# EDGAR Filing Document

**Accession Number:** 0001593001
**File Stem:** 0001493152-25-016841
**Filing Date:** 2025-10
**Character Count:** 169300
**Document Hash:** e0d9f1bf7c976486d7a2ec3d65219766
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001493152-25-016841.hdr.sgml**: 20251003

**ACCESSION NUMBER**: 0001493152-25-016841

**CONFORMED SUBMISSION TYPE**: 8-K/A

**PUBLIC DOCUMENT COUNT**: 16

**CONFORMED PERIOD OF REPORT**: 20250331

**ITEM INFORMATION**: Financial Statements and Exhibits

**FILED AS OF DATE**: 20251003

**DATE AS OF CHANGE**: 20251003

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** NightFood Holdings, Inc.
- **CENTRAL INDEX KEY:** 0001593001
- **STANDARD INDUSTRIAL CLASSIFICATION:** MISC INDUSTRIAL & COMMERCIAL MACHINERY & EQUIPMENT [3590]
- **ORGANIZATION NAME:** 06 Technology
- **EIN:** 463885019
- **STATE OF INCORPORATION:** NV
- **FISCAL YEAR END:** 0630

**FILING VALUES:**
- **FORM TYPE:** 8-K/A
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 000-55406
- **FILM NUMBER:** 251373620

**BUSINESS ADDRESS:**
- **STREET 1:** 500 WHITE PLAINS ROAD
- **STREET 2:** SUITE 520
- **CITY:** TARRYTOWN
- **STATE:** NY
- **ZIP:** 10591
- **BUSINESS PHONE:** 866-291-7778

**MAIL ADDRESS:**
- **STREET 1:** 500 WHITE PLAINS ROAD
- **STREET 2:** SUITE 520
- **CITY:** TARRYTOWN
- **STATE:** NY
- **ZIP:** 10591

?xml version='1.0' encoding='ASCII'?

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

**FORM 8-K/A**

**(Amendment No. 3)**

**CURRENT REPORT**

**PURSUANT TO SECTION 13 OR 15(d) OF THE**

**SECURITIES EXCHANGE ACT OF 1934**

**Date of report (Date of earliest event reported): March 31, 2025**

**<u>NIGHTFOOD HOLDINGS, INC.</u>**

**(Exact Name of Registrant as Specified in Charter)**

---

| | | |
|:---|:---|:---|
| **Nevada** | **000-55406** | **46-3885019** |
| (State or Other Jurisdiction<br> of Incorporation) | (Commission<br> File Number) | (I.R.S. Employer<br> Identification No.) |

---

**13501 South Main Street**

**<u>Los Angeles, CA 90016</u>**

(Address of Principal Executive Offices) (Zip Code)

**Registrant's telephone number, including area code: <u>(866) 291-7778</u>**

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (*see* General Instruction A.2. below):

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).

Emerging Growth Company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Securities registered pursuant to Section 12(b) of the Act:

---

| | | |
|:---|:---|:---|
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
| Not applicable | Not applicable | Not applicable |

---

**EXPLANATORY NOTE**

This Amendment No.3 to the Current Report on Form 8-K filed by NightFood Holdings, Inc. (the "**Company**") on September 10, 2024 (the "**Original Form 8-K**") as amended on December 19, 2024 and April 2, 2025, is being filed solely to include the financial information described in Item 9.01 below that was previously omitted in accordance with Item 9.01(a) and Item 9.01(b) of the Original Form 8-K.

**Item 9.01. Financial Statements and Exhibits**

(d) Exhibits.

---

| | |
|:---|:---|
| Exhibit No | Description |
| 23.1 | [Consent Fruci & Associates II, PLLC](ex23-1.htm) |
| 99.1 | [Audited financial statements of SWC Group, Inc. d/b/a CarryOutSupplies.com as of and for the years ended June 30, 2024 and 2023.](ex99-1.htm) |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). |

---

**SIGNATURES**

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

---

| | |
|:---|:---|
| Nightfood Holdings Inc. | Nightfood Holdings Inc. |
| By: | */s/ Jimmy Chan* |
| Name: | Jimmy Chan |
| Title: | Chief Executive Officer |

---

Date: October 3, 2025

## Exhibit 23.1

**Exhibit 23.1**

CONSENT OF INDEPENDENT AUDITOR

We consent to the inclusion in this Form 8-K/A of our audit report dated October 1, 2025, with respect to the balance sheets of SWC Group, Inc. d/b/a CarryOutSupplies.com ("the Company") as of June 30, 2024 and 2023, and the related statements of operations, changes in stockholders' deficit, and cash flows for the years ended June 30, 2024 and 2023, and the related notes to the financial statements.

Our report relating to those financial statements includes an emphasis of matter paragraph regarding substantial doubt as to the Company's ability to continue as a going concern.

/s/ Fruci & Associates II, PLLC

Fruci & Associates II, PLLC – PCAOB ID #05525

We have served as the Company's auditor since 2025.

Spokane, Washington

October 2, 2025

## Exhibit 99.1

**Exhibit 99.1**

**SWC Group, Inc.**

**DBA Carryout Supplies**

---

| | |
|:---|:---|
|  | Page(s) |
| [Report of Independent Registered Public Accounting Firm](#aj_001) | 2 |
| [Balance Sheets](#RMa_002) | 3 |
| [Statements of Operations](#RMa_003) | 4 |
| [Statements of Changes in Stockholders' Deficit](#RMa_004) | 5 |
| [Statements of Cash Flows](#RMa_005) | 6 |
| [Notes to Financial Statements](#RMa_001) | 7 - 37 |

---

![](audit_002.jpg)

**REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

To the Board of Directors and Shareholders of SWC Group, Inc.

**Opinion on the Financial Statements**

We have audited the accompanying balance sheets of SWC Group, Inc. d/b/a CarryOutSupplies.com ("the Company") as of June 30, 2024 and 2023, and the related statements of operations, changes in stockholders' deficit, and cash flows for each of the years in the two-year period ended June 30, 2024, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of June 30, 2024 and 2023, and the results of its operations and its cash flows for each of the years in the two-year period ended June 30, 2024, in conformity with accounting principles generally accepted in the United States of America.

**Going Concern**

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has not generated sufficient revenues to fund ongoing operations and has historically relied on third-party and related-party financing. These factors, among others, raise substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

**Basis for Opinion**

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

**Critical Audit Matters**

Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that there were no critical audit matters.

![](audit_001.jpg)

Fruci & Associates II, PLLC – PCAOB ID #05525

We have served as the Company's auditor since 2025.

Spokane, Washington

October 1, 2025

**SWC Group, Inc.**

**D/B/A CarryOutSupplies.com**

**Balance Sheets**

---

| | | |
|:---|:---|:---|
|  | **June 30, 2024** | **June 30, 2023** |
| **<u>Assets</u>** |  |  |
| **Current Assets** |  |  |
| Cash | $19439 | $34327 |
| Accounts receivable - net | 4432 | 30099 |
| Inventory | 356399 | 354777 |
| Prepaids and other | 14180 | 60352 |
| **Total Current Assets** | 394450 | 479555 |
| **Right-of-use asset - operating lease** | 129853 | 268760 |
| **Property and equipment - net** | 874814 | 916613 |
| **Deposits** | 31931 | 31931 |
| **Total Assets** | $1431048 | $1696859 |
| **<u>Liabilities and Stockholders' Deficit</u>** |  |  |
| **Current Liabilities** |  |  |
| Accounts payable and accrued expenses | $932685 | $959628 |
| Accounts payable and accrued expenses - related party | 211801 | 7552525 |
| Deferred revenue | 512695 | 905598 |
| Notes payable - net | 1379714 | 379466 |
| Notes payable - related party | 188218 | 53530 |
| Operating lease liability | 142880 | 150068 |
| **Total Current Liabilities** | 3367993 | 10000815 |
| **Long Term Liabilities** |  |  |
| Notes payable - net | 61653 | 756232 |
| Operating lease liability | - | 142880 |
| **Total Long Term Liabilities** | 61653 | 899112 |
| **Total Liabilities** | 3429646 | 10899927 |
| **Commitments and Contingencies** |  |  |
| **Stockholders' Deficit** |  |  |
| Common stock - $0.001 par value, 10,000 shares authorized 10,000 and 10,000 shares outstanding, respectively |  |  |
| Additional paid-in capital | 7761200 |  |
| Accumulated deficit | (9759798) | (9203068) |
| **Total Stockholders' Deficit** | (1998598) | (9203068) |
| **Total Liabilities and Stockholders' Deficit** | $1431048 | $1696859 |

---

The accompanying notes are an integral part of these financial statements

**SWC Group, Inc.**

**D/B/A CarryOutSupplies.com**

**Statements of Operations**

---

| | | |
|:---|:---|:---|
|  | **For the Year Ended June 30,** | **For the Year Ended June 30,** |
|  | **2024** | **2023** |
| **Revenues** | $1780688 | $2388383 |
| **Costs and expenses** |  |  |
| Cost of goods sold | 1017289 | 1435900 |
| General and administrative expenses | 1109991 | 1171844 |
| **Total costs and expenses** | 2127280 | 2607744 |
| **Loss from operations** | (346592) | (219361) |
| **Other income (expense)** |  |  |
| Interest expense (including amortization of debt discount) | (220286) | (145654) |
| Loss on disposal of equipment |  | (173634) |
| Loss on settlement | (110516) |  |
| Other income | 120664 | 150568 |
| **Total other income (expense) - net** | (210138) | (168720) |
| **Net loss before provision for income taxes** | (556730) | (388031) |
| **Provision for income taxes** |  |  |
| **Net loss** | $(556730) | $(388081) |
| **Loss per share - basic and diluted** | $(55.67) | $(38.81) |
| **Weighted average number of shares - basic and diluted** | 10000 | 10000 |

---

The accompanying notes are an integral part of these financial statements

**SWC Group, Inc.**

**D/B/A CarryOutSupplies.com**

**Statement of Changes in Stockholders' Deficit**

**For the Years Ended June 30, 2024 and 2023** 

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Common Stock** | **Common Stock** | | | |
|  | **Shares** | **Amount** | **Additional**<br>**Paid-in**<br>**Capital** |<br>**Accumulated**<br>**Deficit** | **Total**<br>**Stockholders'**<br>**Deficit** |
| **June 30, 2022** | **10000** | $**-** | $**-** | $**(8814987)** | $**(8814987)** |
| Net loss | - | - | - | (388081) | (388081) |
| **June 30, 2023** | 10000 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;- |  | (9203068) | (9203068) |
| Forgiveness of debt - related party |  |  | 7761200 |  | 7761200 |
| Net loss | - | - | - | (556730) | (556730) |
| **June 30, 2024** | **10000** | $**-** | $**7761200** | $**(9759798)** | $**(1998598)** |

---

The accompanying notes are an integral part of these financial statements

**SWC Group, Inc.**

**D/B/A CarryOutSupplies.com**

**Statements of Cash Flows**

---

| | | |
|:---|:---|:---|
|  | **For the Year Ended June 30,** | **For the Year Ended June 30,** |
|  | **2024** | **2023** |
| **Operating activities** |  |  |
| Net loss | $(556730) | $(388081) |
| Adjustments to reconcile net loss to net cash used in operations |  |  |
| &nbsp;&nbsp;&nbsp;Depreciation and amortization | 41799 | 82005 |
| &nbsp;&nbsp;&nbsp;Amortization of operating lease - right-of-use asset | 138907 | 180963 |
| &nbsp;&nbsp;&nbsp;Amortization of debt discount | 38850 | 28575 |
| &nbsp;&nbsp;&nbsp;Bad debt expense | 13239 | 87707 |
| &nbsp;&nbsp;&nbsp;Loss on disposal of property and equipment |  | 173634 |
| &nbsp;&nbsp;&nbsp;Operating lease liability | (150068) | (175124) |
| Changes in operating assets and liabilities |  |  |
| &nbsp;&nbsp;&nbsp;(Increase) decrease in |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts receivable | 12428 | (87984) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Inventory | (1622) | 61866 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Deposits |  | (31931) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prepaids and other | 46172 | 55163 |
| &nbsp;&nbsp;&nbsp;Increase (decrease) in |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts payable and accrued expenses | (26943) | (934228) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts payable and accrued expenses - related party | 420476 | 66847 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Deferred revenue | (392903) | 837692 |
| **Net cash used in operating activities** | (416395) | (42896) |
| **Investing activities** |  |  |
| Proceeds from sale of property and equipment | - | 96065 |
| **Net cash provided by investing activities** | - | 96065 |
| **Financing activities** |  |  |
| Proceeds from notes payable | 525292 | 502637 |
| Repayments on notes payable | (258473) | (575256) |
| Proceeds from notes payable - related party | 167918 | 132818 |
| Repayments on notes payable - related party | (33230) | (129800) |
| **Net cash provided by (used in) financing activities** | 401507 | (69601) |
| **Net decrease in cash** | (14888) | (16432) |
| **Cash - beginning of year** | 34327 | 50759 |
| **Cash - end of year** | $19439 | $34327 |
| **Supplemental disclosure of cash flow information** |  |  |
| Cash paid for interest | $173315 | $127071 |
| Cash paid for income tax | $- | $- |
| **Supplemental disclosure of non-cash investing and financing activities** |  |  |
| Forgiveness of debt - related party | $7761200 | $- |
| Debt exchanged between third party and related party | $- | $92577 |
| Debt discount - notes payable | $- | $67425 |

---

The accompanying notes are an integral part of these financial statements

**SWC GROUP, INC.**

**NOTES TO FINANCIAL STATEMENTS**

**JUNE 30, 2024 AND 2023**

**<u>Note 1 - Organization and Nature of Operations</u>**

**Organization and Nature of Operations**

SWC Group, Inc. ("SWC", "we," "our," or the "Company") operates as a food service packaging company. The Company was incorporated on July 19, 2004 in California.

The Company's operations are organized as follows:

Foodservice Packaging:

The Company operates as a business-to-business ("B2B") enterprise focused on the wholesale distribution of disposable foodservice packaging products.

Product offerings include printed paper cups, plastic cups, food containers, bags, and related consumables for restaurants, cafés, and other foodservice establishments. Operations are conducted primarily through the Company's e-commerce platform, www.carryoutsupplies.com, which serves customers across the United States.

Activities include product design, sourcing from domestic and international manufacturers, quality control, warehousing, and fulfillment. Customers are primarily small to mid-sized businesses in the hospitality and food service industries, with no material dependence on any single customer or supplier.

**Fiscal Year**

The Company's fiscal year end is June 30.

**Basis of Presentation**

The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial statements ("U.S. GAAP").

**SWC GROUP, INC.**

**NOTES TO FINANCIAL STATEMENTS**

**JUNE 30, 2024 AND 2023**

**Segment Information**

The Company operates as a single operating and reportable segment, which consists of the distribution of carryout supplies and related packaging products. The Company's Chief Executive Officer, who serves as the Chief Operating Decision Maker ("CODM"), reviews financial information on an overall company basis when making operating decisions and assessing performance. As the Company has only one operating and reportable segment, no additional segment disclosures are presented.

**Liquidity and Going Concern**

As reflected in the accompanying financial statements, for the year ended June 30, 2024, the Company had:

● Net
 loss of $556,730; and

● Net
 cash used in operations was $416,395

Additionally, at June 30, 2024, the Company had:

● Accumulated
 deficit of $9,759,798

● Stockholders'
 deficit of $1,998,598,

● Working
 capital deficit of $2,973,543; and

● Cash
 on hand of $19,439

While SWC has initiated revenue-generating activities through the distribution of carryout supplies and related packaging products, revenues to date have not been sufficient to fund ongoing operations. Based on current operating levels and cash usage forecasts, existing cash resources are not expected to be sufficient to fund operations for the twelve months following issuance of these financial statements without additional financing.

Historically, the Company has relied on third-party and related-party debt financing to support operations. There can be no assurance that additional financing will be available on commercially acceptable terms, or at all.

These factors raise substantial doubt about the Company's ability to continue as a going concern within one year after the date these financial statements are issued. The financial statements do not include any adjustments that might result if the Company is unable to continue as a going concern and have been prepared on a basis that assumes the Company will continue as a going concern and realize assets and satisfy liabilities in the ordinary course of business.

