NightFood Holdings, Inc 10-Q for FY2021 Q1

NightFood Holdings, Inc. (NGTFD)

10-Q 2020-11-23 For: 2020-09-30

Added on April 11, 2026

About this 10-Q

NightFood Holdings, Inc filed this 10-Q on November 23, 2020, covering the quarter ended September 30, 2020 (FY2021 Q1).

Headline figures

Quarter ended September 30, 2020, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $126.98K; up 173.1% from $46.5K a year earlier
Net loss: $943.82K; compared with a net loss of $513.58K a year earlier

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Nevada		46-3885019
(State or Other Jurisdiction of		(I.R.S. Employer
Incorporation or Organization)		Identification No.)

520 White Plains Road, Suite 500 Tarrytown, New York		10591
(Address of Principal Executive Offices)		(Zip Code)

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☒
		Emerging growth company	☐

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Nightfood Holdings, Inc Common Stock		NGTF		OTCQB

PART I – FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)	1

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	2

Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	8

Item 4.	Controls and Procedures.	8

PART II – OTHER INFORMATION

Item 1.	Legal Proceedings.	9

Item 1A.	Risk Factors.	9

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	9

Item 3.	Defaults Upon Senior Securities.	9

Item 4.	Mine Safety Disclosures.	9

Item 5.	Other Information.	9

Item 6.	Exhibits.	9

Signatures		10

Financial Statements
Condensed Consolidated Balance Sheets as of September 30, 2020 (Unaudited) and June 30, 2020	F-1
Unaudited Condensed Consolidated Statements of Operations for the three months ended September 30, 2020 and 2019	F-2
Unaudited Condensed Consolidated Statements of Changes in Stockholders’ Deficit for the three months ended September 30, 2020 and 2019	F-3
Unaudited Condensed Consolidated Statements of Cash Flows for the three months ended September 30, 2020 and 2019	F-4
Notes to Unaudited Condensed Consolidated Financial Statements	F-5 - F-22

	September 30,			June 30,
	2020			2020
	(Unaudited)
ASSETS
Current assets:
Cash	$	8,360		$	197,622
Accounts receivable – net		65,053			61,013
Inventories		213,384			275,605
Other current assets		272,032			398,085
Total current assets		558,829			932,325

Total assets	$	558,829		$	932,325

LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Accounts payable	$	1,147,502		$	1,286,149
Accrued expense-related party		9,974			9,974
Accrued expense		56,923			-
Accrued interest		214,402			192,625
Short term borrowings – line of credit		2,794			3,897
Convertible notes payable – net of discount		2,348,239			2,330,189
Fair value of derivative liabilities		1,357,245			1,590,638
Total current liabilities	$	5,137,079			5,413,472

Commitments and contingencies		-			-

Stockholders’ deficit:
Preferred stock, ($0.001 par value, 1,000,000 shares authorized, and 1,000 issued and outstanding as of September 30, 2020 and 1,000 outstanding as of June 30, 2020, respectively)		1			1
Common stock, ($0.001 par value, 200,000,000 shares authorized, and 65,085,597 issued and outstanding as of September 30, 2020 and 61,796,680 outstanding as of June 30, 2020, respectively)		65,086			61,797
Additional paid in capital		13,931,609			13,088,177
Accumulated deficit		(18,574,946	)		(17,631,122	)
Total stockholders’ deficit		(4,578,250	)		(4,481,147	)
Total Liabilities and Stockholders’ Deficit	$	558,829		$	932,325

	For the three months ended September 30, 2020			For the three months ended September 30, 2019
Revenues	$	126,983		$	46,497

Operating expenses
Cost of product sold		229,696			146,500
Selling, general and administrative		433,330			28,107
Amortization of intangibles		-			166,667
Total operating expenses		663,026			341,274

Loss from operations		(536,043	)		(294,777	)

Interest expense – bank debt		337			-
Interest expense – shareholder		83,955			26,598
Loss on extinguishment of debt upon notes conversion		188,397			-
Change in derivative liability		(207,524	)		(190,062	)
Interest expense – other		322,739			382,267
Other expense- non cash		19,877			-
Total other expense		407,781			218,803

Provision for income tax		-			-

Net loss	$	(943,824	)	$	(513,580	)

Basic and diluted net loss per common share	$	(0.01	)	$	(0.01	)

Weighted average shares of capital outstanding – basic and diluted		63,442,930			54,482,700

	Common Stock				Preferred Stock				Additional Paid-in		Accumulated			Total Stockholders’
	Shares		Par Value		Shares		Par Value		Capital		Deficit			Deficit
Balance, June 30, 2019		53,773,856	$	53,774		1,000	$	1	$	10,692,679	$	(13,219,059	)	$	(2,472,605	)
Common stock issued for services		122,762		123		-		-		49,274		-			49,397
Common stock issued for interest		110,404		110						26,487		-			26,597
Issuance of common stock for debt conversion		1,409,349		1,409						335,591		-			337,000
Derivative liability reclassed upon debt conversion		-		-						213,739		-			213,739
Net loss		-		-		-		-		-		(513,580	)		(513,580	)
Balance, Three Months ended September 30, 2019		55,416,371	$	55,416		1,000	$	1	$	11,317,770	$	(13,732,639	)	$	(2,359,452	)

