NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 2022
(Unaudited)
NOTE 1 – ORGANIZATION AND BUSINESS
Yuengling’s
Ice Cream Corporation, (f/k/a Aureus, Inc.) (“Yuengling’s,” “ARSN,” “we,”
“us,” or the “Company”) was incorporated in Nevada on April 19, 2013, under the name “Aureus
Incorporated.” We were initially organized to develop and explore mineral properties in the state of Nevada. Effective December 15,
2017, we changed our name to “Hohme, Inc.,” and, effective February 7, 2019, we changed our name to “Aureus, Inc.
and on September 14, 2021, the Company changed their name to Yuengling’s Ice Cream Corporation”. We are currently active in
the state of Nevada.
We are a food brand development company that builds
and represents popular food concepts throughout the United States and international markets. Management is highly experienced at business
integration and re-branding potential. With little territory available for the older brands, we intend to bring to our customers fresh
innovative brands that have great potential. All of our brands will be unique in nature as we focus on niche markets that are still in
need of development.
We operate two lines of business. Through our
subsidiary, YIC Acquisitions Corp. (“YICA”), we acquired the assets of Yuengling’s Ice Cream in June 2019. YICA
produces and sells high-quality ice cream without artificial colors, flavoring, or preservatives and no added hormones.
In September 2020, we entered into the micro market
segment and launched our second business line, Aureus Micro Markets (“AMM”). Closely tied to the vending machine industry,
Micro Markets look and feel like modern convenience stores while functioning with the ease and efficiency of vending foodservice and refreshment
services.
NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES
Basis
of presentation
The Company’s unaudited condensed 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 condensed 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, 2022. These unaudited condensed
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, 2021.
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.
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 September 30, 2022. If the funds are not transferred by September 30, 2022, the Bank the has option to call the loan and to require
the Company to pay any attorney’s fees incurred.
Basic and Diluted Earnings Per Share
Net income (loss) per common share is computed
pursuant to section 260-10-45 of the FASB Accounting Standards Codification. Basic net income (loss) per common share is computed
by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period. Diluted net
income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock and
potentially outstanding shares of common stock during the period. The weighted average number of common shares outstanding and potentially
outstanding common shares assumes that the Company incorporated as of the beginning of the first period presented. As of April 30, 2022
and 2021, there are 3,530,890,717 and 2,520,739,202 potentially dilutive shares, respectively, if the Preferred A were to be converted.
As of April 30, 2022 and 2021, the Company’s diluted loss per share is the same as the basic loss per share, as the inclusion of
any potential shares would have had an anti-dilutive effect due to the Company generating a loss.
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.
Recent Accounting Pronouncements
In August 2020, the FASB issued ASU 2020-06, Debt—Debt
with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic
815-40)—Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. ASU 2020-06 reduces the number
of accounting models for convertible debt instruments and convertible preferred stock. For convertible instruments with conversion features
that are not required to be accounted for as derivatives under Topic 815, Derivatives and Hedging, or that do not result in
substantial premiums accounted for as paid-in capital, the embedded conversion features no longer are separated from the host contract.
ASU 2020-06 also removes certain conditions that should be considered in the derivatives scope exception evaluation under Subtopic 815-40, Derivatives
and Hedging—Contracts in Entity’s Own Equity, and clarify the scope and certain requirements under Subtopic 815-40. In
addition, ASU 2020-06 improves the guidance related to the disclosures and earnings-per-share (EPS) for convertible instruments and contract
in entity’s own equity. ASU 2020-06 is effective for public business entities that meet the definition of a Securities and Exchange
Commission (SEC) filer, excluding entities eligible to be smaller reporting companies as defined by the SEC, for fiscal years beginning
after December 15, 2021, including interim periods within those fiscal years. For all other entities, the amendments are effective for
fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted, but
no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. The Board specified
that an entity should adopt the guidance as of the beginning of its annual fiscal year. The Company has chosen the early adoption of ASU
2020-06. The adoption of ASU 2020-06 had a material effect on the Company’s financial statements. If the standard was not early
adopted the Company would have had to recognize a beneficial conversion feature on its convertible note payable.
The Company has implemented all new accounting
pronouncements that are in effect. These pronouncements did not have any material impact on the condensed consolidated financial statements
unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued
that might have a material impact on our financial position or results of operations.
NOTE 3 – GOING CONCERN
The accompanying unaudited condensed 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 $3,771,235, had a net loss of $220,462, and net
cash used in operating activities of $197,750 for the six months ended April 30, 2022. The Company’s ability to raise additional
capital through the future issuances of common stock and/or debt financing is unknown. The obtainment of additional financing, the successful
development of the Company’s contemplated plan of operations, and its transition, ultimately, to the attainment of profitable operations
are necessary for the Company to continue operations. These conditions and the ability to successfully resolve these factors raise substantial
doubt about the Company’s ability to continue as a going concern. The financial statements of the Company do not include any adjustments
that may result from the outcome of these aforementioned uncertainties.