**SWC GROUP, INC.**

**NOTES TO FINANCIAL STATEMENTS**

**JUNE 30, 2024 AND 2023**

Management's plans to address these matters as they relate to SWC include:

● Pursuing additional debt and/or equity financing to support working capital needs;

● Expanding sales within existing customer channels and into new geographic markets;

● Continuing cost-control measures to better align expenses with expected revenue; and

● Exploring potential collaborations or strategic opportunities to strengthen the carryout supplies business.

**<u>Note 2 - Summary of Significant Accounting Policies</u>**

**Use of Estimates and Assumptions**

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

Changes in estimates are recorded in the period in which they become known and are accounted for prospectively.

The Company bases its estimates on historical experience, industry trends, and other relevant factors, incorporating both quantitative and qualitative assessments that it believes are reasonable under the circumstances.

Significant estimates for the years ended June 30, 2024 and 2023, respectively, include:

● Allowance for doubtful accounts and other receivables

● Inventory reserves and classifications

● Valuation of loss contingencies

● Estimated useful lives of property and equipment

● Uncertain tax positions

● Valuation allowance on deferred tax assets

**SWC GROUP, INC.**

**NOTES TO FINANCIAL STATEMENTS**

**JUNE 30, 2024 AND 2023**

**Risks and Uncertainties**

The Company operates in a highly competitive industry that is subject to intense market dynamics, shifting consumer demand, and economic fluctuations. The Company's operations are exposed to significant financial, operational, and strategic risks, including potential business disruptions, supply chain constraints, and liquidity challenges.

In accordance with ASC 275, "Risks and Uncertainties," the Company evaluates and discloses risks that could materially affect its financial condition, results of operations, and business outlook. Key factors contributing to variability in sales and earnings include:

&nbsp;&nbsp;&nbsp;&nbsp;1. Industry
 Cyclicality – The Company's financial performance is affected by industry trends, seasonality, and shifts in market demand.

2. Macroeconomic
 Conditions – Economic downturns, inflationary pressures, interest rate changes, and geopolitical risks may impact consumer
 purchasing behavior and the Company's revenue streams.

3. Pricing
 Volatility – The cost and availability of raw materials, supply chain disruptions, and competitive pricing pressures can lead
 to fluctuations in gross margins and profitability.

Given these uncertainties, the Company faces challenges in accurately forecasting financial performance and may experience material risks affecting liquidity, business continuity, and long-term strategic growth. The Company continuously assesses these risks and implements measures to mitigate their potential impact.

**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.

**SWC GROUP, INC.**

**NOTES TO FINANCIAL STATEMENTS**

**JUNE 30, 2024 AND 2023**

<u>Fair Value Hierarchy</u>

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.

<u>Fair Value Determination and Use of External Advisors</u>

The Company assesses the fair value of its financial instruments and, where appropriate, may engage external valuation specialists to assist in determining fair value. While management believes that recorded fair values are reasonable, they may not necessarily reflect net realizable values or future fair values.

<u>Financial Instruments Carried at Historical Cost</u>

The Company's financial instruments—including cash, accounts receivable, accounts payable and accrued expenses (including related party balances), and certain debt instruments—are recorded at historical cost. As of June 30, 2024 and 2023, respectively, 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 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, 2024 and 2023, respectively, 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.

At June 30, 2024 and 2023, respectively, the Company did not experience any losses on cash balances in excess of FDIC insured limits.

**SWC GROUP, INC.**

**NOTES TO FINANCIAL STATEMENTS**

**JUNE 30, 2024 AND 2023**

**Accounts Receivable** 

The Company accounts for accounts receivable in accordance with ASC 310, Receivables. Receivables are recorded at their net realizable value, which represents the amount management expects to collect from outstanding customer balances.

The Company extends credit to customers based on an evaluation of their financial condition and other factors. The Company does not require collateral, and interest is not accrued on overdue accounts receivable.

<u>Allowance for Credit Losses</u>

Management periodically assesses the collectability of accounts receivable and establishes an allowance for doubtful accounts as needed. The allowance is determined based on:

● A review of outstanding accounts,

● Historical collection experience, and

● Current economic conditions

Accounts deemed uncollectible are written off against the allowance when determined to be uncollectible.

<u>Applicability of ASC 326 ("CECL") to Accounts Receivable</u>

Accounts receivable consist primarily of short-term trade receivables arising from the sale of goods and services. These receivables are carried at amortized cost and are subject to the expected credit loss model under ASC 326, Financial Instruments—Credit Losses.

The Company estimates expected credit losses using a provision matrix based on historical loss experience, adjusted for current economic conditions and reasonable and supportable forecasts. Receivables with similar risk characteristics are evaluated collectively.

The allowance for credit losses is presented as a contra-asset to accounts receivable on the balance sheet, and changes in the allowance are recognized in selling, general, and administrative expenses. Accounts are written off when collection efforts are exhausted and the receivable is deemed uncollectible.

**SWC GROUP, INC.**

**NOTES TO FINANCIAL STATEMENTS**

**JUNE 30, 2024 AND 2023**

The following is a summary of the Company's accounts receivable at June 30, 2024 and 2023:

---

| | | |
|:---|:---|:---|
|  | **June 30, 2024** | **June 30, 2023** |
| Accounts receivable | $56570 | $70903 |
| Less: allowance for credit losses | 52138 | 40804 |
| Accounts receivable - net | $4432 | $30099 |

---

<u>Bad Debt Expense</u>

For the years ended June 30, 2024 and 2023, bad debt was as follows:

---

| | |
|:---|:---|
| **Year Ended June 30,** | **Year Ended June 30,** |
| **2024** | **2023** |
| $13239 | $87707 |

---

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

**Inventory**

The Company accounts for inventory in accordance with ASC 330, Inventory. Inventory consists solely of snacks and related ingredients and packaging, and is stated at the lower of cost or net realizable value ("LCNRV") using the first-in, first-out (FIFO) method.

From time to time, inventory may include goods in transit once title and risk of loss have transferred to the Company in accordance with the terms of purchase. Inbound freight, handling, customs, insurance, and other costs directly attributable to bringing inventory to its current location and condition are capitalized as part of inventory cost. Abnormal freight, rehandling, or other costs not directly attributable to inventory acquisition are expensed as incurred.

As of June 30, 2024 and 2023, inventory consisted primarily of:

● Foodservice Packaging Distribution: Finished goods including paper cups, plastic cups, food containers, bags, and related consumables.

Management evaluates inventories each reporting period to assess whether reserves are necessary for slow-moving, obsolete, or impaired items. In performing this assessment, management considers market conditions, expected demand, aging trends, turnover rates, and estimated net realizable value.

For the years ended June 30, 2024 and 2023, respectively, the Company did not record any provisions for inventory obsolescence or impairment.

**SWC GROUP, INC.**

**NOTES TO FINANCIAL STATEMENTS**

**JUNE 30, 2024 AND 2023**

At June 30, 2024 and 2023, the Company had inventory of $356,399 and $354,777, respectively. Included in these amounts were $66,378 and $74,934 of inventory in transit, respectively.

**Concentrations**

The Company evaluates concentrations of risk in accordance with ASC 275-10, Risks and Uncertainties. A concentration exists when a single customer, supplier, geographic region, or other external factor accounts for a significant portion of revenues, receivables, or supply chain activity (typically >10%).

Disclosure is required only when it is reasonably possible that such concentration could result in a severe near-term impact on the Company's financial position, results of operations, or cash flows.

As of June 30, 2024 and 2023, the Company has evaluated its customer, supplier, and geographic exposures and determined that no such concentrations exist that meet the threshold for disclosure.

**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.

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.

The Company evaluates the carrying value of property and equipment whenever events or changes in circumstances indicate that the asset may be impaired. If impairment indicators exist, the Company assesses recoverability based on the undiscounted future cash flows expected from the use and disposition of the asset. If the carrying amount exceeds the estimated recoverable amount, an impairment loss is recognized.

**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.

**SWC GROUP, INC.**

**NOTES TO FINANCIAL STATEMENTS**

**JUNE 30, 2024 AND 2023**

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.

<u>Impairment Assessment Process</u>

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.

<u>Impairment Results</u>

For the years ended June 30, 2024 and 2023, the Company did not record any impairment losses.

**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, unless the straight-line method is materially similar.

<u>Original Issue Discounts (OID)</u>

For certain notes issued, the Company may provide the debt holder with an original issue discount (OID), which is recorded as a debt discount, reducing the face value of the note. The discount is amortized to interest expense over the term of the debt in the Statements of Operations.

**SWC GROUP, INC.**

**NOTES TO FINANCIAL STATEMENTS**

**JUNE 30, 2024 AND 2023**

<u>Debt Issuance Costs</u>

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 balance sheets.

<u>Short-Term Leases</u>

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.

<u>Lease Term and Renewal Options</u>

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.

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.

**SWC GROUP, INC.**

**NOTES TO FINANCIAL STATEMENTS**

**JUNE 30, 2024 AND 2023**

<u>Discount Rate and Lease Liability Measurement</u>

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.

<u>Lease Impairment</u>

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, 2024 and 2023, respectively.

**Revenue Recognition**

The Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers, as amended. Revenue is recognized when control of promised goods or services transfers to customers, in an amount that reflects the consideration expected to be received.

<u>Revenue Stream</u>

The Company currently generates revenue primarily from the following single source:

Foodservice Packaging – The wholesale distribution of disposable foodservice packaging products, including custom-printed and stock paper cups, plastic cups, food containers, bags, and related consumables, primarily through the Company's e-commerce platform.

To provide further clarity on the nature, timing, and recognition of revenue, the Company's single revenue stream is discussed below:

**Foodservice Packaging Distribution**

Revenue from the distribution of disposable foodservice packaging products is derived exclusively from business customers on a wholesale basis through the Company's e-commerce platform and direct sales channels. Customer contracts typically contain a single performance obligation: typically, delivery of the ordered products.

**SWC GROUP, INC.**

**NOTES TO FINANCIAL STATEMENTS**

**JUNE 30, 2024 AND 2023**

Shipping and handling activities that occur after the customer obtains control are accounted for as fulfillment costs and not as separate performance obligations. Because sales are exclusively to registered businesses, the Company collects and remits sales taxes where required; sales to businesses are exempt only when valid resale/exemption certificates are obtained.

The Company follows the five-step revenue recognition model:

1. Identify the Contract with a Customer

A contract exists when:

● The agreement creates enforceable rights and obligations;

● It has commercial substance;

● Payment terms are defined and consideration is determinable;

● Collection is probable

Customer credit risk is assessed at contract inception and updated periodically.

2. Identify the Performance Obligations

Each order represents a single performance obligation: shipment or delivery of the ordered goods.

3. Determine the Transaction Price

Transaction price consists primarily of fixed consideration based on contract or list pricing.

4. Allocate the Transaction Price

Contracts generally contain only a single performance obligation - product delivery. Accordingly, the entire transaction price is allocated to that performance obligation.

5. Recognize Revenue When (or As) Performance Obligations Are Satisfied

Revenue is recognized at a point in time, when control of the goods transfers to the customer (generally upon shipment or delivery).

**SWC GROUP, INC.**

**NOTES TO FINANCIAL STATEMENTS**

**JUNE 30, 2024 AND 2023**

<u>Principal vs. Agent Considerations</u>

In accordance with ASC 606-10-55-36 through 55-40, the Company evaluated whether it acts as principal or agent in each of its revenue streams. The assessment considers whether the Company (i) obtains control of goods or services before transfer to the customer, (ii) has discretion in establishing pricing, (iii) is primarily responsible for fulfillment, and (iv) is exposed to inventory or service-level risks.

Based on this analysis, the Company reached the following conclusions:

The Company acts as a principal in foodservice packaging sales.

● The Company designs, sources, and controls products prior to transfer.

● The Company has discretion in pricing.

● The Company is responsible for fulfillment, including warehousing and logistics.

● The Company bears inventory risk prior to transfer.

Revenue is recognized on a gross basis for foodservice packaging sales.

<u>Summary of Compliance with ASC 606 and ASU Updates</u> 

---

| | | | |
|:---|:---|:---|:---|
| **Revenue Stream** | **Performance Obligation** | **Recognition Timing** | **Consideration Type** |
| Foodservice packaging | Shipment to customer | Point in time | Fixed price (wholesale contracts); |
|  |  | upon shipment | excludes sales tax |

---

**Contract Liabilities (Deferred Revenue)**

Contract liabilities represent amounts received in advance of performance obligations being satisfied.

As of June 30, 2024 and 2023, the Company had deferred revenue of $512,695 and $905,598, respectively.

**SWC GROUP, INC.**

**NOTES TO FINANCIAL STATEMENTS**

**JUNE 30, 2024 AND 2023**

The following represents the Company's disaggregation of revenues for the years ended June 30, 2024 and 2023:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Year Ended June 30,** | **Year Ended June 30,** | **Year Ended June 30,** | **Year Ended June 30,** |
|  | **2024** | **2024** | **2023** | **2023** |
|  | **Revenue** | **% of Revenues** | **Revenue** | **% of Revenues** |
| Foodservice packaging | $1780688 | 100.00% | $2388383 | 100.00% |

---

For the years ended June 30, 2024 and 2023, the Company recognized shipping fee revenues of $303,211 and $350,895, respectively, as a component of total revenues.

**Cost of Sales**

Cost of sales for foodservice packaging consists of direct costs incurred to source, warehouse, and distribute packaging products. These costs are recognized in the same period as the related revenue.

Cost components primarily include:

• Purchased Materials – Packaging products sourced from third-party manufacturers and suppliers.

• Freight and Distribution – Outbound shipping costs, warehouse handling, and fuel surcharges.

• Warehousing and Logistics – Facility, labor, and utilities associated with storage and inventory management.

**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 balance sheet, regardless of the classification of the related asset or liability for financial reporting purposes.

**SWC GROUP, INC.**

**NOTES TO FINANCIAL STATEMENTS**

**JUNE 30, 2024 AND 2023**

<u>Uncertain Tax Positions</u>

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, 2024 and 2023, respectively, the Company had no uncertain tax positions that qualified for recognition or disclosure in the financial.

The Company also recognizes interest and penalties related to uncertain tax positions in other expense in the statement of operations. No interest and penalties were recorded for the years ended June 30, 2024 and 2023, respectively.

**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.

<u>Factors Considered in Valuation Allowance Assessment</u>

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.

**SWC GROUP, INC.**

**NOTES TO FINANCIAL STATEMENTS**

**JUNE 30, 2024 AND 2023**

<u>Valuation Allowance Determination</u>

At June 30, 2024 and 2023, respectively, 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.

**Advertising Costs**

Advertising costs are expensed as incurred, "Advertising Costs." These costs are recognized as operating expenses in the period in which they are incurred and are classified within general and administrative expenses in the statements of operations.

Advertising expense related to the discontinued Snack and Beverages business, has been presented within discontinued operations.

The Company recognized marketing and advertising costs during the years ended June 30, 2024 and 2023, respectively as follows:

---

| | |
|:---|:---|
| **Year Ended June 30,** | **Year Ended June 30,** |
| **2024** | **2023** |
| $- | $21353 |

---

**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.

ASC 718 establishes accounting standards for transactions in which an entity exchanges its equity instruments for goods or services. It also applies to transactions where an entity incurs liabilities based on the fair value of its equity instruments or liabilities that may be settled using equity instruments.

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.

**SWC GROUP, INC.**

**NOTES TO FINANCIAL STATEMENTS**

**JUNE 30, 2024 AND 2023**

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.

● 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.

**Basic and Diluted Earnings (Loss) per Share** 

The Company computes earnings per share ("EPS") in accordance with ASC 260, "Earnings Per Share." The calculation of basic EPS follows the two-class method and is determined by dividing net earnings available to common shareholders by the weighted average number of common shares outstanding, including certain other shares committed to be issued.

<u>Basic Earnings Per Share (EPS)</u>

Basic EPS is calculated using the two-class method, and is computed as follows:

● Net earnings available to common shareholders represent net earnings to common shareholders, adjusted for the allocation of earnings to participating securities.

● Losses are not allocated to participating.

● The denominator includes common shares outstanding and certain other shares committed to be issued, such as restricted stock and restricted stock units ("RSUs"), for which no future service is required.

