Quarterly Report for Quarter Ending March 31, 2026 (Form 10-Q)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

FORWARD LOOKING STATEMENT INFORMATION

Certain statements made in this Quarterly Report on Form 10-Q involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance, or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. You can identify these statements by the fact that they do not relate strictly to historical or current facts, and use words such as "anticipate," "believe," "estimate," "expect," "forecast," "may," "should," "plan," "project," "will" and other words of similar meaning. The forward-looking statements included herein are based on current expectations that involve numerous risks and uncertainties. Our plans and objectives are based, in part, on assumptions involving judgments with respect to, among other things, future economic, competitive and market conditions, technological developments related to business support services and outsourced business processes, and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond our control.

Although we believe that our assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove inaccurate and, therefore, there can be no assurance that the forward-looking statements included in this Quarterly Report on Form 10-Q will prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements included herein particularly in view of the current state of our operations, the inclusion of such information should not be regarded as a statement by us or any other person that our objectives and plans will be achieved. Factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements include, but are not limited to, the factors set forth under the headings "Business" and "Risk Factors" within our Annual Report on Form 10-K for the fiscal year ended June 30, 2025 as filed with the Securities and Exchange Commission (the "SEC") on October 14, 2025, as well as the other information set forth herein.

OVERVIEW

Business Overview

Nightfood Holdings, Inc., dba TechForce Robotics ("Nightfood," "NGTF," "TechForce Robotics," or the "Company"), operates through five wholly owned subsidiaries (excluding Nightfood, Inc. which is a discontinued operation) that collectively position us to capitalize on the accelerating demand for automation and efficiency in the hospitality and foodservice industries: TechForce Robotics, Inc. (formerly Skytech Automated Solutions Inc.), Future Hospitality Ventures Holdings Inc. (d/b/a RoboOp365), SWC Group, Inc. (d/b/a CarryOutSupplies.com), Victorville Treasure Holdings, LLC and Treasure Mountain Holdings, LLC.

The Company's operations span Robotics-as-a-Service ("RaaS"), autonomous service robotics, enterprise automation, hospitality technology, supply-chain support, custom engineering, and operational infrastructure designed to support scalable commercial deployments. Through its subsidiaries and strategic relationships, the Company is focused on integrating AI-Enhanced robotics and automation technologies into real-world operating environments to improve labor efficiency, workflow optimization, customer service, and operational consistency.

In addition to internal development initiatives, the Company actively collaborates with sector-leading operators, manufacturers, technology partners, and enterprise customers to co-develop practical automation solutions tailored to industry-specific use cases. These partnerships allow the Company to design, refine, validate, and deploy technologies within live commercial environments, enabling product development driven by operational requirements, customer feedback, and real-world performance data rather than purely conceptual applications.

The Company also continues to pursue strategic acquisitions, distribution relationships, manufacturing collaborations, and vertical integration initiatives intended to expand its technological capabilities, commercialization platform, operational footprint, and long-term market penetration strategy.

TechForce Robotics, Inc., or TechForce or Skytech, a Delaware corporation which we acquired on March 31, 2025, serves as the Company's operational backbone, supported by a team with deep expertise in hospitality operations and a proven track record of building, managing, and scaling hotel and foodservice platforms. This operational strength enables TechForce to lead to the deployment of robotic and AI-enhanced automation solutions, ensuring seamless integration into daily operations. Management believes Skytech's depth of experience is a key differentiator that positions the Company to execute where many robotics competitors may struggle.

Future Hospitality Ventures Holdings Inc., or FHVH, Ventures Holdings or Future Hospitality, a Nevada corporation which we acquired on February 2, 2024, enhances this foundation by delivering advanced AI-enabled robotic systems designed to reduce labor costs, increase efficiency, and improve consumer experience. Launched in California shortly before the state's 2025 minimum wage increase in foodservice and hospitality, Ventures Holdings has benefited from heightened industry awareness and urgency around automation. Its plug-and-play solutions are designed to integrate easily into restaurants, hotels, healthcare facilities, school cafeterias, and other foodservice environments, with exponential benefits for operators managing multiple locations is our initial strategic focus.

SWC Group, Inc., or SWC, a California corporation which we acquired on March 31,2025, further complements the Company's ecosystem, having served more than 6,000 foodservice operators across the United States. As a recognized leader in custom-printed foodservice packaging, SWC generates recurring revenue while also providing a ready-made distribution and marketing channel for cross-selling our robotic solutions to an established base of industry decision-makers.

On August 27, 2025, the Company completed the acquisition of the Holiday Inn Victorville, a 155-room hotel property, through an all-equity transaction valued at approximately $39.0 million (excluding contingent consideration of $7.13 million), consisting of the issuance of 216,667 shares of the Company's Series C Convertible Preferred Stock. This property is one of two hotel assets recently acquired by the Company and is intended to support the Company's operational presence in the hospitality sector and facilitate evaluation of its robotic solutions within an operating hotel environment.

On September 30, 2025, the Company completed the acquisition of Treasure Mountain Holdings, LLC, the owner of the Hilton Garden Inn Palm Springs - Rancho Mirage, for total consideration of approximately $42.28 million (excluding contingent consideration of $4.8 million), which was satisfied through the issuance of 176,167 shares of Series C Convertible Preferred Stock.

