EDGAR 10-K Filing

Company CIK: 1624517
Filing Year: 2025
Filename: 1624517_10-K_2025_0001829126-25-002695.json

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ITEM 1. BUSINESS
ITEM 1. DESCRIPTION OF BUSINESS
Overview
Yuengling’s Ice Cream Corporation (OTC: YCRM), currently undergoing a name and symbol change pending FINRA approval, is transitioning into a diversified technology holding company. This transformation draws inspiration from the models of Berkshire Hathaway and Alphabet, aiming to build a portfolio of synergistic, high-growth technology subsidiaries.
Our flagship operating company, ReachOut, is at the forefront of this strategy. Founded in 2010 by cybersecurity expert Rick Jordan, ReachOut has evolved from a regional IT services provider into a national leader in cybersecurity solutions for small to medium-sized businesses (SMBs). The company offers comprehensive services, including 24/7 threat monitoring, compliance support, and AI-driven automation, all delivered through a subscription-based model that ensures predictable, recurring revenue.
Strategic Evolution
Post-acquisition, ReachOut has shifted its growth strategy from acquiring larger entities to targeting smaller, high-potential firms. This approach allows for faster integration and scalability, leveraging ReachOut's robust platform to enhance service offerings and operational efficiency. The company's focus on AI and automation has streamlined operations, reduced costs, and improved service delivery, positioning ReachOut as a disruptive force in the cybersecurity industry.
In line with our holding company model, we are expanding our portfolio beyond traditional IT services. Our upcoming venture, TRUSTLESS, exemplifies this direction. TRUSTLESS is a blockchain-based identity management platform designed to address the growing need for secure, decentralized identity solutions. By investing in such innovative technologies, we aim to diversify our revenue streams and capitalize on emerging market opportunities.
Market Positioning
Our strategy is to emulate the customer-centric approach of companies like T-Mobile, offering accessible, high-quality cybersecurity services to underserved SMBs across the nation. By combining this approach with the structural advantages of a holding company, we aim to create a scalable, resilient business model capable of delivering substantial value to shareholders.
With a strong leadership team, a clear strategic vision, and a commitment to innovation, we are well-positioned to execute our growth plans and achieve a successful uplisting to NASDAQ.
Competitive Landscape
The cybersecurity and IT services industry serving small to medium-sized businesses (SMBs) remains highly fragmented, with thousands of regional providers competing for localized market share. Traditional Managed Service Providers (MSPs) often lack specialization in advanced cybersecurity, operate without brand distinction, and struggle to scale beyond their geographic footprint. Meanwhile, enterprise-focused firms overlook the SMB sector entirely, creating a significant gap in the market. ReachOut is positioning to fill that gap by building a nationally recognized brand offering enterprise-grade cybersecurity tailored for SMBs. The Company competes based on service depth, speed of response, AI-powered scalability, and a media-driven awareness strategy uncommon in the sector.
Core Differentiators
ReachOut’s platform is built on recurring revenue, subscription-based services, and proprietary operational processes designed for scale. The Company leverages AI to improve ticket resolution time and reduce labor reliance, unlocking better margins and faster acquisition integration. Its leadership team-anchored by CEO Rick Jordan and supported by board member Kevin Harrington-brings a unique blend of cybersecurity, operational, M&A, and public market expertise. In addition, ReachOut’s transformation into a holding company enables investment in high-upside, synergistic ventures like TRUSTLESS, a blockchain-based identity platform expected to contribute long-term balance sheet growth via the equity method. The Company’s acquisition strategy targets high-ROI, under-optimized SMB providers in underserved U.S. markets identified through search-intent data.
Risks & Challenges
As with any acquisition-driven growth strategy, ReachOut faces risks related to integration, cultural alignment, and operational scalability. The Company has mitigated this by shifting focus from larger, complex acquisitions to smaller, more agile targets with faster onboarding potential. The technology landscape evolves rapidly, particularly in AI and cybersecurity, requiring continuous innovation and investment to maintain service relevance. Market volatility, macroeconomic fluctuations, and capital availability may also impact the pace of acquisitions and expansion. Additionally, the Company’s high-growth profile and media-forward leadership may attract increased public scrutiny, which it manages through proactive governance and transparency.
The Broken MSP Model vs. ReachOut’s Scalable Platform Approach
The traditional Managed Service Provider (MSP) model is outdated, fragmented, and fundamentally ill-equipped to scale. Most regional IT providers suffer from long response times, underqualified support teams, and surface-level cybersecurity offerings-leaving SMBs exposed to increasing cyber threats without strategic guidance or enterprise-grade protection.
Common Weaknesses in Traditional IT Providers:
● Delayed Response & Resolution: Ticket triaging systems are slow and arbitrary, often delaying help for critical issues.
● Inefficient Frontline Support: Non-technical dispatchers create bottlenecks before a qualified technician is even looped in.
● Limited Cyber Talent: Most small IT providers lack advanced cybersecurity capabilities or compliance readiness support.
● Basic Security Tools: Antivirus and firewalls are not enough-many providers leave clients vulnerable to ransomware, phishing, and regulatory fines.
ReachOut’s Differentiated, Scalable Approach:
● Sub-Minute Response Times: Client calls are answered live by trained technicians within 60 seconds-most issues are resolved in under 15 minutes.
● AI-Augmented Service Delivery: Intelligent copilots are deployed to automate L1 support, reduce labor costs, and scale support across acquisitions without bloating headcount.
● Proactive Strategic Engagement: Clients receive dedicated vCIOs and vCISOs, quarterly business reviews, and continuous cybersecurity posture analysis-supporting growth, compliance, and risk mitigation.
● Advanced Security Infrastructure: ReachOut delivers 24/7 SOC-backed protection, anti-phishing training, ransomware mitigation, custom audits, and compliance solutions for HIPAA, CMMC, NIST 800-171, and more.
ReachOut isn't just improving MSP operations-it’s replacing them. By reimagining IT and cybersecurity as a national, AI-powered, subscription-based platform with media-fueled brand recognition, ReachOut is positioned to lead this $700B+ market into its next evolution-while creating massive long-term value for shareholders.
ReachOut Technology’s Future Growth Strategy
1. Holding Company Expansion with a Berkshire Model & Alphabet Playbook
ReachOut’s parent company is executing a strategic shift into a modern holding company structure-modeled after Berkshire Hathaway’s capital efficiency and Alphabet’s innovation strategy. This structure allows for the acquisition and development of independently operated, high-growth subsidiaries across cybersecurity, AI, and blockchain-positioning ReachOut not just as an IT company, but as a scalable technology platform holding company with NASDAQ ambitions.
2. Building the T-Mobile of Cybersecurity & IT
We are establishing the first nationally recognized brand in cybersecurity and IT for SMBs-combining aggressive market presence, media dominance, and a bold personality with enterprise-grade service. Just as T-Mobile disrupted telecom by turning a commodity into a brand experience, ReachOut is creating visibility, trust, and loyalty in an industry dominated by forgettable local providers.
3. High-Velocity, High-Margin Rollups
Our acquisition strategy has shifted from large, slow-to-integrate MSPs to nimble, $500k-$2M topline firms in underserved markets. We will integrate them rapidly using AI, operational playbooks, and centralized support infrastructure, growing each acquired location 2-5X within 24 months. With 4-10 acquisitions annually planned and targeting markets with high-demand and low competition, ReachOut is building a national footprint without sacrificing efficiency or margin.
4. Launching & Scaling Disruptive Platforms (e.g., TRUSTLESS)
TRUSTLESS, our blockchain-based identity and data security platform, is the first of several vertically independent, equity-holding ventures ReachOut will launch. These subsidiaries operate with their own branding, management, and financial roadmap, while allowing ReachOut to book long-term value via the equity method-creating asymmetric upside that outpaces traditional service firm multiples.
5. AI-First Operations for Scalable Margin
Through the integration of AI copilots and intelligent automation, ReachOut reduces headcount pressure while increasing client satisfaction, response time, and issue resolution. This enables aggressive acquisition without bloated overhead-scaling revenue without scaling cost, improving margins across the portfolio.
6. Organic Growth Through Media, Search, and Strategy
Rick Jordan’s personal brand, bolstered by a podcast downloaded in 70+ countries and a reach of over 1.6M followers, fuels inbound demand and elevates ReachOut’s media presence. Our go-to-market strategy is powered by intent-driven search data, geo-targeted content, and a direct-response engine that creates outsized lead volume and customer conversion in every acquired market.
7.Compliance-Driven Market Penetration
ReachOut continues to build industry-specific offerings for high-demand, regulation-heavy sectors like education, defense, and healthcare-where compliance frameworks like CMMC, HIPAA, and NIST SP 800-171 create both a barrier to entry and a premium service need. This aligns with our security-first, recurring revenue foundation.
Emerging Growth Company
We are and we will remain an “emerging growth company” as defined under The Jumpstart Our Business Startups Act (the “JOBS Act”), until the earliest to occur of (i) the last day of the fiscal year during which our total annual revenues equal or exceed $1 billion (subject to adjustment for inflation), (ii) the last day of the fiscal year following the fifth anniversary of our initial public offering, (iii) the date on which we have, during the previous three-year period, issued more than $1 billion in non-convertible debt securities, or (iv) the date on which we are deemed a “large accelerated filer” (with at least $700 million in public float) under the Securities and Exchange Act of 1934, as amended (the “Exchange Act”).
As an “emerging growth company”, we may take advantage of specified reduced disclosure and other requirements that are otherwise applicable generally to public companies. These provisions include:
● only two years of audited financial statements in addition to any required unaudited interim financial statements with correspondingly reduced “Management’s Discussion and Analysis” disclosure;
● reduced disclosure about our executive compensation arrangements;
● no requirement that we hold non-binding advisory votes on executive compensation or golden parachute arrangements; and
● exemption from the auditor attestation requirement in the assessment of our internal control over financial reporting.
We have taken advantage of some of these reduced burdens, and thus the information we provide stockholders may be different from what you might receive from other public companies in which you hold shares.
In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. However, we are choosing to “opt out” of such extended transition period, and as a result, we will comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. Section 107 of the JOBS Act provides that our decision to opt out of the extended transition period for complying with new or revised accounting standards is irrevocable.
Notwithstanding the above, we are also currently a “smaller reporting company”, meaning that we are not an investment company, an asset-backed issuer, or a majority-owned subsidiary of a parent company that is not a smaller reporting company and have a public float of less than $250 million and annual revenues of less than $100 million during the most recently completed fiscal year. In the event that we are still considered a “smaller reporting company”, at such time as we cease being an “emerging growth company”, the disclosure we will be required to provide in our SEC filings will increase, but will still be less than it would be if we were not considered either an “emerging growth company” or a “smaller reporting company”. Specifically, similar to “emerging growth companies”, “smaller reporting companies” are able to provide simplified executive compensation disclosures in their filings; are exempt from the provisions of Section 404(b) of the Sarbanes-Oxley Act (“SOX”) requiring that independent registered public accounting firms provide an attestation report on the effectiveness of internal control over financial reporting; and have certain other decreased disclosure obligations in their SEC filings, including, among other things, only being required to provide two years of audited financial statements in annual reports.
Employees
The Company currently has approximately twenty full-time and part-time employees, including officers and directors. Our employees are not represented by any labor union.

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ITEM 1A. RISK FACTORS
ITEM 1A. RISK FACTORS
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and, as such, are not required to provide the information under this Item.

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ITEM 1B. UNRESOLVED STAFF COMMENTS

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ITEM 2. PROPERTIES
ITEM 2. PROPERTIES
The Company currently leases property at the following location:
8910 West 192nd St North, Mokena, Illinois
Our business mailing address is 8910 West 192nd St North, Mokena, Illinois 60448.
Our primary phone number is 312-288-8000.

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ITEM 3. LEGAL PROCEEDINGS
ITEM 3. LEGAL PROCEEDINGS
On April 26, 2024, ReachOut Technology Corp. (“ReachOut”), a wholly-owned subsidiary of the Company filed a lawsuit (Case No. 1:24-cv-03408) in the United States District Court for the Northern District of Illinois, against the former members of RedGear, LLC (“RedGear”) related to certain representations and warranties made by the Defendants, Luciano Aguayo and Armando Gonzalez, in the Membership Interest Purchase Agreement, dated September 29, 2023 and closing on October 2, 2023, under which ReachOut acquired 100% of RedGear. The lawsuit was served on the defendants on April 30, 2024, and the amended complaint, below, was served in June 2024.
In June 2024, ReachOut amended its complaint in the above case including fraud, post-closing misappropriation of funds and opportunities, tortious interference, breach of fiduciary duty, and post-termination illegal activities in violation of the Computer Fraud and Abuse Act (CFAA) attempting to take control of RedGear systems.
On July 2, 2024, the United States District Court for the Northern District of Illinois entered a Temporary Restraining Order against the Defendants in the above case, based on the federal Computer Fraud and Abuse Act, a statute designed to protect against computer hacking.
Under the terms of the RedGear LLC membership interest purchase agreement, there is a clause for set-off. The Buyer shall have the right to recover, and to set-off and apply against, all amounts otherwise due and owing to Sellers, or any of them, all sums in respect of which they may be liable to Buyer, including, but not limited to, as a result of a breach of any representation or warranty of Sellers. As a result of a breach of any of the covenants, or pursuant to the indemnification provisions, such right of set-off shall be in addition to, and not in lieu of, or an election against, any and all other remedies available to Buyer at law or in equity. Management is in discussion with counsel to determine whether the set-off right can be applied prior to judicial determination. As of the filing date of this report no probable outcome has been determined in the above case.
Based on the aforementioned set-off clause and the continuing dispute with the former members of RedGear, management has obtained assurances from legal counsel that, the Company may refute certain liabilities recognized as acquisition related. As such, the Company has refuted certain liabilities owed to the former owners of the membership interest in RedGear which have been discussed above relating to the acquisition or RedGear, Related Party transactions and below related to certain lease liabilities.
While the Company is working with legal counsel to minimize the impact to the business, the exit of the Defendants has led to a material reduction in RedGear business customers and revenue.
On December 10, 2024, IND Holding, Inc. filed a lawsuit in the United States District Court for the District of Delaware against ReachOut Technology NE Holdings, LLC and ReachOut Technology Corp., alleging breach of contract related to a prior acquisition. The Company promptly filed a Motion to Dismiss on the grounds that the claims were brought in an improper venue and are contractually barred. In opposition, Plaintiff made a conditional request to amend-only if the motion were granted against them-then declined the Company’s offer to amend voluntarily before a ruling. The Company’s reply brief notified the Court of this refusal, and the matter is currently awaiting a decision. Management believes the case is procedurally and substantively flawed, expects dismissal, and does not view this matter as having any material impact on its financial position, results of operations, or strategic plans

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ITEM 4. MINE SAFETY DISCLOSURE
ITEM 4. MINE SAFETY DISCLOSURES
None.
PART II

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ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Market Information
Our Common Stock is quoted on the Over-the-Counter (OTC) Markets Pink Current Information under the symbol “YCRM.”
The range of reported high and reported low sales prices per share for our common stock for each fiscal quarter during fiscal year 2024 and 2023, as reported, is set forth below.
Quarterly common stock Price Ranges
Fiscal Year 2024, Quarter Ended:
High
Low
March 31, 2024
$ 0.0067
$ 0.0062
June 30, 2024
$ 0.0054
$ 0.0052
September 30, 2024
$ 0.0023
$ 0.0023
December 31, 2024
$ 0.0021
$ 0.0009
Fiscal Year 2023, Quarter Ended:
High
Low
March 31, 2023
$ 0.0088
$ 0.0014
June 30, 2023
$ 0.0017
$ 0.0006
September 30, 2023
$ 0.008
$ 0.0006
December 31, 2023
$ 0.0209
$ 0.0013
(a) Holders
At April 15, 2025 there were approximately 998 active holders of record of our common stock, although we believe that there are other persons who are beneficial owners of our common stock held in street name.
Transfer Agent
The transfer agent and registrar for our common stock is Pacific Stock Transfer Company, 6725 Via Austi Pkwy, Suite 300, Las Vegas, Nevada 89119. Their telephone number is (800) 785-7782.
(b) Dividends.
We have not paid any cash dividends on common stock to date and do not anticipate or contemplate paying dividends in the foreseeable future. It is the present intention of management to utilize all available funds for the development of the Registrant’s business.
(c) Securities authorized for issuance under equity compensation plans
None
Recent Issuances of Unregistered Securities
On October 1, 2024, YCRM issued a convertible note payable to Frondeur Partners LLC. The convertible note has principal of $10,000, bears interest at 12%, matures on June 30, 2025 and may be converted to common shares at or 50% of the lowest traded price during the thirty days prior to conversion. The principal amount was charged to professional services. Due to the notes fixed conversion price, it is treated as stock settled debt under ASC 480, a put premium of $10,000 was charged to interest expense on issuance.
On November 1, 2024, YCRM issued a convertible note payable to Frondeur Partners LLC. The convertible note has principal of $10,000, bears interest at 12%, matures on July 31, 2025 and may be converted to common shares at or 50% of the lowest traded price during the thirty days prior to conversion. The principal amount was charged to professional services. Due to the notes fixed conversion price, it is treated as stock settled debt under ASC 480, a put premium of $10,000 was charged to interest expense on issuance.
On December 1, 2024, YCRM issued a convertible note payable to Frondeur Partners LLC. The convertible note has principal of $10,000, bears interest at 12%, matures on August 31, 2025 and may be converted to common shares at or 50% of the lowest traded price during the thirty days prior to conversion. The principal amount was charged to professional services. Due to the notes fixed conversion price, it is treated as stock settled debt under ASC 480, a put premium of $10,000 was charged to interest expense on issuance.
On January 1, 2025, YCRM issued a convertible note payable to Frondeur Partners LLC. The convertible note has principal of $10,000, bears interest at 12%, matures on September 30, 2025 and may be converted to common shares at or 50% of the lowest traded price during the thirty days prior to conversion. The principal amount was charged to professional services. Due to the notes fixed conversion price, it is treated as stock settled debt under ASC 480, a put premium of $10,000 was charged to interest expense on issuance.
On February 1, 2025, YCRM issued a convertible note payable to Frondeur Partners LLC. The convertible note has principal of $10,000, bears interest at 12%, matures on October 31, 2025 and may be converted to common shares at or 50% of the lowest traded price during the thirty days prior to conversion. The principal amount was charged to professional services. Due to the notes fixed conversion price, it is treated as stock settled debt under ASC 480, a put premium of $10,000 was charged to interest expense on issuance.
On March 1, 2025, YCRM issued a convertible note payable to Frondeur Partners LLC. The convertible note has principal of $10,000, bears interest at 12%, matures on November 30, 2025 and may be converted to common shares at or 50% of the lowest traded price during the thirty days prior to conversion. The principal amount was charged to professional services. Due to the notes fixed conversion price, it is treated as stock settled debt under ASC 480, a put premium of $10,000 was charged to interest expense on issuance.
On April 1, 2025, YCRM issued a convertible note payable to Frondeur Partners LLC. The convertible note has principal of $10,000, bears interest at 12%, matures on December 31, 2025 and may be converted to common shares at or 50% of the lowest traded price during the thirty days prior to conversion. The principal amount was charged to professional services. Due to the notes fixed conversion price, it is treated as stock settled debt under ASC 480, a put premium of $10,000 was charged to interest expense on issuance.
Under the terms of the Singer Asset Purchase Agreement outlined above, the Company is obligated to designate a new series of preferred stock having a conversion feature of one share of the to be designated preferred stock for one share of restricted common stock. The obligation is recorded as stock to be issued at fair market value of the common stock on the grant date
On December 27, 2024 the board of directors approved the Debt Cancellation and Exchange Agreement in satisfaction of liabilities owed to the CEO and a private company he controlled for an aggregate amount of $2,440,950, and authorized the creation of a new series of preferred stock to be issued to First Portfolio Management LLC. The proposed Certificate of Designation authorizes the new shares of which 1,561,068 are to be issued to First Portfolio Management LLC. The shares have a par value of $0.0001 and a stated value of $1.00. The stock has a 2% annual dividend on the aggregate stated value of $2,440,950, each share is convertible into 385 common shares of stock. The dividend is payable quarterly in either cash or shares of the same series of preferred. The new preferred stock will rank senior to all other preferred stock in liquidation
Issuer Purchases of Equity Securities
None.

