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.
has experienced no material issues with supply chain or logistics resulting from COVID. Order processing function has been consistent
with historical norms. As stated in Development Plans below, the Company is in the process of transitioning contract manufacturers
to handle increased demand and does not anticipate any disruption from this transition as a result of COVID or any other causes.
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 for supermarket distribution. Furthermore,
the Company’s national hotel rollout, which is currently underway, had previously experienced Pandemic-related delays.
Additionally, with more consumers shopping online,
both for delivery or at-store pickup, the opportunity for supermarket shoppers to learn about new brands at the point of purchase has
been somewhat diminished. Management is working to identify opportunities to build awareness and drive supermarket trial and growth under
these new circumstances, while simultaneously executing a strategic pivot to focus on hotel distribution for immediate growth.
It is impossible to know what the future holds
with regard to the Pandemic, both for the Company and in the broader sense. There are many uncertainties regarding the Pandemic, and the
Company is closely monitoring the impact of the Pandemic on all aspects of its business, including how it will impact its customers, vendors,
and business partners.
It is difficult to know if the Pandemic has materially
impacted the results of operations of the Company, and it is unable to predict the impact that the Pandemic will have on its financial
position and operating results due to numerous uncertainties. The Company expects to continue to assess the evolving impact of the Pandemic
and intends to make adjustments accordingly, if necessary.