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It's barely a cybersecurity company. It's an MSP and an OK one at that.
Relm Partners with SideChannel to Enhance Cybersecurity for Clients
https://www.prnewswire.com/news-releases/relm-partners-with-sidechannel-to-enhance-cybersecurity-for-clients-302183507.html
Yes, this story is about Trillium Capital LLC. ReachOut is backed by Trillium Partners LP. Different firms, unfortunately named similarly. 😑
Why are they using a OTC banned lawyer? One who's known for working with scams?
Attorney Matheau J.W. Stout Esq added to the OTC markets Prohibited service providers list.
https://www.otcmarkets.com/learn/prohibited-service-providers
Stout had become probably one of the top 3 most used OTC attorneys the past couple of years and was especially popular with toxic financiers and with many of the hijacked shells (after Adam Tracy got banned).
There is no SEC action against Stout at the moment, so it is likely that OTC Markets determined that attorney letters being written by Stout were either being used to support a scam of some sort or to benefit a bad actor who shouldn't have been allowed to receive free trading stock.
10Q is out. $4m loss on $1.8m revenue in first quarter.
And I can't find that $13m revenue anywhere. https://www.sec.gov/ix?doc=/Archives/edgar/data/0001624517/000182912624003416/yuenglingsice_10q.htm
Nothing comes to mind for only uplisting from OTC. But RS all work the same. The RS needs to put the share price above $4 as that's the NYSE and NASDAQ minimum listing requirement. So any RS will need to do at least that.
1 for 1000 and it was recent. Chinese company, so unsure what's real, but the transfer agent VStock is sound. So who knows. Generally see 1-for-10 to 1-for-100 on most uplists that are trading above .10
https://www.prnewswire.com/news-releases/bit-brother-announces-1-for-1-000-reverse-share-split-302028676.html
Yes, 1-for-40 and were trading at .16 while on OTC at uplist. That's how they had the uplist price of 6.75.
That's in addition to the Preferred Shares that were issued. See "SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS" table on page 48 of that S1.
Most likely to insure that Rick was paid the $525k at conversion. This is pretty standard stuff with Preferred Shares issuance at public companies, ie attaching rights, dividends, voting powers.
A stated value is an amount assigned to a corporation's stock for internal accounting purposes when the stock has no par value. Like par value—which is the face value of a stock stated in the corporate charter—stated value is nominal. The stated value has no relation to market price.
No, the Preferred shares don't convert at $3. That's the value given to them as Preferred Shares. When they convert to common stock they are at the value of the common. You can apply any value to a Preferred share.
There's no magic that bumps the share price to $3 or $1 as the other issuance has the stated value at.
There's also no conversion requirements for price put on those Preferred shares.
A stated value is an amount assigned to a corporation's stock for internal accounting purposes when the stock has no par value. Like par value—which is the face value of a stock stated in the corporate charter—stated value is nominal. The stated value has no relation to market price.
That conversion also has attached to it a $525,000 payout to Rick and a $25,000 payout as expenses to the balance sheets when converted.
Rick - 8,750,000 shares x $3 per share x 2% dividend = $525,000
That's not exactly a healthy expense given the 8K/A prof forma consolidated financial statements showing $1.2m loss on only $7.3m revenue for 2023.
Page F5 on https://www.sec.gov/ix?doc=/Archives/edgar/data/1624517/000182912624002914/yuenglingsice_8ka.htm
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.
The Company is obligated under the terms of the Share Exchange Agreement to issue 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.
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.
180 days after December 13, 2023. That is June 10, 2024.
Exactly. That dilution is spelled out in the recent filings.
As of October 31, 2023, there are obligations to issued Series A Preferred Stock which are convertible into 1,020,062,029 shares of common stock. The total potentially dilutive shares calculated is 1,020,062,029.
The Trillium note dilution is a non event compared to the preferred shares convertible that Rick and company have at their disposal.
As of October 31, 2023, there are obligations to issued Series A Preferred Stock which are convertible into 1,020,062,029 shares of common stock. The total potentially dilutive shares calculated is 1,020,062,029.
They spell out part of it in the the filings... that's 1b shares with a B.
As of October 31, 2023, there are obligations to issued Series A Preferred Stock which are convertible into 1,020,062,029 shares of common stock. The total potentially dilutive shares calculated is 1,020,062,029.
I acknowledge the combined entity, as it was after acquisition, shows that revenue the last 3 months of 2023, trailing 12 month combined with YCRM. Because that's how the 8k presents.
Yes, that's the full 12 month.
YCRM for the first 9 months, then ReachOut the last 3. You think they're purposefully not showing $13m in revenue in their first major filing?