Our Products and Services

The Company offers a comprehensive suite of products and services designed to meet the evolving needs of the hospitality and food service industries. Through TechForce, we deploy AI-enhanced robotic systems and automation services that handle repetitive, labor-intensive tasks such as food delivery, bussing, cleaning, and back-of-house operations. Future Hospitality provides plug-and-play robotic solutions integrated with proprietary AI software, enabling customers to improve efficiency, reduce labor costs, and enhance guest experiences across restaurants, hotels, healthcare facilities, and institutional foodservice environments. SWC complement these technological offerings with custom-printed packaging products, including cups, containers, and other foodservice supplies, giving operators both brand-enhancing packaging and a direct channel to adopt robotic solutions. Together, these subsidiaries allow the Company to provide end-to-end solutions, combining automation hardware, AI-enhanced software, service and maintenance, and consumable packaging products, creating a vertically integrated platform that drives operational efficiency and customer value.

TechForce's Products and Services

The Company believes TechForce is uniquely positioned as the operational backbone of its robotics platform, leveraging decades of hands-on hospitality and food service expertise to ensure the successful deployment of AI-enhanced automation solutions. Unlike many robotics companies that focus solely on hardware, TechForce combines robotics with deep operational know-how, enabling seamless integration of automation into real-world environments.

TechForce offers a suite of robotics and automation solutions under the Robots-as-a-Service (RaaS) model, designed to address repetitive, labor-intensive, and injury-prone tasks that are increasingly difficult for staff to manage. These solutions support both guest-facing and back-of-house operations, helping operators achieve cost savings, efficiency improvements, and enhanced service consistency.

Products and Solutions

TechForce Robotics offers a portfolio of AI-enhanced robotic systems designed to support operational, logistics, and service functions in hospitality, foodservice, and other commercial environments.

(a) BIM-E - Beverage and Inventory Management Engine

BIM-E is an AI-enhanced robotic system designed to automate beverage preparation and dispensing in high-volume service environments, including hotels, resorts, stadiums, and event venues. The system is designed to support standardized beverage preparation, inventory monitoring, and operational data capture. BIM-E may integrate with point-of-sale and other operational systems, subject to configuration, and is intended to reduce manual labor requirements and improve operational consistency.

(b) TIM-E - Task and Intelligent Mobility Engine

TIM-E is an AI-enhanced autonomous mobile robotics platform designed to perform configurable logistics and service tasks within hospitality and commercial facilities. The platform supports autonomous navigation and integration with elevators and access systems, subject to site configuration. TIM-E is designed to accommodate modular payloads, enabling deployment across multiple operational use cases, including internal delivery and facility support functions.

(c) Concierge - Autonomous Delivery System

Concierge is an autonomous robotic delivery system designed for use in hotel and resort environments. The system is intended to support the transport of items such as meals, beverages, and guest supplies within a facility. Concierge supports autonomous navigation and secure compartmentalization and is designed to operate in conjunction with existing building infrastructure, subject to site configuration.

(d) LIN-E - Laundry and Housekeeping Support System

LIN-E is an AI-enhanced robotic system designed to support housekeeping and back-of-house logistics operations. The system is intended to transport laundry, linens, and waste materials within large facilities, including hotels, convention centers, and stadiums. LIN-E supports autonomous navigation and building access integration, subject to site configuration, and is designed to reduce manual handling requirements.

(e) Matradee - Food Service Support System

Matradee is a robotic system designed to assist front-of-house foodservice operations by transporting prepared food items within dining environments. The system is intended to operate alongside human staff and support service flow efficiency in high-volume foodservice settings.

(f) Dustee - Autonomous Cleaning System

Dustee is an autonomous robotic system designed to perform routine sweeping and basic floor-cleaning tasks in hospitality and commercial environments. The system is intended to support daily cleaning operations and reduce reliance on manual labor for repetitive cleaning functions.

TechForce's management has an established track record of building and managing more than 130 hotels and developing over 50 properties from the ground up. This operational background provides the Company with a unique advantage: the ability to test, refine, and implement robotic solutions in live hospitality environments with confidence and precision.

In recent months, TechForce's team has begun positioning its solutions for deployment across hotels, convention centers, healthcare facilities, and shopping malls. The Company is also using its owned hotel assets-including the recently acquired Holiday Inn Victorville-as innovation hubs to validate and showcase real-world use cases for robotics and AI-enhanced automation.

Future Hospitality's Products and Services

The Company believes it is revolutionizing the hospitality industry with plug-and-play robotics and automation solutions designed to enhance service efficiency and consistency.

Future Hospitality offers two key robotics solutions through the RaaS business model, which can transform both front-end and back-end operations within the hospitality industry.

Future Hospitality offers the following products and solutions:

(a) Front-End Solutions

The serving robot, an advanced front-end solution, works alongside wait staff to ensure faster and more reliable service. These server robots help streamline service delivery, enhancing guest experiences by minimizing wait times and reducing human errors.

(b) Back-End Solutions

Smart cooking bots provide game-changing back-end solutions to support chefs in high-volume environments. The advanced kitchen assistant ensures consistent food quality and enables even inexperienced staff to prepare delicious meals quickly, addressing critical challenges in busy kitchens.

In recent months, Future Hospitality has been actively showcasing the capabilities of its service robots and automated systems to various regional restaurant franchises, assisted living facilities, hotels, and hospital operators. These demonstrations have sparked significant interest among industry leaders seeking to solve service inconsistency, labor shortages, and ongoing staffing replacement costs.

Future Hospitality is in active discussions with several organizations interested in implementing these automation solutions at scale in their day-to-day operations.

SWC's Products and Services

The Company believes that SWC (doing business as CarryOutSupplies.com) is one of the most recognized names in the custom-printed foodservice packaging industry, serving as both a revenue-generating subsidiary and a strategic channel for introducing our robotics and automation solutions to the market. With over 6,000 customers served across the United States since inception, SWC has established a strong reputation for quality, reliability, and service.

SWC provides a wide range of foodservice packaging products, specializing in custom printing that helps operators strengthen their brand identity while meeting day-to-day operational needs.