**SWC GROUP, INC.**

**NOTES TO FINANCIAL STATEMENTS**

**JUNE 30, 2024 AND 2023**

<u>Diluted Earnings Per Share (EPS)</u>

Diluted EPS is calculated under both the two-class method and the treasury stock method, and the more dilutive result is reported.

● Diluted EPS is computed by taking the sum of:

○ Net earnings available to common shareholders

○ Dividends on preferred shares

○ Dividends on dilutive mandatorily redeemable convertible preferred shares

○ Divided by the weighted average number of common shares outstanding and certain other shares committed to be issued, plus all dilutive common stock equivalents during the period, such as:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;■ Stock
 options

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;■ Warrants

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;■ Convertible
 preferred stock

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;■ Convertible
 debt

● Preferred shares and unvested share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents (whether paid or unpaid) qualify as participating securities under the two-class method.

<u>Net Loss Per Share Considerations</u>

In computing net loss per share, unvested shares of common stock are excluded from the denominator.

<u>Participating Securities & Share-Based Compensation</u>

Restricted stock and RSUs granted as part of share-based compensation contain nonforfeitable rights to dividends and dividend equivalents, respectively. Therefore:

● Before the requisite service is rendered for the right to retain the award, these instruments meet the definition of a participating security.

● RSUs granted under an executive compensation plan, however, are not considered participating securities because the rights to dividend equivalents are forfeitable.

The Company did not have any potentially dilutive equity securities outstanding for the years ended June 30, 2024 and 2023.

**SWC GROUP, INC.**

**NOTES TO FINANCIAL STATEMENTS**

**JUNE 30, 2024 AND 2023**

**Related Parties**

The Company defines related parties in accordance with ASC 850, "Related Party Disclosures," and SEC Regulation S-X, Rule 4-08(k). 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.

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.

Disclosures are made in accordance with ASC 850-10-50-1 through 50-6 and SEC Regulation S-X, Rule 4-08(k), which requires registrants to disclose material related party transactions and their effects on the financial position and results of operations.

**SWC GROUP, INC.**

**NOTES TO FINANCIAL STATEMENTS**

**JUNE 30, 2024 AND 2023**

**Recent Accounting Standards**

<u>Adopted Accounting Standards</u>

ASU 2023-07 — Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures

In November 2023, the FASB issued ASU 2023-07 to improve disclosures related to reportable segments. The standard requires:

● Enhanced disclosure of significant segment expenses regularly reviewed by the Chief Operating Decision Maker (CODM), even if those expenses are not allocated in segment profit or loss.

● More detailed descriptions of how segment profit or loss is measured, and how reported measures align with internal management reporting.

The Company adopted ASU 2023-07 on July 1, 2024. The adoption did not have a material impact on the Company's financial statements.

ASU 2023-09 — Income Taxes (Topic 740): Improvements to Income Tax Disclosures Issued in December 2023, ASU 2023-09 enhances income tax disclosures by:

● Requiring standardized disaggregation of the effective tax rate reconciliation into prescribed categories.

● Mandating jurisdictional disclosure of income taxes paid, broken out by federal, state, and significant foreign jurisdictions.

● Expanding narrative explanations for reconciling items and effective tax rate fluctuations.

The Company adopted ASU 2023-09 on July 1, 2024. The adoption did not have a material impact on the Company's financial statements.

<u>Adopted Accounting Standards (Not Yet Adopted)</u>

ASU 2024-03 — Income Statement—Reporting Comprehensive Income (Subtopic 220-40): Disaggregation of Income Statement Expenses

In November 2024, the FASB issued ASU 2024-03, which requires greater disaggregation of certain income statement expense categories, including:

● Inventory purchases

● Employee compensation

● Depreciation and amortization

● Selling expenses, including a definition of what is included in that category

**SWC GROUP, INC.**

**NOTES TO FINANCIAL STATEMENTS**

**JUNE 30, 2024 AND 2023**

The standard is effective for fiscal years beginning after December 15, 2026, and for interim periods beginning after December 15, 2027. Early adoption is permitted.

The Company is currently assessing the impact of ASU 2024-03 on its financial statement presentation and footnote disclosures. The standard is not expected to have a material effect on the Company's financial condition, results of operations, or cash flows.

<u>Other Accounting Standards Updates</u>

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 financial statements.

**<u>Note 3 – Property and Equipment</u>**

Property and equipment consisted of the following:

---

| | | | |
|:---|:---|:---|:---|
|  |<br>**June 30, 2024** |<br>**June 30, 2023** | **Estimated Useful**<br>**Lives (Years)** |
| Land | 632391 | 632391 | N/A |
| Building | 197609 | 197609 | 31.5 |
| Computers, furniture and equipment | 28405 | 28405 | 5 |
| Vehicles | 176913 | 228348 | 5 |
| Warehouse equipment | 31340 | 31340 | 3 - 5 |
| Production molds | 145173 | 145173 | 3 - 5 |
| Leasehold improvements | 6250 | 6250 | 5 |
|  | 1218081 | 1269516 |  |
| Accumulated depreciation | (343267) | (352903) |  |
| Total land, property and equipment - net | $874814 | $916613 |  |

---

Depreciation and amortization expense for the years ended June 30, 2024 and 2023, was $41,799 and $82,005, respectively.

Depreciation and amortization are included as a component of general and administrative expenses in the accompanying statements of operations.

**SWC GROUP, INC.**

**NOTES TO FINANCIAL STATEMENTS**

**JUNE 30, 2024 AND 2023**

**<u>Note 4 – Accounts Payable and Accrued Liabilities</u>**

Accounts payable and accrued liabilities were as follows at June 30, 2024 and 2023, respectively:

---

| | | |
|:---|:---|:---|
|  | **June 30, 2024** | **June 30, 2023** |
| Accounts payable and accrued liabilities | $860348 | $913968 |
| Accrued interest payable | 72337 | 45660 |
| Total accounts payable and accrued liabilities | $932685 | $959628 |

---

**<u>Note 5 – Debt</u>**

The following represents a summary of the Company's debt (notes payable and notes payable – related party) at June 30, 2024 and 2023:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Issue Date** | **Maturity Date** | **Interest Rate** | **Default<br> Interest Rate**  | **Collateral** | **Debt Type** |
| Loan #1 | June 15, 2020 | September 15, 2020 | 18.00% | N/A | Unsecured | Notes Payable |
| Loan #2 | June 6, 2019 | June 21, 2024 | 11.60% | N/A | Unsecured | Notes Payable |
| Loan #3 | May 13, 2022 | May 13, 2023 | N/A | N/A | Unsecured | Notes Payable |
| Loan #4 | May 18, 2022 | May 18, 2022 | N/A | N/A | Unsecured | Notes Payable |
| Loan #5 | May 25, 2022 | May 25, 2023 | N/A | N/A | Unsecured | Notes Payable |
| Loan #6 | December 30, 2022 | October 20, 2023 | N/A | N/A | Unsecured | Notes Payable |
| Loan #7 | May 9, 2023 | May 9, 2024 | N/A | N/A | Unsecured | Notes Payable |
| Loan #8 | August 10, 2023 | June 12, 2024 | 9.51% | N/A | Unsecured | Notes Payable |
| Loan #9 | March 25, 2024 | March 24, 2025 | 16.00% | N/A | Unsecured | Notes Payable |
| Loan #10 | January 30, 2024 | June 30, 2025 | 16.00% | N/A | Unsecured | Notes Payable |
| Loan #11 | January 1, 2024 | June 30, 2025 | N/A | N/A | Unsecured | Notes Payable |
| Loan #12 | September 25, 2021 | September 25, 2027 | 6.40% | N/A | Unsecured | Notes Payable |
| Loan #13 | September 10, 2021 | September 10, 2026 | 9.00% | N/A | Unsecured | Notes Payable |
| Loan #14 | April 14, 2020 | May 18, 2021 | 1.00% | N/A | Unsecured | Notes Payable |
| Loan #15 | December 31, 2013 | December 31, 2015 | 18.00% | N/A | Unsecured | Notes Payable |
| Loan #16 | August 11, 2021 | August 15, 2024 | 8.50% | N/A | Unsecured | Notes Payable |
| Loan #17 | October 11, 2021 | October 11, 2026 | 6.40% | N/A | Unsecured | Notes Payable |
| Loan #18 | September 10, 2021 | September 10, 2026 | 9.00% | N/A | Unsecured | Notes Payable |
| Loan #19 | September 10, 2021 | September 10, 2026 | 8.99% | N/A | Unsecured | Notes Payable |
| Loan #20 | September 10, 2021 | September 10, 2026 | 8.99% | N/A | Unsecured | Notes Payable |
| Loan #21 | September 10, 2021 | September 10, 2026 | 8.99% | N/A | Unsecured | Notes Payable |
| Loan #22 | Various | Due on demand | N/A | N/A | Unsecured | Notes Payable - Related Party |
| Loan #23 | October 19, 2019 | Due on demand | N/A | N/A | Unsecured | Notes Payable |
| Loan #24 | September 30, 2022 | Due on demand | 1.30% | N/A | Unsecured | Notes Payable |
| Loan #25 | June 1, 2022 | April 1, 2023 | 3.00% | N/A | Unsecured | Notes Payable |

---

**SWC GROUP, INC.**

**NOTES TO FINANCIAL STATEMENTS**

**JUNE 30, 2024 AND 2023**

The following represents a summary of the Company's notes payable at June 30, 2024 and 2023:

---

| | |
|:---|:---|
| June 30, 2022 | $1083760 |
| Proceeds | 570062 |
| Debt discount | (67425) |
| Amortization of debt discount | 28575 |
| Repayments | (571851) |
| Debt exchanged between third party and related party | 92577 |
| June 30, 2023 | 1135698 |
| Proceeds | 525292 |
| Amortization of debt discount | 38850 |
| Repayments | (258473) |
| June 30, 2024 | $1441367 |

---

The following represents a detail of the Company's notes payable at June 30, 2024 and 2023:

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Year Ended June 30, 2024** | **Year Ended June 30, 2024** | **Year Ended June 30, 2024** | **Year Ended June 30, 2024** | **Year Ended June 30, 2024** | **Year Ended June 30, 2024** | **Year Ended June 30, 2024** | **Year Ended June 30, 2024** | **Year Ended June 30, 2024** | **Year Ended June 30, 2024** |
|  | **June 30, 2023** | **Proceeds** | **Debt Discount** | **Amortization of Debt Discount** | **Balance Transfer** | **Repayments** | **June 30, 2024** | **Short Term** | **Long Term** | **In-Default** |
| Loan #1 | $100000 | $&nbsp;&nbsp;&nbsp;&nbsp;- | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;- | $- | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;- | $- | $100000 | $100000 | $- | $100000 |
| Loan #2 | 6240 |  |  |  |  | (6240) |  |  |  |  |
| Loan #6 | 71016 |  |  | 19050 |  | (92262) | (2196) | (2196) |  | (2196) |
| Loan #7 | 31553 |  |  | 19800 |  | (51353) |  |  |  |  |
| Loan #8 |  | 20588 |  |  |  | (19715) | 873 | 873 |  | 873 |
| Loan #9 |  | 86500 |  |  |  |  | 86500 | 86500 |  |  |
| Loan #10 |  | 95000 |  |  |  |  | 95000 | 95000 |  |  |
| Loan #11 |  | 169880 |  |  |  |  | 169880 | 169880 |  |  |
| Loan #15 | 20000 |  |  |  |  |  | 20000 | 20000 |  | 20000 |
| Loan #16 | 675000 |  |  |  |  |  | 675000 | 675000 |  |  |
| Loan #17 | 19222 |  |  |  |  | (4531) | 14691 |  | 14691 |  |
| Loan #19 | 22094 |  |  |  |  | (2102) | 19992 |  | 19992 |  |
| Loan #20 | 19958 |  |  |  |  | (6473) | 13485 |  | 13485 |  |
| Loan #21 | 19958 |  |  |  |  | (6473) | 13485 |  | 13485 |  |
| Loan #23 | 64842 | 14000 |  |  |  | (24000) | 54842 | 54842 |  | 54842 |
| Loan #24 | 15950 | 137000 |  |  |  | (23000) | 129950 | 129950 |  | 129950 |
| Loan #25 | 69865 | 2324 | - | - | - | (22324) | 49865 | 49865 | - | 49865 |
| Total | $1135698 | $525292 | $- | $38850 | $- | $(258473) | $1441367 | $1379714 | $61653 | $353334 |

---

**SWC GROUP, INC.**

**NOTES TO FINANCIAL STATEMENTS**

**JUNE 30, 2024 AND 2023**

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Year Ended June 30, 2023** | **Year Ended June 30, 2023** | **Year Ended June 30, 2023** | **Year Ended June 30, 2023** | **Year Ended June 30, 2023** | **Year Ended June 30, 2023** | **Year Ended June 30, 2023** | **Year Ended June 30, 2023** | **Year Ended June 30, 2023** | **Year Ended June 30, 2023** |
|  | **June 30, 2022** | **Proceeds** | **Debt Discount** | **Amortization of Debt Discount** | **Balance Transfer** | **Repayments** | **June 30, 2023** | **Short Term** | **Long Term** | **In-Default** |
| Loan #1 | $100000 | $- | $- | $- | $- | $- | $100000 | $100000 | $- | $100000 |
| Loan #2 | 13759 |  |  |  |  | (7519) | 6240 | 6240 |  |  |
| Loan #3 | 21535 |  |  |  |  | (21535) |  |  |  |  |
| Loan #4 | 17167 |  |  |  |  | (17167) |  |  |  |  |
| Loan #5 | 27170 |  |  |  |  | (27170) |  |  |  |  |
| Loan #6 |  | 175000 | (47625) | 28575 |  | (84934) | 71016 | 71016 |  |  |
| Loan #7 |  | 69800 | (19800) |  |  | (18447) | 31553 | 31553 |  |  |
| Loan #12 | 6737 |  |  |  |  | (6737) |  |  |  |  |
| Loan #13 | 2432 | (2432) |  |  |  |  |  |  |  |  |
| Loan #14 | 96595 |  |  |  |  | (96595) |  |  |  |  |
| Loan #15 | 20000 |  |  |  |  |  | 20000 | 20000 |  | 20000 |
| Loan #16 | 490000 | 185000 |  |  |  |  | 675000 |  | 675000 |  |
| Loan #17 | 97216 |  |  |  |  | (77994) | 19222 |  | 19222 |  |
| Loan #18 | 80995 |  |  |  |  | (80995) |  |  |  |  |
| Loan #19 |  | 25250 |  |  |  | (3156) | 22094 |  | 22094 |  |
| Loan #20 |  | 23734 |  |  |  | (3776) | 19958 |  | 19958 |  |
| Loan #21 |  | 23734 |  |  |  | (3776) | 19958 |  | 19958 |  |
| Loan #23 | 60097 | 43745 |  |  |  | (39000) | 64842 | 64842 |  | 64842 |
| Loan #24 |  | 6423 |  |  | 92577 | (83050) | 15950 | 15950 |  | 15950 |
| Loan #25 | 50057 | 19808 | - | - | - | - | 69865 | 69865 | - | 69865 |
| Total | $1083760 | $570062 | $(67425) | $28575 | $92577 | $(571851) | $1135698 | $379466 | $756232 | $270657 |

---

The following represents a summary of the Company's notes payable – related party at June 30, 2024 and 2023:

---

| | |
|:---|:---|
| June 30, 2022 | $143089 |
| Proceeds | 132818 |
| Repayments | (129800) |
| Debt exchanged between third party and related party | (92577) |
| June 30, 2023 | 53530 |
| Proceeds | 167918 |
| Repayments | (33230) |
| June 30, 2024 | $188218 |

---

During 2023, the Chief Executive Officer of an entity that controls the Company entered into a balance transfer agreement, whereby an obligation of $92,577 was assumed by a third party. No consideration was exchanged. The Company was not a party to the agreement, and no accounting recognition has been recorded in the accompanying financial statements.

**SWC GROUP, INC.**

**NOTES TO FINANCIAL STATEMENTS**

**JUNE 30, 2024 AND 2023**

**<u>Debt Maturities</u>**

The following represents future maturities of the Company's various debt arrangements as follows:

---

| | | | |
|:---|:---|:---|:---|
| **For the Year Ended June 30,** | **Notes Payable** | **Notes Payable - Related Party** | **Total** |
| 2025 | $1379714 | $188218 | $1567932 |
| 2026 |  |  |  |
| 2027 | 61653 | - | 61653 |
| Total | $1441367 | $188218 | $1629585 |

---

**<u>Note 6 – Fair Value of Financial Instruments</u>**

The Company evaluates its financial assets and liabilities subject to fair value measurements on a recurring basis to determine the appropriate level in which to classify them for each reporting period. This determination requires significant judgments to be made.

