Nitches Inc 10-K/A for FY2023
Nitches Inc (NICH)
About this 10-K/A
Nitches Inc filed this 10-K/A on January 24, 2025, covering the fiscal year ended August 31, 2023 (FY2023).
Headline figures
Fiscal year ended August 31, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $4224
- up 494.9% from $710 a year earlier
- Net loss
- $827.02K
- compared with a net loss of $834.13K a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
Amendment #2
For the fiscal year ended
For the transition period from _________ to ________
Commission file number:
(Exact name of registrant as specified in its charter) |
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(State or other jurisdiction of incorporation or organization) |
| (I.R.S. Employer Identification No.) |
(Address of principal executive offices)
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(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
| Trading Symbol(s) |
| Name of each exchange on which registered |
Common Stock |
| NICH |
| OTCMarkets Pink Sheets |
Securities registered pursuant to Section 12(g) of the Act:
Common Stock
(Title of Class)
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐
Indicate by checkmark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
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Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer”, “non-accelerated filer”, “emerging growth company” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one).
Large accelerated filer | ☐ |
| Accelerated filer | ☐ |
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| Smaller reporting company | ||
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| Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. Yes ☐ No ☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b).
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
The aggregate market value of the voting stock held by non-affiliates of the registrant, based upon the closing sale price of the registrant’s common stock as of the last business day of the registrant’s most recently completed second fiscal quarter, was $
As of November 30, 2023 the Registrant had
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NITCHES, INC.
FORM 10-K
TABLE OF CONTENTS
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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K, with the accompanying Financial Statements and Notes to Financial Statements contain forward-looking statements that discuss, among other things, future expectations and projections regarding future developments, operations and financial conditions. All forward-looking statements are based on management’s existing beliefs about present and future events outside of management’s control and on assumptions that may prove to be incorrect. Words such as “expects”, “intends”, “anticipates”, “believes”, “estimates”, “assumes”, “projects” and similar expressions are intended to identify such forward-looking statements. You should not rely solely on the forward-looking statements and should consider all uncertainties and risks throughout this Annual Report on Form 10-K, including those described under “Risk Factors”. These statements are based on information currently available, and we undertake no obligation to update any forward-looking statement as circumstances change.
When this report uses the words “we,” “us,” “our,” “Nitches”, or the “Company,” they refer to Nitches, Inc.
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PART I
ITEM 1. BUSINESS
Company Overview and Plan of Operation
The Company was founded with the name, Beeba’s Creations, Inc., originally as a California corporation and was a wholesale importer and distributor of clothing, home décor and tabletop products it manufactured under its own specifications and distributed in the United States under its own brand labels and other retailer-owned private labels. It changed its name to Nitches, Inc. in 1995 and the Company moved jurisdiction to Nevada in 2008.
On November 5, 2020, International Ventures Society, LLC, a Nevada limited liability company, was appointed custodian of the Company pursuant to an Order of District Court of Clark County, Nevada. On November 6, the Company adopted amended Articles of Incorporation, which created the 2020 Series A Preferred Stock, with one share authorized. This one share effectively controls the Company by representing no less than 60% of all combined votes of Common and Preferred Stock at any time, and was issued to International Ventures Society LLC on the same day.
On December 16, 2020, International Ventures Society, LLC sold the one outstanding share of 2020 Series A Preferred Stock to Accelerate Global Market Solutions, a change of control transactions that resulted in John Morgan becoming CEO and launching the Company’s new business plan.
Business Overview
Nitches works one-on-one with social media influencers from design concept through final manufacturing and distribution to deliver select, superior quality products that reflect the personalities of their unique brands. The social media influencers market the products to their followers on their own social media platforms versus spending excessive amounts on advertising in “traditional” media.
The Nitches corporation is focused on distribution and production of household, lifestyle, travel & leisure, and sports goods and clothing, with a long-term objective of bringing sustainable business practices to the supply chain for these products. Our method is to identify business partners that are innovating outside of the box of what is currently trendy in the market and outside of the box of traditional marketing. Nitches aims to find the diamonds in the rough before the world knows about them. Our objective is to find brands (or people that have brands and people that ARE brands) that are on their way to the top of their verticals with new tech, new concepts, or state-of-the-art patents … and then we take them there; these social influencers are our partners (our “Social Media Partners”) for whom we will white-label and back-end brand merchandise and with whom we will drive demand for goods from sustainable supply chains.
The Company is again in the business of wholesale manufactured goods, but it white-labels them under the brand names of our Social Media Partners and also distributes them in an on-line “department store” where each of our Social Media Partners can sell their respective white-labeled merchandise marketing them first to their own social media followers as the “patient zeros” of their viral marketing campaigns to commercialize the personal “brands” they have built. Our business plan is place orders with global manufacturers of high margin household, lifestyle, travel & leisure, and sporting goods, white label these products under the brands that Our Social Media Partners have already cultivated, and then use the social media follower base of Our Social Media Partners to market and promote the products and distribute them through on-line store on the Nitches website, https://nitchescorp.com/brands/. This marketplace stitches niches of fans together in an on-line bazaar – hence “Nitches.”
Management believes we will not need an actual sales team to market our white-labeled products as our stable of Social Media Partners each have a built-in market to advertise their merchandise to simply by featuring their own brand merchandise in their social media content.
Management plans to create an equity incentive program whereby our Social Media Partners can earn and vest shares of our common stock by achieving certain social media analytics and sales thresholds thereby being compensated them for the strength of their social media follower base. Management believes this strategy will be key to attracting strong social media influencers as their modus operandi is capitalizing on their influence, or follower base. We do not anticipate launching our equity incentive plan before the 4th quarter of 2023 and do not yet have a specific time-frame for doing so.
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The first line of goods we have made available to our Social Media Partners to white-label is “athleisure” clothing (clothing designed for exercise and everyday use) as management believes the purpose of the first good to be sold should be to test the market and build brand awareness. We believe our Nitches clothing and lifestyle products will mesh seamlessly with the social media content of our Social Media Partners as social media is all about showcasing lifestyle.
One Social Media Partner’s on-line store is already open and selling its first product and another one is opening soon; one can check them out here: https://nitchescorp.com/brands/. So far both brands have placed bulk orders for merchandise which have been fulfilled, but sales have just begun so far only selling a dozen or so items.
Nitches developed the NITCHES OVS its industry-changing Owner Verification System (OVS™) mobile app called “NITCHES OVS”, an application (app) that can be used to verify authenticity and ownership of Nitches’ luxury products, apparel and streetwear clothing items. The Company believes registering the product and its unique QR code as an NFT will help protect each brand and their name, image and likeness as well as make the purchase of its goods a unique irreplaceable experience for customers.
Nitches has successfully submitted the NITCHES OVS app to Apple iTunes (iPhone) and Google Play (Android) stores. It is now available for buyers who purchase products from stores registered with Nitches. NITCHES OVS is On October 21, 2021, Nitches signed its first Celebrity Influencer “Mr. John Lewis aka The Badass Vegan” (https://badassvegan.com) for its first branded clothing line. As part of the contract, Nitches will be launching 10 clothing items for Mr. John Lewis aka The Badass Vegan, our brand ambassador, with a lead time of 30 days for the first 10 clothing items and styles to be produced and custom manufactured through Nitches. The collection is now for sale and a limited number of orders have already been placed and fulfilled.
A template of our Brand Ambassador Agreement is attached at Exhibit 6.1, a version of which we sign with each of our Social Media Partners. The agreements have a term of three years and may be extended by written agreement of both parties. The agreements grant the Company a license to use the ambassadors image in our public relations, advertising and marketing to promote company products. The ambassador has the responsibility to use their social media and participate in certain activities to help promote the Company’s products. The ambassador is entitled to 50% of the Company’s net profits from the ambassador’s brand. For more information regarding these agreements, see the Brand Ambassador Agreement attached as Exhibit 6.1.
A rundown of our agreements with each of our Social Media Partners follows:
On March 8, 20211, Nitches signed an agreement with visual artist Anthony Piper will design and write the creative concepts around the collaborative “Peace on Marz” campaign. “Peace on Marz” is the result of a collaboration with Viral Vegan Influencer and Filmmaker John Lewis to create a luxury athleisure clothing collection and comprehensive NFT strategy aimed at protecting our planet. An important part of the project is developing an animated story for “Peace on Marz,” which will have a similar creative artistic flair as to Trill League, his celebrated web comic and graphic novel. Trill League is a hip-hop infused vision of a black superhero universe. For the “Peace on Marz” campaign, Piper will develop and creative direct a new Intellectual Property (IP) consisting of multi-faceted Marz Variant characters, eye-catching drawings and compelling storylines.
On March 22, 2022, Nitches signed an agreement to design a limited-edition capsule collection with illustrious Football Coach Steve Calhoun and his Armed and Dangerous Football Camp. The pro-style training camps “prepare quarterbacks, wide receivers, tight ends, running backs, defensive backs, safeties and linebackers for the next level and beyond.” In addition to designing a capsule collection of branded clothing and apparel items, Nitches’ renowned artists will work with Armed and Dangerous to create collectible NFTs (non-fungible tokens) that can be used by buyers as Digital Art. Management’s strategy use the white-labeled sporting goods ordered under this influencer’s brand to further develop relationships with manufacturers of high margin goods as a necessary step in diversifying the Nitches branded product lines outward from the “athleisure” clothing.