Balance, June 30, 2020		61,796,680	$	61,797		1,000	$	1	$	13,088,177	$	(17,631,122	)	$	(4,481,147	)
Common stock issued for interest		312,938		313						36,165		-			36,478
Issuance of common stock for debt conversion		2,975,979		2,976						344,024		-			347,000
Issuance of warrants										65,711					65,711
Loss on fair value of shares issued upon debt conversion		-		-						397,532		-			397,532
Net loss												(943,824	)		(943,824	)
		65,085,597	$	65,086	$	1,000	$	1	$	13,931,609		(18,574,946	)	$	(4,578,250	)

	For the three months ended September 30, 2020			For the three months ended September 30, 2019
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(943,824	)	$	(513,580	)
Adjustments to reconcile net loss to net cash used in operations activities:
Warrants issued for services		65,711			-
Stock issued for services		-			49,397
Stock issued for interest		-			26,598
Amortization of debt discount		322,739			382,267
Deferred financing fees and financing cost		45,577			-
Change in derivative liability		(207,524)			(190,062	)
Loss on extinguishment of debt upon notes conversion		188,397			-
Amortization of intangible assets		-			166,667
Change in operating assets and liabilities
Change in accounts receivable		(4,040	)		(135,967	)
Change in inventory		62,221			(30,583	)
Change in other current assets		126,053			(520,000	)
Change in accounts payable		(81,725	)		804,181
Change in accrued expenses		58,256			(12,001	)
Net cash used in operating activities		(368,159	)		26,916

CASH FLOWS FROM INVESTING ACTIVITIES:
Cash paid for purchase of intangible assets		-			(1,000,000	)
Net cash used in investing activities		-			-

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from the issuance of debt-net		180,000			1,050,000
Borrowings on line of credit		(1,103	)		-
Net cash provided by financing activities		178,897			1,050,000

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		(189,262	)		76,916

Cash and cash equivalents, beginning of period		197,622			30,142
Cash and cash equivalents, end of period	$	8,360		$	107,058

Supplemental Disclosure of Cash Flow Information:
Cash Paid For:
Interest	$	337		$
Income taxes	$	-		$	-
Summary of Non-Cash Investing and Financing Information:
Initial derivative liability and debt discount accounted	$	126,029		$	845,903
Derivative liability reclassed to loss on extinguishment of debt upon notes conversion	$	189,257		$	-
Stock issued for conversion of debt	$	347,000		$	337,000
Stock Issued for Interest	$	36,478		$	26,597
True-up adjustment in debt discount and derivative liability	$	37,360		$	-

1.	Description of Business		Nightfood Holdings, Inc. (the “Company”) is a Nevada Corporation organized October 16, 2013 to acquire all of the issued and outstanding shares of Nightfood, Inc., a New York Corporation from its sole shareholder, Sean Folkson. All of its operations are conducted by its two subsidiaries: Nightfood, Inc. (“Nightfood”) and MJ Munchies, Inc. (“Munchies”). Nightfood’s business model is to manufacture and distribute snack products specifically formulated for nighttime snacking to help consumers satisfy nighttime cravings in a better, healthier, more sleep friendly way. Management believes Nightfood is the first brand to achieve mainstream distribution of snacks focused on better sleep, and expects the category of “sleep-friendly” snacking to become an important segment of the total snacking market in coming years. Munchies has acquired a portfolio of intellectual property around the brand name Half-Baked, and intends to license said IP to operators in the cannabis edibles space and other related spaces.

		●	The Company’s fiscal year end is June 30.

		●	The Company currently maintains its corporate address in Tarrytown, New York.

Cash and Cash Equivalents	●	The Company classifies as cash and cash equivalents amounts on deposit in the banks and cash temporarily in various instruments with original maturities of three months or less at the time of purchase.

Fair Value of Financial Instruments	●	Statement of financial accounting standard FASB Topic 820, Disclosures about Fair Value of Financial Instruments, requires that the Company disclose estimated fair values of financial instruments. The carrying amounts reported in the statements of financial position for assets and liabilities qualifying as financial instruments are a reasonable estimate of fair value.

Inventories	●	Inventories consisting of packaged food items and supplies are stated at the lower of cost (FIFO) or net realizable value, including provisions for spoilage commensurate with known or estimated exposures which are recorded as a charge to cost of sales during the period spoilage is incurred. The Company has no minimum purchase commitments with its vendors.

Advertising Costs	●	Advertising costs are expensed when incurred and are included in advertising and promotional expense in the accompanying statements of operations. Although not traditionally thought of by many as “advertising costs”, the Company includes expenses related to graphic design work, package design, website design, domain names, and product samples in the category of “advertising costs”. The Company reported advertising costs of $185,289 and $198,270 for the three months ended September 30, 2020 and 2019, respectively Further, as discussed on footnote 3, due to the reclassification $396,250 expenses was reversed and set off with the advertising costs incurred during 2019.

Income Taxes	●	The Company has not generated any taxable income, and, therefore, no provision for income taxes has been provided.

	●	Deferred income taxes are reported for timing differences between items of income or expense reported in the financial statements and those reported for income tax purposes in accordance with FASB Topic 740, “Accounting for Income Taxes”, which requires the use of the asset/liability method of accounting for income taxes. Deferred income taxes and tax benefits are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and for tax loss and credit carry-forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The Company provides for deferred taxes for the estimated future tax effects attributable to temporary differences and carry-forwards when realization is more likely than not.

