Nitches Inc 10-Q/A for FY2024 Q3
Nitches Inc (NICH)
About this 10-Q/A
Nitches Inc filed this 10-Q/A on January 24, 2025, covering the quarter ended May 31, 2024 (FY2024 Q3).
Headline figures
Quarter ended May 31, 2024, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $0
- compared with $835 a year earlier
- Net income
- $159.82K
- compared with a net loss of $252.34K a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
Amendment #1
For the quarter 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.) |
Phone: (
(Address, including zip code, and telephone number,
including area code, of registrant’s principal executive offices)
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 |
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).
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.
i
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
NUMBER OF SHARES OUTSTANDING OF THE COMPANY’S COMMON STOCK AS OF MAY 31, 2024:
ii
TABLE OF CONTENTS
iii
PART I - FINANCIAL INFORMATION
Item 1. Financial statements.
NITCHES, INC.
Condensed Consolidated Financial Statements
Balance Sheet
Notes | As at May 31, 2024 |
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ASSETS |
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Current Assets |
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Cash and cash equivalents | 2 | $ |
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Deposits & prepayments |
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Inventory |
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Total Current Assets |
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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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TOTAL ASSETS |
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LIABILITIES & STOCKHOLDERS’ DEFICIT |
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Current Liabilities |
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Accrued expenses |
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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’ DEFICIT |
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Preferred stock Series A: par value $ and August 31, 2023 | 8 |
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Preferred stock Series C: par value $ authorized and and August 31, 2023 | 8 |
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Preferred stock Series D: par value $ authorized and and August 31, 2023 | 8 |
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Common stock: par value $ issued and outstanding at May 31, 2024 and August 31, 2023, respectively | 8 |
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Accumulated deficit |
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TOTAL STOCKHOLDERS’ DEFICIT |
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TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT |
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The accompanying notes are an integral part of these unaudited condensed financial statements.
1
NITCHES, INC.
Condensed Consolidated Financial Statements
Statement Of Operations
| Three Months Ended May 31, |
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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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Other income (expenses) |
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Financing costs |
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Loan interest accrued |
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Non-cash interest, convertible loan |
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Amortization of debt discount |
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Gain (loss) on revaluation of derivative liability |
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Other income (expenditure), net |
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Loss before 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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The accompanying notes are an integral part of these unaudited condensed financial statements.
2
NITCHES, INC.
Condensed Consolidated 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, 2022 | $ | $ | $ | $ | ( | $ | ||||||
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Preferred stock issued in exchange for common 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, nine months ended May 31, 2023 |
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Balance, May 31, 2023 | $ | $ | $ | $ | ( | $ | ||||||
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Balance, September 1, 2023 | $ | $ | $ | $ | ( | $ | ( | |||||
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Common stock issued for services |
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Common stock issued to repay debt |
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Stock subscribed for |
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Net loss, nine months ended May 31, 2024 |
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Balance, May 31, 2024 | $ | $ | $ | $ | ( | $ | ( | |||||
The accompanying notes are an integral part of these unaudited condensed financial statements.
3
NITCHES, INC.
Condensed Consolidated Financial Statements
Statement of Cash Flows
| Nine Months Ended May 31, | ||||
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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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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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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 (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 period |
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Cash, end of period | $ |
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The accompanying notes are an integral part of these unaudited condensed financial statements.
4
NITCHES, INC.
Condensed Consolidated Financial Statements
Notes For the Three and Nine Months Ended May 31, 2024 and 2023
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.
5
NITCHES, INC.
Condensed Consolidated Financial Statements
Notes For the Three and Nine Months Ended May 31, 2024 and 2023
On January 23, 2024, the Company announced the appointment of Mr. Nikola Cvetkovic to its advisory board. Mr. Cvetkovic is renowned for his impactful work at Flaviar.com, where he played a key role in launching their online promotion campaign and distribution channels.
On February 6, 2024, the Company announced the establishment of an Overseas Representative Office in Asia and the appointment of a new advisory board member who will oversee the Asian business, seasoned business leader Li Kam Hung.
On February 28, 2024, the Company announced a partnership with Alamo Distillery to launch Tover Spirits, with product pre-sales starting within 45 days of this announcement as part of bringing the product to market.
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.
6
NITCHES, INC.