Management believes Nitches Corporation will give our clients and partners access to many of the key alternative production countries. To date, the manufacturers we have used have been located in Hong Kong, but we are continually evaluating other prospects located in different countries. China manufacturing is not the only place that you can get quality mass production at high levels. Working with multiple partner facilities across Asia gives us the best ability to get the right quality production capacity coupled with the lowest price to ensure your high-volume output. Because we work on a per-project basis and have not yet entered into any long-term partnerships with any single manufacturer,
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we are able to better protect ourselves from risks related to any individual market and ensure we are receiving quality results at a low price.
On November 25, 2022, management decided to close-down all of its metaverse and NFT initiatives due to prohibitive costs of development, uncertainty of their monetization, and the early results of so-called industry leaders in metaverse development. The only remaining activities/initiatives involving NFTs are in regards to our Nitches OVS platform, as described below.
Additionally, management abandoned plans to accept cryptocurrency for our online stores due to volatility of price and the concerns that created for management in managing its supply chain. We had not yet begun to accept any cryptocurrencies in our online store(s).
The company finalized its obligations to assist and launch the Peace on Mars (POM) NFT collection on behalf of the project owner, our Social Media Partner, John Lewis. The Company was responsible to contract with the artist and pay the fees to mint the collection on opensea.io. The collection has been minted and can be viewed at the following address: https://opensea.io/collection/peace-on-marz. Custody of the NFT will be with the individual that goes to the link to mint it, from there it will be distributed to the individual users digital (Ethereum) wallet. The purpose of the making the POM NFTs available for minting is just to build brand recognition for POM.
They will be transferable and able to be sold on opensea.io, a website to explore, collect, and sell NFTs (“OpenSea”). Open Sea charges a transaction fee on trade of an NFT called a gas fee1. Nitches’s role in the minting of the NFTs is hosting the “mint page” on its website from the which the NFT connects to the block chain and will be transferred to the user’s digital wallet. As the host of the “mint page” for the NFTs, the Company is eligible to receive a portion of the gas fees from any sales of the NFTs on the Open Sea platform, which equate to about 6% of any resale through the Open Sea platform. However, the POM NFTs were minted just to build brand recognition for the collection. We do not anticipate any meaningful revenue from the NFTs but are optimistic that they will help with brand recognition and therefore increase product sales. Our only remaining obligations with the POM project relate to promoting and offering the product line in accordance with our Brand Ambassador Agreement.
Anti-Knockoff Owner Verification System (OVSä)
In March of 2022, Nitches completed its industry-changing Owner Verification System (OVS™) mobile app called “NITCHES OVS”. Nitches has successfully submitted the NITCHES OVS app to Apple iTunes (iPhone) and Google Play (Android) stores. It is now available for buyers who purchase products from stores registered with Nitches. NITCHES OVS is an application (app) that can be used to prove ownership of Nitches’ luxury products, apparel and streetwear clothing items.
Nitches developed the NITCHES OVS to show the authenticity of its limited-edition capsule collections and NFTs (non-fungible tokens) that are created with well-known celebrities and influencers. To reduce costs on Ethereum gas fees, Nitches minted its NFTs on the polygon blockchain network. Polygon is faster and less expensive for transactions than Ethereum.
Nitches plans to provide its NITCHES OVS to other businesses that want to protect their products, apparel and clothing from counterfeiting. According to Ghost Data, about 20 percent of fashion products advertised on social media are fake.
The NFTs minted through NITCHES OVS are a digital asset designed to help protect businesses from counterfeiters and to provide consumers with verification that the good purchased is authentic and not a pirated good. Each product sold by the Company will have a unique QR code that, if the purchaser so desires, can be linked to an NFT which will verify the identity of that product and confirm its authenticity. The Company does not anticipate the NFTs to have any value separate from the goods they are authenticating, and any transfer of the NFTs will come in conjunction with the sale of the goods which they are authenticating. The minting of each NFT will be complete at the time of purchase and there will be no fractionalization of the NFTs. There is no dividends, royalties, or other common enterprise that the holders of the NFTs will be entitled to. The NFTs are purely a verification token designed to protect businesses and consumers from counterfeit goods.
1 This FAQ on the OpenSea website explains what “gas fees” are, why they are needed, who gets them: https://support.opensea.io/hc/en-us/articles/1500006315941-What-are-gas-fees-
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The Company believes registering the product and its unique QR code as an NFT will help protect each brand and their name, image and likeness as well as make the purchase of its goods a unique irreplaceable experience for customers by owning a unique wearable NFT clothing item. The Company believes this will increase engagement with the Company’s social media presence creating an on-line community of its customers thereby improving brand identity for the Company - while also preventing counterfeiting and allowing true verification (consumers and customers can verify they are real and authentic) of authentication (authenticity) of its products with various entertainers, celebrities and social media influencers. However the Company does not believe the NFT will have any value separate from the value of the physical item and purchasers of the physical goods should not expect any capital appreciation of the NFT.
The OVS App is being built on the Ethereum, an open public decentralized platform, where no single person or group has control. The App will integrate with leading Ethereum/Polygon wallets, including MetaMask, Ledger Nano X, TronLink, Scatter, Coinbase and Trust. The purpose of the NFT created in the OVS App is to verify the good purchased and verify to anyone that it is authentic and not a pirated good infringing on the brand using the OVS App.
The decision whether to mint the NFT is solely within the purchaser of the good and the purchaser has custody over the NFT it decides to mint; each NFT minted has a unique QR code that links to a verification of the good purchased with its purchase date, which also serves to verify if the good was purchased as part of a capsule collection. The NFT is transferable and designed to be transferred to a buyer of the good it authenticates, however that is purely up to the buyer and seller to decide and negotiate between themselves. There does exist a second-hand market for vintage clothing and sneakers, in which Nitches OVS verified goods could be sold with ownership of the minted NFT authenticating the good being transferred to the buyer along with the transfer of the actual verified vintage good being purchased.
We do not anticipate the NFT having any value separate from the good it authenticates in that it is not likely to be bought or sold and only transferred with the sale of the good it verifies, however there will be no restrictions on the transfer of the NFT minted by the purchaser of the good. As Nitches will have zero custody over the minted NFT, these decisions will not be made by management but instead by consumers, and Nitches will not profit from or participate in the NFT in any way; the opportunity to mind the NFT is being provided by the Nitches through its Nitches OVS App solely to prohibit piracy of the goods sold by our Social Media Partners.
Management believes it is quite possible a NFT OVS verified good may sell for more on a secondary market than an unverified good but does not assert any particular expertise in how development of the metaverse and NFTs will go from here. It only asserts that we believe there is a need to verify the authenticity of purchase goods which the NFTs minted with the Nitches OVS App. Purchasers of NFTs including those minting NFTs with the Nitches OVS App should be advised that NFT are not a reliable store of value and that they may lose any and all money or other costs incurred in obtaining custody of an NFT.
A second phase of our growth plan will be to consult for, partner with, or acquire our manufacturing vendors to rework their supply chains to qualify for certain Sustainable Manufacturing Certifications. We have not yet begun any partnerships with any manufacturers and so far only vendor-customer relationships with the manufacturers we have done business with.
In our business plan, the brands of our Social Media Partners that we white-labels products under are an entryway to strategic partnerships with global manufacturers of product ready to scale production to take advantage of the effects of our marketing campaigns. We will act as consultants - and financiers - to these manufacturers to scale their production in a sustainable supply and distribution chain. The demand for sustainable products will be driven by the follower base our Social Media Partners for whom it will be important because it is important to the social media influencers they are following and with whom we are partnering.
Management plans for the payments for such consultancies, will be in the form of revenue or profit-sharing arrangements with these manufacturers in order to give multiple streams of revenue, which management believes could be bundled and securitized once matured for later stage financing, which the Company could use to finance or acquire and scale those of these manufacturers that have shown growth and/or the most innovation in sustainability.
We could even use a portion of this bundled stream of income for cash giveaway sweepstakes run by our influencers with their follower base as product and cash giveaways is a proven effective means to increase social media engagement, which will attached more influencers to Nitches because they would then be able to use our giveaways to increase their followers while promoting our Nitches branded products.
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Management believes this phase of our business plan will lead to residual streams of income from the financing we provide to our manufacturing partners. As these streams of income mature and become more credit-worthy, our plan is to bundle those streams of income - whose credit is bolstered by the marketing of our Nitches lifestyle influencers - to offer a corporate bond, the proceeds of which will be used to finance the expansion and creation of a totally sustainable supply chain and distribution chain for our global manufacturers. Because the use of funds would be used to scale sustainable “carbon-neutral” manufacturing, management believes such financing would qualify as for “ESG” (Environmental, Social, or Governance) financing. “ESG investing is investing in companies that score highly on environmental and societal responsibility scales as determined by third-party, independent companies and research groups. “ESG investing is investing in companies that score highly on environmental and societal responsibility scales as determined by third-party, independent companies and research groups.” Management believes Nitches will score well on such scales by living our company ethos and vision -- as well as through the use of consultants expert in qualifying for ESG investing.
