Summary of Significant Accounting Policies

12 Months Ended

Jun. 30, 2026

Summary of Significant Accounting Policies

Note 2 - Summary of Significant Accounting Policies

Principles of Consolidation

The consolidated financial statements have been prepared in accordance with U.S. GAAP and include the accounts of the Company and its wholly owned subsidiaries. The Company consolidates entities where it has a controlling financial interest, as defined by ASC 810, “Consolidation”.

In accordance with ASC 810-10, consolidation applies to:

	●	Entities with more than 50% voting interest, unless control is not with the Company; and
	●	Variable Interest Entities (VIEs), where the Company is the primary beneficiary, possessing both (i) power over significant activities and (ii) the obligation to absorb losses or receive benefits.

All intercompany transactions and balances are eliminated in consolidation. The Company continuously evaluates its investments and relationships to assess consolidation requirements.

Business Combinations and Asset Acquisitions

The Company accounts for acquisitions in accordance with ASC 805, Business Combinations. Transactions that meet the definition of a business are accounted for using the acquisition method of accounting. Transactions that do not meet the definition of a business are accounted for as asset acquisitions under ASC 805-50. The Company also evaluates whether a transaction should be accounted for as a reverse acquisition under ASC 805-40.

Business Combinations

For transactions classified as business combinations, the Company:

	●	Recognizes and measures identifiable assets acquired, liabilities assumed, and noncontrolling interests at their fair values at the acquisition.
	●	Records goodwill as the excess of the fair value of consideration transferred over the fair value of net assets acquired, including any previously held equity interests.
	●	Expenses acquisition-related costs as incurred.
	●	Measures the assets acquired and liabilities assumed at fair value at the acquisition date, with adjustments permitted within the measurement period (not exceeding one year) and adjustments beyond the measurement period recorded in earnings. The allocations for the Victorville and Rancho Mirage acquisitions were final at June 30, 2026 and no measurement period adjustments were recorded.

NIGHTFOOD HOLDINGS, INC. AND SUBSIDIARIES

DBA TECHFORCE ROBOTICS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2026 AND 2025

Significant judgments in fair value determinations include:

	●	Intangible asset valuations, based on estimates of future cash flows and discount rates.
	●	Useful life assessments, impacting amortization and financial results.

Asset Acquisitions

For transactions classified as asset acquisitions under ASC 805-50, the Company:

	●	Applies the “screen test” to determine whether substantially all of the fair value of gross assets acquired is concentrated in a single identifiable asset or group of similar assets.
	●	Allocates the purchase price using a cost accumulation model, assigning costs to acquired assets based on their relative fair values.
	●	Capitalizes direct acquisition costs as part of the asset’s cost, unlike business combinations where such costs are expensed.

Acquisition of BIM-E Intellectual Property and Technology Assets

On February 17, 2026, the Company acquired intellectual property and technology assets (the “BIM-E Assets”) relating to an autonomous beverage dispensing robotics platform from an individual seller (the “Seller”) pursuant to an Asset Purchase and IP Assignment Agreement. The BIM-E Assets consist of patents and patent applications, software, artificial intelligence and machine learning models and datasets, trade secrets, trademarks and related domain names and code repositories. No liabilities of the Seller were assumed.

Concurrently, the Company entered into an Employment Agreement engaging the Seller as Chief Mechatronics Architect and an Incentive Award Agreement providing for performance-based warrants tied to revenue milestones of the BIM-E platform.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2026 AND 2025

The transaction does not constitute a business combination because substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset group, and it has been accounted for as an asset acquisition under ASC 805-50.

Consideration consisted of 7,000,000 fully vested, non-forfeitable shares of the Company’s common stock issued to the Seller on February 17, 2026 at a fair value of $0.0362/share, the closing market price on that date, or $253,400 in the aggregate.

The BIM-E Assets are in-process research and development with no alternative future use. In accordance with ASC 730-10-25-2(c), the $253,400 was expensed as research and development within general and administrative expenses in the consolidated statements of operations for the year ended June 30, 2026. No portion of the consideration was attributed to the Seller’s employment. Research and development costs are expensed as incurred in accordance with ASC 730, Research and Development. Total research and development costs charged to expense were $347,625 and $843 for the years ended June 30, 2026 and 2025, respectively, including the $253,400 of acquired in-process research and development described above. Research and development costs are included in general and administrative expenses.

The Employment Agreement provides the Seller an annual base salary of $100,000 and performance-based, cashless-exercise warrants (the “Earn-Out Warrants”) to purchase common stock at an exercise price of $0.04/share with a five (5) year term. The Earn-Out Warrants are earned in tranches of 10,000,000 warrants for each incremental $5,000,000 of trailing twelve (12) month revenue attributable to the BIM-E platform, up to a maximum of 100,000,000 warrants at $50,000,000 of trailing twelve (12) month revenue.

The Earn-Out Warrants are performance-based awards under ASC 718. Compensation cost is recognized when achievement of the revenue condition becomes probable. As of June 30, 2026, no revenue milestone was probable of achievement and no compensation cost has been recognized.

Warrant Classification. The Company evaluated the Earn-Out Warrants under ASC 815-40, Derivatives and Hedging - Contracts in Entity’s Own Equity, and ASC 480, Distinguishing Liabilities from Equity. The cashless exercise feature results in a fixed-for-fixed settlement in the Company’s own shares, and the warrants contain only standard anti-dilution adjustments that do not preclude equity classification. Accordingly, the Earn-Out Warrants are indexed to the Company’s own stock and meet the conditions for equity classification under ASC 815-40-25. If and when issued, the warrants are expected to be classified within stockholders’ equity.

NIGHTFOOD HOLDINGS, INC. AND SUBSIDIARIES

DBA TECHFORCE ROBOTICS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2026 AND 2025

Goodwill and Impairment

Goodwill represents the excess of the purchase price over the fair value of net assets acquired in a business combination. Goodwill is not amortized, but is reviewed for impairment at least annually, as of June 30, or more frequently if events or changes in circumstances indicate the carrying value of goodwill may not be recoverable.

For impairment testing purposes, goodwill is assigned to the reporting unit(s) expected to benefit from the synergies of the acquisition. The Company performs either a qualitative assessment (“Step 0”) to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value, or a quantitative assessment when required.

	●	If the qualitative assessment indicates potential impairment, the Company estimates the fair value of the reporting unit and compares it with its carrying amount, including goodwill.
	●	If the carrying amount exceeds fair value, an impairment charge is recognized for the difference, not to exceed the carrying value of goodwill.

Significant judgments in goodwill impairment testing include:

	●	Determining the appropriate reporting units and assigning assets and liabilities to those reporting units.
	●	Forecasting future cash flows.
	●	Selecting appropriate discount rates and market multiples.
	●	Assessing macroeconomic factors, industry trends, and Company-specific performance.