	●	A valuation allowance has been recorded to fully offset the deferred tax asset even though the Company believes it is more likely than not that the assets will be utilized.

	●	The Company’s effective tax rate differs from the statutory rates associated with taxing jurisdictions because of permanent and temporary timing differences as well as a valuation allowance.

Revenue Recognition	●	The Company generates its revenue by selling its nighttime snack products wholesale to retailers and wholesalers.

		●	All sources of revenue are recorded pursuant to FASB Topic 606 Revenue Recognition, to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This includes a five-step framework that requires an entity to: (i) identify the contract(s) with a customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract, and (v) recognize revenue when the entity satisfies a performance obligation. In addition, this revenue generation requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers.

		●	The Company offers sales incentives through various programs, consisting primarily of advertising related credits. The Company records advertising related credits with customers as a reduction to revenue as no identifiable benefit is received in exchange for credits claimed by the customer.

		●	The Company revenue from contracts with customers provides that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The Company incurs costs associated with product distribution, such as freight and handling costs. The Company has elected to treat these costs as fulfillment activities and recognizes these costs at the same time that it recognizes the underlying product revenue. As this policy election is in line with the Company’s previous accounting practices, the treatment of shipping and handling activities under FASB Topic 606 did not have any impact on the Company’s results of operations, financial condition and/or financial statement disclosures. The adoption of ASC 606 did not result in a change to the accounting for any of the Company’s revenue streams that are within the scope of the amendments. The Company’s services that fall within the scope of ASC 606 are recognized as revenue as the Company satisfies its obligation to the customer.

			Under ASC 606-10-32-27, if the consideration payable to a customer is accounted for as a reduction of the transaction price, “an entity shall recognize the reduction of revenue when (or as) the later of either of the following events occurs:

			a)	The entity recognizes revenue for the transfer of the related goods or services to the customer.

			b)	The entity pays or promises to pay the consideration (even if the payment is conditional on a future event). That promise might be implied by the entity’s customary business practices.”

			Management reviewed each arrangement to determine if each fee paid is for a distinct good or service and should be expensed as incurred or if the Company should recognize the payment as a reduction of revenue.

		The Company recognizes revenue upon shipment based on meeting the transfer of control criteria. The Company has made a policy election to treat shipping and handling as costs to fulfill the contract, and as a result, any fees received from customers are included in the transaction price allocated to the performance obligation of providing goods with a corresponding amount accrued within cost of sales for amounts paid to applicable carriers.

Concentration of Credit Risk	●	Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash deposits at financial institutions. At various times during the year, the Company may exceed the federally insured limits. To mitigate this risk, the Company places its cash deposits only with high credit quality institutions. Management believes the risk of loss is minimal. At September 30, 2020 and June 30, 2020, the Company did not have any uninsured cash deposits.

	As of June 30, 2019 ^(A)
	Previously Reported			Adjustments		As Corrected
Consolidated Balance Sheet
Current assets	$	482,667		$	487,500	$	970,167
Current liabilities	$	2,955,272		$	223,333	$	3,178,605
Working capital (deficit)	$	(2,472,605	)	$	264,167	$	(2,208,438	)
Total assets	$	482,667		$	487,500	$	970,167
Total liabilities	$	2,955,272		$	223,333	$	3,178,605
Total stockholders' deficit	$	(2,472,605	)	$	264,167	$	(2,208,438	)

	As of September 30, 2019
	Previously Reported			Adjustments			As Corrected
Consolidated Balance Sheet
Current assets	$	858,216		$	387,917		$	1,246,133
Current liabilities	$	3,287,252		$	1,151,666		$	4,438,918
Working capital (deficit)	$	(2,429,036	)	$	(763,749	)	$	(3,192,785	)
Total assets	$	858,216		$	1,221,250		$	2,079,466
Total liabilities	$	3,287,252		$	1,151,666		$	4,438,918
Total stockholders' deficit	$	(2,429,036	)	$	69,584		$	(2,359,452	)

	For the Year Ended June 30, 2019 ^(A)
	Previously Reported			Adjustments			As Corrected
Consolidated Statements of Operations
Revenues	$	352,172		$	-		$	352,172
Operating expenses	$	2,263,722		$	(264,167	)	$	1,999,555
Loss from operations	$	(1,911,550	)	$	264,167		$	(1,647,383	)
Other income (expenses)	$	2,686,793		$	-		$	2,686,793
Net income (loss)	$	(4,598,343	)	$	264,167		$	(4,334,176	)
Basic & diluted EPS	$	(0.09	)	$	-		$	(0.09	)

	September 30, 2020		June 30, 2020
Finished goods – ice cream	$	141,602	$	195,817
Raw material – ingredients		24,515		26,309
Packaging		47,267		53,479
TOTAL	$	213,384	$	275,605

Beneficial Conversion Feature	●	For conventional convertible debt where the rate of conversion is below market value, the Company records any “beneficial conversion feature” (“BCF”) intrinsic value as additional paid in capital and related debt discount. When the Company records a BCF, the relative fair value of the BCF is recorded as a debt discount against the face amount of the respective debt instrument. The discount is amortized over the life of the debt. If a conversion of the underlying debt occurs, a proportionate share of the unamortized amounts is immediately expensed.

Debt Issue Costs	●	The Company may pay debt issue costs in connection with raising funds through the issuance of debt whether convertible or not or with other consideration. These costs are recorded as debt discounts and are amortized over the life of the debt to the statement of operations as amortization of debt discount.