A third phase will be when those influencers that meet certain analytics and sales thresholds begin to qualify for the Nitches Equity Incentive Plan for Social Media Influencers (“Equity Incentive Plan”), however we do not intend to begin the Equity Incentive Plan until after our planned growth with our manufacturing vendors and not have not yet set any thresholds or benchmarks for when equity would be granted and/or vested. Management does not believe it will be able to set any such benchmarks at least until the August 31, 2023 financials have been reported. For the Equity Incentive Program, we will use our publicly traded common stock for an Equity Incentive Plan for Social Media Influencers with the equity vesting based upon their achievement of certain social media analytics milestones based upon impressions and conversions when posting content showcasing our Nitches products.
Company Ethos, Vision is reflected in the Nitches Brand.
Our business model is anchored in a long-term vision that builds on the heritage of our brands and stimulates creativity and excellence for the next generation of sustainable living. The success of the marketing of our products will be based on our company living this vision with its operations.
The Nitches Corporation, as a company committed to excellence, we believe that our integrity and ethics are the most important thing. That’s why we conduct ourselves with exemplary integrity and ethics in the conduct of our business and in our relations with all stakeholders.
Rules of conduct, principles and guidelines governing ethics and environmental and social responsibility have been defined to establish the behavior required of the Group’s executives and employees, as well as our suppliers and partners. The Nitches Corporation Code of Conduct constitutes the cornerstone of our ethics and compliance policy.
FIVE OPERATING KEYS TO NITCHES:
1.Discovering Niche Overlooked Concepts & Businesses
2.Collaborative Creative Verticals
3.Advocating Sustainable Materials
4.Global Manufacturing Partnerships
5.Providing Experienced Fundamentals
These areas will be where the Company will be focusing its efforts moving forward. Notwithstanding, the three different areas of focus the Company will consolidate its financials into one statement and not report as different segments.
Intellectual Property
We do not own any trademarks or patents; however, we have our own proprietary source code that we use in operating our app for our “Apparel Ownership Verification System,” which is called “Nitches OVS”.
Employees
The Company’s only employee is its CEO, John Morgan, who is employed full-time. All other individuals who perform work for the company do so on a contract basis.
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Available Information and Reports to Security Holders
When this Registration Statement becomes effective, we will begin to file reports, proxy statements, information statements, and other information with the SEC. Our SEC filings will also be available to the public from commercial document retrieval services and at the website maintained by the SEC at http://www.sec.gov.
Our website address is http://www.nitchescorp.com. Information contained on the website does not constitute part of this Registration Statement. We have included our website address in this Registration Statement solely as an inactive textual reference. When this Registration Statement is effective, we will make available, through a link to the SEC’s website, electronic copies of the materials we file with the SEC, including annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, the Section 16 reports filed by our executive officers, directors and 10% stockholders and amendments to those reports.
ITEM 1A. RISK FACTORS
We are a “smaller reporting company”, as defined in Item 10(f)(1) of Regulation S-K, and therefore are not required to provide the information specified in Item 1A.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 2. PROPERTIES
We do not own any significant property. We are currently working remotely.
We lease and maintain our primary offices at 1333 N. Buffalo Dr., Suite 210, Las Vegas, NV 89128, which is a shared/virtual office facility.
ITEM 3. LEGAL PROCEEDINGS
We are not presently a party to any legal or regulatory proceedings that in the opinion of our management, if determined adversely to us, would individually or taken together have a material adverse effect on our business, results of operations and financial condition.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
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PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Market Information
Our common stock is traded on the Pink Tier of the OTC Markets Group under the symbol “NICH”.
Holders of Record
As of August 31, 2023, there were 5,729 shares of Common Stock outstanding held by 82 holders of record.
Dividends
The Company does not expect to declare dividends for holders of Common Stock in the foreseeable future. Dividends will be declared, if at all (and subject to rights of holders of additional classes of securities, if any), in the discretion of the Company’s Board of Directors. Dividends, if ever declared, may be paid in cash, in property, or in shares of the capital stock of the Company, subject to the provisions of law, the Company’s Bylaws and the Certificate of Incorporation. Before payment of any dividend, there may be set aside out of any funds of the Company available for dividends such sums as the Board of Directors, in its absolute discretion, deems proper as a reserve for working capital, to meet contingencies, for equalizing dividends, for repairing or maintaining any property of the Company, or for such other purposes as the Board of Directors shall deem in the best interests of the Company.
Recent Sales of Unregistered Securities
On March 9, 2023, the Company issued 3,333 shares of Common Stock to its CEO as partial compensation for services rendered.
On July 7, 2023, the Company issued 283 shares of Common Stock to an investor in satisfaction of $17,000 due and owing under a convertible promissory note.
Use of Proceeds
None.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
None.
ITEM 6. [RESERVED]
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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
You should read the following discussion and analysis of our financial condition and results of operations together with the section entitled “Selected Financial Data” and our financial statements and related notes included elsewhere in this Registration Statement. Some of the information contained in this discussion and analysis or set forth elsewhere in this Registration Statement, including information with respect to our plans and strategy for our business and related financing, includes forward-looking statements that involve risks and uncertainties. See “Cautionary Note Regarding Forward-Looking Statements.” Our actual results may differ materially from those described below.
We define our accounting periods as follows: “Fiscal 2023” – September 1, 2022 through August 31, 2023.
This Management’s Discussion and Analysis (“MD&A”) reports on the operating results and financial condition of the Company for the years ended August 31, 2023 and August 31, 2022. The MD&A should be read in conjunction with the Company’s audited consolidated financial statements for the year ended August 31, 2023 (“Annual Financial Statements”).
The MD&A and Annual Financial Statements have been prepared in accordance with general accepted principles in the United States of America (“GAAP”).
All significant intercompany balances and transactions were eliminated on consolidation.
Company History and Summary
Nitches Inc is a diversified company that specializes in creating merchandise, manufacturing high end luxury brands, goods and collectibles for influencers and celebrities. Nitches is focused on sports clothing, athleisure brands, sustainable products, NFTs and technology. We are also taking tremendous steps to protect Nitches’ and our clients’ intellectual property by innovating technology to help prevent counterfeiting. In addition to the merchandise and manufacturing, Nitches is partnering with brands that are innovating outside of the box. Our business model is anchored in a long-term vision that builds on the heritage of our brands and stimulates creativity and excellence. Nitches empowers brands, celebrities and influencers with customized merchandise to increase their bottom line from their notoriety and social fame in this social age.
The Company was founded originally as a California corporation as a wholesale importer and distributor of clothing, home décor and tabletop products manufactured to our specifications and distributed in the United States under our brand labels and retailer-owned private labels. The Company moved jurisdiction to Nevada in 2008.
On November 5, 2020, International Ventures Society, LLC, a Nevada limited liability company, was appointed custodian of the Company pursuant to an Order of District Court of Clark County, Nevada. On November 6, the Company adopted amended Articles of Incorporation, which created the 2020 Series A Preferred Stock, with one share authorized. This one share effectively controls the Company by representing no less than 60% of all combined votes of Common and Preferred Stock at any time, and was issued to International Ventures Society LLC on the same day.
On December 16, 2020, International Ventures Society, LLC sold the one outstanding share of 2020 Series A Preferred Stock to Accelerate Global Market Solutions, Inc., a change of control transactions that resulted in John Morgan becoming CEO. This share of 2020 Series A Preferred Stock was converted into 100,000,000 shares of Common Stock on November 4, 2021.
Since February 2022, the Company has announced the completion and launch of its Nitches OVS mobile app, which can be used to prove ownership of the Company’s luxury products, apparel and streetwear clothing items, as well as clothing collections in collaboration with legendary football coach Steve Calhoun; superstar vocal coach Nick Cooper; vegan influencer John Lewis; and world-famous artist Voodoo Fe with a collection to honor the legendary Miles Davis. In addition, the Company has announced an NFT campaign to focus on inclusivity and the development of its own exclusive clothing line to promote mental well- being.
On April 5, 2022, the Company executed amended loan notes which, in each case, changed the conversion terms from $0.00001 per share to a 50% discount to the lowest market price experienced in the 20 trading days prior to conversion.
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On July 21, 2022, the Company announced it had repaid all outstanding loan notes and convertible loan notes, leaving the Company completely debt-free. To the end of August 2022, the Company continued to work on development and promotion of its clothing ranges.
On November 25, 2022, the Company announced that it had ceased its involvement in the Metaverse project to focus on selling merchandise in the short term.
On March 22, 2023, the Company announced an expansion into the liquor industry with the launch of lifestyle of spirits, focused on the launch of an exclusive premium aged whiskey under the ‘Tover’ brand name. In furtherance of this expansion, the Company entered into a beverage brand developer agreement with Brenton Foster in March 2023.
On May 18, 2023, the Company announced two new initiatives: a collaboration with the Association of Luxury Suite Directors (‘ALSD’) as an exclusive vendor, providing premium staff clothing for the 2023 ALSD Conference and Tradeshow on July 9-11 at JW Marriott Indianapolis. Secondly, the Company is in talks with an unnamed Major League Baseball team to expand custom clothing options for their premium fans.
Comparison of Year Ended August 31, 2023 to Year Ended August 31, 2022
Results of Operations
|
| Year ended August 31, |
|
|
| Percent | |||||||
|
| 2023 |
|
| 2022 |
| Change |
| Change | ||||
Revenues |
| $ | 4,224 |
|
| $ | 710 |
| $ | 3,514 |
|
| 495% |
Gross profit |
|
| (17,130) |
|
|
| (4,369) |
|
| 12,761 |
|
| 292% |
Operating expenses |
|
| 426,070 |
|
|
| 833,743 |
|
| (407,673) |
|
| (49%) |
Other income (expense) |
|
| (383,818) |
|
|
| 4,248 |
|
| (388,066) |
|
| (9.135%) |
Net loss |
| $ | (827,018) |
|
| $ | (834,134) |
| $ | 7,116 |
|
| (1%) |
Net revenues for the year ended August 31, 2023 were $4,224, as compared to $710 for the year ended August 31, 2022, due to the launch of our Miles Davis clothing line.