Impairment Charges

Fiscal Year End June 30, 2026

For the year ended June 30, 2026, the Company recorded goodwill impairment charges of $63,886,000, consisting of $29,544,000 at the Victorville reporting unit, $31,993,000 at the Rancho Mirage reporting unit and $2,349,000 at the SWC reporting unit, based on its annual impairment test performed as of June 30, 2026. The impairment resulted from operating results at both hotels and SWC falling below the expectations and forecasts used at the acquisition dates. Fair value was determined using an income approach prepared with the assistance of a third-party valuation firm and is a Level 3 measurement. The Victorville and Rancho Mirage reporting units are included in the Hotel Operations reportable segment and the SWC reporting unit is included in the Foodservice Packaging Distribution reportable segment. The charges are final and are not provisional estimates. See Note 9.

Fiscal Year End June 30, 2025

The Company recorded a goodwill impairment charge of $897,542 for the year ended June 30, 2025.

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DBA TECHFORCE ROBOTICS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2026 AND 2025

The 2025 impairment charge relates to goodwill arising from the acquisition of FHVH recorded during the fiscal year ended June 30, 2024, which was determined to be not recoverable based on the Company’s annual impairment testing under ASC 350, Intangibles - Goodwill and Other.

Business Segments and Expense Disclosure

An operating segment is a component of a public entity that:

	●	Engages in business activities from which it may earn revenues and incur expenses;
	●	Has operating results that are regularly reviewed by the Chief Operating Decision Maker (“CODM,” which is our Chief Executive Officer) to make decisions about resource allocation and performance assessment; and
	●	Has discrete financial information available.

Following the acquisition of SWC Group, Inc. (d/b/a CarryOutSupplies.com) on March 31, 2025, the commencement of commercial activities under the Robotics-as-a-Service (“RaaS”) model, and the acquisitions of two hotel properties during the fiscal year ended June 30, 2026, management determined that the Company operates in three (3) reportable segments: Foodservice Packaging Distribution, RaaS, and Hotel Operations. See Note 13.

Discontinued Operations

The Company’s legacy Snacks and Beverages activity has been discontinued. The results of this activity are presented separately from continuing operations.

Segment Expense Disclosure

Effective July 1, 2024, the Company adopted ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The amended guidance requires enhanced disclosures about reportable segment expenses, including:

	●	Significant segment expenses that are regularly provided to and reviewed by the CODM
	●	The measure of segment profit or loss used by the CODM
	●	A description of other segment items included in that measure
	●	How expense amounts are allocated among segments

The Company’s chief operating decision maker (CODM) is its Chief Executive Officer. The CODM evaluates segment performance based on segment revenues, segment costs and expenses, segment other income (expense) - net, segment operating income (loss) and segment net income (loss), each as presented in Note 13. The CODM is not provided with, nor does he review, further disaggregated expense information below those measures, other than expenses reported as Other Corporate Overhead in Note 13, which are not allocated to the operating segments.

Accordingly, the Company’s disclosures include the segment revenues, costs and expenses, other income (expense) - net, operating income (loss) and net income (loss) reviewed by the CODM, as well as “other segment items” necessary to reconcile segment profit (loss) to consolidated loss before income taxes. No additional segment-level expense categories are required to be presented under ASU 2023-07 because no such detailed expense information is provided to or used by the CODM in assessing segment performance.

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DBA TECHFORCE ROBOTICS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2026 AND 2025

Use of Estimates and Assumptions

The preparation of consolidated financial statements in conformity with U.S. Generally Accepted Accounting Principles (“GAAP”) requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying disclosures. These estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities as of the reporting date, and the recognition of revenues and expenses during the reporting period. Actual results may differ from those estimates, and such differences may be material.

Estimates and assumptions are evaluated on an ongoing basis and are based on historical experience, current economic conditions, industry trends, and other relevant quantitative and qualitative factors. Changes in estimates are recorded in the period in which they become known and are accounted for prospectively.

Significant estimates for the years ended June 30, 2026 and 2025, include:

●	Allowance for expected credit losses on accounts receivable and other receivables;
●	Inventory valuation and obsolescence reserves;
●	Fair value measurements related to business combinations under ASC 805, including:
	Purchase price consideration, including the fair value of Series C Convertible
	Preferred Stock issued as acquisition consideration;

	●	Fair value of identifiable intangible assets;
	●	Fair value of property and equipment;
	●	Fair value of contingent consideration; and
	●	Allocation of purchase price to identifiable assets and liabilities, including the resulting goodwill;

●	Impairment assessment of goodwill and indefinite-lived intangible assets;
●	Impairment assessment of long-lived assets, including finite-lived intangible assets and property and equipment;
●	Fair value of derivative liabilities;
●	Classification of convertible preferred stock between temporary equity and permanent equity;
●	Valuation of stock-based compensation;

NIGHTFOOD HOLDINGS, INC. AND SUBSIDIARIES

DBA TECHFORCE ROBOTICS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2026 AND 2025

●	Estimated useful lives of property and equipment and finite-lived intangible assets;
●	Assessment of the Company’s ability to continue as a going concern;
●	Valuation of loss contingencies; and
●	Valuation allowance on deferred tax assets and assessment of uncertain tax positions.

Risks, Uncertainties and Concentrations

The Company is exposed to risks arising from the use of estimates and from concentrations that could significantly affect the amounts reported in the near term, which it discloses in accordance with ASC 275, Risks and Uncertainties.

Revenue and Asset Concentration

Substantially all hospitality segment revenue is generated by two (2) hotel properties located in Victorville and Rancho Mirage, California, which also represent a significant portion of the Company’s total assets. A decline in performance at either property could have a material adverse effect on the Company’s consolidated financial position and results of operations, including a decline resulting from:

	●	local economic conditions;
	●	competitive pressures;
	●	natural disasters; or
	●	loss of franchise rights.

Geographic Concentration

The Company’s hotel operations, robotics deployment activities and warehouse and distribution facilities are concentrated in the State of California. As a result, the Company is disproportionately exposed to conditions specific to that state, including:

	●	regulatory changes;
	●	economic conditions;
	●	natural disasters; and
	●	labor market conditions.

Franchise Concentration

The hotel properties operate under franchise agreements with national hotel brands. Hospitality revenue depends on continued compliance with brand standards, including:

●

property maintenance requirements;

NIGHTFOOD HOLDINGS, INC. AND SUBSIDIARIES

DBA TECHFORCE ROBOTICS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2026 AND 2025

	●	periodic property upgrades; and
	●	participation in brand programs.

Loss of either franchise agreement could materially impair the Company’s hospitality operations and the carrying value of the related assets.

Customer Concentration

For the fiscal year ended June 30, 2026, no single customer accounted for 10% or more of the Company’s consolidated revenues. The Foodservice Packaging Distribution segment serves a diversified base of local small to mid-sized foodservice operators with no material dependence on any single customer.

