As
Filed with the Securities and Exchange Commission on April 21, 2017
Registration
No._________
UNITED
STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
Amendment No. 1
FORM
S-1
REGISTRATION
STATEMENT
UNDER THE SECURITIES ACT OF 1933
Nightfood
Holdings, Inc.
(Exact
Name of Issuer as specified in its charter)
Nevada
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2060
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46-3885019
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(State
or Other Jurisdiction of
Incorporation or Organization)
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(Primary
Standard Industrial Classification
Code Number
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(I.R.S.
Employer
Identification No.)
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520
WHITE PLAINS ROAD - SUITE 500
TARRYTOWN
NY 10591
888-888-6444
(Address
and telephone number of principal executive offices)
520
WHITE PLAINS ROAD - SUITE 500
TARRYTOWN
NY 10591
(Address
of principal place of business or intended principal place of business)
Frank
J. Hariton, Esq.,
1065 Dobbs Ferry Road,
White Plains,
New York 10607,
(914) 674- 4373
(Name,
address and telephone number of agent for service)
Approximate
Date of Proposed Sale to the Public: From time to time after the date this registration statement becomes effective. If any of
the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, check the following box. ☒
If
this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the
following box and list the Securities Act registration statement number of the earlier effective registration statement for the
same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following
box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.
☐
If
delivery of the prospectus is expected to be made pursuant to Rule 424, check the following box. ☐
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” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.
Large
accelerated filer
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☐
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Accelerated
filer
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Non-accelerated
filer
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☐
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Smaller
reporting company
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☒
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Emerging Growth Company
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☐
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(Do
not check if a smaller reporting company)
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CALCULATION
OF REGISTRATION FEE
Title of each class of securities to be registered
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Amount to be registered (1)
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Proposed maximum offering price per share (2)
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Proposed maximum aggregate offering price (1)
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Amount of registration fee (3)
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Common Stock, $.0001 par value per share
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2,838,000
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$
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0.20
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$
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567,600
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$
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65.86
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*
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(1)
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In
accordance with Rule
416(a), the registrant is also registering hereunder an indeterminate number of shares that may be issued and resold
resulting from stock splits, stock dividends or similar transactions.
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(2)
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Estimated in accordance with Rule 457(c) of the Securities Act of 1933 solely for the purpose of computing
the amount of the registration fee based on the closing market price of the Registrant’s common stock on March 13, 2017 on
the OTCPink Market.
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(3)
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Calculated under Section 6(b) of the Securities Act
of 1933.
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The registrant hereby amends this registration
statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment
which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission, acting pursuant
to said Section 8(a), may determine.
THE
INFORMATION CONTAINED IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. THESE SECURITIES MAY NOT BE SOLD UNTIL THE REGISTRATION
STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS DECLARED EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE
SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION, DATED April 21, 2017
PRELIMINARY
PROSPECTUS
NightFood
Holdings, Inc.
2,838,000
Shares of Common Stock
This prospectus relates to the offer and resale of up
to 2,838,000 shares of our common stock, par value $0.0001 per share, by the selling stockholder, Black Forest Capital, LLC (“Black
Forest”), and represent shares that Black Forest has agreed to purchase if put to it by us pursuant to the terms of the Equity
Purchase Agreement (the “EPA”) we entered into with Black Forest on February 8, 2017. Subject to the terms and conditions
of the EPA, we have the right to “put,” or sell, up to $5,000,000 worth of shares of our common stock to Black Forest.
This arrangement is sometimes referred to as an “EPA.” For more information on the selling stockholder, please see the
section of this prospectus entitled “Selling Security Holder” beginning on page 31. We will not receive any proceeds
from the resale of these shares of common stock offered by Black Forest. We will, however, receive proceeds from the sale of shares
directly to Black Forest pursuant to the EPA. When we put an amount of shares to Black Forest, the per share purchase price that
Black Forest will pay to us in respect of such put will be determined in accordance with a formula set forth in the Equity Purchase
Agreement. There will be no underwriter’s discounts or commissions so we will receive all of the proceeds of our sale to Black
Forest. The purchase price to be paid by Black Forest will be equal to 85% multiplied by the lowest VWAP price of our common stock
for the twenty trading days prior to the notice from us (the “Market Price”). If the VWAP for our stock
during the five trading days following a put notice is less than the price in the Put Notice, we are required to issue Black Forest
additional shares of our common stock pursuant to a formula set forth in the EPA. We will be entitled to put to Black Forest on
each put 200% of the average of the dollar volume on the principal trading exchange for our common stock for the 20 trading days
preceding the put date; provided that the number of shares to be purchased by Black Forest shall not exceed the number of such
shares that, when added to the number of shares of our common stock then beneficially owned by Black Forest, would exceed 4.99%
of the number of shares of our common stock outstanding. Black Forest may sell any shares offered under this prospectus at prevailing
market prices or privately negotiated prices. Black Forest is an “underwriter” within the meaning of the Securities
Act of 1933, as amended (the “Securities Act”), in connection with the resale of our common stock under the EPA. For
more information, please see the section of this prospectus titled “Plan of Distribution” beginning on page 32. Our
common stock became eligible for trading on the OTC Bulletin Board on August 21, 2015. Our common stock is currently quoted on
the OTCQB market quoted on the OTCQB under the symbol “NGTF”. The closing price of our stock on April 7, 2017, was $0.158.
You should understand the risks associated with investing in our common stock. Before making an investment, read the “Risk
Factors,” which begin on page 3 of this prospectus. Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation
to the contrary is a criminal offense.
The
date of this prospectus is April 21, 2017.
You
should rely only on the information contained in this prospectus. We have not authorized anyone to provide you with information
different from that which is contained in this prospectus. This prospectus may be used only where it is legal to sell these securities.
The information in this prospectus may only be accurate on the date of this prospectus, regardless of the time of delivery of
this prospectus or of any sale of securities.
PROSPECTUS
SUMMARY
This
summary highlights information contained elsewhere in this prospectus; it does not contain all of the information you should consider
before investing in our common stock. You should read the entire prospectus before making an investment decision. Throughout this
prospectus, the terms, the “Company,” “NightFood,” “we,” “us,” “our,” and “our
company” refer to NightFood Holdings, Inc., a Nevada corporation.
Company
Overview
The
Offering
2,838,000
shares of Common Stock that may be offered to the selling stockholder.
Shares
Outstanding:
29,384,432
shares of Common Stock outstanding as of the date of this prospectus.
Total
proceeds
We
will not receive any proceeds from the resale or other disposition of the shares covered by this prospectus by the selling shareholder.
We will receive proceeds from our sale of shares to Black Forest. Black Forest has committed to purchase up to $5,000,000 worth
of shares of our common stock over a period of time terminating on the earlier of: (i) 24 months after the initial effectiveness
of this registration statement.; or (ii) the date on which Black Forest has purchased shares of our common stock pursuant to the
Equity Purchase Agreement (“EPA”) for an aggregate maximum purchase price of $5,000,000. The purchase price to be
paid by Black Forest will be equal to 85% of the Market Price of the common stock as determined under the EPA. We will be entitled
to put to Black Forest on each put date such number of shares of common stock as equals the lesser of (i) 200% of the average
of the dollar volume on the principal trading exchange for our common stock for the 20 trading days preceding the put date
and (2) $250,000; provided that the number of shares to be purchased by Black Forest shall not exceed the number of such shares
that, when added to the number of shares of our common stock then beneficially owned by Black Forest, would exceed 4.99% of the
number of shares of our common stock outstanding.
Risk
Factors
There
are significant risks involved in investing in our company. For a discussion of risk factors you should consider before buying
our common stock, see “Risk Factors” beginning on page 3.
Company
Overview
NightFood
Holdings, Inc. (“we”, “us” “the Company” or “NightFood”) is a Nevada corporation
organized on October 16, 2013 to acquire all of the issued and outstanding shares of NightFood, Inc., a New York corporation (the
“Subsidiary”) from its sole shareholder, Sean Folkson. All of our operations are conducted by the Subsidiary. We are
in the business of manufacturing, marketing and distributing snacks specially formulated and promoted for evening consumption.
A large number of Americans consume nighttime snacks that are high in sugar, fat, and calories; such snacks can impair sleep and
also impair health in general. Management believes that our products are unique in the food industry and that there is a substantial
market for our products. We are in the process of establishing distribution channels for these products. Our corporate address
is 520 White Plains Road – Suite 500, Tarrytown, New York 10591 and our telephone number is 888-888-6444. We maintain a
web site at www.nightfood.com. Any information that may appear on our web site should not be deemed to be a part of this report.
The
opinion of our independent auditors for the fiscal year ended June 30, 2016 is qualified subject to substantial doubt as
to our ability to continue as a going concern. If we are in fact unable to continue as a going concern, you may lose your entire
investment.
As
of November 16, 2016, we executed an agreement (the “Merger Agreement”) to acquire Hook Group, LLC (“Hook”),
which holds a license from General Mills to produce and market Fiber One™ ice cream. The transactions contemplated by the
Merger Agreement have not been consummated and may be dependent in part on the proceeds of this offering.
RISK
FACTORS
Investing
in our common stock involves a high degree of risk, and you should be able to bear the complete loss of your investment. You should
carefully consider the risks described below and the other information in this prospectus when evaluating our company and our
business. If any of the following risks actually occur, our business could be harmed. In such case, the trading price of our common
stock could decline and investors could lose all or a part of the money paid to buy our common stock.
Risks
Related to Our Business
We have had limited operations and require substantial additional funds
to execute our business plan.
We have had limited operations and have not yet established significant traction in the marketplace.
We generated revenue of $24,918 in the year ended June 30, 2016, $68,409 in the year ended June 30, 2015 and $10,507 during the
six months ended December 31, 2016. Because our capital resources have been extremely limited, we have been unable to provide sufficient
advertising and marketing support for the product at retail, resulting in limited revenues. Unless we are able to continue to leverage
our status as a public company into effective fundraising to fund our capital requirements, we will not be able to execute on our
business plan and purchasers of our stock will be likely to lose their investment
.
During
FY2016, the majority of our revenue was derived from direct to consumer retail sales.
We believe we have established that
there is consumer interest for a better nighttime snack option. We have not yet identified a way to market and sell our snack
products direct to consumer in a manner that is predictably profitable, nor have we yet identified the proper elements of support
at retail that will drive consistent consumer purchase behavior. The proposed Fiber One™ ice cream products manufactured
by our potential acquisition target, Hook Group, LLC, and Suffield Foods, LLC, while receiving favorable acceptance in certain
demos to potential retail outlets, have no history of market acceptance.
Our
independent auditors have expressed doubt about our ability to continue as a going concern.
We received a report on our financial
statements for the years ended June 30, 2016 and June 30, 2015 from our independent registered public accounting firm that includes
an explanatory paragraph and a footnote stating that there is substantial doubt about our ability to continue as a going concern
due to its losses and negative net worth. Inclusion of a “going concern qualification” in the report of our independent
accountants may have a negative impact on our ability to obtain financing and may adversely impact our stock price in any market
that may develop.
We
remain uncertain of our proposed products’ market acceptance.
Although management firmly believes that snacks designed
for evening consumption and Fiber One™ ice cream is each a viable niche market with a potential for attractive returns for
investors, this belief is largely based on informal observations and we have not conducted any formal marketing studies. Our limited
resources preclude us from doing so. If management is wrong in its belief and there is an insufficient market for our products,
it is likely we will fail and investors will lose their investment.
Our
ability to hire additional personnel is important to the continued growth of our business.
Our continued success depends upon
our ability to attract and retain a group of motivated marketing and business support professionals. Our growth may be limited
if we cannot recruit and retain a sufficient number of people. We cannot guarantee that we will be able to hire and retain a sufficient
number of qualified personnel.
We
may face substantial competition.
Competition in all aspects of the functional food industry is intense. We will compete against
both large conglomerates with substantial resources and smaller companies, including new companies that might be formed with resources
similar to our own. Competitors may seek to duplicate the perceived benefits of our products in ways that do not infringe on any
proprietary rights that we can protect. As a result we could find that our entire marketing plan and business model is undercut
or made irrelevant by actions of other companies under which we have no control. We cannot promise that we can accomplish our
marketing goals and as a result may experience negative impact upon our operating results.
Our
success depends to a large extent upon the continued service of key managerial employees and our ability to attract and retain
qualified personnel.
Specifically, we are highly dependent on the ability and experience of our key employee, Sean Folkson,
our president and CEO We have a consulting agreement with Mr. Folkson. The loss of Mr. Folkson would present a significant setback
for us and could impede the implementation of our business plan. There is no assurance that we will be successful in acquiring
and retaining qualified personnel to execute our current plan of operations.
Our
proposed acquisition of Hook Group, LLC (“Hook”) is not certain and even if it occurs and profit therefrom is also
uncertain.
In November 2016 we entered into an agreement providing for us to acquire Hook, the licensee of General Mills for
FiberOne™ ice cream. The agreement calls for us to make substantial investments in Hook and is dependent on our being able
to maintain and renew Hook’s license with General Mills as well as the market acceptance of Hook’s proposed products.
If we cannot raise funding satisfactory to Hook to complete the acquisition, if Hook were to lose the license with General Mills,
or if we are unable to successfully market Fiber One™ ice cream products, we will not realize any return in our investment
in Hook and our results will be adversely affected.
The
ability of our officers to control our business will limit minority shareholders’ ability to influence corporate affairs
.
As of the date of this prospectus, our president,
Sean Folkson, owned 16,433,568 shares (directly and through trusts, includes 2.6 million shares owned by a trust controlled by
Mr. Folkson’s wife. Mr. Folkson disclaims beneficial ownership of these shares). Also, as of March, 14, 2017 our Vice President
Peter Leighton owned 4,000,000 shares. These two shareholders represent an aggregate of approximately 69.5 % of our 29,384,432
issued and outstanding shares. Because of their stock ownership, our officers will be in a position to continue to elect
our board of directors, decide all matters requiring stockholder approval and determine our policies. The interests of our president
may differ from the interests of other shareholders with respect to the issuance of shares, business transactions with or sales
to other companies, selection of officers and directors and other business decisions. The minority shareholders would have no
way of overriding decisions made by our president. This level of control may also have an adverse impact on the market value of
our shares because he may institute or undertake transactions, policies or programs that result in losses, may not take any steps
to increase our visibility in the financial community and/ or may sell sufficient numbers of shares to significantly decrease
our price per share.
If
we do not receive additional financing we will not be able to execute our planned expansion.
Over the next 6-12 months, we
believe we will require over $3,000,000 in debt or equity financing to affect a planned expansion of our operations and roll out
of our existing and any future products, including FiberOne™ ice cream. Management believes that it will be able to raise
the required funds, however this may not prove to be the case. No one has committed to invest the money we need to complete our
planned operations. If we cannot raise additional funds, it is unlikely that we will be able to support a stock price close to
the amount paid by our investors and our investors may lose all or most of their investment. Recent economic developments and
the current economic climate may make it especially difficult to raise additional funds. If we do not raise additional funds,
we may be required to abandon our current business plan and either operate our plan on a much smaller scaled basis, cease operations
entirely, or seek a different line of business. However, we intend to seek additional funds and affect our planned business and
we have no other present plans.
We
may be exposed to potential risks resulting from new requirements under Section 404 of the Sarbanes-Oxley Act of 2002.
Pursuant
to Section 404 of the Sarbanes-Oxley Act of 2002, we are required to include in our annual report our assessment of the effectiveness
of our internal control over financial reporting as of the end of our fiscal year. We have not yet completed our assessment of
the effectiveness of our internal control over financial reporting. We would incur additional expenses and diversion of management’s
time as a result of performing the system and process evaluation, testing and remediation required in order to comply with the
management certification and auditor attestation requirements.
We
do not have a sufficient number of employees and consultants to segregate responsibilities and are presently unable to afford
increasing our staff or engaging outside consultants or professionals to overcome our lack of employees, and this may impair our
ability to effectively comply with Section 404 of the Sarbanes-Oxley Act.
We currently do not have any employees and rely
on our CEO, Sean Folkson and our Vice President/CMO Peter Leighton to perform all executive functions. Peter Leighton will be
working for us on a part time basis. Accordingly, we cannot segregate duties to provide sufficient review of our financial activity.
During the course of our testing our financial procedures, we may identify other deficiencies that we may not be able to remediate
in time to meet the deadline imposed by the Sarbanes-Oxley Act for compliance with the requirements of Section 404. In addition,
if we fail to achieve and maintain the adequacy of our internal controls, as such standards are modified, supplemented or amended
from time to time, we may not be able to ensure that we can conclude on an ongoing basis that we have effective internal controls
over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act. Moreover, effective internal controls, particularly
those related to revenue recognition, are necessary for us to produce reliable financial reports and are important to help prevent
financial fraud. If we cannot provide reliable financial reports or prevent fraud, our business and operating results could be
harmed, investors could lose confidence in our reported financial information, and the trading price of our common stock, if a
market ever develops, could drop significantly. Our officers’ lack of experience in accounting and financial matters may
make our efforts to comply more difficult and cause us to hire consultants to assist him cutting into our resources.