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ITEM 6. SELECTED FINANCIAL DATA
ITEM 6. [Reserved]
Not applicable since we are a smaller reporting company as defined under the applicable SEC rules.

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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations for the Year Ended December 31, 2024, compared to the Year Ended December 31, 2023
Revenue
We had $4,811,040 in revenue for the year ended December 31, 2024, compared to $3,775,142 for the year ended December 31, 2023. The increase in revenue is due to the acquisition of RedGear in October, 2023 and the asset acquisition of Singer Networks in April, 2024.
Cost of Goods Sold
We incurred $1,835,859 in costs of goods sold for the year ended December 31, 2024, compared to $2,564,093 for the year ended December 31, 2023. This decrease is due to improved efficiency, reduced costs, and more automated software-based solutions.
Intangibles impairment
We incurred $3,464,930 in Intangibles impairment for the year ended December 31, 2024, compared to $4,136,746 for the year ended December 31, 2023.
General and administrative expenses
We had $1,170,891 of general and administrative expenses (“G&A”) for the year ended December 31, 2024, compared to $1,097,111 for the year ended December 31, 2023, an increase of $73,780 or 6.72%.
Compensation
We had $3,421,052 in compensation for the year ended December 31, 2024 compared to $1,547,935 in compensation for the year ended December 31, 2023. Stock compensation expense was $0 and $1,690,791, for the years ended December 31, 2024 and 2023, respectively.
Professional expenses
We incurred $576,986 of professional fees for the year ended December 31, 2024, compared to $421,883 for the year ended December 31, 2023, an increase of $155,103 or 36.76%. Professional fees generally consist of audit, legal, accounting and investor relation service fees.
Other income (expense)
For the year ended December 31, 2024, we had total other expense of $10,053,812, compared to total other expenses of $15,095,860 for the year ended December 31, 2023. In the current period we incurred $1,753,453 of interest expense. We also incurred a loss of $9,177,239 for initial derivative expense and change in the fair value of derivatives.
In the prior period we incurred $752,526 of interest expense and $14,343,334 for initial derivative expense and change in the fair value of derivatives.
Net Profit (loss)
We incurred a net profit of $4,395,134 for the year ended December 31, 2024, compared to a net loss of $22,906,015 for the year ended December 31, 2023. Our net profit/loss was primarily due to a large fair market value change and gain on debt extinguishment.
Liquidity and Capital Resources
Cash flow from operations
Cash used in operating activities for the year ended December 31, 2024 was $927,998 compared to $762,097 of cash used in operating activities for the year ended December 31, 2023.
Cash Flows from Investing
We used $121,413 for investing activities for the year ended December 31, 2024, compared to netting $1,181,514 for investing activities for the year ended December 31, 2023.
Cash Flows from Financing
For the year ended December 31, 2024, we netted $964,030 from financing activities. We received $287,705 from proceeds from a loan and $662,500 from the issuance of convertible notes. We repaid $190,763 on lines of credit and to other financial institutions and $113,177 on payment of seller notes. We received $580,526 on proceeds from related party loans.
For the year ended December 31, 2023, we netted $1,732,706 from financing activities. We received $1,225,000 from proceeds from a loan (Fora) and $436,000 from the issuance of convertible notes. We repaid $399,750 on lines of credit and to other financial institutions and $321,008 on payment of seller notes. We received $1,128,354 on proceeds from related party loans.
Critical Accounting Policies
Critical accounting policies and estimates are the specific accounting principles and assumptions that companies use to prepare their financial statements, and they often require significant judgment and estimation. These policies typically involve areas that are highly complex or subjective, such as revenue recognition, valuation of inventory, impairment of goodwill and long-lived assets, allowance for doubtful accounts, deferred tax assets, stock-based compensation, convertible notes and derivative financial instruments, business combinations, related party transactions, and fair value measurements. Because these estimates can have a material impact on a company's financial condition and results of operations, they are closely monitored and disclosed to ensure transparency for investors and other stakeholders. Please refer to NOTE 3 of our financial statements contained elsewhere in this Form 10-K for more details of our critical accounting policies and estimates.

