  
Accrued interest     54,101       59,801  
Due to related party           1,150  
Notes payable     179,871       264,471  
Loans payable     974,729       1,021,950  
Line of credit     800,000       800,000  
Derivative liability           154,620  
Total Liabilities   $ 2,209,991     $ 2,528,414  
                 
Commitments and contingencies                
                 
Stockholders' Deficit:                
Preferred stock: par value $0.001; 10,000,000 shares authorized, 5,000,000 and 0 shares issued and outstanding, respectively     5,000       5,000  
Common stock: $0.001 par value; 1,500,000,000 shares authorized; 810,180,555 and 214,750,000 shares issued and outstanding, respectively     810,181       214,750  
Discount to common stock     (396,917 )     (20,500 )
Preferred stock to be issued     269,250       153,800  
Common stock to be issued     12,500        
Additional paid in capital     389,161       316,600  
Accumulated deficit     (2,948,321 )     (2,755,433 )
Total Stockholders' Deficit     (1,859,146 )     (2,085,783 )
TOTAL LIABILITIES & STOCKHOLDERS' DEFICIT   $ 350,845     $ 442,631  

 

The accompanying notes are an integral part of these financial statements.

 

 

 

  F- 2  

 

 

AUREUS INCORPORATED

CONSOLIDATED STATEMENTS OF OPERATIONS

 

 

    For the Years Ended  
    October 31,  
    2020     2019  
          (Restated)  
Revenue   $ 57,460     $ 83,632  
Cost of goods sold     45,168       41,588  
Gross margin     12,292       42,044  
                 
Operating Expenses:                
General and administrative expenses     147,448       144,042  
Inventory write down           115,408  
Professional fees     84,940       154,375  
Total operating expenses     232,388       413,825  
                 
Loss from operations     (220,096 )     (371,781 )
                 
Other income (expense):                
Interest expense     (127,934 )     (169,069 )
Loss on acquisition           (1,544,782 )
Interest income     2,072       1,010  
Change in fair value of derivative     154,620       69,350  
Gain on sale of asset     416        
Gain on extinguishment of debt           17,353  
Loss on extinguishment of debt     (1,966 )      
Total other income (expense)     27,208       (1,626,138 )
                 
Loss before provision for income tax     (192,888 )     (1,997,919 )
Provision for income tax            
Net Loss   $ (192,888 )   $ (1,997,919 )
                 
Basic loss per share   $ (0.00 )   $ (0.02 )
                 
Basic weighted average shares     501,947,751       131,541,020  
                 

 

 

The accompanying notes are an integral part of these financial statements.

 

 

  F- 3  

 

 

AUREUS INCORPORATED

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ DEFICIT

 

 

    Common Stock     Discount
to
    Preferred Stock     Additional     Preferred Stock     Common Stock     Accumulated        
    Shares     Amount     Common Stock     Shares     Amount     Paid in Capital     To Be Issued     To Be Issued     Deficit     Total
Equity
 
Balance October 31, 2018     126,450,000     $ 126,450     $           $       (95,700 )   $     $     $ (757,514 )   $ (726,764 )
Stock issued for conversion of debt     65,200,000       65,200       (20,500 )                                         44,700  
Stock issued for services     11,000,000       11,000                         28,600                         39,600  
Beneficial conversion feature                                   80,000                         80,000  
Common stock converted to Preferred – related party     (90,000,000 )     (90,000 )           5,000,000       5,000       85,000                          
Stock issued for cash     102,100,000       102,100                         218,700       153,800                   474,600  
Net Loss                                                     (1,997,919 )     (1,997,919 )
Balance October 31, 2019 (restated)     214,750,000       214,750       (20,500 )     5,000,000       5,000       316,600       153,800             (2,775,433 )     (2,085,783 )
Stock issued for conversion of debt     477,375,000       477,375       (376,417 )                                         100,958  
Stock issued to Yuengling's Ice Cream Corp     100,000,000       100,000                         (100,000 )                        
Beneficial conversion feature                                   50,000                         50,000  
Loss on convertible debt                                   75,617                         75,617  
Stock issued for cash     18,055,555       18,056                         46,944       115,450       12,500             192,950  
Net Loss                                                       (192,888 )     (192,888 )
Balance October 31, 2020     810,180,555     $ 810,181     $ (396,917 )     5,000,000     $ 5,000     $ 389,161     $ 269,250     $ 12,500     $ (2,948,321 )   $ (1,859,146 )
                                                                                 

The accompanying notes are an integral part of these financial statements

 

 

  F- 4  

 

 

AUREUS INCORPORATED

CONSOLIDATED STATEMENTS OF CASH FLOWS

 

 

    For the Years Ended  
    October 31,  
    2020     2019  
Cash flows from operating activities:                
Net loss   $ (192,888 )   $ (1,997,919 )
Adjustments to reconcile net loss to net cash used in operating activities:                
Depreciation expense     3,666       2,750  
Beneficial conversion feature     50,000       80,000  
Loss on acquisition           1,544,782  
Loss (gain) on extinguishment of debt     1,966       (17,353 )
Gain on sale of fixed asset     (416 )      
Stock for services           39,600  
Change in fair value of derivative     (154,620 )     (69,350 )
Changes in assets and liabilities:                
Accounts receivable     1,356       (6,942 )
Inventory     40,427       131,568  
Accounts payable     (24,499 )     22,459  
Accrued liabilities     15,873       17,330  
Net cash used in operating activities     (259,135 )     (253,075 )
                 
Cash flows from investing activities:                
Purchase of property and equipment     (30,300 )      
Proceeds from the sales of property and equipment     16,000        
Net cash used in investing activities     (14,300 )      
                 
Cash flows from financing activities:                
Proceeds from notes payable     118,300       15,000  
Net proceeds from the sale of preferred stock     115,450       153,800  
Sale of common stock     77,500       320,800  
Cash received in acquisition           (2,198 )
Payments on notes payable     (97,719 )     (62,235 )
(Payments) / proceeds – related party loan     (1,150 )     1,150  
Net cash provided by financing activities     212,381       426,317  
                 
Net (decrease) increase in cash     (61,054 )     173,242  
Cash, beginning of year     173,288       46  
Cash, end of year   $ 112,234     $ 173,288  
                 
Cash paid during the period for:                
Interest   $     $  
Income taxes   $     $  
                 
Supplemental non-cash disclosure information:                
Common stock issued for conversion of debt   $ 100,958     $ 44,100  

 

 

The accompanying notes are an integral part of these financial statements

 

  F- 5  

 

 

AUREUS INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

October 31, 2020

 

NOTE 1 – ORGANIZATION AND BUSINESS

 

Aureus Incorporated (the “Company”) was incorporated in the state of Nevada on April 19, 2013. The Company was organized to develop and explore mineral properties in the state of Nevada. The Company is currently in active status in the state of Nevada.