Supplier Concentration

The Company sources robotics components and hardware from a limited number of domestic and international suppliers. Alternative sources of supply are available for the Company’s robotic units and components, and the Company is not dependent on any single supplier. Management has concluded that no concentration of suppliers existed at June 30, 2026 or 2025 that would make the Company vulnerable to the risk of a near-term severe impact. Deployments could nevertheless be delayed and RaaS operations adversely affected by:

	●	an interruption in supply;
	●	quality issues; or
	●	changes in supplier pricing or availability.

The Foodservice Packaging Distribution segment sources products from multiple domestic and international manufacturers with no material dependence on any single supplier.

Key Personnel

The Company depends on the continued services of its Chief Executive Officer, who holds all 1,000 outstanding shares of Series A Super Voting Preferred Stock and thereby has effective voting control of the Company. Loss of the Chief Executive Officer’s services could have a material adverse effect on the Company’s operations and strategic direction.

Fair Value of Financial Instruments

The Company accounts for financial instruments in accordance with Financial Accounting Standards Board (FASB) ASC 820, Fair Value Measurements, which establishes a framework for measuring fair value and requires related disclosures. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the Company’s principal market or, if none exists, the most advantageous market for the asset or liability.

NIGHTFOOD HOLDINGS, INC. AND SUBSIDIARIES

DBA TECHFORCE ROBOTICS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2026 AND 2025

Fair Value Hierarchy

ASC 820 requires the use of observable inputs whenever available and establishes a three-tier hierarchy for measuring fair value:

	●	Level 1 - Quoted market prices (unadjusted) for identical assets or liabilities in active markets.
	●	Level 2 - Observable inputs other than quoted prices in active markets, such as quoted prices for similar assets and liabilities or inputs that are directly or indirectly observable.
	●	Level 3 - Unobservable inputs that require significant judgment, including management assumptions and estimates based on available market data.

The classification of an asset or liability within the hierarchy is based on the lowest level of input that is significant to the fair value measurement. Level 3 valuations generally require more judgment and complexity, often involving a combination of cost, market, or income approaches, as well as assumptions about market conditions, pricing, and other factors.

Financial Instruments Carried at Historical Cost

The Company’s financial instruments carried at historical cost include cash, accounts receivable, accounts payable and accrued expenses (including related party balances), and certain debt instruments. As of June 30, 2026 and 2025, the carrying amounts of these instruments approximated their fair values due to their short-term maturities.

Cash and Cash Equivalents and Concentration of Credit Risk

For purposes of the consolidated statements of cash flows, the Company considers all highly liquid instruments with a maturity of three months or less at the purchase date and money market accounts to be cash equivalents.

At June 30, 2026 and 2025, the Company did not have any cash equivalents.

The Company is exposed to credit risk on its cash and cash equivalents in the event of default by the financial institutions to the extent account balances exceed the amount insured by the FDIC, which is $250,000.

NIGHTFOOD HOLDINGS, INC. AND SUBSIDIARIES

DBA TECHFORCE ROBOTICS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2026 AND 2025

At June 30, 2026 and 2025, the Company did not experience any losses on cash balances in excess of FDIC insured limits.

Accounts Receivable

The Company accounts for accounts receivable in accordance with ASC 310, Receivables. Accounts receivable are stated at their net realizable value, which represents the amounts expected to be collected from customers.

Trade receivables primarily arise from:

	●	Foodservice Packaging Distribution - invoiced product sales
	●	RaaS - monthly service fees billed in arrears
	●	Hotel Operations -
	●	Guest ledger receivables, representing charges incurred by in-house guests prior to settlement at check-out
	●	City ledger receivables, representing amounts due from corporate accounts, groups, travel agencies, and other third-party billing arrangements

The Company does not require collateral and does not accrue interest on past-due balances.

Allowance for Expected Credit Losses

The Company evaluates the collectability of accounts receivable and records an allowance for expected credit losses in accordance with ASC 326, Financial Instruments - Credit Losses (“CECL”). The allowance is estimated using a provision matrix approach based on:

	●	historical loss experience by revenue stream,
	●	customer aging and payment trends,
	●	current economic conditions, and
	●	reasonable and supportable forecasts.

Guest ledger balances generally have short settlement periods and historically low loss experience, while city ledger balances and trade receivables are evaluated based on aging, customer credit quality, and historical write-offs.

Amounts determined to be uncollectible are written off against the allowance when collection efforts have been exhausted.

Allowance for expected credit losses was $54,498 and $51,962, at June 30, 2026 and 2025, respectively.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2026 AND 2025

The following is a summary of the Company’s accounts receivable at June 30, 2026 and 2025:

Schedule of Accounts Receivable

	June 30, 2026		June 30, 2025

Accounts receivable	$	298,384	$	98,177
Less: allowance for credit losses		54,498		51,962
Accounts receivable - net	$	243,886	$	46,215

Bad Debt Expense

For the years ended June 30, 2026 and 2025, bad debt was as follows:

Schedule of Bad Debt

Year Ended June 30,
2026		2025
$	58,769	$	201,859

Bad debt expense (recovery) is recorded as a component of general and administrative expenses in the accompanying consolidated statements of operations.

Inventory

The Company accounts for inventory in accordance with ASC 330, Inventory. Inventory is stated at the lower of cost or net realizable value (“LCNRV”) using the first-in, first-out (FIFO) method. Inventory consists of items held for sale or use in the ordinary course of business across the Company’s operating segments.

Continuing Operations

As of June 30, 2026 and 2025, inventory consisted primarily of:

●

Foodservice Packaging Distribution:

Finished goods including paper cups, plastic cups, food containers, bags, and other disposable consumables.

●

Robotics-as-a-Service (RaaS):

None. Inventory used in RaaS deployments (e.g., spare parts, components) is expensed as incurred and not carried as inventory.

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DBA TECHFORCE ROBOTICS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2026 AND 2025

●

Hotel Operations:

Food and beverage inventory and retail/minibar items held for sale. Hotel operating supplies not held for sale - such as guest amenities, linens, and cleaning supplies - are expensed as incurred and excluded from inventory.

Inventory Valuation and Reserves

Management evaluates inventory at each reporting date to determine whether reserves are required for slow-moving, obsolete or impaired items or for items whose net realizable value is below cost. In performing this assessment, management considers:

	●	aging and turnover trends;
	●	expected future demand;
	●	historical usage and spoilage (particularly for perishable hotel F&B items);
	●	current market and pricing conditions; and
	●	estimated net realizable value.

Adjustments to inventory reserves are recorded within cost of revenues in the period identified.

No inventory write-downs or adjustments to LCNRV were recorded during the years ended June 30, 2026 and 2025.