Gross profits for the year ended August 31, 2023 were $(17,130), as compared to $(4,369) for the year ended August 31, 2022.
Total operating expenses were $426,070 for the year ended August 31, 2023, compared to $833,743 for the year ended August 31, 2022. The change is primarily derived from a decrease in selling, general, and administrative expenses of $420,811 in 2023, as compared to $832,183 in 2022.
Other income (expense) was $(383,818) for the year ended August 31, 2023 compared to $4,248 for the year ended August 31, 2022. The $388,066 decrease was primarily $128,090 in amortization of debt discount and derivative expenses associated with embedded liabilities in convertible debt, $222,277 in change in fair market value of derivatives, and $457,801 increase in interest expenses associated with borrowings.
For the year ended August 31, 2023, the Company reported a net loss of $(827,018) as compared to a net loss of $(834,134) for the year ended August 31, 2022.
Liquidity and Capital Resources
As of August 31, 2023, the Company had $344 in cash to fund its operations. The Company reported working capital deficit of $(391,316) on August 31, 2023, as compared to a working capital of $167,942 at August 31, 2022, representing an increase in working capital deficit of $559,258.
The Company does not believe its current cash balance will be sufficient to allow the Company to fund its planned operating activities for the next twelve months. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease operations or substantially curtail some of its planned activities. These conditions raise substantial doubt as to the Company’s ability to continue as a going concern. The accompanying financial statements do not include any adjustments relating to the recoverability and classification of recorded assets and classification of liabilities should the Company be unable to continue as a going concern.
9
As the Company continues to incur losses, achieving profitability is dependent on achieving a level of revenues adequate to support the Company’s cost structure. The Company may never achieve profitability, and unless and until it does, the Company will continue to need to raise additional capital. Management intends to fund future operations through additional private or public equity offerings and may seek additional capital through arrangements with strategic partners from other sources. There can be no assurances, however, that additional funding will be available on terms acceptable to the Company, or at all. Any equity financing may be dilutive to existing shareholders.
Operating Activities:
For the year ended August 31, 2023, net cash flow used by operating activities was $462,901, compared to $482,951 for the year ended August 31, 2022.
Financing Activities:
Net cash flows provided by financing activities for the year ended August 31, 2023, were $416,353, of which $287,000 was from sales of common stock shares and $158,521 in proceeds from borrowings, compared to $570,038 for the year ended August 31, 2022.
Liquidity and Capital Resource Measures:
The Company’s primary source of liquidity has been convertible loans and third party and related party loans.
Going Concern
The Company has experienced a net loss and had an accumulated deficit of $30,924,986 as of August 31, 2023. The success of our business plan during the next 12 months and beyond will be contingent upon generating sufficient revenue to cover our costs of operations and/or upon obtaining additional financing.
Transaction with Related Parties:
None
Critical Accounting Policies
Refer to Note 2 in the Consolidated Financial Statements for a summary of recently adopted and recently issued accounting standards and their related effects or anticipated effects on our consolidated results of operations and financial condition.
Off-Balance Sheet Arrangements
We did not have any off-balance sheet arrangements that are reasonably likely to have a current or future material effect on our financial condition, revenue or expenses, results of operations, liquidity, capital expenditures, or capital resources.
Inflation and Changing Prices
We do not believe that inflation nor changing prices for the year ended August 31, 2023 had a material effect on our operations.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are a “smaller reporting company”, as defined in Item 10(f)(1) of Regulation S-K, and therefore are not required to provide the information specified in Item 7A.
10
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
NITCHES, INC.
ANNUAL REPORT
FOR THE YEAR ENDING AUGUST 31, 2023 and 2022
Index to the Financial Statements
11
Report of the Independent Registered Public Accounting Firm
The Board of Directors and Stockholders of
Nitches, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Nitches, Inc (the ‘Company’) as of August 31, 2023, and 2022, and the related consolidated statements of operations, changes in stockholders’ equity and cash flows for the year ended August 31, 2023, and 2022, and the related notes (collectively referred to as the “financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of August 31, 2023, and 2022, and the results of its operations and its cash flows for the year ended August 31, 2023, and 2022, in conformity with accounting principles generally accepted in the United States of America (US GAAP).
Going Concern
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3, the Company suffered an accumulated deficit of $(30,924,986), net loss of $827,018 and a negative working capital of $391,316. These matters raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans with regards to these matters are also described in Note 3 to the financial statements. These financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis of 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 audit. 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 audits 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
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. 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, providing separate opinions on the critical audit matter or on the accounts or disclosures to which they relate. As of the date of this report, we do not have any critical audit matters to communicate.
/s/ OLAYINKA OYEBOLA & CO.
PCAOB#:
August 30, 2024
We have served as the Company’s auditor since October 2021.
F-1
NITCHES, INC.
Consolidated Audited Financial Statements
Balance Sheet
Notes | As at August 31, 2023 |
| As at August 31, 2022 | |||
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ASSETS |
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Current Assets |
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Cash and cash equivalents | 2 | $ |
| $ | ||
Deposits & prepayments |
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Inventory |
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Total Current Assets |
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| ||
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Fixed assets |
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Property, plant & equipment | 5 |
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| ||
Accumulated depreciation | 5 |
| ( |
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| ( |
Software | 6 |
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Other intangible assets | 6 |
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| ||
Accumulated amortization | 6 |
| ( |
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| ( |
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TOTAL ASSETS |
| $ |
| $ | ||
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LIABILITIES & STOCKHOLDERS’ EQUITY |
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Current Liabilities |
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Accrued expenses |
| $ |
| $ | ||
Loans & notes payable, short-term or current, net of unamortized debt discount of $ | 7 |
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| ||
Related party loans & notes payable, short-term or current | 11 |
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Derivative liability | 9 |
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TOTAL LIABILITIES |
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STOCKHOLDERS’ EQUITY (DEFICIT) |
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Preferred stock Series A: par value $ and August 31, 2022 | 8 |
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| ||
Common stock: par value $ authorized and outstanding at August 31, 2023 and August 31, 2022, respectively | 8 |
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| ||
Additional Paid-In-Capital |
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| ||
Accumulated Deficit |
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| ( |
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| ( |
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TOTAL STOCKHOLDERS’ EQUITY (DEFICIT) |
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| ( |
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| |
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TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) |
| $ |
| $ | ||
See accompanying notes to these consolidated audited financial statements.
F-2
NITCHES, INC.
Consolidated Audited Financial Statements
Statement Of Operations
|
| For the Year Ended August 31, | ||||
| 2023 |
| 2022 | |||
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Revenues |
| $ |
| $ | ||
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Cost of goods sold |
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Gross profit |
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Operating expenses |
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Selling, general & administrative expenses |
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Depreciation & amortization |
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Total operating expenses |
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Loss from operations |
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| ( |
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Other income (expenses) |
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Financing costs |
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| ( |
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Loan interest accrued |
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| ( |
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Non-cash interest, convertible loan |
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| ( |
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Amortization of debt discount |
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| ( |
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Gain (loss) on revaluation of derivative liability |
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Loss before income taxes |
| $ | ( |
| $ | ( |
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Provision for income taxes |
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Net loss |
| $ | ( |
| $ | ( |
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Net loss per share |
| $ | ( |
| $ | ( |
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Weighted average shares outstanding |
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See accompanying notes to these consolidated audited financial statements.
F-3
NITCHES, INC.
Consolidated Audited Financial Statements
Statement of Changes in Stockholders’ Equity
| Preferred Stock | Common Stock |
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Shares | Value | Shares | Value | Additional Paid-In- Capital | Accumulated Surplus (Deficit) | Total | ||||||
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Balance, September 1, 2021 | $ | $ | $ | $ | ( | $ | ( | |||||
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Preferred stock issued in exchange for common stock |
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Common stock issued on conversion of preferred stock |
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Common stock issued for services |
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Common stock issued for investment |
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Net loss, year ending August 31, 2022 |
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Balance, September 1, 2022 |
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Common stock issued for services |
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Common stock issued for investment |
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Net loss, year ended August 31, 2023 |
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Balance, August 31, 2023 | $ | $ | $ | $ | ( | $ | ( | |||||
See accompanying notes to these consolidated audited financial statements.
F-4
NITCHES, INC.