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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable to smaller reporting companies.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
YUENGLING’S ICE CREAM CORPORATION
Report of Independent Registered Public Accounting Firm (PCAOB #5525)
Consolidated Balance Sheets as of December 31, 2024 and 2023
Consolidated Statements of Operations for the Years ended December 31, 2024 and 2023
Consolidated Statement of Changes in Stockholders’ Deficit for the Years ended December 31, 2024 and 2023
Consolidated Statements of Cash Flows for the Years ended December 31, 2024 and 2023
Notes to Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Shareholders of Yuengling’s Ice Cream Corporation
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Yuengling’s Ice Cream Corporation and subsidiaries (“the Company”) as of December 31, 2024 and 2023, and the related consolidated statements of operations, stockholders’ deficit, and cash flows for each of the years in the two-year period ended December 31, 2024, 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 December 31, 2024 and 2023 and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2024, 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 2 to the financial statements, the Company has not generated profits since inception, has sustained operating losses, and has incurred negative cash flows from operations. These factors, among others, 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 2. 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 audits 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 audits, 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 audits 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 audits 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 audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that there were no critical audit matters.
Fruci & Associates II, PLLC - PCAOB ID #05525
We have served as the Company’s auditor since 2019.
Spokane, Washington
April 15, 2025
YUENGLING’S ICE CREAM CORPORATION
CONSOLIDATED BALANCE SHEETS
December 31,
December 31,
ASSETS
Current Assets:
Cash
$ 275,292
$ 360,673
Accounts receivable
164,549
239,825
Prepaid expenses
60,487
275,780
Total Current Assets
500,328
876,278
Other Assets:
Deposits
-
8,618
Furniture and fixed assets, net
7,500
445,697
Goodwill
-
3,343,929
Customer list acquired
-
-
Right of use asset
31,730
518,968
Total non-current assets
39,230
4,317,212
Total Assets
$ 539,558
$ 5,193,490
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current Liabilities:
Accounts payable and accrued expenses
$ 2,998,445
$ 1,764,696
Deferred Revenues
-
68,618
Due to officers
-
309,725
Due to Affiliate
-
1,570,253
Due to financial institutions
917,405
1,649,134
Seller notes and loans payable, related parties current
465,618
1,175,124
SBA loan payable
-
1,012,392
Vehicle and equipment loans
-
336,610
Term note payable, related parties
1,175,000
1,175,000
Other loans and notes payable
240,160
202,206
Officer life insurance liability, current portion
900,000
450,000
Convertible notes payable, third parties, net of put premiums
954,907
30,000
Derivative liability
5,786,478
14,637,055
Lease liability, current portion
33,242
171,315
Equipment lease, current
-
26,092
Total Current Liabilities
13,471,255
24,578,220
Non-Current Liabilities:
Seller notes payable, non-current portion related parties
-
192,932
Convertible notes payable, third parties, net of discounts
-
40,650
Officer life insurance premium, non-current portion
1,800,000
2,250,000
Dividend payable, preferred stock Series C & D
625,344
76,849
Equipment lease, non-current
-
25,090
Lease liability, non-current portion
-
347,605
Total Non-Current Liabilities
2,425,344
2,933,126
Total Liabilities
$ 15,896,599
$ 27,511,346
Commitments and contingencies
-
-
Temporary Equity - Preferred Series A stock to be issued
357,022
357,022
Stockholders’ Deficit:
Common stock to be issued
65,000
68,000
Preferred stock to be issued
2,448,038
-
Preferred stock, Series A; par value $0.0001; 10,000,000 shares authorized, 475,000 shares issued and outstanding at December 31, 2024 and December 31, 2023
Preferred stock, Series C and D, par value $0.0001, 10,000,000 shares authorized, 10,000,000 shares issued and outstanding at December 31, 2024 and December 31, 2023
1,000
1,000
Common stock: $0.001 par value; 2,500,000,000 shares authorized; 384,088,943 and 349,488,710 shares issued and outstanding at December 31, 2024 and December 31, 2023, respectively
384,089
349,489
Additional paid in capital
2,247,549
1,616,009
Accumulated deficit
(20,859,786 )
(24,709,424 )
Total Stockholders’ Deficit
(15,714,062 )
(22,674,878 )
TOTAL LIABILITIES & STOCKHOLDERS’ DEFICIT
$ 539,558
$ 5,193,490
The accompanying notes are an integral part of these consolidated financial statements.
YUENGLING’S ICE CREAM CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
For the
Years Ended
December 31,
Revenue
$ 4,811,040
$ 3,775,142
Cost of goods sold
1,835,859
2,564,093
Gross profit
2,975,181
1,211,049
Operating Expenses:
Intangibles impairment
3,464,930
4,136,746
Loss on disposition
-
126,738
General and administrative expenses
1,170,891
1,097,111
Stock compensation
-
1,690,791
Compensation
3,421,052
1,547,935
Professional fees
576,986
421,883
Total operating expenses
8,633,859
9,021,204
Loss from operations
(5,658,678 )
(7,810,155 )
Other income (expense):
Other gains
286,185
-
Loss on disposal
(156,759 )
-
Interest expense
(1,753,453 )
(752,526 )
Derivative: expense, gains and losses
(20,773,468 )
(1,548,592 )
Derivative: losses upon conversion
(179,921 )
-
Change in fair market value
29,950,707
(12,794,742 )
Gain on debt extinguishment
2,680,521
-
Total other income (expense)	
10,053,812
(15,095,860 )
Income (Loss) before provision for income tax
4,395,134
(22,906,015 )
Provision for income tax
-
-
Net Income (loss)
$ 4,395,134
$ (22,906,015 )
Basic Income (loss) per share
$ 0.01
$ (0.07 )
Diluted Income (loss) per share
$ 0.01
$ (0.07 )
Basic weighted average shares
375,462,584
332,488,710
Diluted weighted average shares
375,462,584
332,488,710
The accompanying notes are an integral part of these consolidated financial statements.
YUENGLING’S ICE CREAM CORPORATION
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ DEFICIT
FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023
Series A Series C & D
To Be Issued Common Additional
Preferred Stock Preferred Stock Common Stock Stock Paid in Accumulated
Shares Amount Shares Amount Shares Amount Amount Capital Deficit Total
Balance at December 31, 2023 475,000 $ 48 10,000,000 $ 1,000 349,488,710 $ 349,489 $ 68,000 $ 1,616,009 $ (24,709,424 ) $ (22,674,878 )
Value of preferred shares to be issued
2,448,038
2,448,038
Cancellation of shares to be issued to former officer
(3,000 )
3,000 -
Conversion of convertible note interest to common stock
34,600,233 34,600
155,702
190,302
Warrants issued to investors - - - - - - - 475,838 - 475,838
Preferred stock dividends Series C & D - - - - - - - - (548,496 ) (548,496 )
Net Income (loss) for year ended December 31, 2024 - - - - - - - - 4,395,134 4,395,134
Balance at December 31, 2024 475,000 $ 48 10,000,000 $ 1,000 384,088,943 $ 384,089 $ 2,513,038 $ 2,247,549 $ (20,859,786 ) $ (15,714,062 )
Series A
Series C & D
To Be Issued Common
Additional
Preferred Stock
Preferred Stock
Common Stock
Stock
Paid in
Accumulated
Shares
Amount
Shares
Amount
Shares
Amount
Amount
Capital
Deficit
Total
Balance at December 31, 2022
475,000
$
10,000,00
$ 1,000
14,828,595
$ 14,829
$ 660,000
$ 1,016,412
$ (1,726,560 )
$ (34,271 )
Recapitalization adjustment, shares issued pre-merger
-
-
-
-
334,660,115
334,660
(592,000 )
113,532
-
(143,808 )
Incentive on future financing
-
-
-
-
-
-
-
52,602
-
52,602
Compensation, non-employees
-
-
-
-
-
-
-
291,186
-
291,186
Dividends on preferred shares
-
-
-
-
-
-
-
-
(76,849 )
(76,849 )
Warrants issued to investors
-
-
-
-
-
-
-
142,277
-
142,277
Net loss for the year ended December 31, 2023
-
-
-
-
-
-
-
-
(22,906,015 )
(22,906,015 )
Balance at December 31, 2023
475,000
$
10,000,000
$ 1,000
349,488,710
$ 349,489
$ 68,000
$ 1,616,009
$ (24,709,424 )
$ (22,674,878 )
The accompanying notes are an integral part of these consolidated financial statements.
YUENGLING’S ICE CREAM CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the
Years Ended
December 31,
Cash flows from operating activities:
Net Income (loss)
$ 4,395,134
$ (22,906,005 )
Adjustments to reconcile net loss to net cash used in operating activities:
Shares issued for compensation and services
-
1,822,769
Debt discounts charged to interest expense
1,164,169
84,025
Depreciation
155,640
65,361
Vesting of Restricted Stock Units
-
-
Gain on extinguishment
(2,680,521 )
-
Bad debt expense
160,045
-
Put premiums charged to interest expense, stock settled debt
-
15,000
Fee notes issued
125,000
-
Intangibles impairment
3,464,930
4,136,746
Derivative expense
20,773,468
1,548,592
Gain (Loss) on conversion of liability to common stock
179,921
-
Changes in fair market values
(29,950,707 )
12,794,742
Other gains and losses, net
(129,426 )
-
Related party advances funding operations
-
-
Changes in assets and liabilities:
Accounts receivable
(84,769 )
(115,141 )
Prepaid expense
215,293
3,458
Inventory
-
273,602
Right of use asset net of liability
1,560
A/P & Accrued liabilities
1,250,715
1,504,855
Customer deposits
(50,706 )
37,174
Finance Lease
(15,244 )
(27,529 )
Other current liabilities
97,500
Net cash used in operating activities
(927,998 )
(762,097 )
Cash flows from investing activities:
Cash acquired in acquisition
-
83,794
Cash paid in acquisition
-
(1,249,548 )
Fixed assets purchased
-
(15,760 )
Cash paid for Singer asset purchase
(121,413 )
-
Net cash used in investing activities
(121,413 )
(1,181,514 )
Cash flows from financing activities:
Loan proceeds
287,705
1,225,000
Repayments Fox loan
(190,763 )
(399,750 )
Repayment of Fora
(316,577 )
-
Repayments seller notes
(113,177 )
-
Note issued
125,000
-
Repayment of notes
(88,374 )
(289,398 )
Other loan repayments
-
-
Vehicle loan
53,896
(382,500 )
Repayment of vehicle loans
(36,706 )
15,000
Convertible notes issued for service
-
-
Proceeds from affiliate advances
580,526
-
Repayments of affiliate advances
-
1,128,354
Proceeds from issuance of convertible notes
662,500
436,000
Repayments - Related party advances
-
-
Net cash provided by financing activities
964,030
1,732,706
Net change in cash
(85,381 )
(210,905 )
Cash, beginning of year
360,673
571,578
Cash, end of year
$ 275,292
$ 360,673
Cash paid during the period for:
Interest
$ 62,682
$ -
Income taxes
$ -
$ -
Supplemental Disclosure of Non-Cash Activity:
Shares to be issued for acquisition
$ -
$ 2,620,673
Debt Discounts
799,000
-
Preferred dividends
548,495
-
Conversion of accrued interest and conversion expenses
24,677
-
Convertible preferred shares to be issued
2,448,038
-
Right-of-use asset and lease liability - ASC 842
$ -
$ 767,068
The accompanying notes are an integral part of these consolidated financial statements.
YUENGLING’S ICE CREAM CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2024
NOTE 1 - ORGANIZATION AND BUSINESS
Yuengling’s Ice Cream Corporation, (f/k/a Aureus, Inc.) (“Yuengling’s,” “YCRM,” or the “Company”) was incorporated in Nevada on April 19, 2013, under the name “Aureus Incorporated.” The Company was initially organized to develop and explore mineral properties in the state of Nevada. Effective December 15, 2017, the name was changed to “Hohme, Inc.,” and, effective February 7, 2019, the Company changed its name to “Aureus, Inc. and on September 14, 2021, the Company changed their name to Yuengling’s Ice Cream Corporation”. The Company is currently active in the state of Nevada.
In November, 2023, YCRM completed its acquisition of ReachOut Technology Corp. (“ReachOut”). ReachOut is a Managed Service Provider (MSP) that provides cybersecurity and IT services to Small to Medium Sized Businesses (SMBs). Management is highly experienced with business operation as well as acquisition and integration. After the closing of the ReachOut transaction, the Company agreed to assign the ice cream assets to Mid Penn Bank in return for the cancellation of the bank debt. The Company also ceased its Aureus Micro Markets operations at the time the ReachOut agreement was signed.
Reverse Merger/Acquisition of ReachOut Technology Corp.
On November 9, 2023, the Yuengling’s Ice Cream Corporation closed the Share Exchange and Control Block Transfer Agreements with ReachOut Technology Corp. (“ReachOut”) whereby 100% of the membership interests of ReachOut were exchanged for Series C Preferred Stock which is convertible into 87.5% of the total issued and outstanding shares of common stock of the Company (fully diluted basis) as determined at the consummation of the acquisition.
The Share Exchange is intended to constitute a reorganization with the meaning of Section 368 of the Internal Revenue Code of 1986 (as amended).
As a result of the transaction, ReachOut became a subsidiary of the Company.
The Company evaluated the substance of the merger transaction and found it met the criteria for the accounting and reporting treatment of a reverse acquisition under ASC 805 (Business Combinations)-40-45 (Reverse Acquisition and Other Presentation Matters) and accordingly will consolidate the operations of ReachOut and the Company and the financial condition from the closing date of the transaction. The historic results of operations will reflect those of ReachOut. As such, ReachOut is treated as the acquirer while the Company is treated as the acquired entity for accounting and financial reporting purposes.
Under reverse merger accounting, the comparative historical financial statements of the Company, as the legal acquirer, are those of the accounting acquirer, ReachOut, the Company’s financial statements prior to the closing of the reverse acquisition; reflect only the business of ReachOut and its subsidiaries.
For accounting purposes, ReachOut is considered the acquirer of YCRM. based upon the terms of the Merger as well as other factors including; (i) RO former shareholders own approximately 87.5% of the combined Company’s outstanding common shares (giving effect to the conversion of the preferred Series C shares ReachOut stockholders received in exchange for the ReachOut stock) immediately following the closing of the Merger, and (ii ReachOut management hold key management positions of the combined Company. The Merger has therefore recorded as a reverse acquisition. The figures described in the notes and financial statements are a continuation of the figures of the legal subsidiary or accounting acquirer (ReachOut). However, the equity reflects the legal acquirer, or accounting acquiree (YCRM) equity structure. The acquisition value is recorded to reflect the par value of the outstanding shares of the Company, including the number of shares issued in the reverse acquisition and has been recast to reflect the merger transactions as if it had occurred as of the earliest period presented. Any difference is recognized as an adjustment to the additional paid in capital to the extent available, and then as a retained earnings adjustment.
Under the terms of the Control Block Transfer Agreement, Everett Dickson (former CEO) sold all his remaining Series A Preferred Stock to Richard Jordan (new CEO) for $140,000.
Following the closing of the agreements, Robert Bohorad and Everett Dickson resigned their positions as CEO and Chairman of the Board of Directors, respectively and Richard Jordan was appointed to those positions.
The Company has authorized 8,750,000 Series C Preferred Shares of Stock, effective December 13, 2023. The shares have a stated value of $3.00 per share, earns a 2% dividend on the stated value, which is cumulative and payable solely upon redemption. The stock has voting rights equal to the number of common shares into which the preferred shares may be converted. At any time following 180 days from the date of issuance the preferred stock in aggregate can be converted into 87.5% of the outstanding common stock for a period of twenty-four months from the date of issuance of the Series C Preferred Stock.
Under the terms of the Share Exchange Agreement the Company issued 8,750,000 shares of Series C Preferred Stock to the owners of ReachOut. in exchange for 100% of the shares of ReachOut upon closing the aforementioned acquisition.
ReachOut Technology Corp.
Reachout Technology, Corp. (“ReachOut”) is a corporation formed on February 13, 2020 under the laws of the State of Delaware. ReachOut provides cybersecurity and IT management solutions to businesses to protect their complete operating landscape and data secrets. ReachOut is headquartered in Chicago, Illinois.
From formation until the acquisition of Innovative Design Networks, LLC (“IND”) on September 2, 2022, ReachOut had no principal operations or revenue. ReachOut’s activities during this period primarily consisted of formation activities, acquisition research and preparations to raise capital.
ReachOut Corp. Acquisition - Innovative Network Designs LLC
IND is a New Jersey limited liability company and ReachOut acquired 100% of the member’s interest of IND in exchange for cash, notes payable, commitment to purchase universal life insurance policies for the principals and 500,000 restricted shares of ReachOut’s common stock. The transaction was deemed to be a business combination and applied acquisition accounting under ASC 805.
Innovative Network Designs LLC - New Jersey
IND Corporation (“IND”) provides information technology services. IND offers cybersecurity, risk assessment, network security, cloud performance, remote management, migration support, and monitoring solutions for businesses, as well as provides consulting and maintenance services. IND serves clients in the States of New York, New Jersey, and Pennsylvania. IND can either manage and support a client’s entire technology infrastructure or complement to the existing internal IT personnel. IND’s unique service model is designed to reduce client costs, increase client profits and mitigate client’s business risks.
ReachOut Corp. Acquisition - RedGear LLC
ReachOut entered into a Membership Interest Purchase Agreement on September 29, 2023 with RedGear, LLC, a Texas limited liability company and acquired 100% of the members’ interest of RedGear, LLC, in exchange for cash, a note payable and the assumption of certain liabilities of RedGear, LLC. The transaction was deemed to be a business combination and applied acquisition accounting under ASC 805. Upon closing October 2, 2023, the total value of the consideration given for the purchase was $3,025,249 The purchase price was allocated to net tangible assets of $54,006 with the balance of $2,510,0291 allocated to goodwill, which is not amortized to expense. ReachOut hired an independent accounting firm to validate the Adjusted EBITDA (as defined in the closing documents). The results of the validation resulted in a purchase price adjustment reducing goodwill to $2,117,502. During the year ended December 31, 2024, the Company determined that the goodwill was fully impaired and charged to loss to operating expenses.
RedGear LLC - Texas
RedGear LLC (“RedGear”) provides professional technology services, structured cabling, equipment, and consulting in the Southwest US region. RedGear’s entire culture is built around supporting business infrastructures, while building relationships and delivering an exceptional customer service experience and always keeping customers’ best interest a top priority. RedGear has built its success by reputation, quality of work, professionalism, and always being there for clients every step of the way whenever needed. RedGear’s services, certifications, experience, and expertise cover the entire spectrum of Information Technology that no other regional technology service provider can match.
NOTE 2 - GOING CONCERN
The Company has evaluated whether there are certain conditions and events, considered in the aggregate, that raise substantial doubt and the Company’s ability to continue as a going concern within one year after the date that the financial statements are issued.
The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has not generated profits until the year ended December 31, 2024 when non-cash changes in fair market value of derivatives, produced net income of $4,395,134, and has however incurred negative cash flows from operations for the period. As of December 31, 2024, the working capital deficit, stockholders’ deficit, and accumulated deficit was $12,970,927, $15,714,062 and $20,859,786 respectively. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The Company’s ability to continue as a going concern for the next twelve months is dependent upon its ability to generate sufficient cash flows from operations to meet its obligations. In the event that the Company cannot generate sufficient revenue to sustain its operations, the Company will need to reduce expenses or obtain financing through the sale of debt and/or equity securities. The issuance of additional equity would result in dilution to existing shareholders. If the Company is unable to obtain additional funds when they are needed or if such funds cannot be obtained on terms acceptable to the Company, the Company would be unable to execute upon the business plan or pay costs and expenses as they are incurred, which would have a material, adverse effect on the business, financial condition, and results of operations. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities as a result of this uncertainty.
NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation and Principles of Consolidation
The Company prepares its consolidated financial statements in accordance with U.S. generally accepted accounting principles (“GAAP”). The accompanying consolidated financial statements include the accounts of ReachOut Technology Corp. and its wholly-owned subsidiaries, ReachOut IND and RedGear. All significant intercompany accounts and transactions have been eliminated in consolidation. Since September 2, 2022, following the purchase of 100% of the membership interests in Innovative Network Designs LLC, (now ReachOut IND) and RedGear, LLC on October 2, 2023, the operations, assets, and liabilities have been consolidated into the Company.
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, YIC Acquisitions Corp., ReachOut (and its subsidiaries). All material intercompany transactions and balances have been eliminated on consolidation. ReachOut’s wholly-owned subsidiaries, ReachOut IND and RedGear were acquired on September 2, 2022 (purchase of 100% of the membership interests) and on October 2, 2023 (purchase of 100% of the membership interests) respectively, the operations, assets and liabilities have been consolidated into the ReachOut. Company.
Under reverse merger accounting, the comparative historical financial statements of the Company, as the legal acquirer, are those of the accounting acquirer, ReachOut, the Company’s financial statements prior to the closing of the reverse acquisition; reflect only the business of ReachOut and its subsidiaries.
Use of Estimates
The preparation of the Company’s financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Significant estimates and assumptions reflected in these financial statements include, but are not limited to, inventory, revenue recognition and the valuations of common and preferred stock, valuations of derivative liabilities and intangible assets. The Company bases its estimates on historical experience, known trends, analysis and other market-specific or other relevant factors that it believes to be reasonable under the circumstances. On an ongoing basis, management evaluates its estimates when there are changes in circumstances, facts, and experience. Changes in estimates are recorded in the period in which they become known. Actual results could differ from those estimates.
Segment Reporting
The Company uses “the management approach” in determining reportable operating segments. The management approach considers the internal organization and reporting used by the Company’s chief operating decision maker for making operating decisions and assessing performance as the source for determining the Company’s reportable segments. The Company’s chief operating decision maker is the chief executive officer of the Company, who reviews operating results to make decisions about allocating resources and assessing performance for the entire Company. As of December 31, 2024, the Company has two regional operating entities which comprises one segment. IND provides technological services from New Jersey and Illinois IND generated 62% of the consolidated sales which includes some former customers from RedGear. Redgear provided technological services in Texas and Arizona and generated 38% of sales primarily to municipal government authorities.
Management decisions about allocation of working capital and other assets are based on sales, inventory and operating costs, with no formal processes in place.
No single customer generates 10% of annual consolidated sales, however a private entity owned by the CEO uses the resources of the Company and the related billings (as adjusted) totaled 9% of consolidated sales.
Concentrations of Credit Risk
Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents. The Company generally maintains balances in various operating accounts at financial institutions that management believes to be of high credit quality, in amounts that may exceed federally insured limits. The Company has not experienced any losses related to its cash and cash equivalents and does not believe that it is subject to unusual credit risk beyond the normal credit risk associated with commercial banking relationships. At December 31, 2024 and 2023, all of the Company’s cash and cash equivalents were held at accredited financial institutions. As of December 31, 2024, the Company had $0 in excess of insured amounts at financial institutions.
The Company’s subsidiary, Innovative Design Networks, has two clients with outstanding unpaid accounts representing a total of 57% and 43% of the accounts receivable balance at December 31, 2024.
Cash Equivalents
The Company considers all highly liquid investments with a maturity of a year or less when purchased to be cash equivalents. There were no cash equivalents at December 31, 2024 or December 31, 2023.
Reclassifications
Certain reclassifications have been made to the prior period financial information to conform to the presentation used in the financial statements for the year ended December 31, 2024. These reclassifications did not have any effect on the results of operations.
Accounts Receivable
Trade receivables are recorded at net realizable value consisting of the carrying amount less the allowance for credit losses. Factors used to establish an allowance include the credit quality of the customer and other factors. The Company may also use the direct write-off method to account for uncollectible accounts that are not received. Using the direct write-off method, trade receivable balances are written off to bad debt expense when an account balance is deemed to be uncollectible. The Company maintains an allowance for credit losses primarily for estimated losses resulting from the inability or failure of individual customers to make required payments. The Company maintains an allowance under Accounting Standards Codification (“ASC”) 326 based on historical losses, changes in payment history, customer-specific information, current economic conditions, and reasonable and supportable forecasts of future economic conditions. The allowance under ASC 326 is updated as additional losses are incurred or information becomes available related to the customer or economic conditions. As of December 31, 2024, the calculated and recognized allowance for credit losses was $96,727.
Deferred Financing Costs
Any unamortized deferred financing costs related to the Company borrowings are presented in the consolidated balance sheets as a direct deduction from the related debt. As of December 31, 2024, there are no unamortized deferred financing fees recognized. Amortization of such costs is reported as interest and financing costs included in the consolidated statement of operations.
Inventory
Inventory is stated at the lower of cost and net realizable value on a first-in, first-out basis. Cost is principally determined using the last-in, first-out (LIFO) method. The Company periodically assesses if any of the inventory has expired or if the value has fallen below cost. When this occurs, the Company recognizes an expense for inventory write down. Total inventories at December 31, 2024 and December 31, 2023 were $0 and $0, respectively.
Property and Equipment
Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation of property and equipment is calculated using the straight-line method over the estimated useful lives of the assets, which range from three to seven years. Leasehold improvements are amortized over the lesser of the remaining term of the lease or the estimated useful life of the asset. Expenditures for repairs and maintenance are expensed as incurred.
Net Loss Per Share
Basic loss per share is calculated by dividing the loss attributable to stockholders by the weighted-average number of shares outstanding for the period. Diluted loss per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that shared in the earnings (loss) of the Company. Diluted loss per share is computed by dividing the loss available to stockholders by the weighted average number of shares outstanding for the period and dilutive potential shares outstanding unless such dilutive potential shares would result in anti-dilution. The total potentially dilutive shares calculated is 9,220,849,985 at December 31, 2024. As of December 31, 2024: there are obligations to issue Series A Preferred Stock which are convertible into 1,020,062,029 shares of common stock; the Series A Preferred shares outstanding convertible into 699,082,277 of common shares; the Series C Preferred shares outstanding may convert into 2,446,420,970 common shares; the Series D Preferred shares outstanding may convert into 49,926,959 common shares; the Company is obligated to issue a new series of preferred stock will be convertible into 1,050,000 shares of common stock; the warrants outstanding may convert into 333,696,913 common shares; and there are 4,666,547,189 potentially dilutive shares arising from the conversion value of the convertible notes payable. There are 3,452,434 shares of common stock to be issued. Options outstanding may be exercised into 611,214 common shares. It should be noted that contractually the limitations on obligation to convertible notes, the various preferred series and warrant holders that limit the number of shares converted to either 4.99% or 9.99% of the then outstanding shares. The Company’s Chairman of the Board of Directors holds a control block of Series A Preferred Stock which confers upon him a majority vote in all Company matters including authorization of additional common shares or to reverse split the stock. As of December 31, 2024, and 2023, potentially dilutive securities consisted of the following:
Schedule of antidilutive shares
December 31,
December 31,
Series A Preferred Stock Payable
1,020,062,029
1,020,062,029
Series A Preferred Stock outstanding
699,082,277
699,082,277
Series C Preferred Stock outstanding
2,446,420,970
2,446,420,970
Series D Preferred Stock outstanding
49,926,959
49,926,959
New Series of Preferred to be issued
1,050,000
-
Warrants
333,696,913
305,757,519
Third party convertible debt
4,666,547,189
1,566,666,667
Common shares to be issued
3,452,434
68,000
Common stock options
611,214
611,214
Total
9,220,849,985
6,088,595,635
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 non-employee awards in the same manner as employee awards. The guidance is effective for fiscal years beginning after December 15, 2018, and interim periods within those annual periods. We adopted this ASU on January 1, 2019. The adoption of ASU 2018-07 did not have a material impact on our consolidated financial statements.
Convertible Notes with Fixed Rate Conversion Options
The Company may enter into convertible notes, some of which contain, predominantly, fixed rate conversion features, whereby the outstanding principal and accrued interest may be converted by the holder, into common shares at a fixed rate to the market price of the common stock at the time of conversion. This results in a fair value of the convertible note being equal to a fixed monetary amount. The Company records the convertible note liability at its fixed monetary amount by measuring and recording a premium, as applicable, on the Note date with a charge to interest expense in accordance with ASC 480 - “Distinguishing Liabilities from Equity”.
Derivative Financial Instruments
The Company evaluates its convertible notes to determine if such instruments have derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date using a binomial model, with changes in the fair value reported in the statements of operations. For stock-based derivative financial instruments, the Company uses a weighted-average Black-Scholes-Merton option pricing model to value the derivative instruments at inception and on subsequent valuation dates. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period.
Fair Value Measurements
The Company follows the FASB Fair Value Measurements standard, as they apply to its financial instruments. This standard defines fair value, outlines a framework for measuring fair value, and details the required disclosures about fair value measurements.
Fair value is defined as the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date. The standard establishes a hierarchy in determining the fair value of an asset or liability. The fair value hierarchy has three levels of inputs, both observable and unobservable. Level 1 inputs include quoted market prices for identical assets or liabilities in an active market that the Company has the ability to access at the measurement date. Level 2 inputs are market data, other than Level 1, that are observable either directly or indirectly. Level 2 inputs include quoted market prices for similar assets or liabilities, quoted market prices in an inactive market, and other observable information that can be corroborated by market data. Level 3 inputs are unobservable and corroborated by little or no market data. The standard requires the utilization of the lowest possible level of input to determine fair value and carrying amounts of current liabilities approximate fair value due to their short-term nature.
The estimated fair value of certain financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and accrued expenses are carried at historical cost basis, which approximates their fair values because of the short-term nature of these instruments.
The Company’s non-financial assets, such as property and equipment, are adjusted to fair value only when an impairment is recognized. Such fair value measurements are based predominantly on Level 3 inputs.
Level 1: Level 1 inputs are unadjusted quoted prices in active markets for identical assets or liabilities.
Level 2: Level 2 inputs are inputs other than quoted prices included in Level 1 that are observable, either directly or indirectly.
Level 2 inputs include quoted prices for similar assets, quoted prices in markets that are not considered to be active, and observable inputs other than quoted prices such as interest rates.
Level 3: Level 3 inputs are unobservable inputs.
The following required disclosure of the estimated fair value of financial instruments has been determined by the Company using available market information and appropriate valuation methodologies. However, considerable judgment is required to interpret market data to develop the estimates of fair value. Accordingly, the use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts.
The methods and assumptions used to estimate the fair values of each class of financial instruments are as follows: Cash and Cash Equivalents, Accounts Receivable, and Accounts Payable. The items are generally short-term in nature, and accordingly, the carrying amounts reported on the consolidated balance sheets are reasonable approximations of their fair values.
The carrying amounts of notes payable approximate the fair value as the notes bear interest rates that are consistent with current market rates.
The table below classifies the Company’s liabilities measured at fair value on a recurring basis into the fair value hierarchy as of December 31, 2024 and December 31, 2023.
Schedule of liabilities measured at fair value
At December 31, 2024
At December 31, 2023
Description
Level 1
Level 2
Level 3
Level 1
Level 2
Level 3
Derivative Liability
-
-
$ 5,786,478
-
-
$ 14,637,055
A roll-forward of the level 3 valuation financial instruments is as follows
Schedule of fair value measurements roll-forward
Derivative
Liabilities
Balance at December 31, 2023
$ 14,637,055
Charged to derivative expense upon issuance of related note
20,773,468
Charged as loss on debt conversion
179,921
Classified as initial debt discount upon issuance of related note
557,751
Fair Value adjustments - convertible notes
(29,950,707 )
Balance at December 31, 2024
$ 5,786,478
A summary of quantitative information about significant unobservable inputs (Level 3 inputs) used in measuring the Company’s derivative liability that are categorized within Level 3 of the fair value hierarchy for the year ended December 31, 2024 is as follows:
Schedule of derivative liabilities
Inputs
December 31,
Stock price
$ 0.0015
Conversion price (note below)
$ 0.00114 to 0.0003
Volatility (annual)
%
Risk-free rate
5.00 %
Dividend rate
-
$179,921 was charged to loss on conversion of liability due to conversion of accrued interest and related expenses for the issuance of common stock during the year ended December 31, 2024. The charge was credited to additional paid in capital.
An additional $397,053 was charged to derivative expense upon issuance of warrants to an investor, during the year ended December 31, 2024. This charge to derivative expense was credited to additional paid in capital.
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 December 31, 2024 and December 31, 2023, no liability for unrecognized tax benefits was required to be reported.
Revenue recognition
The Company adopted Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers, and its related amendments (collectively known as “ASC 606”), effective January 1, 2018. The Company determines revenue recognition through the following steps:
Identification of a contract with a customer;
Identification of the performance obligations in the contract;
Determination of the transaction price;
Allocation of the transaction price to the performance obligations in the contract; and
Recognition of revenue when or as the performance obligations are satisfied.
For the year ended December 31, 2024 and the year ended December 31, 2023, the Company deferred revenue of $0 and $68,618, respectively. The deferral of revenue is based on management’s determination that services or goods have not been provided to the customers as of the reporting date and therefore the revenue is unearned.
The Company and its wholly owned subsidiaries (“Operating Companies”) are not selling or leasing software to customers. The operating companies provide managed IT services (managing customers networks including security, support user needs and network infrastructure), and installation (cabling and network hardware and third-party software set up). Agreements such as the Master Consulting Services Agreement are entered into by the operating companies and their clients. These agreements provide the general terms of service and the legal matters essential to the agreement. The agreements are supplemented by Statements of Work (SOW) which spell specific services and any hardware to be provided. Invoices are prepared based on the terms of the SOW either monthly for services to be rendered for the coming month or based on installation progress estimates, collectively the billings are based on performance obligations. Revenue from invoiced billings is recognized when performance obligations are satisfied through the transfer of control of promised goods to the Company’s customers in an amount that reflects the consideration expected to be received in exchange for transferring goods or services to customers. Control transfers once a customer has the ability to direct the use of, and obtain substantially all of the benefits from, the product. This includes the transfer of legal title, physical possession, the risks and rewards of ownership, and customer acceptance.
It is management’s practice to only invoice for services and goods to be provided within the coming month. While services may not be fully transferred the client is in fact obligated to pay the invoiced amount unless the contract is terminated with prior notice. The company may also have stand ready provisions in service agreements in which performance obligations is to be on call for support, updates and upgrades.