At June 30, 2026 and 2025, inventory was as follows:

Schedule of Inventory

Classification	June 30, 2026		June 30, 2025
Packaging and supplies	$	271,411	$	319,491
Food and beverage		40,236		-
Total Inventory	$	311,647	$	319,491

Inventory at June 30, 2025 included $92,513 of inventory in transit.

Property and Equipment

Property and equipment are recorded at cost, net of accumulated depreciation, in accordance with ASC 360, “Property, Plant, and Equipment.” Depreciation is calculated using the straight-line method over the estimated useful lives of the assets.

Repairs and maintenance expenditures that do not materially extend the useful life of an asset are expensed as incurred. Significant improvements or upgrades that increase the asset’s productivity, efficiency, or useful life are capitalized.

NIGHTFOOD HOLDINGS, INC. AND SUBSIDIARIES

DBA TECHFORCE ROBOTICS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2026 AND 2025

Property Improvement Plans (“PIPs”)

In connection with operating franchised hotel properties, the Company is periodically required under its franchise agreements to complete Property Improvement Plans (“PIPs”), which generally include renovations, replacements, and upgrades to guestrooms, public areas, building systems, and other components of the hotels.

PIP-related expenditures are evaluated under ASC 360 to determine whether they should be capitalized or expensed:

●

Capitalized PIP costs

PIP costs are capitalized when they represent betterments or improvements that:

	●	extend the useful life of the asset;
	●	increase the asset’s capacity or efficiency;
	●	materially upgrade the property to meet current brand standards; or
	●	replace major components of the hotel.

Capitalized PIP costs are recorded as part of buildings and improvements or FF&E and depreciated over their estimated useful lives.

●

Expensed as incurred

Routine repairs, maintenance, cosmetic refreshes, and other PIP activities that do not extend useful life or enhance the asset’s functionality are expensed as incurred.

The determination of whether a PIP expenditure should be capitalized or expensed requires judgment and is based on the nature of the work performed, the condition of the underlying assets, and the extent to which the PIP activity enhances or extends the property’s utility.

Each hotel property, including its land, building and improvements, furniture, fixtures and equipment, and identifiable intangible assets, is the asset group at which recoverability is evaluated under ASC 360-10, and each hotel property is a separate reporting unit for goodwill impairment testing under ASC 350. See Note 9.

Disposals

Upon disposal or sale of property and equipment, the cost and related accumulated depreciation are removed from the accounts, and any resulting gain or loss is recognized in the statement of operations.

NIGHTFOOD HOLDINGS, INC. AND SUBSIDIARIES

DBA TECHFORCE ROBOTICS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2026 AND 2025

Impairment of Long-lived Assets

The Company evaluates the recoverability of long-lived assets, including identifiable intangible assets, in accordance with FASB ASC 360-10-35-15, Impairment or Disposal of Long-Lived Assets.

An impairment review is triggered when events or circumstances indicate that the carrying value of an asset group may not be recoverable. Factors considered include, but are not limited to:

	●	Significant changes in expected performance compared to prior forecasts,
	●	Changes in asset utilization, including discontinued or modified use,
	●	Negative industry or economic trends that impact asset value, and
	●	Strategic shifts in the Company’s business operations.

Impairment Assessment Process

When impairment indicators exist, the Company performs a recoverability test by comparing the undiscounted future cash flows expected to be generated from the use and ultimate disposition of the asset group to its carrying amount.

	●	If the undiscounted cash flows exceed the carrying amount, no impairment is recognized.
	●	If the undiscounted cash flows are less than the carrying amount, an impairment loss is recognized, measured as the excess of the carrying amount over the fair value of the asset.

Impairment Results

For the years ended June 30, 2026 and 2025, the Company did not record any impairment losses.

Derivative Liabilities

The Company evaluates financial instruments containing characteristics of both liabilities and equity in accordance with FASB ASC 480, Distinguishing Liabilities from Equity, and FASB ASC 815, Derivatives and Hedging.

NIGHTFOOD HOLDINGS, INC. AND SUBSIDIARIES

DBA TECHFORCE ROBOTICS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2026 AND 2025

Accounting for Derivative Liabilities

Derivative liabilities are revalued at fair value at each reporting period, with changes in fair value recognized in the results of operations as a gain or loss on derivative remeasurement. The Company uses a Black-Scholes option pricing model to determine the fair value of these instruments.

Conversion and Extinguishment of Derivative Liabilities

When a debt instrument with an embedded conversion option (e.g., convertible debt or warrants) is converted into shares of common stock or repaid, the Company:

	●	Records the shares issued at the carrying amount of the debt, accrued interest and unamortized discount derecognized when the instrument is converted in accordance with its original terms;
	●	Derecognizes all related debt, derivative liabilities, and unamortized debt discounts; and
	●	Recognizes a gain or loss only where the instrument is settled other than in accordance with its original terms or the conversion is induced. No gain or loss was recognized on the conversion of the notes during the years ended June 30, 2026 and 2025, each of which was made at the contractual conversion price. In fiscal 2025, the derivative liability related to a converted related party note was extinguished, resulting in a gain of $500,678 (Note 11).

For equity-based derivative liabilities (e.g., warrants) that are extinguished, any remaining liability balance is reclassified to additional paid-in capital.

Reclassification of Equity Instruments to Liabilities

Equity instruments initially classified as equity may be reclassified as liabilities if they no longer meet equity classification criteria. In such cases, they are remeasured at fair value on the date of reclassification, with changes recognized in the consolidated statements of operations.

Derivative Liability Balances

As of June 30, 2026 and 2025, the Company had derivative liabilities of $5,955,393 and $1,102,992, respectively.

Included in these totals are amounts to related parties of $472,050 and $297,227, respectively.

See Notes 11 and 12.

Original Issue Discounts and Other Debt Discounts

The Company accounts for original issue discounts (OID) and other debt discounts in accordance with FASB ASC 835-30, Interest - Imputation of Interest. These discounts are recorded as a reduction of the carrying amount of the related debt and are amortized to interest expense over the term of the debt using the effective interest method.

NIGHTFOOD HOLDINGS, INC. AND SUBSIDIARIES

DBA TECHFORCE ROBOTICS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2026 AND 2025

Stock and Other Equity Issued with Debt

The Company may issue common stock or other equity instruments in connection with debt issuance. When common stock or other equity instruments are issued, they are recorded at fair value and treated as a debt discount, reducing the carrying amount of the note. These discounts are amortized to interest expense over the life of the debt.

The combined debt discounts, including OID and stock-related discounts, cannot exceed the face amount of the debt.

Debt Issuance Costs

Debt issuance costs, including fees paid to lenders or third parties, are capitalized as a debt discount and amortized to interest expense over the life of the debt. These costs are presented as a direct deduction from the carrying amount of the debt liability rather than as a separate asset.