Condensed Consolidated Financial Statements
Notes For the Three and Nine Months Ended May 31, 2024 and 2023
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 May 31, 2024 or August 31, 2023.
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 May 31, 2024, the allowance for doubtful or non-collectible accounts receivable was nil.
Inventory
Inventory is stated at the lower of cost (First in, First Out method) or net realizable value. As at May 31, 2024, inventory was held according to the following breakdown:
May 31, 2024 | ||
Raw materials | $ | - |
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Finished goods |
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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
7
NITCHES, INC.
Condensed Consolidated Financial Statements
Notes For the Three and Nine Months Ended May 31, 2024 and 2023
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 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.
8
NITCHES, INC.
Condensed Consolidated Financial Statements
Notes For the Three and Nine Months Ended May 31, 2024 and 2023
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 identified assets or liabilities that are required to be presented on the balance sheet at fair value in accordance with the accounting guidance as at May 31, 2024 and August 31, 2023, 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 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 May 31, 2024 and derivative liabilities as at August 31, 2023, 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 May 31, 2024 of $
These financial statements for the six months ended May 31, 2024 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.
9
NITCHES, INC.
Condensed Consolidated Financial Statements
Notes For the Three and Nine Months Ended May 31, 2024 and 2023
NOTE 4. OTHER CURRENT ASSETS
The Company had the following current assets at May 31, 2024 and August 31, 2023:
| May 31, 2024 |
| August 31, 2023 | |||||
Prepaid salary CEO |
| $ |
| $ | ||||
Owed by LPHM - accounting fee |
|
|
|
| ||||
Total |
| $ |
| $ | ||||
NOTE 5. FIXED ASSETS
The Company holds fixed assets with values at May 31, 2024 and August 31, 2023 as follows:
Asset |
| Useful Life (years) |
| November 30, 2023 |
| August 31, 2023 | ||||
Property and equipment |
| 3 |
| $ |
| $ | ||||
Accumulated depreciation |
|
|
|
| ( |
|
| ( | ||
Total |
|
|
| $ |
| $ | ||||
During the nine months ended May 31, 2024, a total of $
NOTE 6. INTANGIBLE ASSETS
The Company owned the following intangible assets as at May 31, 2024 and August 31, 2023:
Asset |
| May 31, 2024 |
| August 31, 2023 | ||||
Nitches software app development |
| $ |
| $ | ||||
Tover Whiskey brand development |
|
|
|
| ||||
Accumulated amortization |
|
| ( |
|
| ( | ||
Total |
| $ |
| $ | ||||
During the nine months ended May 31, 2024, a total of $
NOTE 7. LOANS AND NOTES PAYABLE
The Company had loans and notes payable as at May 31, 2024 and August 31, 2023 totaling $
Description |
| Principal Amount |
| Date of Loan Note |
| Maturity Date |
| May 31, 2024 |
| August 31, 2023 | ||
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 - see 7.1 |
| 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 - see 7.2 |
| 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 |
| 22,000 |
| 7/28/2023 |
| 4/28/2024 |
|
|
|
| ||
10
NITCHES, INC.
Condensed Consolidated Financial Statements
Notes For the Three and Nine Months Ended May 31, 2024 and 2023
Description |
| Principal Amount |
| Date of Loan Note |
| Maturity Date |
| May 31, 2024 |
| August 31, 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 |
| 16,500 |
| 9/26/2023 |
| 6/26/2024 |
|
|
|
| ||
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 |
| 16,500 |
| 10/17/2023 |
| 7/17/2024 |
|
|
|
| ||
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 |
| 47,300 |
| 10/30/2023 |
| 7/30/2024 |
|
|
|
| ||
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 7 |
| 27,500 |
| 11/9/2023 |
| 8/9/2024 |
|
|
|
| ||
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 |
| 27,500 |
| 12/21/2023 |
| 10/17/2024 |
|
|
|
| ||
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 |
| 27,500 |
| 1/17/2024 |
| 11/9/2024 |
|
|
|
| ||
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 |
| 33,000 |
| 2/9/2024 |
| 11/29/2024 |
|
|
|
| ||
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 |
| 47,300 |
| 3/11/2024 |
| 12/11/2024 |
|
|
|
| ||
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 |
| 47,300 |
| 3/15/2024 |
| 12/15/2024 |
|
|
|
| ||
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 |
| 60,500 |
| 5/30/2024 |
| 2/28/2025 |
|
|
|
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
|
|
|
|
| $ |
| $ | ||
Long-term total |
|
|
|
|
|
|
| $ | - |
| $ | - |
Short-term total |
|
|
|
|
|
|
| $ |
| $ | ||
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 |
| $ | |
Notes
7.1.On August 30, 2023, the Company entered into a settlement agreement with the Lender, whereby the Lender agreed to convert the outstanding loan into shares of common stock at a rate of $
7.2.On January 17, 2024, the Company entered into a settlement agreement with the Lender, whereby the Lender agreed to convert the outstanding loan into shares of common stock at a rate of $
NOTE 8. CAPITAL STOCK
The Company is a Nevada corporation with shares of preferred and common stock authorized and issued. As at May 31, 2024 and August 31, 2023, the Company was authorized to issue Preferred Stock and Common Stock as detailed below.