The Company manages its operating income on a regional basis at the present time. Revenue recognized for the Northeast region was $2,984,287, and $1,826,753 for the Southwest region for the year ended December 31, 2024.
Advertising Costs
Advertising costs are expensed as incurred and are included in General and Administrative expenses. The Company expensed approximately $2,000 for advertising and marketing during the year ended December 31, 2024.
Deferred Offering Costs
The Company complies with the requirements of Accounting Standards Codification (“ASC”) 340, Other Assets and Deferred Costs, with regards to offering costs. Prior to the completion of an offering, offering costs are capitalized. The deferred offering costs are charged to additional paid-in capital or as a discount to debt, as applicable, upon the completion of an offering or to expense if the offering is not completed.
Stock-Based Compensation
The Company accounts for stock-based compensation costs under the provisions of ASC 718, Compensation - Stock Compensation, which requires the measurement and recognition of compensation expense related to the fair value of stock-based compensation awards that are ultimately expected to vest. Stock based compensation expense recognized includes the compensation cost for all stock-based payments granted to employees, officers, and directors based on the grant date fair value estimated in accordance with the provisions of ASC 718. ASC 718 is also applied to awards modified, repurchased, or cancelled during the periods reported. Stock-based compensation is recognized as an expense over the employee’s requisite vesting period and over the nonemployee’s period of providing goods or services. In accordance with ASU No. 2018-07, Compensation - Stock Compensation (Topic 718), Improvements to Nonemployee Share-Based Payment Accounting share-based payment transactions for acquiring goods and services from nonemployees are included. Consistent with the accounting requirement for employee share-based payment awards, nonemployee share-based payment awards within the scope of Topic 718 are measured at grant-date fair value of the equity instruments that an entity is obligated to issue when the good has been delivered or the service has been rendered and any other conditions necessary to earn the right to benefit from the instruments have been satisfied.
Business Combinations
In accordance with ASC 805-10, “Business Combinations”, we account for all business combinations using the acquisition method of accounting. Under this method, assets and liabilities, including any remaining non-controlling interests, are recognized at fair value at the date of acquisition. The excess of the purchase price over the fair value of assets acquired, net of liabilities assumed, and non-controlling interests is recognized as goodwill. Certain adjustments to the assessed fair values of the assets, liabilities, or non-controlling interests made subsequent to the acquisition date, but within the measurement period, which is up to one year, are recorded as adjustments to goodwill. Any adjustments subsequent to the measurement period are recorded in income. Any cost or equity method interest that we hold in the acquired company prior to the acquisition is re-measured to fair value at acquisition with a resulting gain or loss recognized in income for the difference between fair value and the existing book value. Results of operations of the acquired entity are included in our results from the date of the acquisition onward and include amortization expense arising from acquired tangible and intangible assets.
Related Party Transactions
The Company follows FASB ASC subtopic 850-10, “Related Party Transactions”, for the identification of related parties and disclosure of related party transactions.
Pursuant to ASC 850-10-20, related parties include: a) our affiliates; b) entities for which investments in their equity securities would be required, absent the election of the fair value option under the Fair Value Option Subsection of Section 825-10-15, to be accounted for by the equity method by the investing entity; c) trusts for the benefit of employees, such as pension and profit sharing trusts that are managed by or under the trusteeship of management; d) our principal owners; e) our management; f) other parties with which we may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests; and g) other parties that can significantly influence the management or operating policies of the transacting parties or that have an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests.
Material related party transactions are required to be disclosed in the consolidated financial statements, other than compensation arrangements, expense allowances, and other similar items in the ordinary course of business. However, disclosure of transactions that are eliminated in the preparation of consolidated or combined financial statements is not required in those statements. The disclosures shall include: a) the nature of the relationship(s) involved; b) a description of the transactions, including transactions to which no amounts or nominal amounts were ascribed, for each of the periods for which statements of operation are presented, and such other information deemed necessary to an understanding of the effects of the transactions on the financial statements; c) the dollar amounts of transactions for each of the periods for which statements of operations are presented and the effects of any change in the method of establishing the terms from that used in the preceding period; and d) amounts due from or to related parties as of the date of each balance sheet presented and, if not otherwise apparent, the terms and manner of settlement
Lease Accounting
In February 2016, the FASB issued ASU No. 2016-02, Leases, which requires lessees to report on their balance sheets a right-of-use asset and a lease liability in connection with most lease agreements classified as operating leases under the prior guidance (ASC Topic 840). Under the new guidance, codified as ASC Topic 842, the lease liability must be measured initially based on the present value of future lease payments, subject to certain conditions. The right-of-use asset must be measured initially based on the amount of the liability, plus certain initial direct costs. The new guidance further requires that leases be classified at inception as either (a) operating leases or (b) finance leases. For operating leases, periodic expense generally is flat (straight-line) throughout the life of the lease. For finance leases, periodic expense declines over the life of the lease. The new standard, as amended, provides an option for entities to use the cumulative-effect transition method. As permitted, the Company adopted ASC Topic 842 effective June 1, 2020. The adoption of ASC Topic 842 did not have a material impact on the Company’s consolidated financial statements.
The Company’s subsidiaries have recognized the Right of Use assets and related liabilities for leases and sublease for the office facilities in New Jersey, Texas and Arizona during the years ended December 31, 2023 and 2022, and following the acquisitions are accounted for under ASC 842. The corporate office is an informal arrangement which provides for office space in a shared office environment with a company controlled by the CEO and has not been charged for the office space during the periods ended December 31, 2024 and December 31, 2023. During the years ended December 31, 2024 and 2023, the Company recognized lease liabilities of $33,242 and $518,920, respectfully, and the related right-of-use asset for the same amounts, and will amortize both over the remaining life of the leases.
Recently Adopted Accounting Pronouncements
The Company has reviewed the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) accounting pronouncements and interpretations thereof that have effectiveness dates during the periods reported and in future periods. We have carefully considered the new pronouncements that alter previous generally accepted accounting principles and do not believe that any new or modified principles will have a material impact on the Company’s reported financial position or operations in the near term. The applicability of any standard is subject to the formal review of the Company’s financial management.
In November 2023, the FASB issued ASU 2023-07, “Segment Reporting: Improvements to Reportable Segment Disclosures” (“ASU 2023-07”). ASU 2023-07 modifies the reportable segment disclosure requirements, primarily by requiring enhanced disclosures about significant segment expenses. In addition, ASU 2023-07: (i) enhances interim disclosure requirements, (ii) clarifies the circumstances in which an entity can disclose multiple measures of a segment’s profit or loss, (iii) provides new segment disclosure requirements for public entities with a single reportable segment, and (iv) requires that a public entity disclose the title and position of the chief operating decision maker (“CODM”) and an explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The amendments in ASU 2023-07 are to be applied retrospectively to all prior periods presented in the financial statements
In March 2022, the FASB issued ASU 2022-02, “Financial Instruments - Credit Losses (Topic 326)”, which is intended to address issues identified during the post-implementation review of ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments”. The amendment, among other things, eliminates the accounting guidance for troubled debt restructurings by creditors in Subtopic 310-40, “Receivables - Troubled Debt Restructurings by Creditors”, while enhancing disclosure requirements for certain loan refinancings and restructurings by creditors when a borrower is experiencing financial difficulty. The new guidance is effective for interim and annual periods beginning after December 15, 2022. This adoption did not have a material effect to the Company.
In August 2020, FASB issued ASU 2020-06, Accounting for Convertible Instruments and Contracts in an Entity; Own Equity (“ASU 2020-06”), as part of its overall simplification initiative to reduce costs and complexity of applying accounting standards while maintaining or improving the usefulness of the information provided to users of financial statements. Among other changes, the new guidance removes from GAAP separation models for convertible debt that require the convertible debt to be separated into a debt and equity component, unless the conversion feature is required to be bifurcated and accounted for as a derivative or the debt is issued at a substantial premium. As a result, after adopting the guidance, entities will no longer separately present such embedded conversion features in equity, and will instead account for the convertible debt wholly as debt. The new guidance also requires use of the “if-converted” method when calculating the dilutive impact of convertible debt on earnings per share, which is consistent with the Company’s current accounting treatment under the current guidance. The guidance is effective for financial statements issued for fiscal years beginning after December 15, 2021, and interim periods within those fiscal years, with early adoption permitted, but only at the beginning of the fiscal year. The Company adopted ASU 2020-06 on February 13, 2020 and the adoption did not have any impact on its financial statements.
Management does not believe that any other recently issued accounting standards could have a material effect on the accompanying financial statements. As new accounting pronouncements are issued, the Company will adopt those that are applicable under the circumstances.
NOTE 4 - PROPERTY & EQUIPMENT
Property and Equipment are first recorded at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the various classes of assets as follows between three and five years.
Long lived assets, including property and equipment, to be held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of the assets may not be recoverable. Impairment losses are recognized if expected future cash flows of the related assets are less than their carrying values. Measurement of an impairment loss is based on the fair value of the asset. Long-lived assets to be disposed of are reported at the lower of carrying amount or fair value less cost to sell.
Maintenance and repair expenses, as incurred, are charged to expense. Betterments and renewals are capitalized in plant and equipment accounts. Cost and accumulated depreciation applicable to items replaced or retired are eliminated from the related accounts with any gain or loss on the disposition included as income.
Property and equipment stated at cost, less accumulated depreciation consisted of the following:
Schedule of property and equipment
December 31,
December 31,
Property and equipment
$ 7,500
$ 1,050,369
Less: accumulated depreciation
-
(604,672 )
Property and equipment, net
$ 7,500
$ 445,697
Property and equipment consisted of vehicles, leasehold improvements and computers and other network technology equipment, primarily located in the RedGear office facilities. For the year ended December 31, 2024, the Depreciation Expense was $155,640. In 2023, the Depreciation Expense was $65,361.
Furniture, fixtures, leasehold improvements and machinery and equipment totaling $1,048,764 along with the related accumulated depreciation of $645,215, were derecognized resulting in $156,759 of loss on disposition (net of disposition gains). The derecognition was the result of lease terminations for three facilities and vehicle disposals, during the year ended December 31, 2024. Vehicles acquired in the Singer Networks asset purchase are not being depreciated and will probably be sold during 2025.
NOTE 5 - GOODWILL
The Company acquired the operations, assets and liabilities of Innovative Network Designs, LLC (IND) during the year ended December 31, 2022. The Company recognized goodwill of $5,363,173. The Company reduced its goodwill by $4,136,746, with a charge to operating expenses, based on the results annual impairment tests. It was determined that the present value of expected future earnings were less than the carrying value of the goodwill. During the year ended December 31, 2024 an additional $1,226,427 was charged to impairment expense leaving a goodwill balance of $0 related to IND. During the year ended December 31, 2023, the Company acquired the operations, assets and liabilities or RedGear, LLC and recognized goodwill of $2,117,502. During the year ended December 31, 2024, the Company determined that the expected future earnings of RedGear, LLC were significantly less than the carrying value of the goodwill and recognized a loss of $2,226,427 The Company offered the Singer customers new agreements under its new business model but most have declined. In turn, the Company determined the future expected earnings from Singer customers was significantly less than the carrying value of the goodwill and recognized a loss of $121,001. Goodwill assets are compared to its fair value at least annually (“impairment test”). The Company follows ASC 350 20 - Goodwill.
Membership Interest Purchase Agreement
Innovative Network Designs, LLC
The Company entered into a Membership Interest Purchase Agreement on August 1, 2022 with Innovative Network Designs, LLC, a New Jersey limited liability company and acquired 100% of the member’s interest of Innovative Network Designs, LLC, in exchange for cash, notes payable, commitment to purchase universal life insurance policies for the two principals and 500,000 restricted shares of the Company’s common stock. The transaction was deemed to be a business combination, and the Company applied acquisition accounting under ASC 805. Upon closing (September 2, 2022) the total value of the consideration given for the purchase was $6,018,193. Included in the purchase consideration: is the commitment to pay universal life insurance policies for a total cash value of $3,150,000 over seven years ($382,500 annually), which the Company anticipates will be financed by a third party; a term promissory note (24 months with a ballon payment at maturity); a promissory note secured by a second priority lien on all the Company’s membership interests and other defined assets (amortizable); and 500,000 shares of the Company’s common stock, valued at $1.00 per share (the offering price of the Company’s regulation A offering documents). The purchase price was allocated to net tangible assets of $655,020 with the balance of $5,363,173 allocated to goodwill, which is not amortized to expense (see note 5). During the year ended December 31, 2023 a charge of $4,136,746 was taken reducing goodwill to $1,226,427. The assets and liabilities (with the exception of the lease related items) are short term and therefore book value approximates the fair value. Management believes that there is significant value in the customer list and the trade name, but has not done separate valuation analysis. The Company does not believe there are any material variations between separately valued intangible assets compared to current goodwill value would be determinable under separate valuations of the intangible assets. An impairment analysis will consider each potential subcomponent (customer list, workforce in place etc.) of the Goodwill recorded in accordance with the relevant accounting standards at least annually and more frequently should there be any financial or economic issues suggesting an impairment.
Assets Acquired and Liabilities Assumed
Schedule of assets acquired and liabilities assumed
Assets Acquired
Fair Value
Cash
$ 613,077
Accounts Receivable
217,816
Prepaid Expenses
62,706
Right of Use Asset
109,456
Total Assets
$ 1,003,055
Liabilities Assumed
Accounts Payable
$ 49,936
Accrued Expenses
118,521
Sales Tax Payable
70,122
Lease Liabilities
109,457
Total Liabilities
$ 348,036
Consideration Value
Cash
$ 325,000
Convertible Note
1,175,000
Universal Life Insurance Commitment
3,150,000
Promissory Note
868,193
Common Stock
500,000
Total Purchase Price
6,018,193
Less, net asset value
655,020
Less impairment charge - 2023
(4,136,746 )
Value of intangible assets
$ 1,226,427
Acquisition - RedGear LLC
The Company entered into a Membership Interest Purchase Agreement on September 29, 2023 with RedGear, LLC, a Texas limited liability company and acquired 100% of the member’s interest of RedGear, LLC, in exchange for cash, a note payable and the assumption of certain liabilities of RedGear, LLC. The transaction was deemed to be a business combination and the Company applied acquisition accounting under ASC 805. Upon closing on October 2, 2023, the total value of the consideration (including assumed SBA loans and other net liabilities) given for the purchase was $2,038,509. The purchase price plus net liabilities of $78,993 totaling $2,117,502 was allocated to goodwill, which is not amortized to expense. The Company hired an independent accounting firm to validate the Adjusted EBITDA (as defined in the closing documents). The results of the validation resulted in a purchase price adjustment of $525,526 (reflected in the table below). Upon acquisition management believed that there was significant value in the customer list and the trade name, but did not do separate valuation analysis. The Company does not believe any material variances would be present in the classification of differing types of indefinite-lived intangible assets versus the goodwill recorded within the financial statements of RedGear. An impairment analysis will consider each potential sub-component (customer list, workforce in place etc.) of the Goodwill recorded in accordance with the relevant accounting standards at least annually and more frequently should there be any financial or economic issues suggesting an impairment.
During the year ended December 31, 2024, the Company was notified by the lessors that the leases for two Texas locations were terminated. These Texas leased facilities were owned by former related parties which were the former members of RedGear LLC. A third Texas facility lease was also terminated by its third-party lessor. The lease for the office facilities in Pheonix, AZ was also terminated, however the related right of use asset and related liabilities remain on the books at December 31, 2024. In the cases for the Texas facilities, the fixed assets (Furniture, Fixtures, Equipment and Leasehold Improvements) were no longer accessible by the Company and therefore the Company wrote-off the value of the fixed assets and right of use assets, recognizing a loss on disposition of $73,552. The related lease deposits for the Texas properties of $8,618 have been recognized as loss on disposal. Additionally, the SBA loans (personal liabilities of former members) and equipment financing were recognized as gains on debt extinguishment of $459,238. (see note 19)
Due to the current litigation with the former RedGear LLC members regarding misrepresentation in the Membership Interest Purchase Agreement the promissory note having a current balance of $789,261 and the employment related liability of $275,000, have also been recognized as gains on debt extinguishment totaling $1,064,261. No payments for the note or the employment liability were issued during the year ended December 31, 2024. (see note 19 and 20)
Assets Acquired and Liabilities Assumed
Schedule of assets acquired and liabilities assumed
Assets Acquired
Fair Value
Cash
$ 83,794
Accounts Receivable
106,931
Fixed Assets,
783,566
Right of Use Asset
592,970
Total Assets
$ 1,567,261
Liabilities Assumed
Accounts payable
$ 49,393
Accrued Expenses
62,402
Bank line of credit
50,000
Vehicle and equipment loans payable
468,189
SBA Loan
423,000
Lease Liabilities
592,970
Total Liabilities
$ 1,646,254
Consideration Value
Cash
$ 1,249,248
Promissory Note
789,261
Total Purchase Price
2,038,509
Less Net Liabilities (exclusive of ROU and related lease liabilities)
78,993
Impairment charge 2024
(2,117,502 )
Value of intangible assets
$ -
Asset Acquisition - Singer Networks, LLC
On April 8, 2024, ReachOut Technology acquired the majority of the assets of Singer Networks, LLC in exchange for $121,413 in cash, and restricted shares (new series of convertible preferred stock). The shares to be issued are valued based on the as-converted number of common shares at the then current market value (solely determined by market price at the time of transaction) or $7,088. There were three vehicles acquired with an assessed aggregate value of $7,500, The network technology business was acquired to expand market share in the Midwest region. The transaction was deemed to be an asset acquisition which is consistent with the asset purchase agreement. The difference between the total consideration paid and the value of the tangible assets of $121,001 was charged to customer list acquired. $121,001, was charged to impairment losses on December 31, 2024.
Following the closing of the transaction, ReachOut began servicing the clients through its wholly owned subsidiary Innovative Network Design (“IND”), using former employees of Singer as well as resources controlled by IND. Former employees of Singer were offered employment with IND under its terms (as per the agreement). No liabilities of any form were assumed as per the Asset Purchase Agreement and Singer is obligated for any compensation or employment benefits owed and accruing under its tenure for all employees. The seller entered into a 6-month contractual Transition Services Agreement without management responsibilities.
Due to the clarity of the Asset Purchase Agreements language regarding termination of Singer’s management control, employees, rights to client services and IND’s control over all staff service providers, the purchase is treated as an asset purchase and not a business combination.
NOTE 6 - BANK NOTES AND LOANS
The Company has an SBA loan with monthly payments that matures on March 13, 2026. The balance due on this loan as of December 31, 2023, is $589,092. As of July 31, 2023, the interest rate on this loan had increased to 10.25% from its original 5.25%. The debt was forgiven by the lender during the year ended December 31, 2024, a gain on debt extinguishment was recognized for carrying value of the accrued interest and principal.
The Company has a line of credit requiring monthly payments. On December 24, 2021, $106,201 from a CD was applied to the Line of Credit balance. On April 5, 2023, a property pledged as collateral by David Yuengling was taken over by Mid Penn Bank. The property’s appraised value of $204,360 was applied to the principal of the Line of Credit and recognized as additional paid in capital. The balance due on this loan as of December 31, 2023, is $489,439. As of July 31, 2023, the interest rate on this loan has increased to 9.5% from its original 4.25%. The debt was forgiven by the lender during the year ended December 31, 2024, a gain on debt extinguishment was recognized for carrying value of the accrued interest and principal.
NOTE 7 - SELLERS’ TERM AND SECURED NOTES PAYABLE
On October 1, 2022 the Company’s subsidiary ReachOut issued a term promissory note to the sellers of the membership interest in Innovative Network Designs LLC. Under the option selected by the holder of the note, a ballon payment of principal is due on October 1, 2024. The note principal is $1,175,000 bears interest at 24%, matures on October 1, 2024. The principal $1,175,000 and accrued interest at December 31, 2024 is $634,307. This term note is currently in default. This term note is excluded from the table below.
On October 1, 2022 the Company issued a secured promissory note to the sellers of the membership interest in Innovative Network Designs LLC. The original (as adjusted for purchase contingencies) note principal was $868,193 bears interest at 7%, matures on April 2, 2025. The note amortizes over the term with the first principal payment of $96,466 due on April 15, 2023, along with $37,463 of accrued interest. Subsequent quarterly payments of interest and principal begin on July 15, 2023 and continue through maturity. The note is secured by a second priority lien on the membership interest purchased by the Company and certain other assets related to the acquisition. The remaining principal due is $465,618, as of December 31, 2024. Accrued interest is $54,086 as of December 31, 2024. At December 31, 2023 the principal outstanding was $578,795 and accrued interest was $72,869. This note is currently in default.
On September 29, 2023, the Company issued a promissory note to the former members of RedGear, LLC as partial payment for the RedGear acquisition. During the year ended December 31, 2024 the note principal of $789,621, has been reduced to $0 and recognized as gain on debt extinguishment. (see note 19)
Schedule of promissory notes payable:
Schedule of secured note payable
Period Ended:
Principal
March 31, 2025
$ 465,618
Totals
$ 465,618
NOTE 8 - DUE TO OFFICERS
$275,000 of compensation due to senior employees at RedGear has been recognized as gain on debt extinguishment during the year ending December 31, 2024 (see note 19). On December 27, 2024 under the terms of the Debt Cancellation Agreement the balance of $137,925 due to the CEO for advances to fund operations was settled for preferred stock to be designated and issued. The amounts due to officers at December 31, 2024 and 2023, were $0 and $309,725, respectively.
NOTE 9 - DUE TO AND FROM AFFILIATIATED COMPANYS
The balances as of December 31, 2024 and 2023, $0 and $1,570,253, respectively was due to affiliates. The affiliate is a private corporation controlled by the CEO which has funded operations for the operations since the corporate creation. On December 27, 2024 under the terms of the Debt Cancellation Agreement the balance of $2,303,025, was exchanged for preferred stock to be designated and issued.
NOTE 10 - DUE TO FINANCIAL INSTITUTIONS
The Company has taken loans from financial institutions in the form of sales of future receivables, had outstanding balance of principal (net of unamortized debt discounts) of $917,405 and $1,649,134 as of December 31, 2024 and 2023, respectively.
The Company, through its wholly owned subsidiary IND, engaged PIPE Technologies Inc. for financing. The financing arrangement was in the form of a sale of future revenues, whereby PIPE advanced a net amount of $613,800 on February 7, 2023, recorded on the books of the Company. On February 1, 2023, the Company recognized $59,520 as principal charged to interest expense related to the financing, also recorded on the books of the Company. The amount of $59,520 was deducted from the proceeds advanced. The total loan principal of $773,320 was recognized. From March 31, to September 30, 2023 the Company made monthly payments of $64,138 or $44,871, from October 31, to December 7, 2023. The total amount paid of $583,578 was applied to principal leaving a balance of $89,743, at December 31, 2024 and 2023.
The Company arranged a similar financing transaction with Fora Financial for which it received cash of $1,212,500 net of underwriting fees of $37,500 (treated as OID and amortized over the life of the loan). A total of $312,500 of interest charges were charged by the lender. Weekly payments of principal and interest totaling $31,250 were scheduled to be paid beginning March 7, 2023. At December 31, 2023 a total principal of $1,247,294, less unamortized discounts of $177,342 ($1,069,952 net for presentation) have been recognized as due to Fora. At December 31, 2024, the debt discount was fully amortized and the principal balance was $753,725.
On January 30, 2024, the Company arranged another financing (Future Sale of Receivables) with Fox Funding Group LLC for which it received cash of $287,705 net of underwriting fees of $12,295 (treated as OID and amortized over the life of the loan). A total of $105,000 of interest charges were charged by the lender. Weekly payments of principal and interest totaling $12,625, beginning February 2, 2024. At December 10, 2024, the debt discount was fully amortized and the principal balance was $65,937.
Choice Financial Group is owed $8,000 under a financial arrangement at December 31, 2024.
There was approximately $489,439 due to Mid Penn Bank under a line of credit, as of December 31, 2023. This financing is subject to a debt forgiveness agreement with Mid Penn which was settled in January 2024. During the year ended December 31, 2024, the debt was forgiven and the principal and accrued interest amounts were recognized as gain on debt extinguishment.
NOTE 11 - THIRD PARTY NOTES PAYABLE
Schedule of third party notes payable
December 31,
December 31,
Note principal (net of debt discount)
$ 240,160
$ 202,206
The Company has issued various notes to investors to fund operations prior to the reverse merger on November 9, 2023. Below is basic information about each of these legacy financings.
During the year ended December 31, 2023, $17,910 of related party notes payable were reclassified to notes payable (third parties) as the former officer is not a related party. There is no interest due on the note. The principal balance is $17,910, at December 31, 2024.
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 December 31, 2024, accrued interest amounted to $17,484.
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 December 31, 2024, accrued interest amounted to $13,814.
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 December 31, 2024, accrued interest amounted to $9,428.
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 December 31, 2024, accrued interest amounted to $3,325.
On July 28, 2017, the Company 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 December 31, 2024, principal and accrued interest amounted are $20,000 and $14,272, respectively.
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 December 31, 2024, 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 December 31, 2024, the balance due on this note for principal and interest is $16,500 and $6,900, respectively.
On June 1, 2023, the Company issued a third party a promissory note in the principal amount of $40,675, bearing interest at the rate of 5% per annum, and maturing on June 1, 2024. During the year ending December 31, 2023, an additional $13,000 was advanced to the Company bringing the total principal due to $53,675 as of December 31, 2024.
At December 31, 2024, the Company was also indebted to a third party for a total of $24,656, for a non-interest-bearing note. This note was in default since December 30, 2015.
On May 20, 2024 the Company issued a promissory note to 1800 Diagonal Lending LLC for the principal amount of $149,500. A Company subsidiary received $125,000 in cash and authorized $5,000 to be paid to its attorney for legal services in conjunction with the note. OID of $19,500 and the legal expense are treated as debt discounts amortized over the term of the note, maturing March 30, 2025. The note carries 12% interest and has mandatory monthly payments of principal and accrued interest of $16,744. In the event of default, the note and unpaid accrued interest are fully convertible into common stock at a 35% discount to market price as defined in the note. The first payment was made on June 30, 2024. The principal balance and accrued interest were $44,899 and $0, at December 31, 2024.
NOTE 12 - CONVERTIBLE NOTES PAYABLE
Post Reverse Merger Issuances
On November 10, 2023, YCRM issued a convertible note payable, warrants to purchase to the Company’s common stock and Series D Preferred Shares to Trillium Partners, L.P. The convertible note has principal of $470,000, bears interest at 12%, matures on May 31, 2025 and may be converted to common shares at the lower of $0.0003 or 50% of the lowest traded price during the thirty days prior to conversion. $436,000 was received as cash and $34,000 was charged to OID to be amortized over the term of the note. Due to the variable conversion price the note includes a bifurcated derivative valued on issuance and for each reporting date. At December 31, 2024 the principal and accrued interest are $470,000 and $56,400 respectively.
On December 1, 2023, YCRM issued a convertible note payable to Frondeur Partners LLC. The convertible note has principal of $15,000, bears interest at 12%, matures on August 31, 2024 and may be converted to common shares at or 50% of the lowest traded price during the thirty days prior to conversion. The principal amount was charged to professional services. The note was determined to include an embedded derivative which has been bifurcated and included in derivative liabilities. At December 31, 2024 the principal and accrued interest are $15,000 and $1,953, respectively. The note is in default and a waiver and forbearance for the default has been issued by the note holder.
On January 1, 2024, YCRM issued a convertible note payable to Frondeur Partners LLC. The convertible note has principal of $15,000, bears interest at 12%, matures on September 30, 2024 and may be converted to common shares at or 50% of the lowest traded price during the thirty days prior to conversion. The principal amount was charged to professional services. Due to the variable conversion price the note includes a bifurcated derivative valued on issuance and for each reporting date. At December 31, 2024 the principal and accrued interest are $15,000 and $1,800, respectively. The note is in default and a waiver and forbearance for the default has been issued by the note holder.
On January 11, 2024, YCRM issued a convertible note payable and 163,333,333 warrants (exercisable at $0.001) to purchase to the Company’s common to Trillium Partners, L.P. The convertible note has principal of $539,000, bears interest at 12%, matures on May 31, 2025 and may be converted to common shares at the lower of $0.001 or 50% of the lowest traded price during the thirty days prior to conversion. $490,000 was received as cash and $49,000 was charged to OID to be amortized over the term of the note. Due to the variable conversion price the note includes a bifurcated derivative valued on issuance and for each reporting date. At December 31, 2024 the principal and accrued interest are $539,000 and $26,908, respectively.
On February 1, 2024, YCRM issued a convertible note payable to Frondeur Partners LLC. The convertible note has principal of $10,000, bears interest at 12%, matures on October 31, 2024 and may be converted to common shares at or 50% of the lowest traded price during the thirty days prior to conversion. The principal amount was charged to professional services. Due to the variable conversion price the note includes a bifurcated derivative valued on issuance and for each reporting date. At December 31, 2024 the principal and accrued interest are $10,000 and $1,098, respectively. The note is in default and a waiver and forbearance for the default has been issued by the note holder.
On March 1, 2024, YCRM issued a convertible note payable to Frondeur Partners LLC. The convertible note has principal of $10,000, bears interest at 12%, matures on November 30, 2024 and may be converted to common shares at or 50% of the lowest traded price during the thirty days prior to conversion. The principal amount was charged to professional services. Due to the variable conversion price the note includes a bifurcated derivative valued on issuance and for each reporting date. At December 31, 2024 the principal and accrued interest are $10,000 and $1,003, respectively. The note is in default and a waiver and forbearance for the default has been issued by the note holder.
On April 1, 2024, YCRM issued a convertible note payable to Frondeur Partners LLC. The convertible note has principal of $10,000, bears interest at 12%, matures on December 31, 2024 and may be converted to common shares at or 50% of the lowest traded price during the thirty days prior to conversion. The principal amount was charged to professional services. Due to the variable conversion price the note includes a bifurcated derivative valued on issuance and for each reporting date. At December 31, 2024 the principal and accrued interest are $10,000 and $901, respectively. The note is in default and a waiver and forbearance for the default has been issued by the note holder.
On April 3, 2024, YCRM issued a convertible note payable and warrants to purchase to the Company’s common stock to Trillium Partners, L.P. The convertible note has principal of $135,000, bears interest at 12%, matures on June 15, 2025 and may be converted to common shares at the lower of $0.0003 or 50% of the lowest traded price during the thirty days prior to conversion. The warrants allow the holder to purchase 18,939,394 shares of common stock for $0.0003 (subject to certain specified adjustments) for a period of seven years from the date of issuance. At December 31, 2024 the principal and accrued interest are $135,000 and $12,072, respectively.
On May 1, 2024, YCRM issued a convertible note payable to Frondeur Partners LLC. The convertible note has principal of $10,000, bears interest at 12%, matures on January 31, 2025 and may be converted to common shares at or 50% of the lowest traded price during the thirty days prior to conversion. The principal amount was charged to professional services. Due to the variable conversion price the note includes a bifurcated derivative valued on issuance and for each reporting date. At December 31, 2024 the principal and accrued interest are $10,000 and $802 respectively. The note is in default and a waiver and forbearance for the default has been issued by the note holder
On May 31, 2024, YCRM issued a convertible note payable and warrants to purchase to the Company’s common stock to Trillium Partners, L.P. The convertible note has principal of $60,000, bears interest at 12%, matures on June 15, 2025 and may be converted to common shares at the lower of $0.0003 or 50% of the lowest traded price during the thirty days prior to conversion. The warrants allow the holder to purchase 9,000,000 shares of common stock for $0.0066 (subject to certain specified adjustments) for a period of seven years from the date of issuance. At December 31, 2024 the principal and accrued interest are $60,000 and $4,221, respectively.
On June 1, 2024, YCRM issued a convertible note payable to Frondeur Partners LLC. The convertible note has principal of $10,000, bears interest at 12%, matures on February 28, 2025 and may be converted to common shares at or 50% of the lowest traded price during the thirty days prior to conversion. The principal amount was charged to professional services. Due to the variable conversion price the note includes a bifurcated derivative valued on issuance and for each reporting date. At December 31, 2024 the principal and accrued interest are $10,000 and $700, respectively. The note is in default and a waiver and forbearance for the default has been issued by the note holder.