SWC offers the following products and solutions:

(a) Custom-Printed Cups

Disposable paper and plastic cups available in multiple sizes, with high-quality custom printing to promote brand visibility and enhance customer experience

(b) Takeout Containers and Boxes

Eco-friendly and durable packaging for restaurants, caterers, and foodservice operators, designed to keep food fresh during transport while showcasing custom branding.

(c) Utensils and Accessories

Branded or generic foodservice accessories, including straws, cutlery, napkins, and lids, to provide operators with a one-stop shop for all consumable needs.

(d) Eco-Friendly Packaging Solutions

Compostable and recyclable packaging options are designed to meet increasing consumer and regulatory demand for sustainable products, helping operators align with ESG and green initiatives.

In addition to providing consumables, SWC serves as a strategic sales and distribution channel for the Company's robotics offerings. Its established relationships with thousands of foodservice operators give the Company immediate access to decision-makers who are increasingly seeking automation solutions to reduce costs and improve efficiency.

By offering consumable products alongside its robotic solutions, SWC seeks to generate recurring revenue and support adoption of the Company's automation technologies in hospitality and foodservice environments. The integrated offering is intended to support operational efficiencies through standardized supplies and coordinated logistics.

Critical Accounting Policies and Estimates

Our discussion and analysis of our financial condition and results of operations is based on our unaudited condensed consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles. The preparation of these unaudited condensed consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent liabilities. On an on-going basis, we evaluate past judgments and our estimates, including those related to allowance for doubtful accounts, allowance for inventory write-downs and write offs, deferred income taxes, provision for contractual obligations and our ability to continue as a going concern. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

Note 2 to the consolidated financial statements, presented in our Annual Report on Form 10-K for the fiscal year ended June 30, 2025, describe the significant accounting estimates and policies used in preparation of our consolidated financial statements. There were no significant changes in our critical accounting estimates during the nine months ended March 31, 2026.

RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2026 AND 2025

		Three Months Ended March 31,								Period Change
		2026				2025				Increase (Decrease)
		Amount				Amount				$ Amount				% Change
Revenues - net		$	2,709,023			$	1,264			$	2,707,759				214,221	%		A
Cost of sales			724,361				-				724,361				N/M			B
Depreciation and amortization			1,063,102				-				1,063,102				N/M			C
General and administrative expenses			5,091,316				1,566,833				3,524,483				225	%		D
Loss from operations			(4,169,756	)			(1,565,569	)			2,604,187				166	%
Other income (expense) - net			(1,250,441	)			(944,204	)			306,237				32	%		E
Loss from continuing operations			(5,420,197	)			(2,509,773	)			2,910,424				116	%
Loss from discontinued operations			(487	)			(31,779	)			(31,292	)			(98	)%
Net loss		$	(5,420,684	)		$	(2,541,552	)		$	2,879,132				113	%

A. Revenues - net

Revenues were $2,709,023 for the three months ended March 31, 2026, compared to $1,264 in the prior-year quarter. Current-quarter continuing-operations revenues by reportable segment were:

	●	Hotel Operations: $2,381,085, or 88% of revenues, representing the second full quarter of operations for both the Holiday Inn Victorville and the Hilton Garden Inn Rancho Mirage;
	●	Foodservice Packaging: $322,069, or 12% of revenues, representing the fourth full quarter of contribution from SWC; and
	●	Robotics-as-a-Service: $5,869, or less than 1% of revenues, from pilot deployments and recurring service fees across hospitality, casino, retail, stadium, and other venues.

The prior-year quarter included only incidental revenues; the hotels had not yet been acquired and SWC was acquired on the last day of that quarter. See "Hotel Operations Discussion" below.

B. Cost of Sales

Cost of sales was $724,361 for the current quarter, compared to none in the prior-year quarter, reflecting property-level operating costs at the two hotels (payroll, utilities, guest supplies, franchise and management fees, and food and beverage costs), product and distribution costs at the foodservice packaging operation, and direct deployment costs in the robotics business. Cost of sales attributable to the legacy snacks and beverages business is presented within the loss from discontinued operations line item for both periods and is therefore not reflected in the continuing-operations cost of sales above.

C. Depreciation and Amortization

Depreciation and amortization expense was $1,063,102 for the current quarter, compared to none in the prior-year quarter. The increase reflects a full quarter of depreciation of the hotel buildings, land improvements, and furniture, fixtures and equipment acquired during the first quarter of fiscal 2026, amortization of acquired franchise, customer relationship, and other intangible assets, and amortization of operating lease right-of-use assets recognized in connection with the hotel and corporate operations.

D. General and Administrative Expenses

General and administrative expenses were $5,091,316 for the current quarter, compared to $1,566,833 in the prior-year quarter, an increase of $3,524,483, or 225%. The principal drivers were:

	●	Expanded payroll, benefits, and contracted services to support the hotel, foodservice packaging, and robotics operations and corporate support functions;
	●	Non-cash stock-based compensation, including the vesting of Series C convertible preferred stock issued as compensation and common stock issued for services;
	●	Public company professional fees, including audit, tax, legal, SEC reporting, transfer agent, director and officer insurance, and investor relations;
	●	Integration and start-up costs related to combining the hotel, packaging, and robotics operations under a unified operating platform;
	●	Hotel property-level and segment corporate overhead, including regional management, revenue management, information technology, and centralized purchasing; and
	●	General inflationary pressures on compensation, insurance, and other overhead.