Implications
of Being an Emerging Growth Company.
As a company with less than $1.0 billion in revenue during its last fiscal year, we qualify
as an “emerging growth company” as defined in the JOBS Act. For as long as a company is deemed to be an emerging growth
company, it may take advantage of specified reduced reporting and other regulatory requirements that are generally unavailable
to other public companies. These provisions include:
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a requirement to have only two years of audited financial statements and only two years of related
Management’s Discussion and Analysis included in an initial public offering registration statement;
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an exemption to provide less than five years of selected financial data in an initial public offering
registration statement;
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an exemption from the auditor attestation requirement in the assessment of the emerging growth company’s
internal controls over financial reporting;
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an exemption from the adoption of new or revised financial accounting standards until they would apply
to private companies;
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an exemption from compliance with any new requirements adopted by the Public Company Accounting Oversight
Board requiring mandatory audit firm rotation or a supplement to the auditor’s report in which the auditor would be required to
provide additional information about the audit and the financial statements of the issuer; and
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reduced disclosure about the emerging growth company’s executive compensation arrangements.
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An
emerging growth company is also exempt from Section 404(b) of Sarbanes Oxley which requires that the registered accounting firm
shall, in the same report, attest to and report on the assessment on the effectiveness of the internal control structure and procedures
for financial reporting. Similarly, as a Smaller Reporting Company we are exempt from Section 404(b) of the Sarbanes-Oxley Act
and our independent registered public accounting firm will not be required to formally attest to the effectiveness of our internal
control over financial reporting until such time as we cease being a Smaller Reporting Company.
As
an emerging growth company, we are exempt from Section 14A (a) and (b) of the Securities Exchange Act of 1934 which require the
shareholder approval of executive compensation and golden parachutes.
Section
107 of the JOBS Act provides that an emerging growth company can take advantage of the extended transition period provided in
Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an emerging growth
company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies.
We have elected to take advantage of the benefits of this extended transition period. Our financial statements may therefore not
be comparable to those of companies that comply with such new or revised accounting standards.
We
would cease to be an emerging growth company upon the earliest of:
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In our fiscal year ended June 30, 2020,
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the first fiscal year after our annual gross revenues are $1 billion or more,
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the date on which we have, during the previous three-year period, issued more than $1 billion in non-convertible
debt securities, or
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as of the end of any fiscal year in which the market value of our common stock held by non-affiliates
exceeded $700 million as of the end of the second quarter of that fiscal year.
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Risks
Related to Our Common Stock
Currently,
there is very little activity on the public markets for our securities, and there can be no assurances that any significant public
trading will ever develop and, our stock is likely to be subject to significant price fluctuations. There has not been any established
trading market for our common stock. Commencing August 21, 2015 we began trading under the Symbol NGTF on the OTC Markets. However,
trading volume to date has been limited and sporadic.
In
addition, our common stock is unlikely to be followed by any market analysts, and there may be few institutions acting as market
makers for the common stock. Either of these factors could adversely affect the liquidity and trading price of our common stock.
Until our common stock is fully distributed and an orderly market develops in our common stock, if ever, the price at which it
trades is likely to fluctuate significantly. Prices for our common stock will be determined in the marketplace and may be influenced
by many factors, including the depth and liquidity of the market for shares of our common stock, developments affecting our business,
including the impact of the factors referred to elsewhere in these Risk Factors, investor perception, and general economic and
market conditions. No assurances can be given that an orderly or liquid market will ever develop for the shares of our common
stock. Because of the anticipated low price of the securities, many brokerage firms may not be willing to effect transactions
in these securities. Any purchasers of our securities should be aware that any market that develops in our stock will likely be
subject to the penny stock restrictions.”
Our
board of directors is authorized to issue shares of preferred stock, which may have rights and preferences detrimental to the
rights of the holders of our common shares.
We are authorized to issue up to 1,000,000 shares of preferred stock, $0.001 par
value. As of the date of this prospectus, we have not issued any shares of preferred stock and have no plans to do so. Our preferred
stock may bear such rights and preferences, including dividend and liquidation preferences, as the Board of Directors may fix
and determine from time to time. Any such preferences may operate to the detriment of the rights of the holders of the common
stock being offered hereby.
Our
articles of incorporation provide for indemnification of officers and directors at our expense and limit their liability that
may result in a major cost to us and hurt the interests of our shareholders because corporate resources may be expended for the
benefit of officers and/or directors.
Our articles of incorporation and applicable Nevada law provide for the indemnification
of our directors, officers, employees, and agents, under certain circumstances, against attorney’s fees and other expenses incurred
by them in any litigation to which they become a party arising from their association with or activities on our behalf. This indemnification
policy could result in substantial expenditures by us, which we will be unable to recoup.
We
have been advised that, in the opinion of the SEC, indemnification for liabilities arising under federal securities laws is against
public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification
against these types of liabilities, other than the payment by us of expenses incurred or paid by a director, officer or controlling
person in the successful defense of any action, suit or proceeding, is asserted by a director, officer or controlling person in
connection with the securities being registered, we will (unless in the opinion of our counsel, the matter has been settled by
controlling precedent) submit to a court of appropriate jurisdiction, the question whether indemnification by us is against public
policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. The legal process relating
to this matter if it were to occur is likely to be very costly and may result in us receiving negative publicity, either of which
factors is are likely to materially reduce the market and price for our shares, if such a market ever develops.
Any
market that develops in shares of our common stock will be subject to the penny stock restrictions that are likely to create a
lack of liquidity and make trading difficult or impossible.
Until our shares of common stock qualify for inclusion in the
NASDAQ system, if ever, the trading of our securities, if any, will be in the over-the-counter market which is commonly referred
to as the OTCBB as maintained by OTCMarkets.com. As a result, an investor may find it difficult to dispose of, or to obtain accurate
quotations as to the price of our securities.
SEC
Rule 15g-9 (as most recently amended and effective on September 12, 2005) establishes the definition of a “penny stock,”
for purposes relevant to us, as any equity security that has a market price of less than $5.00 per share or with an exercise price
of less than $5.00 per share, subject to a limited number of exceptions. It is likely that our shares will be considered to be
penny stocks for the immediately foreseeable future. This classification severely and adversely affects the market liquidity for
our common stock. For any transaction involving a penny stock, unless exempt, the penny stock rules require that a broker or dealer
approve a person’s account for transactions in penny stocks and the broker or dealer receive from the investor a written agreement
to the transaction setting forth the identity and quantity of the penny stock to be purchased.
In
order to approve a person’s account for transactions in penny stocks, the broker or dealer must obtain financial information and
investment experience and objectives of the person and make a reasonable determination that the transactions in penny stocks are
suitable for that person and that person has sufficient knowledge and experience in financial matters to be capable of evaluating
the risks of transactions in penny stocks.
The
broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prepared by the SEC relating
to the penny stock market, which, in highlight form, sets forth:
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the basis
on which the broker or dealer made the suitability determination, and
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that the broker or dealer received a signed, written agreement from the investor prior to the transaction.
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Disclosure
also has to be made about the risks of investing in penny stock in both public offerings and in secondary trading and commissions
payable to both the broker-dealer and the registered representative, current quotations for the securities and the rights and
remedies available to an investor in cases of fraud in penny stock transactions. Finally, monthly statements have to be sent disclosing
recent price information for the penny stock held in the account and information on the limited market in penny stocks.
Because
of these regulations, broker-dealers may not wish to engage in the above-referenced necessary paperwork and disclosures and/or
may encounter difficulties in their attempt to sell shares of our common stock, which may affect the ability of selling shareholders
or other holders to sell their shares in the secondary market and have the effect of reducing the level of trading activity in
the secondary market. These additional sales practice and disclosure requirements could impede the sale of our securities, if
and when our securities become publicly traded. In addition, the liquidity for our securities may decrease, with a corresponding
decrease in the price of our securities. Our shares in all probability will be subject to such penny stock rules for the foreseeable
future and our shareholders will, in all likelihood, find it difficult to sell their securities. Recently, several brokerage firms
and clearing firms have adopted special “house rules” which make it more difficult for their customers to hold or
trade low priced stock and these rules may make it difficult for our shareholders to sell their stock.
We
do not intend to pay dividends on our common stock.
We have not paid any dividends on our common stock to date and there are
no plans for paying dividends on the common stock in the foreseeable future. We intend to retain earnings, if any, to provide
funds for the implementation of our business plan. We do not intend to declare or pay any dividends in the foreseeable future.
Therefore, there can be no assurance that holders of our common stock will receive any additional cash, stock or other dividends
on their shares of our common stock until we have funds which the Board of Directors determines can be allocated to dividends.
If
a market develops for our shares, sales of our shares relying upon rule 144 may depress prices in that market by a material amount
.
25,053,432 of the outstanding shares of our common stock are “restricted securities” within the meaning of Rule 144
under the Securities Act of 1933, as amended. As restricted shares, these shares may be resold only pursuant to an effective registration
statement or under the requirements of Rule 144 or other applicable exemptions from registration under the Act and as required
under applicable state securities laws. Rule 144 provides in essence that a person who has held restricted securities for a prescribed
period may, under certain conditions, sell their shares as a result of revisions to Rule 144 which became effective on or about
February 15, 2008, there is no limit on the amount of restricted securities that may be sold by a non-affiliate (i.e., a stockholder
who has not been an officer, director or control person for at least 90 consecutive days) after the restricted securities have
been held by the owner for a period of six months. A sale under Rule 144 or under any other exemption from the Act, if available,
or pursuant to registration of shares of common stock of present stockholders, may have a depressive effect upon the price of
the common stock in any market that may develop.
Any
trading market that may develop may be restricted by virtue of state securities “Blue Sky” laws to the extent they prohibit
trading absent compliance with individual state laws. These restrictions may make it difficult or impossible to sell shares in
those states.
There is a limited public market for our common stock, and there can be no assurance that an active and regular
public market will develop in the foreseeable future. Transfer of our common stock may also be restricted under the securities
or securities regulations laws promulgated by various states and foreign jurisdictions, commonly referred to as “Blue Sky”
laws. Absent compliance with such individual state laws, our common stock may not be traded in such jurisdictions. Because our
securities have not been registered for resale under the “Blue Sky” laws of any state, the holders of such shares
and persons who desire to purchase them in any trading market that might develop in the future, should be aware that there may
be significant state “Blue Sky” law restrictions upon the ability of investors to sell the securities and of purchasers
to purchase the securities. These restrictions prohibit the secondary trading of our common stock. Accordingly, investors should
consider the secondary market for our securities to be a limited one.
SHARES
ELIGIBLE FOR FUTURE SALE
The
sale of a substantial number of shares of our common stock, or the perception that such sales could occur, could adversely affect
prevailing market prices for our common stock. In addition, any such sale or perception could make it more difficult
for us to sell equity, or equity related, securities in the future at a time and price that we deem appropriate. If
and when this registration statement becomes effective and we become subject to the reporting requirements of the Exchange Act,
we might elect to adopt a stock option plan and file a registration statement under the Securities Act registering the shares
of common stock reserved for issuance there under. Following the effectiveness of any such registration statement,
the shares of common stock issued under such plan, other than shares held by affiliates, if any, would be immediately eligible
for resale in the public market without restriction.
The
sale of shares of our common stock which is not registered under the Securities Act, known as “restricted” shares,
typically is affected under Rule 144. As of the date of this prospectus we have outstanding an aggregate of 29,384,432
shares of common stock of which 25,053,432 are restricted stock. All of our restricted shares of common stock might
be sold under Rule 144 if held for more than six months by non-affiliates. In addition, each of our officers, directors
or affiliates, who own an aggregate of 20,433,568 shares, may sell 1% of our outstanding shares (approximately 30,000 shares)
every three months under Rule 144. No prediction can be made as to the effect, if any, that future sales of “restricted”
shares of our common stock, or the availability of such shares for future sale, will have on the market price of our common stock
or our ability to raise capital through an offering of our equity securities.
The
sale of a substantial number of shares of our common stock, or the perception that such sales could occur, could adversely affect
prevailing market prices for our common stock. In addition, any such sale or perception could make it more difficult
for us to sell equity, or equity related, securities in the future at a time and price that we deem appropriate. If
and when this registration statement becomes effective and we become subject to the reporting requirements of the Exchange Act,
we might elect to adopt a stock option plan and file a registration statement under the Securities Act registering the shares
of common stock reserved for issuance thereunder. Following the effectiveness of any such registration statement, the
shares of common stock issued under such plan, other than shares held by affiliates, if any, would be immediately eligible for
resale in the public market without restriction.
No
Dividends
We
never have paid any dividends on our common stock and we do not intend to pay any dividends in the foreseeable future.
Future
issuances of common shares may be adversely affected by the EPA.
The
market price of our common stock could decline as a result of issuances and sales by us, including pursuant to the Equity Purchase
Agreement, or sales by our existing shareholders, of common stock, or the perception that these issuances and sales could occur.
Sales by our shareholders might also make it more difficult for us to issue and sell common stock at a time and price that we
deem appropriate. It is likely that the sale of shares by Black Forest will depress the market price of our common stock.
Draw-downs
under the EPA may cause dilution to existing shareholders.
Black
Forest has committed to purchase up to $5,000,000 worth of shares of our common stock. From time to time during the term of the
EPA, and at our sole discretion, we may present Black Forest with a put notice requiring Black Forest to purchase shares of our
common stock. The purchase price to be paid by Black Forest will be 85% of the Market Price of our common stock. We will
be entitled to put to Black Forest on each put date such number of shares of common stock as equals the lesser of 200% of the
average of the dollar volume on the principal trading exchange for our common stock for the 20 trading days preceding the
put date or $250,000; provided that the number of shares to be purchased by Black Forest shall not exceed the number of such shares
that, when added to the number of shares of our common stock then beneficially owned by Black Forest, would exceed 4.99% of the
number of shares of our common stock outstanding. All puts to Black Forest shall also be subject to a $25,000 minimum amount and
a $250,000 maximum amount. If the price of our shares falls after the date of the put notice, we are required to issue additional
shares to Black Forest pursuant to formulas set forth in the EPA. As a result, our existing shareholders will experience immediate
dilution upon the purchase of any of the shares by Black Forest. The issue and sale of the shares under the EPA may also have
an adverse effect on the market price of the common shares. Black Forest may resell some, if not all, of the shares that we issue
to it under the EPA and such sales could cause the market price of the common stock to decline significantly. To the extent of
any such decline, any subsequent puts would require us to issue and sell a greater number of shares to Black Forest in exchange
for each dollar of the put amount. Under these circumstances, the existing shareholders of our company will experience greater
dilution. The effect of this dilution may, in turn, cause the price of our common stock to decrease further, both because of the
downward pressure on the stock price that would be caused by a large number of sales of our shares into the public market by Black
Forest, and because our existing stockholders may disagree with a decision to sell shares to Black Forest at a time when our stock
price is low, and may in response decide to sell additional shares, further decreasing our stock price. If we draw down amounts
under the EPA when our share price is decreasing, we will need to issue more shares to raise the same amount of funding. There
is no guarantee that we will satisfy the conditions to the EPA. Although the Equity Purchase Agreement provides that we can require
Black Forest to purchase, at our discretion, up to $5,000,000 worth of shares of our common stock in the aggregate, there can
be no assurances that we will be able to satisfy the closing conditions applicable for each put. If we fail to satisfy the applicable
closing conditions, we will not be able to sell the put shares to Black Forest. There is no guarantee that we will be able to
fully utilize the EPA. This description is qualified in its entirety by reference to the EPA, which is incorporated by reference
as an exhibit to the Registration Statement of which this prospectus forms a part.
USE
OF PROCEEDS
We
will not receive any proceeds from the sale of the common stock by the selling security holder pursuant to this prospectus. All
proceeds from the sale of the shares will be for the account of the selling security holder.
We
have agreed to bear the expenses relating to the registration of the shares for the selling security holder. We anticipate receiving
proceeds from any “puts” tendered to Black Forest under the EPA. Such proceeds from the EPA are intended to be used
approximately as follows: to fund our manufacturing expansion, research and development, marketing, advertising, distribution
efforts, technology development, product line expansion and enhancement and working capital needs.
DETERMINATION
OF OFFERING PRICE
The
offering price for the shares sold to Black Forest under the put will equal 85% of the Market Price of our common stock calculated
under the EPA on the date the put notice is given. To the extent that the disparity between the offering price and market price
of the common stock is material, such disparity was determined by us to be fair in consideration of Black Forest establishing
an equity line to facilitate our ongoing operations.
