Note 8 - Temporary Equity and Stockholders’ Equity (Deficit)

As of June 30, 2026, the Company had five (5) classes of stock, detailed as follows:

With respect to Series B, C and D convertible preferred stock, see Convertible Preferred Stock Classification and Authorized Share Sufficiency below regarding classification as temporary equity at June 30, 2025, the conversion of the Series B on November 12, 2025 and the reclassification of the Series C and Series D to permanent equity effective November 19, 2025.

NIGHTFOOD HOLDINGS, INC. AND SUBSIDIARIES

DBA TECHFORCE ROBOTICS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2026 AND 2025

Preferred Stock

The Company’s preferred stock is as follows.

The Board of Directors has the authority to issue preferred stock in one or more series and determine the rights, privileges, and restrictions of each series without further stockholder approval.

Series A, Preferred Stock - Related Party

Series B, Convertible Preferred Stock

NIGHTFOOD HOLDINGS, INC. AND SUBSIDIARIES

DBA TECHFORCE ROBOTICS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2026 AND 2025

Deemed Dividends - Series B Convertible Preferred Stock

Deemed dividends arising from reductions in the Series B conversion price were recorded as a reclassification from additional paid-in capital to accumulated deficit and reduced income available to common stockholders for purposes of earnings per share.

During the fiscal years ended June 30, 2026 and 2025, the Company recorded additional deemed dividends of $0 and $11,566, respectively.

Conversion of Series B, Convertible Preferred Stock

Effective October 28, 2025, the Company amended the conversion ratio applicable to its Series B Convertible Preferred Stock from 5,000:1 to 8,366:1, eliminating the previously issuable cashless-exercise warrants. Using the revised conversion ratio, the Company converted all 1,950 outstanding shares of Series B Preferred Stock into 16,313,700 shares of common stock on November 12, 2025.

The Company evaluated the amendment under ASC 470-20 and ASC 260-10-S99-2 by comparing the fair value of the securities issuable under the modified terms to the fair value under the original terms at the conversion date and concluded that no deemed dividend arose.

The carrying amount of the Series B Convertible Preferred Stock of $5,065,421 was credited to common stock and additional paid-in capital on conversion, with no income statement impact. Following the conversion, no shares of Series B Preferred Stock remain outstanding.

Series C, Convertible Preferred Stock

NIGHTFOOD HOLDINGS, INC. AND SUBSIDIARIES

DBA TECHFORCE ROBOTICS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2026 AND 2025

Increase in Authorized Shares for Designation

The original Certificate of Designation designated 500,000 shares. On December 3, 2025, the Company filed a Certificate of Amendment with the Nevada Secretary of State increasing the designated shares to 800,000 to accommodate shares issued as acquisition consideration and compensation.

Lock-Up Provisions

Shares of Series C Convertible Preferred Stock issued as compensation, as acquisition consideration and to a material lender in connection with certain convertible notes payable are subject to contractual lock-up provisions that prohibit conversion until the Company has completed an uplisting to a senior national stock exchange and effected a reverse stock split such that its authorized common shares are sufficient to accommodate conversion of all outstanding convertible securities.

At June 30, 2026, 542,851 shares of Series C Convertible Preferred Stock were outstanding, convertible into 3,257,106,000 shares of common stock at 6,000 shares of common stock for each share. Of these, 540,588 shares (3,243,528,000 common shares) are locked up and 2,263 shares (13,578,000 common shares) are eligible for conversion. The lock-up is released when the Company has completed an uplisting to a senior national securities exchange and effected a reverse stock split such that its authorized common shares are sufficient to accommodate conversion of all outstanding convertible securities.

The eligible shares are included in the antidilutive securities table in Note 2. The locked-up shares are excluded from that table and from the authorized share sufficiency analysis while the lock-up remains in effect, and will be included when it expires.

Effective March 31, 2026, a material lender agreed to a contractual lock-up on the conversion of Loans #13, #14, #15, #39, #40 and #41 until sufficient authorized shares are made available to effect a related conversion. At June 30, 2026, the principal and accrued interest on these notes were convertible into 236,234,541 shares of common stock. These shares are excluded from the anti-dilutive securities table in Note 2 and from the authorized share sufficiency analysis while the lock-up remains in effect, and will be included when it expires.

NIGHTFOOD HOLDINGS, INC. AND SUBSIDIARIES

DBA TECHFORCE ROBOTICS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2026 AND 2025

Convertible Preferred Stock Classification and Authorized Share Sufficiency

Temporary Equity Classification at June 30, 2025

At June 30, 2025, the Company had 200,000,000 authorized shares of common stock, and the common shares issuable on conversion or exercise of its Series B, Series C and Series D Convertible Preferred Stock, warrants and convertible notes payable exceeded that amount.