**<u>Note 7 – Commitments and Contingencies</u>**

**Contingencies – Legal Matters**

The Company is subject to litigation claims arising in the ordinary course of business. The Company records litigation accruals for legal matters which are both probable and estimable and for related legal costs as incurred. The Company does not reduce these liabilities for potential insurance or third-party recoveries.

As of June 30, 2024, the Company is not aware of any litigation, pending litigation, or other transactions that require accrual or disclosure.

**Commitments - Operating Lease**

The Company accounts for leases in accordance with FASB ASC 842: Leases, which requires lessees to apply the right-of-use (ROU) model by recognizing a right-of-use asset and a lease liability for all leases with terms exceeding 12 months. Lease classification determines the pattern of expense recognition in the statement of operations:

● Operating leases: Recognized on a straight-line basis as lease expense over the lease term.

**SWC GROUP, INC.**

**NOTES TO FINANCIAL STATEMENTS**

**JUNE 30, 2024 AND 2023**

<u>Lease Recognition and Measurement</u>

The Company evaluates whether an arrangement contains a lease at inception and recognizes the lease in the financial statements upon lease commencement (the date the underlying asset is available for use). ROU assets represent the Company's right to use an asset over the lease term, while lease liabilities reflect the present value of future lease payments.

At lease commencement:

● ROU assets and lease liabilities are initially measured at the present value of lease payments.

● The Company primarily uses its incremental borrowing rate (IBR) to determine the present value of lease payments, except when an implicit rate is readily determinable.

● The IBR is based on market data, adjusted for credit risk and lease term.

<u>Practical Expedients and Lease Components</u>

The Company applies certain practical expedients to simplify lease accounting:

● Lease and non-lease components are combined for classification and measurement, except for direct sales-type leases and production equipment embedded in supply agreements.

● Short-term leases (12 months or less, without purchase or renewal options) are not recorded on the balance sheet.

<u>Lease Term and Expense Recognition</u>

● Lease liabilities include options to extend or terminate when reasonably certain of exercise.

● Operating lease expense is recognized on a straight-line basis over the lease term and reported under general and administrative expenses.

● Variable lease payments based on an index/rate are initially measured using the rate at lease commencement, with differences expensed as incurred.

**SWC GROUP, INC.**

**NOTES TO FINANCIAL STATEMENTS**

**JUNE 30, 2024 AND 2023**

<u>Company Lease Commitments</u>

As of June 30, 2024 and 2023, the Company had no finance leases under FASB ASC 842.

On February 21, 2020, the Company executed an approximate five-year lease for its office space, covering the period from March 1, 2020, through April 30, 2025.

● Lease term: 62 months

● Monthly lease payments: $2,378

● Total lease obligation: $147,446

● Renewal option: None

● Security deposit paid: $30,193

● Lease classification: The lease is evaluated under FASB ASC 842, Leases, and recorded as a right-of-use (ROU) asset and lease liability based on the present value of lease payments at lease commencement.

The Company recognizes lease expense on a straight-line basis over the lease term.

The tables below present information regarding the Company's operating lease asset and liability at June 30, 2024 and 2023:

---

| | | |
|:---|:---|:---|
|  | **June 30, 2024** | **June 30, 2023** |
| Assets |  |  |
| Operating lease - right-of-use asset - non-current | $129853 | $268760 |
| Liabilities |  |  |
| Operating lease liability | $142880 | $292948 |
| Weighted-average remaining lease term (years) | 0.83 | 1.84 |
| Weighted-average discount rate | 10% | 10% |

---

The components of lease expense were as follows:

---

| | | |
|:---|:---|:---|
|  | **Year Ended** | **Year Ended** |
|  | **June 30, 2024** | **June 30, 2023** |
| Operating lease costs |  |  |
| Amortization of right-of-use operating lease asset | $138907 | $180963 |
| Lease liability expense in connection with obligation repayment | 22396 | 36358 |
| Total operating lease costs | $161303 | $161303 |
| Supplemental cash flow information related to operating leases was as follows: |  |  |
| Operating cash outflows from operating lease (obligation payment) | $172464 | $211482 |
| Right-of-use asset obtained in exchange for new operating lease liability | $- | $- |

---

**SWC GROUP, INC.**

**NOTES TO FINANCIAL STATEMENTS**

**JUNE 30, 2024 AND 2023**

Future minimum lease payments required under leases that have initial or remaining non-cancellable lease terms in excess of one year at June 30,:

---

| | |
|:---|:---|
| <u>Year Ended June 30,</u> |  |
| 2024 | $147446 |
| Total undiscounted cash flows | 147446 |
| Less: amount representing interest | 4566 |
| Present value of operating lease liabilities | 142880 |
| Less: current portion of operating lease liabilities | 142880 |
| Long-term operating lease liabilities | $- |

---

**Other Income**

For the years ended June 30, 2024 and 2023, the Company recognized other income of $120,664 and $150,568, respectively, related to the sublease of office space to a third party. The Company maintains a month-to-month arrangement with the subtenant, under which the subtenant reimburses the Company for the use of space.

**<u>Note 8 – Stockholders' Deficit</u>**

As of June 30, 2024, the Company had one (1) class of stock, detailed as follows:

**Common Stock**

● Authorized Shares: 10,000

● Issued & Outstanding:

○ 10,000 shares as of June 30, 2024

○ 10,000 shares as of June 30, 2023

● Par Value: $0.00001 per share

● Voting Rights: 1 vote per share

**<u>Equity Transactions for the Year Ended June 30, 2024</u>**

**Debt Forgiveness – Related Party**

During the year ended June 30, 2024, the Company executed an agreement with a related party, its majority shareholder. to forgive accrued liabilities totaling $7,761,200. This forgiveness has been accounted for as, in substance, a capital contribution from the parent company and recorded as an increase to additional paid-in capital in the accompanying financial statements. This accounting treatment is consistent with ASC 470-50-40-2, *Debt—Modifications and Extinguishments - Derecognition*, which requires that debt forgiven by a parent or equity holder be reflected as a capital transaction rather than as income.

**<u>Equity Transactions for the Year Ended June 30, 2023</u>**

There was no activity.

**SWC GROUP, INC.**

**NOTES TO FINANCIAL STATEMENTS**

**JUNE 30, 2024 AND 2023**

**<u>Note 9 – Income Taxes</u>**

The Components of the deferred tax assets and liabilities at June 30, 2024 and 2023 were approximately as follows:

---

| | | |
|:---|:---|:---|
|  | **June 30, 2024** | **June 30, 2023** |
| **<u>Deferred Tax Assets</u>** | | |
| Bad debt | $25000 | $25000 |
| Amortization of ROU lease | 136000 | 97000 |
| Amortization of debt discount | 46000 | 35000 |
| Loss on disposal of equipment | 59000 | 59000 |
| Net operating loss carryforwards | 2494000 | 2388000 |
| Total deferred tax assets | 2760000 | 2604000 |
| Less: valuation allowance | (2760000) | (2604000) |
| Net deferred tax asset recorded | $- | $- |

---

The components of the income tax benefit and related valuation allowance for the years ended June 30, 2024 and 2023 was approximately as follows:

---

| | | |
|:---|:---|:---|
|  | **June 30, 2024** | **June 30, 2023** |
| Current | $- | $- |
| Deferred | (156000) | (108000) |
| Total income tax provision (benefit) | (156000) | (108000) |
| Less: valuation allowance | 156000 | 108000 |
|  | $- | $- |

---

Deferred tax assets and liabilities are computed by applying the federal and state income tax rates in effect to the gross amounts of temporary differences and other tax attributes, such as net operating loss carryforwards. In assessing if the deferred tax assets will be realized, the Company considers whether it is more likely than not that some or all of these deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the period in which these deductible temporary differences reverse. As a result of historic losses, the Company has recorded a full valuation allowance as of June 30, 2024.

**SWC GROUP, INC.**

**NOTES TO FINANCIAL STATEMENTS**

**JUNE 30, 2024 AND 2023**

A reconciliation of the provision for income taxes for the years ended June 30, 2024 and 2023 as compared to statutory rates was approximately as follows:

---

| | | |
|:---|:---|:---|
|  | **June 30, 2024** | **June 30, 2023** |
| Federal income tax benefit - 21% | $(107000) | $(74000) |
| State income tax - 8.84% | (49000) | (34000) |
| Subtotal | (156000) | (108000) |
| Change in valuation allowance | 156000 | 108000 |
| Income tax benefit | $- | $- |

---

Federal net operating loss carry forwards at June 30, 2024 and 2023 were approximately as follows:

---

| | |
|:---|:---|
| **June 30, 2024** | **June 30, 2023** |
| $8912000 | $8534000 |

---

The net operating losses carry forward indefinitely and accordingly have been reserved. These net operating losses have been fully reserved as management does not believe that it is probable that the losses will be utilized before their expiration.

During the year ended June 30, 2024, the valuation allowance increased by approximately $156,000. The total valuation allowance results from the Company's estimate of its future recoverability of its net deferred tax assets.

The Company is in the process of analyzing their NOL and has not determined if the Company has had any change of control issues that could limit the future use of these NOL's. As of June 30, 2024, all federal NOL carryforwards that were generated after 2017 may only be used to offset 80% of taxable income and are carried forward indefinitely.

The Company follows the provisions of ASC 740, which requires the computations of current and deferred income tax assets and liabilities only consider tax positions that are more likely than not (defined as greater than 50% chance) to be sustained if the taxing authorities examined the positions. There are no significant differences between the tax provisions represented in the accompanying financial statements and that reported in the Company's income tax returns.

The Company files corporate income tax returns in the United States and California. Due to the Company's net operating loss posture, all tax years are open and subject to income tax examination by tax authorities. The Company's policy is to recognize interest expense and penalties related to income tax matters as tax expense. At June 30, 2024 and 2023, respectively, there are no unrecognized tax benefits, and there were no accruals for interest related to unrecognized tax benefits or tax penalties.

**SWC GROUP, INC.**

**NOTES TO FINANCIAL STATEMENTS**

**JUNE 30, 2024 AND 2023**

**<u>Note 10 - Subsequent Events</u>**

**Acquisition by Nightfood Holdings, Inc.**

On March 31, 2025, the Company was acquired by Nightfood Holdings, Inc. pursuant to a share exchange agreement, whereby Nightfood Holdings acquired 100% of the Company's issued and outstanding equity interests. As consideration, the Company's equity holders received 83,333 shares of Nightfood Holdings' Series C Convertible Preferred Stock, which had an estimated fair value of $4,399,982, based on the as-converted value of the underlying common shares as of the acquisition date.

As a result of this transaction, the Company became a wholly-owned subsidiary of Nightfood Holdings, Inc. The purchase price allocation and related accounting for this acquisition will be performed and reported by Nightfood Holdings, Inc. in its consolidated financial statements.

See Form 8-K filed with the U.S. Securities and Exchange Commission on April 2, 2025.

**Legal Judgment**

In August 2024, a judgment in the amount of $75,394 was entered against the Company in favor of a former supplier related to unpaid invoices for a custom printed customer order. The judgment was settled and paid in full in July 2025.

**SWC Group, Inc.**

**DBA Carryout Supplies**

---

| | |
|:---|:---|
|  | Page(s) |
| [Balance Sheets (Unaudited)](#hk_001) | 39 |
| [Statements of Operations (Unaudited)](#hk_002) | 40 |
| [Statements of Changes in Stockholders' Deficit (Unaudited)](#hk_003) | 41 - 42 |
| [Statements of Cash Flows (Unaudited)](#hk_004) | 43 |
| [Notes to Financial Statements (Unaudited)](#hk_005) | 44 - 73 |

---

**SWC Group, Inc.**

**D/B/A CarryOutSupplies.com** 

**Balance Sheets**

---

| | | |
|:---|:---|:---|
|  | **March 31, 2025** | **June 30, 2024** |
|  | **(Unaudited)** | |
| **<u>Assets</u>** |  |  |
| **Current Assets** |  |  |
| Cash | $28340 | $19439 |
| Accounts receivable - net | 9624 | 4432 |
| Inventory | 252203 | 356399 |
| Prepaids and other | 97397 | 14180 |
| **Total Current Assets** | 387564 | 394450 |
| **Right-of-use asset - operating lease** | 13317 | 129853 |
| **Property and equipment - net** | 26942 | 874814 |
| **Deposits** | 30193 | 31931 |
| **Total Assets** | $458016 | $1431048 |
| **<u>Liabilities and Stockholders' Deficit</u>** |  |  |
| **Current Liabilities** |  |  |
| Accounts payable and accrued expenses | $1548020 | $1144486 |
| Deferred revenue |  | 512695 |
| Notes payable - net | 37260 | 1379714 |
| Notes payable - related party |  | 188218 |
| Operating lease liability | 14972 | 142880 |
| **Total Current Liabilities** | 1600252 | 3367993 |
| **Long Term Liabilities** |  |  |
| Notes payable - net | - | 61653 |
| **Total Long Term Liabilities** |  | 61653 |
| **Total Liabilities** | 1600252 | 3429646 |
| **Commitments and Contingencies** |  |  |
| **Stockholders' Deficit** |  |  |
| Common stock - $0.001 par value, 10,000 shares authorized 10,000 and 10,000 shares outstanding, respectively |  |  |
| Additional paid-in capital | 9114432 | 7761200 |
| Accumulated deficit | (10256668) | (9759798) |
| **Total Stockholders' Deficit** | (1142236) | (1998598) |
| **Total Liabilities and Stockholders' Deficit** | $458016 | $1431048 |

---

The accompanying notes are an integral part of these unaudited financial statements

**SWC Group, Inc.**

**D/B/A CarryOutSupplies.com**

**Statements of Operations**

**(Unaudited)**

---

| | | |
|:---|:---|:---|
|  | **For the Nine Months Ended March 31,** | **For the Nine Months Ended March 31,** |
|  | **2025** | **2024** |
| **Revenues** | $1302642 | $1274934 |
| **Costs and expenses** |  |  |
| Cost of goods sold | 785518 | 697469 |
| General and administrative expenses | 882189 | 794951 |
| **Total costs and expenses** | 1667707 | 1492420 |
| **Loss from operations** | (365065) | (217486) |
| **Other income (expense)** |  |  |
| Interest income | 6706 | 26015 |
| Other income | 106297 | 104395 |
| Gain on debt settlement |  | 23676 |
| Interest expense (including amortization of debt discount) | (244808) | (138368) |
| Loss on settlement | - | (110516) |
| **Total other income (expense) - net** | (131805) | (94798) |
| **Net loss before provision for income taxes** | (496870) | (312284) |
| **Provision for income taxes** |  |  |
| **Net loss** | $(496870) | $(312284) |
| **Loss per share - basic and diluted** | $(49.69) | $(31.23) |
| **Weighted average number of shares - basic and diluted** | 10000 | 10000 |

---

The accompanying notes are an integral part of these unaudited financial statements

**SWC Group, Inc.**

**D/B/A CarryOutSupplies.com**

**Statement of Changes in Stockholders' Deficit**

**For the Nine Months Ended March 31, 2025**

**(Unaudited)**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Common Stock** | **Common Stock** | | | |
|  | **Shares** | **Amount** | **Additional<br> Paid-in**<br>**Capital** | **Accumulated**<br>**Deficit** | **Total<br> Stockholders'**<br>**Deficit** |
| **June 30, 2023** | **10000** | $**-** | $**-** | $**(9203068)** | $**(9203068)** |
| Forgiveness of debt - related party |  |  | 7761200 |  | 7761200 |
| Net loss | - | - | - | (556730) | (556730) |
| **June 30, 2024** | 10000 |  | 7761200 | (9759798) | (1998598) |
| Contributions |  |  | 449230 |  | 449230 |
| Contributions - non-cash |  |  | 1744327 |  | 1744327 |
| Distributions |  |  | (840325) |  | (840325) |
| Net loss | - | - | - | (496870) | (496870) |
| **March 31, 2025** | **10000** | $**-** | $**9114432** | $**(10256668)** | $**(1142236)** |