Consolidated Audited Financial Statements
Statement of Cash Flows
| Year Ended August 31, | ||||
2023 |
| 2022 | |||
CASH FLOWS FROM OPERATING ACTIVITIES |
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Net loss | $ | ( |
| $ | ( |
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Adjustments to reconcile net loss to net cash (used in) operating activities: |
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Stock issued for services |
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Depreciation and amortization |
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Amortization of debt discount |
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(Gain) loss on revaluation of derivative liability |
| ( |
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Non-cash interest, convertible loan |
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Financing costs |
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Changes in operating assets and liabilities: |
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Other current assets |
| ( |
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| |
Inventory |
| ( |
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| ( |
Accounts payable and other current liabilities |
| ( |
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| ( |
NET CASH (USED IN) OPERATING ACTIVITIES |
| ( |
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| ( |
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CASH FLOWS FROM INVESTING ACTIVITIES |
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Sale (purchase) of tangible assets |
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Sale (purchase) of intangible assets |
| ( |
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NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES |
| ( |
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CASH FLOWS FROM FINANCING ACTIVITIES |
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Proceeds from issuance of equity |
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Proceeds from (repayment of) debt instruments |
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| ( | |
Related party loans |
| ( |
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Financing costs |
| ( |
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| ( |
NET CASH PROVIDED BY FINANCING ACTIVITIES |
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NET INCREASE (DECREASE) IN CASH |
| ( |
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Cash, beginning of year |
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Cash, end of year | $ |
| $ | ||
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SUPPLEMENTAL DISCLOSURES |
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Supplemental schedules of non-cash investing and financing activities |
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Interest paid | $ |
| $ | ||
See accompanying notes to these consolidated audited financial statements.
F-5
NITCHES, INC.
Consolidated Audited Financial Statements
Notes For the Years Ending August 31, 2023 and 2022
NOTE 1. NATURE AND BACKGROUND OF BUSINESS
The accompanying consolidated audited financial statements include Nitches, Inc. (‘NICH’ or the “Company”), a Nevada corporation, its wholly-owned subsidiaries and any majority controlled interests.
Nitches Inc is a diversified company that specializes in creating merchandise, manufacturing high end luxury brands, goods and collectibles for influencers and celebrities. Nitches is focused on sports clothing, athleisure brands, sustainable products, NFTs and technology. We are also taking tremendous steps to protect Nitches and our clients intellectual property by innovating technology to help prevent counterfeiting. In addition to the merchandise and manufacturing, Nitches is partnering with brands that are innovating outside of the box. Our business model is anchored in a long-term vision that builds on the heritage of our brands and stimulates creativity and excellence. Nitches empowers brands, celebrities and influencers with customized merchandise to increase their bottom line from their notoriety and social fame in this social age.
The Company was founded originally as a California corporation as a wholesale importer and distributor of clothing, home décor and tabletop products manufactured to our specifications and distributed in the United States under our brand labels and retailer-owned private labels. The Company moved jurisdiction to Nevada in 2008.
On November 5, 2020, International Ventures Society, LLC, a Nevada limited liability company, was appointed custodian of the Company pursuant to an Order of District Court of Clark County, Nevada. On November 6, the Company adopted amended Articles of Incorporation, which created the 2020 Series A Preferred Stock, with
On December 16, 2020, International Ventures Society, LLC sold the one outstanding share of 2020 Series A Preferred Stock to Accelerate Global Market Solutions, Inc., a change of control transactions that resulted in John Morgan becoming CEO. This share of 2020 Series A Preferred Stock was converted into
Since February 2022, the Company has announced the completion and launch of its Nitches OVS mobile app, which can be used to prove ownership of the Company’s luxury products, apparel and streetwear clothing items, as well as clothing collections in collaboration with legendary football coach Steve Calhoun; superstar vocal coach Nick Cooper; vegan influencer John Lewis; and world-famous artist Voodoo Fe with a collection to honor the legendary Miles Davis. In addition, the Company has announced an NFT campaign to focus on inclusivity and the development of its own exclusive clothing line to promote mental well-being.
On April 5, 2022, the Company executed amended loan notes which, in each case,
On July 21, 2022, the Company announced it had repaid all outstanding loan notes and convertible loan notes, leaving the Company completely debt-free.
To the end of August 2022, the Company continued to work on development and promotion of its clothing ranges.
On November 25, 2022, the Company announced that it had ceased its involvement in the Metaverse project to focus on selling merchandise in the short term.
On March 22, 2023, the Company announced an expansion into the liquor industry with the launch of lifestyle of spirits, focused on the launch of an exclusive premium aged whiskey under the ‘Tover’ brand name.
On May 18, 2023, the Company announced two new initiatives: a collaboration with the Association of Luxury Suite Directors (‘ALSD’) as an exclusive vendor, providing premium staff clothing for the 2023 ALSD Conference and Tradeshow on July 9-11 at JW Marriott Indianapolis. Secondly, the Company is in talks with an unnamed Major League Baseball team to expand custom clothing options for their premium fans.
F-6
NITCHES, INC.
Consolidated Audited Financial Statements
Notes For the Years Ending August 31, 2023 and 2022
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying financial statements have been prepared for Nitches, Inc. in accordance with accounting principles generally accepted in the United States of America (US GAAP), with all numbers shown in US Dollars.
In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for fair presentation of the financial statements have been included. The financial statements include acquired subsidiaries, as discussed below, and include all consolidation entries required to include those subsidiaries.
Revenue Recognition
The Company recognizes revenue under the Financial Accounting Standards Board’s Topic 606, Revenue from Contracts with Customers (‘Topic 606’). Topic 606 has established a five-step process to determine the amount of revenue to record from contracts with customers. The five steps are:
·Determine if we have a contract with a customer;
·Determine the performance obligations in that contract;
·Determine the transaction price;
·Allocate the transaction price to the performance obligations; and
·Determine when to recognize revenue.
Our revenues are generally earned under formal contracts with our customers and are derived from sales of branded clothing products to customers. Our contracts do not include the possibility for additional contingent consideration so that our determination of the contract price does not involve having to consider potential additional variable consideration.
For arrangements with multiple performance obligations (eg. multiple deliveries), we recognize product revenue by allocating the transaction revenue to each performance obligation based on the relative fair value of each deliverable and recognize revenue when performance obligations are met including when product is delivered. Our contracts sometimes require customer payments in advance of revenue recognition. These are recognized as revenue when the Company has fulfilled its obligations under the respective contracts. Until such time, we recognize this prepayment as deferred revenue.
Contracts in progress are included in revenue recognition as unbilled revenues until delivery is made and billing occurs.
On a quarterly basis, we examine all of our fixed-price contracts to determine if there are any losses to be recognized during the period. Any such loss is recorded in the quarter in which the loss first becomes apparent based upon costs incurred to date and the estimated costs to complete as determined by experience from similar contracts. Variations from estimated contract performance could result in adjustments to operating results.
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Cash and Cash Equivalents
For the Balance Sheet and Statement of Cash Flows, all highly liquid investments with maturity of three months or less are considered to be cash equivalents. The Company had no cash equivalents as at August 31, 2023 or August 31, 2022.
Accounts Receivable
Accounts receivable are shown net of any allowance for doubtful accounts, determined as such when management has made a decision that an account is not collectible. As at August 31, 2023, the allowance for doubtful or non-collectible accounts receivable was nil.
F-7
NITCHES, INC.
Consolidated Audited Financial Statements
Notes For the Years Ending August 31, 2023 and 2022
Inventory
Inventory is stated at the lower of cost (First in, First Out method) or net realizable value. As at August 31, 2023, inventory was held according to the following breakdown:
August 31, 2023 | ||
Raw materials | $ | - |
Work in progress |
| |
Finished goods |
| |
Total | $ | |
Depreciation and Amortization
Depreciation is applied to all tangible fixed assets in accordance with the useful life of the type of asset, using the straight line method, for the following types of assets:
·Land and buildings -
·Plant and equipment -
·Motor vehicles -
·Leasehold improvements - based on the length of the lease
Amortization is applied to non-tangible assets in accordance with the useful life of the type of asset, using the straight line method, for the following types of assets:
·Software -
Goodwill is not amortized but is tested for impairment at the end of each financial year to assess the carrying value. If the carrying value is higher than the asset balance, then no impairment is charged to amortization. If the carrying value is lower than the asset balance then an impairment charge is made to amortization for the difference between the values.
Income Taxes
Income taxes are provided in accordance with the FASB Accounting Standards (ASC 740), Accounting for Income Tax. A deferred tax asset or liability is recorded for all temporary differences between financial and tax reporting and net operating loss carry forwards. Any deferred tax expense (benefit) resulting from the net change during the year is shown as deferred tax assets and liabilities. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it was more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.
Basic and Diluted Net Income (Loss) Per Share
Net income (loss) per unit is calculated in accordance with Codification topic 260, “Earnings per Share” for the periods presented. Basic net loss per share is computed using the weighted average number of common shares outstanding. Diluted loss per share has not been presented because the shares of common stock equivalents have not been included in the per share calculations as such inclusion would be anti-dilutive. Diluted earnings per share is based on the assumption that all dilutive stock options, warrants and convertible debt are converted or exercised applying the treasury stock method. Under this method, options, warrants and convertible debt are assumed exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase shares of common stock at the average market price during the period. Options, warrants and/or convertible debt will have a dilutive effect during periods of net profit only when the average market price of the units during the period exceeds the exercise or conversion price of the items.
Stock Based Compensation
Codification topic 718 “Stock Compensation” requires that the cost resulting from all share-based transactions be recorded in the financial statements and establishes fair value as the measurement objective for share-based payment transactions with employees and acquired goods or services from non-employees. The codification also provides guidance on valuing and expensing these awards, as well as disclosure requirements of these equity arrangements. The Company adopted the codification upon creation of the Company and will expense share-based costs in the period
F-8
NITCHES, INC.
