HOMETOWN INTERNATIONAL, INC. The information set forth in this Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") contains certain "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995, including, among others (i) expected changes in our revenue and profitability, (ii) prospective business opportunities and (iii) our strategy for financing our business. Forward-looking statements are statements other than historical information or statements of current condition. Some forward-looking statements may be identified by use of terms such as "believes", "anticipates", "intends" or "expects". These forward-looking statements relate to our plans, liquidity, ability to complete financing and purchase capital expenditures, growth of our business including entering into future agreements with companies, and plans to successfully develop and obtain approval to market our product. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs.
Although we believe that our expectations with respect to the forward-looking statements are based upon reasonable assumptions within the bounds of our knowledge of our business and operations, in light of the risks and uncertainties inherent in all future projections, the inclusion of forward-looking statements in this Quarterly Report should not be regarded as a representation by us or any other person that our objectives or plans will be achieved.
We assume no obligation to update these forward-looking statements to reflect actual results or changes in factors or assumptions affecting forward-looking statements.
Our revenues and results of operations could differ materially from those projected in the forward-looking statements as a result of numerous factors, including, but not limited to, the following: the risk of significant natural disaster, the inability of our company to insure against certain risks, inflationary and deflationary conditions and cycles, currency exchange rates, and changing government regulations domestically and internationally affecting our products and businesses.
You should read the following discussion and analysis in conjunction with the Financial Statements and Notes attached hereto, and the other financial data appearing elsewhere in this Quarterly Report.
US Dollars are denoted herein by "USD", "$" and "dollars".
Overview and Recent Developments
General
Your Hometown Deli
On
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On
Once the Your Hometown Deli brand name was established, the plan was to expand
into other smaller towns and communities. The Company's first delicatessen was
built in
Makamer
On
On
Impact of Coronavirus (COVID-19) Pandemic on the Company
We were forced to temporarily close our delicatessen located in
Recent Developments Merger
On
At the Effective Time of the Merger, the stockholders of Makamer exchanged a total of 19,986,667 shares of Makamer common stock (representing 100% of Makamer's outstanding shares) for an aggregate of 30,000,000 shares of common stock of the Company (the "Merger Shares"), with each Makamer stockholder receiving a pro rata portion of the Merger Shares based upon the total number of shares of Makamer common stock held by such Makamer stockholder immediately prior to the Effective Time.
In connection with the Merger, Makamer assigned its
The Company agreed that
In connection with the Merger, certain pre-Merger stockholders of the Company agreed to return 1,450,000 shares of the Company's common stock to the Company for cancellation within 30 days of the closing (the "Share Cancellation"). The Share Cancellation has not yet occurred.
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Changes to Management
On
In anticipation of the Merger, on
The Company has submitted to the
Sale of Your Hometown Deli
After carefully evaluating its prospects, the Company's new management has
determined to sell Your Hometown Deli and its assets and focus on the business
operations of Makamer as the Company's business going forward. Our sole
delicatessen location in
The delicatessen ceased its operation following the merger and on
Results of Operations
The following discussion does not include a discussion of the comparative prior
periods for the three and six months ended
Three Months Ended
Revenue
We generated revenue of
Costs and Expenses and Loss from Continuing Operations
Our total cost and expenses were
Other Income
Interest income is
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Loss from Discontinued Operations
Loss from discontinued operations was
The loss is attributed to the winding down of our delicatessen business, as we transition to the business operations of Makamer, which is to develop and market biodegradable resins with the goal of replacing traditional plastics with renewable and compostable materials to help reduce worldwide toxic plastic waste pollution.