Original Issue Discount	●	If debt is issued with an original issue discount, the original issue discount is recorded to debt discount, reducing the face amount of the note and is amortized over the life of the debt to the statement of operations as amortization of debt discount. If a conversion of the underlying debt occurs, a proportionate share of the unamortized amounts is immediately expensed.

Valuation of Derivative Instruments	●	ASC 815 “Derivatives and Hedging” requires that embedded derivative instruments be bifurcated and assessed, along with free-standing derivative instruments such as warrants, on their issuance date and measured at their fair value for accounting purposes. In determining the appropriate fair value, the Company uses the Trinomial Tree option pricing formula. Upon conversion of a note where the embedded conversion option has been bifurcated and accounted for as a derivative liability, the Company records the shares at fair value, relieves all related notes, derivatives and debt discounts and recognizes a net gain or loss on derivative liability under the line item “change in derivative liability”.

Derivative Financial Instruments	●	The Company does not use derivative instruments to hedge exposures to cash flow, market or foreign currency risks. The Company evaluates all of its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and then is revalued at each reporting date, with changes in fair value reported in the consolidated statement of operations. For stock based derivative financial instruments, Fair value accounting requires bifurcation of embedded derivative instruments such as conversion features in convertible debt or equity instruments, and measurement of their fair value for accounting purposes. In determining the appropriate fair value, the Company uses the Trinomial Tree option-pricing model. In assessing the convertible debt instruments, management determines if the convertible debt host instrument is conventional convertible debt and further if there is a beneficial conversion feature requiring measurement. If the instrument is not considered conventional convertible debt, the Company will continue its evaluation process of these instruments as derivative financial instruments.

		Once determined, derivative liabilities are adjusted to reflect fair value at the end of each reporting period. Any increase or decrease in the fair value from inception is made quarterly and appears in results of operations as a change in fair market value of derivative liabilities.

Customer Concentration	●	During the three months ended September 30, 2020, the Company had one customer account for approximately 39% of the gross sales. One other customer accounted for approximately 21% of gross sales, and two other customers accounted for over 9% of gross sales. During the three months ended September 30, 2019, one customer accounted for approximately 34% of the gross sales while two other customers accounted for over 10% of gross sales. As the Company continues to grow its distribution base, it is anticipated that revenue distribution will become less concentrated.

Vendor Concentration		During the quarter ended June 30, 2020, three vendors accounted for more than 10% of our operating expenses. During the quarter ended June 30, 2019, two vendors accounted for more than 10% of our operating expenses.

Receivables Concentration	●	As of September 30, 2020, the Company had receivables due from seven customers, two customers of which each accounted for over 20% of the outstanding balance. Three of the other five, each accounted for 10% of the total balance. As of June 30, 2020, the Company had receivables due from seven customers, two of whom accounted for over 20% of the outstanding balance. Four of the other five accounted for over 10% of the total balance.

Income/Loss Per Share	●	Net income/loss per share data for both the three-month periods ending September 30, 2020 and 2019, are based on net income/loss available to common shareholders divided by the weighted average of the number of common shares outstanding. The Company does not present a diluted Earnings per share as the convertible debt and interest that is convertible into shares of the Company’s common stock would not be included in this computation, as the Company is generating a loss and therefore these shares would be antidilutive.

Impairment of Long-lived Assets	●	The Company accounts for long-lived assets in accordance with the provisions of FASB Topic 360, Accounting for the Impairment of Long-Lived Assets. This statement requires that long-lived assets and certain identifiable intangibles be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell. Fair values are determined based on quoted market value, discounted cash flows or internal and external appraisals, as applicable. During the period ended September 30, 2020 and 2019, the Management determined and impaired $-0- and $-0-, respectively as impairment on intangible asset

Reclassification		The Company may make certain reclassifications to prior period amounts to conform with the current year’s presentation. These reclassifications did not have a material effect on its consolidated statement of financial position, results of operations or cash flows.

Recent Accounting Pronouncements		The Company reviews all of the Financial Accounting Standard Board’s updates periodically to ensure the Company’s compliance of its accounting policies and disclosure requirements to the Codification Topics. In May 2014, the Financial Accounting Standards Board (FASB) issued ASU 2014-09, Revenue from Contracts with Customers, to establish ASC Topic 606, (ASC 606). ASU 2014-09 supersedes the revenue recognition requirements in ASC Topic 605, Revenue Recognition and most industry-specific guidance throughout the Industry Topics of the Codification. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance includes a five-step framework that requires an entity to: (i) identify the contract(s) with a customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract, and (v) recognize revenue when the entity satisfies a performance obligation. In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers.

			The standard became effective for us beginning on July 1, 2018 and did not have a material impact on our financial statements. In January 2016, the FASB issued ASU 2016-01,Financial Instruments – Overall (Subtopic 825-10) – Recognition and Measurement of Financial Assets and Financial Liabilities, which requires all investments in equity securities with readily determinable fair value to be measured at fair value with changes in the fair value recognized through net income (other than those accounted for under the equity method of accounting or those that result in consolidation of the investee). ASU 2016-01 is intended to enhance the reporting model for financial instruments to provide users of financial statements with more decision-useful information and removes the requirement to disclose the methods and significant assumptions used to estimate the fair value for financial instruments measured at amortized cost on the balance sheet. For public companies, the new standard is effective for annual periods beginning after December 15, 2017, including interim periods within the fiscal year. For all other entities, including emerging growth companies, ASU 2016-01 is effective for annual periods beginning after December 15, 2018, and interim periods within annual periods beginning after December 15, 2019. The Company evaluated the impact on the financial statements and implemented the provisions of ASU 2016-01 for the annual financial statements for the year ended June 30, 2020. This new standard did not have a material impact on our financial statements or related disclosures.