Consolidated Audited Financial Statements
Notes For the Years Ending August 31, 2023 and 2022
incurred. The Company has not yet adopted a stock option plan and all share-based transactions and share based compensation has been expensed in accordance with the codification guidance.
Convertible Instruments
The Company evaluates and accounts for conversion options embedded in its convertible instruments in accordance with professional standards for “Accounting for Derivative Instruments and Hedging Activities”. Professional standards generally provide three criteria that, if met, require companies to bifurcate conversion options from their host instruments and account for them as free standing derivative financial instruments. These three criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instruments are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under otherwise applicable generally accepted accounting principles with changes in fair value reported in earnings as they occur, and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument. Professional standards also provide an exception to this rule when the host instrument is deemed to be conventional as defined under professional standards as “The Meaning of Conventional Convertible Debt Instrument”.
The Company accounts for convertible instruments when it has determined that the embedded conversion options should not be bifurcated from their host instruments in accordance with professional standards when “Accounting for Convertible Securities with Beneficial Conversion Features,” as those professional standards pertain to “Certain Convertible Instruments.” Accordingly, the Company records, when necessary, discounts to convertible notes for the intrinsic value of conversion options embedded in debt instruments based upon the differences between the fair value of the underlying shares of common stock at the commitment date of the note transaction and the effective conversion price embedded in the note. Debt discounts under these arrangements are amortized over the term of the related debt to their earliest date of redemption. The Company also records when necessary deemed dividends for the intrinsic value of conversion options embedded in preferred shares of common stock based upon the differences between the fair value of the underlying shares at the commitment date of the note transaction and the effective conversion price embedded in the note.
ASC 815-40 provides that, among other things, generally, if an event not within the entity’s control could require net cash settlement, then the contract shall be classified as an asset or a liability.
Fair Value of Financial Instruments
We adopted the guidance of ASC-820 for fair value instruments, which clarifies the definition of fair value, prescribes methods for determining fair value, and establishes a fair value hierarchy to classify the inputs used in measuring fair value, as follows:
Level 1 - Inputs are unadjusted quoted prices in active markets for identical assets or liabilities available at the measurement date.
Level 2 - Inputs are quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, inputs other than quoted prices that are observable, and inputs derived from or corroborated by observable market data.
Level 3 - Inputs are unobservable inputs which reflect the reporting entity’s own assumptions on what assumptions the market participants would use in pricing the asset or liability based on the best available information.
The carrying amounts for cash, accounts receivable, accounts payable and accrued expenses, and loans payable approximate their fair value based on the short- term maturity of these instruments. We did not identify any assets or liabilities that are required to be presented on the balance sheet at fair value in accordance with the accounting guidance as at August 31, 2023 but we did identify such assets or liabilities as at August 31, 2022, as detailed in Note 9, Derivative Liabilities.
ASC 825-10 “Financial Instruments” allows entities to voluntarily choose to measure certain financial assets and liabilities at fair value (fair value option). The fair value option may be elected on an instrument-by-instrument basis and is irrevocable, unless a new election date occurs. If the fair value option is elected for an instrument, unrealized
F-9
NITCHES, INC.
Consolidated Audited Financial Statements
Notes For the Years Ending August 31, 2023 and 2022
gains and losses for that instrument should be reported in earnings at each subsequent reporting date. We did not elect to apply the fair value option to any outstanding instruments.
Derivative Liabilities
Derivative financial instruments consist of convertible instruments and rights to shares of the Company’s common stock. The Company assessed that it had no derivative liabilities as at August 31, 2023 and derivative liabilities as at August 31, 2022, as detailed in Note 9, Derivative Liabilities.
ASC 815 generally provides three criteria that, if met, require companies to bifurcate conversion options from their host instruments and account for them as free standing derivative financial instruments. These three criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under otherwise applicable generally accepted accounting principles with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument subject to the requirement of ASC 815. ASC 815 also provides an exception to this rule when the host instrument is deemed to be conventional, as described.
Impact of New Accounting Standards
The Company does not expect the adoption of recently issued accounting pronouncements to have a significant impact on the Company’s results of operations, financial position, or cash flow.
NOTE 3. GOING CONCERN
The Company’s financial statements are prepared in accordance with generally accepted accounting principles applicable to a going concern. This contemplates the realization of assets and the liquidation of liabilities in the normal course of business. Realization values may be substantially different from carrying values as shown and these financial statements do not give effect to adjustments that would be necessary to the carrying values and classification of assets and liabilities should the Company be unable to continue as a going concern. Currently, the Company does not have significant cash or other material assets, nor does it have operations or a source of revenue sufficient to cover its operation costs and allow it to continue as a going concern.
The Company has a limited operating history and had a cumulative net loss from inception to August 31, 2023 of $
These financial statements for the year ending August 31, 2023 have been prepared assuming the Company will continue as a going concern, which is dependent upon the Company’s ability to generate future profits and/or obtain necessary financing to meet its obligations as they come due.
The management has committed to an aggressive growth plan for the Company. The Company’s future operations are dependent upon external funding and its ability to execute its business plan, realize sales and control expenses. Management believes that sufficient funding will be available from additional borrowings and private placements to meet its business objectives including anticipated cash needs for working capital, for a reasonable period of time. However, there can be no assurance that the Company will be able to obtain sufficient funds to continue the development of its business operation, or if obtained, upon terms favorable to the Company.
NOTE 4. OTHER CURRENT ASSETS
The Company had other current assets at August 31, 2023 and August 31, 2022 as follows:
| August 31, 2023 |
| August 31, 2022 | |||||
Prepaid salary CEO |
| $ |
| $ | ||||
Total |
| $ |
| $ | ||||
F-10
NITCHES, INC.
Consolidated Audited Financial Statements
Notes For the Years Ending August 31, 2023 and 2022
NOTE 5. FIXED ASSETS
The Company holds fixed assets with values at August 31, 2023 and August 31, 2022 as follows:
Asset |
| Useful Life (years) |
| August 31, 2023 |
| August 31, 2022 | ||||
Property and equipment |
| 3 |
| $ |
| $ | ||||
Accumulated depreciation |
|
|
|
| ( |
|
| ( | ||
Total |
|
|
| $ |
| $ | ||||
During the year ended August 31, 2023, a total of $
NOTE 6. INTANGIBLE ASSETS
The Company owned the following intangible assets as at August 31, 2023 and August 31, 2022:
Asset |
| August 31, 2023 |
| August 31, 2022 | ||||
Nitches software app development |
| $ |
| $ | ||||
Tover Whiskey brand development |
|
|
|
| ||||
Accumulated depreciation |
|
| ( |
|
| ( | ||
Total |
| $ |
| $ | ||||
During the year ended August 31, 2023, a total of $2,380 was charged to the Statement of Operations for amortization.
NOTE 7. LOANS AND NOTES PAYABLE
The Company had loans and notes payable as at August 31, 2023 and August 31, 2022 totaling $
Description |
| Principal Amount |
| Date of Loan Note |
| Maturity Date |
| August 31, 2023 |
| August 31, 2022 | ||
Convertible loan note from World Market Ventures for 12 months, interest rate of 9%, convertible at 50% disc. to lowest price in past 30 days |
| 27,500 |
| 10/19/2022 |
| 7/19/2023 |
|
|
|
| - | |
|
|
|
|
|
|
|
|
|
|
|
|
|
Convertible loan note from CC Strategic Enterprises LLC for 12 months, interest rate of 9%, convertible at 50% disc. to lowest price in past 30 days |
| 27,500 |
| 10/19/2022 |
| 7/19/2023 |
|
|
|
| - | |
|
|
|
|
|
|
|
|
|
|
|
|
|
Convertible loan note from World Market Ventures for 12 months at interest rate of 12%, convertible at 50% disc. to lowest price in past 30 days |
| 22,000 |
| 12/21/2022 |
| 9/21/2023 |
|
|
|
| - | |
|
|
|
|
|
|
|
|
|
|
|
|
|
Convertible loan note from John Morgan for 12 months at interest rate of 12%, convertible at $0.0001 per share |
| 50,000 |
| 3/9/2023 |
| 9/5/2023 |
|
|
|
| - | |
|
|
|
|
|
|
|
|
|
|
|
|
|
Convertible loan note from World Market Ventures for 12 months at interest rate of 9%, convertible at 50% disc. to bid price on day before conversion - see note 6 |
| 22,000 |
| 7/282023 |
| 4/28/2024 |
|
|
|
| - | |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
|
|
|
|
| $ |
| $ | - | |
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term total |
|
|
|
|
|
|
| $ | - |
| $ | - |
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term total |
|
|
|
|
|
|
| $ |
| $ | - | |
F-11
NITCHES, INC.
Consolidated Audited Financial Statements
Notes For the Years Ending August 31, 2023 and 2022
Loans and Notes Amortization |
| Amount Due | |
Due within 12 months |
| $ | |
Due within 24 months |
|
| - |
Due within 36 months |
|
| - |
Due within 48 months |
|
| - |
Due after 48 months |
|
| - |
|
|
|
|
Total |
| $ | |
NOTE 8. CAPITAL STOCK
The Company is a Nevada corporation with shares of preferred and common stock authorized and issued. As at August 31, 2023 and August 31, 2022, the Company was authorized to issue Preferred Stock and Common Stock as detailed below.