NOTE 4 - PROPERTY & EQUIPMENT
Property and Equipment are first recorded at cost.
Depreciation is computed using the straight-line method over the estimated useful lives of the various classes of assets as follows between
three and five years.
Long lived assets, including property and equipment,
to be held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying
value of the assets may not be recoverable. Impairment losses are recognized if expected future cash flows of the related assets are less
than their carrying values. Measurement of an impairment loss is based on the fair value of the asset. Long-lived assets to be disposed
of are reported at the lower of carrying amount or fair value less cost to sell.
Maintenance and repair expenses, as incurred,
are charged to expense. Betterments and renewals are capitalized in plant and equipment accounts. Cost and accumulated depreciation applicable
to items replaced or retired are eliminated from the related accounts with any gain or loss on the disposition included as income.
Property and equipment stated at cost, less accumulated
depreciation consisted of the following:
Schedule of property and equipment | |
| | |
| |
| |
April 30, 2022 | | |
October 31, 2021 | |
Property and equipment | |
$ | 30,300 | | |
$ | 30,300 | |
Less: accumulated depreciation | |
| – | | |
| – | |
Property and equipment, net | |
$ | 30,300 | | |
$ | 30,300 | |
Depreciation Expense
As of April 30, 2022,
the Company’s fixed asset have not yet been placed in service. Depreciation will begin on the date the assets are placed into service.
NOTE 5 – LOAN
RECEIVABLE
On May
17, 2022, the Company and Revolution Desserts, LLC (“Revolution”) terminated the Definitive Agreement entered into on
April 30, 2022. The primary reason for the termination is the regulatory delays in qualifying the Company’s Reg 1-A. Per
the terms of the original agreement, the Company has advanced Revolution $80,000,
which has been accounted for as a note receivable. No loan terms have been established as of April 30, 2022.
NOTE 6 – NOTES PAYABLE
On September 9, 2015, the Company issued to Backenald
Corp. a promissory note in the principal amount of $20,000, bearing interest at the rate of 5% per annum and maturing on the first anniversary
of the date of issuance. This note is in default and its interest rate has been increased to 10%. As of April 30, 2022, accrued interest
amounted to $12,151.
On February 23, 2017, the Company issued Travel
Data Solutions a promissory note in the principal amount of $17,500, bearing interest at the rate of 8% per annum, compounded annually,
and maturing on the first anniversary of the date of issuance. This note is in default. As of April 30, 2022, accrued interest amounted
to $8,964.
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 April 30, 2022, accrued interest amounted to $6,018.
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 April 30, 2022, accrued interest amounted to
$2,103.
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 April 30, 2022, accrued interest amounted to $8,893.
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 April 30, 2022, there is $0 and $1,155, principal and interest, respectively, due on this note.
On March 24, 2020, the company issued a third
party a promissory note in the principal amount of $20,000, bearing interest at the rate of 10% per annum, and maturing on May 30, 2020.
As of April 30, 2022, the balance due on this note for principal and interest is $5,000 and $3,975, respectively. This note is in default.
On April 10, 2020, the Company issued a convertible
promissory note to Device Corp., in the principal amount of $49,328, bearing interest at the rate of 10% per annum, and maturing on April
10, 2021. The note is convertible into shares of common stock at $0.0001 per share. The note was issued pursuant to the terms of the Debt
Purchase and assignment agreement between Tiger Trout Capital Puerto Rico LLC and Device Corp, whereby Device purchased from Tiger Trout
debt in the amount of $49,328 plus any accrued interest. As of April 30, 2022, the balance due on this note is $0.
As of April 30, 2022, the Company was also indebted
to another third party for a total of $24,656. This note is non-interest bearing and currently past due and in default.
NOTE 7 – LOANS PAYABLE
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 April 30, 2022 October 31, 2021, is $658,401 and $735,502, respectively. The
second loan is a line of credit with a balance of $814,297 and an annual interest rate of 4.25%. Payments on this line of credit are monthly.
On December 24, 2021, $106,201.44 from a CD was applied to the Line of Credit balance. The balance due on this loan as of April 30, 2022
and October 31, 2021 is $693,799 and $800,000, respectively.
On March 16, 2021, the Company received a
Paycheck Protection Program loan under the CARES Act for $114,582
(the “PPP Loan”). The Paycheck Protection Program provides that the use of
PPP Loan proceeds are limited to certain qualifying expenses and may be partially or wholly forgiven in accordance
with the requirements set forth in the CARES Act. The Company has used the PPP Loan only for permitted uses,
although no assurance can be given that the Company will obtain forgiveness of all or any portion of amounts due under
the PPP Loan. If not forgiven the loan bears interest at 1%
per annum and matures in five years. During year ended October 31, 2021, $34,582
of this loan was forgiven per the terms of the PPP loan. $80,000
remains unforgiven. The Company is working with the SBA on the forgiveness process on the remaining part of the loan.