Because share settlement was not within the Company’s control, the Series B, Series C and Series D Convertible Preferred Stock were classified as temporary equity at June 30, 2025 under ASC 480-10-S99-3A and ASC 815-40-25. The shares are not redeemable; the classification arose solely from the insufficiency of authorized shares.

Increase in Authorized Shares

On October 7, 2025, the Board of Directors and the majority voting stockholder approved an increase in authorized common stock from 200,000,000 to 900,000,000 shares. The amendment to the Articles of Incorporation became effective November 19, 2025, twenty (20) days after the definitive information statement on Schedule 14C was mailed to stockholders, and did not change the shares outstanding or the rights of existing stockholders.

Resolution of Authorized Share Insufficiency and Reclassification to Permanent Equity

On November 19, 2025, the Company’s authorized common stock increased to 900,000,000 shares. At that date, the common shares issuable on conversion or exercise of all outstanding convertible notes, warrants and Series C and D Convertible Preferred Stock, other than the 516,759 shares of Series C Convertible Preferred Stock (3,100,554,000 common shares) locked up as described above, were within the 900,000,000 authorized.

Effective November 19, 2025, the Company reclassified its Series C and Series D Convertible Preferred Stock, and the $11,925,000 contingent consideration payable in Series C Convertible Preferred Stock, from temporary equity to stockholders’ equity at their carrying values of $100,848,780 in total. No gain or loss was recognized. Series C Convertible Preferred Stock issued on resolution of the contingent consideration is subject to the same lock-up.

NIGHTFOOD HOLDINGS, INC. AND SUBSIDIARIES

DBA TECHFORCE ROBOTICS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2026 AND 2025

Contingent Consideration - Series C Convertible Preferred Stock

In connection with the Victorville and Rancho Mirage acquisitions, the Company agreed to issue up to 41,667 and 20,000 additional shares of Series C Convertible Preferred Stock, respectively, on achievement of post-acquisition milestones. At June 30, 2026, no milestone had been achieved and no shares had been issued. Any Series C Convertible Preferred Stock issued on achievement of a milestone is subject to the lock-up described above, which prohibits conversion until the Company has completed an uplisting to a senior national stock exchange and a reverse stock split that provides sufficient authorized common shares. Because the shares cannot be converted while the lock-up is in effect, they are excluded from the authorized share sufficiency analysis in the same manner as the locked-up Series C Convertible Preferred Stock already outstanding, and will be included when the lock-up expires.

The contingent consideration was measured at acquisition-date fair value under ASC 805 at $11,925,000 ($7,125,000 Victorville and $4,800,000 Rancho Mirage), classified as temporary equity for the reason described above and reclassified to stockholders’ equity effective November 19, 2025. It is not remeasured; adjustments are recognized on resolution of the contingency.

Ongoing Monitoring

The Company reassesses authorized share sufficiency, and the classification of its convertible preferred stock, on expiration of the Series C lock-up, resolution of the contingent consideration, issuance of additional convertible instruments and any change to warrant or conversion terms.

Preferred Stock Transactions for the Year Ended June 30, 2026

Shares Issued in Acquisitions

On August 27, 2025 and September 30, 2025, the Company completed the acquisitions of the Victorville (“VV”) and Rancho Mirage (“RM”) hotel properties, respectively. As part of the purchase consideration for these business combinations, the Company issued 216,667 shares and 176,167 shares of Series C Convertible Preferred Stock.

In accordance with ASC 805, Business Combinations, the Series C shares issued in connection with the VV and RM acquisitions were measured at their fair values of $39,000,060 (excluding contingent consideration of $7,125,000) and $42,280,080 (excluding contingent consideration of $4,800,000), respectively, as of the applicable acquisition dates.

See Note 9.

NIGHTFOOD HOLDINGS, INC. AND SUBSIDIARIES

DBA TECHFORCE ROBOTICS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2026 AND 2025

Stock Issued for Services

On October 22, 2025, the Company issued 589 shares of Series C Convertible Preferred Stock to a consultant for services rendered. The fair value of the Series C shares was based on the quoted closing trading price of $0.08/share. Applying the 6,000:1 conversion ratio, the grant equates to 3,534,000 common shares on an as-converted basis, resulting in a total fair value of $282,720.