Preferred Stock
At August 31, 2023 the Company had authorized Preferred Stock in one designation totaling 1 share:
Preferred Stock Series A
The Company is authorized to issue
On November 6, 2020, the Company adopted amended Articles of Incorporation, which created the
On November 6, 2020, in accordance with a Court Order, the Company issued the
On December 16, 2020, International Venture Society, LLC sold the one share of issued and outstanding 2020 Series A Preferred Stock to Accelerate Global Market Solutions for a total of $
On November 4, 2021, the holder of the one share of issued and outstanding 2020 Series A Preferred Stock converted this share into
In March 2022, the Company agreed that it would issue
At August 31, 2023 the Company had
As at August 31, 2023, the Company had
Common Stock
As at May 31, 2023, the Company is authorized to issue up to
As at September 1, 2021, the Company had
On August 3, 2021, the Company issued
On October 12, 2021, the Company issued
F-12
NITCHES, INC.
Consolidated Audited Financial Statements
Notes For the Years Ending August 31, 2023 and 2022
On October 12, 2021, the Company issued
On November 4, 2021, the Company issued
On November 4, 2021, the Company issued
On November 4, 2021, the Company issued
On December 14, 2021, the Company issued
On January 7, 2022, the Company issued
On March 9, 2022, the Company issued
On March 18, 2022, the Company issued
On March 31, 2022, the Company bought back and canceled
On April 11, 2022, the Company issued
On April 11, 2022, the Company issued
On May 9, 2022, the Company issued
On June 7, 2022, the Company issued
On July 15, 2022, the Company issued
On July 19, 2022, the Company issued
On July 25, 2022, the Company issued
On March 9, 2023, the Company issued
On March 14, 2023, the Company issued
On March 27, 2023, the Company issued
F-13
NITCHES, INC.
Consolidated Audited Financial Statements
Notes For the Years Ending August 31, 2023 and 2022
On April 3, 2023, the Company issued
On May 5, 2023, the Company issued
On May 26, 2023, the Company issued
On July 7, 2023, the Company issued
As at August 31, 2023, there were
NOTE 9. DERIVATIVE LIABILITIES
The Company applies the provisions of ASC Topic 815-40, Contracts in Entity’s Own Equity (“ASC Topic 815-40”), under which convertible instruments, which contain terms that protect holders from declines in the stock price (reset provisions), may not be exempt from derivative accounting treatment. As a result, embedded conversion options in convertible debt are recorded as a liability and are revalued at fair value at each reporting date. If the fair value of the note exceeds the face value of the related debt, the excess is recorded as change in fair value in operations on the issuance date.
The Company identified embedded derivatives as a
On October 19, 2022, the Company entered into two identical convertible loan notes with a face value of $
Dividend yield |
| 0.00% |
Volatility |
| 248.05% |
Risk-free rate |
| 4.35% |
The initial fair value of the embedded debt derivative was $
On December 21, 2022, the Company entered into a convertible loan note with a face value of $
F-14
NITCHES, INC.
Consolidated Audited Financial Statements
Notes For the Years Ending August 31, 2023 and 2022
Dividend yield |
| 0.00% |
Volatility |
| 243.35% |
Risk-free rate |
| 3.78% |
The initial fair value of the embedded debt derivative was $
On March 9, 2023, the Company entered into a convertible loan note with a face value of $
Dividend yield |
| 0.00% |
Volatility |
| 212.03% |
Risk-free rate |
| 4.34% |
The initial fair value of the embedded debt derivative was $
On July 28, 2023, the Company entered into a convertible loan note with a face value of $
Dividend yield |
| 0.00% |
Volatility |
| 213.59% |
Risk-free rate |
| 4.25% |
The initial fair value of the embedded debt derivative was $
The fair value of the embedded debt derivative was reviewed at August 31, 2023, using the following inputs:
Dividend yield |
| 0.00% |
Volatility |
| 223.03% |
Risk-free rate |
| 4.27% |
The fair value of the embedded debt derivative was $
F-15
NITCHES, INC.
Consolidated Audited Financial Statements
Notes For the Years Ending August 31, 2023 and 2022
The following table provides a summary of changes in fair value of the Company’s Level 3 derivative liabilities as at August 31, 2023:
|
| August 31, 2023 |
| August 31, 2022 | |||
Balance, beginning of period |
| $ | - |
| $ | - | |
Additions |
|
|
|
| - | ||
Market-to-market at modification date |
|
| ( |
|
| - | |
Reclassified to additional paid-in capital upon modification of term |
|
| - |
|
| - | |
Balance, August 31, 2023 |
| $ |
| $ | - | ||
Net gain due to change in fair value for the period included in Statement of Operations |
| $ |
| $ | - | ||
This mark-to-market decrease of $
NOTE 10. INCOME TAXES
The Company uses the assets and liability method of accounting for income taxes pursuant to SFAS No. 109 “Accounting for Income Taxes”. Under the assets and liability method of SFAS No. 109, deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases. 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.
In June 2006, the FASB issued FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes.” Specifically, the pronouncement prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken from year ended December 31, 2015 tax return onwards. The interpretation also provides guidance on the related derecognition, classification, interest and penalties, accounting for interim periods, disclosure and transition of uncertain tax positions. The Company adopted this interpretation effective on inception.
For the year ended August 31, 2023, the Company had available for US federal income tax purposes net operating loss carryovers of $
The Company has provided a full valuation allowance against the full amount of the net operating loss benefit, since, in the opinion of management, based upon the earnings history of the Company, it is more likely than not that the benefits will not be realized:
August 31, 2023 |
| August 31, 2022 | |||
Statutory federal income tax rate |
|
|
| ||
Statutory state income tax rate |
|
|
| ||
Valuation allowance |
| ( |
|
| ( |
Effective tax rate |
|
|
| ||
Deferred income taxes result from temporary differences in the recognition of income and expenses for financial reporting purposes and for tax purposes. The tax effect of these temporary differences representing deferred tax assets result principally from the following:
Deferred Tax Assets (Gross Values) | August 31, 2023 |
| August 31, 2022 | ||
Net operating loss carryforward | $ | ( |
| $ | ( |
Less: Valuation allowance |
|
|
| ||
Net deferred asset | $ |
| $ | ||
F-16
NITCHES, INC.
Consolidated Audited Financial Statements
Notes For the Years Ending August 31, 2023 and 2022
NOTE 11. RELATED PARTY TRANSACTIONS
There were related party transactions during the year ending August 31, 2023 and 2022. The Company’s CEO accrued pay and expenses of $
The $
NOTE 12. SUBSEQUENT EVENTS
There were no events to report subsequent to August 31, 2023.
F-17
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
None.
ITEM 9A. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
We have performed an evaluation under the supervision and with the participation of our management, including our President, and our Chief Executive Officer (“CEO”) and principal financial officer (“CFO”), of the effectiveness of our disclosure controls and procedures, (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of August 31, 2023. Based on that evaluation, our management, including our President, and CEO and CFO, concluded that our disclosure controls and procedures were not effective as of August 31, 2023 to provide reasonable assurance that information required to be disclosed by us in the reports filed or submitted by us under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (ii) accumulated and communicated to our management, including our principal executive officer, as appropriate to allow timely decisions regarding required disclosure due to the material weaknesses described below.
Based on our evaluation under the framework described above, our management concluded that we had “material weaknesses” (as such term is defined below) in our control environment and financial reporting process consisting of the following as of the Evaluation Date:
1.lack of a functioning audit committee for the entire fiscal year resulting in ineffective oversight in the establishment and monitoring of required internal control and procedures; and
2.inadequate segregation of duties consistent with control objectives.
A “material weakness” is defined under SEC rules as a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of a company’s annual or interim financial statements will not be prevented or detected on a timely basis by the company’s internal controls.
A system of controls, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the system of controls are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.
Management’s Annual Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on criteria established in Internal Control - Integrated Framework (2013) issued by COSO. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that (a) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (b) provide reasonable assurance that transactions are recorded as necessary to permit the preparation of financial statements in accordance with generally accepted accounting principles and that receipts and expenditures of the Company are being made only in accordance with authorizations of the our management and directors; and (c) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.
Changes in Internal Control over Financial Reporting
None.
12
ITEM 9B. OTHER INFORMATION
None.
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.
13
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE
Below are the names of and certain information regarding the Company’s current executive officers and directors:
Name |
| Position |
| Date of Appointment |
John Morgan |
| President, CEO, Director |
| January 2021 |
Ahsan Zeb |
| CTO |
| January 19, 2022 |
The following are brief biographies of the officers and directors:
John Morgan (46) – CEO, Sole Director
Mr. Morgan received an education and multiple certifications from the University of South Alabama, Columbia Southern, and Mississippi State. From 2010 to December 2022, he was a sales executive in the retail segment for a Fortune 100 telecommunications company, managing sales teams of as many as 800 people with a cumulative value of approximately $24 million USD across 20 locations. In addition to this position, Mr. Morgan has held management positions at multiple micro-cap public companies. He was the CEO at ZA Group, Inc. from 2018 to January 2023; the CEO of Nitches, Inc. from 2020 to the present; the CEO of RONN (f/k/a Lee Pharmaceuticals, Inc.) from January 2021 to March 2023.-march or 2023.