On March 1, 2024, the Company increased the number of authorized shares of common stock to 1 Billion, and also introduced two new series of preferred stock: (1) Lifestyle Spirits 2024 Series C Preferred, with 1,000,000 shares designated and authorized; and (2) Series D Preferred Stock, also with 1,000,000 shares designated and authorized.
11
NITCHES, INC.
Condensed Consolidated Financial Statements
Notes For the Three and Nine Months Ended May 31, 2024 and 2023
On June 10, 2024, the Company executed a 1 for 60,000 reverse split of its shares of common stock. All share numbers referenced herein reflect this reverse
split.
Preferred Stock
At May 31, 2024 the Company had authorized Preferred Stock in three designations totaling
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 May 31, 2024 the Company had
Preferred Stock Series C
On March 1, 2024, the Company introduced its Lifestyle Spirits 2024 Preferred Stock Series C, designating
Preferred Stock Series D
On March 1, 2024, the Company introduced its Preferred Stock Seris D, designating
As at May 31, 2024, the Company had
12
NITCHES, INC.
Condensed Consolidated Financial Statements
Notes For the Three and Nine Months Ended May 31, 2024 and 2023
Common Stock
As at May 31, 2024, the Company is authorized to issue up to
As at September 1, 2022, the Company had
On March 9, 2023 the Company issued
On March 14, 2023 the Company issued
On March 27, 2023 the Company issued
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
Between September 7, 2023 and January 8, 2024 the Company issued
On December 22, 2023 the Company bought back and canceled
Between January 22, 2024 and February 29, 2024 the Company issued
Between March 6, 2024 and May 31, 2024 the Company issued
As at May 31, 2024, 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
13
NITCHES, INC.
Condensed Consolidated Financial Statements
Notes For the Three and Nine Months Ended May 31, 2024 and 2023
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 $
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 $
14
NITCHES, INC.
Condensed Consolidated Financial Statements
Notes For the Three and Nine Months Ended May 31, 2024 and 2023
Notes, the Company determined a fair value for the embedded derivative using the Black Scholes Model based on the following assumptions:
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 $
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 | |
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 |
| $ | 384,524 |
Net gain due to change in fair value for the period included in Statement of Operations |
| $ | 222,277 |
This mark-to-market decrease of $222,277 for the year was charged to the statement of operations as a gain on change in value of derivative liability of $384,524.
Between September 26, 2023 and November 9, 2023, the Company entered into four convertible loan notes with an aggregate face value of $
Dividend yield |
| 0.00% |
Volatility |
| 218.87-235.14% |
Risk-free rate |
| 4.52-4.80% |
The fair value of the initial embedded debt derivative was $312,317. The proceeds of the note of $107,800 were allocated as a debt discount. The amount in excess of the proceeds of the loan note of $204,517 was charged as interest to the Statement of Operations for the period.
Between December 1, 2023 and February 29, 2024, the Company entered into three convertible loan notes with an aggregate face value of $
15
NITCHES, INC.
Condensed Consolidated Financial Statements
Notes For the Three and Nine Months Ended May 31, 2024 and 2023
conversion features, whereby they are convertible at a price per share of 50% of the lowest market price of the stock in previous three months. The accounting treatment of derivative financial instruments requires that the Company record the fair value of the derivatives as of the inception date of the Convertible Promissory Notes and to adjust the fair value as of each subsequent balance sheet date. At the inception of the Convertible Promissory Notes, the Company determined a fair value for the embedded derivative using the Black Scholes Model based on the following assumptions:
Dividend yield |
| 0.00% |
Volatility |
| 254.66-261.81% |
Risk-free rate |
| 3.87-4.12% |
The fair value of the initial embedded debt derivative was $446,583. The proceeds of the note of $88,000 were allocated as a debt discount. The amount in excess of the proceeds of the loan note of $358,583 was charged as interest to the Statement of Operations for the period.
