| Restatement of Prior Financial Information |
| 3. |
Restatement
of Prior Financial Information |
|
Subsequent
to Form 10K for the year ended June 30, 2019 filing, during the interim reviews and based on such reviews, the following determinations
were made by the Company: |
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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 |
|
|
Adjustments |
|
|
As Corrected |
|
| Consolidated Balance Sheet |
|
|
|
|
|
|
|
|
|
|
|
|
| Current assets |
|
$ |
482,667 |
|
|
$ |
487,500 |
|
|
$ |
970,167 |
|
| Current liabilities |
|
$ |
2,955,272 |
|
|
$ |
223,333 |
|
|
$ |
3,178,605 |
|
| Working capital (deficit) |
|
$ |
(2,472,605 |
) |
|
$ |
264,167 |
|
|
$ |
(2,208,438 |
) |
| Total assets |
|
$ |
482,667 |
|
|
$ |
487,500 |
|
|
$ |
970,167 |
|
| Total liabilities |
|
$ |
2,955,272 |
|
|
$ |
223,333 |
|
|
$ |
3,178,605 |
|
| Total stockholders' deficit |
|
$ |
(2,472,605 |
) |
|
$ |
264,167 |
|
|
$ |
(2,208,438 |
) |
|
(A) |
The
balance sheet impact of the errors was corrected in the quarter ended December 31, 2019. |
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As of December 31, 2019 |
|
| |
|
Previously
Reported |
|
|
Adjustments |
|
|
As Corrected |
|
| Consolidate Balance Sheet |
|
|
|
|
|
|
|
|
|
| Current assets |
|
$ |
577,944 |
|
|
$ |
408,294 |
|
|
$ |
986,238 |
|
| Current liabilities |
|
$ |
4,514,446 |
|
|
$ |
249,007 |
|
|
$ |
4,763,453 |
|
| Working capital (deficit) |
|
$ |
(3,936,502 |
) |
|
$ |
159,287 |
|
|
$ |
(3,777,215 |
) |
| Total assets |
|
$ |
1,550,298 |
|
|
$ |
102,607 |
|
|
$ |
1,652,905 |
|
| Total liabilities |
|
$ |
4,514,446 |
|
|
$ |
249,007 |
|
|
$ |
4,763,453 |
|
| Total stockholders' deficit |
|
$ |
(2,964,148 |
) |
|
$ |
(146,400 |
) |
|
$ |
(3,110,548 |
) |
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For the Year Ended June 30, 2019 (A) |
|
| |
|
Previously Reported |
|
|
Adjustments |
|
|
As Corrected |
|
| Consolidated Statements of Operations |
|
|
|
|
|
|
|
|
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| Revenues |
|
$ |
352,172 |
|
|
$ |
- |
|
|
$ |
352,172 |
|
| Operating expenses |
|
$ |
2,263,722 |
|
|
$ |
(264,167 |
) |
|
$ |
1,999,555 |
|
| Loss from operations |
|
$ |
(1,911,550 |
) |
|
$ |
264,167 |
|
|
$ |
(1,647,383 |
) |
| Other income (expenses) |
|
$ |
2,686,793 |
|
|
$ |
- |
|
|
$ |
2,686,793 |
|
| Net income (loss) |
|
$ |
(4,598,343 |
) |
|
$ |
264,167 |
|
|
$ |
(4,334,176 |
) |
| Basic & diluted EPS |
|
$ |
(0.09 |
) |
|
$ |
- |
|
|
$ |
(0.09 |
) |
|
(A) |
The
income statement impact of the errors was corrected in the quarter ended September 30, 2019. |
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For the Six Months Ended December 31, 2019
|
|
| |
|
Previously Reported |
|
|
Adjustments |
|
|
As Corrected |
|
| Consolidated Statements of Operations |
|
|
|
|
|
|
|
|
|
| Revenues |
|
$ |
379,488 |
|
|
$ |
(271,706 |
) |
|
$ |
107,782 |
|
| Operating expenses |
|
$ |
1,326,290 |
|
|
$ |
(125,306 |
) |
|
$ |
1,200,984 |
|
| Loss from operations |
|
$ |
(946,802 |
) |
|
$ |
(146,400 |
) |
|
$ |
(1,093,202 |
) |
| Other income (expenses) |
|
$ |
557,320 |
|
|
$ |
- |
|
|
$ |
557,320 |
|
| Net income (loss) |
|
$ |
(1,504,122 |
) |
|
$ |
(146,400 |
) |
|
$ |
(1,650,522 |
) |
| Basic & diluted EPS |
|
$ |
(0.02 |
) |
|
$ |
- |
|
|
$ |
(0.03 |
) |
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For the Three Months Ended December 31, 2019
|
|
| |
|
Previously Reported |
|
|
Adjustments |
|
|
As Corrected |
|
| Consolidated Statements of Operations |
|
|
|
|
|
|
|
|
|
| Revenues |
|
$ |
172,991 |
|
|
$ |
(111,706 |
) |
|
$ |
61,285 |
|
| Operating expenses |
|
$ |
755,432 |
|
|
$ |
104,278 |
|
|
$ |
859,710 |
|
| Loss from operations |
|
$ |
(582,441 |
) |
|
$ |
(215,984 |
) |
|
$ |
(798,425 |
) |
| Other income (expenses) |
|
$ |
338,517 |
|
|
$ |
- |
|
|
$ |
338,517 |
|
| Net income (loss) |
|
$ |
(920,958 |
) |
|
$ |
(215,984 |
) |
|
$ |
(1,136,942 |
) |
| Basic & diluted EPS |
|
$ |
(0.02 |
) |
|
$ |
- |
|
|
$ |
(0.02 |
) |
|