Annual report pursuant to Section 13 and 15(d)

Stockholders' Equity

v3.21.2
Stockholders' Equity
12 Months Ended
Jun. 30, 2021
Stockholders' Equity Note [Abstract]  
Stockholders’ Equity
14. Stockholders’ Equity 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.

  Common Stock

   

The Company is authorized to issue Two Hundred Million (200,000,000) 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 had 80,707,467 and 61,796,680 shares of its $0.001 par value common stock issued and outstanding as of June 30, 2021 and 2020 respectively.


  During the Fiscal Year ended June 30, 2021:

  The Company issued 1,661,210 shares of common stock for services with a fair value of $372,253.
     
  The Company issued 17,249,577 shares of common stock as consideration for convertible debt in the principal amount of $1,433,000 and in the accrued interest payable of $184,274, with a fair value of $3,717,709.

  During the year ended June 30, 2020:

  The Company issued 1,385,990 shares of common stock for services with a fair value of $308,768
     
  The Company issued 6,636,834 shares of common stock as consideration for convertible debt in the principal amount of $961,000 and in the accrued interest payable of $88,762, with a fair value of $2,026,762.

  ●  During the fiscal years ended June 30, 2021 and 2020, the Company recorded a Loss on fair value of shares issued upon notes conversion of $2,100,435 and $977,000, respectively.

   

Preferred Stock

 

Series A Stock

 

On July 9 2018, the Company was authorized to issue 1,000,000 shares of $0.001 par value per share Preferred Stock. Of the 1,000,000 shares. 10,000 shares were designated as Series A Preferred Stock (“Series A Stock”). Holders of Series A Stock are each entitled to cast 100,000 votes for each Share held of record on all matters presented to shareholders.

 

In addition to his ownership of the common stock, Mr. Folkson owns 1,000 shares of the Series A Stock which votes with the common stock and has an aggregate of 100,000,000 votes.

 

The Company had 1,000 and 1,000 shares of its $0.001 par value preferred Series A stock issued and outstanding as of June 30, 2021 and 2020 respectively.

 

Series B Stock

 

In April 2021, the Company designated 5,000 shares of its Preferred Stock as Series B Preferred Stock (“B Stock”), each Series B share of which is convertible into 5,000 shares of common stock and 5,000 non-detachable warrants with a strike price of $.30.

 

During Fiscal Year 2021, the Company issued 4,650 shares of B Stock to investors in exchange for invested capital at a price of $1,000 per share, and issued 15 shares to a legal firm associated with this financing activities. These proceeds were used to retire pre-existing debt and for operating capital. 1,500 shares of B Stock were issued in conjunction with $1,300,000 in cash to settle $2,325,000 of convertible note principal. An additional 3,150 B Shares provided $3,150,000 of cash. The Series B stock meets the criteria for equity and is accounted for as equity. Specifically, among other factors, this qualifies as equity because redemption is not invoked at the option of the holder and the Series B stock does not have to be redeemed on a specified date.

 

Dividends

     
    The Company has never declared dividends, however as set out below, during the fiscal year ended June 30, 2021, upon issuance of a total of 4,665 shares of Series B Preferred stock the Company recorded a deemed dividend as a result of beneficial conversion feature associated with the transaction.
       
    In connection with certain conversion terms provided for in the designation of the Series B Preferred Stock, pursuant to which each share of Series B Preferred Stock is convertible into 5,000 shares of common stock and 5,000 warrants, the Company recognized a beneficial conversion feature upon the conclusion of the transaction in the amount of $4,085,925.  The beneficial conversion feature was treated as a deemed dividend, and fully amortized on the transaction date due to the fact that the issuance of the Series B preferred stock was classified as equity.

    Warrants

   

The following is a summary of the Company’s outstanding common stock purchase warrants. 

 

Of the 500,000 warrants shown below at an exercise price of $.15, these warrants were issued as compensation for a four-year advisory agreement. 150,000 warrants vested on July 24, 2018, another 150,000 on July 24, 2019, another 150,000 vested on July 24, 2020, and the remaining 50,000 vested on July 24, 2021. These warrants were all accounted for in the fiscal year ended June 30, 2020.

 

During the fiscal year ended June 30, 2021 the Company entered into a warrant agreement with one of the Company’s vendors issuing 500,000 warrants at a strike price of $0.50 and having a term of five years. The Company valued these warrants using the Black Scholes model utilizing a 107.93% volatility and a risk-free rate of 0.29%, respectively.

 

In exchange for an agreement to lock up Mr Folkson’s shares, Folkson received warrants to acquire 400,000 shares of Company common stock on February 4, 2021, at a strike price of $.30, and with a term of 12 months from the date of that agreement. The warrants include a provision for cashless exercise and will expire if not exercised within the twelve-month term. The Company valued these warrants using the Black Scholes model utilizing a 107.93% volatility and a risk-free rate of 0.50%.

 

The Company retained Spencer Clarke, LLC (“SCL”) to act as a placement agent for capital raising and M&A activities. SCL received 360,000 retainer warrants on February 2, 2021 and further received 1,240,000 retainer warrants on April 13, 2021 at a strike price of $.01. The warrants include a provision for cashless exercise and will expire if not exercised within the 5 years term. The Company valued these warrants using the Black Scholes model utilizing a 107.93% ~ 156.11% volatility and a risk-free rate of 0.45% ~ 0.85%. Additional, SCL received 2,250,000 success warrants at a strike price of $0.20 and 2,250,000 success warrants at a strike price of $0.30, with expiration in 5 years. The Company recorded the retainer warrants into consulting expenses and recognized value of success warrants as part of financing costs issued as an equity instrument with the fair value debited to additional paid in capital. There is no accounting effect for these transactions associated with these success warrants.

 

The aggregate intrinsic value of the warrants as of June 30, 2021 is $613,009. The aggregate intrinsic value of the warrants as of June 30, 2020 was $28,025


      Outstanding at     Issued /           Outstanding  
Exercise Price     June 30,
 2019
    (exercised) in
 2020
    Expired     June 30,
 2020
 
$ 0.15       500,000                 -       500,000  
$ 0.20       105,000               80,000       25,000  
$ 0.30       100,000               -       100,000  
$ 0.40       150,000               -       150,000  
$ 0.75       300,000       -       -       300,000  
          1,155,000               80,000       1,075,000  

      Outstanding at                 Outstanding at  
Exercise Price     June 30,
2020
    Issued in 2021     Expired     June 30,
2021
 
$ 0.01       -       1,600,000       -       1,600,000  
$ 0.15       500,000               -       500,000  
$ 0.20       25,000       2,250,000       25,000       2,250,000  
$ 0.30       -       2,650,000       -       2,650,000  
$ 0.40       150,000               -       150,000  
$ 0.50       -       500,000       -       500,000  
$ 0.75       300,000       -       -       300,000  
$ 0.30       100,000                       100,000  
          1,075,000       7,000,000       25,000       8,050,000  

    Options
     
    The Company has never issued options.