Between March 12, 2024 and May 30, 2024, the Company entered into three convertible loan notes with an aggregate face value of $
Dividend yield |
| 0.00% |
Volatility |
| 248.43-256.66% |
Risk-free rate |
| 4.09-4.64% |
The fair value of the initial embedded debt derivative was $370,671. The proceeds of the notes of $155,100, including the Original Issuer Discounts of $14,100, were allocated as a debt discount. The amount in excess of the proceeds of the loan note of $215,571 was charged as interest to the Statement of Operations for the period.
The fair value of the embedded debt derivative was reviewed at May 31, 2024, using the following inputs:
Dividend yield |
| 0.00% |
Volatility |
| 248.21% |
Risk-free rate |
| 4.57% |
The fair value of the embedded debt derivative at May 31, 2024 was $1,303,745, an increase in the valuation of the embedded debt derivative of $672,574 for the period.
The following table provides a summary of changes in fair value of the Company’s Level 3 derivative liabilities as at May 31, 2024:
|
| May 31, 2024 |
| August 31, 2023 | ||
Balance, beginning of period |
| $ | 384,524 |
| $ | - |
Additions |
|
|
|
| ||
Market-to-market at modification date |
|
| ( |
|
| ( |
Reclassified to additional paid-in capital upon modification of term |
|
| - |
|
| - |
Balance, May 31, 2024 |
| $ |
| $ | ||
Net gain due to change in fair value for the period included in Statement of Operations |
| $ |
| $ | ||
This mark-to-market decrease of $210,350 for the period ended May 31, 2024 was charged to the statement of operations as a gain on change in value of derivative liabilities.
16
NITCHES, INC.
Condensed Consolidated Financial Statements
Notes For the Three and Nine Months Ended May 31, 2024 and 2023
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:
May 31, 2024 |
| August 31, 2023 | |||
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) | May 31, 2024 |
| August 31, 2023 | ||
Net operating loss carryforward | $ | ( |
| $ | ( |
Less: Valuation allowance |
|
|
| ||
Net deferred asset | $ |
| $ | ||
NOTE 11. RELATED PARTY TRANSACTIONS
There were related party transactions during the nine months ended May 31, 2024 and year ending August 31, 2023. The Company’s CEO accrued pay and expenses of $
The $
Since March 9, 2023, the CEO has paid for expenses totaling $
17
NITCHES, INC.
Condensed Consolidated Financial Statements
Notes For the Three and Nine Months Ended May 31, 2024 and 2023
NOTE 12. SUBSEQUENT EVENTS
There were no events to report subsequent to May 31, 2024.
18
Item 2. 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 our operations together with our consolidated financial statements and the notes thereto appearing elsewhere in this quartlery report. This discussion contains forward-looking statements reflecting our current expectations, whose actual outcomes involve risks and uncertainties. Actual results and the timing of events may differ materially from those stated in or implied by these forward-looking statements due to a number of factors. Please see the notes to our Financial Statements for information about our Significant Accounting Policies and Recent Accounting Pronouncements.
Overview
The Company was founded originally as a California corporation as a wholesale importer and distributor of clothing, home decor 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.
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.
Although the Company does not continue any of its previous operations, the Company again is in the business of wholesale manufactured goods; our business plan is to partner with global manufacturers of high margin household, lifestyle, and travel & leisure goods, white label their products under our “Nitches” and market them using a stable of social media influencers.
Financial Statement Presentation
The accompanying consolidated audited financial statements have been prepared in conformity with generally accepted accounting principles in the United States (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Pursuant to these rules and regulations, certain information and note disclosures, normally included in financial statements prepared in accordance with GAAP, have been condensed or omitted. GAAP requires management to make estimates and assumptions that affect reported amounts and related disclosures. In the opinion of management, all adjustments (consisting of normal recurring items) considered necessary for a fair presentation have been included in operating results for the Company for the year ending August 31, 2023. The balance sheet as of August 31, 2023 has been derived from the unaudited financial statements at that date but does not include all of the information and footnotes required by GAAP for complete financial statements. For further information, refer to the Company’s financial statements and notes thereto. The notes to the unaudited condensed consolidated financial statements are presented on a continuing basis unless otherwise noted.