 

On December 21, 2018, pursuant to a Stock Purchase Agreement, dated December 20, 2018, by and among the Company and Everett M. Dickson (the “Buyer”) and Hohme Holdings International, Inc. (the “Seller”), the Buyer purchased 90,000,000 shares of common stock of the Company from the Seller for a total of $15,000. Sadiq Shaikh has voting and dispositive control over the Seller. Simultaneously with the consummation of the Stock Purchase Agreement on December 21, 2018, Sadiq Shaikh resigned as the President and Chief Executive Officer and from the Board of Directors of the Company; Deborah Engles resigned as the Secretary and Treasurer of the Company; and Everett M. Dickson was appointed as the President, Chief Executive Officer, Treasurer, Secretary and as a director to the Board of directors of the Company.

 

We are a food brand development company that builds and represents popular food concepts throughout the United States as well as international markets. Management is highly experienced at business integration and re-branding potential. With little territory available for the older brands we intend to bring to our customers fresh innovative brands that have great potential. All of our brands will be unique in nature as we focus on niche markets that are still in need of developing.

 

The Company has reached an agreement to purchase a multi-unit tranche of Micro Markets with Healthy SmartMarts and has received an initial order of equipment so that it can move forward in establishing its first 10 Micro Markets throughout the Atlanta metropolitan area. 

 

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES

 

Basis of presentation

The Company’s financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).

 

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

 

Concentrations of Credit Risk

We maintain our cash in bank deposit accounts, the balances of which at times may exceed federally insured limits. We continually monitor our banking relationships and consequently have not experienced any losses in our accounts. We believe we are not exposed to any significant credit risk on cash.

 

Cash Equivalents

The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. There were no cash equivalents for the years ended October 31, 2020 or 2019.

 

Restricted Cash

The Company has an obligation to transfer $50,000 to Mid Penn Bank as security pursuant to the Agreement of Sale and Security Agreement with Mid Penn Bank and Yuengling Ice Cream Corp, by December 31, 2020. If the funds are not transferred by December 31, 2020, the Bank the has option to call the loan and to require the Company to pay any attorney’s fees incurred.

 

 

  F- 6  

 

 

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiary YIC Acquisitions Corp. All material transactions and balances have been eliminated on consolidation.

  

Inventory

Inventories are stated at the lower of cost or market. Cost is principally determined using the last-in, first-out (LIFO) method. The Company periodically assesses if any of the inventory has expired or if the value has fallen below cost. When this occurs, the Company recognizes an expense for inventory write down. Total inventories at October 31, 2020 and 2019 were $202,724 and $243,151, respectively.

 

Property and Equipment

Property and equipment is 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.

 

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.

 

Income Taxes

Income taxes are provided for the tax effects of the transactions reported in the financial statements and consist of taxes currently due plus deferred taxes related primarily to tax net operating loss carryforwards. The deferred tax assets and liabilities represent the future tax return consequences of these differences, which will either be taxable or deductible when assets and liabilities are recovered or settled, as well as operating loss carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is established against deferred tax assets when in the judgment of management, it is more likely than not that such deferred tax assets will not become available. Because the judgment about the level of future taxable income is dependent to a great extent on matters that may, at least in part, be beyond the Company’s control, it is at least reasonably possible that management’s judgment about the need for a valuation allowance for deferred taxes could change in the near term.

 

Tax benefits are recognized only for tax positions that are more likely than not to be sustained upon examination by tax authorities. The amount recognized is measured as the largest amount of benefit that is greater than 50 percent likely to be realized upon settlement. A liability for “unrecognized tax benefits” is recorded for any tax benefits claimed in the Company’s tax returns that do not meet these recognition and measurement standards. As of October 31, 2020, and 2019, no liability for unrecognized tax benefits was required to be reported.

  

Revenue recognition

Revenue is recognized when a customer obtains control of promised goods or services and is recognized in an amount that reflects the consideration that an entity expects to receive in exchange for those goods or services. In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The amount of revenue that is recorded reflects the consideration that the Company expects to receive in exchange for those goods. The Company applies the following five-step model in order to determine this amount: (i) identification of the promised goods in the contract; (ii) determination of whether the promised goods are performance obligations, including whether they are distinct in the context of the contract; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations; and (v) recognition of revenue when (or as) the Company satisfies each performance obligation.

 

 

  F- 7  

 

 

The Company only applies the five-step model to contracts when it is probable that the entity will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. Once a contract is determined to be within the scope of ASC 606 at contract inception, the Company reviews the contract to determine which performance obligations the Company must deliver and which of these performance obligations are distinct. The Company recognizes as revenues the amount of the transaction price that is allocated to the respective performance obligation when the performance obligation is satisfied or as it is satisfied. Generally, the Company's performance obligations are transferred to customers at a point in time, typically upon delivery. YIC Acquisitions Corp (Yuengling’s Ice Cream) generates its revenue through the sale of pints to retailers, through the online sales of pints directly to consumers, and through the sale of 3 gallon tubs to food service establishments, such as restaurants, stadiums, and universities. Revenue is recognized at the time of delivery or, for online sales, at the time of the transaction. Retailers and food service customers’ terms are generally 15 or 30 days. Online sales are paid via credit card and funds are generally received within 30 days.

 

Basic and Diluted Earnings Per Share

Net income (loss) per common share is computed pursuant to section 260-10-45 of the FASB Accounting Standards Codification.  Basic net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period.  Diluted net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock and potentially outstanding shares of common stock during the period. The weighted average number of common shares outstanding and potentially outstanding common shares assumes that the Company incorporated as of the beginning of the first period presented. As of October 31, 2020, there are 30,857 potentially dilutive shares if the Preferred A were to be converted. As of October 31, 2020 and 2019, the Company’s diluted loss per share is the same as the basic loss per share, as the inclusion of any potential shares would have had an anti-dilutive effect due to the Company generating a loss.

 

Fair Value Measurements

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC Topic No. 820 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels, as described below:

 

Level 1: Level 1 inputs are unadjusted quoted prices in active markets for identical assets or liabilities.

 

Level 2: Level 2 inputs are inputs other than quoted prices included in Level 1 that are observable, either directly or indirectly.

 

Level 2 inputs include quoted prices for similar assets, quoted prices in markets that are not considered to be active, and observable inputs other than quoted prices such as interest rates.

 

Level 3: Level 3 inputs are unobservable inputs.

 

The following required disclosure of the estimated fair value of financial instruments has been determined by the Company using available market information and appropriate valuation methodologies. However, considerable judgment is required to interpret market data to develop the estimates of fair value. Accordingly, the use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts.

 

The methods and assumptions used to estimate the fair values of each class of financial instruments are as follows: Cash and Cash Equivalents, Accounts Receivable, and Accounts Payable. The items are generally short-term in nature, and accordingly, the carrying amounts reported on the consolidated balance sheets are reasonable approximations of their fair values.

 

 

  F- 8  

 

  

The carrying amounts of Notes Receivable and Notes Payable approximate the fair value as the notes bear interest rates that are consistent with current market rates.