---

The accompanying notes are an integral part of these unaudited financial statements

**SWC Group, Inc.**

**D/B/A CarryOutSupplies.com**

**Statement of Changes in Stockholders' Deficit**

**For the Nine Months Ended March 31, 2024**

**(Unaudited)**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Common Stock** | **Common Stock** | | | |
|  | **Shares** | **Amount** | **Additional<br> Paid-in**<br>**Capital** | **Accumulated**<br>**Deficit** | **Total<br> Stockholders'**<br>**Deficit** |
| **June 30, 2022** | **10000** | $**-** | $**-** | $**(8814987)** | $**(8814987)** |
| Net loss | - | - | - | (388081) | (388081) |
| **June 30, 2023** | 10000 |  |  | (9203068) | (9203068) |
| Forgiveness of debt - related party |  |  | 7761200 |  | 7761200 |
| Net loss | - | - | - | (312284) | (312284) |
| **March 31, 2024** | **10000** | $**-** | $**7761200** | $**(9515352)** | $**(1754152)** |

---

The accompanying notes are an integral part of these unaudited financial statements

**SWC Group, Inc.**

**D/B/A CarryOutSupplies.com**

**Statements of Cash Flows**

---

| | | |
|:---|:---|:---|
|  | **For the Nine Months Ended March 31,** | **For the Nine Months Ended March 31,** |
|  | **2025** | **2024** |
| **Operating activities** |  |  |
| Net loss | $(496870) | $(312284) |
| Adjustments to reconcile net loss to net cash used in operations |  |  |
| &nbsp;&nbsp;&nbsp;Depreciation and amortization | 7547 | 31742 |
| &nbsp;&nbsp;&nbsp;Amortization of operating lease - right-of-use asset | 116536 | 102768 |
| &nbsp;&nbsp;&nbsp;Amortization of debt discount |  | 22280 |
| &nbsp;&nbsp;&nbsp;Loss on settlement |  | 110515 |
| &nbsp;&nbsp;&nbsp;Gain on settlement |  | (23676) |
| &nbsp;&nbsp;&nbsp;Operating lease liability | (127908) | (110285) |
| Changes in operating assets and liabilities |  |  |
| &nbsp;&nbsp;&nbsp;(Increase) decrease in |  |  |
| &nbsp;&nbsp;&nbsp;Accounts receivable | (5192) | 11207 |
| &nbsp;&nbsp;&nbsp;Inventory | 104196 | 15867 |
| &nbsp;&nbsp;&nbsp;Deposits | 1738 |  |
| &nbsp;&nbsp;&nbsp;Prepaids and other | (83217) | (14434) |
| Increase (decrease) in |  |  |
| &nbsp;&nbsp;&nbsp;Accounts payable and accrued expenses | 403534 | 416584 |
| &nbsp;&nbsp;&nbsp;Accounts payable and accrued expenses - related party |  | (78204) |
| &nbsp;&nbsp;&nbsp;Deferred revenue | (512695) | (905598) |
| **Net cash used in operating activities** | (592331) | (733518) |
| **Financing activities** |  |  |
| Proceeds from notes payable | 277572 | 714897 |
| Repayments on notes payable | (125570) | (148893) |
| Proceeds from notes payable - related party |  | 152187 |
| Repayments on notes payable - related party |  | (19000) |
| Capital contribution | 449230 | - |
| **Net cash provided by financing activities** | 601232 | 699191 |
| **Net increase (decrease) in cash** | 8901 | (34327) |
| **Cash - beginning of period** | 19439 | 34327 |
| **Cash - end of period** | $28340 | $- |
| **Supplemental disclosure of cash flow information** |  |  |
| Cash paid for interest | $328106 | $144075 |
| Cash paid for income tax | $- | $- |
| **Supplemental disclosure of non-cash investing and financing activities** |  |  |
| Debt forgiven prior to being acquired by Nightfood Holdings, Inc. (capital contribution) | $546452 | $- |
| Note payable on property assumed by parent - prior to being acquired by Nightfood Holdings, Inc. (capital contribution) | $675000 | $- |
| Property acquired by parent - prior to being acquired by Nightfood Holdings, Inc. (capital distribution) | $840325 | $- |
| Notes payable - transferred to Nightfood Holdings, Inc. prior to acquisition (capital contribution) | $334657 | $- |
| Notes payable - related party - transferred to Nightfood Holdings, Inc. prior to acquisition (capital contribution) | $188218 | $- |

---

The accompanying notes are an integral part of these unaudited financial statements

**SWC GROUP, INC.**

**NOTES TO UNAUDITED FINANCIAL STATEMENTS**

**MARCH 31, 2025**

**<u>Note 1 - Organization and Nature of Operations</u>**

**Organization and Nature of Operations**

SWC Group, Inc. ("SWC", "we," "our," or the "Company") operates as a food service packaging company. The Company was incorporated on July 19, 2004 in California.

The Company's operations are organized as follows:

Foodservice Packaging:

The Company operates as a business-to-business ("B2B") enterprise focused on the wholesale distribution of disposable foodservice packaging products.

Product offerings include printed paper cups, plastic cups, food containers, bags, and related consumables for restaurants, cafés, and other foodservice establishments. Operations are conducted primarily through the Company's e-commerce platform, www.carryoutsupplies.com, which serves customers across the United States.

Activities include product design, sourcing from domestic and international manufacturers, quality control, warehousing, and fulfillment. Customers are primarily small to mid-sized businesses in the hospitality and food service industries, with no material dependence on any single customer or supplier.

**Fiscal Year**

The Company's fiscal year end is June 30.

**Basis of Presentation**

The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial statements ("U.S. GAAP"). Accordingly, they do not contain all information and footnotes required by accounting principles generally accepted in the United States of America for annual financial statements.

In the opinion of the Company's management, the accompanying unaudited financial statements contain all of the adjustments necessary (consisting only of normal recurring accruals) to present the financial position of the Company as of March 31, 2025 and the results of operations and cash flows for the periods presented.

**SWC GROUP, INC.**

**NOTES TO UNAUDITED FINANCIAL STATEMENTS**

**MARCH 31, 2025**

The results of operations for the nine months ended March 31, 2025 are not necessarily indicative of the operating results for the full fiscal year or any future period.

These unaudited financial statements should be read in conjunction with the audited financial statements and related notes thereto included in the Form 8-K/A Nightfood Holdings, Inc. ("NGTF") filed on September 29, 2025 for the years ended June 30, 2024 and 2023.

The Company and NGTF completed a share exchange agreement on March 31, 2025, whereby SWC was acquired by NGTF in a business combination.

**Segment Information**

The Company operates as a single operating and reportable segment, which consists of the distribution of carryout supplies and related packaging products. The Company's Chief Executive Officer, who serves as the Chief Operating Decision Maker ("CODM"), reviews financial information on an overall company basis when making operating decisions and assessing performance. As the Company has only one operating and reportable segment, no additional segment disclosures are presented.

**Liquidity and Going Concern**

As reflected in the accompanying financial statements, for the nine months ended March 31, 2025, the Company had:

● Net
 loss of $496,870; and

● Net
cash used in operations was $592,331

Additionally, at March 31, 2025, the Company had:

● Accumulated deficit of $10,256,668

● Stockholders' deficit of $1,142,236,

● Working capital deficit of $1,212,688; and

● Cash on hand of $28,340

While SWC has initiated revenue-generating activities through the distribution of carryout supplies and related packaging products, revenues to date have not been sufficient to fund ongoing operations. Based on current operating levels and cash usage forecasts, existing cash resources are not expected to be sufficient to fund operations for the twelve months following issuance of these financial statements without additional financing.

Historically, the Company has relied on third-party and related-party debt financing to support operations. There can be no assurance that additional financing will be available on commercially acceptable terms, or at all.

**SWC GROUP, INC.**

**NOTES TO UNAUDITED FINANCIAL STATEMENTS**

**MARCH 31, 2025**

These factors raise substantial doubt about the Company's ability to continue as a going concern within one year after the date these financial statements are issued. The financial statements do not include any adjustments that might result if the Company is unable to continue as a going concern and have been prepared on a basis that assumes the Company will continue as a going concern and realize assets and satisfy liabilities in the ordinary course of business.

Management's plans to address these matters as they relate to SWC include:

● Pursuing additional debt and/or equity financing to support working capital needs;

● Expanding sales within existing customer channels and into new geographic markets;

● Continuing cost-control measures to better align expenses with expected revenue; and

● Exploring potential collaborations or strategic opportunities to strengthen the carryout supplies business.

**<u>Note 2 - Summary of Significant Accounting Policies</u>**

**Use of Estimates and Assumptions**

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

Changes in estimates are recorded in the period in which they become known and are accounted for prospectively.

The Company bases its estimates on historical experience, industry trends, and other relevant factors, incorporating both quantitative and qualitative assessments that it believes are reasonable under the circumstances.

Significant estimates for the nine months ended March 31, 2025 and 2024, respectively, include:

● Allowance for doubtful accounts and other receivables

● Inventory reserves and classifications

● Valuation of loss contingencies

● Estimated useful lives of property and equipment

● Uncertain tax positions

● Valuation allowance on deferred tax assets

**SWC GROUP, INC.**

**NOTES TO UNAUDITED FINANCIAL STATEMENTS**

**MARCH 31, 2025**

**Risks and Uncertainties**

The Company operates in a highly competitive industry that is subject to intense market dynamics, shifting consumer demand, and economic fluctuations. The Company's operations are exposed to significant financial, operational, and strategic risks, including potential business disruptions, supply chain constraints, and liquidity challenges.

In accordance with ASC 275, "Risks and Uncertainties," the Company evaluates and discloses risks that could materially affect its financial condition, results of operations, and business outlook. Key factors contributing to variability in sales and earnings include:

&nbsp;&nbsp;&nbsp;&nbsp;1. Industry
 Cyclicality – The Company's financial performance is affected by industry trends,
 seasonality, and shifts in market demand.

&nbsp;&nbsp;&nbsp;&nbsp;2. Macroeconomic
 Conditions – Economic downturns, inflationary pressures, interest rate changes, and
 geopolitical risks may impact consumer purchasing behavior and the Company's revenue
 streams.

&nbsp;&nbsp;&nbsp;&nbsp;3. Pricing
 Volatility – The cost and availability of raw materials, supply chain disruptions,
 and competitive pricing pressures can lead to fluctuations in gross margins and profitability.

Given these uncertainties, the Company faces challenges in accurately forecasting financial performance and may experience material risks affecting liquidity, business continuity, and long-term strategic growth. The Company continuously assesses these risks and implements measures to mitigate their potential impact.

**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.

**SWC GROUP, INC.**

**NOTES TO UNAUDITED FINANCIAL STATEMENTS**

**MARCH 31, 2025**

<u>Fair Value Hierarchy</u>

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.

<u>Fair Value Determination and Use of External Advisors</u>

The Company assesses the fair value of its financial instruments and, where appropriate, may engage external valuation specialists to assist in determining fair value. While management believes that recorded fair values are reasonable, they may not necessarily reflect net realizable values or future fair values.

<u>Financial Instruments Carried at Historical Cost</u>

The Company's financial instruments—including cash, accounts receivable, accounts payable and accrued expenses (including related party balances), and certain debt instruments—are recorded at historical cost. As of March 31, 2025 and June 30, 2024, respectively, 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 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.

**SWC GROUP, INC.**

**NOTES TO UNAUDITED FINANCIAL STATEMENTS**

**MARCH 31, 2025**

At March 31, 2025 and June 30, 2024, respectively, 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.

At March 31, 2025 and June 30, 2024, respectively, 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. Receivables are recorded at their net realizable value, which represents the amount management expects to collect from outstanding customer balances.

The Company extends credit to customers based on an evaluation of their financial condition and other factors. The Company does not require collateral, and interest is not accrued on overdue accounts receivable.

<u>Allowance for Credit Losses</u>

Management periodically assesses the collectability of accounts receivable and establishes an allowance for doubtful accounts as needed. The allowance is determined based on:

● A review of outstanding accounts,

● Historical collection experience, and

● Current economic conditions

Accounts deemed uncollectible are written off against the allowance when determined to be uncollectible.

<u>Applicability of ASC 326 ("CECL") to Accounts Receivable</u>

Accounts receivable consist primarily of short-term trade receivables arising from the sale of goods and services. These receivables are carried at amortized cost and are subject to the expected credit loss model under ASC 326, Financial Instruments—Credit Losses.

The Company estimates expected credit losses using a provision matrix based on historical loss experience, adjusted for current economic conditions and reasonable and supportable forecasts. Receivables with similar risk characteristics are evaluated collectively.

**SWC GROUP, INC.**

**NOTES TO UNAUDITED FINANCIAL STATEMENTS**

**MARCH 31, 2025**

The allowance for credit losses is presented as a contra-asset to accounts receivable on the balance sheet, and changes in the allowance are recognized in selling, general, and administrative expenses. Accounts are written off when collection efforts are exhausted and the receivable is deemed uncollectible.

The following is a summary of the Company's accounts receivable at March 31, 2025 and June 30, 2024:

---

| | | |
|:---|:---|:---|
|  | **March 31, 2025** | **June 30, 2024** |
| Accounts receivable | $61586 | $56570 |
| Less: allowance for credit losses | 51962 | 52138 |
| Accounts receivable - net | $9624 | $4432 |

---

<u>Bad Debt Expense</u>

For the nine months ended March 31, 2025 and 2024, bad debt was as follows:

---

| | |
|:---|:---|
| **Nine Months Ended March 31,** | **Nine Months Ended March 31,** |
| **2025** | **2024** |
| $- | $1190 |

---

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

**Inventory**

The Company accounts for inventory in accordance with ASC 330, Inventory. Inventory consists solely of snacks and related ingredients and packaging, and is stated at the lower of cost or net realizable value ("LCNRV") using the first-in, first-out (FIFO) method.

From time to time, inventory may include goods in transit once title and risk of loss have transferred to the Company in accordance with the terms of purchase. Inbound freight, handling, customs, insurance, and other costs directly attributable to bringing inventory to its current location and condition are capitalized as part of inventory cost. Abnormal freight, rehandling, or other costs not directly attributable to inventory acquisition are expensed as incurred.

As of March 31, 2025 and June 30, 2024, inventory consisted primarily of:

● Foodservice Packaging Distribution: Finished goods including paper cups, plastic cups, food containers, bags, and related consumables.

Management evaluates inventories each reporting period to assess whether reserves are necessary for slow-moving, obsolete, or impaired items. In performing this assessment, management considers market conditions, expected demand, aging trends, turnover rates, and estimated net realizable value.

**SWC GROUP, INC.**

**NOTES TO UNAUDITED FINANCIAL STATEMENTS**

**MARCH 31, 2025**

For the nine months ended March 31, 2025 and 2024, respectively, the Company did not record any provisions for inventory obsolescence or impairment.

At March 31, 2025 and June 30, 2024, the Company had inventory of $252,203 and $356,399, respectively. Included in these amounts were $0 and $66,378 of inventory in transit, respectively.

**Concentrations**

The Company evaluates concentrations of risk in accordance with ASC 275-10, Risks and Uncertainties. A concentration exists when a single customer, supplier, geographic region, or other external factor accounts for a significant portion of revenues, receivables, or supply chain activity (typically >10%).

Disclosure is required only when it is reasonably possible that such concentration could result in a severe near-term impact on the Company's financial position, results of operations, or cash flows.

At March 31, 2025 and June 30, 2024, the Company has evaluated its customer, supplier, and geographic exposures and determined that no such concentrations exist that meet the threshold for disclosure.

**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.

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.

The Company evaluates the carrying value of property and equipment whenever events or changes in circumstances indicate that the asset may be impaired. If impairment indicators exist, the Company assesses recoverability based on the undiscounted future cash flows expected from the use and disposition of the asset. If the carrying amount exceeds the estimated recoverable amount, an impairment loss is recognized.

**SWC GROUP, INC.**

**NOTES TO UNAUDITED FINANCIAL STATEMENTS**

**MARCH 31, 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.

<u>Impairment Assessment Process</u>

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.

<u>Impairment Results</u>

For the nine months ended March 31, 2025 and 2024, the Company did not record any impairment losses.