Right of Use Assets and Lease Obligations

The Company accounts for right-of-use (ROU) assets and lease liabilities in accordance with FASB ASC 842, Leases. These amounts reflect the present value of the Company’s estimated future minimum lease payments over the lease term, including any reasonably certain renewal options, discounted using a collateralized incremental borrowing rate.

The Company classifies its leases as either operating or finance leases. The Company’s leases primarily consist of operating leases, which are included as Right-of-Use Assets and Operating Lease Liabilities on the consolidated balance sheets.

Short-Term Leases

The Company has elected the short-term lease exemption, whereby leases with a term of 12 months or less are not recorded on the balance sheet. Instead, lease payments are expensed on a straight-line basis over the lease term.

Lease Term and Renewal Options

In determining the lease term, the Company evaluates whether renewal options are reasonably certain to be exercised. Factors considered include:

	●	The useful life of leasehold improvements relative to the lease term,
	●	The economic performance of the business at the leased location,
	●	The comparative cost of renewal rates versus market rates, and
	●	The presence of any significant economic penalties for non-renewal.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2026 AND 2025

If a renewal option is deemed reasonably certain to be exercised, the ROU asset and lease liability reflect those additional future lease payments. The Company’s operating leases contain renewal options with no residual value guarantees. Currently, management does not expect to exercise any renewal options, which are therefore excluded in the measurement of lease obligations.

Discount Rate and Lease Liability Measurement

Since the implicit rate in the leases is not readily determinable, the Company applies an incremental borrowing rate that represents the rate it would incur to borrow on a collateralized basis over a similar term and currency environment.

Lease Impairment

The Company evaluates ROU assets for impairment indicators whenever events or changes in circumstances suggest the carrying amount may not be recoverable. No impairments of ROU assets were recognized for the years ended June 30, 2026 and 2025, respectively.

See Note 15.

Revenue Recognition

The Company recognizes revenue in accordance with Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC 606”), when control of the promised goods or services transfers to the customer in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. The Company applies the following five (5) steps to each customer contract:

	●	identify the contract with the customer;
	●	identify the performance obligations in the contract;
	●	determine the transaction price;
	●	allocate the transaction price to the performance obligations; and
	●	recognize revenue when, or as, each performance obligation is satisfied.

The Company derives revenue from three (3) revenue streams, which correspond to its three (3) reportable segments (Note 13):

	●	foodservice packaging distribution;
	●	Robotics as a Service (“RaaS”); and
	●	hotel operations.

NIGHTFOOD HOLDINGS, INC. AND SUBSIDIARIES

DBA TECHFORCE ROBOTICS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2026 AND 2025

The Company previously generated revenue from the sale of packaged snack and beverage products; that activity was discontinued as of June 30, 2025 and is presented as discontinued operations (Note 14). The performance obligation, timing of recognition and consideration for each revenue stream are summarized in the following table and described below.

Revenue Stream	Performance Obligation	Timing of Recognition	Consideration
Foodservice packaging distribution (SWC Group)	Delivery of the packaging products ordered by the customer	Point in time, upon shipment when control transfers	Fixed price per order based on contract or list pricing, paid at the time of order

Robotics as a Service (TechForce Robotics and FHVH)	A single performance obligation comprising access to robotics equipment, automation and monitoring software, installation, maintenance and support over the contract term	Over time, ratably each month over the thirty-six (36) month non-cancellable term beginning at go-live	Fixed monthly service fee, invoiced monthly in arrears

Hotel operations (Victorville Treasure Holdings, LLC and Treasure Mountain Holdings, LLC)	Rooms, food and beverage, event and banquet services, and other ancillary guest services, each a distinct performance obligation	Rooms daily as each night of occupancy occurs; food, beverage and ancillary services when provided; events when the event occurs	Fixed room rates, menu prices and event contract prices, settled at check-out or at the point of sale

A. Foodservice Packaging Distribution

SWC Group distributes disposable foodservice packaging products, including custom-printed and stock paper cups, plastic cups, food containers, bags and related consumable items, exclusively to business customers on a wholesale basis through the Company’s e-commerce platform and direct sales channels.

	●	Performance obligation: each order contains a single performance obligation, the delivery of the ordered products.
	●	Timing: revenue is recognized at a point in time when control of the products transfers to the customer upon shipment. Custom-printed orders are also recognized upon shipment because the customer may cancel before shipment and the Company does not have an enforceable right to payment for work in process.
	●	Transaction price: the fixed consideration stated in the order based on contract or list pricing. Products may be returned only if damaged or shipped in error, and the arrangements do not provide volume rebates, allowances or other variable consideration.
	●	Payment: customers pay at the time of order, and amounts received before shipment are recorded as deferred revenue until the products ship.
	●	Principal: the Company sources and controls the products, sets prices and bears inventory risk prior to transfer, and revenue is recognized on a gross basis.

NIGHTFOOD HOLDINGS, INC. AND SUBSIDIARIES

DBA TECHFORCE ROBOTICS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2026 AND 2025

B. Robotics as a Service

TechForce Robotics and FHVH provide automation solutions to customers in the foodservice and hospitality industries under service agreements.

	●	Contract term: non-cancellable, except for breach, for an initial term of thirty-six (36) months, renewing automatically for successive one (1) year periods unless terminated. Renewals are accounted for as new contracts.
	●	Pilot period: each arrangement begins with a pilot and site-preparation period during which the Company installs and integrates the robotic systems and trains the customer’s staff. No fee is charged during that period, and the contract term and monthly billing commence when the systems go live.
	●	Performance obligation: access to the robotic equipment, automation and monitoring software, maintenance, software updates and remote technical support together constitute a single performance obligation that is a series of distinct daily services. Installation, integration and training are not distinct. The customer cannot benefit from those activities on their own or together with other resources readily available to it, because the robotic systems are proprietary and the Company does not sell those activities separately (ASC 606-10-25-19(a)). They are also not separately identifiable within the context of the contract, because the Company provides a significant integration service that combines the equipment, software, installation, integration and training into the combined output the customer contracted for, and they are highly interdependent with the ongoing service (ASC 606-10-25-19(b) and 25-21).
	●	Transaction price: a fixed recurring monthly service fee, which is the only charge under the agreements. The contracts do not contain variable consideration.
	●	Timing: revenue is recognized over time, ratably each month, because the customer simultaneously receives and consumes the benefit of the service as it is performed.
	●	Billing: customers are invoiced monthly in arrears. The monthly fee is fixed and the Company’s performance is the same each month, so revenue is recognized ratably as the service is provided. No consideration is received before performance.
	●	Equipment: the Company owns and deploys all robotic equipment, which is included in property and equipment and depreciated over its estimated useful life (Note 3). The Company directs how and when the robotic systems perform their tasks through proprietary software, determines operating parameters and scheduling, performs all servicing, maintenance and software updates, and retains the right to substitute units at its discretion without customer approval. Because the customer does not obtain the right to control the use of the equipment, the arrangements do not contain a lease under ASC 842, Leases, and the entire arrangement is accounted for under ASC 606.
	●	Principal: the Company controls the equipment and services throughout the contract term, is primarily responsible for performance, bears the inventory and deployment risk and has discretion in establishing the monthly fee charged to the customer, and revenue is recognized on a gross basis.