 

The following table classifies the Company’s liabilities measured at fair value on a recurring basis into the fair value hierarchy as of December 31, 2020:

 

Description   Level 1     Level 2     Level 3     Total Gains  
Derivative   $     $     $     $ 154,620  
Total   $     $     $     $ 154,620  

 

 The following table classifies the Company’s liabilities measured at fair value on a recurring basis into the fair value hierarchy as of December 31, 2019:

 

Description   Level 1     Level 2     Level 3     Total Gains  
Derivative   $     $     $ 154,620     $ 69,350  
Total   $     $     $ 154,620     $ 69,350  

 

Recent Accounting Pronouncements

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). ASU 2016-02 requires lessees to recognize lease assets and lease liabilities on the balance sheet and requires expanded disclosures about leasing arrangements. The new standard supersedes the present U.S. GAAP standard on leases and requires substantially all leases to be reported on the balance sheet as right-of-use assets and lease obligations. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018 and interim periods in fiscal years beginning after December 15, 2018, with early adoption permitted. There has been no impact on our financial statements as a result of adopting this standard.

 

Topic 606, Revenue from Contracts with Customers, of the Financial Accounting Standards Board’s (FASB) Accounting Standards Codification (ASC). The guidance in ASC 606 was originally issued by the FASB in May 2014 in Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers (Topic 606). Since then, the FASB has issued several ASUs that have revised or clarified the guidance in ASC 606. The Company has evaluated the impact of this accounting standard update and noted that it has had no material impact.

 

On June 20, 2018, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2018-07, Compensation—Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting. ASU 2018-07 is intended to reduce cost and complexity and to improve financial reporting for share-based payments to nonemployees (for example, service providers, external legal counsel, suppliers, etc.). Under the new standard, companies will no longer be required to value non-employee awards differently from employee awards. Meaning that companies will value all equity classified awards at their grant-date under ASC718 and forgo revaluing the award after this date. The Company has chosen to early adopt this standard. There has been no material impact on our financial statements as a result of adopting this standard.

 

The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the condensed financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on our financial position or results of operations.

 

NOTE 3 – GOING CONCERN

 

The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has an accumulated deficit of $2,742,704 (which includes a noncash loss on acquisition of $1,544,78) at October 31, 2020, had a net loss of $67,271, and net cash used in operating activities of $259,135 for the year ended October 31, 2020. The Company’s ability to raise additional capital through the future issuances of common stock and/or debt financing is unknown. The obtainment of additional financing, the successful development of the Company’s contemplated plan of operations, and its transition, ultimately, to the attainment of profitable operations are necessary for the Company to continue operations. These conditions and the ability to successfully resolve these factors raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements of the Company do not include any adjustments that may result from the outcome of these aforementioned uncertainties.

 

 

  F- 9  

 

 

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:

 

    October 31,
2020
    October 31,
2019
 
Automobile   $     $ 22,000  
Property and equipment     30,300        
Less: accumulated depreciation           (2,750 )
Property and equipment, net   $ 30,300     $ 19,250  

 

Depreciation expense

Depreciation expense for the years ended October 31, 2020 and 2019 was $3,666 and $2,750, respectively.

 

During the year ended October 31, 2020, the Company sold its vehicle, recognizing a gain of $416 on the sale.

 

NOTE 5 – NOTES PAYABLE

 

On September 9, 2015, the Company issued to Backenald Corp. a promissory note in the principal amount of $20,000, bearing interest at the rate of 5% per annum and maturing on the first anniversary of the date of issuance. This note is in default and its interest rate has been increased to 10%. As of October 31, 2020, accrued interest amounted to $9,151.

 

On November 6, 2015, the Company issued Craigstone Ltd. a promissory note in the principal amount of $20,000, bearing interest at the rate of 5% per annum and maturing on the first anniversary of the date of issuance. This note is in default and its interest rate has been increased to 10%. As of October 31, 2020, accrued interest amounted to $8,992.

 

On March 22, 2016, the Company issued Craigstone Ltd. a promissory note in the principal amount of $20,000, bearing interest at the rate of 5% per annum and maturing on the first anniversary of the date of issuance. This note is in default and its interest rate has been increased to 10%. As of October 31, 2020, accrued interest amounted to $8,121.

 

 

  F- 10  

 

 

On August 31, 2016, the Company issued Success Zone Tech Ltd. a promissory note in the principal amount of $100,000, bearing interest at the rate of 8% per annum, compounded annually, and maturing on the first anniversary of the date of issuance. On January 7, 2019, this note was purchased by and assigned to Device Corp. The note is convertible into shares of common stock at $0.0005. The Company accounted for the initial conversion feature as a beneficial conversion feature. A beneficial conversion feature arises when the conversion price of a convertible instrument is below the per share fair value of the underlying stock into which it is convertible, with the resulting expense not to exceed the loan amount. The company accounted for an additional beneficial conversion feature expense of $50,000 and $80,000 for the years ended October 31, 2020 and 2019, respectively. The amount was immediately expensed to interest expense with a credit to additional paid in capital.  During the year ended October 31, 2019, Device Corp converted $39,650 and $5,050 of principal and interest, respectively, into 65,200,000 shares of common stock. During the year ended October 31, 2020, Device Corp converted $59,600 and $9,275 of principal and interest, respectively, into shares of common stock. As of October 31, 2020, accrued interest amounted to $8,250. This note is in default.

 

On February 23, 2017, the Company issued Travel Data Solutions a promissory note in the principal amount of $17,500, bearing interest at the rate of 8% per annum, compounded annually, and maturing on the first anniversary of the date of issuance. This note is in default. As of October 31, 2020, accrued interest amounted to $6,076.

 

On March 27, 2017, the Company issued Craigstone Ltd. a promissory note in the principal amount of $12,465, bearing interest at the rate of 8% per annum, compounded annually, and maturing on the first anniversary of the date of issuance. This note is in default. As of October 31, 2020, accrued interest amounted to $3,991.

 

On May 16, 2017, the Company issued Travel Data Solutions a promissory note in the principal amount of $4,500, bearing interest at the rate of 8% per annum, compounded annually, and maturing on the first anniversary of the date of issuance. This note is in default. As of October 31, 2020, accrued interest amounted to $1,379.

 

On May 19, 2017, the Company issued Travel Data Solutions a promissory note in the principal amount of $25,000, bearing interest at the rate of 8% per annum, compounded annually, and maturing on the first anniversary of the date of issuance. This note has been paid in full.

 

On July 28, 2017, we issued Backenald Trading Ltd. a promissory note in the principal amount of $20,000, bearing interest at the rate of 8% per annum, compounded annually, and maturing on the first anniversary of the date of issuance. This note is in default. As of October 31, 2020, accrued interest amounted to $5,724.

 

On August 13, 2018, the company issued Travel Data Solutions a promissory note in the principal amount of $25,000, bearing interest at the rate of 8% per annum, compounded annually, and maturing on the first anniversary of the date of issuance. This note has been fully converted to common stock.

 

On January 24, 2020, the company issued a third party a promissory note in the principal amount of $15,000, bearing interest at the rate of 10% per annum, and maturing on April 30, 2020. As of October 31, 2020, the balance due on this note for principal and interest is $5,000 and $1,155, respectively. This note is in default.

 

On March 24, 2020, the company issued a third party a promissory note in the principal amount of $20,000, bearing interest at the rate of 10% per annum, and maturing on May 30, 2020. As of October 31, 2020, the balance due on this note for principal and interest is $20,000 and $1,211, respectively. This note is in default.