Ahsan Zeb (30) – CTO
Mr. Zeb received a bachelor’s degree in computer science from National University of Sciences & Technology of Pakistan Islamabad. As the Chief Technology Officer, he demonstrates profound knowledge in technology strategy, implementation, and innovation. He successfully leads cross-functional teams and played a pivotal role in driving digital transformation initiatives. His ability to align technology solutions with business objectives significantly contributed to the growth and success of our organization. Moreover, Mr. Zeb has been instrumental in fostering a culture of collaboration, creativity, and continuous improvement within the technology department. His exceptional communication skills enable him to effectively liaise with stakeholders at all levels, ensuring the successful delivery of projects and initiatives. He consistently demonstrates a strong work ethic, reliability, and the ability to adapt to changing circumstances. Prior to joining the Company in January 2022, Mr. Zeb worked in the IT department of his local municipality in Pakistan.
Board of Directors
Our board of directors currently consists of one director, who is not “independent” as defined in Rule 4200 of FINRA’s listing standards. We may appoint additional independent directors to our board of directors in the future, particularly to serve on committees should they be established.
Committees of the Board of Directors
We may establish an audit committee, compensation committee, a nominating and governance committee and other committees to our Board of Directors in the future but have not done so as of the date of this Offering Circular. Until such committees are established, matters that would otherwise be addressed by such committees will be acted upon by the Board of Directors.
Director Compensation
The Company currently does not pay any cash compensation to members of its board of directors for their services as directors of the Company. However, the Company reimburses its directors for all reasonable out-of-pocket expenses incurred in connection with their attendance at meetings of the board of directors. The Company may determine to grant to each new director, at the time of such director’s appointment, an option to purchase its common shares. In the future, the Company may also elect to offer directors cash compensation.
14
Limitation of Liability and Indemnification of Officers and Directors
Our Certificate of Incorporation and bylaws both provide for the indemnification of our officers and directors to the fullest extent permitted by the Nevada Business Corporation Act. Our Certificate of Incorporation states that a director of the company shall not be personally liable to the company or its stockholders for monetary damages for breach of fiduciary duty as a director.
The bylaws state that the company shall, to the maximum extent and in the manner permitted by the Nevada Business Corporation Act, indemnify each of its directors and officers against expenses (including attorneys’ fees), judgments, fines, settlements, and other amounts actually and reasonably incurred in connection with any proceeding, arising by reason of the fact that such person is or was an agent of the company.
ITEM 11. EXECUTIVE COMPENSATION
The following table sets forth for the two years ended August 31, 2023 and 2022, the compensation awarded to, paid to, or earned by, the Company’s officers.
Summary Compensation Table
Name & Principal Position |
| Fiscal Year Ended August 31, |
| Salary ($) |
| Bonus ($) |
| Stock Awards ($) |
| Option Awards ($) |
| Non-Equity Incentive Plan Compensation ($) |
| Non-Qualified Deferred Compensation Earnings ($) |
| All Other Compensation ($) |
| Total ($) |
John Morgan, |
| 2023 |
| 120,000 |
| 0 |
| 200,000 |
| 0 |
| 0 |
| 0 |
| 0 |
| 320,000 |
President, CEO |
| 2022 |
| 102,000 |
| 0 |
| 0 |
| 0 |
| 0 |
| 0 |
| 0 |
| 102,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ahsan Zeb |
| 2023 |
| 42,000 |
| 0 |
| 0 |
| 0 |
| 0 |
| 0 |
| 0 |
| 42,000 |
CTO |
| 2022 |
| 24,000 |
| 0 |
| 0 |
| 0 |
| 0 |
| 0 |
| 0 |
| 24,000 |
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The following table sets forth information regarding beneficial ownership of our Stock as of the date of this report.
Name and Position Address |
| Class |
| Shares Owned | ||
|
|
|
| Number |
| Percent |
John Morgan, President, CEO 1333 N Buffalo Dr. Las Vegas, NV 89128 |
| Common Stock Series A Preferred |
| 3,750 1 |
| 42.19% 100.0% |
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
All related transactions have been reported in Part II Item 8 Financial Statements.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
|
| 2023 |
| 2022 | ||
Audit Fees |
| $ | 5,375 |
| $ | 5,375 |
Audit Related Fees |
|
| – |
|
| – |
Tax Fees |
|
| 10,000 |
|
| 10,000 |
All Other Fees |
|
|
|
|
|
|
|
| $ | 15,375 |
| $ | 15,375 |
15
Audit Fees - This category includes the audit of our annual financial statements, review of financial statements included in our Quarterly Reports on Form 10-Q and services that are normally provided by the independent registered public accounting firm in connection with engagements for those fiscal years. This category also includes advice on audit and accounting matters that arose during, or as a result of, the audit or the review of interim financial statements.
Audit-Related Fees - This category consists of assurance and related services by the independent registered public accounting firm that are reasonably related to the performance of the audit or review of our financial statements and are not reported above under “Audit Fees.” The services for the fees disclosed under this category include consultation regarding our correspondence with the Securities and Exchange Commission, other accounting consulting and other audit services.
Tax Fees - This category consists of professional services rendered by our independent registered public accounting firm for tax compliance and tax advice. The services for the fees disclosed under this category include tax return preparation and technical tax advice.
Policy for Pre-Approval of Audit and Non-Audit Services
We have not established an audit committee. Our board of directors approved the services rendered and fees charged by our independent registered public accounting firm.
Our board of directors’ policy is to pre-approve all audit services and all non-audit services that our independent registered public accounting firm is permitted to perform for us under applicable federal securities regulations. As permitted by the applicable regulations, our board of directors’ policy utilizes a combination of specific pre-approval on a case-by-case basis of individual engagements of the independent registered public accounting firm.
All engagements of the independent registered public accounting firm to perform any audit services and non-audit services since that date have been pre-approved by our board of directors in accordance with the pre-approval policy. The policy has not been waived in any instance. All engagements of the independent registered public accounting firm to perform any audit services and non-audit services prior to the date the pre-approval policy was implemented were approved by our board of directors in accordance with its normal functions.
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
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| Incorporated by Reference | ||
Exhibit No. |
| Description |
| Filed Herewith (*) |
| Filing Type |
| Date Filed |
| Order Granting Application for Appointment of International Venture Society as Custodian of Nitches, Inc. |
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| 1-A/A |
| 09/08/2021 | |
| Articles of Incorporation, as amended |
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| 1-A |
| 08/04/2021 | |
| Bylaws |
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| 1-A |
| 08/04/2021 | |
| Series A Preferred Stock Designation |
|
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| 1-A/A |
| 09/08/2021 | |
| Beverage Brand Developer Agreement (March 2023) |
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| 10-K |
| 12/07/2023 | |
| Auditor’s Consent |
| * |
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| |
| Certification pursuant to Section 302 of the Sarbanes–Oxley Act of 2002 of Principal Executive Officer and Principal Financial Officer |
| * |
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| |
| Certification pursuant to Section 906 of the Sarbanes–Oxley Act of 2002 of the Principal Executive and Financial Officer |
| * |
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101.INS |
| Inline XBRL Instances Document |
| * |
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101.SCH |
| Inline XBRL Taxonomy Extension Schema Document |
| * |
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101.CAL |
| Inline XBRL Taxonomy Extension Calculation Linkbase Document |
| * |
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101.DEF |
| Inline XBRL Taxonomy Extension Definition Linkbase Document |
| * |
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101.LAB |
| Inline XBRL Taxonomy Extension Label Linkbase Document |
| * |
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101.PRE |
| Inline XBRL Taxonomy Extension Presentation Linkbase Document |
| * |
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|
104 |
| Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101). |
| * |
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16
SIGNATURES
Pursuant to the requirements of Section 13 or 15 of the Securities Exchange Act, the registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.
| NITCHES, INC. | |
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January 24, 2025 | By: | /s/ John Morgan |
| Name: | John Morgan |
| Title: | Principal Executive Officer & Principal Accounting/Financial Officer |
17
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors
Nitches, Inc.
We hereby consent to the use in this Form 10-K/A Annual Report pursuant to section 13 or 15 (D) under the Securities Act of 1934 of our Report dated August 30, 2024, with respect to the audited balance sheets of Nitches, Inc as of August 31, 2023, and 2022 and the related statements of operations, stockholders’ equity, and cashflows for the years ended August 31, 2023, and 2022.
/s/ OLAYINKA OYEBOLA & CO.
OLAYINKA OYEBOLA & CO.
Chartered Accountants
Lagos, Nigeria
August 30, 2024
[ PREVIOUSLY FILED VERSION – DO NOT FILE – WAIT FOR FINAL ]
EXHIBIT 31.1
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER AND PRINCIPAL FINANCIAL OFFICER
I, John Morgan, certify that:
1.I have reviewed this annual report on Form 10-K/A of Nitches, Inc.;
2.Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
3.Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
4.I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have:
(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to registrant, including its subsidiaries, is made known to me by others within those entities, particularly during the period in which this quarterly report is being prepared;
(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this quarterly report my conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
January 24, 2025 | By: | /s/ John Morgan |
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| John Morgan |
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| Principal Executive Officer and Principal Financial Officer |
EXHIBIT 32.1
CERTIFICATION REQUIRED BY
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE
SARBANES-OXLEY ACT OF 2002
In connection with the annual report of Nitches, Inc. (the “Company”) on Form 10-K/A for the fiscal year ended August 31, 2023, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1)The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
January 24, 2025 | By: | /s/ John Morgan |
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| John Morgan |
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| Principal Executive and Financial Officer |