NICH 10-K & 10-Q changes, risk factors and insider trading

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.

Other expense was $(2,211,041) for the year ended August 31, 2024 compared to $(1,266,990) for the year ended August 31, 2023. The $944,051 increase in expense was caused by increases in (i) loan interest, (ii) non-cash interest, (iii) amortization of debt discount, and (iv) loss on the revaluation of derivative liabilities.

Restatement of the Year Ending August 31, 2023

Certain of the Company’s previously filed annual audited financial statements should no longer be relied upon and a restatement is required for these previously issued financial statements. The Company has restated herein the financial statements as of and for the year ended August 31, 2023, previously issued on December 7, 2023. The Company has also restated related amounts within the accompanying footnotes to the financial statements to conform to the corrected amounts in the financial statements.

The Company has evaluated and concluded that the misstatement was material to its previously issued financial statements.

Restatement Background

The Company determined several errors within the audited financial statements for the year ending August 31, 2023, including (1) presentational errors connected with convertible loans advanced to the Company with the related party loan amounting to $50,000 including debt discount $1,924 with the minor interest accrual offset; (2) the re-issuance of one share of Preferred Stock Series A to the CEO, which should have been accounted for at the value of the beneficial conversion feature embedded within the stock, resulting in an increase in costs for the year of $1,000,000; and (3) the miscalculation of derivative liabilities embedded within the convertible loan notes, resulting in an increase in costs of change in derivative liability of $303,440, an increase in interest accrual of $18,001, offset by $648 due to a presentational issue, and a decrease in derivative liability of $134,828; this affected a miscalculation of non-cash interest connected with the issuance of the related said convertible loan notes, which resulted in a reduction in costs of $420,268.

Description of Restatement Reconciliation Tables

In the following tables, the Company has presented a reconciliation of the previously issued balance sheets from prior periods as previously reported to the restated amounts as of August 31, 2023, as well as the previously issued statements of operations and statements of cash flows from the prior periods as previously reported to the restated amounts for the year ended August 31, 2023. The statement of stockholders’ equity for the year ended August 31, 2023 has been restated for the correction to net loss.

Note 1. Relates to an error in presentation of the convertible promissory notes, whereby (a) one of the notes was from a related party and should have been presented as such, and (b) interest was miscalculated and included in the convertible loan note balance instead of in accrued expenses. While this has a presentational effect only on the balance sheet and cash flow statement, there is no effect on the income statement.

Note 2. Relates to an error arising from the re-issuance of the one outstanding share of preferred stock series A, whereby such re-issuance was originally at par, but should have been assigned a beneficial conversion feature valuation, which is $1,000,000. The net effect on the originally filed income statement is, therefore, an additional cost of $1,000,000. The net effect on the balance sheet is an increase in stockholders’ deficit of $1,000,000 and an increase in additional paid-in capital of the same amount. There is no net effect on the cash flow statement.

Note 3. Relates to (a) a miscalculation of derivative liability. The revised liability at the year end is $249,696, a reduction of $134,828 from the original amount. The change for the income statement is from a gain of $222,277 to a loss of $81,163, a difference of $303,440. There is no net effect on the cash flow statement; and (b) a miscalculation of non-cash interest. The revised amount is a cost of $37,533 instead of $457,801, a difference of $420,268. There is no net effect on the cash flow statement.

Note 4. An issuance of stock for $200,000, including repayment of debt instruments of $$68,521 and related party loans of $8,964, was wrongly stated within Cash Flows from Financing Activities but should have been included in Cash Flows from Operating Activities, and has been corrected.

Note 5. Non-cash activities related disclosures in the Statement of Cash Flows which was missed in prior reporting and is now included.

For the year ended August 31, 2024, net cash flow used by investing activities was nil, compared to $24,500 for the year ended August 31, 2023.

Financing Activities

These factors raise substantial doubt about the Company’s ability to continue as a going concern, within one year from the issuance date of the financial statements. Management expects substantial additional expenses over the next several years as their commercial activities increase.

These financial statements for the year ending August 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 operations, or if obtained, upon terms favorable to the Company.

Shares Issued to the CEO

In addition to an annual salary, the Company also compensates the CEO with shares, including the following issuances:

On March 9, 2023, the Company issued 3,333 shares of Common Stock to the CEO for services of $3, or $0.001 per share. These shares were issued at par value, which was $200,000 (note: this was prior to the reverse split of 1:60,000, meaning that 200,000,000 shares were originally issued), as they were subsequently cancelled..

On December 22, 2023, the Company cancelled 3,717 shares of Common Stock previously issued to the CEO, at par value.

On June 20, 2024, the Company issued 1,999,967 shares of Common Stock to the CEO at par value.

At August 31, 2024, the CEO held 2,000,001 shares of Common Stock and one share of Preferred Stock Series A.

Transactional Support Received from the CEO

The CEO, John Morgan, provides transactional and financial support for the Company on an informal basis by paying for certain items on behalf of the Company and being compensated subsequently.

As at August 31, 2024, the Company owed Mr. Morgan a total of $50,000, detailed in a formal convertible promissory note with no fixed schedule for repayment of this amount. Payment will be made when the Company has sufficient cash to do so.