C. Hotel Operations

Victorville Treasure Holdings, LLC and Treasure Mountain Holdings, LLC own and operate the Holiday Inn Victorville and the Hilton Garden Inn Rancho Mirage, respectively, under franchise agreements with the brand owners and management agreements with a third-party hotel management company. Hotel revenue consists of the following:

●

Rooms: each night of occupancy is a distinct performance obligation, and rooms revenue is recognized daily at the contracted room rate as each night of occupancy occurs. Payment is settled at check-out.

NIGHTFOOD HOLDINGS, INC. AND SUBSIDIARIES

DBA TECHFORCE ROBOTICS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2026 AND 2025

	●	Food and beverage: restaurant, bar, catering and banquet sales are recognized at the point in time the goods or services are provided to the guest.
	●	Events and banquets: each event is a single performance obligation recognized when the event occurs.
	●	Other ancillary services: meeting and event space rentals, parking, resort fees and other guest services are recognized when the service is rendered or the rental period has elapsed.

Other hotel policies:

	●	Transaction price: the fixed room rates, menu prices and event contract prices, including any discounts or promotional rates offered to the guest.
	●	Advance deposits: billing and payment coincide with the satisfaction of the performance obligations. Advance deposits for group bookings and events are recorded as deferred revenue until the stay or event occurs and were not significant at June 30, 2026.
	●	Principal: the Company owns the properties, controls the rooms and services before they are transferred to the guest, sets prices and bears the operating risk of the hotels; the franchisors and the hotel manager do not transfer goods or services to the guest. Revenue is recognized on a gross basis.
	●	Franchise and management fees: franchise royalty, marketing, loyalty and system fees and fees paid to the hotel management company are expensed as incurred and included in hotel operating expenses, which also consist of rooms, food and beverage, property operations and maintenance, utilities, property taxes, insurance and other direct costs of operating the hotel properties. Corporate overhead is included in general and administrative expenses.

D. Practical Expedients and Policy Elections

The Company has elected the following practical expedients and accounting policies, which apply to all revenue streams:

	●	Sales, use, occupancy and other taxes collected from customers and remitted to government authorities are excluded from revenue.
	●	Shipping and handling activities performed after control of a product transfers to the customer are accounted for as fulfillment activities rather than as separate performance obligations, and the related costs are included in cost of revenue.
	●	The transaction price is not adjusted for the effects of a significant financing component when the period between the transfer of the goods or services and payment is one (1) year or less.

NIGHTFOOD HOLDINGS, INC. AND SUBSIDIARIES

DBA TECHFORCE ROBOTICS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2026 AND 2025

	●	Incremental costs of obtaining a contract are expensed as incurred when the amortization period would have been one (1) year or less. The Company had no capitalized contract costs at June 30, 2026 or June 30, 2025.
	●	The Company does not disclose the transaction price allocated to remaining performance obligations for contracts with an original expected duration of one (1) year or less.

E. Contract Liabilities (Deferred Revenue)

Deferred revenue represents consideration received in advance of performance and consists of foodservice packaging orders paid by customers before shipment, which are recognized as revenue when the products ship. Deferred revenue was $620,196 and $557,725 as of June 30, 2026 and 2025, respectively, all of which related to foodservice packaging distribution. The Company had no contract assets as of June 30, 2026 or June 30, 2025.

F. Disaggregation of Revenue

Revenue by revenue stream, which is also the Company’s reportable segment, for the years ended June 30, 2026 and 2025 is presented in the following table. Hotel operations revenue for the year ended June 30, 2026 is included from the acquisition dates of August 27, 2025 for Victorville and September 30, 2025 for Rancho Mirage (Note 9). Revenue from the discontinued snack and beverage operations is presented in discontinued operations (Note 14).

The following represents the Company’s disaggregation of revenues for the years ended June 30, 2026 and 2025:

Schedule of Disaggregation of Revenue

	Year Ended June 30,
	2026					2025
	Revenue		% of Revenues			Revenue		% of Revenues
Foodservice Packaging	$	1,609,016		19.80	%	$	466,633		96.75	%
Robotics as a Service (RaaS)		62,111		0.76	%		15,652		3.25	%
Hotels		6,455,902		79.44	%		-		0.00	%
Total revenues - net	$	8,127,029		100.00	%	$	482,285		100.00	%

Revenue is disaggregated by primary revenue stream, consistent with the Company’s reportable segments and the nature, timing, and uncertainty of revenue recognition described herein.

NIGHTFOOD HOLDINGS, INC. AND SUBSIDIARIES

DBA TECHFORCE ROBOTICS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2026 AND 2025

Revenues from discontinued snack and beverage operations are presented separately. See Note 14.

Cost of Sales

Cost of sales consists of the direct costs of generating revenue in each of the Company’s three (3) revenue streams, as described below. Cost of sales of the discontinued snack and beverage business is presented within discontinued operations (Note 14).

Foodservice Packaging Distribution

Cost of sales consists of the cost of the packaging products sold, which is relieved from inventory when the products ship, and the direct costs of storing and delivering them:

	●	Purchased products: packaging products sourced from third-party manufacturers and suppliers.
	●	Freight and distribution: outbound shipping, warehouse handling and fuel surcharges.
	●	Warehousing and logistics: facility, labor and utility costs of storage and inventory management.

Robotics as a Service

Cost of sales consists of the direct costs of deploying and operating the robotic systems at customer sites, which are expensed as incurred:

	●	Equipment depreciation: depreciation of the robotic units deployed at customer sites over their estimated useful lives (Note 3).
	●	Installation and training: setup, integration and training performed during the pilot period.
	●	Maintenance and support: technical support, repairs and software updates.
	●	Hosting and connectivity: cloud infrastructure and communication costs for remote monitoring and operation of the robots.

Hotel Operations

Cost of sales consists of the direct costs of providing lodging, food and beverage and related guest services, which are expensed as incurred:

●

Rooms: housekeeping, front office, laundry, linens, guest amenities and utilities of guest accommodations.

NIGHTFOOD HOLDINGS, INC. AND SUBSIDIARIES

DBA TECHFORCE ROBOTICS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2026 AND 2025

	●	Food and beverage: cost of food, beverages and consumables used in restaurant, bar and banquet operations.
	●	Departmental labor: wages, benefits and payroll taxes of rooms, food and beverage and other guest service personnel.
	●	Franchise and management fees: franchise royalty, marketing, loyalty and system fees and fees paid to the third-party hotel management company.
	●	Property costs: property operations and maintenance, property taxes and insurance.
	●	Other direct costs: contract services, credit card commissions and minor operating equipment.