Equity
Purchase Agreement
We
entered into the Equity Purchase Agreement (“EPA”) with Black Forest on February 8, 2017. Pursuant to the EPA, Black
Forest committed to purchase up to $5,000,000 worth of our common stock, over a period of time terminating on the earlier of:
(i) 36 months from the date of the agreement; (ii) the date on which Black Forest has purchase shares of our common stock pursuant
to the EPA for an aggregate maximum purchase price of $5,000,000; or (iii) if there is no effective registration statement for
a period of 45 days after the registration statement of which this prospectus forms a part is ordered effective. We may
draw on this facility from time to time, as and when we determine appropriate in accordance with the terms and conditions of the
EPA. The purchase price to be paid by Black Forest will be 85% of the Market Price of our common stock. We will be entitled
to put to Black Forest on each put date such number of shares of common stock as equals the lesser of 200% of the average of the
dollar volume on the principal trading exchange for our common stock for the 20 trading days preceding the put date or $250,000
with a minimum put amount of $25,000; provided that the number of shares to be purchased by Black Forest shall not exceed the
number of such shares that, when added to the number of shares of our common stock then beneficially owned by Black Forest, would
exceed 4.99% of the number of shares of our common stock outstanding. The EPA provides for payment to us of the price for
the shares delivered to Black Forest within one business day of electronic delivery of the shares. There are put restrictions
applied on days between the put notice date and the closing date with respect to that particular put. During such time, we are
not entitled to deliver another put notice. There are circumstances under which we will not be entitled to put shares to Black
Forest, including the following:
|
●
|
we will not be entitled to put shares to Black Forest
unless there is an effective registration statement under the Securities Act of 1933, as amended (the “Securities Act”),
to cover the resale of the shares by Black Forest;
|
|
●
|
we will not be entitled to put shares to Black Forest
unless our common stock continues to be quoted on the OTCPink or a higher market and has not been suspended from trading;
|
|
●
|
we will not be entitled to put shares to Black Forest
if an injunction shall have been issued and remain in force against us, or action commenced by a governmental authority which
has not been stayed or abandoned, prohibiting the purchase or the issuance of the shares to Black Forest;
|
|
●
|
we will not be entitled to put shares to Black Forest
if we have not complied with our obligations and are otherwise in breach of or in default under, the EPA, our registration rights
agreement with Black Forest (the “Registration Rights Agreement”) or any other agreement executed in connection therewith
with Black Forest; and,
|
|
●
|
we will not be entitled to put shares to Black Forest
to the extent that such shares would cause Black Forest’s beneficial ownership to exceed 4.99% of our outstanding shares.
|
The
EPA further provides that Black Forest is entitled to customary indemnification from us for any losses or liabilities it suffers
as a result of any material misrepresentation, breach of warranty or non-fulfillment of or a failure to perform any material covenant
or agreement contained in the EPA. The EPA also contains representations and warranties of each of the parties. The assertions
embodied in those representations and warranties were made for purposes of the EPA and are subject to qualifications and limitations
agreed to by the parties in connection with negotiating the terms of the EPA. In addition, certain representations and warranties
were made as of a specific date, may be subject to a contractual standard of materiality different from what a stockholder or
investor might view as material, or may have been used for purposes of allocating risk between the respective parties rather than
establishing matters as facts.
Dilutive
Effects
Under
the EPA, the purchase price of the shares to be sold to Black Forest will be at a price equal to 85% of the Market Price of our
common stock. The table below illustrates an issuance of shares of common stock to Black Forest under the EPA for a hypothetical
draw down amount of $25,000 at an assumed Market Price of $0.20:
Draw Down Amount
|
|
Price to be paid by Black Forest
|
|
Number of Shares to be Issued
|
|
|
|
|
|
$25,000
|
|
$0.17
|
|
147,059
|
By
comparison, if the Market Price of our common stock was $0.15, the number of shares that we would be required to issue in order
to have the same draw down amount of $25,000 would be greater, as shown by the following table:
Draw Down Amount
|
|
Price to be paid by Black Forest
|
|
Number of Shares to be Issued
|
|
|
|
|
|
$25,000
|
|
$0.1275
|
|
196,078
|
Accordingly,
there would be dilution of an additional 49,019 shares issued due to the lower stock price of $0.15 per share. In effect, if we
are interested in receiving a fixed funding amount, a lower price per share of our common stock means a higher number of shares
to be issued to Black Forest in order to receive that fixed funding amount, which equates to greater dilution of existing stockholders.
The effect of this dilution may, in turn, cause the price of our common stock to decrease further, both because of the downward
pressure on the stock price that would be caused by a large number of sales of our shares into the public market by Black Forest,
and because our existing stockholders may disagree with a decision to sell shares to Black Forest at a time when our stock price
is low, and may in response decide to sell additional numbers of shares, further decreasing our stock price.
The
actual number of shares that will be issued to Black Forest under the EPA will depend upon the market price of our common stock
at the time of our puts to Black Forest and shortly thereafter.
Likelihood
of Accessing the Full Amount of the EPA
Notwithstanding
that the EPA is in an amount of $5,000,000, the likelihood that we would access the full $5,000,000 is low. This is due to several
factors including the fact that the EPA’s share volume limitations will limit our use of the EPA and the market price may decrease
and thus fewer dollars will be received by us as shares are issued.
We
determined to register in this registration statement a total of 2,838,000 shares, which represents less than one-third of our
public float (after subtracting the holdings of insiders and controlling shareholders) in order to allow the greatest possible
flexibility under the EPA. The amount of shares that might be utilized under the EPA cannot be determined at this time as
it will fluctuate with the market price of our stock and our financial requirements.
BUSINESS
NightFood
Holdings, Inc. (“we”, “us” “the Company” or “NightFood”) is a Nevada corporation
organized on October 16, 2013 to acquire all of the issued and outstanding shares of NightFood, Inc., a New York corporation (the
“Subsidiary”) from its sole shareholder, Sean Folkson. All of our operations are conducted by the Subsidiary. We are
in the business of manufacturing, marketing and distributing snacks specially formulated and promoted for evening consumption.
A large number of Americans consume nighttime snacks that are high in sugar, fat, and calories; such snacks can impair sleep and
also impair health in general. Management believes that our products are unique in the food industry and that there is a substantial
market for our products. We are in the process of establishing distribution channels for these products. Our corporate address
is 520 White Plains Road – Suite 500, Tarrytown, New York 10591 and our telephone number is 888-888-6444. We maintain a
web site at www.nightfood.com. We have recently entered into an agreement for the acquisition of a company that is licensed by
General Mills to produce FiberOne™ ice cream. See Business-Planned Acquisition. Any information that may appear on our web
site should not be deemed to be a part of this prospectus.
Industry
Overview
We
are an early-stage company that is seeking to establish a market within the snack industry by offering a line of snack foods that
are appropriate for evening consumption. Based on available figures for 2013 published by SymphonyIRI Group, American consumers
spend over $50 Billion annually on snacks consumed at night, and this figure continues to grow. A majority of adults are trying
to eat foods and snacks that they understand will prevent or manage health problems and 37% of consumers are willing to pay more
for foods with perceived health benefits. Moreover, industry data indicates that the most popular nighttime snack choices include
products and categories that are traditionally considered high in calories, and “unhealthy” options, such as cookies,
salty snacks (chips, pretzels, and popcorn), ice cream, and candy.
Our
Products, Present and Proposed
Our
initial product is the NightFood nutrition bar. NightFood nutrition bars are made from commercially available ingredients and
a proprietary combination of other components in a proprietary process. During the course of fiscal 2016, the Company modified
its packaging, positioning, and branding, including switching from a 6 count retail pack to a 12 count pack for the bars. The
packages are typically merchandised both open and closed, so the consumer can purchase an individual bar, or an entire box of
bars. NightFood® is the first product positioned as a healthier and better alternative to other convenient nighttime snack
options. Compared to the existing popular options, each 140 calorie NightFood® bar is specially formulated to satisfy late-night
cravings, tackle nighttime hunger, on fewer calories, and with a healthier, more sleep-friendly nutritional profile. We believe
that NightFood® bars are an optimal after-dinner snack in terms of composition and calories. In addition, the bars contain
a clinically proven bioactive ingredient called Chocamine®. Chocamine is a patented natural cocoa extract that is believed
to promote satiety and craving satisfaction, while also providing the health and relaxation benefits of chocolate without the
caffeine, fat, calories, and sugars. In April of 2016, the Company secured exclusive use of Chocamine in any products formulated
and marketed for nighttime consumption.
Depending
upon the success of the NightFood® bar and our available resources, we intend to consider expanding our product line to include
formulations with and without sleep aiding bioactive ingredients, nighttime snack products specifically for children, and snacks
in different food formats such as cookies, chips, ice cream, etc. In furtherance of our planned expansion of our product offerings,
we have entered into an agreement to acquire a company which is licensed to produce FiberOne™ ice cream. See Business-Planned
Acquisition
Production
We
have utilized contract manufacturers for producing our products. These include Noble Foods for product manufacture, Arranti Label
and Stuart Packaging for our packaging, and ShipRight Solutions for our warehousing and fulfillment. We consider our relations
with Stuart Packaging to be satisfactory. We may be required by ShipRight Solutions to find another fulfillment provider. However,
we also believe that the nature of the market for these services ensures that if we were required to find an alternate supplier
for any of these services, we could do so on similar terms
.
Marketing
& Distribution
During
FY2016, our new marketing and distribution strategy shifted NightFood products away from the specialty health & nutrition
vertical and towards mainstream supermarkets. We believe our most receptive consumer will be one that is wrestling with undesirable
night snacking habits. Our updated product packaging merchandises NightFood bars in a novel 12-pack display case featuring the
CraveMonster™ design and was approved for distribution by KeHE Distributors LLC in March of 2016.
Through
our relationship with KeHE, NightFood is now available in the Market Street supermarket chain in Texas, a division of Albertsons.
With well over 2,000 locations, Albertsons is the 2nd largest supermarket retailer in the country. In addition, in December of
2016, The Company received a purchase order from KeHE to place NightFood product in the Meijer chain of supermarkets. Meijer has
over 200 locations, mostly located in the upper Midwest. The Company is in discussions to introduce NightFood products onto the
shelves of other large supermarket chains though KeHE, once properly capitalized.
NightFood
is also available in the Fairway supermarket chain in Metro New York City, as well as some other independent retailers in and
around New York. Additional funds are needed to support sales at Fairway and maintain sales volume after an initial introductory
push, bolstered by in-store product sampling and demonstrations.
Due
to market dynamics and distribution channels, Fairway retails each NightFood bar for $2.50, whereas Market Street retails each
NightFood bar at $1.79.
NightFood
bars may also still be found in some GNC locations around the country, however, we did not receive any orders from them during
fiscal 2016 despite reports from GNC of increasing sales in FY2016 compared to FY2015.
Competition
The
nutritional/snack food business is highly competitive and includes such participants as large companies like Mondelez, Nestle
S.A. and Quaker Oats and more specialized companies such as Cliff Bar, Quest Nutrition and many smaller companies. Many of these
competitors have well established names and products. Management is not aware of any competitor offering snacks targeting the
nighttime snack occasion, or formulated to satisfy unhealthy nighttime cravings in a sleep-friendly way. We will initially compete
based upon the unique nature of our product. However, other companies, including those with greater name recognition than us and
greater resources may seek to introduce products that directly compete with our products. Management believes that if a competitor
sought to develop a competing product, it could do so and begin to establish retail distribution in 12-24 months.
Intellectual
Property Rights
We
own the registered trademark “NightFood®” and believe that it will prove important to our business. Additionally
we own the domain NightFood.com as well as many other relevant domains such as late-night-snack.com, nighttimesnack.com, and nighttimesnacking.com,
as well as NightFood.us, NightFood.net, TryNightFood.com, GetNightFood.com, NiteFood.com, and Night-Food.com. We also own the
toll-free number 888-888-NIGHT. We also rely on proprietary information as to our formulas and have non-disclosure agreements
with our suppliers.
Personnel
We
currently have no employees except Sean Folkson, our President and CEO, and Peter Leighton, our VP of Marketing who is currently
serving the company on a part-time basis. Should we be successful in executing our business plan, we anticipate hiring additional
employees in the future to assist with marketing, sales and clerical positions. We rely on consultants and outsourced services
to accomplish work that might otherwise be done by employees in a large established company
.
Customers
In
FY 2016, no individual customer made up more than 15% of our revenues.
Planned
Acquisition
On
November 25, 2016 we executed and delivered a Plan of Reorganization Including Option to Acquire (the “Plan”) by and
among the Registrant, Hook Group, LLC (“Hook”) and Suffield Foods. LLC (“Suffield”). The Plan contemplates
our acquiring an equity interest in and potentially merging Hook and its subsidiary Suffield with and into a wholly owned subsidiary
of the Registrant. Pursuant to the Plan, we have agreed to use its best efforts to invest up to $9,000,000 in Hook in exchange
for preferred equity in Hook. The Plan contemplated an investment in Hook by the Registrant in tranches over approximately 18
months. The Plan provided that any time after we had invested $7,500,000 in Hook, we may request a merger of Hook with and into
our wholly owned subsidiary, Fiber One™ Ice Cream, Inc., in exchange for the Hook members receiving a 50% shareholder interest
in us. Such merger would be subject to shareholder approval by us. Hook is a licensee of General Mills Marketing, Inc. and holds
the right to manufacture and distribute ice cream under the Fiber One™ brand name. We are seeking to raise funds through
the sale of equity to meet our obligations under the Plan, but has obtained limited commitments for funding. If funding is not
realized, the Plan may not go into effect. The forgoing is a summary of the Plan and is qualified in its entirety by the Plan,
which is an exhibit hereto. We anticipate, based on discussions with Hook management, that the Plan will be amended to change
the amount and timing of capital investments due thereunder to require a smaller investment by us prior to the merger. However,
there is no written agreement for such amendment and we cannot give assurance that the acquisition with Hook will occur.
MARKET
PRICE OF COMMON STOCK AND OTHER STOCKHOLDER MATTERS
As
of April 10, 2017, our common stock is quoted on the OTCQB under the symbol “NGTF”. Our common stock had previously
been quoted on the under the same symbol on the OTCPink Market which is sponsored and operated by OTCMarkets, Inc. The OTCQB Market
is a network of security dealers who buy and sell stock. The dealers are connected by a computer network that provides information
on current “bids” and “asks,” as well as volume information.
The
following table sets forth the range of high and low bid quotations for our common stock for each of the periods indicated as
reported by the OTCPink Market. These quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission
and may not necessarily represent actual transactions.
Three Fiscal Quarters Ended March 31, 2017
|
|
High
Closing
Price
|
|
|
Low
Closing
Price
|
|
|
|
|
|
|
|
|
First Quarter
|
|
$
|
.24
|
|
|
$
|
.105
|
|
|
|
|
|
|
|
|
|
|
Second Quarter
|
|
$
|
.50
|
|
|
$
|
.09
|
|
|
|
|
|
|
|
|
|
|
Third Quarter
|
|
$
|
.225
|
|
|
$
|
.13401
|
|
Fiscal
Year Ended June 30, 2016
|
|
High
Closing
Price
|
|
|
Low
Closing
Price
|
|
First Quarter
|
|
$
|
1.40
|
|
|
$
|
0.85
|
|
|
|
|
|
|
|
|
|
|
Second Quarter
|
|
$
|
2.10
|
|
|
$
|
1.45
|
|
|
|
|
|
|
|
|
|
|
Third Quarter
|
|
$
|
2.10
|
|
|
$
|
0.85
|
|
|
|
|
|
|
|
|
|
|
Fourth Quarter
|
|
$
|
0.95
|
|
|
$
|
0.195
|
|
The
closing price for shares of our common stock on April 20, 2017 was $0.168 per share.
Penny
Stock
Our
stock is considered to be a penny stock. The SEC has adopted rules that regulate broker-dealer practices in connection with transactions
in penny stocks. Penny stocks are generally equity securities with a market price of less than $5.00, other than securities registered
on certain national securities exchanges or quoted on the NASDAQ system, provided that current price and volume information with
respect to transactions in such securities is provided by the exchange or system. The penny stock rules require a broker-dealer,
prior to a transaction in a penny stock, to deliver a standardized risk disclosure document prepared by the SEC, that: (a) contains
a description of the nature and level of risk in the market for penny stocks in both public offerings and secondary trading; (b)
contains a description of the broker’s or dealer’s duties to the customer and of the rights and remedies available to the customer
with respect to a violation of such duties or other requirements of the securities laws; (c) contains a brief, clear, narrative
description of a dealer market, including bid and ask prices for penny stocks and the significance of the spread between the bid
and ask price; (d) contains a toll-free telephone number for inquiries on disciplinary actions; (e) defines significant terms
in the disclosure document or in the conduct of trading in penny stocks; and (f) contains such other information and is in such
form, including language, type size and format, as the SEC shall require by rule or regulation.
The
broker-dealer also must provide, prior to effecting any transaction in a penny stock, the customer with: (a) bid and offer quotations
for the penny stock; (b) the compensation of the broker-dealer and its salesperson in the transaction; (c) the number of shares
to which such bid and ask prices apply, or other comparable information relating to the depth and liquidity of the market for
such stock; and (d) a monthly account statement showing the market value of each penny stock held in the customer’s account. In
addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from those rules, the
broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive
the purchaser’s written acknowledgment of the receipt of a risk disclosure statement, a written agreement as to transactions involving
penny stocks, and a signed and dated copy of a written suitability statement.
These
disclosure requirements may have the effect of reducing the trading activity for our common stock. Therefore, stockholders may
have difficulty selling our securities.
