NGTF.OQBNightfood Holdings, INC
10-Q: Nightfood Holdings Reports Increased Revenue but Continues to Face Going Concern Challenges in Q2 2025
Sentiment:
Quarterly Report (Form 10-Q)
Nightfood Holdings reports increased revenue for the quarter ended December 31, 2024, but continues to face substantial doubt about its ability to continue as a going concern due to limited cash resources and accumulated losses.
Delay expectedThe acquisition of Stratford Education Group Inc., doing business as the Los Angeles Cooking School, is now anticipated to complete in the second half of calendar 2025, later than initially expected.
Capital raiseThe company is continuing to seek to raise capital through the sales of its common stock, preferred stock and/or convertible notes, as well as potentially the exercise of outstanding warrants, to finance the Company's operations.
Worse than expectedThe company's financial results indicate a worsening financial position due to increasing operating expenses and continued net losses, raising concerns about its ability to sustain operations.
Summary
- Nightfood Holdings, Inc. reported increased revenues for the three and six months ended December 31, 2024, compared to the same periods in 2023.
- Revenue for the three months ended December 31, 2024, was $15,141, compared to $898 in 2023.
- Revenue for the six months ended December 31, 2024, was $39,595, compared to $9,833 in 2023.
- The company's operating expenses for the three months ended December 31, 2024, were $251,666, compared to $120,965 in 2023.
- Operating expenses for the six months ended December 31, 2024, were $588,426, compared to $425,841 in 2023.
- The net loss for the three months ended December 31, 2024, was $479,606, compared to $422,034 in 2023.
- The net loss for the six months ended December 31, 2024, was $1,244,217, compared to $1,740,967 in 2023.
- The company has an accumulated deficit of $39,882,183 as of December 31, 2024.
- Nightfood Holdings states that its cash on hand is not adequate to satisfy its working capital needs and that there is substantial doubt about the company's ability to continue as a going concern.
- The company is seeking to raise capital through the sale of its securities to finance its operations.
- The company completed the acquisition of Future Hospitality Ventures Holdings Inc. on February 2, 2024.
- The company announced a strategic all-stock acquisition of SWC Group Inc., doing business as CarryoutSupplies.com, on September 10, 2024, but the transaction has not yet closed.
Sentiment
Score: 3
Explanation: The document presents a mixed picture, with increased revenue offset by significant losses and going concern risks. The sentiment is negative due to the company's financial instability and reliance on external funding.
Positives
- Revenue increased for both the three and six months ended December 31, 2024, compared to the same periods in 2023.
- The net loss for the six months ended December 31, 2024, was lower than the net loss for the same period in 2023.
- The company completed the acquisition of Future Hospitality Ventures Holdings Inc. on February 2, 2024, expanding its business into the Robots-as-a-Service (RaaS) space.
- The company secured paid trial placements with two customers for its RoboOp365 business during the quarter ended December 31, 2024.
Negatives
- The company has a significant accumulated deficit of $39,882,183 as of December 31, 2024.
- The company states that its cash on hand is not adequate to satisfy its working capital needs.
- There is substantial doubt about the company's ability to continue as a going concern.
- The company is continuing to raise capital through the sale of its securities, indicating a reliance on external funding.
- The company's disclosure controls and procedures were not effective at December 31, 2024, due to the lack of full-time accounting and management personnel.
Risks
- The company's limited cash resources and accumulated losses raise substantial doubt about its ability to continue as a going concern.
- The company's reliance on external financing through the sale of its securities carries the risk that it may not be able to raise sufficient capital.
- The company's dependence on the exercise of outstanding warrants for cash proceeds is uncertain.
- The company's ability to achieve profitability from the sale of its products and services is not assured.
- The company's disclosure controls and procedures were not effective at December 31, 2024, due to the lack of full-time accounting and management personnel.
- The company's acquisition of SWC Group Inc. has not yet closed, and there is a risk that the transaction may not be completed.
Future Outlook
The company's focus is on identifying and exploiting market trends within the hospitality, food services, and consumer goods sectors, with the goal of building a portfolio of operating companies and uplisting to a senior exchange such as NASDAQ. The company expects to complete additional acquisitions of operating companies prior to the close of fiscal 2025.
Management Comments
- Management believes that incorporating Future Hospitality's advanced AI-enabled robotic solutions positions the Company at the forefront of innovation in the hospitality sector at this critical point in time.
- Management believes that incorporating Future Hospitalitys advanced AI-enabled robotic solutions positions the Company at the forefront of innovation in the hospitality sector at this critical point in time.