Loss from Operations

Loss from operations widened to $(4,169,756) for the current quarter from $(1,565,569) in the prior-year quarter, an increase in the operating loss of $2,604,187, or 166%. The hotel properties continue to operate within their stabilization period (during which occupancy and rate levels are typically below long-term targets while operating costs and capital improvement requirements remain elevated), and the Company is absorbing the full cost structure of an expanded multi-segment public company. Current-quarter revenues did not yet cover current-quarter operating costs and depreciation and amortization.

E. Other Income (Expense) - net

Other expense, net, was $(1,250,441) for the current quarter, compared to $(944,204) in the prior-year quarter, an increase in net other expense of $306,237, or 32%. The increase reflects substantially higher interest expense and debt discount amortization on the Company's expanded debt structure (including hotel mortgage notes and convertible notes payable issued during fiscal 2026), partially offset by a $1,290,823 non-cash gain on the change in fair value of derivative liabilities. See further detail below.

Net Loss

		Three Months Ended March 31,								Period Change
		2026				2025				Increase (Decrease)
		Amount				Amount				$ Amount				% Change
Net Loss		$	(5,420,684	)		$	(2,541,552	)		$	2,879,132				113	%

Net loss was $(5,420,684) for the current quarter, compared to $(2,541,552) in the prior-year quarter, an increase of $2,879,132, or 113%. The principal drivers of the increase were:

	(i)	A wider operating loss of $(4,169,756), as discussed in items A through D above, reflecting the cost structure of an expanding multi-segment operating company during the hotel stabilization period;
	(ii)	Higher non-operating expense (item E), principally driven by a $1,620,303 increase in interest expense and amortization of debt discount, partially offset by a $1,290,823 non-cash gain on the change in fair value of derivative liabilities and a modest decrease in derivative expense; partially offset by
	(iii)	A $31,292 reduction in the loss from discontinued operations as wind-down activities for the legacy snacks and beverages business were substantially completed effective June 30, 2025.

OTHER INCOME (EXPENSE) - NET

Three Months Ended March 31, 2026 and 2025

		Three Months Ended March 31,								Period Change
		2026				2025				Increase (Decrease)
Other income (expense) - net		Amount				Amount				$ Amount				% Change
Interest income		$	-			$	3,811			$	(3,811	)			(100	)%		A
Other income			6,101				-				6,101				N/M			B
Derivative expense			(590,630	)			(611,583	)			(20,953	)			(3	)%		C
Interest expense (including amortization of debt discount)			(1,956,735	)			(336,432	)			1,620,303				482	%		D
Change in fair value of derivative liabilities			1,290,823				-				1,290,823				N/M			E
Total other income (expense) - net		$	(1,250,441	)		$	(944,204	)		$	306,237				32	%

A - Interest Income

Interest income was none for the current quarter, compared to $3,811 in the prior-year quarter. The decrease reflects the absence of an interest-bearing acquisition note receivable that was outstanding during the prior-year quarter.

B - Other Income

Other income was $6,101 for the current quarter, with no comparable amount in the prior-year quarter, consisting of miscellaneous incidental items.

C - Derivative Expense

Derivative expense was $(590,630) for the current quarter, compared to $(611,583) in the prior-year quarter, a modest decrease of $20,953. The current-quarter charge reflects the bifurcation of conversion features on the three convertible notes issued during the current quarter:

	●	January 10, 2026 senior secured convertible note: $239,342 was charged to derivative expense at issuance;
	●	March 19, 2026 senior secured convertible note: $242,005 was charged to derivative expense at issuance; and
	●	March 31, 2026 related-party convertible note: $109,283 was charged to derivative expense at issuance.

Derivative expense represents the excess, at issuance, of the fair value of bifurcated conversion features and other embedded derivatives over the net proceeds received on the underlying convertible debt instruments.

D - Interest Expense (including amortization of debt discount)

Interest expense, including amortization of debt discounts, increased $1,620,303, or 482%, to $1,956,735 for the current quarter from $336,432 in the prior-year quarter. The increase reflects substantially higher average outstanding debt during the current quarter, including the hotel mortgage notes payable and the Company's previously-issued senior secured convertible note and other notes payable outstanding throughout the quarter, together with three additional convertible notes payable issued during the current quarter:

	●	January 10, 2026 senior secured convertible note with a face amount of $1,175,000, original issue discount of $201,252, and net proceeds of $973,748;
	●	March 19, 2026 senior secured convertible note with a face amount of $1,176,471, original issue discount of $176,471, and net proceeds of $1,000,000; and
	●	March 31, 2026 related-party convertible note.

Each of the Company's senior secured convertible notes bears interest at 15% per annum (24% upon default). The increase in interest expense also reflects accrued default interest on instruments in default and significantly higher non-cash amortization of debt discount on the Company's outstanding convertible notes.

E - Change in Fair Value of Derivative Liabilities

The Company recognized a non-cash gain of $1,290,823 for the current quarter from the favorable remeasurement of its bifurcated derivative liabilities to fair value at the reporting date. No comparable adjustment was recorded in the prior-year quarter as no instruments with bifurcated derivative liabilities were outstanding during that period. Because the fair value of these instruments is highly sensitive to changes in the Company's common stock price and expected volatility, the period-over-period change can result in significant gains or losses that may not correlate with the Company's operating performance.

Total Other Income (Expense) - net

Total net other expense increased to $(1,250,441) for the current quarter from $(944,204) in the prior-year quarter, an increase of $306,237, or 32%, principally driven by the increase in interest expense and amortization of debt discount (item D), partially offset by the non-cash gain on the change in fair value of derivative liabilities (item E).

RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED MARCH 31, 2026 AND 2025

		Nine Months Ended March 31,								Period Change
		2026				2025				Increase (Decrease)
		Amount				Amount				$ Amount				% Change
Revenues - net		$	5,681,079			$	1,681			$	5,679,398				337858	%		A
Cost of sales			1,974,415				-				1,974,415				N/M			B
Depreciation and amortization			2,414,226				-				2,414,226				N/M			C
General and administrative expenses			11,143,240				1,977,559				9,165,681				463	%		D
Loss from operations			(9,850,802	)			(1,975,878	)			7,874,924				399	%		E
Other income (expense) - net			(3,550,687	)			(1,635,837	)			1,914,850				117	%		F
Loss from continuing operations			(13,401,489	)			(3,611,715	)			9,789,774				271	%		G
Loss from discontinued operations			(3,050	)			(174,054	)			(171,004	)			(98	)%		H
Net loss		$	(13,404,539	)		$	(3,785,769	)		$	9,618,770				254	%		I

A. Revenues - net

Revenues were $5,681,079 for the nine months ended March 31, 2026, compared to $1,681 in the prior-year period. The increase principally reflects the contribution of the two hotel properties acquired during the first quarter of fiscal 2026 (closed August 27, 2025 and September 30, 2025) and a full nine months of contribution from the foodservice packaging operation. Current-period continuing-operations revenues by reportable segment were:

	●	Hotel Operations: $4,551,198, or 80% of revenues, reflecting partial-period and full-period contribution from the two hotels since their respective acquisition dates;
	●	Foodservice Packaging: $1,091,895, or 19% of revenues, reflecting a full nine months of contribution from SWC; and
	●	Robotics-as-a-Service: $37,986, or less than 1% of revenues, from pilot deployments and recurring service fees.

The prior-year period was substantially pre-revenue with respect to continuing operations.

B. Cost of Sales

Cost of sales was $1,974,415 for the current period, compared to none in the prior-year period, reflecting the operating cost categories described in the corresponding three-month section. Prior-period cost of sales attributable to the legacy snacks and beverages business is presented within the loss from discontinued operations line item and is not reflected in the continuing-operations cost of sales above.

C. Depreciation and Amortization

Depreciation and amortization expense was $2,414,226 for the current period, compared to none in the prior-year period, reflecting depreciation of hotel and other acquired property and equipment, amortization of acquired intangible assets, and amortization of operating lease right-of-use assets, all of which were placed in service during the first quarter of fiscal 2026 and accordingly had no prior-year comparable activity within continuing operations.

D. General and Administrative Expenses

General and administrative expenses were $11,143,240 for the current period, compared to $1,977,559 in the prior-year period, an increase of $9,165,681, or 463%. Non-cash stock-based compensation alone accounted for $2,177,560 of current-period expense (including $1,810,840 from the vesting of Series C convertible preferred stock issued as compensation and $366,720 from common stock issued for services), and the Company recognized an additional $253,400 of expense from common stock issued for intellectual property. The remaining increase reflects expanded compensation and headcount across the segments and corporate functions, public company professional fees and compliance costs, integration and start-up expenses, and $58,769 of bad debt expense on receivables from new operations.

E. Loss from Operations

Loss from operations widened to $(9,850,802) for the current period from $(1,975,878) in the prior-year period, an increase in the operating loss of $7,874,924, or 399%. The wider loss reflects partial-period and stabilization-period economics of the hotel properties, the addition of segment-level costs in foodservice packaging and robotics, and the corporate overhead and stock-based compensation of an expanded multi-segment public company. Current-period revenues of $5,681,079 did not yet cover current-period operating costs and depreciation and amortization.

Segment Operating Performance

The consolidated loss from operations of $(9,850,802) reflects performance across the Company's three reportable segments and corporate-level activities that are not allocated to the segments:

	●	Hotel Operations: segment operating loss of $(1,687,974), reflecting stabilization-period economics at the two recently-acquired hotel properties, during which occupancy and rate performance is below long-term targets while property-level operating costs, depreciation, and amortization remain elevated;
	●	Foodservice Packaging: segment operating loss of $(855,368);
	●	Robotics-as-a-Service: segment operating loss of $(2,072,292), reflecting early-stage investment in pilot deployments, robotics development, and platform commercialization activities; and
	●	Corporate overhead and unallocated: operating loss of $(5,239,784), representing the largest single component of the consolidated operating loss. Corporate-level activities include public company compliance, executive management, finance, legal, and other centralized functions that are not allocated to the reportable segments, as well as non-cash stock-based compensation expense.

F. Other Income (Expense) - net

Other expense, net, was $(3,550,687) for the current period, compared to $(1,635,837) in the prior-year period, an increase in net other expense of $1,914,850, or 117%. The increase principally reflects significantly higher interest expense and amortization of debt discount and increased non-cash derivative expense, partially offset by a non-cash gain on the change in fair value of derivative liabilities and the absence of a prior-year loss on debt extinguishment. See further detail below.

G. Net Loss from Continuing Operations

		Nine Months Ended March 31,				Nine Months Ended March 31,				Period Change				Period Change
		2026				2025				$ Amount				% Change
Net loss from continuing operations		$	(13,401,489	)		$	(3,611,715	)			9,789,774				271	%

Net loss from continuing operations was $(13,401,489) for the current period, compared to $(3,611,715) in the prior-year period, an increase of $9,789,774, or 271%, reflecting the wider operating loss (items A through E) and the increase in net non-operating expense (item F).

H. Net Loss from Discontinued Operations

Net loss from discontinued operations was $(3,050) for the current period, compared to $(174,054) in the prior-year period, a decrease in the loss of $(171,004), or 98%. The improvement reflects the substantial completion of wind-down activities for the legacy snacks and beverages business effective June 30, 2025.