**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, unless the straight-line method is materially similar.

<u>Original Issue Discounts (OID)</u>

For certain notes issued, the Company may provide the debt holder with an original issue discount (OID), which is recorded as a debt discount, reducing the face value of the note. The discount is amortized to interest expense over the term of the debt in the Statements of Operations.

**SWC GROUP, INC.**

**NOTES TO UNAUDITED FINANCIAL STATEMENTS**

**MARCH 31, 2025**

<u>Debt Issuance Costs</u>

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 balance sheets.

<u>Short-Term Leases</u>

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.

<u>Lease Term and Renewal Options</u>

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.

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.

<u>Discount Rate and Lease Liability Measurement</u>

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.

**SWC GROUP, INC.**

**NOTES TO UNAUDITED FINANCIAL STATEMENTS**

**MARCH 31, 2025**

<u>Lease Impairment</u>

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 nine months ended March 31, 2025 and the year ended June 30, 2024, respectively.

**Revenue Recognition**

The Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers, as amended. Revenue is recognized when control of promised goods or services transfers to customers, in an amount that reflects the consideration expected to be received.

<u>Revenue Stream</u>

The Company currently generates revenue primarily from the following single source:

Foodservice Packaging – The wholesale distribution of disposable foodservice packaging products, including custom-printed and stock paper cups, plastic cups, food containers, bags, and related consumables, primarily through the Company's e-commerce platform.

To provide further clarity on the nature, timing, and recognition of revenue, the Company's single revenue stream is discussed below:

**Foodservice Packaging Distribution**

Revenue from the distribution of disposable foodservice packaging products is derived exclusively from business customers on a wholesale basis through the Company's e-commerce platform and direct sales channels. Customer contracts typically contain a single performance obligation: typically, delivery of the ordered products.

Shipping and handling activities that occur after the customer obtains control are accounted for as fulfillment costs and not as separate performance obligations. Because sales are exclusively to registered businesses, the Company collects and remits sales taxes where required; sales to businesses are exempt only when valid resale/exemption certificates are obtained.

**SWC GROUP, INC.**

**NOTES TO UNAUDITED FINANCIAL STATEMENTS**

**MARCH 31, 2025**

The Company follows the five-step revenue recognition model:

1. Identify the Contract with a Customer

A contract exists when:

● The agreement creates enforceable rights and obligations;

● It has commercial substance;

● Payment terms are defined and consideration is determinable;

● Collection is probable

Customer credit risk is assessed at contract inception and updated periodically.

2. Identify the Performance Obligations

Each order represents a single performance obligation: shipment or delivery of the ordered goods.

3. Determine the Transaction Price

Transaction price consists primarily of fixed consideration based on contract or list pricing.

4. Allocate the Transaction Price

Contracts generally contain only a single performance obligation - product delivery. Accordingly, the entire transaction price is allocated to that performance obligation.

5. Recognize Revenue When (or As) Performance Obligations Are Satisfied

Revenue is recognized at a point in time, when control of the goods transfers to the customer (generally upon shipment or delivery).

<u>Principal vs. Agent Considerations</u>

In accordance with ASC 606-10-55-36 through 55-40, the Company evaluated whether it acts as principal or agent in each of its revenue streams. The assessment considers whether the Company (i) obtains control of goods or services before transfer to the customer, (ii) has discretion in establishing pricing, (iii) is primarily responsible for fulfillment, and (iv) is exposed to inventory or service-level risks.

**SWC GROUP, INC.**

**NOTES TO UNAUDITED FINANCIAL STATEMENTS**

**MARCH 31, 2025**

Based on this analysis, the Company reached the following conclusions:

The Company acts as a principal in foodservice packaging sales.

● The Company designs, sources, and controls products prior to transfer.

● The Company has discretion in pricing.

● The Company is responsible for fulfillment, including warehousing and logistics.

● The Company bears inventory risk prior to transfer.

Revenue is recognized on a gross basis for foodservice packaging sales.

<u>Summary of Compliance with ASC 606 and ASU Updates</u>

---

| | | | |
|:---|:---|:---|:---|
| **Revenue Stream** | **Performance Obligation** | **Recognition Timing** | **Consideration Type** |
| Foodservice packaging | Shipment to customer | Point in time | Fixed price (wholesale contracts); |
|  |  | upon shipment | excludes sales tax |

---

**Contract Liabilities (Deferred Revenue)**

Contract liabilities represent amounts received in advance of performance obligations being satisfied.

As of March 31, 2025 and June 30, 2024, the Company had deferred revenue of $488,964 and $512,695, respectively.

The following represents the Company's disaggregation of revenues for the nine months ended March 31, 2025 and 2024:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **For the Nine Months Ended March 31,** | **For the Nine Months Ended March 31,** | **For the Nine Months Ended March 31,** | **For the Nine Months Ended March 31,** |
|  | **2025** | **2025** | **2024** | **2024** |
|  | **Revenue** | **% of Revenues** | **Revenue** | **% of Revenues** |
| Foodservice packaging | $1302642 | 100.00% | $1274934 | 100.00% |

---

For the nine months ended March 31, 2025 and 2024, the Company recognized shipping fee revenues of $197,126 and $177,268, respectively, as a component of total revenues.

**SWC GROUP, INC.**

**NOTES TO UNAUDITED FINANCIAL STATEMENTS**

**MARCH 31, 2025**

**Cost of Sales**

Cost of sales for foodservice packaging consists of direct costs incurred to source, warehouse, and distribute packaging products. These costs are recognized in the same period as the related revenue.

Cost components primarily include:

● Purchased Materials – Packaging products sourced from third-party manufacturers and suppliers.<br> ● Freight and Distribution – Outbound shipping costs, warehouse handling, and fuel surcharges.<br> ● Warehousing and Logistics – Facility, labor, and utilities associated with storage and inventory management.

**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 balance sheet, regardless of the classification of the related asset or liability for financial reporting purposes.

<u>Uncertain Tax Positions</u>

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 March 31, 2025 and 2024, respectively, the Company had no uncertain tax positions that qualified for recognition or disclosure in the financial statements.

The Company also recognizes interest and penalties related to uncertain tax positions in other expense in the statement of operations. No interest and penalties were recorded for the nine months ended March 31, 2025 and 2024, respectively.

**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.

**SWC GROUP, INC.**

**NOTES TO UNAUDITED FINANCIAL STATEMENTS**

**MARCH 31, 2025**

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

<u>Factors Considered in Valuation Allowance Assessment</u>

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.

<u>Valuation Allowance Determination</u>

At March 31, 2025 and June 30, 2024, respectively, 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.

**Advertising Costs**

Advertising costs are expensed as incurred, "Advertising Costs." These costs are recognized as operating expenses in the period in which they are incurred and are classified within general and administrative expenses in the statements of operations.

Advertising expense related to the discontinued Snack and Beverages business, has been presented within discontinued operations.

**SWC GROUP, INC.**

**NOTES TO UNAUDITED FINANCIAL STATEMENTS**

**MARCH 31, 2025**

The Company recognized marketing and advertising costs during the nine months ended March 31, 2025 and 2024, respectively as follows:

---

| | |
|:---|:---|
| **For the Nine Months Ended March 31,** | **For the Nine Months Ended March 31,** |
| **2025** | **2024** |
| $14903 | $- |

---

**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.

ASC 718 establishes accounting standards for transactions in which an entity exchanges its equity instruments for goods or services. It also applies to transactions where an entity incurs liabilities based on the fair value of its equity instruments or liabilities that may be settled using equity instruments.

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.

● Cash flow classification for certain tax-related transactions.

**SWC GROUP, INC.**

**NOTES TO UNAUDITED FINANCIAL STATEMENTS**

**MARCH 31, 2025**

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.

**Basic and Diluted Earnings (Loss) per Share**

The Company computes earnings per share ("EPS") in accordance with ASC 260, "Earnings Per Share." The calculation of basic EPS follows the two-class method and is determined by dividing net earnings available to common shareholders by the weighted average number of common shares outstanding, including certain other shares committed to be issued.

<u>Basic Earnings Per Share (EPS)</u>

Basic EPS is calculated using the two-class method, and is computed as follows:

● Net earnings available to common shareholders represent net earnings to common shareholders, adjusted for the allocation of earnings to participating securities.

● Losses are not allocated to participating.

● The denominator includes common shares outstanding and certain other shares committed to be issued, such as restricted stock and restricted stock units ("RSUs"), for which no future service is required.

<u>Diluted Earnings Per Share (EPS)</u>

Diluted EPS is calculated under both the two-class method and the treasury stock method, and the more dilutive result is reported.

● Diluted EPS is computed by taking the sum of:

○ Net earnings available to common shareholders

○ Dividends on preferred shares

○ Dividends on dilutive mandatorily redeemable convertible preferred shares

○ Divided by the weighted average number of common shares outstanding and certain other shares committed to be issued, plus all dilutive common stock equivalents during the period, such as:

● Stock options

● Warrants

● Convertible preferred stock

● Convertible debt

● Preferred shares and unvested share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents (whether paid or unpaid) qualify as participating securities under the two-class method.

**SWC GROUP, INC.**

**NOTES TO UNAUDITED FINANCIAL STATEMENTS**

**MARCH 31, 2025**

<u>Net Loss Per Share Considerations</u>

In computing net loss per share, unvested shares of common stock are excluded from the denominator.

<u>Participating Securities & Share-Based Compensation</u>

Restricted stock and RSUs granted as part of share-based compensation contain nonforfeitable rights to dividends and dividend equivalents, respectively. Therefore:

● Before the requisite service is rendered for the right to retain the award, these instruments meet the definition of a participating security.

● RSUs granted under an executive compensation plan, however, are not considered participating securities because the rights to dividend equivalents are forfeitable.

The Company did not have any potentially dilutive equity securities for the nine months ended March 31, 2025 and 2024.

**Related Parties**

The Company defines related parties in accordance with ASC 850, "Related Party Disclosures," and SEC Regulation S-X, Rule 4-08(k). 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.

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.

**SWC GROUP, INC.**

**NOTES TO UNAUDITED FINANCIAL STATEMENTS**

**MARCH 31, 2025**

Disclosures are made in accordance with ASC 850-10-50-1 through 50-6 and SEC Regulation S-X, Rule 4-08(k), which requires registrants to disclose material related party transactions and their effects on the financial position and results of operations.

See Notes 3, 5 and 8 for related party transactions.

<u>Relationship with Parent</u>

Prior to its acquisition by NGTF on March 31, 2025, SWC was a wholly owned subsidiary of another entity ("Parent"). From time to time, SWC engaged in transactions with its Parent in the ordinary course of business. Intercompany balances were settled in cash/netted through stockholders' deficit. There were no outstanding intercompany balances as of March 31, 2025.

**Recent Accounting Standards**

<u>Adopted Accounting Standards</u>

ASU 2023-07 — Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures

In November 2023, the FASB issued ASU 2023-07 to improve disclosures related to reportable segments. The standard requires:

● Enhanced disclosure of significant segment expenses regularly reviewed by the Chief Operating Decision Maker (CODM), even if those expenses are not allocated in segment profit or loss.

● More detailed descriptions of how segment profit or loss is measured, and how reported measures align with internal management reporting.

The Company adopted ASU 2023-07 on July 1, 2024. The adoption did not have a material impact on the Company's financial statements.

ASU 2023-09 — Income Taxes (Topic 740): Improvements to Income Tax Disclosures<br> Issued in December 2023, ASU 2023-09 enhances income tax disclosures by:

● Requiring standardized disaggregation of the effective tax rate reconciliation into prescribed categories.

● Mandating jurisdictional disclosure of income taxes paid, broken out by federal, state, and significant foreign jurisdictions.

● Expanding narrative explanations for reconciling items and effective tax rate fluctuations.

**SWC GROUP, INC.**

**NOTES TO UNAUDITED FINANCIAL STATEMENTS**

**MARCH 31, 2025**

The Company adopted ASU 2023-09 on July 1, 2024. The adoption did not have a material impact on the Company's financial statements.

<u>Adopted Accounting Standards (Not Yet Adopted)</u>

ASU 2024-03 — Income Statement—Reporting Comprehensive Income (Subtopic 220-40): Disaggregation of Income Statement Expenses

<br> In November 2024, the FASB issued ASU 2024-03, which requires greater disaggregation of certain income statement expense categories, including:

● Inventory purchases

● Employee compensation

● Depreciation and amortization

● Selling expenses, including a definition of what is included in that category

The standard is effective for fiscal years beginning after December 15, 2026, and for interim periods beginning after December 15, 2027. Early adoption is permitted.

The Company is currently assessing the impact of ASU 2024-03 on its financial statement presentation and footnote disclosures. The standard is not expected to have a material effect on the Company's financial condition, results of operations, or cash flows.

<u>Other Accounting Standards Updates</u>

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 financial statements.

**SWC GROUP, INC.**

**NOTES TO UNAUDITED FINANCIAL STATEMENTS**

**MARCH 31, 2025**

**<u>Note 3 – Property and Equipment</u>**

Property and equipment consisted of the following:

---

| | | | |
|:---|:---|:---|:---|
|  |<br>**March 31, 2025** |<br>**June 30, 2024** | **Estimated Useful**<br>**Lives (Years)** |
| Land |  | 632391 | N/A |
| Building |  | 197609 | 31.5 |
| Computers, furniture and equipment | 28405 | 28405 | 5 |
| Vehicles | 107528 | 176913 | 5 |
| Warehouse equipment | 31340 | 31340 | 3 - 5 |
| Production molds | 145173 | 145173 | 3 - 5 |
| Leasehold improvements | - | 6250 | 5 |
|  | 312446 | 1218081 |  |
| Accumulated depreciation | (285504) | (343267) |  |
| Total land, property and equipment - net | $26942 | $874814 |  |

---

**<u>Nine Months Ended March 31, 2025</u>**

**Excluded Assets (Related Party Distribution)**

SWC distributed property and equipment with a carrying value of $840,325 to its parent, (a related party). These assets were not transferred as part of the business acquired by Nightfood Holdings, Inc. on March 31, 2025 and are therefore excluded from the accompanying financial statements. The distribution was recorded as a reduction of net assets within stockholders' deficit on the distribution date. No gain or loss was recognized as the assets were distributed at carrying value.

 

**Vehicle Disposals**

During the nine months ended March 31, 2025, SWC disposed of various inoperable vehicles with an aggregate historical cost of $69,385 and a net carrying amount of $0. The assets were retired from service and derecognized. No gain or loss was recognized upon disposal. Additionally, no cash proceeds were received.

 

**Depreciation and Amortization**

Depreciation and amortization expense for the nine months ended March 31, 2025 and 2024, was $7,547 and $31,742, respectively.

Depreciation and amortization are included as a component of general and administrative expenses in the accompanying statements of operations.