Depreciation of hotel buildings, furnishings and equipment is excluded from cost of sales and presented in depreciation and amortization within operating expenses.

Income Taxes

The Company accounts for income taxes using the asset and liability method prescribed by FASB ASC 740, Income Taxes. Under this method, deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities. These deferred amounts are measured using enacted tax rates expected to apply in the periods when the temporary differences are expected to reverse.

The effect of a change in tax law or tax rates on deferred tax balances is recognized in the period in which the change is enacted.

All deferred tax assets and liabilities are presented as noncurrent in the Company’s consolidated balance sheet, regardless of the classification of the related asset or liability for financial reporting purposes.

Uncertain Tax Positions

The Company evaluates uncertain tax positions, which requires that a tax position be recognized in the financial statements only if it is more likely than not (greater than 50% likelihood) to be sustained upon examination by tax authorities.

As of June 30, 2026 and 2025, the Company had no uncertain tax positions that qualified for recognition or disclosure in the consolidated financial statements.

The Company also recognizes interest and penalties related to uncertain tax positions in other expense in the consolidated statement of operations. No interest and penalties were recorded for the years ended June 30, 2026 and 2025, respectively. Federal and state income tax returns for Nightfood Holdings, Inc. and its subsidiaries for the fiscal years ended June 30, 2016 through June 30, 2025 have not been filed as of the date these consolidated financial statements were issued. Management does not believe the unfiled returns result in an unrecognized tax benefit because the Company has reported losses in each of those years, and no liability for uncertain tax positions has been recorded.

NIGHTFOOD HOLDINGS, INC. AND SUBSIDIARIES

DBA TECHFORCE ROBOTICS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2026 AND 2025

Valuation of Deferred Tax Assets

The Company’s deferred tax assets include certain future tax benefits, such as net operating losses (NOLs), tax credits, and deductible temporary differences. A valuation allowance is required if it is more likely than not that some portion, or all, of the deferred tax assets will not be realized.

The Company reviews the realizability of deferred tax assets on a quarterly basis, or more frequently if circumstances warrant, considering both positive and negative evidence.

Factors Considered in Valuation Allowance Assessment

The Company evaluates multiple factors in determining whether a valuation allowance is necessary, including:

	●	Historical earnings trends (cumulative pre-tax income or losses in the most recent three-year period)
	●	Future financial projections, including expected taxable income based on long-term estimates of business performance and market conditions
	●	Statutory carryforward periods for net operating losses and other deferred tax assets
	●	Prudent and feasible tax planning strategies that could impact the realization of deferred tax assets
	●	Nature and predictability of temporary differences and the timing of their reversal
	●	Sensitivity of financial forecasts to external factors such as commodity prices, market demand, and operational risks

While cumulative three-year losses are a strong indicator that a valuation allowance may be needed, a valuation allowance determination is not solely based on past losses - all available positive and negative evidence must be considered.

Valuation Allowance Determination

At June 30, 2026 and 2025, the Company recorded a full valuation allowance against its deferred tax assets, resulting in a net carrying amount of $0. This determination was based on cumulative losses in recent years and the lack of sufficient positive evidence to support the realization of deferred tax assets in the near term.

The Company will continue to evaluate its valuation allowance each reporting period and will recognize deferred tax assets in the future if sufficient positive evidence emerges to support their realization.

NIGHTFOOD HOLDINGS, INC. AND SUBSIDIARIES

DBA TECHFORCE ROBOTICS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2026 AND 2025

Advertising Costs

Advertising costs are expensed as incurred and are classified within general and administrative expenses in the consolidated statements of operations.

The Company recognized marketing and advertising costs during the years ended June 30, 2026 and 2025, respectively as follows:

Stock-Based Compensation

The Company accounts for stock-based compensation in accordance with ASC 718, “Compensation - Stock Compensation,” using the fair value-based method. Under this guidance, compensation cost is measured at the grant date based on the fair value of the award and is recognized over the requisite service period, typically the vesting period.

The Company applies the fair value method for equity instruments granted to both employees and non-employees, aligning non-employee share-based payment accounting with that of employees. The fair value of stock-based compensation is determined as of the grant date or the measurement date (i.e., when the performance obligation is completed) and is recognized over the vesting period.

The Company determines the fair value of stock options using the Black-Scholes option pricing model, considering the following key assumptions:

	●	Exercise price - The agreed-upon price at which the option can be exercised.
	●	Expected dividends - The anticipated dividend yield over the expected life of the option.
	●	Expected volatility - Based on historical stock price fluctuations.
	●	Risk-free interest rate - Derived from U.S. Treasury securities with similar maturities.
	●	Expected life of the option - Estimated based on historical exercise patterns and contractual terms.

Additionally, the Company follows the guidance under ASU 2016-09, which introduced amendments to simplify certain accounting aspects of share-based compensation, including:

	●	The treatment of tax benefits and tax deficiencies in income tax reporting.
	●	The option to recognize forfeitures as they occur rather than estimating them upfront.

NIGHTFOOD HOLDINGS, INC. AND SUBSIDIARIES

DBA TECHFORCE ROBOTICS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2026 AND 2025

●

Cash flow classification for certain tax-related transactions.

The Company continues to evaluate and apply the latest Accounting Standards Updates (ASUs) and interpretive releases related to stock-based compensation to ensure compliance with evolving financial reporting requirements.

Stock Warrants

In connection with certain financing transactions (debt or equity), consulting arrangements, or strategic partnerships, the Company may issue warrants to purchase shares of its common stock. These standalone warrants are not puttable or mandatorily redeemable by the holder and are classified as equity instruments in accordance with ASC 480, “Distinguishing Liabilities from Equity.”

The fair value of warrants issued for compensation purposes is measured using the Black-Scholes option pricing model.

Accounting Treatment of Warrants

	●	Warrants issued in conjunction with common stock issuance are initially recorded at fair value as a reduction in Additional Paid-In Capital (APIC),
	●	Warrants issued for services are recorded at fair value and expensed over the requisite service period or immediately upon issuance if no service period exists; and
	●	Warrants classified as liabilities due to settlement features or pricing adjustments are remeasured at fair value each reporting period, with changes recognized in earnings.

Basic and Diluted Net Loss per Share

The Company computes net loss per share in accordance with ASC 260, Earnings Per Share. Basic net loss per share is computed by dividing net loss attributable to common stockholders by the weighted average number of shares of common stock outstanding during the period.