I. Net Loss

		Nine Months Ended March 31,								Period Change
		2026				2025				Increase (Decrease)
		Amount				Amount				$ Amount				% Change
Net Loss		$	(13,404,539	)		$	(3,785,769	)		$	9,618,770				254	%

Net loss was $(13,404,539) for the current period, compared to $(3,785,769) in the prior-year period, an increase of $9,618,770, or 254%. The principal drivers of the increase were:

	(i)	A wider operating loss of $(9,850,802), as discussed in items A through E above, including $1,974,415 of cost of sales, $2,414,226 of depreciation and amortization, and $11,143,240 of general and administrative expenses (which included approximately $2,431,000 of non-cash stock-based and intellectual-property compensation) against current-period revenues of $5,681,079;
	(ii)	An increase in net non-operating expense of $1,914,850 (item F), principally driven by interest expense of $4,131,634 in the current period compared to $981,199 in the prior-year period (reflecting hotel mortgage debt, the October 2025 senior secured convertible note with $1,929,500 of net proceeds, additional convertible note arrangements, and amortization of related debt discounts of $2,031,240 in the current period compared to $186,318 in the prior-year period), and an increase in derivative expense of $874,804; partially offset by a $2,028,810 non-cash gain on the change in fair value of derivative liabilities and the absence of a prior-year loss on debt extinguishment of $113,955; partially offset by
	(iii)	A $171,004 reduction in the loss from discontinued operations as wind-down activities for the legacy snacks and beverages business were substantially completed effective June 30, 2025.

OTHER INCOME (EXPENSE) - NET

Nine Months Ended March 31, 2026 and 2025

		Nine Months Ended March 31,								Period Change
		2026				2025				Increase (Decrease)
Other income (expense) - net		Amount				Amount				$ Amount				% Change
Interest income		$	-			$	70,900			$	(70,900	)			(100	)%		A
Other income			38,524				-			$	38,524				N/M			B
Loss on debt extinguishment			-				(113,955	)			(113,955	)			(100	)%		C
Derivative expense			(1,486,387	)			(611,583	)			874,804				143	%		D
Interest expense (including amortization of debt discount)			(4,131,634	)			(981,199	)			3,150,435				321	%		E
Change in fair value of derivative liabilities			2,028,810				-			$	2,028,810				N/M			F
Total other income (expense) - net		$	(3,550,687	)		$	(1,635,837	)		$	1,914,850				117	%

A - Interest Income

Interest income was none for the current period, compared to $70,900 in the prior-year period. The decrease reflects the absence of an interest-bearing acquisition note receivable that was outstanding during the prior-year period.

B - Other Income

Other income was $38,524 for the current period, with no comparable amount in the prior-year period.

C - Loss on Debt Extinguishment

No loss on debt extinguishment was recognized for the current period, compared to a loss of $(113,955) in the prior-year period arising from the July 2024 modification of two convertible notes that qualified as a debt extinguishment, in connection with which the Company issued 1,667 shares of Series D convertible preferred stock.

D - Derivative Expense

Derivative expense was $(1,486,387) for the current period, compared to $(611,583) in the prior-year period, a significant increase of $874,804. The current-period charge reflects the bifurcation of conversion features on the four convertible notes issued during the current period:

	●	October 8, 2025 senior secured convertible note: $895,757 was charged to derivative expense at issuance;
	●	January 10, 2026 senior secured convertible note: $239,342 was charged to derivative expense at issuance;
	●	March 19, 2026 senior secured convertible note: $242,005 was charged to derivative expense at issuance; and
	●	March 31, 2026 related-party convertible note: $109,283 was charged to derivative expense at issuance.

Derivative expense represents the excess, at issuance, of the fair value of bifurcated conversion features and other embedded derivatives over the net proceeds received on the underlying convertible debt instruments.

E - Interest Expense (including amortization of debt discount)

Interest expense, including amortization of debt discounts, increased $3,150,435, or 321%, to $4,131,634 for the current period from $981,199 in the prior-year period. The increase reflects substantially higher average outstanding mortgage and convertible debt balances during the current period, including the hotel mortgage notes payable assumed in connection with the hotel acquisitions and four convertible notes payable issued during the current period:

	●	October 8, 2025 senior secured convertible note with a face amount of $2,270,000, original issue discount of $340,500, and net proceeds of $1,929,500;
	●	January 10, 2026 senior secured convertible note with a face amount of $1,175,000, original issue discount of $201,252, and net proceeds of $973,748;
	●	March 19, 2026 senior secured convertible note with a face amount of $1,176,471, original issue discount of $176,471, and net proceeds of $1,000,000; and
	●	March 31, 2026 related-party convertible note.

The three senior secured convertible notes generated aggregate net proceeds of $3,903,248. Each senior secured convertible note bears interest at 15% per annum (24% upon default). The increase in interest expense also reflects accrued default interest on instruments in default and significantly higher non-cash amortization of debt discount of $2,031,240 in the current period compared to $186,318 in the prior-year period.

F - Change in Fair Value of Derivative Liabilities

The Company recognized a net non-cash gain of $2,028,810 for the current period from favorable remeasurement of its bifurcated derivative liabilities to fair value at the reporting date. No comparable adjustment was recorded in the prior-year period.

Total Other Income (Expense) - net

Total net other expense increased to $(3,550,687) for the current period from $(1,635,837) in the prior-year period, an increase of $1,914,850, or 117%, principally driven by the increase in interest expense (item E) and the increase in derivative expense (item D), partially offset by the net gain on the change in fair value of derivative liabilities (item F) and the absence of a prior-period loss on debt extinguishment (item C).

