OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________ to __________
Commission File Number 333-193347
NIGHTFOOD HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
212-828-8275
(Registrant's telephone number, including area code)
85 Parkview Road, Elmsford, NY 10523
(Former name, former address and former fiscal year, if changed since last report)
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes [ ] No [X]
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes [ ] No [X]
Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X]
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]
State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of June 30, 2014: NA.
As of June 30, 2014, the issuer had 25,130,560 shares of its common stock issued and outstanding, par value $0.001 per share.
Forward-Looking Information
Certain statements made in this Annual Report involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. The forward-looking statements included herein are based on current expectations that involve numerous risks and uncertainties. Our plans and objectives are based, in part, on assumptions involving judgments with respect to, among other things, future economic, competitive and market conditions, technological developments related to business support services and outsourced business processes, and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond our control.
Although we believe that our assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove inaccurate and, therefore, there can be no assurance that the forward-looking statements included in this prospectus will prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements included herein particularly in view of the current state of our operations, the inclusion of such information should not be regarded as a statement by us or any other person that our objectives and plans will be achieved. Factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements include, but are not limited to, the factors set forth herein under the headings “Business,” “Risk Factors” and “Plan of Operations.”
ITEM 1. B
NightFood Holdings, Inc. (“we”, “us” “the Company” or “NightFood”) is a Nevada corporation organized on October 16, 2013 to acquire all of the issued and outstanding shares of NightFood, Inc., a New York corporation (the “Subsidiary”) from its sole shareholder, Sean Folkson. All of our operations are conducted by the subsidiary. We are in the business of manufacturing, marketing and distributing a functional food line of snacks that are suitable for evening consumption and which may provide the nutritional foundation for better sleep. A large number of Americans consume nighttime snacks that are high in sugar, fat, and calories; such snacks can impair sleep and also impair health in general. Management believes that our products are unique in the functional food industry and that there is a substantial market for our products. We are in the process of establishing distribution channels for these products. Our offices are located at 520 White Plains Road – Suite 500, Tarrytown, New York 10591 and our telephone number is (212) 828-8275. We maintain a web site at www.nightfood.com. Any information that may appear on our web site should not be deemed to be a part of this report.
Industry Overview
We are an early-stage company that is seeking to establish a market within the functional food industry by offering a line of snack foods that are appropriate for evening consumption. Based on available figures for 2013 published by SymphonyIRI Group, American consumers spend over $50 Billion annually on snacks consumed at night, and this figure continues to grow. A majority of adults are trying to eat foods and snacks that they understand will prevent or manage health problems and 37% of consumers are willing to pay more for foods with perceived health benefits. Moreover, industry data indicates that the most popular nighttime snack choices include products and categories that are traditionally considered high in calories, and “unhealthy” options, such as cookies, salty snacks (chips & popcorn), ice cream, and candy.
Our Products, Present and Proposed
NightFood nutrition bars are made from commercially available ingredients and a proprietary combination of other components in a proprietary process. NightFood bars will be merchandised in a 6-pack. At retail, they will typically be merchandised open, so the consumer can purchase an individual bar, or an entire box of 6. The SRP on an individual bar is $2.49. NightFood® is the first product positioned as a healthier & better alternative to other convenient nighttime snack options. Compared to the existing popular options, each 140 calorie NightFood® bar is specially formulated to satisfy late-night cravings, tackle nighttime hunger, and support better quality sleep on fewer calories, and with a healthier, more sleep-friendly nutritional profile. We believe that NightFood® bars are an optimal after-dinner snack in terms of composition and calories. In addition , the bars contain a clinically proven bioactive ingredient called Chocamine® (a patented natural cocoa extract that promotes satiety and craving
satisfaction, while also providing the health and relaxation benefits of chocolate without the caffeine, fat, calories, and sugars).
Depending upon the success of the NightFood® bar and our available resources, we intend to expand our product line to include formulations with and without sleep aiding bioactive ingredients, and a healthy nighttime snack product specifically for children, and perhaps into different food formats.
Production
We have utilized contract manufacturers for producing our products. These include Noble Foods for product manufacture, Empress Label and Stuart Packaging for our packaging, and ShipRight Solutions for our warehousing and fulfillment. We consider our relations with each of these suppliers to be good. We also believe that the nature of the market for these services ensures that if we were required to find an alternate supplier for any of these services, we could do so on similar terms.