			In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) and subsequently amended the guidance relating largely to transition considerations under the standard in January 2017, to increase transparency and comparability among organizations by requiring the recognition of right-of-use (“ROU”) assets and lease liabilities on the balance sheet. Most prominent among the changes in the standard is the recognition of ROU assets and lease liabilities by lessees for those leases classified as operating leases under current U.S. GAAP. Under the standard, disclosures are required to meet the objective of enabling users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases. We will be required to recognize and measure leases existing at, or entered into after, the beginning of the earliest comparative period presented using a modified retrospective approach, with certain practical expedients available. The standard became effective for us beginning July 1, 2019. We have reviewed this and have determined that there is no material impact on our financial statements.

			In July 2017, the FASB issued ASU No. 2017-11, Earnings Per Share, Distinguishing Liabilities from Equity and Derivatives and Hedging, which changes the accounting and earnings per share for certain instruments with down round features. The amendments in this ASU should be applied using a cumulative-effect adjustment as of the beginning of the fiscal year or retrospective adjustment to each period presented and is effective for annual periods beginning after December 15, 2018, and interim periods within those periods. We adopted this guidance effective July 1, 2019. The adoption of this guidance did not materially impact our financial statements and related disclosures.

			In February 2018, the Financial Accounting Standards Board (“FASB”) issued ASC Update No 2018-02 (Topic 220) Income Statement – Reporting Comprehensive Income: Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. This ASC update allows for a reclassification into retained earnings of the stranded tax effects in accumulated other comprehensive income (“AOCI”) resulting from the enactment of the Tax Cuts and Jobs Act (“TCJA”). The updated guidance is effective for interim and annual periods beginning after December 15, 2018. We adopted this guidance effective July 1, 2019. The adoption of this guidance did not materially impact our financial statements and related disclosures.

			In June 2018, the FASB issued ASU 2018-07, Compensation - Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting, to expand the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees and supersedes the guidance in Subtopic 505-50, Equity - Equity-Based Payments to Non-Employees. Under ASU 2018-07, equity-classified nonemployee share-based payment awards are measured at the grant date fair value on the grant date The probability of satisfying performance conditions must be considered for equity-classified nonemployee share-based payment awards with such conditions. ASU 2018-07 is effective for fiscal years beginning after December 15, 2018, with early adoption permitted. We adopted this guidance effective July 1, 2019. The adoption of this guidance did not materially impact our financial statements and related disclosures. In July 2018, the FASB issued ASU 2018-09 to provide clarification and correction of errors to the Codification. The amendments in this update cover multiple Accounting Standards Updates. Some topics in the update may require transition guidance with effective dates for annual periods beginning after December 15, 2018. We adopted this guidance effective July 1, 2019. The adoption of this guidance did not materially impact our financial statements and related disclosures.

			The Company will continue to monitor these emerging issues to assess any potential future impact on its financial statements.

3.	Restatement of Prior Financial Information	Subsequent to Form 10K for the year ended June 30, 2019 filing, during the interim reviews and based on such reviews, the following determinations were made by the Company:

		Error in Accounting for Slotting and Set-up Fees

		During our review, we determined that the accounting treatment for the recognition of slotting fees and other fees paid or payable by the Company to certain strategic partners was incorrect. Specifically, it was determined that revenue relating to slotting fees, which were originally capitalized and amortized into expense over an 18-month period, should instead be treated as a reduction in revenue at the later of recognition of revenue for the transfer of the Nightfood product or when the Company pays or promised to pay the slotting fee. In addition, certain fees related to platforms to launch our products and advertising efforts should have been capitalized and recorded as an intangible asset. The Company previously recorded a portion of this fee as an intangible asset – placement fee and expensed the remaining amount as advertising expense in the Period Ended December 31, 2019.

		In accordance with the guidance provided by the SEC’s Staff Accounting Bulletin 99, Materiality (“SAB 99”) and Staff Accounting Bulletin 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements (“SAB 108”), the Company has determined that the impact of adjustments relating to the corrections of this accounting error are not material to previously issued annual audited and unaudited financial statements. Accordingly, these changes are disclosed herein and will be disclosed prospectively.

	For the Three Months Ended September 30, 2019
	Previously Reported			Adjustments			As Corrected
Consolidated Statements of Operations
Revenues	$	206,497		$	(160,000	)	$	46,497
Operating expenses	$	570,858		$	(229,584	)	$	341,274
Loss from operations	$	(364,361	)	$	69,584		$	(294,777	)
Other income (expenses)	$	218,803		$	-		$	218,803
Net income (loss)	$	(583,164	)	$	69,584		$	(513,580	)
Basic & diluted EPS	$	(0.01	)	$	-		$	(0.01	)

		●	The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. For the three months ended September 30, 2020, the Company had a net loss of $943,824, negative cash flow from operations and other expenses related to financing activities of $368,159 and accumulated deficit of $18,574,946. Management is taking steps to raise additional funds to address its operating and financial cash requirements to continue operations in the next twelve months. Management has devoted a significant amount of time in the raising of capital from additional debt and equity financing. However, the Company’s ability to continue as a going concern is dependent upon raising additional funds through debt and equity financing and generating revenue. There are no assurances the Company will receive the necessary funding or generate revenue necessary to fund operations.