NOTE
8 – CONVERTIBLE NOTE PAYABLE
On March 2, 2022, the Company issued a convertible
promissory note to Quick Capital, LLC in the amount of $87,222. The company received $73,500, after a 10% OID and transaction and legal
costs. The note bears interest at 12% and matures in one year. The difference of $13,722 was recorded as a debt discount with $2,287 amortized
as of April 30, 2022. The note is convertible into shares of common stock at $0.0005 per share.
NOTE 9 – RELATED PARTY TRANSACTIONS
During the six months ended April 30, 2022,
a $5,500
payment was mistakenly made to a Company controlled by Everett Dickson. The amount is to be repaid in the third quarter.
During the six months ended April 30, 2022, the
Company paid Robert Bohorad, YICA’s Chief Operating Officer, $18,000 for compensation. As of April 30, 2022, there is $15,000 of
accrued compensation due to Mr. Bohorad.
NOTE 10 – COMMON STOCK
During the
six months ended April 30, 2022, the Company issued the 110,000,000 shares of common
stock that was sold in the prior period, but not yet issued as of October 31, 2021.
During the
six months ended April 30, 2022, the Company sold 120,000,000 shares of common stock
at $0.0008, for total cash proceeds of $96,000.
On January 21, 2022, the Company increased its
authorized common stock from 1,750,000,000 (1.75 billion) to 2,000,000,000 (2 billion) shares.
NOTE 11 – PREFERRED STOCK
Series A Preferred
The Company has designated Ten Million (10,000,000)
shares of Preferred Stock the Series A Convertible Preferred Stock with a par and stated value of $0.001 per share. The holders of the
Series A Convertible Preferred Stock are not entitled to receive any dividends.
Except as otherwise required by law or by the
Articles of Incorporation and except as set forth below, the outstanding shares of Series A Convertible Preferred Stock shall vote together
with the shares of Common Stock and other voting securities of the Corporation as a single class and, regardless of the number of shares
of Series A Convertible Preferred Stock outstanding and as long as at least one of such shares of Series A Convertible Preferred Stock
is outstanding shall represent Sixty Six and Two Thirds Percent (66 2/3%) of all votes entitled to be voted at any annual or special meeting
of shareholders of the Corporation or action by written consent of shareholders. Each outstanding share of the Series A Convertible Preferred
Stock shall represent its proportionate share of the 66 2/3% which is allocated to the outstanding shares of Series A Convertible Preferred
Stock.
The entirety of the shares of Series A Convertible
Preferred Stock outstanding as such time shall be convertible, at the option of the holder thereof, at any time and from time to time,
and without the payment of additional consideration by the holder thereof, into two thirds of the after conversion outstanding fully paid
and non-assessable shares of Common Stock. Each individual share of Series A Convertible Preferred Stock shall be convertible into Common
Stock at a ratio determined by dividing the number of shares of Series A Convertible Stock to be converted by the number of shares of
outstanding pre-conversion Series A Convertible Preferred Stock. Such initial Conversion Ratio, and the rate at which shares of Series
A Convertible Preferred Stock may be converted into shares of Common Stock. As of April 30, 2022,
there are 5,000,000 shares of Series A preferred stock owned by the CEO.
As of April 30,
2022, the Company has preferred stock to be issued in the amount of $398,522. As of April 30,
2022, the preferred Series A can be converted at $0.0004 per share, into 996,305,000 shares of common stock. As
of the balance sheet date and the date of this report, these shares have not been issued to the Purchaser. S99-3A(2) ASR 268 requires
preferred securities that are redeemable for cash or other assets to be classified outside of permanent equity if they are redeemable
(1) at a fixed or determinable price on a fixed or determinable date, (2) at the option of the holder, or (3) upon the occurrence of an
event that is not solely within the control of the issuer. Given that there is an unknown amount of preferred shares to be issued, cash
has been repaid and the preferred shares are convertible at the option of the holder, the Company determined that mezzanine treatment
appears appropriate. As such, the Company feels these securities should be classified as Mezzanine equity until they are fully issued.
Series B Preferred
The Series B preferred stock is convertible into
shares of common stock at the option of the holder at a 35% discount to the lowest closing price for the thirty days prior to conversion.
On August 21, 2020, the Company entered into a
Stock Purchased Agreement with Kanno Group Holdings II Ltd.(“KGH”), in which KGH purchased $3,000 of Series B Preferred Stock.
The Company rescinded its agreement with KGH, agreeing to return the $3,000 it had received for
the preferred stock.
NOTE
12 – COMMITMENTS AND CONTINGENCIES
On January 20, 2022, the Company entered into
a Service Agreement with Desmond Partners, LLC for consulting services to be provided. The agreement is effective on February 1, 2022
for a term of three months. Per the terms of the agreement the consultant will receive a fee of $10,000 per month and 5% equity
in the Company.
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.
On June 1, 2022, the Company sold 88,000,000 shares
of common stock to Quick Capital LLC for $32,500.