Conversion of Series C, Convertible Preferred Stock

The Company converted 45,634 shares of Series C Preferred Stock into 273,804,000 shares of common stock.

As the Series C Preferred Stock was equity-classified, the conversion was accounted for as a reclassification within stockholders’ equity with no income statement impact.

Preferred Stock Transactions for the Year Ended June 30, 2025

Series C, Convertible Preferred Shares Issued for Services

On February 17, 2025, the Company issued 2,000 shares of Series C, convertible preferred stock to a consultant for services rendered. The fair value of the Series C shares was based on the quoted closing trading price of $0.0081/share. Applying the 6,000:1 conversion ratio, the grant equates to 12,000,000 common shares on an as-converted basis, resulting in a total fair value of $97,200.

On March 25, 2025, the Company granted 94,250 shares of Series C, convertible preferred stock to several service providers as compensation. The fair value of the Series C shares was based on the quoted closing trading price of $0.0068/share. Applying the 6,000:1 conversion ratio, the grant equates to 565,500,000 common shares on an as-converted basis, resulting in a total fair value of $3,845,400.

Pursuant to the applicable service agreements, vesting is contingent upon the achievement of the following milestones:

In the event that one or more of the remaining milestones are not achieved, the unvested portion of the award will vest ratably over a 20-month period (April 2025 - November 2026).

NIGHTFOOD HOLDINGS, INC. AND SUBSIDIARIES

DBA TECHFORCE ROBOTICS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2026 AND 2025

Unvested Series C, Convertible Preferred Stock - Compensation

 Schedule of Unvested Series C Convertible Preferred Stock

During the years ended June 30, 2026 and 2025, respectively, the Company recognized $2,003,110 and $1,521,840 of compensation expense related to vesting. During the year ended June 30, 2026, 49,096 shares of Series C Convertible Preferred Stock were issued upon vesting under these awards, having an aggregate grant date fair value of $2,003,110 ($40.80 per share of Series C Convertible Preferred Stock, being $0.0068 per common share on an as-converted basis).

Shares Issued in Acquisitions

On March 31, 2025, the Company completed the acquisitions of SWC and TechForce. In connection with these transactions, the Company issued 83,333 and 10,000 shares of Series C Convertible Preferred Stock, respectively, as part of the purchase consideration.

See Note 9 for additional information regarding these acquisitions.

NIGHTFOOD HOLDINGS, INC. AND SUBSIDIARIES

DBA TECHFORCE ROBOTICS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2026 AND 2025

Contingent Compensation Related to the Skytech Acquisition

In connection with the Skytech acquisition, certain additional equity awards may be issued to the sellers contingent upon achieving specified revenue and/or EBITDA milestones. These awards are structured as compensation for post-combination services and are not considered part of the purchase price under ASC 805, Business Combinations. Accordingly, any related expense will be recognized in the Company’s consolidated statement of operations in accordance with ASC 718, Compensation - Stock Compensation, based on the probability of achieving the specified performance conditions.

Each award is to be granted once upon achievement, is independent and cumulative, and is to be measured based on a 30-day volume-weighted average price of the Company’s common stock as of the applicable measurement date

Revenue-Based Equity Awards

The sellers are eligible to receive shares of Series C Convertible Preferred Stock with an aggregate maximum value of $35,000,000 based on the following Company revenue milestones:

 Schedule of Revenue Based Equity Awards

EBITDA-Based Equity Awards

The sellers are eligible to receive additional shares of Series C Convertible Preferred Stock with an aggregate maximum value of $18,110,000 based on the following Company EBITDA milestones:

 Schedule of EBITDA Based Equity Awards

Awards are allocated pro rata among eligible recipients and are subject to continued service through each measurement date. The Series C shares issued upon achievement of milestones are subject to the same lock-up restrictions described below. As of June 30, 2026, none of the revenue or EBITDA milestones have been achieved and no awards have been issued.

NIGHTFOOD HOLDINGS, INC. AND SUBSIDIARIES

DBA TECHFORCE ROBOTICS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2026 AND 2025

Lock-Up Restrictions

Pursuant to the TechForce acquisition agreement, each seller is subject to a lock-up period restricting the sale, transfer, pledge, or other disposition of any equity securities received in connection with the transaction for a period of six months (6) following the closing date. During this period, sellers are prohibited from transferring or encumbering such securities, except in limited circumstances where transferees agree to be bound by the same restrictions. The lock-up may be terminated earlier at the sole discretion of the Company.