No, it's " Pro-forma combined statements of operations
Twelve Month Period "
Fiscal Year Ended December 31, 2023
Straight from "EX-99.3 5 yuenglingsice_ex99-3.htm"
Maybe I read a different filing this week from YCRM. They didn't show $13.7m revenue. The pro forma showed $7,384,747 as revenue thru end of 2023. It'd be a tough valuation to give 10x for a MSP. Most likely they'd get a 2x-5x on revenue... but that's not factoring in the liabilities RO assumed along with the expenses going out to 7 years.
I'm not a downer on this stock, but there's some things that should be factored in that aren't discussed.
NASDAQ uplisting requires a waiting period of 30+ days after a R/S that would require a larger R/S to stay above the $4 min share price.
The alternative is ReachOut does another raise at time of the R/S and uplisting to avoid the waiting period in order to actually uplist at the $4 share price.
Any sale after uplist in that type of volume you outlined would drove the share price down significantly. If they did go this way, i doubt they'd sell and burn themselves.
If Rick wants to uplist to a bigger board, he'll have to RS to meet the requirements. Hard truths.
YCRM will be part of a new ETF, the Human Fund. It's money for people.
It's time on dd anyway and not that I don't believe or not, it's is there value as a shareholder to invest. Eager to see what Rick does to get RO into profit mode, how he offsets the expenses he assumed with those recent acquisitions, what he does with his preferred shares and how that impacts any shareholders today.
Remember, it's not a lie if YOU believe it.
You obviously looked at what boards I've posted to.
RO seems closer as direct competition to HWNI or CISO than SDCH. MSP services vs pro services and software.
None, there a number of otc cyber firms that have boards here. Been looking for one that seems to have a future. And a board that has reasonable investors. This is a hot space and there's not that many that are public companies. The problem is finding one that going to be profitable and worth investing long term.
And it's back. Not worried about any short term trends.
That's even worse. But seriously, no officer of a company will publish far off numbers in an unaudited filing and expect to be long with the SEC.
And finally the RO consolidated numbers. $1.7 net loss on $4.2m of revenue as of Dec 31, 2023.
https://www.otcmarkets.com/filing/html?id=17506929&guid=HdQ-knnQ9HXCJth#YUENGLINGS_EX10-7_HTM_a_002
It's been fun watching the pump on this board since the announcement. But now we know what you all bought into.
It keeps getting better. ReachOut has to pay out $3.1m over the next 7 years. That was in exchange for an acquisition that's only helped them net $1.1m revenue? Ouch. This is in addition to the motes payable debts accrued. We won't see a profitable company here for quote some time with expenses like this. Who's making these deals?!?!?!
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 $382,500 and the non-current portion due is $2,700,000, as of December 31, 2022.
Coupled with only $1.1m revenue in 2022... https://www.otcmarkets.com/filing/html?id=17506929&guid=HdQ-knnQ9HXCJth#YUENGLINGS_EX10-6_HTM_b_003
There's going to be a heavy pull from that Trillium shelf for shares to acquire anything with numbers like that... adds to more significant dilution to current shareholders.
There's the dilution right there in the S1:
Our directors and executive officers beneficially own a significant number of shares of our common stock. Their interests may conflict with our outside stockholders, who may be unable to influence management and exercise control over our business.
As of the date of this Form S-1, our executive officers directors and the original equity investors in ReachOut Technology together beneficially own approximately 87.5% of our shares of common stock through the ownership of Series C Convertible Preferred Stock and the CEO owns 475,000 shares of Series A preferred stock the voting rights for the Series A shares entitles the shareholder to voting rights equal to the number of common shares outstanding 232,977,455 which will always grant the holder a majority voting capability. As a result, our executive officers and directors may be able to: elect or defeat the election of our directors, amend or prevent amendment to our certificates of incorporation or bylaws, effect or prevent a merger, sale of assets or other corporate transaction, and control the outcome of any other matter submitted to the shareholders for vote. Accordingly, our outside stockholders may be unable to influence management and exercise control over our business.
2023 10K is out. Both management and the auditor say "...due to losses incurred, substantial doubt about the Company’s ability to continue as a going concern exists." This ship is going down.
This could be one. Also look at $SDCH and maybe even $HWNI. All are in the cyber space. SDCH hits all those criteria, but HWNI has some debt out still and the profits path isn't clear yet.
No 8k is associated with that kinds of news.
The latest 10q says "As of and for the nine months ended September 30, 2023, the Company had an operating loss of $7,402,876, cash flows used in continuing operations of $6,898,188, and a working capital deficit of $6,609,855. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern for a period of one year from the issuance of these unaudited condensed consolidated financial statements."
There are also 14 pages of entries in that 10q under "Loans Payable to Related Parties".
I don't see how they paid off $6.2m of debt with a negative EBITDA and weak quarterly growth.
So, not much different now
What would a good timeline look like for that? Last Q shows $3.6m in loans out (plus interest). Given low cash and current revenue generation, it'd be a few years without a raise to pay that off. What are some alternatives for them to consider?