8-K/A: Nightfood Holdings Acquires CarryOutSupplies.com

Nightfood Holdings, Inc. completed the acquisition of SWC Group, Inc., operating as CarryOutSupplies.com, for $4.4 million in preferred stock, integrating a B2B foodservice packaging distributor into its portfolio.

Summary

• Nightfood Holdings, Inc. (NGTF) acquired 100% of SWC Group, Inc. (d/b/a CarryOutSupplies.com) on March 31, 2025, pursuant to a share exchange agreement.
• The acquisition consideration was 83,333 shares of NGTF Series C Convertible Preferred Stock, with an estimated fair value of $4,399,982.
• SWC Group, a business-to-business (B2B) wholesale distributor of disposable foodservice packaging products, became a wholly-owned subsidiary of NGTF.
• SWC Group reported a net loss of $556,730 for the year ended June 30, 2024, and a net loss of $496,870 for the nine months ended March 31, 2025.
• As of March 31, 2025, SWC Group had an accumulated deficit of $10,256,668, a stockholders deficit of $1,142,236, and a working capital deficit of $1,212,688.
• The acquisition involved significant non-cash capital contributions to SWC Group, including the assumption and forgiveness of approximately $1,744,327 in debt by NGTF and its parent.
• Pro forma combined revenues for NGTF and SWC Group were $1,303,212 for the nine months ended March 31, 2025, and $1,869,960 for the year ended June 30, 2024, with combined net losses of $(4,282,639) and $(3,792,236) respectively.

Sentiment

Score: 4

Explanation: While the acquisition of SWC Group is a strategic expansion for Nightfood Holdings, SWC's underlying financial health is very poor, marked by consistent losses, significant deficits, and a going concern warning. The substantial debt relief is positive for SWC's immediate solvency but highlights the severity of its prior financial state. The combined entity still reports considerable net losses, indicating ongoing financial challenges that require careful management and successful integration to overcome.

Positives

• Nightfood Holdings acquired SWC Group, integrating an established e-commerce platform and diversifying its product portfolio, which is expected to strengthen its foodservice distribution market presence.
• The acquisition is anticipated to offer revenue growth opportunities via combined operations and operational efficiencies through integrated sourcing and fulfillment capabilities.
• SWC Group benefited from significant debt forgiveness and assumption by Nightfood Holdings and its parent, totaling $1,744,327 in non-cash capital contributions, which improved its liability position.
• SWC Group's revenues for the nine months ended March 31, 2025, increased to $1,302,642 from $1,274,934 in the prior comparable period.
• A legal judgment of $75,394 against SWC Group from August 2024 was settled and paid in full in July 2025.

Negatives

• SWC Group has not generated sufficient revenues to fund ongoing operations and has historically relied on third-party and related-party debt financing.
• SWC Group reported a net loss of $556,730 for the year ended June 30, 2024, and a net loss of $496,870 for the nine months ended March 31, 2025.
• SWC Group had an accumulated deficit of $10,256,668 and a stockholders deficit of $1,142,236 as of March 31, 2025.
• SWC Group's working capital deficit was $1,212,688 as of March 31, 2025, and cash on hand was only $28,340.
• The independent auditor's report for SWC Group included an emphasis of matter paragraph regarding substantial doubt about the company's ability to continue as a going concern.
• The pro forma combined financial statements for Nightfood Holdings and SWC Group still show significant net losses of $(4,282,639) for the nine months ended March 31, 2025, and $(3,792,236) for the year ended June 30, 2024.

Risks

• Substantial doubt exists about SWC Group's ability to continue as a going concern due to insufficient revenues and historical reliance on external financing.
• The company operates in a highly competitive industry subject to intense market dynamics, shifting consumer demand, and economic fluctuations.
• Operations are exposed to significant financial, operational, and strategic risks, including potential business disruptions, supply chain constraints, and liquidity challenges.
• Financial performance is affected by industry cyclicality, seasonality, and shifts in market demand.
• Macroeconomic conditions such as economic downturns, inflationary pressures, interest rate changes, and geopolitical risks may impact consumer purchasing behavior and revenue streams.
• Pricing volatility, raw material costs, supply chain disruptions, and competitive pressures can lead to fluctuations in gross margins and profitability.
• Challenges exist in accurately forecasting financial performance, potentially leading to material risks affecting liquidity, business continuity, and long-term strategic growth.

Future Outlook

SWC Group's management plans to address its financial challenges by pursuing additional debt and/or equity financing, expanding sales within existing customer channels and into new geographic markets, continuing cost-control measures, and exploring potential collaborations or strategic opportunities. Nightfood Holdings expects the acquisition to strengthen its foodservice distribution market presence through e-commerce platform integration, diversified product portfolio expansion, nationwide customer base addition, revenue growth opportunities, and operational efficiencies. The final purchase price allocation for the acquisition will be determined within one year from the closing date.