On July 1, 2024, YCRM issued a convertible note payable to Frondeur Partners LLC. The convertible note has principal of $10,000, bears interest at 12%, matures on March 31, 2025 and may be converted to common shares at or 50% of the lowest traded price during the thirty days prior to conversion. The principal amount was charged to professional services. Due to the variable conversion price the note includes a bifurcated derivative valued on issuance and for each reporting date. At December 31, 2024 the principal and accrued interest are $10,000, and $602, respectively. The note is in default and a waiver and forbearance for the default has been issued by the note holder.
On August 1, 2024, YCRM issued a convertible note payable to Frondeur Partners LLC. The convertible note has principal of $10,000, bears interest at 12%, matures on April 30, 2025 and may be converted to common shares at or 50% of the lowest traded price during the thirty days prior to conversion. The principal amount was charged to professional services. Due to the variable conversion price the note includes a bifurcated derivative valued on issuance and for each reporting date. At December 31, 2024 the principal and accrued interest are $10,000 and $500, respectively.
On September 1, 2024, YCRM issued a convertible note payable to Frondeur Partners LLC. The convertible note has principal of $10,000, bears interest at 12%, matures on May 31, 2025 and may be converted to common shares at or 50% of the lowest traded price during the thirty days prior to conversion. The principal amount was charged to professional services. Due to the variable conversion price the note includes a bifurcated derivative valued on issuance and for each reporting date. At December 31, 2024 the principal and accrued interest are $10,000, and $398, respectively.
On October 1, 2024, YCRM issued a convertible note payable to Frondeur Partners LLC. The convertible note has principal of $10,000, bears interest at 12%, matures on June 30, 2025 and may be converted to common shares at or 50% of the lowest traded price during the thirty days prior to conversion. The principal amount was charged to professional services. Due to the variable conversion price the note includes a bifurcated derivative valued on issuance and for each reporting date. At December 31, 2024 the principal and accrued interest are $10,000, and $299, respectively.
On November 1, 2024, YCRM issued a convertible note payable to Frondeur Partners LLC. The convertible note has principal of $10,000, bears interest at 12%, matures on July 31, 2025 and may be converted to common shares at or 50% of the lowest traded price during the thirty days prior to conversion. The principal amount was charged to professional services. Due to the variable conversion price the note includes a bifurcated derivative valued on issuance and for each reporting date. At December 31, 2024 the principal and accrued interest are $10,000, and $197, respectively.
On December 1, 2024, YCRM issued a convertible note payable to Frondeur Partners LLC. The convertible note has principal of $10,000, bears interest at 12%, matures on August 31, 2025 and may be converted to common shares at or 50% of the lowest traded price during the thirty days prior to conversion. The principal amount was charged to professional services. Due to the variable conversion price the note includes a bifurcated derivative valued on issuance and for each reporting date. At December 31, 2024 the principal and accrued interest are $10,000, and $99, respectively.
NOTE 13 - SMALL BUSINESS LOANS PAYABLE
The Company’s subsidiary ReachOut Technology Corporation assumed two SBA notes payable originally issued by RedGear, as part of the acquisition. The first note was issued May 26, 2020 for $150,000, matures in thirty years and bears interest at 3.75%. The note principal and accrued interest at December 31, 2023 are $150,000 and $20,250, respectively. The second note was issued November 22, 2021, for $273,500, matures in thirty years and bears interest at 3.75%. During the year ended December 31, 2024, payments commenced for monthly interest: however, on September 30, 2024, the principal was reduced to $0 and recognizedas a gain on debt extinguishment (based on the terms of the RedGear LLC membership acquisition agreement, see note 19).
NOTE 14 - OFFICER LIFE INSURANCE PREMIUMS PAYABLE
On October 1, 2022, the Company committed to paying life insurance with the sellers of the membership interest in Innovative Network Designs LLC. The total amount of the liability was $3,150,000 to be paid in equal installments of $450,000 over seven years. The current portion due is $900,000 and the non-current portion due is $1,800,000, as of December 31, 2024.
Schedule of life Insurance Payable
Year Ended December 31:
Insurance
Premiums Due
450,000
450,000
450,000
2027 - 2029
1,350,000
Total
$ 2,700,000
NOTE 15 - RELATED PARTY TRANSACTIONS
During the year ended December 31, 2024, the Company and a private company controlled by the CEO shared services and customer responsibilities. The private company provides low level technical assistance to clients of both companies using the infrastructure of the private company. The Company provides higher levels of technical support for clients of both companies with employees of the Company using the technical infrastructure of the private company (hardware and software). As such the Company invoiced the private company $878,535 recorded as revenue for services provided. The private company billed the Company $547,155 for services provided to the Company which were recorded as a component of cost of goods sold. Aggregate gross margin from these revenue and costs transactions are the same levels of gross margin from services provided solely by the Company to its customer base.
During the years ended December 31, 2022 and 2021, the Company’s CEO advanced the Company funds for operating expenses. At December 31, 2024 and December 31, 2023, the outstanding balances owed were settled for preferred stock to be designated and issued and $132,225, respectively and presented as Due to Officers. No interest is due on this informal arrangement.
During the years ended December 31, 2023 and 2022, an entity controlled by the CEO advanced (net of repayments) the Company $887,854 and $619,399, respectively. During the year ended December 31, 2024, the Company repaid $186,585, net of advances. The Company used the funds to pay various operating expenses. The balance due was $1,499,568 at December 27, 2024, was settled for a commitment to issue a to be designated and issues convertible preferred stock.
During the year ended December 31, 2022, the Company issued notes to former owners of the membership interest in Innovative Network Designs, LLC (now ReachOut IND) and committed to purchase universal life insurance for officers of ReachOut IND. The notes issued were a term promissory note for $1,175,000 and an amortizing promissory note for $868,193, the commitment to purchase life insurance totaled $3,150,000. At December 31, 2024, the term note, amortizing note and liability for the life insurance are $1,175,000, $465,618 and $2,700,000, respectively.
During the year ended December 31, 2023, the Company issued notes totaling $1,314,787 to the former owners of the membership interest in RedGear, LLC and paid cash of $1,249,248. Following the contractual terms of the purchase agreement the note principal (right to set-off) was reduced to $789,261 during the year ended December 31, 2023. The full principal was reclassified as gain on debt extinguishment as of December 31, 2024. (see note 19)
Compensation due to former officers of RedGear amounts to $275,000 and $137,500, respectively at December 31, 2024 and December 31, 2023. During the year ended September $275,000 was reclassified to gain on debt extinguishment, based on the terms of the employment agreements and misrepresentations made in the Membership Interest Purchase Agreement (see note 19).
RedGear is obligated under office leases to a company controlled by the former owners of the RedGear membership interests. The office space is in two locations in the city of El Paso, Texas and covers approximately 10,000 square feet in total. The remaining liability as calculated for the right to use asset (under ASC 842) of $385,317, was written off against the related ROU due to the termination notification received during the year ended December 31, 2024.
The Company and the former principle of ReachOut IND entered into an employment agreement. The former head of ReachOut IND is named as Regional Vice President of Northeast (the Executive) at an annual salary of $250,000, plus incentive compensation with a target bonus of 10% of salary and an equity incentive of up to $1,400,000, value of Restricted Stock Units vesting ratably over seven years. The Executive is also given an annual expense stipend of $5,000, eligibility for employee benefits and specified paid leave. The initial term of the agreement is 24 months.
On May 3, 2024, the employment agreement with the former principle of ReachOut IND has been amended in accordance with the terms of the employment agreement. The amendment takes effect on May 16, 2023, and reduces annual compensation to $125,000, and alters the responsibilities of his management role.
During the year ended December 31, 2023 and 2022, the Company paid Robert C. Bohorad, President and CEO, $7,000 and $22,000 for compensation, respectively. During the year ended December 31, 2023, Mr. Bohorad forgave $53,000 of accrued compensation and the balance of $30,000, was paid by June 30, 2024. Mr. Bohorad was paid $60,000 through December 31, 2024 of which $20,000 is recognized as accrued expense.
NOTE 16 - TEMPORARY EQUITY
Commitment to Purchase Series A Convertible Preferred Stock
On January 18, 2019, The Company entered into a Series A Preferred Stock Purchase Agreement with Device Corp. (“the Agreement”), of up to $250,000. On May 1, 2023, a second stock purchase agreement was executed by Device Corp. for $250,000. Under the terms of the Agreement the Series A Preferred Stock is Convertible into shares of common stock at a 50% discount to the lowest close price of the common stock for the prior thirty trading days. Under the Agreement Device Corp. has advanced the Company approximately $562,000, of which approximately $170,000 had been repaid by October 31, 2022, leaving a balance due of $392,000.
As of December 31, 2024, the Company has preferred stock to be issued in the amount of $357,022, following conversions to 50,000,000 common shares. Based on the terms of the Agreement as of December 31, 2024, the preferred Series A can be converted at $0.00035 per share, into 1,020,062,029 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 number of preferred shares to be issued and the preferred shares are convertible at the option of the holder, the Company determined that the shares to be issued shall be treated as temporary equity.
On January 26, 2024, Everett Dickson (former CEO and Chairman of the Board of Directors) acquired the preferred series A shares formerly held by Device Corp.
Series B Preferred Stock
On August 25, 2023, the Company Amended its Articles of Incorporation, to designate 5,000,000 of the Authorized preferred stock, par value $0.0001, as Series B Preferred Stock (“Series B”). The Series B is convertible into shares of common stock at the average price of the previous five trading days. The Series B shares are not entitled to dividends and have no voting rights.
Following the amendment above the Series B preferred stock is convertible into shares of common stock at the option of the holder at a 50% discount to the average price for the five trading days prior to conversion. As of the balance sheet date and the date of this report, these shares have not been issued to the Purchaser. S99-3A(2) ASR 268 requires preferred securities that are redeemable for cash or other assets to be classified outside of permanent equity if they are redeemable (1) at a fixed or determinable price on a fixed or determinable date, (2) at the option of the holder, or (3) upon the occurrence of an event that is not solely within the control of the issuer. Given that there is an unknown number of preferred shares to be issued and the preferred shares are convertible at the option of the holder, the Company determined that the shares to be issued shall be treated as temporary equity.
On August 25, 2023, the Company and Device Corp amended the January 18, 2019, and the May 1, 2023 Series A Preferred Stock Purchase Agreements, so that any purchased Series A preferred stock is now Series B preferred stock.
NOTE 17 - STOCKHOLDERS’ DEFICIT
Preferred Stock
Series A Preferred Stock
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 $0.0001 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 Certificate of Designation was amended on September 12, 2023, among other changes the Series A Convertible Preferred Stock must be held for one year following issuance or reissuance prior to conversion.
The entirety of the shares of Series A Convertible Preferred Stock outstanding as such time shall be convertible, at the option of the holder thereof, at any time and from time to time, and without the payment of additional consideration by the holder thereof, into two thirds of the after conversion outstanding fully paid and non-assessable shares of Common Stock. Each individual share of Series A Convertible Preferred Stock shall be convertible into Common Stock at a ratio determined by dividing the number of shares of Series A Convertible Stock to be converted by the number of shares of outstanding pre-conversion Series A Convertible Preferred Stock. Such initial Conversion Ratio, and the rate at which shares of Series A Convertible Preferred Stock may be converted into shares of Common Stock. On August 25, 2023, Everett Dickson, Chairman of the Board, agreed to return 4,525,000 shares of Series A preferred Stock to the Company. The shares will be retired by the Company. His remaining 475,000 shares were sold to Mr. Richard Jordan for $140,000, during the year ended December 31, 2023.
Series C Preferred Stock
The Company has authorized 8,750,000 Series C Preferred Shares of Stock, effective December 13, 2023. The shares have a stated value of $3.00 per share, earns a 2% dividend on the stated value, which is cumulative and payable solely upon redemption. The stock has voting rights equal to the number of common shares into which the preferred shares may be converted. At any time following 180 days from the date of issuance the preferred stock in aggregate can be converted into 87.5% of the outstanding common stock for a period of twenty-four months from the date of issuance of the Series C Preferred Stock.
Under the terms of the Share Exchange Agreement the Company issued 8,750,000 shares of Series C Preferred Stock to the owners of ReachOut common stock in exchange for 100% of the shares of ReachOut.
Using a Black-Scholes model the preferred Series C stock was valued at $2,910,984 and $291,186 was charged to stock compensation for service providers and $2,620,673 was charged to investment in ReachOut. The accrued dividend of 2% of the stated value ($3.00 per share) was calculated to be $532,055, for the year ended December 31, 2024, for the year ended December 31, 2023, $71,233 was accrued for dividends
Series D Preferred Stock
The Company has authorized 1,250,000 Series D Preferred Shares of Stock, effective December 13, 2023. The shares have a stated value of $1.00 per share, earns a 2% dividend on the stated value, which is cumulative and payable solely upon redemption. The stock has voting rights equal to the number of common shares into which the preferred shares may be converted. At any time following 180 days from the date of issuance the preferred stock in aggregate can be converted into 12.5% of the outstanding common stock for a period of twenty-four months from the date of issuance of the Series D Preferred Stock.
Under the terms of the Security Purchase Agreement to issue Trillium Partners 1,000,000 shares of Series D Preferred Stock for a financing commitment and 250,000 shares to Everett Dickson as consideration for surrendering 4,525,000, shares of Series A Preferred Stock.
Using a Black-Scholes model the preferred Series D stock was valued at $475,693 and was charged to acquisition costs and deferred financing to was fully amortized at December 31, 2023. The accrued dividend of 2% of the stated value ($1.00 per share) was calculated to be $16,440 for the year ended December 31, 2024. For the year ended December 31, 2023, $5,616 was accrued for dividends
Obligations to Issue Newly Designated Series of Preferred Stock
The total obligation to issue newly designated convertible preferred shares is $2,448,038 at December 31, 2024. The obligation is outlined below.
Under the terms of the Singer Asset Purchase Agreement outlined above, the Company is obligated to designate a new series of preferred stock having a conversion feature of one share of the to be designated preferred stock for one share of restricted common stock. The total value of this series of to be designated and issued preferred stock is $7,088
The obligation is recorded as stock to be issued at fair market value of the common stock on the grant date.
On December 27, 2024 the board of directors approved the Debt Cancellation and Exchange Agreement in satisfaction of liabilities owed to the CEO and a private company he controlled for an aggregate amount of $2,440,950, and authorized the creation of a new series of preferred stock to be issued to First Portfolio Management LLC.
The proposed Certificate of Designation authorizes the new shares of which 2,440,950 are to be issued to First Portfolio Management LLC. The shares have a par value of $0.0001 and a stated value of $1.00. The stock has a 2% annual dividend on the aggregate stated value of $2,440,950, each share is convertible into 385 common shares of stock. The dividend is payable quarterly in either cash or shares of the same series of preferred. The new preferred stock will rank senior to all other preferred stock in liquidation.
Common Stock
On December 31, 2024 and December 31, 2023, the Company had 2,500,000,000 and 2,500,000,000 shares of common stock authorized respectively. There were 384,088,943 and 349,488,710 common shares of stock outstanding on December 31, 2024 and December 31, 2023, respectively.
On May 15, 2024, a convertible note holder was issued 34,600,233 shares of common stock in conversion of $8,035 of accrued interest and professional fees related to the conversion of $2,345.
During the year ended December 31, 2024, 191,272,727 warrants for common stock were issued, having a seven-year period during which the warrants can be exercised at $0.001 per share were issued to investors. The warrants have been valued at $475,838 and were charged to loss on issuance.
The Company has charged the dividends on Series C and D preferred stock to accumulated deficit ($548,496).
Warrants Issued
For the year ended December 31, 2024 and year ended December 31, 2023, a summary of the Company’s warrant activity is as follows:
Schedule of warrant activity
Number of
Warrants Weighted-
Average
Exercise Price Weighted-
Average
Remaining
Contractual
Term (Years) Weighted-
Average
Grant-Date
Fair Value Aggregate
Intrinsic
Value
Outstanding and exercisable at December 31, 2023 142,424,186 $ 0.0003 6.12 $ 0.001 $ 284,848
Issued and exercisable during the year ended December 31, 2024 191,272,727 0.0012 6.33 0.0018 206,527
Outstanding and exercisable at December 31, 2024 333,696,913 $ 0.0004 6.24 $ 0.0078 $ 491,376
All warrants were issued as an incentive to an investor for future investment.
Stock Options Issued
For the year ended December 31, 2024 and the year ended December 31, 2023, a summary of the Company’s stock options activity is as follows:
Schedule of stock option activity
Number of
Options
Weighted-
Average
Exercise Price
Weighted-
Average
Remaining
Contractual
Term (Years)
Weighted-
Average
Grant-Date
Fair Value
Aggregate
Intrinsic
Value
Outstanding and exercisable at December 31, 2023
611,214
$ 1.00
9.75
$ 0.004
$ 2,750
Issued during the year ended December 31, 2024
-
-
-
-
-
Outstanding and exercisable at December 31, 2024
611,214
$ 1.00
9.25
$ 0.004
$ 2,750
All options were issued as compensation to key employees.
During the year ended December 31, 2023, the Company’s subsidiary issued 611,214 common stock options to purchase 611,214 common shares to key employees of RedGear, LLC. The options were valued at $0.004. Following the reverse merger with the Company, the options were changed to the Company’s common stock at a ratio of approximately 1 of the subsidiary’s shares for 1 share of the Company’s common stock. The options vest ratably over twelve months, are exercisable at $1.00 per share and expire in 10 years from grant date.
The inputs for the Black-Scholes model calculation of the options model were:
Stock (YCRM) price - $0.0045 midmarket price on the grant date;
Annualized volatility of 352%;
Discount rate 5.18%.
NOTE 18 - INCOME TAX
The Company recognizes deferred tax assets and liabilities for the tax effects of differences between the financial statement and tax basis of assets and liabilities. A valuation allowance is established to reduce the deferred tax assets if it is more likely than not that a deferred tax asset will not be realized.
As of December 31, 2024, the Company has net operating loss carryforwards of approximately $14,228,656 to reduce future taxable income. A valuation allowance for the entire amount of deferred tax assets has been established as of December 31, 2024 and 2023. Additionally, due to the change in control of the Company, the net operating loss carryforwards may be impaired.
A reconciliation of the provision for income taxes at the federal and state statutory rates of 21% and 2% - 11.5% respectively to the Company’s provision for income tax is as follows:
Schedule of provision for income tax
Year Ended
December 31,
U.S. Federal (tax benefit) provision at statutory rate
$ 1,180,528
$ (4,601,911 )
State (tax benefit) income taxes, net of federal benefit
121,629
(1,805,326 )
Permanent differences
(1,914,237 )
5,432,293
Temporary differences
81,046
-
Changes in valuation allowance
531,034
974,944
Total
$ -
$ -
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The following table presents the significant components of the Company’s deferred tax assets and liabilities for the periods presented:
Schedule of deferred tax amount net
Year Ended
December 31,
Deferred Tax Assets
Net operating losses
1,524,200
1,524,200
Total deferred tax assets
2,055,234
1,524,200
Valuation allowance
(2,055,234 )
(1,524,200 )
Net deferred tax assets
-
-
Deferred Tax Liabilities
Total deferred tax liabilities
-
-
Net deferred tax
$ -
$ -
The Company determines its valuation allowance on deferred tax assets by considering both positive and negative evidence in order to ascertain whether it is more likely than not that deferred tax assets will be realized. Realization of deferred tax assets is dependent upon the generation of future taxable income, if any, the timing and amount of which are uncertain. Due to the history of losses the Company has generated in the past, the Company believes that it is not more likely than not that all of the deferred tax assets in the U.S. can be realized as of December 31, 2024 and 2023, accordingly, the Company has recorded a full valuation allowance on its deferred tax assets.
The Company is not currently under any international or any United States federal, state and local income tax examinations for any taxable years. All of the Company’s net operating losses are subject to tax authority adjustment upon examination.
NOTE 19 - COMMITMENTS AND CONTINGENCIES
Legal Matters
IND - Purchase Dispute
On December 10, 2024, IND Holding, Inc. filed a lawsuit in the United States District Court for the District of Delaware against ReachOut Technology NE Holdings, LLC and ReachOut Technology Corp., alleging breach of contract related to a prior acquisition. The Company promptly filed a Motion to Dismiss on the grounds that the claims were brought in an improper venue and are contractually barred. In opposition, Plaintiff made a conditional request to amend-only if the motion were granted against them-then declined the Company’s offer to amend voluntarily before a ruling. The Company’s reply brief notified the Court of this refusal, and the matter is currently awaiting a decision. Management believes the case is procedurally and substantively flawed, expects dismissal, and does not view this matter as having any material impact on its financial position, results of operations, or strategic plans.
RedGear LLC - Purchase Dispute
On April 26, 2024, ReachOut Technology Corp. (“ReachOut”), a wholly-owned subsidiary of the Company filed a lawsuit (Case No. 1:24-cv-03408) in the United States District Court for the Northern District of Illinois, against the former members of RedGear related to certain representations and warranties made by the Defendants, Luciano Aguayo and Armando Gonzalez, in the Membership Interest Purchase Agreement, dated September 29, 2023 and closing on October 2, 2023, under which ReachOut acquired 100% of RedGear. The lawsuit was served on the defendants on April 30, 2024, and the amend below were served in June 2024.
In June 2024, ReachOut amended its complaint in the above case including fraud, post-closing misappropriation of funds and opportunities, tortious interference, breach of fiduciary duty, and post-termination illegal activities in violation of the Computer Fraud and Abuse Act (CFAA) attempting to take control of RedGear systems.
On July 2, 2024, the United States District Court for the Northern District of Illinois entered a Temporary Restraining Order against the Defendants in the above case, based on the federal Computer Fraud and Abuse Act, a statute designed to protect against computer hacking.
Under the terms of the RedGear LLC membership interest purchase agreement, there is a clause for set-off. The Buyer shall have the right to recover, and to set-off and apply against, all amounts otherwise due and owing to Sellers, or any of them, all sums in respect of which they may be liable to Buyer, including, but not limited to, as a result of a breach of any representation or warranty of Sellers. As a result of a breach of any of the covenants, or pursuant to the indemnification provisions, such right of set-off shall be in addition to, and not in lieu of, or an election against, any and all other remedies available to Buyer at law or in equity. Management is in discussion with counsel to determine whether the set-off right can be applied prior to judicial determination. As of the filing date of this report no probable outcome has been determined in the above case.
Based on the aforementioned set-off clause and the continuing dispute with the former members of RedGear, management has obtained assurances from legal counsel that, the Company may refute certain liabilities recognized as acquisition related. As such, the Company has refuted certain liabilities owed to the former owners of the membership interest in RedGear which have been discussed above relating to the acquisition or RedGear, Related Party transactions and below related to certain lease liabilities.
While the Company is working with legal counsel to minimize the impact to the business, the exit of the Defendants has led to a material reduction in RedGear business customers and revenue Existing customers are being served through IND and will be offered new service agreements to replace legacy agreements under the RedGear name.
Settlements
Fox Funding Group LLC - Settlement Agreement
On December 19, 2024, the Company’s subsidiaries reached an agreement through arbitration with Fox Funding Group LLC (“Fox”) to settle its liability having a net carrying value of $265,781 owed due to a financing arrangement provided by Fox, for total payments of $200,000. The Company is to arrange the release of $134,063 of receivables collected by its lockbox provider PAYA. And make twelve monthly payments totaling $65,937 by December 31, 2025 in full settlement of the liability. The Company recognized a gain on debt extinguishment for the difference of the amounts paid and to be paid totaling $200,000 and the December 31, 2024 principal amount of the loan, $316,406. The gain of $116,406 was recognized upon payment of $134,063.
Other Contingencies
Tax Levy
In October, 2024, the Texas Comptroller’s office placed a hold on RedGear’s Chase and GECU bank accounts. As of December 16, 2024, the amount of the hold is $234,378.22. This hold is due to a sales audit conducted by the Texas Comptroller’s office from November, 2019 through April, 2023, which is prior to ReachOut Technology’s acquisition of RedGear’s in October, 2023. Additionally, the last extension to the audit was signed by the previous owners of Red Gear on September 8, 2023, less than a month prior to closing the transaction. This audit was not disclosed in the purchase agreement and violated the Representations and Warranties made by the sellers. This matter has been added to ReachOut’s lawsuit filed against the previous owners. The potential liability has been recognized by the Company as of December 31, 2024.
Fora Financial - Negotiation
The Company through its representative is in negotiation with Fora Financial (“Fora”) to settle it obligation under a sale of future accounts receivable having a carrying value of $753,275 as of December 31, 2024.
Default on Loan - PIPE Technologies Inc.
The Company, through its wholly owned subsidiary IND, engaged PIPE Technologies Inc.(“PIPE”) for financing. The financing arrangement was in the form of a sale of future revenues, whereby PIPE advanced a net amount of $613,800 on February 7, 2023, recorded on the books of ReachOut Technology Corporation. The Company paid $583,578 which was applied to principal leaving a balance of $89,743.
On February 7, 2024 PIPE sent a notice of default and demand for payment to IND. The notice and demand letter confirmed the balance due was $89,743 as recorded by the Company. This amount is disputed by the company believing there were duplicate payments and/or payments not applied during the Silicon Valley Bank collapse, the primary financial backing for PIPE.
As of the filing date of this report no probable outcome has been determined.
RedGear Vehicles and Related Loans
RedGear had a number of service technician vehicles purchased over several years. Most of the vehicles have financing loans. The company has sold several of the vehicles and paid off the loans associated. The Company also stopped servicing some of the loans where the liability was greater than the value of the asset when the office facilities under lease were abandoned following terminations in July 2024. The Company, through its legal counsel, is in negotiation with the lenders to surrender the vehicles under favorable terms with those lenders. The former members of RedGear had personally guaranteed the loans and given the scheduled mediation for misrepresentation of liabilities and other violations of the purchase agreement (RedGear Membership Interest Purchase Agreement) the primary obligor for these liabilities is in question.
Lease Obligations
Effective October 2020, the ReachOut’s subsidiary (RedGear, LLC) renewed the lease for the principal offices at 123 West Mills Avenue, El Paso, Texas. The lease extends through September 30, 2025, for $1,350.20 per month with annual escalation of 2%. The liability and Right of Use Asset was recognized for $61,590. Effective during the year ended December 31, 2024 the remaining liability of $10,736, was derecognized, along with the related Right of Use Asset.
Effective October 29, 2021, the ReachOut’s subsidiary (RedGear, LLC) entered into a lease for office facilities at 3636 North Central Avenue, Phoenix, Arizona. The lease extends through October 31, 2025, for $3,224.83 per month with annual escalation of 3%. The liability and Right of Use Asset was recognized for $125,364. The liability and the Right of Use Asset were $33,242, and $31,730, respectively at December 31, 2024.
Effective September 29, 2023, the ReachOut’s subsidiary (RedGear, LLC) entered into a lease for office facilities at 10033 Carnegie Avenue, El Paso, Texas. The lease extends through September 28, 2028, for $5,018.00 per month with annual escalation of 3%. The liability and Right of Use Asset was recognized for $232,940. The lessor is considered a related party (see note 15). Effective during the year ended December 31, 2024 the remaining liability of $216,661, was derecognized, along with the related Right of Use Asset.
Effective September 29, 2023, the ReachOut’s subsidiary (RedGear, LLC) entered into a lease for office facilities at 6713 Viscount Blvd. El Paso, Texas. The lease extends through September 28, 2028, for $3,600.00 per month with annual escalation of 5%. The liability and Right of Use Asset was recognized for $173,076. The lessor is considered a related party (see note 15). Effective during the year ended December 31, 2024 the remaining liability of $118,656, was derecognized, along with the related Right of Use Asset.
On May 1, 2021, the ReachOut’s subsidiary IND entered into a sublease for its office in Whippany, NJ for a term commencing on June 1, 2021 extending through February 28, 2025 at an initial monthly rent of approximately $4,847. The liability and Right of Use Asset was recognized for $174,076. The sublease is only renewable under the condition that the sublandlord renews its lease, therefore no subsequent extension is considered in the lease Right of Use Asset or the related lease liability beyond the initial term. The balance of the lease liability ($12,322) and the Right of Use Asset were derecognized upon settlement with the sublandlord during the year ended December 31, 2024
The Company recognized an initial right-of-use assets of and a related lease liabilities of $767,068, which represents the fair value of the lease payments calculated as present value of the minimum lease payments using a discount rate of 12.9% on date of the lease execution in accordance with ASC 842. The asset and liability will have been derecognized as outline above.
The offices for ReachOut are shared with a related party ReachOut IL (an S corporation), under an arrangement that is not formalized.
Right of use asset (ROU) is summarized below:
Schedule of right of use asset
December 31,
December 31,
Operating lease at inception
$ 767,068
$ 767,068
Less accumulated reduction (includes termination write-off)
(735,338 )
(248,101 )
Balance ROU asset
$ 31,730
$ 518,968
Operating lease liability related to the ROU asset is summarized below:
Schedule of operating lease liability
Operating lease liabilities at inception
$ 767,068
$ 767,068
Reduction of lease liabilities (includes termination write-off)
(733,826 )
(248,147 )
Total lease liabilities
$ 33,242
$ 518,920
Less: current portion
(33,242 )
(171,316 )
Lease liabilities, non-current
$ -
$ 347,605
Non-cancellable operating lease total future payments are summarized below:
Schedule of non-cancellable operating lease
Total minimum operating lease payments
$ 33,242
$ 707,347
Discount to fair value
-
(188,427 )
Total lease liability
$ 33,242
$ 518,920
The future minimum lease payments under non-cancellable operating leases at December 31, 2024, total $33,242.
For the year ended December 31, 2024 rent expense was for was $125,587.
Other Commitments
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 year. Per the terms of the agreement the consultant will receive a fee of $10,000 per month and 5% equity in the Company. The initial term has expired with no issuance of equity to date. On January 23, 2024, Desmond Partners, LLC and the Company entered into a Settlement Agreement and Mutual Release relating to the Professional Services Agreement (‘initial agreement”) entered into by the parties on January 20, 2022. Under the terms of the settlement the Company will issue 500,000 common shares to Desmond Partners, LLC thereby settling all claims for service and fees related thereto and releasing both parties from the terms of the initial agreement.
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 unlikely that the claim will prevail.
On December 1, 2023, the Company entered into a service agreement with Frondeur Partners LLC (“Frondeur”). Frondeur will provide accounting, reporting and consulting services on a monthly basis. On December 1, 2023, the Company executed a corporate services agreement with Frondeur Partners LLC a Nevada limited liability company. Under the terms of the agreement the Company will receive accounting and reporting services. As compensation Frondeur will receive monthly payments of $5,000 in cash and a convertible promissory note for $10,000. The notes are convertible into the Company’s common stock at a 50% discount to the market price (defined in the notes). As of the date of issuance of this report the Company has issued thirteen such notes (December 1, 2023 through December 31, 2024), which are accounted for as notes with embedded derivatives to be bifurcated and recognized as derivative liabilities.
NOTE 20 - SUBSEQUENT EVENTS
In accordance with 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.
Sale of Subsidiaries
On March 31, 2025, the Company entered into a transaction selling its wholly owned subsidiary ReachOut Technology Corp. (ReachOut) to an unrelated third party. ReachOut owns Innovative Network Design LLC and RedGear LLC. The purpose for the business disposition is a financial restructuring Which provides a relief of liabilities totaling $8,007,507 and assets of $539,558 as of December 31, 2024. ReachOut had consolidated gross profit of $2,975,181, total operating expenses of $8,316,805 (including impairment charges of $3,464,930). Management does not believe that revenue from operations arising from customers be materially less than current reported revenues for the year ending December 31, 2025. Management also believes that cost of sales and gross margins will improve (restructuring and streamlining customer service) over the year ending December 31, 2024. Management determined that this sale transaction was not a discontinuance of operations as there is no change of strategic shift (operations post sale will be substantially the same as pre-sale), rather it is a restructuring and streamlining operations. Management did not opt for a held for sale accounting treatment at December 31, 2024 as the transaction was not contemplated at that date. The sale consideration was $1.00. Any gain due to derecognition of the net liabilities will be offset by the derecognition of the investment in in subsidiaries of $8,056,702 The probable loss on disposition will be between $50,000 and $100,000. The sale and any attendant losses or gains will be reflected in the quarterly report (Form 10Q) as of March 31, 2025.
Default on RedGear Purchase Note
The note issued to former members of RedGear matured on March 31, 2025, and therefore it is technically in default.
Securities Issued
On January 1, 2025, YCRM issued a convertible note payable to Frondeur Partners LLC. The convertible note has principal of $10,000, bears interest at 12%, matures on September 30, 2025 and may be converted to common shares at or 50% of the lowest traded price during the thirty days prior to conversion. The principal amount was charged to professional services. Due to the variable conversion price the note includes a bifurcated derivative valued on issuance and for each reporting date.
On February 1, 2025, YCRM issued a convertible note payable to Frondeur Partners LLC. The convertible note has principal of $10,000, bears interest at 12%, matures on October 31, 2025 and may be converted to common shares at or 50% of the lowest traded price during the thirty days prior to conversion. The principal amount was charged to professional services. Due to the variable conversion price the note includes a bifurcated derivative valued on issuance and for each reporting date.
On March 1, 2025, YCRM issued a convertible note payable to Frondeur Partners LLC. The convertible note has principal of $10,000, bears interest at 12%, matures on November 30, 2025 and may be converted to common shares at or 50% of the lowest traded price during the thirty days prior to conversion. The principal amount was charged to professional services. Due to the variable conversion price the note includes a bifurcated derivative valued on issuance and for each reporting date.
On April 1, 2025, YCRM issued a convertible note payable to Frondeur Partners LLC. The convertible note has principal of $10,000, bears interest at 12%, matures on December 31, 2025 and may be converted to common shares at or 50% of the lowest traded price during the thirty days prior to conversion. The principal amount was charged to professional services. Due to the variable conversion price the note includes a bifurcated derivative valued on issuance and for each reporting date.