**SWC GROUP, INC.**

**NOTES TO UNAUDITED FINANCIAL STATEMENTS**

**MARCH 31, 2025**

**<u>Note 4 – Accounts Payable and Accrued Liabilities</u>**

Accounts payable and accrued liabilities were as follows at March 31, 2025 and June 30, 2024, respectively:

---

| | | |
|:---|:---|:---|
|  | **March 31, 2025** | **June 30, 2024** |
| Accounts payable and accrued liabilities | $1475683 | $1072149 |
| Accrued interest payable | 72337 | 72337 |
| Total accounts payable and accrued liabilities | $1548020 | $1144486 |

---

**<u>Note 5 – Debt</u>**

The following represents a summary of the Company's debt (notes payable and notes payable – related party) at March 31, 2025 and June 30, 2024:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Issue Date** | **Maturity Date** | **Interest Rate** | **Default<br> Interest Rate** | **Collateral** | **Debt Type** |
| Loan #1 | June 15, 2020 | September 15, 2020 | 18.00% | N/A | Unsecured | Notes Payable |
| Loan #2 | June 6, 2019 | June 21, 2024 | 11.60% | N/A | Unsecured | Notes Payable |
| Loan #3 | May 13, 2022 | May 13, 2023 | N/A | N/A | Unsecured | Notes Payable |
| Loan #4 | May 18, 2022 | May 18, 2022 | N/A | N/A | Unsecured | Notes Payable |
| Loan #5 | May 25, 2022 | May 25, 2023 | N/A | N/A | Unsecured | Notes Payable |
| Loan #6 | December 30, 2022 | October 20, 2023 | N/A | N/A | Unsecured | Notes Payable |
| Loan #7 | May 9, 2023 | May 9, 2024 | N/A | N/A | Unsecured | Notes Payable |
| Loan #8 | August 10, 2023 | June 12, 2024 | 9.51% | N/A | Unsecured | Notes Payable |
| Loan #9 | March 25, 2024 | March 24, 2025 | 16.00% | N/A | Unsecured | Notes Payable |
| Loan #10 | January 30, 2024 | June 30, 2025 | 16.00% | N/A | Unsecured | Notes Payable |
| Loan #11 | January 1, 2024 | June 30, 2025 | N/A | N/A | Unsecured | Notes Payable |
| Loan #12 | September 25, 2021 | September 25, 2027 | 6.40% | N/A | Unsecured | Notes Payable |
| Loan #13 | September 10, 2021 | September 10, 2026 | 9.00% | N/A | Unsecured | Notes Payable |
| Loan #14 | April 14, 2020 | May 18, 2021 | 1.00% | N/A | Unsecured | Notes Payable |
| Loan #15 | December 31, 2013 | December 31, 2015 | 18.00% | N/A | Unsecured | Notes Payable |
| Loan #16 | August 11, 2021 | August 15, 2024 | 8.50% | N/A | Unsecured | Notes Payable |
| Loan #17 | October 11, 2021 | October 11, 2026 | 6.40% | N/A | Unsecured | Notes Payable |
| Loan #18 | September 10, 2021 | September 10, 2026 | 9.00% | N/A | Unsecured | Notes Payable |
| Loan #19 | September 10, 2021 | September 10, 2026 | 8.99% | N/A | Unsecured | Notes Payable |
| Loan #20 | September 10, 2021 | September 10, 2026 | 8.99% | N/A | Unsecured | Notes Payable |
| Loan #21 | September 10, 2021 | September 10, 2026 | 8.99% | N/A | Unsecured | Notes Payable |
| Loan #22 | Various | Due on demand | N/A | N/A | Unsecured | Notes Payable - Related Party |
| Loan #23 | October 19, 2019 | Due on demand | N/A | N/A | Unsecured | Notes Payable |
| Loan #24 | September 30, 2022 | Due on demand | 1.30% | N/A | Unsecured | Notes Payable |
| Loan #25 | June 1, 2022 | April 1, 2023 | 3.00% | N/A | Unsecured | Notes Payable |

---

**SWC GROUP, INC.**

**NOTES TO UNAUDITED FINANCIAL STATEMENTS**

**MARCH 31, 2025**

The following represents a summary of the Company's notes payable at March 31, 2025 and June 30, 2024:

---

| | |
|:---|:---|
| June 30, 2023 | $1135698 |
| Proceeds | 525292 |
| Amortization of debt discount | 38850 |
| Repayments | (258473) |
| June 30, 2024 | 1441367 |
| Proceeds | 277572 |
| Acquired by Nightfood Holdings, Inc. | (334657) |
| Capital contribution | (1221452) |
| Repayments | (125570) |
| March 31, 2025 | $37260 |

---

The following represents a detail of the Company's notes payable at March 31, 2025 and June 30, 2024:

---

| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Nine Months Ended March 31, 2025** | **Nine Months Ended March 31, 2025** | **Nine Months Ended March 31, 2025** | **Nine Months Ended March 31, 2025** | **Nine Months Ended March 31, 2025** | **Nine Months Ended March 31, 2025** | **Nine Months Ended March 31, 2025** | **Nine Months Ended March 31, 2025** | **Nine Months Ended March 31, 2025** |
|  | **June 30, 2024** | **Proceeds** | **Acquired<br> by<br> Nightfood<br> Holdings,<br> Inc.** | **Capital<br> Contribution** | **Repayments** | **March 31,<br> 2025** | **Short<br> Term** | **Long<br> Term** | **In-Default** |
| Loan #1 | $100000 | $- | $(100000) | $- | $- | $- | $- | $- | $- |
| Loan #6 | (2196) |  |  |  | 2196 |  |  |  |  |
| Loan #8 | 873 |  |  |  | (873) |  |  |  |  |
| Loan #9 | 86500 |  |  | (86500) |  |  |  |  |  |
| Loan #10 | 95000 |  |  | (95000) |  |  |  |  |  |
| Loan #11 | 169880 | 277572 |  | (364952) | (82500) |  |  |  |  |
| Loan #15 | 20000 |  |  |  |  | 20000 | 20000 |  | 20000 |
| Loan #16 | 675000 |  |  | (675000) |  |  |  |  |  |
| Loan #17 | 14691 |  |  |  | (14691) |  |  |  |  |
| Loan #19 | 19992 |  |  |  | (19992) |  |  |  |  |
| Loan #20 | 13485 |  |  |  | (4855) | 8630 |  | 8630 |  |
| Loan #21 | 13485 |  |  |  | (4855) | 8630 |  | 8630 |  |
| Loan #23 | 54842 |  | (54842) |  |  |  |  |  |  |
| Loan #24 | 129950 |  | (129950) |  |  |  |  |  |  |
| Loan #25 | 49865 | - | (49865) | - | - | - | - | - | - |
| Total | $1441367 | $277572 | $(334657) | $(1221452) | $(125570) | $37260 | $20000 | $17260 | $20000 |

---

**SWC GROUP, INC.**

**NOTES TO UNAUDITED FINANCIAL STATEMENTS**

**MARCH 31, 2025**

**<u>Nine Months Ended March 31, 2025</u>**

**Debt Acquired/Forgiven by Nightfood Holding, Inc.**

<u>Assumption of Third-Party Debt by NGTF (Capital Contribution)</u>

Prior to closing, NGTF assumed $334,657 of SWC notes payable in connection with the pending acquisition. Upon NGTF's assumption, SWC derecognized the related debt and recorded a corresponding increase to additional paid-in capital. No gain or loss was recognized on the assumption. This transaction was non-cash and is presented as a non-cash financing activity in the statement of cash flows.

<u>Assumption of Related-Party Debt by NGTF (Capital Contribution)</u>

Prior to closing, NGTF assumed $188,218 of SWC notes payable – related party, in connection with the pending acquisition. Upon NGTF's assumption, SWC derecognized the related debt and recorded a corresponding increase to additional paid-in capital. No gain or loss was recognized on the assumption. This transaction was non-cash and is presented as a non-cash financing activity in the statement of cash flows.

<u>Debt Forgiveness by NGTF Subsidiary (Capital Contribution)</u>

Prior to closing, NGTF forgave $546,452 of SWC notes payable due to one of its subsidiaries, in connection with the pending acquisition. Upon NGTF's forgiveness, SWC derecognized the related debt and recorded a corresponding increase to additional paid-in capital. No gain or loss was recognized on the assumption. This transaction was non-cash and is presented as a non-cash financing activity in the statement of cash flows.

<u>Excluded Liability — Parent Assumption of Property-Secured Note (Related Party)</u>

SWC transferred a property and related secured note payable to its parent (a related party), and the parent assumed the obligation with a carrying amount of $675,000. The property securing the note was retained by the parent ($840,325 - see note 3), and was not included in the acquisition.

Accordingly, the liability (and related property) was excluded from the business acquired by NGTF on March 31, 2025 and is excluded from the accompanying financial statements.

SWC derecognized the liability and recorded a capital contribution in stockholders' equity. No gain or loss was recognized. This transaction was non-cash and is presented as a non-cash financing activity in the statement of cash flows.

**SWC GROUP, INC.**

**NOTES TO UNAUDITED FINANCIAL STATEMENTS**

**MARCH 31, 2025**

---

| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Year Ended June 30, 2024** | **Year Ended June 30, 2024** | **Year Ended June 30, 2024** | **Year Ended June 30, 2024** | **Year Ended June 30, 2024** | **Year Ended June 30, 2024** | **Year Ended June 30, 2024** | **Year Ended June 30, 2024** | **Year Ended June 30, 2024** |
|  | **June 30, 2023** | **Proceeds** | **Debt<br> Discount** | **Amortization<br> of Debt<br> Discount** | **Repayments** | **June 30,<br> 2024** | **Short<br> Term** | **Long<br> Term** | **In-Default** |
| Loan #1 | $100000 | $- | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;- | $- | $- | $100000 | $100000 | $- | $100000 |
| Loan #2 | 6240 |  |  |  | (6240) |  |  |  |  |
| Loan #6 | 71016 |  |  | 19050 | (92262) | (2196) | (2196) |  | (2196) |
| Loan #7 | 31553 |  |  | 19800 | (51353) |  |  |  |  |
| Loan #8 |  | 20588 |  |  | (19715) | 873 | 873 |  | 873 |
| Loan #9 |  | 86500 |  |  |  | 86500 | 86500 |  |  |
| Loan #10 |  | 95000 |  |  |  | 95000 | 95000 |  |  |
| Loan #11 |  | 169880 |  |  |  | 169880 | 169880 |  |  |
| Loan #15 | 20000 |  |  |  |  | 20000 | 20000 |  | 20000 |
| Loan #16 | 675000 |  |  |  |  | 675000 | 675000 |  |  |
| Loan #17 | 19222 |  |  |  | (4531) | 14691 |  | 14691 |  |
| Loan #19 | 22094 |  |  |  | (2102) | 19992 |  | 19992 |  |
| Loan #20 | 19958 |  |  |  | (6473) | 13485 |  | 13485 |  |
| Loan #21 | 19958 |  |  |  | (6473) | 13485 |  | 13485 |  |
| Loan #23 | 64842 | 14000 |  |  | (24000) | 54842 | 54842 |  | 54842 |
| Loan #24 | 15950 | 137000 |  |  | (23000) | 129950 | 129950 |  | 129950 |
| Loan #25 | 69865 | 2324 | - | - | (22324) | 49865 | 49865 | - | 49865 |
| Total | $1135698 | $525292 | $- | $38850 | $(258473) | $1441367 | $1379714 | $61653 | $353334 |

---

The following represents a summary of the Company's notes payable – related party at March 31, 2025 and June 30, 2024:

---

| | |
|:---|:---|
| June 30, 2023 | $53530 |
| Proceeds | 167918 |
| Repayments | (33230) |
| June 30, 2024 | 188218 |
| Debt assumed by Nightfood Holdings, Inc. | (188218) |
| March 31, 2025 | $- |

---

**SWC GROUP, INC.**

**NOTES TO UNAUDITED FINANCIAL STATEMENTS**

**MARCH 31, 2025**

**<u>Debt Maturities</u>**

The following represents future maturities of the Company's various debt arrangements as follows:

---

| | |
|:---|:---|
| **For the Year Ended June 30,** | **Notes Payable** |
| 2025 (3 Months) | $20000 |
| 2026 |  |
| 2027 | 17260 |
| Total | $37260 |

---

**<u>Note 6 – Fair Value of Financial Instruments</u>**

The Company evaluates its financial assets and liabilities subject to fair value measurements on a recurring basis to determine the appropriate level in which to classify them for each reporting period. This determination requires significant judgments to be made.

**<u>Note 7 – Commitments and Contingencies</u>**

**Contingencies – Legal Matters**

The Company is subject to litigation claims arising in the ordinary course of business. The Company records litigation accruals for legal matters which are both probable and estimable and for related legal costs as incurred. The Company does not reduce these liabilities for potential insurance or third-party recoveries.

As of March 31, 2025, the Company is not aware of any litigation, pending litigation, or other transactions that require accrual or disclosure, except for the following:

In August 2024, a judgment in the amount of $75,394 was entered against the Company in favor of a former supplier related to unpaid invoices for a custom printed customer order. The judgment was settled and paid in full in July 2025.

**Commitments - Operating Lease**

The Company accounts for leases in accordance with FASB ASC 842: Leases, which requires lessees to apply the right-of-use (ROU) model by recognizing a right-of-use asset and a lease liability for all leases with terms exceeding 12 months. Lease classification determines the pattern of expense recognition in the statement of operations:

● Operating leases: Recognized on a straight-line basis as lease expense over the lease term.

**SWC GROUP, INC.**

**NOTES TO UNAUDITED FINANCIAL STATEMENTS**

**MARCH 31, 2025**

<u>Lease Recognition and Measurement</u>

The Company evaluates whether an arrangement contains a lease at inception and recognizes the lease in the financial statements upon lease commencement (the date the underlying asset is available for use). ROU assets represent the Company's right to use an asset over the lease term, while lease liabilities reflect the present value of future lease payments.

At lease commencement:

● ROU assets and lease liabilities are initially measured at the present value of lease payments.

● The Company primarily uses its incremental borrowing rate (IBR) to determine the present value of lease payments, except when an implicit rate is readily determinable.

● The IBR is based on market data, adjusted for credit risk and lease term.

<u>Practical Expedients and Lease Components</u>

The Company applies certain practical expedients to simplify lease accounting:

● Lease and non-lease components are combined for classification and measurement, except for direct sales-type leases and production equipment embedded in supply agreements.

● Short-term leases (12 months or less, without purchase or renewal options) are not recorded on the balance sheet.

<u>Lease Term and Expense Recognition</u>

● Lease liabilities include options to extend or terminate when reasonably certain of exercise.

● Operating lease expense is recognized on a straight-line basis over the lease term and reported under general and administrative expenses.

● Variable lease payments based on an index/rate are initially measured using the rate at lease commencement, with differences expensed as incurred.

<u>Company Lease Commitments</u>

As of March 31, 2025 and June 30, 2024, the Company had no finance leases under FASB ASC 842.

On February 21, 2020, the Company executed an approximate five-year lease for its office space, covering the period from March 1, 2020, through April 30, 2025.

● Lease term: 62 months

● Monthly lease payments: $2,378

● Total lease obligation: $147,446

● Renewal option: None

● Security deposit paid: $30,193

● Lease classification: The lease is evaluated under FASB ASC 842, Leases, and recorded as a right-of-use (ROU) asset and lease liability based on the present value of lease payments at lease commencement.

**SWC GROUP, INC.**

**NOTES TO UNAUDITED FINANCIAL STATEMENTS**

**MARCH 31, 2025**

The Company recognizes lease expense on a straight-line basis over the lease term.

The tables below present information regarding the Company's operating lease asset and liability at March 31, 2025 and June 30, 2024:

---

| | | |
|:---|:---|:---|
|  | **March 31, 2025** | **June 30, 2024** |
| Assets |  |  |
| Operating lease - right-of-use asset - non-current | $129853 | $268760 |
| Liabilities |  |  |
| Operating lease liability | $142880 | $292948 |
| Weighted-average remaining lease term (years) | 0.83 | 1.84 |
| Weighted-average discount rate | 10% | 10% |

---

The components of lease expense were as follows:

---

| | | |
|:---|:---|:---|
|  | **Nine Months Ended** | **Nine Months Ended** |
|  | **March 31, 2025** | **March 31, 2024** |
| Operating lease costs |  |  |
| Amortization of right-of-use operating lease asset | $116536 | $102768 |
| Lease liability expense in connection with obligation repayment | 4442 | 18210 |
| Total operating lease costs | $120978 | $120978 |
| Supplemental cash flow information related to operating leases was as follows: |  |  |
| Operating cash outflows from operating lease (obligation payment) | $132350 | $128495 |
| Right-of-use asset obtained in exchange for new operating lease liability | $- | $- |

---

**SWC GROUP, INC.**

**NOTES TO UNAUDITED FINANCIAL STATEMENTS**

**MARCH 31, 2025**

Future minimum lease payments required under leases that have initial or remaining non-cancellable lease terms at June 30,:

---

| | |
|:---|:---|
| <u>Year Ended June 30,</u> |  |
| 2025 (3 Months) | $147446 |
| Total undiscounted cash flows | 147446 |
| Less: amount representing interest | 4566 |
| Present value of operating lease liabilities | 142880 |
| Less: current portion of operating lease liabilities | 142880 |
| Long-term operating lease liabilities | $- |

---

**Other Income**

For the nine months ended March 31, 2025 and 2024, the Company recognized other income of $106,297 and $104,395, respectively, related to the sublease of office space to a third party. The Company maintains a month-to-month arrangement with the subtenant, under which the subtenant reimburses the Company for the use of space.