- We believe our success in this area can open new avenues for growth and efficiency across our portfolio.
Industry Context
The company is positioning itself to capitalize on the growing trend of automation and AI in the hospitality and food service industries, particularly in response to rising labor costs and the need for increased efficiency.
Comparison to Industry Standards
- It is difficult to compare Nightfood Holdings directly to industry standards due to its unique business model, which combines snack food products with Robots-as-a-Service (RaaS).
- However, in the snack food industry, companies like Mondelez International and Hershey typically have much higher revenue and profitability due to their established brands and distribution networks.
- In the RaaS space, companies like Bear Robotics and Next Robots are focused on developing and deploying robotic solutions, but their financial performance is not always publicly available for comparison.
- Given Nightfood's limited revenue and significant accumulated deficit, it is currently underperforming compared to industry leaders in both the snack food and RaaS sectors.
Management Changes
| Role | Previous Person | New Person | Effective Date | Reason |
|---|---|---|---|---|
| Board Member | Dr. Thanuja Hamilton | November 27, 2024 | Resignation | |
| Board Member | Ms. Nisa Amoils | November 27, 2024 | Resignation | |
| Board Member | Mr. Jamie Steigerwald | January 21, 2025 | To fill vacancy | |
| Board Member | Mr. Christopher Dieterich | January 21, 2025 | To fill vacancy | |
| Chairman of the Board | Mr. Sean Folkson | Mr. Jamie Steigerwald | January 21, 2025 | Designation by the Board |
Legal Proceedings
- The Company is not aware of any such legal proceedings that we believe will have, individually or in the aggregate, a material adverse effect on our business, financial condition or operating results.
Related Party Transactions
- As of December 31, 2024 and June 30, 2024, related parties are due a total of $408,724 and $295,510, respectively.
Stakeholder Impact
- Shareholders face significant risk due to the company's financial instability and potential dilution from future capital raises.
- Employees' job security is uncertain due to the company's going concern challenges.
- Customers may be affected by potential disruptions in the company's operations.
- Suppliers and creditors face increased risk of non-payment due to the company's financial difficulties.
Next Steps
- The company plans to continue to pay or satisfy existing obligations and commitments and finance its operations, as it has in the past, primarily through the sale of its securities and other forms of external financing until such time that it is able to generate sufficient funds from the sale of its products to finance its operations.
- The company anticipates deriving additional revenue from its subsidiaries in fiscal year 2025.
- The company expects to successfully complete additional acquisitions of operating companies prior to the close of fiscal 2025.
Key Dates
| Date | Description |
|---|---|
| October 16, 2013 | Nightfood Holdings, Inc. was incorporated in Nevada. |
| April 2021 | The Company designated 5,000 shares of its Preferred Stock as Series B Preferred. |
| September 23, 2022 | The Company entered into a Securities Purchase Agreement and issued and sold to Mast Hill, a Promissory Note in the principal sum of $700,000.00. |
| February 5, 2023 | The Company entered into a Securities Purchase Agreement and issued and sold to Mast Hill, a Promissory Note in the principal amount of $619,000.00. |
| February 28, 2023 | The Company entered into a Securities Purchase Agreement and issued and sold to Mast Hill, a Promissory Note in the principal amount of $169,941. |
| March 24, 2023 | The Company entered into a Securities Purchase Agreement and issued and sold to Mast Hill, a Promissory Note in the principal amount of $169,941. |
| April 17, 2023 | The Company entered into a Securities Purchase Agreement and issued and sold to Mast Hill, a Promissory Note in the principal amount of $169,941. |
| June 1, 2023 | The Company entered into a Securities Purchase Agreement and issued and sold to Mast Hill, a Promissory Note in the principal amount of $200,000. |
| June 29, 2023 | The Company entered into a Securities Purchase Agreement and issued and sold to Fourth Man, LLC, a Promissory Note in the principal amount of $65,000.00. |
| July 7, 2023 | The Company entered into a Letter of Engagement with Spencer Clarke LLC (SC). |
| August 28, 2023 | The Company entered into a Securities Purchase Agreement and issued and sold to Fourth Man, LLC, a Promissory Note in the principal amount of $60,000.00. |