Marketing & Distribution
In August, 2014, The Company secured an initial purchase order from a major national specialty retail chain, focusing on nutritional products and supplements. Under this agreement, this major retail chain will launch NightFood bars into approximately 900 of their US locations during the month of September, 2014. The Company is also involved in discussions for product distribution with other major retail chains in the specialty nutrition space, as well as mass drug.
Competition
The nutritional/snack food business is highly competitive and includes such participants as large companies like Nabisco, Keebler, Kellogg’s and Quaker Oats and more specialized companies such as Cliff Bar and many smaller companies. Many of these competitors have well established names and products. While there are companies currently marketing traditional-type snacks laced with sleep aids such as melatonin, management is not aware of any competitor offering snacks optimized for healthier or better nighttime nutrition and sleep support. We will initially compete based upon the unique nature of our product. However, other companies, including those with greater name recognition than us and greater resources may seek to introduce products that directly compete with our products. Management believes that if a competitor sought to develop a competing product, it could do so and begin to establish retail distribution in 12-24 months.
Inventory
We started fiscal 2014 with limited inventory. A minimum run of NightFood bars costs approximately $50,000 to begin the inventory cycle. As cash became available for inventory procurement, we were able to do a full production run of our Cookies n’ Dreams flavor bars. The finished bars became available for distribution during the first week of June, 2014. This initial production run provided product in hand to enhance our sales efforts with our targeted retailers to secure purchase orders. As we began consummating these purchase orders, we proceeded to initiate a full production run of our second flavor (Midnight Chocolate Crunch). This was obligatory as the retailer wanted a minimum of two flavors to place on their shelves, as is common in the industry. Our balance sheet as of June 30th shows approximately $73,000 of inventory assets. $50,000 of this was finished product in inventory, and another $23,000 represents deposits we had placed with our manufacturing partners towards finished product. Subsequent to the June 30th balance sheet, a 2nd production run has been completed and is now in our warehouse, and the $23,000 of inventory deposits have been converted to finished inventory. Future production runs of product will require no deposit with the bar manufacturer as we’ve secured preferred terms starting with our next production run, allowing us to pay for product 30 days after it lands at our warehouse. The previous arrangement had us depositing 50% approximately 6-8 weeks prior to production, and paying the balance prior to receipt of product in our warehouse. These terms make it easier for us to scale in a less cash-intensive fashion as we land new accounts and broaden distribution.
Intellectual Property Rights
We own the registered trademark “NightFood®” and believe that it will prove important to our business. We also rely on proprietary information as to our formulas and have non-disclosure agreements with our suppliers.
Personnel
We currently have no employees except Sean Folkson, our President and CEO. Should we be successful in executing our business plan, we anticipate hiring additional employees in the future to assist with marketing, sales and clerical positions.
Customers
No customer represented more than ten (10%) of our revenue during the last two fiscal years. Should the arrangement with our initial retail chain be successful, AND should the company be unable to secure distribution relationships with other major retailers, it is likely that more than 10% of our revenues would eventually be coming through our relationship with said retail chain.
ITEM 1A. RI
You should carefully consider the following factors in evaluating our business, operations and financial condition. The occurrence of any the following risks could have a material adverse affect on our business, financial condition and results of operations.
Risks Related to Our Business
We have had limited operations and require substantial additional funds to execute our business plan. We have had limited operations and the bulk of our sales have resulted from our website. We generated revenue of $2,575 in the year ended June 30, 2014 and $5,817 in the year ended June 30, 2013. Because our capital resources had been extremely limited we were unable to fund continual production of our product through contract manufacturers which resulted in limited revenues. Unless we are able to leverage our status as a public company into effective fundraising to fund our capital requirements, we will not be able to execute on our business plan and purchasers of our stock will be likely to lose their investment.
Our independent auditors have expressed doubt about our ability to continue as a going concern. We received a report on our financial statements for the years ended June 30, 2014 and June 30, 2013 from our independent registered public accounting firm that includes an explanatory paragraph and a footnote stating that there is substantial doubt about our ability to continue as a going concern due to its losses and negative net worth. Inclusion of a “going concern qualification” in the report of our independent accountants may have a negative impact on our ability to obtain financing and may adversely impact our stock price in any market that may develop.