Holders
As of April 17, 2017, we had 114 shareholders of record and 29,384,432 common shares issued and outstanding. The number of holders
does not include the shareholders for whom shares are held in a “nominee” or “street” name.
Dividends
Since
its organization, the Company has not paid any cash dividends on its common stock, nor does it plan to do so in the foreseeable
future.
SECURITIES
AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS
We
do not have any equity compensation plans.
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The
following discussion of our financial condition and results of operations should be read in conjunction with the financial statements
and the notes to those statements included elsewhere in this prospectus. This discussion includes forward-looking statements that
involve risks and uncertainties. As a result of many factors, such as those set forth under “Risk Factors” and elsewhere
in this prospectus, our actual results may differ materially from those anticipated in these forward-looking statements.
Certain
statements contained herein, including statements regarding the anticipated development and expansion of our business, our intent,
belief or current expectations, primarily with respect to our future operating performance and other statements contained herein
regarding matters that are not historical facts, are “forward-looking” statements. Future filings with the Securities
and Exchange Commission, future press releases and future oral or written statements made by us or with our approval, which are
not statements of historical fact, may contain forward-looking statements, because such statements include risks and uncertainties,
actual results may differ materially from those expressed or implied by such forward-looking statements. All forward-looking
statements speak only as of the date on which they are made. We undertake no obligation to update such statements to reflect events
that occur or circumstances that exist after the date on which they are made.
Overview
We
caution you that reliance on any forward-looking statement involves risks and uncertainties, and that although we believe the
assumptions on which our forward-looking statements are based are reasonable, any of those assumptions could prove to be inaccurate,
and as a result, the forward-looking statements based on those assumptions could be incorrect. In light of these and
other uncertainties, you should not conclude that we will necessarily achieve any plans and objectives or projected financial
results referred to in any of the forward-looking statements. We do not undertake to release the results of any revisions
of these forward-looking statements to reflect future events or circumstances. Some of the factors that may cause actual
results, developments and business decisions to differ materially from those contemplated by such forward-looking statements include
the following:
RESULTS
OF OPERATIONS
Fiscal
Year ended June 30, 2016 Compared to Fiscal Year ended June 30, 2015
Revenue
For
the twelve months ended June 30, 2016, we had revenues of $24,918 compared to the twelve months ended June 30, 2015 when we had
revenues of $68,409. The company also provided certain sales allowances of $22,681 for the year ended June 30, 2016, compared
to $12,923 for the year ended June 30, 2015.
Operating
Expenses
Our
operating expenses for the twelve months ended June 30, 2016 were $743,247 compared to for the twelve months ended June 30, 2015
were $424,905. The increase was mainly due to an increase in professional fees related to capital raising efforts and corporate
strategy, along with increases to costs relating to SEC compliance, and expenses relating to the rebranding efforts
Net
Loss
For
the twelve months ended June 30, 2016, we had a net loss of $726,596 compared to the twelve months ended June 30, 2015 when we
had a net loss of $367,134. Again, the majority of this an increase in professional fees related to capital raising efforts and
corporate strategy, along with increases to costs relating to SEC compliance, and expenses relating to the rebranding efforts
Inventory
As
of June 30, 2016, we had approximately $121,706 worth of product in inventory, compared to $46,936 worth of product in inventory
as of June 30, 2015.
Customers
In
FY 2016, no individual customer made up more than 15% of our revenues.
RESULTS
OF OPERATIONS FOR THE THREE AND SIX MONTH PERIOD ENDED DECEMBER 31, 2016 AND DECEMBER 31, 2015.
For
the three months ended December 31, 2016 and December 31, 2015 we had revenues of $8,043 and ($338) respectively and incurred
a net loss of $84,372 and $148,747 respectively. These losses were largely attributable to consulting fees and expenses related
to being a public company.
For
the six months ended December 31, 2016 and December 31, 2015, we had revenues of $10,507 and $21,155 respectively and incurred
a net loss of $158,538 and $285,193 respectively. These losses were largely attributable to consulting fees and expenses related
to being a public company.
Revenue
Our
net revenues for the three month period ended December 31, 2016 were $8,043 net of sales allowances and sales discounts compared
to ($338) for the three month period ended December 31, 2015.
Our
net revenues for the six month period ended December 31, 2016 were $10,507 net of sales allowances and sales discounts compared
to $21,155 for the six month period ended December 31, 2015.
Inventory
As
of December 31, 2016, we had approximately $110,095 worth of product and packaging in inventory, compared to $121,706 worth of
product in inventory as of June 30, 2016.
Operating
Expenses
Operating
expenses decreased by $55,727 for the three month period ended December 31, 2016, from $148,105 for the three month period ended
December 31, 2015. The decrease was primarily due to the decrease in paid advertising and other operating expenses related to
direct to consumer sales of our product.
Operating
expenses decreased by $142,024 for the six month period ended December 31, 2016, from $305,731 for the six month period ended
December 31, 2015. The decrease was primarily due to the decrease in paid advertising and other operating expenses related to
direct to consumer sales of our product.
Customers
For
the three and six month period ending December 31, 2016, the majority of revenues resulted from wholesale sales of NightFood to
distributors and retailers, as well as direct to consumer sales.
LIQUIDITY
AND CAPITAL RESOURCES
As
of December 31, 2016, we had cash on hand of $5,396, and inventory value of $110,095.
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 to finance the Company’s
operations, of which it can give no assurance of success. However, we believe that our current capitalization structure, combined
with the continued expansion in distribution, will enable us to achieve successful financings to continue our growth. Because
the business is new and has limited operating history and relatively few sales, no certainty of continuation can be stated. 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.
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. 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.
Since
our inception, we have sustained operating losses. During the six months ended December 31, 2016, we incurred a net loss of $158,538
compared to $285,193 for the six months ended December 31, 2015.
During
the six months ended December 31, 2016, net cash used in operating activities was $29,633 compared to $220,684 for the six months
ended December 31, 2015.
During
the six months ended December 31, 2016, net cash aggregating $29,548 was provided by financing activities.
From
our inception in January 2010 through December 31, 2016, we have generated an accumulated deficit of approximately $2,624,342.
Assuming we raise additional funds and continue operations, we expect to incur additional operating losses during the remainder
of fiscal 2017 and possibly thereafter. We plan to continue to pay or satisfy existing obligation and commitments and finance
our operations, as we have in the past, primarily through the sale of our securities and other forms of external financing until
such time that we are able to generate sufficient funds from the sale of our products to finance our operations, of which we can
give no assurance.
On
November 25, 2016, the company entered into a material definitive agreement. On that date, the company executed and delivered
a Plan of Reorganization Including Option to Acquire (the “Plan”) by and among the Registrant, Hook Group, LLC (“Hook”)
and Suffield Foods. LLC (“Suffield”). The Plan contemplates the Registrant acquiring an equity interest in and potentially
merging Hook and its subsidiary Suffield with and into a wholly owned subsidiary of the Registrant. As of the date of this filing,
the agreement remains in effect, and the parties continue to work towards a closing.
Funds
on hand are not sufficient to fund our operations and we intend to rely on the sale of stock in private placements to increase
liquidity and, we anticipate deriving additional revenue from product sales in fiscal 2016, but we cannot at this time quantify
the amount. If we are unable to raise cash through the sale of our stock, we may be required to severely restrict our
operations.
As
of February 8, 2017, we entered into two agreements with Black Forest, an Equity Purchase Agreement (the “EPA”) and
a Registration Rights Agreement (the “RRA”). The two agreements were filed as exhibits to the Registrant’s
Current Report on Form 8-K dated February 8, 2017, and this Registration Statement is being filed in order for us to fulfill our
obligations under the RRA. The following summary is qualified in its entirety by reference to such exhibits to our Form 8-K.
The
agreements required us to file a registration statement for the common stock underlying the EPA. Subject to various limitations
set forth in the EPA, Black Forest, after effectiveness of such registration statement, will be required to purchase up to $5,000,000
worth of our common stock at a price equal to 85% of the market price as determined under the EPA. The EPA provides for
volume limitations on the amount of shares that Black Forest must purchase at any time and provides that we will be paid for the
common stock upon electronic delivery of the shares to Black Forest.
If
funds raised through the EPA are not sufficient to fund our operations, we intend to rely on the sale of stock in private placements
to increase liquidity. If we are unable to raise cash through the sale of our stock, we may be required to severely
restrict our operations.
Off-Balance
Sheet Arrangements
We
do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial
condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital
resources that is material to investors.
DIRECTORS,
EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
Our
directors and officers as of the date of this prospectus are:
Name
|
|
Age
|
|
Position(s)
|
|
|
|
|
|
Sean
Folkson
|
|
47
|
|
President,
Chief Executive Officer and Director
|
|
|
|
|
|
Peter
Leighton
|
|
55
|
|
VP
Marketing and Chief Marketing Officer
|
Term
and Family Relationships
Our
director currently has a term which will end at our next annual meeting of the stockholders or until successors are elected and
qualify, subject to their prior death, resignation or removal. Officers serve at the discretion of the Board of Directors.
No
family relationships exist among our officers, directors and consultants.
Business
Experience
Sean
Folkson
was elected president, CEO and a director upon formation of the Company. Sean Folkson has been CEO and President of
our subsidiary NightFood, Inc., a New York corporation, since its formation in January 2010. From 2004 to 2009 he served as president
of Specialty Equipment Direct, Inc. which is an online marketer of flooring maintenance equipment which he founded. In 1998 he
founded AffiliatePros.com, Inc. a company engaged in assisting its clients with internet marketing which operated through 2008.
Mr. Folkson received a B.A. in Business Administration with a concentration in marketing from S.U.N.Y Albany in 1991.
Peter
Leighton
was appointed Vice President Marketing and Chief Marketing Officer upon the formation of the Company. Peter Leighton
holds a BA in marketing from the University of Florida. For over 25 years he has been engaged in marketing and management for
functional foods, biotech and turnaround companies. Since 2001 Mr. Leighton has been the founding partner of Copernican Associates,
LLOC a consulting firm offering B to B and B to C services in various segments. From 2007 to 2010 he was CEO of Advana Science,
Inc., a developer of OTC consumer products and was VP Marketing of Natrol, Inc., an OTC supplement manufacturer from 2002 to 2004.
From February 2014 through March 2015, Mr. Leighton served as Vice President – Product Strategy for Complete Nutrition Holdings,
Inc., a company involved in operating and franchising high end nutritional product stores. He continues to serve the Company on
a part time basis.
Legal
Proceedings
No
officer, director, or persons nominated for these positions, and no promoter or significant employee of our corporation has been
involved in legal proceedings that would be material to an evaluation of our management.
Code
of Ethics
We
have determined that due to our early stage of development and our small size, the present adoption of a code of ethics is not
appropriate. If we grow we will adopt a suitable code of ethics.
CORPORATE
GOVERNANCE
Committees
Our
board of directors currently only has one member and consequently does not currently have a compensation committee or nominating
and corporate governance committee. If our board of directors were to significantly increase in size, we will consider the appropriateness
of committees.
Audit
Committee and Financial Expert
Presently,
the board of directors acts as the audit committee. The board of directors does not have an audit committee financial expert.
The board of directors has not yet recruited an audit committee financial expert to join the board of directors because we have
only recently commenced a significant level of financial operations.
Director
Independence
Our
sole director is not deemed independent because he is our majority shareholder, CEO and sole full-time employee.
Section
16(a) Beneficial Ownership of Reporting Compliance
Section
16(a) of the Exchange Act requires our directors and executive officers and persons who own beneficially more than 10% of our
common stock to file reports of ownership and changes in ownership of such common stock with the SEC, and to file copies of such
reports with us. Based solely upon a review of the copies of such reports filed with us, we believe that during the fiscal year
ended June 30, 2016 such reporting persons complied with the filing requirements of Section 16(a). Neither Mr. Folkson nor Mr.
Leighton have engaged in any purchases or sales of our common stock since we became subject to the reporting requirements of the
Securities Exchange Act of 1934, as amended.
EXECUTIVE
COMPENSATION
Compensation
of Executive Officers
The
following table sets forth all compensation earned during the fiscal year ended June 30, 2016 and 2015, by (i) our Chief Executive
Officer (principal executive officer), (ii) our Chief Financial Officer (principal financial officer), (iii) the three most highly
compensated executive officers other than our CEO and CFO who were serving as executive officers at the end of our last completed
fiscal year, whose total compensation exceeded $100,000 during such fiscal year ends, and (iv) up to two additional individuals
for whom disclosure would have been provided but for the fact that the individual was not serving as an executive officer at the
end of our last completed fiscal year, whose total compensation exceeded $100,000 during such fiscal year ends. We refer to all
of these officers collectively as our “named executive officers”.
Summary
Compensation Table
The
following table sets forth the cash and non-cash annual remuneration of our CEO and director during our past two fiscal years:
Name and
Principal
Position
|
|
Year
|
|
|
Salary
|
|
|
Bonus
|
|
|
Stock
Awards
|
|
|
Option
Awards
|
|
|
Non-Equity
Incentive
Plan
Compensation
|
|
|
Nonqualified
Deferred
Compensation
Earnings
|
|
|
All Other
Compensation
|
|
|
Total
|
|
Sean Folkson,
|
|
|
2016
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
72,000
|
|
|
$
|
72,000
|
|
CEO
|
|
|
2015
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
36,000
|
1
|
|
$
|
36,000
|
|
Name and
Principal
Position
|
|
Year
|
|
|
Salary
|
|
|
Bonus
|
|
|
Stock
Awards
|
|
|
Option
Awards
|
|
|
Non-Equity
Incentive
Plan
Compensation
|
|
|
Nonqualified
Deferred
Compensation
Earnings
|
|
|
All Other
Compensation
|
|
|
Total
|
|
Peter Leighton,
|
|
|
2016
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
CMO
|
|
|
2015
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
1
– To date, Mr. Folkson has not received any payment as a result of his consulting agreement. All compensation continues
to accrue.
The
Company has not paid and has no present plan to give any compensation other than cash and the granting of shares of common stock.
The Company does not have any Stock Option Plan or other equity compensation plans.
Employment
Agreements
A
consulting agreement exists between Mr. Folkson and the Company, whereby Mr. Folkson receives $6,000 in consulting fees each month,
beginning January, 2015. As the company has not had sufficient funds to date to pay Mr. Folkson, these fees have accrued and will
continue to accrue until such time as the Company has sufficient funds to issue payment.
Termination
of Employment
There
are no compensatory plans or arrangements, including payments to be received from the Company, with respect to any person named
in the Summary Compensation Table set forth above that would in any way result in payments to any such person because of his or
her resignation, retirement or other termination of such person’s employment with us.
OUTSTANDING
EQUITY AWARDS
STOCK
OPTIONS.
No
grants of stock options or stock appreciation rights were made during the year ended June 30, 2016. We have no stock options outstanding.
LONG
TERM INCENTIVE PLANS.
There
are no arrangements or plans in which we provide pension, retirement or similar benefits for directors or executive officers.
We do not have any material bonus or profit sharing plans pursuant to which cash or non-cash compensation is or may be paid to
our directors or executive officers.
Compensation
of Directors
The
Company has no standard arrangements in place or currently contemplated to compensate the Company’s directors for their
service as directors or as members of any committee of directors.
Employment
Agreements
We
do not have employment agreements with any of our executive officers or directors.
Termination
of Employment
There
are no compensatory plans or arrangements, including payments to be received from the Company, with respect to any person named
in the Summary Compensation Table set forth above that would in any way result in payments to any such person because of his or
her resignation, retirement or other termination of such person’s employment with us.
Employee
Benefit Plans
None
Indemnification
of Directors and Executive Officers and Limitation of Liability
Nevada
law generally permits us to indemnify our directors, officers, employees and agents. Pursuant to the provisions of Nevada Revised
Statutes 78.7502, we, as a corporation organized in Nevada, may indemnify our directors, officers, employees and agents in accordance
with the following:
|
(a)
|
A
corporation may indemnify any person who was or is a party or is threatened to be made a party to any action, except an action
by or in the right of the corporation, by reason of the fact that he is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation, against expenses, actually and reasonably incurred by
him in connection with the action, suit or proceeding if he: (a) is not liable for breach of his fiduciary duties as a director
or officer pursuant to Nevada Revised Statutes 78.138; or (b) acted in good faith and in a manner which he reasonably believed
to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding,
had no reasonable cause to believe his conduct was unlawful.
|
|
(b)
|
A
corporation may indemnify any person who was or is a party or is threatened to be made a party to any action by or in the
right of the corporation to procure a judgment in its favor, by reason of the fact that he is or was a director, officer,
employee or agent of the corporation, or is or was serving at the request of the corporation against expenses actually and
reasonably incurred by him in connection with the defense or settlement of the action or suit if he: (a) is not liable for
breach of his fiduciary duties pursuant to Nevada Revised Statutes 78.138; or (b) acted in good faith and in a manner which
he reasonably believed to be in or not opposed to the best interests of the corporation. Indemnification may not be made for
any claim, issue or matter as to which such a person has been adjudged by a court of competent jurisdiction, after exhaustion
of all appeals there from, to be liable to the corporation or for amounts paid in settlement to the corporation, unless and
only to the extent that the court in which the action or suit was brought or other court of competent jurisdiction determines
upon application that in view of all the circumstances of the case, the person is fairly and reasonably entitled to indemnity
for such expenses as the court deems proper.
|
|
(c)
|
To
the extent that a director, officer, employee or agent of a corporation has been successful on the merits or otherwise in
defense of any action, suit or proceeding, or in defense of any claim, issue or matter therein, the corporation shall indemnify
him against expenses, including attorneys’ fees, actually and reasonably incurred by him in connection with the defense.
|
Charter
Provisions, Bylaws and Other Arrangements of the Registrant
Our
Certificate of Incorporation, as amended, does not contain any specific language enhancing or limiting the Nevada statutory provisions
referred to above.