| October 6, 2023 | The Company entered into a Securities Purchase Agreement and issued and sold to Mast Hill, a Secured Promissory Note in the principal amount of $62,000. |
| November 17, 2023 | The Company entered into a Securities Purchase Agreement and issued and sold to Mast Hill, a Promissory Note in the principal amount of $62,000. |
| December 6, 2023 | The Company entered into a Securities Purchase Agreement and issued and sold to Mast Hill, a Promissory Note in the principal amount of $170,588. |
| December 1, 2023 | Effective date of Sean Folkson's consulting agreement. |
| January 22, 2024 | The Company, Future Hospitality Ventures Holdings Inc., Sean Folkson and Lei Sonny Wang entered into a share exchange agreement. |
| January 24, 2024 | The Company entered into a Securities Purchase Agreement, and issued and sold to Mast Hill a Promissory Note in the principal amount of $388,300. |
| January 26, 2024 | The Certificate of Designation of Preferences, Rights and Limitations of Series A Super Voting Preferred Stock of Nightfood Holdings, Inc. was amended. |
| February 1, 2024 | Fourth Man and NGTF entered into a letter agreement whereby Fourth Man agreed to amend that certain promissory note in the principal amount of $65,000 issued by NGTF to Fourth Man on June 29, 2023 the Promissory Note and that certain promissory note in the principal amount of $60,000 to Fourth Man on August 28, 2023. |
| February 2, 2024 | The Company closed the acquisition of Future Hospitality Ventures Holdings Inc. and Lei Sonny Wang became the Chief Executive Officer of Nightfood. |
| February 7, 2024 | NGTF filed a Certificate of Designation of Preferences, Rights and Limitations of Series C Convertible Preferred Stock. |
| March 13, 2024 | The Company entered into a Securities Purchase Agreement and issued and sold to Mast Hill a Promissory Note in the principal amount of $336,000. |
| May 9, 2024 | The Company consummated transactions pursuant to a Securities Purchase Agreement and issued and sold to Mast Hill Fund, L.P., a Promissory Note in the principal amount of $395,000.00. |
| June 20, 2024 | A debtholder converted a total of $33,000, of which $31,250 was interest payable and $1,750 was transfer agent fees, in exchange for 1,000,000 shares of common stock. |
| June 30, 2024 | The Company's fiscal year end. |
| July 22, 2024 | The Company and Fourth Man, LLC (Noteholder) entered into a letter agreement to amend that certain promissory note in the principal amount of $65,000 issued on June 29, 2023, as amended February 1, 2024 (Note) and that certain promissory note in the principal amount of $60,000 issued on August 28, 2023, as amended February 1, 2024 (Subsequent Note, together with the Note, the Notes) issued by the Company to the Noteholder, effective as of July 23, 2024. |
| September 4, 2024 | Share Exchange Agreement dated September 4, 2024 with Nightfood Holdings, Inc., Future Hospitality Ventures Holdings Inc., SWC Group, Inc. and Sugarmade, Inc. |
| September 10, 2024 | The Company announced a strategic all-stock acquisition of SWC Group Inc., doing business as CarryoutSupplies.com. |
| September 23, 2024 | The Company consummated transactions pursuant to a Securities Purchase Agreement and issued and sold to Mast Hill Fund, L.P., a Promissory Note in the principal amount of $473,000.00. |
| October 1, 2024 | The Company announced that it has signed a Letter of Intent (LOI) to acquire Stratford Education Group Inc., doing business as the Los Angeles Cooking School. |
| October 4, 2024 | The Company's subsidiary Future Hospitality Ventures Holdings Inc. entered into a reseller agreement with Bear Robotics, Inc. |
| November 27, 2024 | The Board of Directors accepted the resignations of Dr. Thanuja Hamilton and Ms. Nisa Amoils from the Board, effective immediately. |
| December 4, 2024 | Under the revised terms, the share issuance will be determined based on the 90-day Volume Weighted Average Price (VWAP) of the Company's common stock as of December 4, 2024. |
| December 9, 2024 | The Company issued 83,333 shares of its Series C preferred stock as the consideration required above. |
| December 10, 2024 | The Company, Future Hospitality Ventures Holdings, Inc., SWC Group, Inc., and Sugarmade, Inc. entered into an amendment which modified certain terms of the Share Exchange Agreement. |
| December 31, 2024 | Sean Folkson has a consulting agreement entered into on February 2, 2024 and effective as of December 1, 2023 and runs through December 31, 2024. The agreement was automatically renewed on December 31, 2024. |
| January 21, 2025 | The Board of Directors appointed Mr. Jamie Steigerwald and Mr. Christopher Dieterich as members of the Board and designated Mr. Steigerwald as Chairman of the Board. |
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