 

As of October 31, 2020 and 2019, the Company was also indebted to two other third parties for a total of $39,656 and $39,656, respectively. These notes are non-interest bearing and are currently past due and in default.

 

 

  F- 11  

 

 

NOTE 6 – ASSET ACQUISITION

 

On June 18, 2019, the company entered into a Secured Creditor Asset Sale and Purchase Agreement with Mid Penn Bank (“Creditor”) and Yuengling’s Ice Cream (“Debtor”). The Company agreed to purchase certain assets of Yuengling’s Ice Cream and to assume certain liabilities of Debtor. The Company, for good and valuable consideration assumed the tangible and intangible assets that relates to and are directly derived from the assets purchased pursuant to the Secured Creditor Asset Sale and Purchase Agreement including, but not limited to the following: (i) Accounts, Chattel Paper (including Tangible Chattel Paper and Electronic Chattel Paper), Deposit Accounts, Documents, Equipment, Fixtures, General Intangibles, Goods, Instruments, Inventory, Investment Property, Letter of Credit Rights, Payment Intangibles, supporting obligations, books and records, all rents, issues and profits of the business of selling ice cream and any other business Debtor is involved in: and (ii) all other tangible and intangible personal property, whether now owned or hereafter acquired, including policies of insurance thereon and all insurance proceeds and unearned premium in connection therewith, together withal all accessions, additional to replacements for and substitutions of Collateral and all cash and non-cash proceeds and products thereof. In addition, a 2015 Chevrolet Truck, it is intended that the Collateral shall include all assets of the Debtor including all operating contracts. Collateral shall also include a certain account held at Mid Penn Bank including all interest and earnings thereon. The Company will assume the debt in the total amount of $1,889,012.

 

YIC Acquisition has assumed three loans. The first loan was an SBA loan with a balance of $1,056,807 and annual interest of 5.25%. The loan has monthly payments and matures March 13, 2026. The balance due on this loan as of October 31, 2020 and 2019 is $891,429 and $1,011,534, respectively. The second loan is a line of credit with a balance of $814,297 and an annual interest rate of 4.25%. Payment on this line of credit are monthly. The balance due on this loan as of October 31, 2020 and 2019 is $800,000 and $800,000, respectively. The third loan is for a truck with a balance of $17,908 and annual interest of 4.95%. This loan has monthly payments and matures May 6, 2020. The balance due on this loan as of October 31, 2020 and 2019 is $0 and $10,416, respectively. The Line of Credit with Mid Penn is disclosed as a current liability pursuant to the ability of the bank to call the loan if $50,000 is not transferred to Mid Penn to secure the loans, per the terms of the original Agreement of Sale and Security Agreement with Mid Penn Bank and Yuengling Ice Cream Corp. The SBA is also disclosed as a current liability.

 

NOTE 7 – LOANS PAYABLE

 

As of October 31, 2020, the balance on the Company’s line of credit with Mid Penn Bank is $800,000 (refer to Note 6).

As of October 31, 2020, the balance on the Company’s SBA loan is $891,429 (refer to Note 6). During the year ended October 31, 2020, the Mid Penn Bank made several of the Company’s loan payments as part of the CARES Act. This amount has been recognized as a gain on forgiveness of debt of $68,436.

 

On August 31, 2020, the Company received a Paycheck Protection Program loan under the CARES Act for $83,300 (the “PPP Loan”). The Paycheck Protection Program provides that the use of PPP Loan proceeds are limited to certain qualifying expenses and may be partially or wholly forgiven in accordance with the requirements set forth in the CARES Act. The Company currently intends to use the PPP Loan for permitted uses, although no assurance can be given that the Company will obtain forgiveness of all or any portion of amounts due under the PPP Loan. If not forgiven the loan bears interest at 1% per annum and matures in five years.

 

NOTE 8 – RELATED PARTY TRANSACTIONS

 

On May 14, 2019, the Company issued 250,000,000 shares of Common Stock to Mr. Dickson. These shares were returned to the Company and canceled on July 11, 2019.

 

On March 20, 2020, the Company issued 100,000,000 shares of common stock to its subsidiary, YIC Acquisition Corp. The shares will be returned to the Company.

 

As of October 31, 2020 and 2019, the Company owes its officers $0 and $1,150, respectively, for cash advances to pay for operating expenses.

 

 

  F- 12  

 

 

NOTE 9 – COMMON STOCK

 

On February 11, 2019, the Company amended its Articles of Incorporation to increase its authorized common stock to 500,000,000 shares, par value $0.001 per share.

 

On May 30, 2019, the Company issued a Public offering of the securities of the Company. The offering was for 38,000,000 shares of common stock, par value $0.00, at an offering price of $0.015 per share (the "Offered Shares"). The minimum purchase requirement per investor is 100,000 Offered Shares ($1,500); however, the Company may waive the minimum purchase requirement on a case-by-case basis at the Company's sole discretion.

 

On July 17, 2019, the Company issued an amendment to the Public offering of the securities of the Company that was previously issued on May 30, 2019. The amended offering is for 228,000,000 shares of common stock, par value $0.001, at an offering price of $0.0025 per share. The minimum purchase requirement per investor is 40,000 shares ($1,000); however, the Company may waive the minimum purchase requirement on a case-by-case basis at the Company's sole discretion.

 

During the year ended October 31, 2019, the Company sold 102,100,000 shares of common stock for total cash proceeds of $320,800.

 

During the year ended October 31, 2019, the Company granted 11,000,000 shares of common stock for services for total noncash expense of $41,800.

 

During the year ended October 31, 2019, the Company issued 65,200,000 shares of common stock for conversion of $44,700 of debt.

 

On March 13, 2020, the Company amended its Articles of Incorporation increased its authorized common stock to one billion (1,000,000,000) shares.

 

During the year ended October 31, 2020, the Company sold 21,527,777 shares of common stock for cash proceeds of $77,500. 3,472,222 of the shares have not yet been issued by the transfer agent.

 

During the year ended October 31, 2020, the Company issued 477,375,000 shares of common stock for conversion of $100,958 of principal and interest.

 

NOTE 10 – PREFERRED STOCK

 

Series A Preferred

The Company has designated Ten Million (10,000,000) shares of Preferred Stock the Series A Convertible Preferred Stock with a par and stated value of $0.001 per share. The holders of the Series A Convertible Preferred Stock are not be entitled to receive any dividends.

 

Except as otherwise required by law or by the Articles of Incorporation and except as set forth below, the outstanding shares of Series A Convertible Preferred Stock shall vote together with the shares of Common Stock and other voting securities of the Corporation as a single class and, regardless of the number of shares of Series A Convertible Preferred Stock outstanding and as long as at least one of such shares of Series A Convertible Preferred Stock is outstanding shall represent Sixty Six and Two Thirds Percent (66 2/3%) of all votes entitled to be voted at any annual or special meeting of shareholders of the Corporation or action by written consent of shareholders. Each outstanding share of the Series A Convertible Preferred Stock shall represent its proportionate share of the 66 2/3% which is allocated to the outstanding shares of Series A Convertible Preferred Stock.