Insofar
as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers and controlling
persons pursuant to the foregoing provisions, or otherwise, we have been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy and is, therefore, unenforceable.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
Security
Ownership of Certain Beneficial Owners
The
following table sets forth information regarding beneficial ownership of our common stock as of the date of this prospectus by
(i) any person or group with more than 5% of any class of voting securities, (ii) each director, (iii) our chief executive officer
and each other executive officer whose cash compensation for the most recent fiscal year exceeded $100,000 and (iv) all such executive
officers and directors as a group. Except as indicated in the footnotes to this table and subject to applicable community property
laws, the persons named in the table to our knowledge have sole voting and investment power with respect to all shares of securities
shown as beneficially owned by them.
Name
and address of owner
|
|
Amount
owned
|
|
|
Percent
of class (1)
|
|
|
|
|
|
|
|
|
Sean
Folkson
|
|
|
|
|
|
|
|
|
c/o
Nightfood Holdings, Inc.
|
|
|
|
|
|
|
|
|
520
White Plains Road – Suite 500
|
|
|
|
|
|
|
|
|
Tarrytown,
NY 10691
|
|
|
16,433,568
|
(2)
|
|
|
55.9
|
%
|
|
|
|
|
|
|
|
|
|
Peter
Leighton
|
|
|
|
|
|
|
|
|
c/o
Nightfood Holdings, Inc.
|
|
|
|
|
|
|
|
|
White
Plains Road – Suite 500
|
|
|
|
|
|
|
|
|
Tarrytown,
NY 10691
|
|
|
4,000,000
|
|
|
|
13.6
|
%
|
|
|
|
|
|
|
|
|
|
All
officers and directors as a group (2 persons)
|
|
|
20,433,568
|
|
|
|
69.6
|
%
|
1.
|
Based
on 29,384,432 shares outstanding.
|
2.
|
Mr. Folkson’s
shares include 2,680,000 shares held in a trust where his wife is the trustee. Mr. Folkson disclaims beneficial ownership
of such shares.
|
Changes
in Control
We
know of no contractual arrangements which may at a subsequent date result in a change of control in the Company.
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
The
Company was incorporated on October 16, 2013 and upon our organization we issued 20,000,000 shares of common stock to the Company’s
founder, President and CEO in exchange for all of the issued and outstanding common stock of Night Food, Inc., a New York corporation.
During October and December 2013, Mr. Folkson assigned 4,000,000 shares of his common stock to Peter Leighton as compensation
in connection with his joining the Company and an aggregate of 104,500 shares to 35 persons as gifts. Mr. Folkson had advanced
an aggregate of $134,517 to us to fund our operations, and had previously been shown on our financial statements as a Note Payable.
This note has since been converted to equity as outlined below. Our sole director is not deemed independent because he is our
majority shareholder, CEO and sole full-time employee. The Company may seek to satisfy all or part of this indebtedness through
the issuance of stock to Mr. Folkson.
|
●
|
The Company received cash from Mr. Folkson, the Company’s Chief Executive Officer and related
party, $1,000 and $15,000 in 2015 and 2014, respectively, to supplement the Company’s working capital. These short term
advances have all been repaid. The Company reimbursed Mr. Folkson $5,000 for advances made previously during 2015.
|
|
●
|
On May 27, 2015, Mr. Folkson converted the outstanding note
payable of $134,517 into 538,068 shares of the Company’s $0.001 par value common stock.
|
|
●
|
The amounts previously included
in short term borrowings – related party of $0 and $0 in 2016 and 2015, respectively had represented a Note Payable which
was to be repayable upon Mr. Folkson providing the borrower with written notice of demand, according to certain terms. However
Mr. Folkson was not permitted to demand repayment of the Note until the Company was profitable, and in a positive cash flow position.
At that time, Mr. Folkson would have been allowed to demand repayment. The Company had agreed to make payments equal to 10% of
the monthly positive cash flow of the Company until balance would have been paid in full. Subsequently, on May 27, 2015, Mr. Folkson
converted his note into shares of the Company’s stock.
|
|
●
|
Included in short-term borrowings
- related party is $1,000 which is a short term advance to the company made on May 6, 2016 which was repaid after the end of the
fiscal year.
|
|
●
|
During the third quarter of our fiscal year 2015, Mr. Folkson began accruing a consulting fee of
$6,000 per month, reflected in professional fees and presented as accrued expenses – related party in our filings. Mr. Folkson
has, to date, not received any payment for his services. This expense has continued to accrue since contract inception on January
1, 2015. As of March 1, 2017, the balance is for 26 months, totaling $156,000.
|
|
●
|
The consulting agreement had an initial
term of one year, and then converted into a month to month effective January 1, 2016. This agreement can be terminated after the
initial term, with thirty (30) days’ notice by either party.
|
|
●
|
Imputed interest expense accrued on the converted note payable to Mr. Folkson totaled $0 and $9,894
for the years ended June 30, 2016 and 2015, respectively.
|
Director
Independence
We
believe that our sole director, Sean Folkson cannot be considered “independent” under Rule 400(a)(15) of the National
Association of Securities Dealers listing standards due his position as our CEO and stock ownership in us.
SELLING
SECURITY HOLDER
The
shares to be offered by the selling security holder were or will be issued in private placement transactions by us, each of which
was exempt from the registration requirements of the Securities Act. The shares offered hereby are “restricted” securities
under applicable federal and state securities laws and are being registered under the Securities Act, to give the selling security
holder the opportunity to publicly sell these shares. This prospectus is part of a registration statement on Form S-1 filed by
us with the Securities and Exchange Commission under the Securities Act covering the resale of such shares of our common stock
from time to time by the selling security holder. No estimate can be given as to the amount or percentage of our common stock
that will be held by the selling security holder after any sales made pursuant to this prospectus because the selling security
holder is not required to sell any of the shares being registered under this prospectus. The following table assumes that the
selling security holder will sell all of the shares listed in this prospectus.
The
following table sets forth the name of each person who is offering for resale shares of common stock covered by this prospectus,
the beneficial ownership of each selling security holder, the number of shares of common stock that may be sold in this offering
and the number of shares of common stock each will own after the offering, assuming they sell all of the shares offered. The term
“selling security holder” includes the stockholder listed below. Beneficial ownership is determined in accordance with
the rules of the Securities and Exchange Commission and generally includes voting or investment power with respect to securities.
There are no shares of common stock subject to options, warrants and convertible securities.
Shareholder and Name
of Person Controlling
|
|
Amount
of Shares owned before Offering
|
|
|
Number
of shares offered
|
|
|
Amount
of shares owned after Offering
|
|
|
Percent
of shares held after Offering
|
|
Black Forest Capital, LLC(1)
|
|
|
0
|
(2)
|
|
|
2,838,000
|
|
|
|
0
|
|
|
|
0
|
|
Total
|
|
|
0
|
(2)
|
|
|
2,838,000
|
|
|
|
0
|
|
|
|
0
|
|
(1)
|
Black Forest Capital, LLC, is organized in the State
of Wyoming, has an address of 81 Prospect Street, Brooklyn, NY 11201. We have been further advised that Max Riccio and Andrew
Avitan collectively, as equity owners of the Selling Stockholder, have sole voting and dispositive powers with respect to the
shares of common stock being registered for sale by the Selling Stockholder.
|
(2)
|
Does not include any shares issuable on conversion of
the Note.
See – Description of Securities – Warrants and Convertible Securities.
|
RELATIONSHIP
BETWEEN THE ISSUER AND THE SELLING SECURITY HOLDER
The
selling security holder has not at any time during the past three years acted as one of our employees, officers or directors or
had a material relationship with us. The Selling Security Holder holds a convertible promissory note in the principal amount of
$32,500.
See – Description of Securities – Warrants and Convertible Securities.
PLAN
OF DISTRIBUTION
The
selling security holder of our common stock may, from time to time, sell any or all of their shares of common stock on the stock
exchange, market or trading facility on which the shares are traded or in private transactions. These sales may be at fixed or
negotiated prices. The selling security holder may use any one or more of the following methods when selling shares:
|
●
|
ordinary brokerage transactions and transactions in
which the broker-dealer solicits purchasers;
|
|
●
|
block trades in which the broker-dealer will attempt
to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction;
|
|
●
|
privately negotiated transactions
|
|
●
|
a combination of such methods of sale; or
|
|
●
|
any other method permitted by applicable law.
|
The
selling security holder may also sell shares under Rule 144 under the Securities Act, if available, rather than under this prospectus.
Broker-dealers engaged by the selling security holder may arrange for other broker-dealers to participate in sales. Broker-dealers
may receive commissions or discounts from the selling security holder (or, if any broker-dealer acts as agent for the purchaser
of shares, from the purchaser) in amounts to be negotiated. The selling security holder does not expect these commissions and
discounts relating to its sales of shares to exceed what is customary in the types of transactions involved. The selling security
holder and any broker-dealers or agents that are involved in selling the shares of common stock are deemed to be “underwriters”
within the meaning of the Securities Act in connection with such sales. In such event, any commissions received by such broker-dealers
or agents and any profit on the resale of the shares purchased by them is deemed to be underwriting commissions or discounts under
the Securities Act. Because selling security holder is deemed to be an underwriter within the meaning of the Securities Act, it
will be subject to the prospectus delivery requirements of the Securities Act. Discounts, concessions, commissions and similar
selling expenses, if any, that can be attributed to the sale of common stock will be paid by the selling security holder and/or
the purchasers. There is no underwriter or coordinating broker acting in connection with the proposed sale of the resale shares
by the selling security holder. We are required to pay certain fees and expenses incurred by us incident to the registration of
the shares. We have agreed to indemnify the selling security holder against certain losses, claims, damages and liabilities, including
liabilities under the Securities Act. Upon our company being notified in writing by the selling security holder that any material
arrangement has been entered into with a broker-dealer for the sale of common stock through a block trade, special offering, exchange
distribution or secondary distribution or a purchase by a broker or dealer, a supplement to this prospectus will be filed, if
required, pursuant to Rule 424(b) under the Securities Act, disclosing: (i) the name of each such selling security holder and
of the participating broker-dealer(s); (ii) the number of shares involved; (iii) the price at which such the shares of common
stock were sold; (iv) the commissions paid or discounts or concessions allowed to such broker-dealer(s), where applicable; (v)
that such broker-dealer(s) did not conduct any investigation to verify the information set out or incorporated by reference in
this prospectus; and (vi) other facts material to the transaction.
Under
applicable rules and regulations under the Exchange Act, any person engaged in the distribution of the resale shares may not simultaneously
engage in market making activities with respect to our common stock for a period of two business days prior to the commencement
of the distribution. In addition, the selling security holders will be subject to applicable provisions of the Exchange Act and
the rules and regulations thereunder, including Regulation M, which may limit the timing of purchases and sales of shares of our
common stock by the selling security holders or any other person. We will make copies of this prospectus available to the selling
security holders and have informed them of the need to deliver a copy of this prospectus to each purchaser at or prior to the
time of the sale.
DESCRIPTION
OF SECURITIES
The
Company’s Certificate of Incorporation authorizes us to issue an aggregate of 100,000,000 shares of Common Stock. As
of the date of this prospectus 29,384,432 shares of our Common Stock were issued and outstanding. All outstanding shares
of Common Stock are of the same class and have equal rights and attributes. The holders of Common Stock are entitled to one vote
per share on all matters submitted to a vote of stockholders of the Company. All stockholders are entitled to share in dividends,
if any, as may be declared from time to time by the Board of Directors out of funds legally available therefore. In the
event of liquidation, the holders of Common Stock are entitled to share ratably in all assets remaining after payment of all liabilities.
Holders of Common Stock do not have cumulative or preemptive rights.
Warrants
or Convertible Securities
On
November 8, 2016, the Company entered into a Consulting Agreement with ABL Media Group with compensation of 200,000 shares
of restricted common stock, and warrants to purchase up to 1,000,000 shares of the Company common stock at a price of $.25
per share. The warrants expire six months from the date the contract was executed.
|
|
On
October 18, 2016, the Company entered into a Consulting Agreement with AJO Capital, Inc. with compensation of 200,000 shares
of restricted common stock, and warrants to purchase up to 1,000,000 shares of the Company common stock at a price of $.25
per share. The warrants expire six months from the date the contract was executed.
|
|
On
October 7, 2016, the Company entered into a revised Consulting Agreement with A.S. Austin Company with compensation consisting
of warrants to purchase up to 300,000 shares of the Company common stock at a price of $.75 per share. The warrants expire
five years from the date the contract was executed.
|
We
also have a convertible note (the “Note”) with a principal amount of $32,500 owed to Black Forest and dated February
8, 2017. This Note is convertible into our common stock at a price equal to 80% of our market price, as determined under the Note
and subject to adjustment as determined therein. We intend to prepay the Note from proceeds of puts under the EPA, but there is
no assurance we can do so. The Note has been incorporated by reference as an exhibit to this Registration Statement and the reader
is referred thereto for the complete terms thereof.
Transfer
Agent
The
transfer agent for our common stock is Clear Trust, LLC, 16540 Pointe Village Drive - Suite 210, Lutz, FL 33558.
DISCLOSURE
OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Under
Nevada Law and our Bylaws, we may indemnify an officer or director who is made a party to any proceeding, including a lawsuit,
because of his position, if he acted in good faith and in a manner he reasonably believed to be in our best interest. We may advance
expenses incurred in defending a proceeding. To the extent that the officer or director is successful on the merits in a proceeding
as to which he is to be indemnified, we must indemnify him against all expenses incurred, including attorney’s fees. With respect
to a derivative action, indemnity may be made only for expenses actually and reasonably incurred in defending the proceeding,
and if the officer or director is judged liable, only by a court order. The indemnification is intended to be to the fullest extent
permitted by the laws of the State of Nevada.
Regarding
indemnification for liabilities arising under the Securities Act which may be permitted to directors or officers under Nevada
law, we are informed that, in the opinion of the Securities and Exchange Commission, indemnification is against public policy,
as expressed in the Securities Act and is, therefore, unenforceable.
EXPERTS
The consolidated financial statements as of and for the years ended June 30, 2016 and 2015, included in this prospectus have
been audited by RBSM LLP, to the extent and for the periods indicated in their report thereon. Such consolidated financial statements
have been included in this prospectus and Registration Statement in reliance upon the report of RBSM LLP, and upon the authority
of such firm as experts in auditing and accounting.
LEGAL
MATTERS
The
validity of our common stock offered hereby will be passed upon for us by Frank J. Hariton, Esq., White Plains, New York. Mr.
Hariton owns 50,000 shares of our common stock.
WHERE
YOU CAN FIND MORE INFORMATION
We
are subject to the informational requirements of the Exchange Act, and file annual and current reports, proxy statements and other
information with the Commission. These reports, proxy statements and other information filed by NightFood Holdings, Inc. can be
read and copied at the Commission’s Public Reference Room at 100 F Street, N.W., Washington, D.C. 20549. You may obtain information
on the operation of the Public Reference Room by calling the Commission at 1-800-SEC-0330. We will provide to the record holders
of our securities a copy of our annual reports containing audited financial statements and such periodic and quarterly reports
free of charge upon request. The Commission also maintains a website that contains reports, proxy statements, information statements
and other information located at http://www.sec.gov. This prospectus does not contain all the information required to be in the
registration statement (including the exhibits), which we have filed with the Commission under the Securities Act and to which
reference is made in this prospectus.
TABLE
OF CONTENTS
NightFood
Holdings, Inc.
Financial
Statements
For
the fiscal year ended June 30, 2016 and the quarter ended December 31, 2016 30, 2015
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To
the Board of Directors and
Stockholders of NightFood Holdings, Inc.
We
have audited the accompanying consolidated balance sheets of NightFood Holdings, Inc. (the “Company”) as of June 30,
2016 and 2015 and the related consolidated statements of operations and comprehensive loss, changes in stockholders’ equity
and cash flows for the two year period ended June 30, 2016. These consolidated financial statements are the responsibility of
the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.
We
conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. The Company is not required to have, nor were we engaged to perform an audit of the Company’s
internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a
basis for designing audit procedures that are appropriate in the circumstances, but not for the purposes of expressing an opinion
on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In
our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position
of the Company as of June 30, 2016 and 2015 and the results of its operations and its cash flows for the two year in the period
ended June 30, 2016, in conformity with accounting principles generally accepted in the United States of America.