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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.

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ITEM 9A. CONTROLS AND PROCEDURES
ITEM 9A. CONTROLS AND PROCEDURES
Under the supervision and with the participation of our management, including the Chief Executive Officer who also acts as our principal financial officer, we have evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act) as of the end of the period covered by this report. The disclosure controls and procedures ensure that all information required to be disclosed by us in the reports that we file or submit under the Exchange Act is: (i) recorded, processed, summarized and reported, within the time periods specified in the SEC’s rule and forms; and (ii) accumulated and communicated to our management, including our Chief Executive Officer as appropriate to allow timely decisions regarding required disclosure. Based on that evaluation, the Chief Executive Officer concluded that, as of December 31, 2024, these disclosure controls and procedures were not effective.
Management’s Report on Internal Control Over Financial Reporting
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of our management, including the Chief Executive Officer who also acts as our principal financial officer, we have evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act) as of the end of the period covered by this report. The disclosure controls and procedures ensure that all information required to be disclosed by us in the reports that we file or submit under the Exchange Act is: (i) recorded, processed, summarized and reported, within the time periods specified in the SEC’s rule and forms; and (ii) accumulated and communicated to our management, including our Chief Executive Officer as appropriate to allow timely decisions regarding required disclosure. Based on that evaluation, the Chief Executive Officer concluded that, as of December 31, 2024, these disclosure controls and procedures were not effective.
Management’s Annual Report on Internal Control over Financial Reporting
Our management is responsible to establish and maintain adequate internal control over financial reporting. Our Chief Executive Officer is responsible to design or supervise a process that provides reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. The policies and procedures include:
● maintenance of records in reasonable detail to accurately and fairly reflect the transactions and dispositions of assets,
● reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorizations of management and directors, and
● reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of assets that could have a material effect on our financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance of achieving their control objectives.
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our internal control over financial reporting as of the end of the period December 31, 2024. In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control - Integrated Framework (2013). Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the fiscal year December 31, 2024, our internal control over financial reporting was not effective at that reasonable assurance level. The following aspects of the Company were noted as potential material weaknesses:
● Due to our size and limited resources, we currently do not employ the appropriate accounting personnel to ensure (a) we maintain proper segregation of duties, (b) that all transactions are entered timely and accurately, and (c) we properly account for complex or unusual transactions;
● Due to our size and scope of operations, we currently do not have an independent audit committee in place;
● Due to our size and limited resources, we have not properly documented a complete assessment of the effectiveness of the design and operation of our internal control over financial reporting.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting that occurred during our most recent fiscal quarter that have materially affected, or reasonably likely to materially affect, our internal control over financial reporting.
Attestation Report of Independent Public Accounting Firm
This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting because as a smaller reporting company we are not subject to attestation by our independent registered public accounting firm pursuant to rules of the Securities and Exchange Commission that permit us to provide only management’s report in this annual report.