Seniority of Series B Convertible Preferred Stock

Under the original Certificate of Designation, the Series C Convertible Preferred Stock ranked junior to the Company’s Series B Convertible Preferred Stock with respect to liquidation preference. On November 12, 2025, all outstanding shares of Series B Preferred Stock were converted into common stock (see Series B Convertible Preferred Stock above), and the subordination is no longer applicable.

Series D, Convertible Preferred Stock

NIGHTFOOD HOLDINGS, INC. AND SUBSIDIARIES

DBA TECHFORCE ROBOTICS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2026 AND 2025

Under the original Certificate of Designation, the Series D Convertible Preferred Stock ranked junior to the Company’s Series B Convertible Preferred Stock with respect to liquidation preference. On November 12, 2025, all outstanding shares of Series B Preferred Stock were converted into common stock (see Series B Convertible Preferred Stock above), and the subordination is no longer applicable.

Series D, Convertible Preferred Stock Transactions for the Year Ended June 30, 2026

In December 2025, the Company issued 9,000,000 shares of common stock upon the conversion of 1,500 shares of Series D Convertible Preferred Stock at the 6,000:1 conversion ratio. The transaction was accounted for as a reclassification within stockholders’ equity at the par value of the shares issued and received, with no impact to total stockholders’ equity.

Series D, Convertible Preferred Stock Transactions for the Year Ended June 30, 2025

On July 23, 2024, the Company issued an additional 1,667 shares of Series D, Convertible Preferred Stock in connection with the modification of an existing debt arrangement. In accordance with ASC 470-50, the transaction was evaluated to determine whether it represented a modification or an extinguishment of debt. Based on the terms and quantitative assessment, the transaction qualified as an extinguishment, and a loss was recognized accordingly.

The fair value of the equity issued was estimated to be $113,955, based on the as-converted value of the underlying common stock adjusted for a discount for lack of marketability.

See Note 5 for additional discussion regarding debt and related calculation of loss on debt extinguishment.

Common Stock

NIGHTFOOD HOLDINGS, INC. AND SUBSIDIARIES

DBA TECHFORCE ROBOTICS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2026 AND 2025

Equity Transactions for the Year Ended June 30, 2026

Stock Issued for Cash

The Company issued 25,257,086 shares of common stock for cash proceeds of $962,552 ($0.021/share to $0.04/share) in several private placements, including shares sold under its equity line of credit with a majority lender.

Stock Issued for Cash - Subscription Receivable

The Company issued 1,049,044 shares of common stock under its equity line of credit with a majority lender for $24,700 ($0.026/share to $0.0281/share), recorded as a subscription receivable. The cash was received subsequent to June 30, 2026.

Cash Paid as Direct Offering Costs

The Company paid $9,571 in direct offering costs in connection with sales of common stock under its equity line of credit, which were charged against the proceeds.

Common Stock Issued upon Conversion of Convertible Notes Payable and Related Accrued Interest Payable

The Company issued 36,366,895 shares of common stock to holders of convertible notes upon conversion of $1,200,107 of outstanding principal and accrued interest, of which 29,766,895 shares settled principal and 6,600,000 shares settled accrued interest. The shares were valued at $0.033/share in accordance with the conversion terms of the underlying notes. See Note 5.

Stock Issued for Services

The Company issued 2,000,000 shares of common stock to consultants for services rendered, having a fair value of $84,000 ($0.042/share), based upon the quoted closing trading price. See Note 15.

Acquisition of BIM-E Intellectual Property and Technology Assets

The Company issued 7,000,000 shares of common stock to an individual seller as consideration for the acquisition of the BIM-E intellectual property and technology assets, having a fair value of $253,400 ($0.0362/share), based upon the quoted closing trading price. The aggregate consideration was expensed as in-process research and development within general and administrative expenses in accordance with ASC 730-10-25-2(c). See Note 2.

NIGHTFOOD HOLDINGS, INC. AND SUBSIDIARIES

DBA TECHFORCE ROBOTICS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2026 AND 2025

Equity Transactions for the Year Ended June 30, 2025

Stock Issued for Services

The Company issued 50,000 shares of common stock to consultants for services rendered, having a fair value of $995 ($0.0199/share), based upon the quoted closing trading price.

Common Stock Issued in connection with Conversion of Convertible Notes Payable and Related Accrued Interest Payable

The Company issued an aggregate of 8,003,614 shares of common stock to certain convertible debt holders upon conversion of their outstanding notes and related accrued interest payable. The shares had a total fair value of $264,120 (approximately $0.033 per share), determined in accordance with the conversion terms set forth in the underlying note agreement. See Note 5 for additional information.