**<u>Note 8 – Stockholders' Deficit</u>**

As of March 31, 2025, the Company had one (1) class of stock, detailed as follows:

**Common Stock**

● Authorized Shares: 10,000

● Issued & Outstanding:

○ 10,000 shares as of March 31, 2025

○ 10,000 shares as of June 30, 2024

● Par Value: $0.00001 per share

● Voting Rights: 1 vote per share

**<u>Equity Transactions for the Nine Months Ended March 31, 2025</u>**

The Company had the following activity:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. Non-cash
 contributions - $1,744,327 (see note 5)

Comprised of the following capital contributions recorded directly to additional paid-in capital**:**

● NGTF assumption of third-party notes payable — $334,657

● NGTF assumption of related-party notes payable — $188,218

● NGTF subsidiary forgiveness of notes payable — $546,452

● Parent assumption of property-secured note — $675,000

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. Non-cash
 distributions - $840,325 (see note 3)

**SWC GROUP, INC.**

**NOTES TO UNAUDITED FINANCIAL STATEMENTS**

**MARCH 31, 2025**

**<u>Equity Transactions for the Year Ended June 30, 2024</u>**

**Debt Forgiveness – Related Party**

During the year ended June 30, 2024, the Company executed an agreement with a related party, its majority shareholder, its parent company to forgive accrued liabilities totaling $7,761,200. This forgiveness has been accounted for as, in substance, a capital contribution from the parent company and recorded as an increase to additional paid-in capital in the accompanying financial statements. This accounting treatment is consistent with ASC 470-50-40-2, *Debt—Modifications and Extinguishments - Derecognition*, which requires that debt forgiven by a parent or equity holder be reflected as a capital transaction rather than as income.

**<u>Note 9 - Subsequent Events</u>**

**Acquisition by Nightfood Holdings, Inc.**

On March 31, 2025, the Company was acquired by Nightfood Holdings, Inc. pursuant to a share exchange agreement, whereby Nightfood Holdings acquired 100% of the Company's issued and outstanding equity interests. As consideration, the Company's equity holders received 83,333 shares of Nightfood Holdings' Series C Convertible Preferred Stock, which had an estimated fair value of $4,399,982, based on the as-converted value of the underlying common shares as of the acquisition date.

As a result of this transaction, the Company became a wholly-owned subsidiary of Nightfood Holdings, Inc. The purchase price allocation and related accounting for this acquisition will be performed and reported by Nightfood Holdings, Inc. in its consolidated financial statements.

See Form 8-K filed with the U.S. Securities and Exchange Commission on April 2, 2025.

**UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION**

**Introduction**

The acquisition of SWC Group, Inc. ("SWC") by Nightfood Holdings, Inc. ("NGTF" or the "Parent Company") evolved through three agreements:

● September
 4, 2024 – NGTF, through its wholly-owned subsidiary, Future Hospitality Ventures Holdings,
 Inc. ("FHVH"), entered into a Share Exchange Agreement (the "Exchange Agreement")
 with SWC and Sugarmade, Inc., a Delaware corporation and the sole shareholder of SWC (the
 "SWC Shareholder"), pursuant to which NGTF agreed to acquire all of the issued
 and outstanding shares of SWC.

● December
 10, 2024 – The parties entered into a First Amendment to the Exchange Agreement, modifying
 certain terms related to transaction pricing and share calculations, while leaving all other
 terms in effect.

● March
 31, 2025 – The parties entered into the Second Amendment to the Share Exchange Agreement
 (the "Second Amendment"), which revised delivery obligations, required additional
 documentation of transfer, and finalized the purchase price and closing date.

The following represents the key terms of the Second Amendment:

&nbsp;&nbsp;&nbsp;&nbsp;1. Closing
 Date – March 31, 2025.

2. Purchase
 Price – 83,333 shares of NGTF Series C Preferred Stock, having an estimated fair value
 of $4,399,982.

3. Resulting
 Structure – SWC delivered all issued and outstanding shares of its common stock to
 NGTF and became a wholly-owned subsidiary of NGTF.

**Business of SWC**

SWC Group, Inc. (d/b/a CarryOutSupplies.com) operates as a business-to-business ("B2B") enterprise focused on the wholesale distribution of disposable foodservice packaging products.

**UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION**

**Core Operations of SWC**

● Product portfolio: printed paper cups, plastic cups, food containers, bags, and related consumables

● Value chain activities: product design, domestic/international sourcing, quality control, warehousing, and fulfillment

● Customer base: primarily small to mid-sized businesses in the hospitality and foodservice industries, with U.S.-wide distribution.

● Risk profile – SWC is not materially dependent on any single customer or supplier, and no customer represented 10% or more of revenues in the most recent fiscal year.

**Reasons for the Transaction**

NGTF expects the SWC acquisition to strengthen its foodservice distribution market presence through:

● Established e-commerce platform integration

● Diversified product portfolio expansion

● Nationwide customer base addition

● Revenue growth opportunities via combined operations

● Operational efficiencies through integrated sourcing and fulfillment capabilities

**Anticipated Accounting Treatment**

The transaction is accounted for as a business combination in accordance with ASC 805, Business Combinations, using the acquisition method.

In accordance with ASC 805, the acquisition method requires:

&nbsp;&nbsp;&nbsp;&nbsp;(a) Identifying
 the Acquirer – NGTF is the legal and accounting acquirer.

&nbsp;&nbsp;&nbsp;&nbsp;(b) Determining
 the Acquisition Date – March 31, 2025 (the "Closing Date").

&nbsp;&nbsp;&nbsp;&nbsp;(c) Recognizing
 and Measuring Identifiable Assets and Liabilities – SWC's assets and liabilities
 will be measured at estimated fair values as of the Closing Date. No noncontrolling interests
 were identified.

&nbsp;&nbsp;&nbsp;&nbsp;(d) Recognizing
 and Measuring Goodwill and Intangible Assets – To the extent the fair value of consideration
 transferred exceeds the fair value of net assets acquired, NGTF will recognize goodwill.
 Identifiable intangible assets will be recognized separately from goodwill if they arise
 from contractual or legal rights or are otherwise separable. The final allocation of purchase
 price will be determined during the measurement period, not to exceed one year from the Closing
 Date.

**UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION**

**Consideration Transferred**

83,333 shares of NGTF Series C, Preferred Stock, with an estimated fair value of $4,399,982, based on the as-converted value of the underlying common shares (6,000:1) as of the acquisition date.

**Transaction Costs**

Acquisition-related costs, including legal, accounting, and advisory fees, are expensed in the period incurred. Transaction costs associated with the SWC acquisition were immaterial and expensed as incurred.

**Contingent Consideration**

<br> The transaction did not include any contingent consideration, earn-outs, or additional equity issuances.

**Relationship Between the Parties**

This was not a related party transaction, nor were NGTF and SWC entities under common control prior to the transaction.

**Estimated Preliminary Purchase Price Allocation**

The preliminary allocation of purchase price to the assets acquired and liabilities assumed is as follows:

---

| | |
|:---|:---|
| Consideration |  |
| &nbsp;&nbsp;&nbsp;Series C - convertible preferred stock - 83,333 shares | $4399982 |
| Fair value of consideration transferred | 4399982 |
| Recognized amounts of identifiable assets acquired and liabilities assumed: |  |
| &nbsp;&nbsp;&nbsp;Cash | 28340 |
| &nbsp;&nbsp;&nbsp;Accounts receivable | 22624 |
| &nbsp;&nbsp;&nbsp;Prepaids and other | 114590 |
| &nbsp;&nbsp;&nbsp;Inventory | 252203 |
| &nbsp;&nbsp;&nbsp;Property and equipment - net | 26942 |
| &nbsp;&nbsp;&nbsp;Operating lease - right - of - use asset | 13317 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total assets acquired | 458016 |
| &nbsp;&nbsp;&nbsp;Accounts payable and accrued expenses | 1517927 |
| &nbsp;&nbsp;&nbsp;Notes payable | 67262 |
| &nbsp;&nbsp;&nbsp;Operating lease liability | 14972 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total liabilities assumed | 1600161 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total identifiable net liabilities assumed | (1142145) |
| Allocation required for identifiable intangible assets and goodwill | 5542127 |
| Trade names/trademarks | 786800 |
| Customer relationships | 1041300 |
| &nbsp;&nbsp;&nbsp;Total identifiable intangible assets | 1828100 |
| Goodwill (including assembled workforce) | $3714027 |

---

The above amounts are preliminary estimates. NGTF will complete a formal valuation of SWC's assets and liabilities and finalize the purchase price allocation within the measurement period (not to exceed one year from the Closing Date), as required under ASC 805. Adjustments may materially affect the allocation between tangible assets, intangible assets, and goodwill.

**UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION**

**No Change in Control**

Although the transaction is accounted for as a business combination under ASC 805, it did not result in a change in control of NGTF. NGTF is both the legal acquirer and the accounting acquirer, and continues as the reporting entity for SEC purposes.

NGTF's existing shareholders retained their voting and ownership interests in the Parent Company both before and after the acquisition. The acquisition represents the addition of SWC as a wholly-owned subsidiary, rather than a reverse acquisition or change in control event.

Accordingly, the historical consolidated financial statements of NGTF will remain those of the registrant, with the results of SWC included prospectively from the Closing Date, consistent with Rule 3-05 of Regulation S-X.

**Pro Forma Condensed Combined Financial Information**

The following unaudited pro forma condensed combined financial information presents the combination of NGTF and SWC, adjusted to reflect the acquisition.

**Balance Sheet Presentation:**

As the acquisition of SWC was completed on March 31, 2025, NGTF's historical consolidated balance sheet as of that date already reflects the financial position of the combined company. Accordingly, no separate pro forma balance sheet is presented, consistent with Rule 11-02(c)(2) of Regulation S-X and SEC Release No. 33-10786.

**Statements of Operations Presentation:**

The unaudited pro forma condensed combined statements of operations are presented for the:

● Nine months ended March 31, 2025; and

● Year ended June 30, 2024.

Both periods give effect to the acquisition as if it had occurred on July 1, 2023.

**UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION**

**Basis of Presentation**

The pro forma financial information has been prepared in accordance with Article 11 of Regulation S-X, as amended by SEC Release No. 33-10786. It is presented for illustrative purposes only and is not necessarily indicative of what NGTF's consolidated financial position or results of operations would have been had the acquisition occurred on the dates indicated, nor is it indicative of future results.

The pro forma information should be read in conjunction with:

● NGTF's historical consolidated financial statements, and

● SWC's historical consolidated financial statements.

**Transaction Accounting Adjustments**

As the March 31, 2025 consolidated balance sheet already reflects the acquisition, no additional pro forma balance sheet adjustments are presented. The pro forma statements of operations reflect the consolidation of SWC as a wholly-owned subsidiary.

&nbsp;&nbsp;&nbsp;&nbsp;1. Elimination
 of intercompany balances and transactions.

&nbsp;&nbsp;&nbsp;&nbsp;2. Transaction
 costs, which were immaterial and expensed.

The unaudited pro forma condensed combined financial statements do not reflect any potential operating synergies, dis-synergies, or cost savings that may result from the acquisition, nor do they reflect any related integration costs.

**Pro Forma Earnings per Share**

Pro forma basic and diluted net income (loss) per share is calculated based on NGTF's historical weighted average common shares outstanding. The issuance of 83,333 shares of NGTF Series C, Preferred Stock as consideration for the acquisition does not impact the calculation of pro forma EPS, as these preferred shares are not treated as common stock equivalents for purposes of EPS.

**Additional Information**

The audited financial statements of SWC for the year ended June 30, 2024, and the unaudited financial statements for the nine months ended March 31, 2025, together with the pro forma financial information required under Article 11 of Regulation S-X, are filed as Exhibits to this Form 8-K/A.

The unaudited pro forma condensed combined financial statements are forward-looking and subject to risks and uncertainties. Actual results may differ materially from those presented. See "Caution Regarding Forward-Looking Statements" and "Risk Factors" included elsewhere in this Form 8-K/A.

**UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **March 31, 2025**<br>**Historical**<br>**Nightfood**<br>**Holdings, Inc.** | **March 31, 2025**<br>**Historical**<br>**SWC Group,**<br>**Inc.** |<br>**Transaction**<br>**Accounting**<br>**Adjustments** | <br>**Notes** | **March 31,**<br> **2025**<br>**Pro Forma**<br>**Combined** |
| **Revenues** | $570 | $1302642 | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;- |  | $1303212 |
| **Costs and expenses** |  |  |  |  |  |
| Cost of sales |  | 785518 |  |  | 785518 |
| General and administrative expenses | 2145289 | 882189 | - |  | 3027478 |
| **Total costs and expenses** | 2145289 | 1667707 |  |  | 3812996 |
| **Loss from operations** | (2144719) | (365065) | - |  | (2509784) |
| **Other income (expense)** |  |  |  |  |  |
| Interest income | 70900 | 6706 |  |  | 77606 |
| Other income |  | 106297 |  |  | 106297 |
| Loss on debt extinguishment | (113955) |  |  |  | (113955) |
| Derivative expense | (611583) |  |  |  | (611583) |
| Interest expense (including amortization of debt discount) | (986412) | (244808) | - |  | (1231220) |
| **Total other income (expense) - net** | (1641050) | (131805) | - |  | (1772855) |
| **Net loss** | $(3785769) | $(496870) | $- |  | $(4282639) |
| Deemed dividend on Series B Preferred Stock | (11566) | - | - |  | (11566) |
| **Net loss available to common stockholders - basic and diluted** | $(3797335) | $(496870) | $- |  | $(4294205) |
| **Loss per share - basic and diluted** | $(0.03) | $(49.69) |  | **1** | $(0.03) |
| **Weighted average number of shares - basic and diluted** | 128945181 | 10000 |  | **1** | 128945181 |

---

1 – The calculation of loss per share excludes the issued and outstanding common stock of SWC, as these shares were canceled in connection with the business combination and therefore would not remain outstanding in the pro forma presentation. The consideration paid in the form of 83,333 shares of Series C Preferred Stock is excluded from diluted earnings (loss) per share because the Company reported a net loss and inclusion would be anti-dilutive. No retroactive adjustment has been made related to the issuance of the Series C Preferred Stock issued.

**UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **June 30, 2024**<br>**Historical**<br>**Nightfood**<br>**Holdings, Inc.** | **June 30, 2024**<br>**Historical**<br>**SWC Group,**<br>**Inc.** |<br>**Transaction**<br>**Accounting**<br>**Adjustments** | <br>**Notes** | **June 30,**<br> **2024**<br>**Pro Forma**<br>**Combined** |
| **Revenues** | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;89272 | $1780688 | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;- |  | $1869960 |
| **Costs and expenses** |  |  |  |  |  |
| Cost of sales | 107395 | 1017289 |  |  | 1124684 |
| General and administrative expenses | 970544 | 1109991 | - |  | 2080535 |
| **Total costs and expenses** | 1077939 | 2127280 |  |  | 3205219 |
| **Loss from operations** | (988667) | (346592) | - |  | (1335259) |
| **Other income (expense)** |  |  |  |  |  |
| Interest income | 17599 |  |  |  | 17599 |
| Other income |  | 120664 |  |  | 120664 |
| Loss on debt extinguishment | (111730) |  |  |  | (111730) |
| Loss on settlement |  | (110516) |  |  | (110516) |
| Interest expense (including amortization of debt discount) | (2152708) | (220286) | - |  | (2372994) |
| **Total other income (expense) - net** | (2246839) | (210138) | - |  | (2456977) |
| **Net loss** | $(3235506) | $(556730) | $- |  | $(3792236) |
| Deemed dividend on Series B Preferred Stock | (84106) | - | - |  | (84106) |
| **Net loss available to common stockholders - basic and diluted** | $(3319612) | $(556730) | $- |  | $(3876342) |
| **Loss per share - basic and diluted** | $(0.03) | $(55.67) |  | **1** | $(0.03) |
| **Weighted average number of shares - basic and diluted** | 126540836 | 10000 |  | **1** | 126540836 |

---

**1 –** The calculation of loss per share excludes the issued and outstanding common stock of SWC, as these shares were canceled in connection with the business combination and therefore would not remain outstanding in the pro forma presentation. The consideration paid in the form of 83,333 shares of Series C Preferred Stock is excluded from diluted earnings (loss) per share because the Company reported a net loss and inclusion would be anti-dilutive. No retroactive adjustment has been made related to the issuance of the Series C Preferred Stock issued.