Six Months Ended
Revenue
We generated revenue of
Costs and Expenses and Loss from Continuing Operations
Our total cost and expenses were
Other Income
Interest income is
Loss from Discontinued Operations
Loss from discontinued operations was
On
The following discussion does not include a discussion of the comparative prior
period for the six months ended
Liquidity and Capital Resources
As of
Our current liabilities as of
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Our long-term liabilities as of
The following is a summary of our cash flows provided by (used in) operating,
investing, and financing activities for the six months ended
For the six
months
ended
June 30,
2022 $ (766,036 ) Net Cash Used in Operating Activities$ (774,863 )
Net Cash Provided by Investing Activities - discontinued operations $ -
Net Cash Provided by Investing Activities - continued operations
$ 841,221
For the six months ended
Net cash provided our investing activities was
Our financing activities resulted in a cash inflow of
On
Deconsolidation of Subsidiary
On
On
Liquidity, Going Concern and Management's Plans
We manage liquidity risk by reviewing, on an ongoing basis, our sources of
liquidity and capital requirements. The Company has cash on hand of
These factors create substantial doubt about the Company's ability to continue as a going concern within the twelve-month period subsequent to the date that these financial statements are issued. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. Accordingly, the financial statements have been prepared on a basis that assumes the Company will continue as a going concern and which contemplates the realization of assets and satisfaction of liabilities and commitments in the ordinary course of business.
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Management's strategic plans include the following:
? Pursuing additional capital raising opportunities,
? Continuing research and development on advancing bioplastics technologies,
executing and commercializing its business operations,
? Continuing to secure supply chain and execute strategic partnering or
distribution opportunities? and
? Identifying unique market opportunities that represent potential positive
short-term cash flow.
Critical Accounting Policies and Estimates
Use of Estimates in Financial Statements
In preparing financial statements in conformity with generally accepted accounting principles, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the reported period. Significant estimates include valuation of in-kind contribution of service and valuation of deferred tax assets. Actual results could differ from those estimates.
Revenue Recognition
The Company recognizes revenue in accordance with Accounting Standards Codification ("ASC") Topic 606, "Revenue from Contracts with Customers". The standard states that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.
The Company generates revenue operating a delicatessen. Revenues from the operations of Company-owned delicatessen are recognized when sales occur.
Leases
The Company accounts for lease in accordance with ASC Topic 842, "Leases".
Operating lease assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at the commencement date. The operating lease right-of-use (ROU) asset also includes any lease payments made and excludes lease incentives and initial direct costs incurred, if any.
The lease expense is recognized over the expected term on a straight-line basis. Operating leases are recognized on the balance sheet as operating lease assets, current operating lease liabilities and non-current operating lease liabilities.
We account for domain names and patents in accordance with ASC 350-30, General
Intangibles Other than
The Company initially records intangible assets at their estimated fair values
and reviews these assets periodically for impairment.
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Impairment of Long-lived Assets
Management evaluates the recoverability of the Company's identifiable intangible assets and other long-lived assets when events or circumstances indicate a potential impairment exists, in accordance with the provisions of ASC 360-10-35-15 "Impairment or Disposal of Long-Lived Assets." Events and circumstances considered by the Company in determining whether the carrying value of identifiable intangible assets and other long-lived assets may not be recoverable include but are not limited to significant changes in performance relative to expected operating results; significant changes in the use of the assets; significant negative industry or economic trends; and changes in the Company's business strategy. In determining if impairment exists, the Company estimates the undiscounted cash flows to be generated from the use and ultimate disposition of these assets.
If impairment is indicated based on a comparison of the assets' carrying values and the undiscounted cash flows, the impairment to be recognized is measured as the amount by which the carrying amount of the assets exceeds the fair value of the assets.
Stock-Based Compensation
The Company accounts for our stock-based compensation under ASC 718 "Compensation - Stock Compensation" using the fair value-based method. Under this method, compensation cost is measured at the grant date based on the value of the award and is recognized over the service period, which is usually the vesting period. This guidance establishes standards for the accounting for transactions in which an entity exchanges it equity instruments for goods or services. It also addresses transactions in which an entity incurs liabilities in exchange for goods or services that are based on the fair value of the entity's equity instruments or that may be settled by the issuance of those equity instruments.
The Company uses the fair value method for equity instruments granted to non-employees and use the Black-Scholes model for measuring the fair value of options.
The fair value of stock-based compensation is determined as of the date of the grant or the date at which the performance of the services is completed (measurement date) and is recognized over the vesting periods.
When determining fair value, the Company considers the following assumptions in the Black-Scholes model: ? Exercise price, ? Expected dividends, ? Expected volatility,
? Risk-free interest rate; and
? Expected life of option
Off Balance Sheet Arrangements
We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, sales or expenses, results of operations, liquidity or capital expenditures, or capital resources that are material to an investment in our securities.
Contractual Obligations
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information under this item.
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