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ITEM 9B. OTHER INFORMATION
ITEM 9B. OTHER INFORMATION
None

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ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Directors and Executive Officers
The names of our director and executive officers as of June 28, 2024, their ages, positions, and biographies are set forth below. Our executive officers are appointed by, and serve at the discretion of, our board of directors.
Name
Age
Position(s)
Richard Jordan
Chairman, Chief Executive Officer, President, Secretary and Treasurer
Kevin Harrington
Director
Kingsley Charles
Director
Rick Jordan, Chairman, Chief Executive Officer, President, Secretary and Treasurer
Rick Jordan, age 45, the CEO and Founder of ReachOut Technology, is a model of resilience, vision, and expertise in the cybersecurity and entrepreneurial arenas. His journey with ReachOut Technology, from its inception during a challenging personal and economic period to its evolution into a publicly held industry leader, is a true embodiment of the American dream. Rick has shaped his path through unwavering perseverance, a relentless ‘never-quit’ attitude.
Rick Jordan is emerging as a nationally recognized voice in business and cybersecurity. He is frequently featured on global networks such as Bloomberg, Newsmax, Cheddar, NewsNation, Reuters, Fox, and NBC for his expert insights in cybersecurity, business, and social topics. His expertise is so renowned that it has been sought after in the White House, highlighting his significant influence and authority in the cybersecurity sector.
Rick’s leadership style is deeply involved and motivational. He hosts a weekly “CEO Talk” every Monday, where he engages with and inspires the entire company, setting a positive tone for the week ahead. This approach not only fosters a strong company culture but also aligns the team with the company’s goals and vision.
Rick has a strategic mind with unique ability to foresee industry trends and futures, allowing him to be a disruptor in the space. A key milestone in Rick’s leadership was partnering with Kevin Harrington, the Original Shark from Shark Tank, to take ReachOut Technology public. This strategic partnership has been instrumental in the company’s growth trajectory, positioning it for greater success and market impact.
Rick is a master communicator and passionately shares his knowledge and inspiration through his podcast, “ALL IN with Rick Jordan.” The podcast, which enjoys a global audience in over 70 countries and ranks in the top 2.5% worldwide, explores the nuances of building successful businesses, fostering meaningful relationships, and leading a fulfilling life. Rick’s ability to connect with and motivate his audience is evident in the podcast’s widespread acclaim.
Rick Jordan’s skills and knowledge span a broad spectrum, making him a unique figure in the industry. Known for never shying away from a challenge and remaining steadfast in adversity, Rick lives life on his own terms. Whether tackling new challenges, disproving doubters, or enjoying a glass of his favored MaCallan Scotch, Rick Jordan is an inspiration, encouraging others to embrace life fully.
Follow Rick’s journey and get inspired by connecting with him on social media @MrRickJordan.
Kevin Harrington, Director
Kevin Harrington, age 66, is a Director of ReachOut Technology, a globally acclaimed entrepreneur and a pioneer in the realms of business and direct marketing, serves as a distinguished member of the Board of Directors at ReachOut Technology. His tenure at ReachOut Technology is marked by strategic guidance and visionary leadership, leveraging over four decades of entrepreneurial and investment expertise.
As an original “Shark” on ABC’s “Shark Tank,” Kevin Harrington gained fame for his sharp investment insights and his ability to identify and nurture promising business ventures. His tenure on the show cemented his status as a savvy investor and a fervent supporter of entrepreneurship.
Harrington’s entrepreneurial journey began in the early 1980s with the creation of the infomercial, a groundbreaking concept that revolutionized television marketing and direct response advertising. This innovation not only transformed product marketing but also democratized the way entrepreneurs and startups could reach global audiences.
Throughout his career, Harrington has launched over 20 businesses that have exceeded $100 million in revenue. His exceptional ability to spot market opportunities and convert them into successful enterprises is a testament to his entrepreneurial genius.
Harrington is also a respected author, with books like “Act Now: How I Turn Ideas into Million-Dollar Products” under his belt. His writings offer a wealth of knowledge and inspiration to aspiring entrepreneurs and established business leaders alike.
In his role at ReachOut Technology, Kevin Harrington plays a pivotal role in shaping the company’s strategic direction, particularly in the realms of technology and cybersecurity. His insights are instrumental in driving innovation and ensuring that ReachOut Technology stays at the forefront of its industry.
ReachOut Technology, renowned for its expertise in cybersecurity and IT services, benefits immensely from Harrington’s strategic foresight. The company specializes in providing top-tier cybersecurity solutions, IT management, and consulting services, helping businesses safeguard their digital assets and navigate the complexities of the modern technological landscape.
Kevin Harrington’s involvement with ReachOut Technology is not just a reflection of his illustrious career but also a commitment to driving the company towards new heights of innovation and success. His vision and leadership continue to be pivotal in the company’s journey towards becoming a leader in cybersecurity and technology solutions.
Kingsley Charles, Director
Kingsley Charles, age 58, Director of ReachOut Technology, brings to the Board of Directors of a rich tapestry of experience in business and financial consultancy, honed over more than fifteen years of dedicated service. His career is distinguished by his extensive work with a diverse range of private firms, regional entrepreneurs, and small business owners across the United States.
Charles’s professional journey is marked by significant achievements and contributions. He has been a pivotal consultant for dozens of start-ups and operating companies, with revenues scaling up to $200 million. His expertise was further sharpened by his tenure managing operations within a Fortune 500 company, where he gained invaluable insights into the workings of large-scale corporate environments.
A hallmark of Charles’s career has been his collaborative approach, working closely with a spectrum of professionals including Master of Taxation experts, CPAs, CFPs, accountants, valuation experts, and attorneys. This multidisciplinary engagement has been a cornerstone of his professional life for over two decades, enabling him to offer comprehensive and nuanced advice to his clients.
Under Kingsley Charles’s leadership, his team has established a robust network of legal partners and financial professionals. This network supports his firm’s commitment to providing clients with interactive, comprehensive financial and strategic management services. His approach is characterized by a keen focus on ‘eyes-wide-open’ strategies, ensuring that clients are fully informed and strategically positioned in their financial decisions.
At ReachOut Technology, Kingsley Charles leverages his extensive experience in financial and strategic management to provide invaluable guidance and oversight. His expertise is particularly crucial in steering the company through complex financial landscapes, ensuring robust financial health, and aligning strategic goals with market realities.
Indemnification of Directors and Officers
Our Articles of Incorporation and Bylaws both provide for the indemnification of our officers and directors, to the fullest extent, permitted by Nevada law.
Compliance with Section 16(a) of the Exchange Act
Section 16(a) of the Securities Exchange Act of 1934 requires our directors, executive officers and persons who own more than ten percent of our common stock, to file with the SEC initial reports of ownership and reports of changes in ownership of common stock. Officers, directors and 10% or greater beneficial owners are required by SEC regulations to furnish us with copies of all Section 16(a) reports they file. Based upon a review of those forms and representations regarding the need for filing for the year ended December 31, 2024, we believe all necessary forms have been filed.
Involvement in Certain Legal Proceedings
Our directors and executive officers have not been personally involved in any of the following events during the past ten years:
● any bankruptcy petition filed by or against such person or any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time;
● any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);
● being subject to 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 his involvement in any type of business, securities or banking activities or to be associated with any person practicing in banking or securities activities;
● being found by a court of competent jurisdiction in a civil action, the SEC or the Commodity Futures Trading Commission to have violated a Federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated;
● being 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 any Federal or state securities or commodities law or regulation, any law or regulation respecting financial institutions or insurance companies, or any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or
● being subject of or party to any sanction or order, not subsequently reversed, suspended, or vacated, of any self-regulatory organization, any registered entity or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.
Family Relationships
There are no familial relationships among any of our directors or officers.
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.”
Board Committees
Our board does not currently have a standing Audit Committee, Compensation Committee or Nominating/Corporate Governance Committee due the board’s limited size and the Company’s limited operations. The entire Board of Directors performs all functions that would otherwise be performed by committees. Given the present size of our Board, 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 are able to grow our business and increase our operations, we intend to expand the size of our board and our committees and allocate responsibilities accordingly.