 

The entirety of the shares of Series A Convertible Preferred Stock outstanding as such time shall be convertible, at the option of the holder thereof, at any time and from time to time, and without the payment of additional consideration by the holder thereof, into two-thirds of the after conversion outstanding fully paid and non-assessable shares of Common Stock. Each individual share of Series A Convertible Preferred Stock shall be convertible into Common Stock at a ratio determined by dividing the number of shares of Series A Convertible Stock to be converted by the number of shares of outstanding pre-conversion Series A Convertible Preferred Stock. Such initial Conversion Ratio, and the rate at which shares of Series A Convertible Preferred Stock may be converted into shares of Common Stock.

 

 

  F- 13  

 

 

As of October 31, 2020 and 2019, there are 5,000,000 and 5,000,000 shares of Series A preferred stock, respectively, owned by the CEO.

 

As of October 31, 2020 and 2019, the Company has preferred stock to be issued in the amount of $269,250 and $153,800, respectively.

 

Series B Preferred

The Series B preferred stock is convertible into shares of common stock at the option of the holder at a 35% discount to the lowest closing price for the thirty days prior to conversion.

 

On August 21, 2020, the Company entered into a Stock Purchased Agreement with Kanno Group Holdings II Ltd.(“KGH”), in which KGH purchased $3,000 of Series B Preferred Stock. The shares have not yet been issued and are disclosed as preferred stock to be issued.

 

NOTE 11 - INCOME TAX

 

Deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carry forwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. The Company is using the U.S. federal income tax rate of 21% and 5% estimated state tax.

 

The provision for Federal income tax consists of the following October 31:

 

    2020     2019  
Federal income tax benefit attributable to:                
Book income   $ (17,500 )   $ (498,700 )
Other nondeductible expenses     (59,400 )     389,400  
Less: valuation allowance     76,900       109,300  
Net provision for Federal income taxes   $     $  

 

The cumulative tax effect at the expected rate of 21% of significant items comprising our net deferred tax amount is as follows:

 

    2020     2019  
Deferred tax asset attributable to:                
Net operating loss carryover   $ (244,700 )   $ (167,800 )
Less: valuation allowance     244,700       167,800  
Net deferred tax asset   $     $  

 

At October 31, 2020, the Company had net operating loss carry forwards of approximately $941,000 that maybe offset against future taxable income.  No tax benefit has been reported in the October 31, 2020 or 2019 financial statements since the potential tax benefit is offset by a valuation allowance of the same amount.

 

On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cut and Jobs Act (the “Tax Act”). The Tax Act establishes new tax laws that affects 2018 and future years, including a reduction in the U.S. federal corporate income tax rate to 21% effective January 1, 2018.

 

Due to the change in ownership provisions of the Tax Reform Act of 1986, net operating loss carry forwards for Federal income tax reporting purposes are subject to annual limitations. Should a change in ownership occur, net operating loss carry forwards may be limited as to use in future years.

 

 

  F- 14  

 

 

ASC Topic 740 provides guidance on the accounting for uncertainty in income taxes recognized in a company’s financial statements. Topic 740 requires a company to determine whether it is more likely than not that a tax position will be sustained upon examination based upon the technical merits of the position. If the more-likely-than-not threshold is met, a company must measure the tax position to determine the amount to recognize in the financial statements.

 

The Company includes interest and penalties arising from the underpayment of income taxes in the statements of operations in the provision for income taxes. As of October 31, 2020, the Company had no accrued interest or penalties related to uncertain tax positions. The Company files income tax returns in the U.S. federal jurisdiction, Nevada. 

 

NOTE 12 – RESTATEMENT

 

The October 31, 2019 financial statements were restated to correct errors in accounting for assets, liabilities, including derivatives, operating expenses and certain operating expenses. The original October 31, 2019 financial statements that

  

The following table summarizes changes made to the October 31, 2019 balance sheet.

 

    October 31, 2019  
    As Reported     Adjustment     As Restated  
Balance Sheet:                        
Cash   $ 173,288     $     $ 173,288  
Inventory     391,967       (148,816 )     243,151  
Accounts receivable     6,942             6,942  
Other     12,500       (12,500 )      
Property and equipment     14,708       4,542       19,250  
Total assets   $ 599,405       (156,774 )   $ 442,631  
                         
Accounts payable   $ 225,922     $ 500     $ 226,422  
Accrued interest     56,334       3,467       59,801  
Due to related party     1,100       50       1,150  
Notes payable     264,471             264,471  
Loans payable     1,020,157       1,793       1,021,950  
Line of credit     814,520       (14,520 )     800,000  
Derivative liability           154,620       154,620  
Total liabilities     2,382,504       145,910       2,528,414  
                         
Preferred stock     5,000             5,000  
Common stock     214,750             214,750  
Discount to common stock             (20,500 )     (20,500 )
Preferred stock to be issued     153,800             153,800  
Additional paid-in capital     218,300       98,300       316,600  
Accumulated deficit     (2,374,949 )     (380,484 )     (2,755,433 )
Total Stockholders’ Deficit     (1,783,099 )     (302,684 )     (2,085,783 )
Total liabilities and stockholders’ deficit   $ 599,405     $ (156,774 )   $ 442,631  

 

 

  F- 15  

 

 

 The following table summarizes changes made to the October 31, 2019 Statements of Operations.

 

    As Reported     Adjustment     As Restated  
Revenue   $ 79,679     $ 3,953     $ 83,632  
Cost of goods sold     (68,242 )     26,654       (41,588 )
Gross margin     11,437       30,607       42,044  
                         
General and administrative     (66,012 )     (78,030 )     (144,042 )
Inventory write down           (115,408 )     (115,408 )
Professional fees     (156,575 )     2,200       (154,375 )
Interest expense     (76,043 )     (93,026 )     (169,069 )
Loss on acquisition     (1,598,650 )     53,868       (1,544,782 )
Interest income     1,010             1,010  
Change in fair value of derivative           69,350       69,350  
Gain on extinguishment of debt     17,353             17,353  
Net Loss   $ (1,867,480 )   $ (130,439 )   $ (1,997,919 )

 

NOTE 13 – 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.

 

Subsequent to October 31, 2020, the Company issued 450,000,000 shares of common stock for conversion of $45,000 of principal and interest.

 

On December 10, 2020, the Company amended its Articles of Incorporation increased its authorized common stock to 1.5 billion (1,500,000,000) shares.

