The accompanying consolidated financial statements have been prepared
assuming the Company will continue as a going concern. For the six months ended December 31, 2021, the Company had a net loss of $1,614,594,
negative cash flow from operations of $1,440,431 and accumulated deficit of $27,170,122.
The Company believes it has sufficient cash on hand to operate into the second half of calendar 2022 at which time it will require additional funds for operating and growth capital. Although internal projections include several realistic scenarios in which the Company could attain profitability in calendar 2022, we must account for the likelihood that our cash on hand will not be adequate to satisfy our long-term working capital needs.
We believe that our current capitalization structure, combined with anticipated increases in distribution, revenues, and market capitalization, will enable us to successfully secure required financing to continue our growth.
Because the business has limited operating history and sales, no certainty of continuation can be stated. Management has devoted a significant amount of time in the raising of capital from additional debt and equity financing. However, the Company’s ability to continue as a going concern will again be dependent upon raising additional funds through debt and equity financing and generating revenue. There are no assurances the Company will receive the necessary funding or generate revenue necessary to fund operations long-term.
The Company cannot give any assurance that it will, in the future, be able to achieve a level of profitability from the sale of its products to sustain its operations. These conditions raise substantial doubt about the Company’s ability to continue as a going concern for one year from the date the financials are issued. The accompanying financial statements do not include any adjustments to reflect the possible future effects on recoverability and reclassification of assets or the amounts and classification of liabilities that may result from the outcome of this uncertainty.
There is still potential uncertainty resulting from the outbreak of the novel coronavirus (COVID-19) (the “Pandemic”), including those potentially related to measures to reduce its spread, and the impact on the economy. Rates of unemployment, recession, inflation, and other possible unforeseen factors could also have an impact.
From both public statements, and conversations between Nightfood management and current and former executives from certain global food and beverage conglomerates, management believes that there is increased strategic interest in the nighttime nutrition space as a potential high-growth opportunity, partially due to ongoing declines in consumer sleep quality and increases in at-home nighttime snacking, both trends believed to be accelerated by COVID.
The Company has experienced no material issues with supply chain or logistics. Order processing function has been consistent with historical norms, and the Company’s major suppliers and manufacturers have represented that their operations are continuing in the ordinary course.
It is possible that the fallout from the Pandemic could make it more difficult in the future for the Company to access required growth capital, possibly rendering the Company unable to meet certain debts and expenses.
More directly, the Pandemic has impaired
the Company’s ability to execute certain in-store and out-of-store marketing initiatives within the normal course of supermarket
business. For example, since the inception of the Pandemic, the Company was unable to conduct in-store demonstrations and unable to participate
in local pregnancy, baby expos, and health expos that were originally intended to be part of our marketing mix. Furthermore, we have
experienced some Pandemic-related delays to our national hotel rollout.