		●	The Company has limited available cash resources and we do not believe our cash on hand will be adequate to satisfy our ongoing working capital needs. The Company is continuing to raise capital through private placement of our common stock and through the use of convertible notes to finance the Company’s operations, of which it can give no assurance of success. However, the Company has a strong ongoing relationship with Eagle Equities and we expect to be able to continue to finance our operations as we have over the previous several quarters, although no assurance can be guaranteed. We believe that our current capitalization structure, combined with ongoing increases in revenues, will enable us to successfully secure required financing to continue our growth. In the short term, the Company plans to continue to utilize convertible notes as a financing vehicle, as it allows for today’s operating capital to be either repaid, or converted to equity at future valuations.

			Because the business is new and has limited operating history and sales, no certainty of continuation can be stated. Management has devoted a significant amount of time in the raising of capital from additional debt and equity financing. However, the Company’s ability to continue as a going concern is dependent upon raising additional funds through debt and equity financing and generating revenue. There are no assurances the Company will receive the necessary funding or generate revenue necessary to fund operations.

			Even if the Company is successful in raising additional funds, the Company cannot give any assurance that it will, in the future, be able to achieve a level of profitability from the sale of its products to sustain its operations. These conditions raise substantial doubt about the Company’s ability to continue as a going concern for one year from the date the financial statements are issued. The accompanying financial statements do not include any adjustments to reflect the possible future effects on recoverability and reclassification of assets or the amounts and classification of liabilities that may result from the outcome of this uncertainty.

	September 30, 2020		June 30, 2020
Prepaid advertising costs	$	263,822	$	398,045
Vendor deposits – Other	$	8,210	$	40
TOTAL	$	272,032	$	398,085

	September 30,		June 30,
	2020		2020
Intangible assets	$	-	$	1,000,000
Amortization of intangible assets		-		(500,000	)
Impairment of intangible assets		-		(500,000	)
TOTAL	$	-	$	-

	September 30, 2020		June 30, 2020
Accrued consulting fees – related party	$	9,974	$	9,974
Accrued interest		214,402		192,625
Accrued slotting fees		56,923		-
TOTAL	$	281,299	$	202,599

			On June 11, 2019, the Company entered into a convertible promissory note and a security purchase agreement dated June 11, 2019, in the amount of $300,000. The lender was Eagle Equities, LLC. The notes have a maturity of June 11, 2020 and interest rate of 8% per annum and are convertible at a price of 70% of the lowest trading price on the primary trading market on which the Company’s Common Stock is then listed for the fifteen (15) trading days immediately prior to conversion. The note may be prepaid, but carries a penalty in association with the remittance amount, as there is an accretion component to satisfy the note with cash. The convertible note qualifies for derivative accounting and bifurcation under ASC 815, “Derivatives and Hedging.” The fair value of the $300,000 Notes was calculated using the Black-Scholes pricing model at $240,217, with the following assumptions: risk-free interest rate of 2.05%, expected life of 1 year, volatility of 16%, and expected dividend yield of zero. Because the fair value of the note did not exceed the net proceeds from the $300k Notes, no charge was recorded to “Financing cost” for the excess of the fair value of the note. As of September 30, 2020 and June 30, 2020, the debt discount was $0 and $46,726, respectively. The Company fair valued the notes as of conversion date and accounted for a loss on conversion of $42,595 included under line item “Loss on debt extinguishment upon note conversion, net”.

			On July 5, 2019, the Company entered into a convertible promissory note and a security purchase agreement dated July 5, 2019, in the amount of $300,000. The lender was Eagle Equities, LLC. The notes have a maturity of July 5, 2020 and interest rate of 8% per annum and are convertible at a price of 70% of the lowest trading price on the primary trading market on which the Company’s Common Stock is then listed for the fifteen (15) trading days immediately prior to conversion. The note may be prepaid, but carries a penalty in association with the remittance amount, as there is an accretion component to satisfy the note with cash. The convertible note qualifies for derivative accounting and bifurcation under ASC 815, “Derivatives and Hedging.” The fair value of the $300,000 Notes was calculated using the Black-Scholes pricing model at $239,759, with the following assumptions: risk-free interest rate of 1.98%, expected life of 1 year, volatility of 118%, and expected dividend yield of zero. Because the fair value of the note did not exceed the net proceeds from the $300k Notes, no charge was recorded to “Financing cost” for the excess of the fair value of the note. As of September 30, 2020 and June 30, 2020, the debt discount was $0 and $2,627, respectively.

			On August 8, 2019, the Company entered into a convertible promissory note and a security purchase agreement dated August 8, 2019, in the amount of $300,000. The lender was Eagle Equities, LLC. The notes have a maturity of August 8, 2020 and interest rate of 8% per annum and are convertible at a price of 70% of the lowest trading price on the primary trading market on which the Company’s Common Stock is then listed for the fifteen (15) trading days immediately prior to conversion. The note may be prepaid, but carries a penalty in association with the remittance amount, as there is an accretion component to satisfy the note with cash. The convertible note qualifies for derivative accounting and bifurcation under ASC 815, “Derivatives and Hedging.” The fair value of the $300,000 Notes was calculated using the Black-Scholes pricing model at $254,082, with the following assumptions: risk-free interest rate of 1.79%, expected life of 1 year, volatility of 113%, and expected dividend yield of zero. Because the fair value of the note did not exceed the net proceeds from the $300k Notes, no charge was recorded to “Financing cost” for the excess of the fair value of the note. As of September 30, 2020, and June 30, 2020 the debt discount was $0 and $26,452, respectively.

