8-K/A: Yuenglings Ice Cream Corp. Completes Acquisition of ReachOut Technology Corp., Files Audited Financials

Yuenglings Ice Cream Corporation finalizes its acquisition of ReachOut Technology Corp., providing audited financials and pro forma information as required by the SEC.

Summary

• Yuenglings Ice Cream Corporation (YCRM) has completed the acquisition of ReachOut Technology Corp., a cybersecurity and IT management solutions provider.
• The acquisition was finalized through a Share Exchange Agreement where ReachOut shareholders received Series C Preferred Stock in YCRM, convertible into 87.5% of YCRM's common stock.
• This amendment to the original 8-K filing includes audited financial statements for ReachOut for the years ended December 31, 2022 and 2021, as well as unaudited financials for 2023.
• Pro forma financial statements for YCRM and ReachOut as of October 31, 2023, and December 31, 2023, are also provided.
• ReachOut's audited financials show a net loss of $1,341,800 for 2022 and $364,928 for 2021, with revenue of $1,140,574 in 2022 and no revenue in 2021.
• ReachOut's unaudited financials for 2023 show a net loss of $1,744,814 with revenue of $4,240,477.
• The acquisition of ReachOut was accounted for as a reverse merger, with ReachOut being treated as the acquirer for accounting purposes.
• YCRM also acquired RedGear LLC in September 2023, adding to its cybersecurity and IT management portfolio.
• The pro forma combined statements of operations show a net loss of $1,209,505 for the combined entities.

Sentiment

Score: 4

Explanation: The document presents a mixed picture. While the acquisitions expand the company's business and revenue, the significant losses, going concern issues, and debt obligations raise concerns. The sentiment is cautiously negative.

Positives

• The acquisition of ReachOut Technology Corp. provides YCRM with a new business line in cybersecurity and IT management.
• ReachOut's revenue increased significantly from $0 in 2021 to $4,240,477 in 2023.
• The acquisition of RedGear LLC further expands YCRM's presence in the cybersecurity and IT management sector.
• The pro forma financials provide a view of the combined entity's potential.

Negatives

• ReachOut has incurred significant net losses, with a loss of $1,341,800 in 2022 and $1,744,814 in 2023.
• The combined pro forma statements of operations show a net loss of $1,209,505.
• ReachOut's auditor has expressed substantial doubt about the company's ability to continue as a going concern.
• The company has a significant working capital deficit and accumulated deficit.

Risks

• ReachOut's history of losses and negative cash flows raise concerns about its financial stability.
• The company's ability to continue as a going concern is dependent on generating sufficient cash flows or obtaining additional financing.
• The integration of ReachOut and RedGear into YCRM may present challenges.
• The company has significant debt obligations, including notes payable and life insurance premiums.
• The company's reliance on related party transactions could pose a risk.

Future Outlook

The document contains forward-looking statements regarding the company's prospective performance and strategies, but cautions that actual results may differ materially from anticipated results. The company undertakes no obligation to update these statements.

Management Comments

• Management believes that there is significant value in the customer list and the trade name of acquired companies, but has not done separate valuation analysis.
• Management is highly experienced at business integration and re-branding.

Industry Context

This announcement reflects a trend of companies seeking growth through acquisitions, particularly in the technology sector. The acquisition of ReachOut and RedGear positions YCRM to capitalize on the growing demand for cybersecurity and IT management solutions.

Comparison to Industry Standards

• The cybersecurity and IT management sector is highly competitive, with companies like CrowdStrike, Palo Alto Networks, and Okta leading the market.
• ReachOut's revenue growth from $0 in 2021 to $4,240,477 in 2023 is significant, but its net losses are concerning compared to industry leaders.
• The acquisition of RedGear is similar to other companies expanding their service offerings through strategic acquisitions.
• The reverse merger structure is not uncommon for smaller companies seeking to go public or gain access to capital markets.

Management Changes

Related Party Transactions

• The company has significant related party transactions, including loans and advances from the CEO and entities controlled by the CEO.
• The company has lease obligations with a company controlled by the former owners of RedGear.
• The company has a loan from YCRM to ReachOut that occurred after the fiscal year end of YCRM.

Stakeholder Impact

• Shareholders face potential dilution from the issuance of additional equity.
• Employees of ReachOut and RedGear are now part of YCRM.
• Customers of ReachOut and RedGear will be served by YCRM.
• Creditors of ReachOut and RedGear are now creditors of YCRM.
• Suppliers of ReachOut and RedGear will now be dealing with YCRM.

Next Steps

• The company needs to integrate ReachOut and RedGear into its operations.
• The company needs to address the going concern issues raised by the auditor.
• The company needs to improve its financial performance and generate positive cash flows.
• The company needs to complete the validation of RedGear's Adjusted EBITDA, which may result in a purchase price adjustment.

Key Dates

Keywords

acquisition, reverse merger, cybersecurity, IT management, financial statements, audited financials, pro forma, ReachOut Technology Corp, Yuenglings Ice Cream Corporation, RedGear LLC