HOTEL OPERATIONS DISCUSSION

During the first quarter of fiscal 2026, the Company completed two hotel acquisitions that transformed it into an owner and operator of lodging properties in addition to its foodservice packaging and robotics businesses:

	●	Holiday Inn Victorville, California: a 155-room property acquired on August 27, 2025 in a share exchange transaction valued at approximately $46.1 million. Consideration consisted of 216,667 shares of Series C convertible preferred stock valued at $39,000,060, with up to an additional 41,667 shares (valued at $7,125,000) issuable as contingent consideration. The property is being established as a Company AI hospitality innovation hub for robotics deployment, testing, and operational benchmarking.
	●	Hilton Garden Inn Rancho Mirage, California: a 120-room property acquired on September 30, 2025 in a share exchange transaction valued at approximately $47.1 million. Consideration consisted of 176,167 shares of Series C convertible preferred stock valued at $42,280,080, with up to an additional 20,000 shares (valued at $4,800,000) issuable as contingent consideration. The property is strategically located adjacent to Cotino, a Storyliving by Disney community, and serves as a flagship property for the Company's robotics platform.

The hotels added a substantial revenue base, property-level operating costs, depreciation and amortization, and mortgage debt to the consolidated financial statements. The March 2026 quarter represented the second full quarter of operations for both properties. Management is implementing revenue-management initiatives, updated reservation systems, and targeted marketing intended to grow occupancy, average daily rate ("ADR"), and revenue per available room ("RevPAR") over time. The Company is also integrating the hotels with the broader robotics platform, including the planned deployment of TechForce Robotics AI-powered service robots for housekeeping, food service, and guest management functions.

Hotel properties typically experience a stabilization period of 12 to 24 months following acquisition, during which occupancy and rate performance is below long-term targets while operating costs and capital improvement requirements remain elevated. Management expects hotel-level performance and cash flows to improve as integration progresses, although there can be no assurance that targeted operating performance or return on invested capital will be achieved. Hotel operations are inherently sensitive to general economic conditions, business and leisure travel trends, competitive supply additions, weather, and other factors outside the Company's control.

LIQUIDITY AND CAPITAL RESOURCES

Liquidity and Going Concern

For the nine months ended March 31, 2026, the Company had a net loss of $(13,404,539) and net cash used in operating activities of $(5,215,977). At March 31, 2026, the Company had:

	●	An accumulated deficit of $(60,158,383);
	●	A working capital deficit of $(23,498,273), reflecting current liabilities of $25,381,978 in excess of current assets of $1,883,705;
	●	Positive total stockholders' equity of $82,614,372, a substantial improvement from the stockholders' deficit of $(17,332,174) at June 30, 2025, attributable principally to the reclassification of approximately $106,298,927 of convertible preferred stock from temporary equity to permanent stockholders' equity effective November 19, 2025 following the increase in authorized common shares from 200,000,000 to 900,000,000; and
	●	Cash on hand of $732,691 (the Company holds no cash equivalents).

These factors, including recurring losses from continuing operations, limited operating cash flows, and dependence on debt and equity financing, continue to raise substantial doubt about the Company's ability to continue as a going concern within one year after the date of issuance of the accompanying condensed consolidated financial statements. The accompanying financial statements have been prepared on a going-concern basis and do not include any adjustments to the carrying amounts or classifications of assets or liabilities that might result from this uncertainty.

Management's plans to address these conditions include:

	●	Increasing revenue and operating profitability at the hotel properties, including through revenue-management initiatives, cost controls, and selective capital investments, and the potential pursuit of additional hotel acquisitions;
	●	Scaling foodservice packaging and robotics revenues, including through cross-selling into the hotel customer base and expanding robotic deployments into casinos, stadiums, convention centers, public schools, assisted living facilities, and other verticals;
	●	Pursuing additional debt and equity financing, including potential drawdowns under the Equity Purchase Agreement entered into on October 8, 2025, mortgage refinancings, and additional equity issuances;
	●	Advancing the planned uplisting to a national securities exchange;
	●	Commercializing the Beverage Bot platform unveiled in December 2025 and pursuing strategic collaborations, including the Joint Development, Manufacturing and Licensing Agreement entered into on March 31, 2026 and the Supply Agreement executed on April 11, 2026; and
	●	Maintaining disciplined capital allocation, including reviewing underperforming assets and considering asset sales, restructurings, or partnership arrangements where appropriate.

There can be no assurance that these plans will be successful or that additional financing will be available on acceptable terms or in sufficient amounts. If the Company is unable to obtain necessary financing or improve operating cash flows, it may be required to delay or curtail expansion plans, sell or restructure assets, restructure or refinance obligations, or pursue other strategic alternatives.

Cash

										Period Change
										Increase (Decrease)
		March 31, 2026				June 30, 2025				$ Amount				% Change
Cash and cash equivalents		$	732,691			$	350,231			$	382,460				109	%

Cash increased $382,460, or approximately 109%, to $732,691 at March 31, 2026 from $350,231 at June 30, 2025. The increase reflects approximately $4.8 million of net financing proceeds and $1,269,000 of cash acquired in the hotel acquisitions, partially offset by approximately $5.2 million of cash used in operating activities, $215,771 of contractual debt principal repayments, and $252,179 of capital expenditures. The Company does not hold any cash equivalents.