			On September 24, 2019, the Company entered into a convertible promissory note and a security purchase agreement dated September 24, 2019, in the amount of $150,000. The lender was Eagle Equities, LLC. The notes have a maturity of September 24, 2020 and interest rate of 8% per annum and are convertible at a price of 70% of the lowest trading price on the primary trading market on which the Company’s Common Stock is then listed for the fifteen (15) trading days immediately prior to conversion. The note may be prepaid, but carries a penalty in association with the remittance amount, as there is an accretion component to satisfy the note with cash. The convertible note qualifies for derivative accounting and bifurcation under ASC 815, “Derivatives and Hedging.” The fair value of the $150,000 Notes was calculated using the Black-Scholes pricing model at $118,009, with the following assumptions: risk-free interest rate of 1.78%, expected life of 1 year, volatility of 113%, and expected dividend yield of zero. Because the fair value of the note did not exceed the net proceeds from the $150k Notes, no charge was recorded to “Financing cost” for the excess of the fair value of the note. As of September 30, 2020 and June 30, 2020, the debt discount was $0 and $27,482.

			On November 7, 2019, the Company entered into a convertible promissory note and a security purchase agreement dated November 7, 2019, in the amount of $150,000. The lender was Eagle Equities, LLC. The notes have a maturity of November 7, 2020 and interest rate of 8% per annum and are convertible at a price of 70% of the lowest trading price on the primary trading market on which the Company’s Common Stock is then listed for the fifteen (15) trading days immediately prior to conversion. The note may be prepaid, but carries a penalty in association with the remittance amount, as there is an accretion component to satisfy the note with cash. The convertible note qualifies for derivative accounting and bifurcation under ASC 815, “Derivatives and Hedging.” The fair value of the $150,000 Notes was calculated using the Black-Scholes pricing model at $121,875, with the following assumptions: risk-free interest rate of 1.58%, expected life of 1 year, volatility of 122%, and expected dividend yield of zero. Because the fair value of the note did not exceed the net proceeds from the $150k Notes, no charge was recorded to “Financing cost” for the excess of the fair value of the note. As of September 30, 2020 and June 30, 2020, the debt discount was $12,354 and $43,074, respectively.

			On December 31, 2019, the Company entered into a convertible promissory note and a security purchase agreement dated December 31, 2019, in the amount of $150,000. The lender was Eagle Equities, LLC. The notes have a maturity of December 31, 2020 and interest rate of 8% per annum and are convertible at a price of 70% of the lowest trading price on the primary trading market on which the Company’s Common Stock is then listed for the fifteen (15) trading days immediately prior to conversion. The note may be prepaid, but carries a penalty in association with the remittance amount, as there is an accretion component to satisfy the note with cash. The convertible note qualifies for derivative accounting and bifurcation under ASC 815, “Derivatives and Hedging.” The fair value of the $150,000 Notes was calculated using the Black-Scholes pricing model at $189,172, with the following assumptions: risk-free interest rate of 1.59%, expected life of 1 year, volatility of 115%, and expected dividend yield of zero. Because the fair value of the note exceeded the net proceeds from the $150k Notes, $39,172 was recorded to “Financing cost” for the excess of the fair value of the note. As of September 30, 2020 and June 30, 2020, the debt discount was $37,797 and $75,205, respectively.

			On June 23, 2020, the Company entered into a convertible promissory note and a security purchase agreement dated June 23, 2020, in the amount of $205,700. This note carried an Original Discount of 10% or $18,700 which was included in interest expense at the time of valuation. The lender was Eagle Equities, LLC. The notes have a maturity of June 23, 2021 and interest rate of 8% per annum and are convertible at a price of 78% of the lowest closing bid price on the primary trading market on which the Company’s Common Stock is then listed for the twenty (20) trading days immediately prior to conversion. The note may be prepaid, but carries a penalty in association with the remittance amount, as there is an accretion component to satisfy the note with cash. The convertible note qualifies for derivative accounting and bifurcation under ASC 815, “Derivatives and Hedging.” The fair value of the $205,700 Notes was calculated using the Black-Scholes pricing model at $132,236, with the following assumptions: risk-free interest rate of 0.18%, expected life of 1 year, volatility of 108%, and expected dividend yield of zero. As of September 30, 2020 and June 30, 2020, the debt discount was $96,369 and $129,700, respectively.

			On August 12, 2020, the Company entered into a convertible promissory note and a security purchase agreement dated August 12, 2020, in the amount of $205,700. This note carried an Original Discount of 10% or $18,700 which was included in interest expense at the time of valuation. The lender was Eagle Equities, LLC. The notes have a maturity of August 12, 2021 and interest rate of 8% per annum and are convertible at a price of 78% of the lowest closing bid price on the primary trading market on which the Company’s Common Stock is then listed for the twenty (20) trading days immediately prior to conversion. The note may be prepaid, but carries a penalty in association with the remittance amount, as there is an accretion component to satisfy the note with cash. The convertible note qualifies for derivative accounting and bifurcation under ASC 815, “Derivatives and Hedging.” The fair value of the $205,700 Notes was calculated using the Black-Scholes pricing model at $126,029, with the following assumptions: risk-free interest rate of 0.13%, expected life of 1 year, volatility of 101%, and expected dividend yield of zero. As of September 30, 2020, the debt discount was $109,110.