 

 

  F- 16  

 

   

AUREUS INCORPORATED

CONSOLIDATED BALANCE SHEETS

(Unaudited) / (Revised)

 

 

    January 31, 2021     October 31, 2020  
ASSETS                
Current Assets:                
Cash   $ 110,735     $ 112,234  
Inventory     170,273       202,724  
Accounts receivable     5,438       5,587  
Total Current Assets     286,446       320,545  
                 
Other Assets:                
Property and equipment, net     30,300       30,300  
Total Assets   $ 316,746     $ 350,845  
LIABILITIES AND STOCKHOLDERS' DEFICIT                
Current Liabilities:                
Accounts payable     172,133       201,290  
Accrued interest     49,510       54,101  
Due to related party     2,600        
Notes payable     174,121       179,871  
Loans payable     962,466       974,729  
Line of credit     800,000       800,000  
Total Liabilities   $ 2,160,830     $ 2,209,991  
                 
Commitments and contingencies            
                 
Stockholders' Deficit:                
Preferred stock: par value $0.001; 10,000,000 shares authorized, 5,000,000 and 5,000,000 shares issued and outstanding, respectively     5,000       5,000  
Common stock: $0.001 par value; 1,000,000,000 shares authorized; 1,160,180,555 and 810,180,555 shares issued and outstanding, respectively     1,160,181       810,181  
Discount to common stock     (711,917 )     (396,917 )
Preferred stock to be issued     403,250       269,250  
Common stock to be issued     12,500       12,500  
Additional paid in capital     389,161       389,161  
Accumulated deficit     (3,102,259 )     (2,948,321 )
Total Stockholders' Deficit     (1,844,084 )     (1,859,146 )
TOTAL LIABILITIES & STOCKHOLDERS' DEFICIT   $ 316,746     $ 350,845  

 

The accompanying notes are an integral part of these unaudited consolidated financial statements.

 

 

  F- 17  

 

 

AUREUS INCORPORATED

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited) / (Revised)

 

 

    For the Three Months Ended  
    January 31,  
    2021     2020  
             
Revenue   $ 3,386     $ 21,225  
Cost of goods sold     4,051       26,014  
Gross margin     (665 )     (4,789 )
                 
Operating Expenses:                
General and administrative expenses     78,665       32,015  
Inventory write down     28,400        
Professional fees     5,000       31,840  
Total operating expenses     112,065       63,855  
                 
Loss from operations     (112,730 )     (68,644 )
                 
Other income (expense):                
Interest expense     (16,208 )     (34,434 )
Gain on disposal of fixed assets     1,000        
Change in fair value of derivative           154,620  
Gain on extinguishment of debt           5,215  
Loss on conversion of debt     (26,000 )      
Total other (expense) income     (41,208 )     125,401  
                 
(Loss) income before provision for income tax     (153,938 )     56,757  
Provision for income tax            
Net (Loss) income   $ (153,938 )   $ 56,757  
                 
Basic (loss) income per share   $ (0.00 )   $ 0.00  
                 
Basic weighted average shares     1,003,441,425       243,397,343  
                 

 

 

The accompanying notes are an integral part of these unaudited consolidated financial statements.

 

 

  F- 18  

 

 

AUREUS INCORPORATED

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (DEFICIT)

FOR THE THREE MONTHS ENDED JANUARY 31, 2020 AND 2021

(Unaudited)

 

 

    Common Stock     Discount to     Preferred Stock     Additional     Preferred Stock     Common Stock     Accumulated        
    Shares     Amount     Common Stock     Shares     Amount     Paid in Capital     To Be Issued     To Be Issued     Deficit     Total Equity  
Balance October 31, 2019 (restated)     214,750,000     $ 214,750     $       5,000,000     $ 5,000     $ 216,100     $ 153,800     $     $ (2,675,433 )   $ (2,085,783 )
Stock issued for conversion of debt     35,000,000       35,000       (17,500 )                                         17,500  
Stock issued for cash     13,888,889       13,889                         36,111       (19,800 )     27,500             57,700  
Net Loss                                                     56,757       56,757  
Balance January 31, 2020 (Revised)     263,638,889     $ 263,639     $ (17,500 )     5,000,000     $ 5,000     $ 252,211     $ 134,000     $ 27,500     $ (2,618,676 )   $ (1,953,826 )
                                                                                 
Balance October 31, 2020 (Revised)     810,180,555     $ 810,181     $ (396,917 )     5,000,000     $ 5,000     $ 389,161     $ 269,250     $ 12,500     $ (2,948,321 )   $ (1,859,146 )
Stock issued for conversion of debt     350,000,000       350,000       (315,000 )                                         35,000  
Stock issued for cash                                         134,000                   134,000  
Net Loss                                                     (153,938 )     (153,938 )
Balance January 31, 2021 (Revised)     1,160,180,555     $ 1,160,181     $ (711,917 )     5,000,000     $ 5,000     $ 389,161     $ 403,250     $ 12,500     $ (3,102,259 )   $ (1,844,084 )

 

 The accompanying notes are an integral part of these unaudited consolidated financial statements.

 

 

 

  F- 19  

 

  

AUREUS INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited) / (Revised)

 

 

    For the Three Months Ended  
    January 31,  
    2021     2020  
Cash flows from operating activities:                
Net (loss) income   $ (153,938 )   $ 56,757  
Adjustments to reconcile net (loss) income to net cash used in operating activities:                
Loss (gain) on extinguishment of debt     26,000       (5,215 )
Gain on sale of fixed asset     (1,000 )      
Change in fair value of derivative           (154,620 )
Depreciation expense           1,833  
Changes in assets and liabilities:                
Accounts receivable     148       10,365  
Inventory     32,451       23,513  
Accounts payable     (29,157 )     (17,301 )
Accrued liabilities     3,659       3,395  
Net cash used in operating activities     (121,837 )     (81,273 )
                 
Cash flows from investing activities:                
Proceeds from the sales of property and equipment     1,000        
Net cash provided by investing activities     1,000        
                 
Cash flows from financing activities:                
Net payments (proceeds) from the sale of preferred stock     134,000       (19,800 )
Sale of common stock           77,500  
Payments on notes payable     (17,262 )     (42,660 )
Proceeds / (payments) – related party loan     2,600       (1,150 )
Net cash provided by financing activities     119,338       13,890  
                 
Net decrease cash     (1,499 )     (67,383 )
Cash, beginning of period     112,234       173,288  
Cash, end of period   $ 110,735     $ 105,905  
                 
Cash paid during the period for:                
Interest   $     $  
Income taxes   $     $  
                 
Supplemental non-cash disclosure information:                
Common stock issued for conversion of debt   $ 35,000     $ 17,500  

 

 

The accompanying notes are an integral part of these financial statements

 

 

  F- 20  

 

 

AUREUS INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

January 31, 2021

(Unaudited)

 

NOTE 1 – ORGANIZATION AND BUSINESS

 

Aureus Incorporated (the “Company”) was incorporated in the state of Nevada on April 19, 2013. The Company was organized to develop and explore mineral properties in the state of Nevada. The Company is currently in active status in the state of Nevada.

 

On December 21, 2018, pursuant to a Stock Purchase Agreement, dated December 20, 2018, by and among the Company and Everett M. Dickson (the “Buyer”) and Hohme Holdings International, Inc. (the “Seller”), the Buyer purchased 90,000,000 shares of common stock of the Company from the Seller for a total of $15,000. Sadiq Shaikh has voting and dispositive control over the Seller. Simultaneously with the consummation of the Stock Purchase Agreement on December 21, 2018, Sadiq Shaikh resigned as the President and Chief Executive Officer and from the Board of Directors of the Company; Deborah Engles resigned as the Secretary and Treasurer of the Company; and Everett M. Dickson was appointed as the President, Chief Executive Officer, Treasurer, Secretary and as a director to the Board of directors of the Company.

