S-1: Yuenglings Ice Cream Corp Files for Resale of 600 Million Common Shares Through Equity Financing Agreement

Yuenglings Ice Cream Corporation intends to resell up to 600 million shares of its common stock through an equity financing agreement with Trillium Partners, LP, aiming to raise up to $3 million.

Summary

• Yuenglings Ice Cream Corporation (YCRM) has filed a registration statement for the resale of up to 600,000,000 shares of its common stock.
• The shares are to be resold by Trillium Partners, LP, under an equity financing agreement where Trillium is committed to purchase up to $3,000,000 of YCRM's common stock.
• YCRM may draw on this facility from time to time as needed.
• Trillium will pay 85% of the Market Price during the Valuation Period, subject to a floor price of $0.005 per share.
• The company will use the proceeds for general administrative expenses, legal expenses, and accounting and audit fees.
• The offering will terminate 24 months after the registration statement is declared effective by the SEC.
• As of February 20, 2024, the closing price of YCRM's common stock was $0.0098 per share.
• The company has a significant accumulated deficit and has expressed doubt about its ability to continue as a going concern.
• The company completed its acquisition of ReachOut Technology in November 2023, shifting its focus to cybersecurity and IT services for SMBs.
• The company has a history of past transactions with Trillium Partners, L.P., including convertible notes and warrants issued in November 2023 and January 2024.

Sentiment

Score: 4

Explanation: The document presents a mixed picture. While there's a strategic shift towards a potentially lucrative sector (cybersecurity), the company's financial health is a major concern, as highlighted by the auditor's going concern warning. The reliance on an equity financing agreement with potentially dilutive effects further tempers the outlook.

Positives

• The company has completed its acquisition of ReachOut Technology, shifting its focus to cybersecurity and IT services for SMBs.
• The company has secured an equity financing agreement with Trillium Partners, LP, providing access to up to $3 million in funding.
• The company intends to use the proceeds from the offering to cover general administrative expenses, legal expenses, and accounting and audit fees.

Negatives

• The company's auditor has expressed substantial doubt about its ability to continue as a going concern.
• The company has a significant accumulated deficit and has incurred net losses.
• The company's stock price is highly volatile and thinly traded.
• The company may be unable to raise sufficient funds when needed.
• The company may be unable to respond to rapid technology changes and innovative products.
• The company faces intense competition in its market.
• The company may be unable to protect its intellectual property.
• The company may lose key personnel or be unable to hire additional personnel.
• The company's executive officers collectively own a majority of its outstanding shares, which may lead to conflicts of interest.
• The company does not intend to pay cash dividends to its stockholders.

Risks

• The company will need to raise additional capital.
• The company's financial status raises doubt about its ability to continue as a going concern.
• The company may be unable to respond to rapid technology changes and innovative products.
• There is intense competition in the company's market.
• Future acquisitions may be unsuccessful and may negatively affect operations and financial condition.
• The company may be unable to protect its intellectual property.
• If the company loses its key personnel or is unable to hire additional personnel, it will have trouble growing its business.
• Because the company's executive officers collectively own a majority of its outstanding shares, they can elect its directors without regard to other stockholders votes.
• Acquisitions, investments and other strategic relationships and alliances, if pursued, may involve significant cash expenditures, debt incurrence, operating losses, and expenses that could have a material adverse effect on the company's financial condition and operating results.
• Since the company has acquired ReachOut and changed its focus to cyber security, it is difficult for potential investors to evaluate its future consolidated business.
• Failure to manage the company's growth may be detrimental to its business because its infrastructure may not be adequate for expansion.
• The company will need to increase the size of its organization, and it may experience difficulties in managing growth, which would hurt its financial performance.
• The company's business depends on experienced and skilled personnel, and if it is unable to attract and integrate skilled personnel, it will be more difficult for it to manage its business and complete contracts.
• The company expects to expand its business, in part, through future acquisitions, but it may not be able to identify or complete suitable acquisitions, which could harm its financial performance.
• Insurance and contractual protections may not always cover lost revenue, increased expenses or liquidated damages payments, which could adversely affect the company's financial results.
• The loss of the company's Chief Executive Officer (CEO) or other key personnel may adversely affect its operations.
• Internal system or service failures could disrupt the company's business and impair its ability to effectively provide its services and products to its customers, which could damage its reputation and adversely affect its revenues and profitability.
• The company expects to enter into joint ventures, teaming and other arrangements, and these activities involve risks and uncertainties.
• The company's business and operations expose it to numerous legal and regulatory requirements and any violation of these requirements could harm its business.
• If the company does not adequately protect its intellectual property rights, it may experience a loss of revenue and its operations may be materially harmed.
• Difficult conditions in the global capital markets and the economy generally may materially adversely affect the company's business and results of operations.
• The company is eligible to be treated as an emerging growth company as defined in the Jumpstart Our Business Startups Act of 2012, and it cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make its common stock less attractive to investors.
• The company's directors and executive officers beneficially own a significant number of shares of its common stock. Their interests may conflict with its outside stockholders, who may be unable to influence management and exercise control over its business.
• The company does not intend to pay cash dividends to its stockholders, so you will not receive any return on your investment in the company prior to selling your interest in the company.
• Anti-Takeover, Limited Liability and Indemnification Provisions.
• The obligations associated with being a public company require significant resources and management attention, which may divert from the company's business operations.
• Public company compliance may make it more difficult to attract and retain officers and directors.
• The company's stock price may be volatile.
• The company's shares of common stock are thinly traded, the price may not reflect its value, and there can be no assurance that there will be an active market for its shares of common stock either now or in the future.
• The company's common stock may be deemed a penny stock, which would make it more difficult for its investors to sell their shares.
• Offers or availability for sale of a substantial number of shares of the company's common stock may cause the price of its common stock to decline.
• Because the company became public by means of a reverse merger, it may not be able to attract the attention of major brokerage firms.
• Any substantial sale of stock by existing shareholders could depress the market value of the company's stock, thereby devaluing the market price and causing investors to risk losing all or part of their investment.
• The company's issuance of preferred stock in the future may adversely affect the rights of its common stockholders.
• The company's success may depend on its ability to obtain and protect the proprietary information.
• Trillium will pay less than the prevailing market price for the company's common stock.
• Future issuances of common shares may be adversely affected by the Equity Line.
• Draw downs under the Equity Financing Agreement may cause dilution to existing shareholders.
• If the company draws down amounts under the Equity Line when its share price is decreasing, it will need to issue more shares to raise the same amount of funding.
• There is no guarantee that the company will satisfy the conditions to the Equity Financing Agreement.
• There is no guarantee that the company will be able to fully utilize the Equity Line.
• Sales of put shares under the Purchase Agreement could result in the possibility of short sales.
• There is uncertainty as to number of subscription shares and the amount Trillium will pay for the put shares.