Summary of Results
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.
Revenue Recognition
Revenue is recognized when all of the following elements are satisfied: (i) there are no uncertainties regarding customer acceptance; (ii) there is persuasive evidence that an agreement exists; (iii) delivery has occurred; (iv) legal title to the products has transferred to the customer; (v) the sales price is fixed or determinable; and (vi) collectability is reasonably assured. At this time the company is in a reorganization phase and has minimal to no revenue.
19
Fair Value of Financial Instruments
The Company’s financial instruments consist mainly of cash and cash equivalents, accounts receivable, prepaid expenses, accounts payable, accrued expenses, derivative liabilities, and loans payable. The carrying values of the financial instruments approximate their fair value due to the short-term nature of these instruments. The fair values of the loans payable have interest rates that approximate market rates.
Derivative Instruments
The Company does not enter into derivative contracts for purposes of risk management or speculation. However, from time to time, the Company enters into contracts, namely convertible notes payable, that are not considered derivative financial instruments in their entirety, but that include embedded derivative features.
In accordance with Financial Accounting Standards Board (“FASB”) ASC Topic 815-15, Embedded Derivatives, and guidance provided by the SEC Staff, the Company accounts for these embedded features as a derivative liability or equity at fair value.
The recognition of the fair value of the derivative instrument at the date of issuance is applied first to the debt proceeds. The excess fair value, if any, over the proceeds from a debt instrument, is recognized immediately in the statement of operations as interest expense. The value of derivatives associated with a debt instrument is recognized at inception as a discount to the debt instrument and amortized to interest expense over the life of the debt instrument. A determination is made upon settlement, exchange, or modification of the debt instruments to determine if a gain or loss on the extinguishment has been incurred based on the terms of the settlement, exchange, or modification and on the value allocated to the debt instrument at such date.
Cash and Cash Equivalents
The Company considers all highly liquid investments with a maturity of three months or less at the date of purchase to be cash equivalents. Cash and cash equivalents are stated at cost and consist of bank deposits. The carrying amount of cash and cash equivalents approximates fair value.
Accounts Receivable and Allowance for Doubtful Accounts
The Company will bill its customers after its products are shipped. The Company bases its allowance for doubtful accounts on estimates of the creditworthiness of customers, analysis of delinquent accounts, payment histories of its customers and judgment with respect to the current economic conditions. The Company generally does not require collateral. The Company believes the allowances are sufficient to cover uncollectible accounts. The Company reviews its accounts receivable aging on a regular basis for past due accounts, and writes off any uncollectible amounts against the allowance.
Inventory
On May 31, 2024, the Company held $151,530 in inventory.
Inventory is stated at the lower of cost or market. Cost is principally determined by using the average cost method that approximates the First-In, First-Out (FIFO) method of accounting for inventory. Inventory consists of raw materials as well as finished goods held for sale. The Company’s management monitors the inventory for excess and obsolete items and makes necessary valuation adjustments when required.
Property and Equipment
None at present.
Property and equipment is recorded at cost less accumulated depreciation. Replacements, maintenance and repairs, which do not improve or extend the lives of the respective assets are charged to expense as incurred. Depreciation is computed using the straight-line method over the estimated useful lives of the assets as follows:
20
Impairment of Long-Lived Assets
None at present.
Long-lived assets are reviewed for impairment when events or changes in circumstances indicate the book value of the assets may not be recoverable. In accordance with Accounting Standards Codification (“ASC”) 360-10-35-15 Impairment or Disposal of Long-Lived Assets, recoverability is measured by comparing the book value of the asset to the future net undiscounted cash flows expected to be generated by the asset.
No events or changes in circumstances have been identified which would impact the recoverability of the Company’s long- lived assets reported at May 31, 2024.
