Restatement of Prior Financial Information |
3. |
Restatement of Prior Financial Information |
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Subsequent to Form 10K for the year ended June 30, 2019 filing,
during the interim reviews and based on such reviews, the following determinations were made by the Company: |
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Error in Accounting for Slotting and Set-up Fees |
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During our review, we
determined that the accounting treatment for the recognition of slotting fees and other fees paid or payable by the Company
to certain strategic partners was incorrect. Specifically, it was determined that revenue relating to slotting fees, which
were originally capitalized and amortized into expense over an 18-month period, should instead be treated as a reduction in
revenue at the later of recognition of revenue for the transfer of the Nightfood product or when the Company pays or promised
to pay the slotting fee. In addition, certain fees related to platforms to launch our products and advertising efforts should
have been capitalized and recorded as an intangible asset. The Company previously recorded a portion of this fee as an
intangible asset – placement fee and expensed the remaining amount as advertising expense in the Period Ended December
31, 2019. |
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In accordance with the guidance provided by the SEC's
Staff Accounting Bulletin 99, Materiality ("SAB 99") and Staff Accounting Bulletin 108, Considering
the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements ("SAB
108"), the Company has determined that the impact of adjustments relating to the corrections of this accounting error
are not material to previously issued annual audited and unaudited financial statements. Accordingly, these changes are disclosed
herein and will be disclosed prospectively. |
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As
of June 30, 2019 (A) |
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Previously Reported |
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Adjustments |
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As Corrected |
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Consolidated Balance Sheet |
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Current assets |
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$ |
482,667 |
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$ |
487,500 |
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$ |
970,167 |
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Current liabilities |
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$ |
2,955,272 |
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$ |
223,333 |
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|
$ |
3,178,605 |
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Working capital (deficit) |
|
$ |
(2,472,605 |
) |
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$ |
264,167 |
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|
$ |
(2,208,438 |
) |
Total assets |
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$ |
482,667 |
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$ |
487,500 |
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$ |
970,167 |
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Total liabilities |
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$ |
2,955,272 |
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$ |
223,333 |
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$ |
3,178,605 |
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Total stockholders' deficit |
|
$ |
(2,472,605 |
) |
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$ |
264,167 |
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|
$ |
(2,208,438 |
) |
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(A) |
The
balance sheet impact of the errors was corrected in the quarter ended September 30, 2019. |
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As of September 30, 2019 |
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Previously
Reported |
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Adjustments |
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As Corrected |
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Consolidated Balance Sheet |
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Current assets |
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$ |
858,216 |
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$ |
387,917 |
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$ |
1,246,133 |
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Current liabilities |
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$ |
3,287,252 |
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$ |
1,151,666 |
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$ |
4,438,918 |
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Working capital (deficit) |
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$ |
(2,429,036 |
) |
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$ |
(763,749 |
) |
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$ |
(3,192,785 |
) |
Total assets |
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$ |
858,216 |
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$ |
1,221,250 |
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$ |
2,079,466 |
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Total liabilities |
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$ |
3,287,252 |
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$ |
1,151,666 |
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$ |
4,438,918 |
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Total stockholders' deficit |
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$ |
(2,429,036 |
) |
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$ |
69,584 |
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$ |
(2,359,452 |
)
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For
the Year Ended June 30, 2019 (A) |
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Previously Reported |
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Adjustments |
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As Corrected |
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Consolidated Statements of Operations |
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Revenues |
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$ |
352,172 |
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$ |
- |
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$ |
352,172 |
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Operating expenses |
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$ |
2,263,722 |
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$ |
(264,167 |
) |
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$ |
1,999,555 |
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Loss from operations |
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$ |
(1,911,550 |
) |
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$ |
264,167 |
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$ |
(1,647,383 |
) |
Other income (expenses) |
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$ |
2,686,793 |
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$ |
- |
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$ |
2,686,793 |
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Net income (loss) |
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$ |
(4,598,343 |
) |
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$ |
264,167 |
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$ |
(4,334,176 |
) |
Basic & diluted EPS |
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$ |
(0.09 |
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$ |
- |
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$ |
(0.09 |
) |
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(A) |
The
income statement impact of the errors was corrected in the quarter ended September 30,
2019. |
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For
the Three Months Ended September
30, 2019
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Previously Reported |
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Adjustments |
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As Corrected |
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Consolidated Statements of Operations |
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Revenues |
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$ |
206,497 |
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$ |
(160,000 |
) |
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$ |
46,497 |
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Operating expenses |
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$ |
570,858 |
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$ |
(229,584 |
) |
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$ |
341,274 |
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Loss from operations |
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$ |
(364,361 |
) |
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$ |
69,584 |
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$ |
(294,777 |
) |
Other income (expenses) |
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$ |
218,803 |
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$ |
- |
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$ |
218,803 |
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Net income (loss) |
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$ |
(583,164 |
) |
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$ |
69,584 |
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$ |
(513,580 |
) |
Basic & diluted EPS |
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$ |
(0.01 |
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$ |
- |
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$ |
(0.01 |
) |
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