 

We are a food brand development company that builds and represents popular food concepts throughout the United States and international markets. Management is highly experienced at business integration and re-branding potential. With little territory available for the older brands, we intend to bring to our customers fresh innovative brands that have great potential. All of our brands will be unique in nature as we focus on niche markets that are still in need of development.

 

We operate two lines of business. Through our subsidiary, YIC Acquisitions Corp. (“YICA”), we acquired the assets of Yuengling’s Ice Cream in June 2019. YICA produces and sells high-quality ice cream without artificial colors, flavoring, or preservatives and no added hormones. In September 2020, we entered into the micro market segment and launched our second business line, Aureus Micro Markets (“AMM”). Closely tied to the vending machine industry, Micro Markets look and feel like modern convenience stores while functioning with the ease and efficiency of vending foodservice and refreshment services.

 

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES

 

Basis of presentation

The Company’s unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The accompanying unaudited consolidated financial statements reflect all adjustments, consisting of only normal recurring items, which, in the opinion of management, are necessary for a fair statement of the results of operations for the periods shown and are not necessarily indicative of the results to be expected for the full year ending October 31, 2021. These unaudited consolidated financial statements should be read in conjunction with the financial statements and related notes included in the Company’s financial statements for the year ended October 31, 2020.

 

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

 

Revised Financial Statements

The Company’s accompanying unaudited consolidated financial statements have all been revised due to adjustments made to our accounts as a result of our recently completed audit for the year ended October 31, 2020.

 

Concentrations of Credit Risk

We maintain our cash in bank deposit accounts, the balances of which at times may exceed federally insured limits. We continually monitor our banking relationships and consequently have not experienced any losses in our accounts. We believe we are not exposed to any significant credit risk on cash.

 

 

  F- 21  

 

 

Restricted Cash

The Company has an obligation to transfer $50,000 to Mid Penn Bank as security pursuant to the Agreement of Sale and Security Agreement with Mid Penn Bank and Yuengling Ice Cream Corp, by December 31, 2020. If the funds are not transferred by May 31, 2021, the Bank the has option to call the loan and to require the Company to pay any attorney’s fees incurred.

 

 Recent Accounting Pronouncements

The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the condensed financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on our financial position or results of operations.

 

NOTE 3 – GOING CONCERN

 

The accompanying unaudited consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has an accumulated deficit of $3,102,259 had a net loss of $153,938, and net cash used in operating activities of $121,837 for the three months ended January 31, 2021. The Company’s ability to raise additional capital through the future issuances of common stock and/or debt financing is unknown. The obtainment of additional financing, the successful development of the Company’s contemplated plan of operations, and its transition, ultimately, to the attainment of profitable operations are necessary for the Company to continue operations. These conditions and the ability to successfully resolve these factors raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements of the Company do not include any adjustments that may result from the outcome of these aforementioned uncertainties.

 

NOTE 4 - PROPERTY & EQUIPMENT

 

Property and Equipment are first recorded at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the various classes of assets as follows between three and five years.

 

Long lived assets, including property and equipment, to be held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of the assets may not be recoverable. Impairment losses are recognized if expected future cash flows of the related assets are less than their carrying values. Measurement of an impairment loss is based on the fair value of the asset. Long-lived assets to be disposed of are reported at the lower of carrying amount or fair value less cost to sell.

 

Maintenance and repair expenses, as incurred, are charged to expense. Betterments and renewals are capitalized in plant and equipment accounts. Cost and accumulated depreciation applicable to items replaced or retired are eliminated from the related accounts with any gain or loss on the disposition included as income.

 

Property and equipment stated at cost, less accumulated depreciation consisted of the following:

 

    January 31,
2021
    October 31,
2020
 
Automobile   $     $  
Property and equipment     30,300       30,300  
Less: accumulated depreciation            
Property and equipment, net   $ 30,300     $ 30,300  

 

Depreciation expense

Depreciation expense for the three months ended January 31, 2021 and 2020 was $0 and $0, respectively.

 

 

  F- 22  

 

 

NOTE 5 – NOTES PAYABLE

 

On September 9, 2015, the Company issued to Backenald Corp. a promissory note in the principal amount of $20,000, bearing interest at the rate of 5% per annum and maturing on the first anniversary of the date of issuance. This note is in default and its interest rate has been increased to 10%. As of January 31, 2021, accrued interest amounted to $9,655.

 

On November 6, 2015, the Company issued Craigstone Ltd. a promissory note in the principal amount of $20,000, bearing interest at the rate of 5% per annum and maturing on the first anniversary of the date of issuance. This note is in default and its interest rate has been increased to 10%. This note was transferred to Device Corp on April 10, 2020. As of January 31, 2021, accrued interest amounted to $9,496.

 

On March 22, 2016, the Company issued Craigstone Ltd. a promissory note in the principal amount of $20,000, bearing interest at the rate of 5% per annum and maturing on the first anniversary of the date of issuance. This note is in default and its interest rate has been increased to 10%. January 31, 2021, accrued interest amounted to $8,625.

 

On August 31, 2016, the Company issued Success Zone Tech Ltd. a promissory note in the principal amount of $100,000, bearing interest at the rate of 8% per annum, compounded annually, and maturing on the first anniversary of the date of issuance. On January 7, 2019, this note was purchased by and assigned to Device Corp. This note has been fully converted as of January 31, 2021.

 

On February 23, 2017, the Company issued Travel Data Solutions a promissory note in the principal amount of $17,500, bearing interest at the rate of 8% per annum, compounded annually, and maturing on the first anniversary of the date of issuance. This note is in default. As of January 31, 2021, accrued interest amounted to $6,552.

 

On March 27, 2017, the Company issued Craigstone Ltd. a promissory note in the principal amount of $12,465, bearing interest at the rate of 8% per annum, compounded annually, and maturing on the first anniversary of the date of issuance. This note is in default. As of January 31, 2021, accrued interest amounted to $4,323.

 

On May 16, 2017, the Company issued Travel Data Solutions a promissory note in the principal amount of $4,500, bearing interest at the rate of 8% per annum, compounded annually, and maturing on the first anniversary of the date of issuance. This note is in default. As of January 31, 2021, accrued interest amounted to $1,497.

 

On July 28, 2017, we issued Backenald Trading Ltd. a promissory note in the principal amount of $20,000, bearing interest at the rate of 8% per annum, compounded annually, and maturing on the first anniversary of the date of issuance. This note is in default. As of January 31, 2021, accrued interest amounted to $6,243.

 

On January 24, 2020, the company issued a third party a promissory note in the principal amount of $15,000, bearing interest at the rate of 10% per annum, and maturing on April 30, 2020. As of January 31, 2021, there is $0 and $1,405, principal and interest, respectively, due on this note. This note is currently in default.

 

On March 24, 2020, the company issued a third party a promissory note in the principal amount of $20,000, bearing interest at the rate of 10% per annum, and maturing on May 30, 2020. As of January 31, 2021, the balance due on this note for principal and interest is $20,000 and $1,715, respectively. This note is in default.

 

As of January 31, 2021, the Company was also indebted to two other third parties for a total of $39,656, These notes are non-interest bearing and are currently past due and in default.