Current Plan of Operations
Our plan of operations is to shift into a diversified holding company of various Lifestyle brands with growth oriented development can trajectory that can take advantage of our dedicated specialized media marketing operations to grow their sales and distribution. We expect to incur substantial expenditures in the foreseeable future for the development and sales and marketing of our Lifestyle brands and ongoing internal research and development. At this time, we cannot reliably estimate the nature, timing or aggregate amount of such costs. We intend to continue to build our corporate and operational infrastructure and to build interest in our product and service offerings and as such are unable to project those costs at this time.
As noted above, the pivot to this plan of operations requires us to raise significant additional capital immediately. If we are successful in raising capital through the sale of shares offered for sale in this Offering Circular we believe that the Company will have sufficient cash resources to fund its plan of operations for the next twelve months.
We continually evaluate our plan of operations discussed above to determine the manner in which we can most effectively utilize our limited cash resources. The timing of completion of any aspect of our plan of operations is highly dependent upon the availability of cash to implement that aspect of the plan and other factors beyond our control. There is no assurance that we will successfully obtain the required capital or revenues, or, if obtained, that the amounts will be sufficient to fund our ongoing operations. The inability to secure additional capital would have a material adverse effect on us, including the possibility that we would have to sell or forego a portion or all of our assets or cease operations. If we discontinue our operations, we will not have sufficient funds to pay any amounts to our stockholders.
Even if we raise additional capital in the near future, if our operating business segments fail to achieve anticipated financial results, our ability to raise additional capital in the future to fund our operating business segments would likely be seriously impaired. If in the future we are not able to demonstrate favorable financial results or projections from our operating business segments, we will not be able to raise the capital we need to continue our then current business operations and business activities, and we will likely not have sufficient liquidity or cash resources to continue operating.
Because our working capital requirements depend upon numerous factors there can be no assurance that our current cash resources will be sufficient to fund our operations. At present, we have no committed external sources of capital, and do not expect any significant product revenues for the foreseeable future. Thus, we will require immediate additional financing to fund future operations. There can be no assurance, however, that we will be able to obtain funds on acceptable terms, if at all.
Company Growth Strategy
Our long-term strategy is focused on four priorities: expanding and diversifying our revenues from sales of our own brands of Lifestyles; improving our sales and marketing effectiveness of our media operations through analysis of our marketing data grow sales of our branded Lifestyles faster; disciplined acquisition of upstart Lifestyle brands; developing a stream of revenue from providing our sales and marketing services to third party brands.
21
Credit Facilities
As of May 31, 2024, the Company had loans or notes payable and other accrued expenses of $1,579,597. Other than the foregoing, and to vendors and service providers in the ordinary course of our business, we do not have any other credit facilities or other access to bank credit.
Off-Balance Sheet Arrangements
The Company does not have any derivative financial instrument or other off-balance sheet arrangements.
Contingencies
Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company, but which will only be resolved when one or more future events occur or fail to occur. The Company’s management, in consultation with its legal counsel as appropriate, assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company, in consultation with legal counsel, evaluates the perceived merits of any legal proceedings or unasserted claims, as well as the perceived merits of the amount of relief sought or expected to be sought therein. If the assessment of a contingency indicates it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s financial statements. If the assessment indicates a potentially material loss contingency is not probable, but is reasonably possible, or is probable, but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss, if determinable and material, would be disclosed. Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed.
Litigation
From time to time, we may become the subject of litigation that is incurred in the ordinary course of its business. However, to date, we have not been made aware of any actual, pending or threatened litigation against the Company.
Item 3. Quantitative and Qualitative Disclosures about Market Risk.
In the ordinary course of our business, we are not exposed to market risk of the sort that may arise from changes in interest rates or foreign currency exchange rates, or that may otherwise arise from transactions in derivatives.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) that are designed to ensure that information required to be disclosed in our reports filed under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer, as appropriate to allow timely decisions regarding required disclosure.
We carried out an evaluation under the supervision and with the participation of management, including our Chief Executive Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of May 31, 2024, the end of the period covered by this report. Based on that evaluation, our Chief Executive Officer concluded that our disclosure controls and procedures were not effective at the reasonable assurance level due to the material weaknesses discussed below.