The
accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern.
As discussed in Note 3 to the consolidated financial statements, the Company has incurred recurring losses and generated negative
cash flows from its operating activities. These raise substantial doubt about the Company’s ability to continue as a going concern.
Management’s plans, with respect to these matters are also described in Note 1 to the consolidated financial statements. The consolidated
financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/
RBSM LLP
New
York, New York
September
28, 2016
NightFood
Holdings, Inc.
CONSOLIDATED
BALANCE SHEETS
|
|
June 30,
|
|
|
June 30,
|
|
|
|
2016
|
|
|
2015
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets :
|
|
|
|
|
|
|
Cash
|
|
$
|
5,481
|
|
|
$
|
16,059
|
|
Accounts receivable (net of allowance of $22,681 and $12,923, respectively)
|
|
|
1,358
|
|
|
|
34,528
|
|
Inventories
|
|
|
121,706
|
|
|
|
46,936
|
|
Other current assets
|
|
|
1,400
|
|
|
|
5,086
|
|
Total current assets
|
|
|
129,945
|
|
|
|
102,609
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
129,945
|
|
|
$
|
102,609
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ DEFICIT
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
165,441
|
|
|
$
|
97,221
|
|
Accrued expense-related party
|
|
|
108,000
|
|
|
|
36,000
|
|
Short-term borrowings
|
|
|
4,290
|
|
|
|
4,007
|
|
Advance-related party
|
|
|
1,000
|
|
|
|
5,000
|
|
Advance from Shareholders
|
|
|
23,000
|
|
|
|
-
|
|
Total current liabilities
|
|
|
301,731
|
|
|
|
142,228
|
|
|
|
|
|
|
|
|
|
|
Long term borrowings
|
|
|
2,222
|
|
|
|
6,169
|
|
|
|
|
|
|
|
|
|
|
Commitments and contingencies
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Stockholders’ deficit:
|
|
|
|
|
|
|
|
|
Common stock, ($0.001 par value, 100,000,000 shares authorized, and 28,501,932 issued and outstanding as of June 30, 2016 and 26,588,588 outstanding as of June 30, 2015, respectively)
|
|
|
28,502
|
|
|
|
26,589
|
|
Additional paid in capital
|
|
|
2,263,294
|
|
|
|
1,666,832
|
|
Accumulated deficit
|
|
|
(2,465,804
|
)
|
|
|
(1,739,208
|
)
|
Total stockholders’ deficit
|
|
|
(174,008
|
)
|
|
|
(45,788
|
)
|
Total Liabilities and Stockholders’ Deficit
|
|
$
|
129,945
|
|
|
$
|
102,609
|
|
The
accompanying notes are an integral part of these audited consolidated financial statements
NightFood
Holdings, Inc.
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
|
For the
|
|
|
For the
|
|
|
|
Year
|
|
|
Year
|
|
|
|
Ended
|
|
|
Ended
|
|
|
|
June 30,
2016
|
|
|
June 30,
2015
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
24,918
|
|
|
$
|
68,409
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
|
|
|
|
|
|
|
Cost of product sold
|
|
|
104,712
|
|
|
|
75,835
|
|
Advertising and promotional
|
|
|
110,751
|
|
|
|
86,200
|
|
Selling, general and administrative
|
|
|
73,545
|
|
|
|
49,169
|
|
Professional Fees
|
|
|
454,240
|
|
|
|
213,701
|
|
Total operating expenses
|
|
|
743,247
|
|
|
|
424,905
|
|
|
|
|
|
|
|
|
|
|
Loss from operations
|
|
|
(718,329
|
)
|
|
|
(356,496
|
)
|
|
|
|
|
|
|
|
|
|
Other expenses
|
|
|
|
|
|
|
|
|
Interest expense - bank debt
|
|
|
1,267
|
|
|
|
743
|
|
Interest expense - shareholder
|
|
|
7,000
|
|
|
|
-
|
|
Interest expense - related party
|
|
|
-
|
|
|
|
9,894
|
|
Net loss before income taxes
|
|
|
(726,596
|
)
|
|
|
(367,134
|
)
|
|
|
|
|
|
|
|
|
|
Provision for income tax
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(726,596
|
)
|
|
$
|
(367,134
|
)
|
|
|
|
|
|
|
|
|
|
Basic and diluted net loss per common share
|
|
|
(0.03
|
)
|
|
|
(0.01
|
)
|
|
|
|
|
|
|
|
|
|
Weighted average shares of capital outstanding – basic and diluted
|
|
|
27,524,987
|
|
|
|
25,558,832
|
|
The
accompanying notes are an integral part of these audited consolidated financial statements
NightFood
Holdings, Inc.
STATEMENTS
OF CHANGES IN STOCKHOLDERS’ DEFICIT
Years
ended June 30, 2016 and 2015
|
|
Common Stock
|
|
|
Additional
Paid-in
|
|
|
Accumulated
|
|
|
Total Stockholders’
|
|
|
|
Shares
|
|
|
Par Value
|
|
|
Capital
|
|
|
Deficit
|
|
|
Deficit
|
|
Balance, July 1, 2014
|
|
|
25,130,560
|
|
|
$
|
25,131
|
|
|
$
|
1,256,816
|
|
|
$
|
(1,144,325
|
)
|
|
$
|
(90,127
|
)
|
Common stock issued for services
|
|
|
261,960
|
|
|
|
262
|
|
|
|
65,228
|
|
|
|
-
|
|
|
|
65,490
|
|
Common stock issued for debt conversion
|
|
|
538,068
|
|
|
|
538
|
|
|
|
180,945
|
|
|
|
-
|
|
|
|
181,483
|
|
Common Stock issued for cash
|
|
|
658,000
|
|
|
|
658
|
|
|
|
163,842
|
|
|
|
-
|
|
|
|
164,500
|
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(367,134
|
)
|
|
|
(367,134
|
)
|
Balance, June 30, 2015
|
|
|
26,588,588
|
|
|
|
26,589
|
|
|
|
1,666,832
|
|
|
|
(1,739,208
|
)
|
|
|
(45,788
|
)
|
Common stock issued for services
|
|
|
829,344
|
|
|
|
829
|
|
|
|
293,046
|
|
|
|
-
|
|
|
|
293,875
|
|
Common stock issued as part of loan agreement
|
|
|
20,000
|
|
|
|
20
|
|
|
|
6,980
|
|
|
|
-
|
|
|
|
7,000
|
|
Common Stock issued for cash
|
|
|
1,064,000
|
|
|
|
1,064
|
|
|
|
296,436
|
|
|
|
-
|
|
|
|
297,500
|
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(726,596
|
)
|
|
|
(726,596
|
)
|
Balance, June 30, 2016
|
|
|
28,501,932
|
|
|
$
|
28,502
|
|
|
$
|
2,263,294
|
|
|
$
|
(2,465,804
|
)
|
|
$
|
(174,008
|
)
|
The
accompanying notes are an integral part of these audited consolidated financial statements
NightFood
Holdings, Inc.
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
|
For The
Year
Ended
June 30,
2016
|
|
|
For The
Year
Ended
June 30,
2015
|
|
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
Net loss
|
|
$
|
(726,596
|
)
|
|
$
|
(367,134
|
)
|
Adjustments to reconcile net loss to net cash used in operations activities:
|
|
|
|
|
|
|
|
|
Stock issued for services
|
|
|
293,875
|
|
|
|
65,490
|
|
Stock issued as part of loan agreement
|
|
|
7,000
|
|
|
|
-
|
|
Increase in sales allowance
|
|
|
9,758
|
|
|
|
12,923
|
|
(Increase) decrease in accounts receivable
|
|
|
23,411
|
|
|
|
(47,421
|
|
(Increase) decrease in inventory
|
|
|
(74,770
|
)
|
|
|
25,479
|
)
|
(Increase) decrease in other current assets
|
|
|
3,686
|
|
|
|
(3,586
|
)
|
Increase in accounts payable
|
|
|
68,220
|
|
|
|
70,666
|
|
Increase (decrease) in accrued expenses
|
|
|
72,000
|
|
|
|
45,894
|
|
Increase (decrease) in deferred revenue
|
|
|
-
|
|
|
|
(457
|
|
Net cash used in operating activities
|
|
|
(323,415
|
)
|
|
|
(198,146
|
)
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Proceeds from the sale of stock
|
|
|
297,500
|
|
|
|
164,500
|
|
Short-term borrowings (repayment)-related party
|
|
|
19,000
|
|
|
|
5,000
|
|
Repayment of short-term debt
|
|
|
(3,663
|
)
|
|
|
(4,323
|
)
|
Net cash provided by financing activities
|
|
|
312,837
|
|
|
|
165,177
|
|
|
|
|
|
|
|
|
|
|
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS
|
|
|
(10,578
|
)
|
|
|
(32,969
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, beginning of year
|
|
|
16,059
|
|
|
|
49,028
|
|
Cash and cash equivalents, end of year
|
|
$
|
5,481
|
|
|
$
|
16,059
|
|
|
|
|
|
|
|
|
|
|
Supplemental Disclosure of Cash Flow Information:
|
|
|
|
|
|
|
|
|
Cash Paid For:
|
|
|
|
|
|
|
|
|
Interest
|
|
$
|
1,267
|
|
|
$
|
743
|
|
Income taxes
|
|
$
|
-
|
|
|
$
|
-
|
|
Conversion of Debt Principal
|
|
$
|
-
|
|
|
$
|
134,517
|
|
The
accompanying notes are an integral part of these audited consolidated financial statements
NightFood
Holdings, Inc.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
1.
|
Description
of Business
|
●
|
Ni
ghtFood 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 the subsidiary, NightFood, Inc.
The Company’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.
|
|
|
●
|
The
Company’s fiscal year end is June 30.
|
|
|
|
|
|
|
●
|
The
Company● currently maintains its corporate address in Tarrytown, New York.
|
2.
|
Summary
of Significant Accounting Policies
|
●
|
Management
is responsible for the fair presentation of the Company’s financial statements, prepared in accordance with U.S. generally
accepted accounting principles (GAAP).
|
|
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. Estimates are used in the determination of depreciation and amortization,
the valuation for non-cash issuances of common stock, and the website, income taxes and contingencies, among others.
|
|
|
|
|
|
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 market, 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. Included in this category are expenses related to public relations, investor relations, new package design,
website design, design of promotional materials, cost of trade shows, cost of products given away as promotional samples,
and paid advertising. The Company incurred advertising costs of $110,751 and $86,200 for the years ended June 30,
2016 and 2015, respectively.
|
|
|
|
|
|
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 from products sold from traditional retail outlets along with items distributed from the Company’s
and other customer websites.
|
|
|
●
|
All
sources of revenue is recorded pursuant to FASB Topic 605 Revenue Recognition, when persuasive evidence of arrangement exists,
delivery of services has occurred, the fee is fixed or determinable and collectability is reasonably assured.
|
|
|
|
|
|
|
●
|
The
Company occasionally 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.
|
|
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 June 30, 2016 and 2015 the Company did not have any uninsured cash deposits.
|
|
|
|
|
|
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.
|
|
|
|
|
|
Recent
Accounting Pronouncements
|
●
|
All
new accounting pronouncements issued but not yet effective or adopted have been deemed not to be relevant to us, hence are
not expected to have any impact once adopted.
|
3.
|
Going
Concern
|
●
|
The
Company’s financial statements are prepared using generally accepted accounting principles, which contemplate the realization
of assets and liquidation of liabilities in the normal course of business. Because the business is new and has
limited operating history and relatively few sales, no certainty of continuation can be stated.
|
|
|
●
|
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.
|
4.
|
Accounts
receivable
|
●
|
The
Company’s accounts receivable arise primarily from the sale of the Company’s snack products. On a periodic basis,
the Company evaluates each customer account and based on the days outstanding of the receivable, history of past write-offs,
collections, and current credit conditions, writes off accounts it considers uncollectible.
|
|
|
|
|
5.
|
Customer
Concentrations
|
●
|
During
the year ended June 30, 2016, no individual customer made up more than 15% of our revenues.
|
6.
|
Inventories
|
●
|
Inventories
consists of the following at June 30,
|
|
|
|
|
2016
|
|
|
|
2015
|
|
|
Finished
Goods
|
|
$
|
113,517
|
|
|
$
|
35,273
|
|
|
Packaging
|
|
|
8,189
|
|
|
|
11,662
|
|
|
TOTAL
|
|
$
|
121,706
|
|
|
$
|
46,936
|
|
|
|
●
|
Inventories
are stated at the lower of cost or market. The Company periodically reviews the value of items in inventory and provides write-downs
or write-offs of inventory based on its assessment of market conditions and the products relative shelf life. Write-downs
and write-offs are charged to loss on inventory write down.
|
|
|
|
|
7.
|
Other
Current Liabilities
|
●
|
Other
current liabilities consist of the following at June 30,
|
|
|
|
|
2016
|
|
|
|
2015
|
|
|
Accrued
consulting fees – related party
|
|
$
|
108,000
|
|
|
$
|
36,000
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
|
|
$
|
108,000
|
|
|
$
|
36,000
|
|
8.
|
Short
and long term borrowings
|
●
|
On
November 24, 2010, the Company entered into a Small Business Working Capital Loan with a well-established Bank. The loan is
personally Guaranteed by the Company’s Chief Executive Officer, which is further Guaranteed for 90% by the United States
Small Business Administration (SBA).
|
|
|
●
|
The
term of the loan is seven years until full amortization and currently carries an 8.25% interest rate, which is based upon
Wall Street Journal (“WSJ”) Prime 3.75 % Plus 4.75% and is adjusted quarterly. Monthly principal payments are
required during this 84 month period.
|
|
|
|
2016
|
|
|
2015
|
|
|
Bank
Loan
|
|
$
|
6,513
|
|
|
$
|
10,176
|
|
|
Total
borrowings
|
|
|
6,513
|
|
|
|
10,176
|
|
|
Less:
current portion
|
|
|
(4,291
|
)
|
|
|
(4,007
|
)
|
|
Long
term debt
|
|
$
|
2,222
|
|
|
$
|
6,169
|
|
|
|
●
|
Interest
expense for the years ended June 30, 2016 and 2015, totaled $1,267 and $743, respectively.
|
|
|
|
|
9.
|
Stockholders’
Deficit
|
●
|
On
October 16, 2013, the NightFood, Inc. became a wholly-owned subsidiary of NightFood Holdings, Inc. Accordingly, the stockholders’
equity has been revised to reflect the share exchange on a retroactive basis.
|
|
|
●
|
The
Company is authorized to issue One Hundred Million (100,000,000) shares of $0.001 par value per share Common Stock. Holders
of Common Stock are each entitled to cast one vote for each Share held of record on all matters presented to shareholders.
Cumulative voting is not allowed; hence, the holders of a majority of the outstanding Common Stock can elect all directors.
Holders of Common Stock are entitled to receive such dividends as may be declared by the Board of Directors out of funds legally
available therefore and, in the event of liquidation, to share pro-rata in any distribution of the Company’s assets after
payment of liabilities. The Board of Directors is not obligated to declare a dividend and it is not anticipated that dividends
will be paid unless and until the Company is profitable. Holders of Common Stock do not have pre-emptive rights to subscribe
to additional shares if issued by the Company. There are no conversion, redemption, sinking fund or similar provisions regarding
the Common Stock. All of the outstanding Shares of Common Stock are fully paid and non-assessable and all of the Shares of
Common Stock offered thereby will be, upon issuance, fully paid and non-assessable. Holders of Shares of Common Stock will
have full rights to vote on all matters brought before shareholders for their approval, subject to preferential rights of
holders of any series of Preferred Stock. Holders of the Common Stock will be entitled to receive dividends, if and as declared
by the Board of Directors, out of funds legally available, and share pro-rata in any distributions to holders of Common Stock
upon liquidation. The holders of Common Stock will have no conversion, pre-emptive or other subscription rights. Upon any
liquidation, dissolution or winding-up of the Company, assets, after the payment of debts and liabilities and any liquidation
preferences of, and unpaid dividends on, any class of preferred stock then outstanding, will be distributed pro-rata to the
holders of the common stock. The holders of the common stock have no right to require the Company to redeem or purchase their
shares. Holders of shares of common stock do not have cumulative voting rights, which means that the holders of more than
50% of the outstanding shares, voting for the election of directors, can elect all of the directors to be elected, if they
so choose, and, in that event, the holders of the remaining shares will not be able to elect any of our directors.
|
|
|
|
|
|
|
●
|
The
Company has 28,501,932 and 26,588,588 shares of its $0.001 par value common stock issued and outstanding as of June 30, 2016
and 2015 respectively.
|
|
|
|
|
|
|
●
|
During
the year ended June 30, 2016:
|
|
|
●
|
the
Company sold 1,064,000 shares of common stock for cash proceeds of $297,500,
|
|
|
|
|
|
|
●
|
and
issued 829,344 shares of common stock for services with a fair value of $293,875.
|
|
|
|
|
|
|
●
|
and
issued 20,000 shares of common stock as part as a loan agreement valued at $7,000.
|
|
|
Dividends
|
|
|
●
|
The
Company has never issued dividends.
|
|
|
Warrants
|
|
|
●
|
The
Company has never issued any warrants.
|
|
|
Options
|
|
|
●
|
The
Company has never issued options.
|
10.
|
Related
Party Transactions
|
●
|
The
Company received cash from Mr. Folkson, the Company’s Chief Executive Officer and related party, $1,000 and $15,000
in 2016 and 2015, respectively, to supplement the Company’s working capital. These short term advances have all been
repaid. The Company reimbursed Mr. Folkson $5,000 for advances made previously during 2016. The company owes Mr. Folkson another
$1,458 for expenses incurred on behalf of the company through June 30, 2016.
|
|
|
●
|
On
May 27, 2015, Mr. Folkson converted the outstanding note payable of $134,517 into 538,068 shares of the Company’s $0.001
par value common stock.
|
|
|
|
|
|
|
●
|
The
amounts previously included in short term borrowings – related party of $0 and $0 in 2016 and 2015, respectively had
represented a Note Payable which was to be repayable upon Mr. Folkson providing the borrower with written notice
of demand, according to certain terms. However Mr. Folkson was not permitted to demand repayment of the Note until the Company
was profitable, and in a positive cash flow position. At that time, Mr. Folkson would have been allowed to demand repayment.