During all periods presented, the Company reported a net loss. Accordingly, all potentially dilutive common stock equivalents were excluded from the computation of diluted net loss per share because their inclusion would have been anti-dilutive. As a result, diluted net loss per share is equal to basic net loss per share for all periods presented.

NIGHTFOOD HOLDINGS, INC. AND SUBSIDIARIES

DBA TECHFORCE ROBOTICS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2026 AND 2025

Anti-Dilutive Securities

The following potentially dilutive securities were excluded from the computation of diluted net loss per share for the years ended June 30, 2026 and 2025 because their effect would have been anti-dilutive:

	June 30, 2026		June 30, 2025
Convertible debt		161,977,742		246,690,974
Series B, convertible preferred stock (8,366:1)		-		9,750,000
Series C, convertible preferred stock (6,000:1)		13,578,000		875,796,000
Series D, convertible preferred stock (6,000:1)		11,004,000		20,004,000
Warrants		185,308,735		191,996,343
Stock options		12,757,576		-
Total common stock equivalents		384,626,053		1,344,237,317

All financial instruments listed above included as common stock equivalents represent those that are fully vested and exercisable.

Shares of Series C Convertible Preferred Stock and shares issuable on conversion of convertible notes payable subject to contractual lock-up provisions are excluded from the anti-dilutive securities table above and from the Company’s authorized share sufficiency analysis while the lock-up remains in effect. The lock-up provisions, the classification of the Company’s convertible preferred stock, and its reclassification from temporary equity to permanent equity effective November 19, 2025 are described in Note 8.

Related Parties

The Company defines related parties in accordance with ASC 850, Related Party Disclosures. Related parties include entities and individuals that, directly or indirectly, through one or more intermediaries, control, are controlled by, or are under common control with the Company.

Related parties include, but are not limited to:

	●	Principal owners of the Company.
	●	Members of management (including directors, executive officers, and key employees).
	●	Immediate family members of principal owners and members of management.
	●	Entities affiliated with principal owners or management through direct or indirect ownership.
	●	Entities with which the Company has significant transactions, where one party has the ability to exercise control or significant influence over the management or operating policies of the other.

A party is considered related if it has the ability to control or significantly influence the management or operating policies of the Company in a manner that could prevent either party from fully pursuing its own separate economic interests.

NIGHTFOOD HOLDINGS, INC. AND SUBSIDIARIES

DBA TECHFORCE ROBOTICS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2026 AND 2025

The Company discloses all material related party transactions, including:

	●	The nature of the relationship between the parties.
	●	A description of the transaction(s), including terms and amounts involved.
	●	Any amounts due to or from related parties as of the reporting date.
	●	Any other elements necessary for a clear understanding of the transactions’ effects on the financial statements.

Related party disclosures include the nature of the relationship, a description of the transactions and their terms and amounts, and amounts due to or from related parties at the reporting date.

The Company’s related parties are its Chief Executive Officer, who also serves as Chief Financial Officer, holds all 1,000 outstanding shares of Series A Preferred Stock and holds convertible notes payable to the Company, its Chief Revenue Officer, who is a member of the Board of Directors and holds convertible notes payable, and the lender under the Company’s revolving line of credit, which has significant influence and control over the Company’s hotel properties, is controlled by an individual and holds 281,021 shares of Series C Convertible Preferred Stock.

Balances with related parties are presented separately on the consolidated balance sheets as accounts payable and accrued expenses - related parties, line of credit - related party, convertible notes payable - related parties and derivative liabilities - related parties. See Notes 4, 5, 8 and 11.

Recent Accounting Standards

Recently Adopted Accounting Standards

The Company adopted ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, effective July 1, 2024. See Note 13.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which enhances disclosure requirements for income tax rate reconciliation (including disaggregation into specified categories) and income taxes paid by jurisdiction. The Company adopted ASU 2023-09. The expanded rate reconciliation and income taxes paid disclosures are reflected in Note 16.

Accounting Standards Not Yet Adopted

In November 2024, the FASB issued ASU 2024-03, Income Statement, Reporting Comprehensive Income (Subtopic 220-40): Disaggregation of Income Statement Expenses, as subsequently clarified by ASU 2025-01 issued in January 2025, which requires expanded disclosure of certain expense categories. The standard is effective for the Company’s annual period ending June 30, 2028 and interim periods beginning in fiscal year 2029. As the standard is disclosure-only, adoption will not affect the Company’s financial position, results of operations, or cash flows. The Company is evaluating the enhanced disclosure requirements.

NIGHTFOOD HOLDINGS, INC. AND SUBSIDIARIES

DBA TECHFORCE ROBOTICS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2026 AND 2025

In November 2024, the FASB issued ASU 2024-04, Debt with Conversion and Other Options (Subtopic 470-20), which clarifies the requirements for determining whether settlements of convertible debt instruments should be accounted for as induced conversions. The standard is effective for the Company’s fiscal year beginning July 1, 2026. The Company is evaluating the impact, which is not expected to be material.

In July 2025, the FASB issued ASU 2025-05, Financial Instruments, Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets, which provides a practical expedient that allows entities to assume current economic conditions persist over the forecast period when estimating expected credit losses on current accounts receivable and contract assets within the scope of ASC 606. The standard is effective for the Company’s fiscal year beginning July 1, 2026. The Company plans to adopt ASU 2025-05 in fiscal 2027 and does not expect a material impact.

In September 2025, the FASB issued ASU 2025-06, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software, which removes the project-stage framework for capitalizing internal-use software costs. The standard is effective for the Company’s fiscal year beginning July 1, 2028. The Company is evaluating the effect on its robotics and artificial intelligence software development costs.

In September 2025, the FASB issued ASU 2025-07, Derivatives and Hedging (Topic 815) and Revenue from Contracts with Customers (Topic 606): Derivatives Scope Refinements and Scope Clarification for Share-Based Noncash Consideration from a Customer in a Revenue Contract, which excludes certain non-exchange-traded contracts with underlyings based on operations or activities specific to one of the parties from derivative accounting. The standard is effective for the Company’s fiscal year beginning July 1, 2027. The Company is evaluating the effect on its bifurcated conversion features.

Other Accounting Standards Updates

The FASB has issued other technical corrections and narrow-scope amendments across various accounting topics. These updates are not expected to have a material impact on the Company’s consolidated financial statements.

NIGHTFOOD HOLDINGS, INC. AND SUBSIDIARIES

DBA TECHFORCE ROBOTICS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2026 AND 2025

Reclassifications

Certain amounts in the prior year’s consolidated financial statements have been reclassified to conform to the current year presentation. These reclassifications had no material impact on the Company’s consolidated results of operations, stockholders’ equity (deficit), or cash flows.

As a result of the classification of the Company’s Snacks and Beverages segment as discontinued operations, the related results of operations, cash flows, and disclosures have been reclassified and presented separately from continuing operations for all periods presented.

Year Ended June 30,