Future Outlook

The company's future success and viability are dependent upon its ability to generate capital financing. The failure to generate sufficient revenues or raise additional capital may have a material and adverse effect upon the company and its shareholders.

Management Comments

• Management believes that we have access to capital resources through possible public or private equity offerings, exchange offers, debt financings, corporate collaborations or other means.
• Based on market response to our products, services, and technologies, it is managements opinion that we will require additional funding.

Industry Context

The document indicates a shift from the ice cream business to cybersecurity and IT services, reflecting a strategic pivot to a potentially higher-growth sector. The company aims to revolutionize the Cybersecurity & IT Service Provider landscape for SMBs, with the goal of creating the first nationwide brand in its sector.

Comparison to Industry Standards

• The document mentions ReachOut Technology's focus on serving Small to Medium Sized Businesses (SMBs), a segment often underserved in terms of advanced IT solutions and cybersecurity.
• ReachOut Technology's growth strategy includes acquiring firms with stable customer contracts and strong recurring revenue, which is a common practice among MSPs to increase market share and profitability.
• The document highlights ReachOut Technology's differentiated approach compared to traditional MSPs, including rapid response times, expert technical support, proactive strategic engagement, and advanced cybersecurity services.
• The document mentions ReachOut Technology's focus on compliance with standards like HIPAA, NIST SP 800-171, CMMC, and CIPA, which are important for MSPs serving regulated industries.

Management Changes

Legal Proceedings

• An individual has asserted that the Company owes approximately $500,000, for a promissory note issued by a company that was never owned by the public company nor its subsidiary.
• Legal counsel has reviewed the claim and found no relationship to this debt nor any assumptions of the debt by the Company.
• While there is risk that there may be litigation over this claim, the Company believes that it is more unlikely that the claim would prevail.

Related Party Transactions

• In June 2022, Everett Dickson advanced the Company $6,000 for a general operating expense.
• During the year ended October 31, 2022, a $5,500 payment was mistakenly made to a company controlled by Everett Dickson.
• Pickle Jar advanced the Company $22,000, on September 1, 2023.
• On August 17, 2023, Everett Dickson paid $1,910, to a consultant of the Company's.
• On September 1, 2023, Everett Dickson directly paid $13,500 to Diagonal Lending LLC on behalf of the Company.
• On September 1, 2023, Everett Dickson deposited $2,000, into the Company's bank accounts to fund payments.
• On January 14, 2023, the Company granted 30 million restricted common shares to Robert C. Bohorad.
• During the year ended October 31, 2023 and 2022, the Company paid Robert C. Bohorad, YICA's Chief Operating Officer, $7,000 and $22,000 for compensation, respectively.
• On October 30, 2023, the Company awarded Mr. Bohorad 3,000,000 shares of restricted common stock to facilitate the preparation of financial statements and in the transition of the Company to new ownership.

Stakeholder Impact

• Existing shareholders will experience dilution upon the purchase of shares by Trillium.
• The market price of the common stock could decline as a result of issuances and sales by the company, including pursuant to the Equity Line under the Equity Financing Agreement, or sales by existing shareholders, of common stock, or the perception that these issuances and sales could occur.
• The company's ability to continue as a going concern is dependent upon management's ability to further implement its business plan and raise additional capital as needed from the sales of stock or debt.

Next Steps

• The company needs to file all reports required to be filed with the SEC pursuant to the 1934 Act.
• The company needs to maintain the listing of all of the Registrable Securities on the Principal Market.
• The company needs to take all other reasonable actions necessary to expedite and facilitate disposition by the Investor of Registrable Securities pursuant to the Registration Statement.

Key Dates

Keywords

Equity Financing, Common Stock, Resale, Trillium Partners, ReachOut Technology, Cybersecurity, IT Services, YCRM, Yuenglings Ice Cream, Convertible Note, Warrants, Going Concern, Risk Factors