The Company had agreed to make payments equal to 10% of the monthly positive cash flow of the Company until balance would
have been paid in full. Subsequently, on May 27, 2015, Mr. Folkson converted his note into shares of the Company’s stock.
|
|
|
|
|
|
|
●
|
During
the third quarter 2015, Mr. Folkson began accruing a consulting fee of $6,000 per month which the aggregate of $72,000 and
$36,000 is reflected in professional fees and presented in the accrued expenses – related party for 2016 and 2015 respectively.
|
|
|
|
|
|
|
●
|
The
consulting agreement for Mr. Folkson had a term of one year, and then converted into a month to month effective January 1,
2016. This agreement can be terminated after the initial term, with thirty (30) days notice by either party.
|
|
|
|
|
|
|
●
|
Imputed
interest expense accrued on the converted note payable to Mr. Folkson totaled $0 and $9,894 for the years ended June 30, 2016
and 2015, respectively.
|
|
|
|
|
|
|
●
|
On
February 10, 2016, shareholder Dror Tepper loaned the company $4,000. Mr. Tepper through his On April 8, 2016,
Mr. Tepper loaned the company an additional $9,000, $4,000 of which was a cash loan made directly to the company, and $5,000
of which was paid directly to a vendor for services received. There was no compensation paid to Mr. Tepper for
making these advances. These advances were secured by a promissory note from the company to Mr. Tepper, whereby
the company has until November 4, 2016 to repay the $13,000. Should the company not be able to repay the note,
Mr. Tepper is entitled to receive 150,000 shares of Company stock as repayment of the note.
|
|
|
|
|
|
|
●
|
On
March 4, 2016, shareholder Richard Faraci loaned the company $10,000. As compensation for making this loan, Mr. Faraci received
20,000 shares of Company common stock. This advance was secured by a promissory note from the company to Mr. Faraci,
whereby the company has until September 1, 2016 to repay the $10,000. Should the company not be able to repay the
note, Mr. Faraci is entitled to receive 100,000 shares of Company stock as repayment of the note. After the end
of the fiscal year, this note was extended by both parties, see Note 14, Subsequent Events.
|
11.
|
Income
Tax
|
●
|
A
reconciliation of the statutory income tax rates and the Company’s effective tax rate is as follows:
|
|
|
|
June
30,
|
|
|
|
|
2016
|
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
Statutory
U.S. federal rate
|
|
|
(34.0
|
)%
|
|
|
(34.0
|
)%
|
|
Permanent
differences
|
|
|
13.8
|
%
|
|
|
6.1
|
%
|
|
Valuation
allowance
|
|
|
20.2
|
%
|
|
|
27.9
|
%
|
|
Provision
for income tax expense(benefit)
|
|
|
0.0
|
%
|
|
|
0.0
|
%
|
|
|
●
|
The
tax effects of the temporary differences and carry forwards that give rise to deferred tax assets consist of the following:
|
|
|
|
2016
|
|
|
2015
|
|
|
Deferred
tax assets:
|
|
|
|
|
|
|
|
|
|
Net
operating loss carry-forwards
|
|
$
|
346,487
|
|
|
$
|
196,982
|
|
|
Non-cash
compensation
|
|
|
|
|
|
|
|
|
|
Total
deferred tax assets
|
|
$
|
346,487
|
|
|
$
|
346,487
|
|
|
|
|
|
|
|
|
|
|
|
|
Valuation
allowance
|
|
|
(346,487
|
)
|
|
|
(346,487
|
)
|
|
Net
deferred tax asset
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
●
|
At
June 30, 2016 the Company had estimated U.S. federal net operating losses of approximately
$1,012,000 for income tax purposes which will expire between 2031 and 2036. For financial
reporting purposes, the entire amount of the net deferred tax assets has been offset
by a valuation allowance due to uncertainty regarding the realization of the assets.
The net change in the total valuation allowance for the year ended June 30, 2016 was
an increase of $149,505. The Company follows FASC 740-10-25 P which requires a company
to evaluate whether a tax position taken by the company will “more likely than
not” be sustained upon examination by the appropriate tax authority. The Company
has analyzed filing positions in all of the federal and state jurisdictions where it
is required to file income tax returns, as well as all open tax years in these jurisdictions.
The Company believes that its income tax filing positions and deductions would be sustained
on audit and does not anticipate any adjustments that would result in a material change
to its financial position. Therefore, no reserves for uncertain income tax positions
have been recorded.
|
|
|
|
|
|
|
●
|
The
Company may not be able to utilize the net operating loss carryforwards for its US income taxes in future periods should it
experience a change in ownership as defined in Section 382 of the Internal Revenue Code (“IRC”). Under section
382, should the Company experience a more than 50% change in its ownership over a 3 year period, the Company would be limited
based on a formula as defined in the IRC to the amount per year it could utilize in that year of the net operating loss carryforwards.
|
|
|
|
|
|
|
●
|
As
of June 30, 2016 the Company had not performed an analysis to determine if the Company was subject to the provisions of Section
382. The Company is subject to U.S. federal income tax including state and local jurisdictions. Currently, no federal or state
income tax returns are under examination by the respective taxing jurisdictions.
|
|
|
|
|
|
|
●
|
The
Company’s accounting policy is to recognize interest and penalties related to uncertain tax positions in income tax expense.
The Company has not accrued interest for any periods.
|
12.
|
Fair
Value of Financial Instruments
|
●
|
Cash
and Equivalents, Receivables, Other Current Assets, 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:
|
|
|
|
|
Fiscal
2016 Fair Value Measurements
|
|
|
|
|
|
Level
1
|
|
|
Level
2
|
|
|
Level
3
|
|
|
Total
Fair
Value
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
assets
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
Total
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short
and long-term debt
|
|
$
|
6,513
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
6,513
|
|
|
|
Total
|
|
$
|
6,513
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
6,513
|
|
|
|
|
|
Fiscal
2015 Fair Value Measurements
|
|
|
|
|
|
Level
1
|
|
|
Level
2
|
|
|
Level
3
|
|
|
Total
Fair
Value
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
assets
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
Total
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short
and long-term debt
|
|
$
|
10,176
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
10,176
|
|
|
|
Total
|
|
$
|
10,176
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
10,176
|
|
13.
|
Net
Loss per Share of Common Stock
|
●
|
The
Company has adopted FASB Topic 260, “Earnings per Share,” which requires presentation of basic and diluted EPS on
the face of the income statement for all entities with complex capital structures and requires a reconciliation of the
numerator and denominator of the basic EPS computation to the numerator and denominator of the diluted EPS computation.
In the accompanying financial statements, basic loss per share of common stock is computed by dividing net loss by the
weighted average number of shares of common stock outstanding during the year. Basic net loss per common share
is based upon the weighted average number of common shares outstanding during the period. Dilution is computed by
applying the treasury stock method. Under this method, options and warrants are assumed to be exercised at the beginning
of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock
at the average market price during the period. However, shares associated with convertible debt, stock options and stock
warrants are not included because the inclusion would be anti-dilutive (i.e. reduce the net loss per common share). There
were no anti-dilutive instruments.
|
|
|
|
2016
|
|
|
2015
|
|
|
Numerator
- basic and diluted loss per share net loss
|
|
$
|
(726,596
|
)
|
|
$
|
(367,134
|
)
|
|
|
|
|
-
|
|
|
|
-
|
|
|
Net
loss available to common stockholders
|
|
$
|
(726,596
|
)
|
|
$
|
(367,134
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Denominator
– basic and diluted loss per share – weighted average common shares outstanding
|
|
|
27,524,987
|
|
|
|
25,558,832
|
|
|
Basic
and diluted earnings per share
|
|
$
|
(0.03
|
)
|
|
$
|
(0.01
|
)
|
14.
|
Subsequent
Events
|
●
|
The
Company and investor Richard Faraci mutually agreed to extend the length of an outstanding promissory note relating to a loan
made by Faraci to the Company. In exchange for agreeing to extend the repayment period an additional 180 days, Faraci was
granted an additional 25,000 shares. The Company was not in a position to repay the note, and Faraci was entitled to receive
100,000 shares in lieu of the repayment of the $10,000 principal, but the Company felt it preferable to extend.
|
|
|
|
|
|
|
●
|
As part
of a consulting agreement entered into by the Company with A.S. Austin Company, Inc., which commenced in June of 2016, the
Company entered into a Warrant Agreement with the Consultant in July of 2017, whereby consultant receives warrants to purchase
75,000 shares of common stock of the Company at $.75 per share
|
Table
of Contents
PART
I – FINANCIAL INFORMATION
|
|
|
|
Item
1.
|
Financial Statements.
|
F-15
|
|
|
|
Item
2.
|
Management’s
Discussion and Analysis of Financial Condition and Results of Operations.
|
|
|
|
|
Item
3.
|
Quantitative
and Qualitative Disclosures About Market Risk.
|
|
|
|
|
Item
4.
|
Controls
and Procedures.
|
|
NightFood
Holdings, Inc.
Financial
Statements
For
the three and six months ended December 31, 2016 and December 31, 2015
Item
1. Financial Statements
NightFood
Holdings, Inc.
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
|
December 31,
|
|
|
June 30,
|
|
|
|
2016
|
|
|
2016
|
|
|
|
(Unaudited)
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets :
|
|
|
|
|
|
|
Cash
|
|
$
|
5,396
|
|
|
$
|
5,481
|
|
Accounts receivable (net of allowance of $0 and $22,363, respectively)
|
|
|
11,035
|
|
|
|
1,358
|
|
Inventory
|
|
|
110,095
|
|
|
|
121,706
|
|
Other current assets
|
|
|
-
|
|
|
|
1,400
|
|
Total current assets
|
|
|
126,525
|
|
|
|
129,945
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
126,525
|
|
|
$
|
129,945
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ DEFICIT
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
198,512
|
|
|
$
|
165,441
|
|
Accrued expense-related party
|
|
|
144,000
|
|
|
|
108,000
|
|
Short-term borrowings
|
|
|
5,048
|
|
|
|
4,290
|
|
Advance from shareholders
|
|
|
44,984
|
|
|
|
23,000
|
|
Advance- related party
|
|
|
28
|
|
|
|
1,000
|
|
Total current liabilities
|
|
|
392,572
|
|
|
|
301,731
|
|
|
|
|
|
|
|
|
|
|
Long term borrowings
|
|
|
-
|
|
|
|
2,222
|
|
|
|
|
|
|
|
|
|
|
Commitments and contingencies
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Stockholders’ deficit:
|
|
|
|
|
|
|
|
|
Common stock, ($0.001 par value, 100,000,000 shares authorized, and 28,884,432 issued and outstanding as of December 31, 2016 and 28,501,932 outstanding as of June 30, 2016, respectively)
|
|
|
28,884
|
|
|
|
28,502
|
|
Additional paid in capital
|
|
|
2,329,411
|
|
|
|
2,263,294
|
|
Accumulated deficit
|
|
|
(2,624,342
|
)
|
|
|
(2,465,804
|
)
|
Total stockholders’ deficit
|
|
|
(266,047
|
)
|
|
|
(174,008
|
)
|
Total Liabilities and Stockholders’ Deficit
|
|
$
|
126,525
|
|
|
$
|
129,945
|
|
The
accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
NightFood
Holdings, Inc.
UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
For the six months ended December 31,
2016
|
|
|
For the six months ended December 31,
2015
|
|
|
For the three months ended December 31,
2016
|
|
|
For the three months ended December 31,
2015
|
|
Revenues
|
|
$
|
10,507
|
|
|
$
|
21,155
|
|
|
$
|
8,043
|
|
|
$
|
(338
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of product sold
|
|
|
15,246
|
|
|
|
55,084
|
|
|
|
3,145
|
|
|
|
27,126
|
|
Advertising and promotional
|
|
|
1,058
|
|
|
|
77,279
|
|
|
|
438
|
|
|
|
24,417
|
|
Selling, general and administrative
|
|
|
18,031
|
|
|
|
38,500
|
|
|
|
5,755
|
|
|
|
17,959
|
|
Professional Fees
|
|
|
129,372
|
|
|
|
134,868
|
|
|
|
83,040
|
|
|
|
78,603
|
|
Total operating expenses
|
|
|
163,707
|
|
|
|
305,731
|
|
|
|
92,378
|
|
|
|
148,105
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from operations
|
|
|
(153,200
|
)
|
|
|
(284,576
|
)
|
|
|
(84,335
|
)
|
|
|
(148,443
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense - bank debt
|
|
|
338
|
|
|
|
617
|
|
|
|
37
|
|
|
|
304
|
|
Interest expense - shareholder
|
|
|
5,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Total interest expense
|
|
|
5,338
|
|
|
|
617
|
|
|
|
37
|
|
|
|
304
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for income tax
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(158,538
|
)
|
|
$
|
(285,193
|
)
|
|
$
|
(84,372
|
)
|
|
$
|
(148,747
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted net loss per common share
|
|
$
|
(0.01
|
)
|
|
$
|
(0.01
|
)
|
|
$
|
(0.00
|
)
|
|
$
|
(0.00
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares of capital outstanding – basic and diluted
|
|
|
28,552,706
|
|
|
|
26,958,789
|
|
|
|
28,585,220
|
|
|
|
27,253,599
|
|
The
accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
NightFood
Holdings, Inc.
UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
For the six months ended
December 31,
2016
|
|
|
For the six months ended
December 31,
2015
|
|
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
Net loss
|
|
$
|
(158,538
|
)
|
|
$
|
(285,193
|
)
|
Adjustments to reconcile net loss to net cash used in operations activities:
|
|
|
|
|
|
|
|
|
Stock issued for services
|
|
|
51,500
|
|
|
|
28,563
|
|
Stock issued as part of loan agreement
|
|
|
5,000
|
|
|
|
-
|
|
(Increase) decrease in accounts receivable
|
|
|
(9,677
|
)
|
|
|
13,818
|
|
Decrease in inventory
|
|
|
11,611
|
|
|
|
31,178
|
|
Increase in other current assets
|
|
|
1,400
|
|
|
|
(48,144
|
)
|
Increase in accounts payable
|
|
|
33,071
|
|
|
|
3,094
|
|
Increase in accrued expenses
|
|
|
36,000
|
|
|
|
36,000
|
|
Net cash used in operating activities
|
|
|
(29,633
|
)
|
|
|
(220,684
|
)
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Proceeds from the sale of stock
|
|
|
10,000
|
|
|
|
231,000
|
|
Advance from shareholders
|
|
|
21,984
|
|
|
|
(5,000
|
)
|
Advance from related party
|
|
|
28
|
|
|
|
-
|
|
Repayment of short-term debt
|
|
|
(1,464
|
)
|
|
|
(1,557
|
)
|
Repayment of related party advance
|
|
|
(1,000
|
)
|
|
|
-
|
|
Net cash provided by financing activities
|
|
|
29,548
|
|
|
|
224,443
|
|
|
|
|
|
|
|
|
|
|
NET (INCREASE) IN CASH AND CASH EQUIVALENTS
|
|
|
(86
|
)
|
|
|
3,759
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, beginning of period
|
|
|
5,481
|
|
|
|
16,059
|
|
Cash and cash equivalents, end of period
|
|
$
|
5,396
|
|
|
$
|
19,818
|
|
|
|
|
|
|
|
|
|
|
Supplemental Disclosure of Cash Flow Information:
|
|
|
|
|
|
|
|
|
Cash Paid For:
|
|
|
|
|
|
|
|
|
Interest
|
|
$
|
301
|
|
|
$
|
617
|
|
Income taxes
|
|
$
|
-
|
|
|
$
|
-
|
|
The
accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
NightFood
Holdings, Inc.
NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
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 the subsidiary, NightFood, Inc. The Company’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.
|
|
|
|
|
|
|
●
|
The
Company’s fiscal year end is June 30.
|
|
|
|
|
|
|
●
|
The
Company currently maintains its corporate address in Tarrytown, New York.
|
2.
|
Summary
of Significant Accounting Policies
|
●
|
Management
is responsible for the fair presentation of the Company’s financial statements, prepared in accordance with U.S. generally
accepted accounting principles (GAAP).
|
|
|
|
|
|
Interim
Financial
Statements
|
●
●
|
These
unaudited condensed consolidated financial statements as of and for the six (6) months ended December 31, 2016 and 2015,
respectively, reflect all adjustments including normal recurring adjustments, which, in the opinion of management, are
necessary to present fairly the financial position, results of operations and cash flows for the periods presented in
accordance with the accounting principles generally accepted in the United States of America.
These
interim unaudited condensed consolidated financial statements should be read in conjunction with the Company’s consolidated
financial statements and notes thereto for the years ended June 30, 2016 and 2015, respectively, which are included in
the Company’s June 30, 2016 Annual Report on Form 10-K filed with the United States Securities and Exchange Commission
on September 28, 2016. The Company assumes that the users of the interim financial information herein have read, or have
access to, the audited consolidated financial statements for the preceding period, and that the adequacy of additional
disclosure needed for a fair presentation may be determined in that context. The results of operations for the six (6)
months ended December 31, 2016 are not necessarily indicative of results for the entire year ending June 30, 2017.
|
|
|
|
|
|
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. Estimates are used in the determination of depreciation and amortization,
the valuation for non-cash issuances of common stock, and the website, income taxes and contingencies, among others.
|
|
|
|
|
|
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 market, 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 incurred advertising costs of $1,058 and $77,279 for the six months ended December 31, 2016 and
2015, respectively.
|
|
|
|
|
|
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 and direct to consumer.
|
|
|
|
|
|
|
●
|
All
sources of revenue is recorded pursuant to FASB Topic 605 Revenue Recognition, when persuasive evidence of arrangement exists,
delivery of services has occurred, the fee is fixed or determinable and collectability is reasonably assured.
|
|
|
|
|
|
|
●
|
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.
|
|
|
|
|
|
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 December 31, 2016 and June 30, 2016 the Company did not have any uninsured cash deposits.
|
|
Customer
Concentration
|
●
|
During
the six months ended December 31, 2016, two customers, accounted for approximately 90% of revenues.
|
|
|
|
|
|
Receivables
Concentration
|
●
|
As
of December 31, 2016, the company had accounts receivable totaling $11,035, with approximately 90% of that from two customers. Approximately
80% of that has been collected as of the time of this filing.
|
|
|
|
|
|
Income
Per Share
|
●
|
Net
income per share data for both the three and six month periods ending December 31, 2016 and 2015 are based on net income available
to common shareholders divided by the weighted average of the number of common shares outstanding. As of December 31, 2016,
there are no outstanding common stock equivalents.
|
|
|
|
|
|
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.
|
|
|
|
|
|
Recent
Accounting Pronouncements
|
●
|
All
new accounting pronouncements issued but not yet effective or adopted have been deemed not to be relevant to us, hence are
not expected to have any impact once adopted.
|
3.
|
Going
Concern
|
●
|
The
Company’s financial statements are prepared using generally accepted accounting principles, which contemplate the realization
of assets and liquidation of liabilities in the normal course of business. Because the business is new and has limited operating
history and relatively few sales, no certainty of continuation can be stated.
|
|
|
●
|
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.
|
4.
|
Accounts
receivable
|
●
|
The
Company’s accounts receivable arise primarily from the sale of the Company’s snack products. On a periodic basis,
the Company evaluates each customer account and based on the days outstanding of the receivable, history of past write-offs,
collections, and current credit conditions, writes off accounts it considers uncollectible. With most of our retail and distribution
partners, invoices will typically be due in 30 or 45 days. The Company does not accrue interest on past due accounts and the
Company does not require collateral. Accounts become past due on an account-by-account basis. Determination that an account
is uncollectible is made after all reasonable collection efforts have been exhausted. The Company has also provided certain
sales allowances of $0 and $22,363 as of December 31, 2016 and June 30, 2016, respectively.
|
5.
|
Inventories
|
●
|
Inventory
consists of the following at December 31
th
2016 and June 30
th
2016,
|
|
|
|
December
31,
2016
|
|
|
June
30,
2016
|
|
|
Finished
Goods
|
|
$
|
101,906
|
|
|
$
|
113,517
|
|
|
Packaging
|
|
|
8,189
|
|
|
|
8,189
|
|
|
TOTAL
|
|
$
|
110,095
|
|
|
$
|
121,706
|
|
|
|
|
Inventories
are stated at the lower of cost or market. The Company periodically reviews the value of items in inventory and provides write-downs
or write-offs of inventory based on its assessment of market conditions and the products relative shelf life. Write-downs
and write-offs are charged to loss on inventory write down.
|
6.
|
Other
current assets
|
●
|
Other
current assets consists of the following at December 31
th
2016 and June 30
th
2016,
|
|
|
|
December
31,
2016
|
|
|
June
30,
2016
|
|
|
Vendor
deposits
|
|
|
-
|
|
|
|
1,400
|
|
|
TOTAL
|
|
$
|
-
|
|
|
$
|
1,400
|
|
7.
|
Other
Current Liabilities
|
●
|
Other
current liabilities consist of the following at December 31
st
2016 and June 30
th
2016,
|
|
|
|
December
31,
2016
|
|
|
June
30,
2016
|
|
|
Accrued
consulting fees – related party
|
|
$
|
144,000
|
|
|
$
|
108,000
|
|
|
TOTAL
|
|
|
144,000
|
|
|
|
108,000
|
|
8.
|
Short
and long term Borrowings
|
●
|
On
November 24, 2010, the Company entered into a Small Business Working Capital Loan with a well-established Bank. The loan is
personally guaranteed by the Company’s Chief Executive Officer, which is further guaranteed for 90% by the United States
Small Business Administration (SBA).
|
|
|
|
|
|
|
|
The
term of the loan is seven years until full amortization and carried an
8.25%
interest rate, through Second Quarter of our 2017 fiscal year. Monthly principal payments are required during this 84 month
period.
|
|
|
|
December
31,
2016
|
|
|
June
30,
2016
|
|
|
Bank
loan
|
|
$
|
5,048
|
|
|
$
|
6,512
|
|
|
Total
borrowings
|
|
|
5,048
|
|
|
|
6,512
|
|
|
Less:
current portion
|
|
|
(5,048
|
)
|
|
|
(4,290
|
)
|
|
Long
term debt
|
|
$
|
-
|
|
|
$
|
2,222
|
|
|
|
|
Interest
expense for the three months ended December 31, 2016 and 2015, totaled $338 and $617, respectively.
|
9.
|
Capital
Stock Activity
|
●
|
The
Company has 28,884,432 and 28,501,932 shares of its $0.001 par value common stock issued and outstanding as of December 31,
2016 and June 30, 2016 respectively.
|
|
|
|
|
|
|
●
|
During
the six months ended December 31, 2016 the Company issued 257,500 shares of common stock for services valued at $51,500, issued
100,000 shares of common stock for cash proceeds of $10,000, and issued 25,000 shares of common stock valued at $5,000 as
part of a loan agreement.
|
10.
|
Advances
by Affiliates
|
●
|
The
Company received cash from Mr. Folkson, the Company’s Chief Executive Officer and related party, of which $28 and $1,000
was outstanding as of December 31, 2016 and June 30, 2016, respectively, to supplement the Company’s working capital.
Additionally, five of the Company’s shareholders also loaned funds to the Company of $21,984 during the six month period
ended December 31, 2016
|
|
|
●
|
During
the third quarter of Fiscal Year 2015, Mr. Folkson began accruing a consulting fee of $6,000 per month which the aggregate
of $6,000 is reflected in professional fees for the three ended December 31, 2016 and reflected in the accrued expenses –
related party with a balance of $144,000 and $108,000 at December 31, 2016 and June 30, 2016, respectively.
|
11.
|
Subsequent
Events
|
●
|
On
January 3, 2017, the Company entered into a consulting agreement with Robert Gross for services related to capitalization
strategies, with compensation of 250,000 shares of restricted common stock, with a leak out provision.
|
|
|
|
|
|
|
●
|
Reference
is made to an 8-K filed by the Company on December 6, 2016, relating to entry by the Company into a material definitive agreement
to merge Hook Group, LLC and Suffield Foods, LLC (collectively, “Hook”) into a wholly owned subsidiary of the
Company. Subsequent to the end of the reporting period, the Company and Hook have engaged, and continue to engage,
in ongoing discussions regarding changes to the terms of the transaction. In conjunction with this proposed merger,
in January of 2016, two private investors who have been contemplating an investment in the Company for purposes of facilitating
the merger, placed a total of $400,000 into an account at Sterling National bank, in the name of NightFood Holdings, Inc. The
funds remain in said account, and remain under investor control. Should the Company be unable to come to terms
with these investors, the funds will be returned to the investors, and the account will be closed.
|
|
|
|
|
|
|
●
|
On
February 13, 2017, the Company entered into three agreements with Black Forest Capital, LLC. The first is an Equity
Purchase Agreement calling for the funding of up to $5,000,000. The second is a Registration Rights Agreement,
and the third was a $32,500 promissory note. An 8-K was filed on February 13, 2017 with each agreement as an exhibit.
|
PART
II - INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM
13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
We
estimate that expenses in connection with the distribution described in this registration statement (other than brokerage commissions,
discounts or other expenses relating to the sale of the shares by the selling security holders) will be as set forth below. We
will pay all of the expenses with respect to the distribution, and such amounts, with the exception of the Securities and Exchange
Commission registration fee, are estimates.
SEC registration fee
|
|
$
|
30.00
|
|
|
|
|
|
|
Accounting fees and expenses
|
|
$
|
5,000.00
|
|
|
|
|
|
|
Legal fees and expenses
|
|
$
|
10,000.00
|
|
|
|
|
|
|
Printing and related expenses
|
|
$
|
1,000.00
|
|
|
|
|
|
|
Transfer agent fees and expenses
|
|
$
|
1,000.00
|
|
|
|
|
|
|
Miscellaneous
|
|
$
|
970.00
|
|
|
|
|
|
|
Total
|
|
$
|
18,000.00
|
|
ITEM
14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The
Certificate of Incorporation and the Bylaws of our Company provide that our Company will indemnify, to the fullest extent permitted
by the Nevada Revised Statutes, each person who is or was a director, officer, employee or agent of our Company, or who serves
or served any other enterprise or organization at the request of our Company. Pursuant to Nevada law, this includes elimination
of liability for monetary damages for breach of the directors’ fiduciary duty of care to our Company and its stockholders.
These provisions do not eliminate the directors’ duty of care and, in appropriate circumstances, equitable remedies such
as injunctive or other forms of non-monetary relief will remain available under Nevada law. In addition, each director will continue
to be subject to liability for breach of the director’s duty of loyalty to our Company, for acts or omissions not in good
faith or involving intentional misconduct, for knowing violations of law, for any transaction from which the director derived
an improper personal benefit, and for payment of dividends or approval of stock repurchases or redemptions that are unlawful under
Nevada law. The provision also does not affect a director’s responsibilities under any other laws, such as the federal securities
laws or state or federal environmental laws.
We
have not entered into any agreements with our directors and executive officers that require us to indemnify these persons against
expenses, judgments, fines, settlements and other amounts actually and reasonably incurred (including expenses of a derivative
action) in connection with any proceeding, whether actual or threatened, to which any such person may be made a party by reason
of the fact that the person is or was a director or officer of our Company or any of our affiliated enterprises.
We
do not maintain any policy of directors’ and officers’ liability insurance that insures its directors and officers
against the cost of defense, settlement or payment of a judgment under any circumstances.
ITEM
15. RECENT SALES OF UNREGISTERED SECURITIES
During
the Fiscal years ended June 30, 2016 and June 30, 2015, we sold an aggregate of 1,722,000 shares to 23 persons at prices ranging
from $0.25 to $0.35 in transactions under rule 506 of regulation D and realized net proceeds of $462,000.
These
transactions were exempt from registration under the Act by reason of Section 4(2) thereof as transactions by an issuer not involving
a public offering. We filed Form D with respect to these transactions and all of the shares issued therein where subject to an
appropriate legend under the Act reflecting lack of registration.
On November 8, 2016, the Company entered into a Consulting Agreement with ABL Media Group with compensation of 200,000 shares of restricted common stock, and warrants to purchase up to 1,000,000 shares of the Company common stock at a price of $.25 per share. The warrants expire six months from the date the contract was executed.
On October 18, 2016, the Company entered into a Consulting Agreement with AJO Capital, Inc. with compensation of 200,000 shares of restricted common stock, and warrants to purchase up to 1,000,000 shares of the Company common stock at a price of $.25 per share. The warrants expire six months from the date the contract was executed.
On October 7, 2016, the Company entered into a revised Consulting Agreement with A.S. Austin Company with compensation consisting of warrants to purchase up to 300,000 shares of the Company common stock at a price of $.75 per share. The warrants expire five years from the date the contract was executed.
These
transactions were exempt from registration under the Act by reason of Section 4(2) thereof as transactions by an issuer not involving
a public offering.
ITEM
16. EXHIBITS
Exhibit
No.
|
|
Description
|
3.1
|
|
Certificate
of Incorporation*
|
3.2
|
|
Bylaws*
|
4.1
|
|
Subscription Agreements*
|
4.2
|
|
Specimen Stock Certificate*
|
10.1
|
|
Lease Receipt and terms and conditions**
|
10.2
|
|
Plan
of Reorganization Including Option to Acquire with Hook Group, LLC ***
|
10.3
|
|
Equity
Purchase Agreement with Black Forest Capital, LLC, dated February 8, 2017 ****
|
10.4
|
|
Registration
Rights Agreement with Black Forest Capital, LLC, dated February 8, 2017 *****
|
10.5
|
|
Convertible
Promissory Note with Black Forest Capital, LLC, dated February 8, 2017******
|
21.1
|
|
Subsidiaries
of the Registrant NightFood, Inc. a 100% owned New York corporation and Fiber One™ Ice Cream, Inc., a 100% owned Delaware
corporation
|
5.1
|
|
Opinion
of Frank J. Hariton. Previously Filed
|
23.1
|
|
Consent
of RBSM LLP. Filed herewith
|
23.2
|
|
Consent
of Frank J. Hariton (included in exhibit 5.1)
|
*
|
Incorporated by reference to like numbered exhibit to the Registrant’s registration Statement on Form S-1 File Number
333-193347
|
**
|
Incorporated by reference to the Registrant’s annual report on Form 10-K for Fiscal Year ended June 30, 2015
|
***
|
Incorporated
by reference to Exhibit 99.1 to
the Registrant’s Current Report on Form 8-K, dated November 25, 2016.
|
****
|
Incorporated by reference to Exhibit 10.1 to the Registrant’s
Current Report on Form 8-K, dated February 8, 2017
|
*****
|
Incorporated by reference to Exhibit 10.2 to the Registrant’s
Current Report on Form 8-K, dated February 8, 2017
|
******
|
Incorporated by reference to Exhibit 10.3 to the Registrant’s
Current Report on Form 8-K, dated February 8, 2017
|
ITEM
17. UNDERTAKINGS
(1) Rule
415 Offering The undersigned registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement: (i) To include any prospectus required by Section 10(a)(3) of the Securities
Act of 1933; (ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement
(or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change
in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume
of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation
from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20 percent change in the
maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration
statement. (iii) To include any material information with respect to the plan of distribution not previously disclosed on the
registration statement or any material change to such information in the registration statement;
(2)
That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall
be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the termination of the offering. (4) That, for the purpose
of determining liability under the Securities Act of 1933 to any purchaser in the initial distribution of the securities:
The
undersigned registrant undertakes that in a primary offering of the securities of the undersigned registrant pursuant to this
registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities
are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller
and will be considered to offer or sell such securities to such purchaser: (i) Any preliminary prospectus or prospectus of the
undersigned registrant relating to the offering required to be filed pursuant to Rule 424 (230.424 of this chapter); (ii) Any
free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to
by the undersigned registrant; (iii) The portion of any other free writing prospectus relating to the offering containing material
information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and (iv)
Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser. B. Request for Acceleration
of Effective Date Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers
and controlling persons of the Company pursuant to the foregoing provisions, or otherwise, the Company has been advised that in
the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities
Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment
by the Company of expenses incurred or paid by a director, officer or controlling person of the Company in the successful defense
of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities
being registered, the Company will, unless in the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed
in the Securities Act and will be governed by the final adjudication of such issue.
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,
in the Village of Tarrytown, State of New York on April 21, 2017.
|
NightFood Holdings, Inc.
|
|
|
|
|
By:
|
/s/ Sean Folkson
|
|
|
Sean
Folkson, President and CEO
|
Pursuant
to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/
Sean Folkson
|
|
CEO
and President
|
|
4/21/2017
|
Sean
Folkson
|
|
(Principal
Executive Financial and
Accounting Officer)
|
|
|
I
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