Summary of Cash Flow Activities

		Nine Months Ended March 31,								Period Change
		2026				2025				Increase (Decrease)
Net Cash Provided by (Used in)			Amount				Amount				$ Amount				% Change
Operating activities		$	(5,215,977	)		$	(665,254	)		$	4,550,723				684	%
Investing activities			1,016,821				(294,790	)		$	1,311,611				445	%
Financing activities			4,581,616				959,650			$	3,621,966				377	%
Net change in cash		$	382,460			$	(394	)		$	382,854				97171	%

Operating Activities

Cash used in operating activities increased $4,551,007, to $(5,215,977), reflecting the wider net loss, unfavorable working capital changes (most notably a $(221,571) decrease in accounts payable and accrued expenses and a $(188,366) increase in accounts receivable), partially offset by a $2,271,092 increase in related-party accounts payable and accrued expenses and significantly higher non-cash charges. Material non-cash charges that partially offset the net loss included $2,174,582 of depreciation and amortization, $1,486,387 of derivative expense, $2,031,240 of amortization of debt discount, $2,177,560 of stock-based compensation, and $253,400 of stock issued for intellectual property, partially reduced by a $(2,028,810) non-cash gain on the change in fair value of derivative liabilities.

Investing Activities

Investing activities provided $1,016,821 of cash, compared to a use of $(294,790) in the prior-year period. The change reflects $1,269,000 of cash acquired in connection with the hotel acquisitions and $(252,179) of capital expenditures for robotics units, hotel furniture, fixtures and equipment, and other property and equipment. The prior-year period reflected $28,253 of cash acquired in connection with the Skytech acquisition, $(39,700) of capital expenditures, and $(283,343) of acquisition-related costs financed directly with debt.

Financing Activities

Financing activities provided $4,581,616 of cash, compared to $959,650 in the prior-year period. Current-period sources of cash consisted of $894,423 in proceeds from the issuance of common stock to third-party investors in private placement transactions and $3,903,248 in aggregate net proceeds from the issuance during the period of three senior secured convertible notes:

	●	October 8, 2025 senior secured convertible note: net proceeds of $1,929,500;
	●	January 10, 2026 senior secured convertible note: net proceeds of $973,748; and
	●	March 19, 2026 senior secured convertible note: net proceeds of $1,000,000.

These sources were partially offset by $(18,272) of contractual principal repayments on notes payable and $(197,783) of contractual principal repayments on hotel mortgage notes payable.

On March 31, 2026, the Company also issued a related-party convertible note in exchange for the non-cash conversion of $73,927 of related-party accounts payable; that issuance is reflected in the supplemental disclosure of non-cash investing and financing activities and is therefore excluded from current-period financing activities cash flow.

The prior-year financing activity consisted entirely of $959,650 of proceeds from a single convertible note. The shift reflects the Company's transition to a more diversified capital structure to fund hotel operations, integration, capital investments, and working capital.

Critical Accounting Policies and Estimates

Our discussion and analysis of financial condition and results of operations is based upon our unaudited consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles ("GAAP"). The preparation of these financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, and expenses, as well as related disclosures of contingent assets and liabilities.

These estimates are based on historical experience and on various other factors believed to be reasonable under the circumstances, including current economic conditions and information available at the time the financial statements are prepared. Actual results may differ materially from those estimates, and such differences could have a material impact on our financial position or results of operations.

We define our critical accounting policies as those that require significant judgment or complexity in their application and that are most important to the portrayal of our financial condition and results of operations. These policies typically require assumptions about matters that are uncertain at the time the estimate is made and could change materially in subsequent periods.

Significant estimates for the nine months ended March 31, 2026 and 2025, respectively, include the following:

	●	Allowance for Doubtful Accounts and Other Receivables - Management evaluates the collectability of accounts and other receivables based on historical trends, customer-specific credit risk, aging, and current economic conditions. Adjustments to the allowance are recorded as necessary to reflect expected losses.
	●	Inventory Reserves and Classifications - We assess our inventory for obsolescence, impairment, and classification between raw materials, work-in-process, and finished goods. Changes in demand forecasts, damage, or excess supply may lead to write-downs to net realizable value.
	●	Valuation of Goodwill and Intangible Assets (Acquired in an Acquisition) - Goodwill and indefinite-lived intangible assets are not amortized but are tested annually for impairment, or more frequently if events or circumstances indicate possible impairment. Valuation involves estimating future discounted cash flows or applying a market-based approach.
	●	Impairment Losses Related to Goodwill and Intangible Assets - We periodically assess long-lived assets and intangible assets with finite lives for impairment when indicators of impairment are present. The process includes evaluating future cash flows and other market-based factors.
	●	Valuation of Loss Contingencies - We assess potential liabilities from legal proceedings, regulatory matters, and other contingencies and recognize a liability when it is both probable that a loss has been incurred and the amount can be reasonably estimated.
	●	Valuation of Stock-Based Compensation - We estimate the fair value of stock-based compensation awards using appropriate valuation models (e.g., Black-Scholes), which include assumptions such as volatility, risk-free interest rate, and expected term. The resulting expense is recognized over the requisite service period.
	●	Estimated Useful Lives of Property and Equipment - Depreciation is calculated using estimated useful lives of our tangible assets. These estimates reflect management's judgment on the period the assets are expected to be used and are adjusted if conditions warrant a revision.

	●	Uncertain Tax Positions - We evaluate our tax positions in accordance with ASC 740 and recognize a liability when it is more likely than not that a tax position will not be sustained upon examination by tax authorities. Estimates are updated as new information becomes available.
	●	Valuation Allowance on Deferred Tax Assets - Deferred tax assets are recognized only to the extent it is more likely than not they will be realized. This assessment includes consideration of future taxable income, tax planning strategies, and historical results. A full valuation allowance remains in place as of March 31, 2026.

Please refer to Note 2 - Summary of Significant Accounting Policies in our Annual Report on Form 10-K for the fiscal year ended June 30, 2025, for a comprehensive description of these policies. There were no material changes in our critical accounting policies or estimates during the nine months ended March 31, 2026, though the Company continues to monitor the impact of business combinations, evolving market conditions, and financing transactions (including convertible debt and stock-based compensation) on the valuation of assets, liabilities, and equity-based instruments.