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ITEM 11. EXECUTIVE COMPENSATION
ITEM 11. EXECUTIVE COMPENSATION
Summary Compensation
The following table provides information as to cash compensation of all executive officers of the Company, for each of the Company’s last two fiscal years.
Name and principal position
Year
Salary
($)
Bonus
($)
Stock
Awards
($)
Option
Awards
($)
Non-Equity
Incentive Plan
Compensation
($)
Nonqualified
Deferred
Compensation
Earnings
($)
All Other
Compensation
($)
Total
($)
Richard Jordan $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
President, CEO & Chairman $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Everett M. Dickson $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Former Chairman $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Robert C. Bohorad $ 63,710 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 63,710
Former President and CEO $ 50,000 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 50,000
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 periods ending December 31, 2024, the company’s directors, Richard Jordan, Kevin Harrington, and Kingsley Charles, received no compensation for director services.
Outstanding Equity Awards at Fiscal Year End. There were no outstanding equity awards as of December 31, 2024.
Board Committees
We do not currently have any committees of the Board of Directors. Additionally, due to the nature of our intended business, the Board of Directors does not foresee a need for any committees in the foreseeable future.

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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The following table sets forth, as of December 31, 2024, certain information with respect to the beneficial ownership of shares of our common stock by: (i) each person known to us to be the beneficial owner of more than five percent (5%) of our outstanding shares of common stock, (ii) each director or nominee for director of our Company, (iii) each of the executives, and (iv) our directors and executive officers as a group. Unless otherwise indicated, the address of each shareholder is c/o our company at our principal office address:
Name and Address of Beneficial Owner(1)(2)
Common Stock
Beneficially
Held
Percent of
Class
Named Executive Officers and Directors
Richard Jordan - Series A(3)
699,082,277 (3)
66.67 %
Richard Jordan - Series C(4)
2,365,687,358
84.61 %
KHBH LLC - Series C(4)
56,325,836
2.01 %
Kingsley Charles - Series C(4)
24,407,776
0.87 %
All Executive Officers and Directors as a group
5% or More Stockholders
Trillium Partners, LP - Series D(5)
49,926,959
12.50 %
(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 ReachOut Technology, 8910 W. 192nd St. Suite N, Mokena, IL 60448.
(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 349,488,710 shares of common stock, outstanding as of the filing date of this Form 10-K and 699,082,277 shares of common stock issuable upon the conversion of the 475,000 shares of Series A Preferred Stock held by Mr. Jordan. (The Shares A Preferred Stock are convertible into such number of shares of common stock resulting in two-thirds (66.67%) of the outstanding shares of common stock of the Company on a post-conversion basis.)
(4) 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 349,488,710 shares of common stock, outstanding as of the filing date of this Form 10-K. 2,365,687,358 shares of common stock issuable upon the conversion of the 7,338,079 shares of Series C Preferred Stock held by Richard Jordan, 24,407,776 shares of common stock issuable upon the conversion of the 75,710 shares of Series C Preferred Stock held by Kingsley Charles, and 56,325,836 shares of common stock issuable upon the conversion of the 174,716 shares of Series C Preferred Stock held by KHBH LLC (The Shares C Preferred Stock are convertible into such number of shares of common stock resulting in 87.50% of the outstanding shares of common stock of the Company on a post-conversion basis.)
(5) 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 349,488,710 shares of common stock, outstanding as of the filing date of this Form 10-K and 49,926,959 shares of common stock issuable upon the conversion of the 1,000,000 shares of Series D Preferred Stock held by Trillium Partners, LP. (The Shares D Preferred Stock are convertible into such number of shares of common stock resulting in 12.50% of the outstanding shares of common stock of the Company on a post-conversion basis.)

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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
During the year ended December 31, 2024, Richard Jordan was owed $50,000 in accrued compensation and Robert C. Bohorad owed $35,000 in accrued compensation.
Director Independence
We currently do not have any independent directors, as the term “independent” is defined in Section 803A of the NYSE Amex LLC Company Guide. Since the OTC Markets does not have rules regarding director independence, the Board makes its determination as to director independence based on the definition of “independence” as defined under the rules of the New York Stock Exchange (“NYSE”) and American Stock Exchange (“Amex”).

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ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
Audit Fees
The aggregate fees billed for professional services rendered by our auditor Fruci & Associates II, PLLC for the audit and review of our financial statements for the fiscal years ended December 31, 2024 and 2023 amounted to $47,500 and $67,500, respectively.
Audit-Related Fees
During the fiscal years ended December 31, 2024 and 2023 our principal accountant rendered assurance and related services reasonably related to the performance of the audit or review of our financial statements in the amount of $0 and $0, respectively.
Tax Fees
The aggregate fees billed for professional services rendered by our principal accountant for the tax compliance for the years ended December 31, 2024 and 2023 was $0.
All Other Fees
During the fiscal years ended December 31, 2024 and 2023, there were no fees billed for products and services provided by the principal accountant other than those set forth above.
PART IV

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ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
ITEM 15. EXHIBITS
The following documents have been filed as part of this report.
Incorporated by reference
Exhibit
Number
Exhibit Description
Filed
herewith
Form
Period
ending
Exhibit
Filing date
31.1
Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act
X
32.1
Section 1350 Certification
X
101.INS
Inline XBRL Instance Document
101.SCH
Inline XBRL Taxonomy Extension Schema Document
101.CAL
Inline XBRL Taxonomy Calculation Linkbase Document
101.DEF
Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB
Inline XBRL Taxonomy Label Linkbase Document
101.PRE
Inline XBRL Taxonomy Presentation Linkbase Document
Cover Page Interactive Data File (formatted in iXBRL, and included in exhibit 101).
X