 

 

  F- 23  

 

 

NOTE 6 – LOANS PAYABLE

 

YIC Acquisition assumed two loans that the Company still has. The first loan was an SBA loan with a balance of $1,056,807 and annual interest of 5.25%. The loan has monthly payments and matures March 13, 2026. The balance due on this loan as of January 31, 2021 and October 31, 2020 is $879,816 and $891,429, respectively. The second loan is a line of credit with a balance of $814,297 and an annual interest rate of 4.25%. Payment on this line of credit are monthly. The balance due on this loan as of January 31, 2021 and October 31, 2020 is $800,000 and $800,000, respectively.

 

As of January 31, 2021, the balance on the Company’s SBA loan is $879,166. During the year ended October 31, 2020, the Mid Penn Bank made several of the Company’s loan payments as part of the CARES Act. This amount has been recognized as a gain on forgiveness of debt of $68,436.

On August 31, 2020, the Company received a Paycheck Protection Program loan under the CARES Act for $83,300 (the “PPP Loan”). The Paycheck Protection Program provides that the use of PPP Loan proceeds are limited to certain qualifying expenses and may be partially or wholly forgiven in accordance with the requirements set forth in the CARES Act. The Company currently intends to use the PPP Loan for permitted uses, although no assurance can be given that the Company will obtain forgiveness of all or any portion of amounts due under the PPP Loan. If not forgiven the loan bears interest at 1% per annum and matures in five years.

 

NOTE 7 – RELATED PARTY TRANSACTIONS

 

As of January 31, 2021 and October 31, 2020 the Company owes its officers $2,600 and $0, respectively, for cash advances to pay for operating expenses.

 

NOTE 8 – COMMON STOCK

 

On December 10, 2020, the Company amended its Articles of Incorporation increased its authorized common stock to 1.5 billion (1,500,000,000) shares.

 

During the year ended October 31, 2020, the Company sold 21,527,777 shares of common stock for cash proceeds of $77,500. 3,472,222 of the shares have not yet been issued by the transfer agent.

 

During the year ended October 31, 2020, the Company issued 477,375,000 shares of common stock for conversion of $100,958 of principal and interest.

 

During the three months ended January 31, 2021, the Company issued 350,000,000 shares of common stock for conversion of $35,000 of principal and interest.

 

NOTE 9 – PREFERRED STOCK

 

Series A Preferred

The Company has designated Ten Million (10,000,000) shares of Preferred Stock the Series A Convertible Preferred Stock with a par and stated value of $0.001 per share. The holders of the Series A Convertible Preferred Stock are not entitled to receive any dividends.

 

Except as otherwise required by law or by the Articles of Incorporation and except as set forth below, the outstanding shares of Series A Convertible Preferred Stock shall vote together with the shares of Common Stock and other voting securities of the Corporation as a single class and, regardless of the number of shares of Series A Convertible Preferred Stock outstanding and as long as at least one of such shares of Series A Convertible Preferred Stock is outstanding shall represent Sixty Six and Two Thirds Percent (66 2/3%) of all votes entitled to be voted at any annual or special meeting of shareholders of the Corporation or action by written consent of shareholders. Each outstanding share of the Series A Convertible Preferred Stock shall represent its proportionate share of the 66 2/3% which is allocated to the outstanding shares of Series A Convertible Preferred Stock.

 

 

  F- 24  

 

 

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 twothirds of the after conversion outstanding fully paid and non-assessable shares of Common Stock. Each individual share of Series A Convertible Preferred Stock shall be convertible into Common Stock at a ratio determined by dividing the number of shares of Series A Convertible Stock to be converted by the number of shares of outstanding pre-conversion Series A Convertible Preferred Stock. Such initial Conversion Ratio, and the rate at which shares of Series A Convertible Preferred Stock may be converted into shares of Common Stock. As of January 31, 2021, there are 5,000,000 shares of Series A preferred stock owned by the CEO.

 

As of January 31, 2021 and October 31, 2020, the Company has preferred stock to be issued in the amount of $403,250 and $269,250, respectively.

 

Series B Preferred

The Series B preferred stock is convertible into shares of common stock at the option of the holder at a 35% discount to the lowest closing price for the thirty days prior to conversion.

 

On August 21, 2020, the Company entered into a Stock Purchased Agreement with Kanno Group Holdings II Ltd.(“KGH”), in which KGH purchased $3,000 of Series B Preferred Stock. The shares have not yet been issued and are disclosed as preferred stock to be issued.

 

NOTE 10 – 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.

 

Subsequent to January 31, 2021, the Company issued 100,000,000 shares of common stock for conversion of $10,000 of debt.

 

 

 

  F- 25  

 

 

ITEM 14. CHANGES IN AND DISAGREEEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES.

 

None.

 

ITEM 15. FINANCIAL STATEMENTS AND EXHIBITS.

 

(a)       Financial Statements:

 

All financial statements as set forth under Item 13 of this Form 10.

 

(b)       Exhibits:

 

Exhibit
Number:
Description of Exhibit:   Previously Filed and Incorporated by Reference Herein:
3.1 Articles of Incorporation dated April 19, 2013   Exhibit 2.1 to Form 1-A filed on May 29, 2019
3.2 Certificate of Amendment dated December 6, 2017   Exhibit 2.1 to Form 1-A filed on May 29, 2019
3.3 Certificate of Amendment dated February 11, 2019   Exhibit 2.1 to Form 1-A filed on May 29, 2019
3.4 Certificate of Amendment dated March 18, 2020   *
3.5 Certificate of Designation for Series A Preferred Stock   Exhibit 2.2 to Form 1-A/A filed on June 25, 2019
3.6 Certificate of Amendment dated December 10, 2020   *
3.7 Bylaws   Exhibit 2.2 to Form 1-A filed on May 29, 2019
10.1† Employment Agreement with Everett M. Dickson dated May 20, 2019   Exhibit 6.4 to Form 1-A filed on May 29, 2019
10.2 Indemnification Agreement with Everett M. Dickson dated May 20, 2019   Exhibit 6.5 to Form 1-A filed on May 29, 2019
10.3 Asset Acquisition Agreement – Yuengling’s   Exhibit 6.9 to Form 1-A filed on May 29, 2019
10.4 Secured Creditor Asset Sale and Purchase Agreement dated June 18, 2019   Exhibit 7.1 to Form 1-A/A filed on June 25, 2019
10.5 Security Agreement dated June 18, 2019   *
10.6 Post-Closing Agreement dated June 2, 2019   Exhibit 7.1 to Form 1-A/A filed on July 24, 2019
10.7 First Amended Post-Closing Agreement dated July 30, 2020   *
10.8 First Amended Post-Closing Agreement dated December 20, 2020   *
21.1 List of Subsidiaries   *

 

 

Management contract or compensatory plan
* Filed herewith

  

 

  38  

 

 

SIGNATURES

 

Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized.

 

 

  AUREUS, INC.
   
Date: April 6, 2021 By: /s/ Everett M. Dickson
    Everett M. Dickson
   

Chief Executive Officer and Interim Chief Financial Officer

(Principal Executive

Principal Financial and Accounting Officer)

 

 

 

 

 

 

 

 

 

 

 

 

 

  39  

 

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