Management Comments

• Management's plans to address SWC Group's financial matters include: Pursuing additional debt and/or equity financing to support working capital needs; Expanding sales within existing customer channels and into new geographic markets; Continuing cost-control measures to better align expenses with expected revenue; and Exploring potential collaborations or strategic opportunities to strengthen the carryout supplies business.
• Nightfood Holdings expects the SWC acquisition to strengthen its foodservice distribution market presence through: Established e-commerce platform integration; Diversified product portfolio expansion; Nationwide customer base addition; Revenue growth opportunities via combined operations; Operational efficiencies through integrated sourcing and fulfillment capabilities.

Industry Context

The acquisition positions Nightfood Holdings to expand its presence in the foodservice distribution market, specifically in disposable packaging. This aligns with broader trends of consolidation and diversification within the food service supply chain, as companies seek to leverage e-commerce platforms and cater to the growing demand for carryout and delivery services. The B2B nature of SWC Group's operations suggests a focus on efficiency and scale, which NGTF aims to enhance through integrated sourcing and fulfillment.

Comparison to Industry Standards

• NA

Legal Proceedings

• A judgment in the amount of $75,394 was entered against SWC Group in August 2024 in favor of a former supplier related to unpaid invoices for a custom printed customer order. The judgment was settled and paid in full in July 2025.

Related Party Transactions

• During the year ended June 30, 2024, SWC Group's majority shareholder (parent company) forgave accrued liabilities totaling $7,761,200, which was accounted for as a capital contribution.
• Prior to the acquisition on March 31, 2025, Nightfood Holdings, Inc. assumed $334,657 of SWC Group's third-party notes payable, recorded as a capital contribution.
• Prior to the acquisition on March 31, 2025, Nightfood Holdings, Inc. assumed $188,218 of SWC Group's related-party notes payable, recorded as a capital contribution.
• Prior to the acquisition on March 31, 2025, a Nightfood Holdings, Inc. subsidiary forgave $546,452 of SWC Group's notes payable, recorded as a capital contribution.
• SWC Group transferred property and a related secured note payable with a carrying amount of $675,000 to its parent (a related party), which assumed the obligation. This was recorded as a capital contribution, and the property with a carrying value of $840,325 was distributed to the parent.

Stakeholder Impact

• Shareholders of Nightfood Holdings: The acquisition diversifies NGTF's business and offers potential for revenue growth and operational efficiencies, but also integrates a company with significant historical losses and going concern issues, potentially impacting NGTF's overall financial performance in the short term. The issuance of Series C Preferred Stock dilutes existing equity.
• Shareholders of SWC Group: SWC Group's equity holders received 83,333 shares of NGTF Series C Convertible Preferred Stock, providing an exit and a stake in the acquiring company.
• Employees of SWC Group: The acquisition by NGTF may provide more stability and resources for SWC Group's operations, potentially securing jobs.
• Customers of SWC Group: Integration into NGTF may lead to expanded product offerings, improved service, or changes in the e-commerce platform.
• Creditors of SWC Group: Significant debt forgiveness and assumption by NGTF and its parent improved SWC Group's liability position, reducing risk for remaining creditors.

Next Steps

• Nightfood Holdings, Inc. will perform the purchase price allocation and related accounting for the acquisition in its consolidated financial statements.
• Nightfood Holdings, Inc. will finalize the purchase price allocation within the measurement period (not to exceed one year from the Closing Date).
• SWC Group's management plans to pursue additional debt and/or equity financing.
• SWC Group's management plans to expand sales within existing customer channels and into new geographic markets.
• SWC Group's management plans to continue cost-control measures to better align expenses with expected revenue.
• SWC Group's management plans to explore potential collaborations or strategic opportunities to strengthen the carryout supplies business.

Key Dates

Recommendation

While the acquisition of SWC Group offers strategic benefits for Nightfood Holdings by expanding its market presence and product portfolio, SWC's standalone financial performance has been very weak, marked by consistent losses and a going concern warning. The substantial debt forgiveness and capital contributions are positive for SWC's immediate solvency but highlight the significant financial challenges being absorbed by NGTF. The pro forma combined financials still show considerable net losses for NGTF. Investors should hold to observe how NGTF integrates SWC, realizes anticipated synergies, and manages the combined entity's financial health, particularly its ability to return to profitability. The long-term success hinges on effective integration and execution of growth strategies.

Keywords

Nightfood Holdings, SWC Group, CarryOutSupplies.com, Acquisition, Foodservice Packaging, B2B Distribution, SEC Filing, Business Combination, Financial Results, Going Concern, Preferred Stock, Debt Forgiveness, E-commerce Platform