	Principal ($)			Debt Discount ($)			Net Value ($)
Balance at June 30, 2019		1,748,000			(630,259	)		1,117,741
Convertible notes payable issued during fiscal year ended June 30, 2020		2,148,400			-			2,148,400
Notes converted into shares of common stock		(961,000	)		-			(961,000	)
Debt discount associated with new convertible notes		-			(1,684,711	)		(1,684,711	)
Amortization of debt discount		-			1,709,759			1,709,759
Balance at June 30, 2020		2,935,400			(605,211	)		2,330,189
Convertible notes payable issued during three months ended September 30, 2020		205,700			-			205,700
Notes converted into shares of common stock		(347,000	)		-			(347,000	)
Debt discount associated with new convertible notes		-			(126,029	)		(126,029	)
Amortization of debt discount		-			322,739			322,739
True-up adjustment in debt discount and derivative liability		-			(37,360)			(37,360)
Balance at September 30, 2020		2,794,100			(445,861	)		2,348,239

10.	Derivative Liability	Due to the variable conversion price associated with some of these convertible promissory notes disclosed in Note 8 above, the Company has determined that the conversion feature is considered a derivative liability for instruments which are convertible and have not yet been settled. The accounting treatment of derivative financial instruments requires that the Company record the fair value of the derivatives on the date they are deemed to be derivative liabilities.

		During the three month period ended September 30, 2020, the Company recorded a change in fair value of derivative $207,524. The Company will measure the fair value of each derivative instrument in future reporting periods and record the change based on the change in fair value.

Derivative liability as of June 30, 2019	$	1,306,748
Initial derivative liability accounted for convertible notes payable issued during the period ended June 30, 2019		1,723,883
Change in derivative liability during the period		(858,774	)
Reclassify derivative liability associated with Notes converted		(581,219	)
Derivative liability as of June 30, 2020	$	1,590,638
Initial derivative liability accounted for convertible notes payable issued during the period ended September 30, 2020		126,029
True-up adjustment in debt discount and derivative liability		37,360
Change in derivative liability during the period		(207,524	)
Reclassify derivative liability associated with Notes converted		(189,257)
Balance at September 30, 2020	$	1,357,245

	Sept. 30, 2020		June 30, 2020
Line of Credit	$	2,794	$	3,897
Total borrowings		2,794		3,897
Less: current portion		2,794		3,897
Long term debt	$	-	$	-

13.	Warrants	The following is a summary of the Company’s outstanding common stock purchase warrants. Of the 500,000 warrants shown below at an exercise price of $.15, these warrants were issued as compensation for a four-year advisory agreement. 150,000 warrants vested on July 24, 2018, another 150,000 on July 24, 2019, another 150,000 vested on July 24, 2020, and the remaining 50,000 will vest on July 24, 2021, should advisor complete the term of his engagement. These warrants were all accounted for in Fiscal 2020.

		During the three months ended September 30, 2020 the Company entered into a warrant agreement with one of the Company’s vendors issuing 500,000 warrants at a strike price of $0.50 having a term of five years. The Company valued these warrants using the Black Scholes model utilizing a 107.93% volatility and a risk-free rate of 0.29%

		The aggregate intrinsic value of the warrants as of September 30, 2020 is $-0-.

		Outstanding at						Outstanding
Exercise Price		June 30, 2020		Issued / (Exercised) in 2020		Expired		September 30 2020
$	0.15		500,000		-		-		500,000
$	0.20		105,000		-		-		105,000
$	0.30		100,000		-		-		100,000
$	0.40		150,000		-		-		150,000
$	0.50		-		500,000		-		500,000
$	0.75		300,000		-		-		300,000
			1,155,000		500,000		-		1,655,000

14.	Fair Value of Financial Instruments	Cash and Equivalents, Receivables, Other Current Assets, Short-Term Debt, Accounts Payable, Accrued and Other Current Liabilities.

		The carrying amounts of these items approximated fair value.

		Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. To increase the comparability of fair value measures, Financial Accounting Standards Board (“FASB”) ASC Topic 820-10-35 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurement) and the lowest priority to unobservable inputs (level 3 measurements).

		Level 1—Valuations based on quoted prices for identical assets and liabilities in active markets.

		Level 2—Valuations based on observable inputs other than quoted prices included in Level 1, such as 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, or other inputs that are observable or can be corroborated by observable market data.

		Level 3—Valuations based on unobservable inputs reflecting our own assumptions, consistent with reasonably available assumptions made by other market participants. These valuations require significant judgment.

		The application of the three levels of the fair value hierarchy under Topic 820-10-35 to our assets and liabilities are described below:

	September 30, 2020 Fair Value Measurements
	Level 1		Level 2		Level 3		Total Fair Value
Assets
Other assets	$	-	$	-	$	-	$	-
Total	$	-	$	-	$	-	$	-
Liabilities
Short and long-term debt	$		$	-	$	2,794,100	$	2,794,100
Total	$		$	-	$	2,794,100	$	2,794,100