22
Internal Control Over Financial Reporting
Evaluation of Disclosure Controls and Procedures
Management of the Company has evaluated, with the participation of the Chief Executive Officer of the Company, the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) promulgated by the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on that evaluation, the Chief Executive Officer of the Company concluded that the Company’s disclosure controls and procedures as of the period covered by this Quarterly Report on Form 10-Q were not effective for the following reasons:
a)The Company has limited segregation of duties amongst its employees with respect to the Company’s control activities. This deficiency is the result of the Company’s limited number of employees. This deficiency may affect management’s ability to determine if errors or inappropriate actions have taken place. Management is required to apply its judgment in evaluating the cost-benefit relationship of possible changes in our disclosure controls and procedures.
b)The Company’s has a limited number of external board members. This deficiency may give the impression to the investors that the board is not independent from management. Management and the Board of Directors are required to apply their judgment in evaluating the cost-benefit relationship of possible changes in the composition of the Board of Directors.
Changes in Internal Control over Financial Reporting.
Management of the Company has also evaluated, with the participation of the Chief Executive Officer of the Company, any change in the Company’s internal control over financial reporting that occurred during the period covered by this Quarterly Report on Form 10-Q and determined that there was no change in the Company’s internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
23
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
From time to time, we may be involved in various claims and legal actions in the ordinary course of business. We are not currently involved in any material legal proceedings.
Item 1A. Risk Factors.
There have been no material changes to the Risk Factors disclosed in our Form 10-12G/A filed on February 28, 2023.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
The following sales were made under a Reg A filing exemption:
On March 14, 2023 the Company issued 217 shares of Common Stock to an investor for investment of $13,000, or $60.00 per share.
On March 27, 2023 the Company issued 200 shares of Common Stock to an investor for investment of $12,000, or $60.00 per share.
On April 3, 2023 the Company issued 233 shares of Common Stock to an investor for investment of $14,000, or $60.00 per share.
On May 5, 2023 the Company issued 250 shares of Common Stock to an investor for investment of $15,000, or $60.00 per share.
On May 26, 2023 the Company issued 267 shares of Common Stock to an investor for investment of $16,000, or $60.00 per share.
On July 7, 2023 the Company issued 283 shares of Common Stock to an investor for investment of $17,000, or $60.00 per share.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosure.
Not applicable.
Item 5. Other Information.
None.
24
Item 6. Exhibits.
The following exhibits are included as part of this report by reference:
Exhibit |
|
|
Number |
| Exhibit Description |
|
|
|
| Certification of Chief Executive Officer pursuant to Securities Exchange Act of 1934 Rule 13a-14(a) or 15d-14(a). | |
| Certification of Chief Financial Officer pursuant to Securities Exchange Act of 1934 Rule 13a-14(a) or 15d-14(a). | |
| Certifications pursuant to Securities Exchange Act of 1934 Rule 13a-14(b) or 15d-14(b) and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes- Oxley Act of 2002. | |
| Certifications pursuant to Securities Exchange Act of 1934 Rule 13a-14(b) or 15d-14(b) and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes- Oxley Act of 2002. | |
101.INS |
| Inline XBRL Instance Document |
101.SCH |
| Inline XBRL Taxonomy Extension Schema Document |
101.CAL |
| Inline XBRL Taxonomy Extension Calculation Linkbase Document |
101.DEF |
| Inline XBRL Taxonomy Extension Definition Linkbase Document |
101.LAB |
| Inline XBRL Taxonomy Extension Label Linkbase Document |
101.PRE |
| Inline XBRL Taxonomy Extension Presentation Linkbase Document |
104 |
| Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
25
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized on January 24, 2025.
| NITCHES, INC. | |
|
|
|
| By: | /s/ John Morgan |
| Name: | John Morgan |
| Title: | Principal Executive Officer and Principal Financial Officer |
26
EXHIBIT 31.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
I, John Morgan, certify that:
1.I have reviewed this quarterly report on Form 10-Q/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 |
|
| John Morgan |
|
| Chief Executive Officer |
EXHIBIT 31.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER
I, John Morgan, certify that:
1.I have reviewed this quarterly report on Form 10-Q/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 |
|
| John Morgan |
|
| Chief Financial Officer, Principal Accounting 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 quarterly report of Nitches, Inc. (the “Company”) on Form 10-Q/A for the quarterly period ended May 31, 2024, 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 |
|
| John Morgan |
|
| Chief Executive Officer |
EXHIBIT 32.2
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 quarterly report of Nitches, Inc. (the “Company”) on Form 10-Q/A for the quarterly period ended May 31, 2024, 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 |
|
| John Morgan |
|
| Chief Financial Officer, Principal Accounting Officer |