Warrants

Warrant activity for the years ended June 30, 2026 and 2025 are summarized as follows:

 Schedule of Stock Warrant Activity

Common Stock Issued Upon Cashless Exercise of Warrants

During the year ended June 30, 2026, holders exercised 3,844,697 warrants on a cashless basis, resulting in the issuance of 2,465,698 shares of common stock. The transaction was accounted for as a reclassification within stockholders’ equity at par value, with no impact to total stockholders’ equity.

Warrants Issued as Commitment Fee

On October 8, 2025, the Company entered into an Equity Purchase Agreement with a material lender under which the Company may sell up to $25,000,000 of common stock at its discretion over a twenty-four (24) month period. In connection with the agreement, the Company issued a warrant to purchase 6,000,000 shares of common stock at an exercise price of $0.10/share, immediately exercisable and expiring five (5) years from issuance. The exercise price resets to the lowest price at which the Company sells common stock under the agreement, and the number of shares issuable increases so that the aggregate exercise price of $600,000 is unchanged. At June 30, 2026, the exercise price was $0.02/share and 30,000,000 shares were issuable.

NIGHTFOOD HOLDINGS, INC. AND SUBSIDIARIES

DBA TECHFORCE ROBOTICS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2026 AND 2025

The fair value of the warrant, $258,723 at issuance and $977,270 at June 30, 2026, was estimated using the Black-Scholes option pricing model with the following assumptions:

 Schedule of Fair Value of Warrant

The fair value of the warrant at issuance was recognized as commitment fee expense and is included in other expense in the consolidated statements of operations for the year ended June 30, 2026. The warrant permits the holder to elect cash settlement upon a change of control. Because net cash settlement could be required in circumstances outside the Company’s control, the warrant does not qualify for equity classification under ASC 815-40 and is accounted for as a derivative liability, recorded at its fair value of $258,723 at issuance and remeasured at each reporting date with changes in fair value recognized in other income (expense). At June 30, 2026, the fair value of the warrant was $977,270, and the increase of $718,547 was recognized in change in fair value of derivative liabilities. See Note 11.

Stock Options

Stock option transactions for the year ended June 30, 2026 are summarized as follows:

 Schedule of Stock Option Transactions

No stock options were outstanding at June 30, 2025, and the Company recognized no stock option expense during the year ended June 30, 2025.

During the year ended June 30, 2026, the Company granted nonstatutory stock options to purchase 34,630,305 shares of common stock to employees, consultants and members of its advisory board. The options were granted as standalone awards under individual option agreements approved by the board of directors and not under an equity incentive plan. Each option has an exercise price of $0.033/share.

NIGHTFOOD HOLDINGS, INC. AND SUBSIDIARIES

DBA TECHFORCE ROBOTICS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2026 AND 2025

The aggregate grant date fair value of the options was $937,986, or a weighted average of $0.0271/option, determined using a Black-Scholes option pricing model with the following inputs:

 Schedule of Black-Scholes Option Pricing Model

The following is a summary of the Company’s unvested stock option activity for the year ended June 30, 2026:

 Schedule of Unvested Stock Option Activity

The unvested stock options are scheduled to vest as follows:

 Schedule of Unvested Stock Option

NIGHTFOOD HOLDINGS, INC. AND SUBSIDIARIES

DBA TECHFORCE ROBOTICS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2026 AND 2025

The options vest as follows, subject to the grantee’s continued service through each vesting date. Unvested options are forfeited upon termination of service.

The following is a detail of the stock options granted during the year ended June 30, 2026:

 Schedule of Stock Options Granted

The Company recognized stock-based compensation expense of $439,608 for the year ended June 30, 2026, which is included in general and administrative expenses in the consolidated statements of operations. No income tax benefit was recognized and no compensation cost was capitalized.

Options to purchase 6,060,606 shares of common stock included in the tables above were granted to two (2) consultants who are immediate family members of an officer and director of the Company and are therefore related parties.

The advisory board agreements also provide for options to purchase up to 1,200,000 additional shares of common stock in the aggregate that are granted only upon the board of directors determining that specified advisor-sourced robot deployment milestones have been achieved. As of June 30, 2026, the board of directors had not determined that either milestone had been achieved. Accordingly, no grant date has been established, no compensation cost has been recognized and these options are excluded from the tables in this note.

NIGHTFOOD HOLDINGS, INC. AND SUBSIDIARIES

DBA TECHFORCE ROBOTICS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2026 AND 2025