UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
10-K
(Mark
One)
☒ ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For
the fiscal year ended: December 31, 2020
or
☐ TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For
the transition period from ___________ to ___________
Commission
file number: 333-207488
HOMETOWN
INTERNATIONAL, INC.
(Exact
name of registrant as specified in its charter)
|
Nevada |
|
46-5705488 |
(State
or other jurisdiction of
incorporation or organization) |
|
(I.R.S. Employer
Identification No.) |
| |
|
|
|
25
E. Grant Street, Woodstown, NJ |
|
08098 |
| (Address
of principal executive offices) |
|
(Zip
Code) |
(856) 759-9034
Registrant’s telephone number, including area code
Securities registered pursuant to Section 12(b) of the Exchange
Act:
|
Title
of each class: |
|
Name
of each exchange on which registered: |
| None |
|
None |
Securities registered pursuant to Section 12(g) of the Exchange
Act: None
Indicate
by check mark if the registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act. Yes ☐ No
☒
Indicate
by check mark if the registrant is not required to file reports
pursuant to Section 13 or Section 15(d) of the Act.
Yes ☐ No ☒
Indicate
by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes ☒ No ☐
Indicate
by check mark whether the registrant has submitted electronically
every Interactive Data File required to be submitted pursuant to
Rule 405 of Regulation S-T (§232.405 of this chapter) during the
preceding 12 months (or for such shorter period that the registrant
was required to submit and post such files).
Yes ☒ No ☐
Indicate
by check mark whether the registrant is a large accelerated filer,
an accelerated filer, a non-accelerated filer, a smaller reporting
company, or an emerging growth company. See the definitions of
“large accelerated filer,” “accelerated filer,” smaller reporting
company,” and “emerging growth company” in Rule 12b-2 of the
Exchange Act.
|
Large
accelerated filer |
☐ |
Accelerated
filer |
☐ |
| Non-accelerated
filer |
☐ |
Smaller
reporting company |
☒ |
|
|
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 ☐
Indicate
by check mark whether the registrant has filed a report on and
attestation to its management’s assessment of the effectiveness of
its internal control over financial reporting under Section 404(b)
of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered
public accounting firm that prepared or issued its audit report.
☐
Indicate
by check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Act). Yes ☐ No ☒
The
aggregate market value of the voting and non-voting common equity
held by non-affiliates computed by reference to the price at which
the common equity was last sold, or the average bid and asked price
of such common equity, as of the last business day of the
registrant’s most recently completed second fiscal quarter is not
ascertainable as there was no market for the equity as of such
date.
As of
March 25, 2021, the number of shares of common stock of the
registrant outstanding is 7,797,004, par value $0.0001 per
share.
TABLE OF CONTENTS
CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS
This Annual Report on Form 10-K contains “forward-looking
statements”. Forward-looking statements discuss matters that are
not historical facts. Because they discuss future events or
conditions, forward-looking statements may include words such as
“anticipate,” “believe,” “estimate,” “intend,” “could,” “should,”
“would,” “may,” “seek,” “plan,” “might,” “will,” “expect,”
“anticipate,” “predict,” “project,” “forecast,” “potential,”
“continue” negatives thereof or similar expressions.
Forward-looking statements speak only as of the date they are made,
are based on various underlying assumptions and current
expectations about the future and are not guarantees. Such
statements involve known and unknown risks, uncertainties and other
factors that may cause our actual results, level of activity,
performance or achievement to be materially different from the
results of operations or plans expressed or implied by such
forward-looking statements.
We cannot predict all of the risks and uncertainties. Accordingly,
such information should not be regarded as representations that the
results or conditions described in such statements or that our
objectives and plans will be achieved, and we do not assume any
responsibility for the accuracy or completeness of any of these
forward-looking statements. These forward-looking statements are
found at various places throughout this Annual Report on Form 10-K
and include information concerning possible or assumed future
results of our operations, including statements about potential
acquisition or merger targets; business strategies; future cash
flows; financing plans; plans and objectives of management; any
other statements regarding future acquisitions, future cash needs,
future operations, business plans and future financial results, and
any other statements that are not historical facts.
These forward-looking statements represent our intentions, plans,
expectations, assumptions and beliefs about future events and are
subject to risks, uncertainties and other factors. Many of those
factors are outside of our control and could cause actual results
to differ materially from the results expressed or implied by those
forward-looking statements. In light of these risks, uncertainties
and assumptions, the events described in the forward-looking
statements might not occur or might occur to a different extent or
at a different time than we have described. You are cautioned not
to place undue reliance on these forward-looking statements, which
speak only as of the date of the Annual Report on Form 10-K. All
subsequent written and oral forward-looking statements concerning
other matters addressed in this Annual Report on Form 10-K and
attributable to us or any person acting on our behalf are expressly
qualified in their entirety by the cautionary statements contained
or referred to in this Annual Report on Form 10-K.
Except to the extent required by law, we undertake no obligation to
update or revise any forward-looking statements, whether as a
result of new information, future events, a change in events,
conditions, circumstances or assumptions underlying such
statements, or otherwise.
PART I
ITEM 1. BUSINESS.
Overview
Hometown International, Inc. (the “Company”) was incorporated on
May 19, 2014 under the laws of the State of Nevada. The Company is
the originator of a new Delicatessen concept. Through our
wholly-owned subsidiary, Your Hometown Deli Limited Liability
Company (“Your Hometown Deli”), we operate a delicatessen store
that features “home-style” sandwiches and other entrees in a casual
and friendly atmosphere. The store is designed to offer local
patrons of all ages with a comfortable community gathering places.
Targeted towards smaller towns and communities, the Company’s first
unit was built in Paulsboro, New Jersey.
On January 18, 2014, Your Hometown Deli was formed under the laws
of State of New Jersey. On May 29, 2014, Your Hometown Deli entered
into a Membership Interest Purchase Agreement with the Company and
is a wholly-owned subsidiary of our Company. We introduced the
delicatessen concept under the Your Hometown Deli brand name.
The Company is the originator of a new “Delicatessen” concept
called “Your Hometown Deli.” Your Hometown Delis features
“home-style” sandwiches, food items, and groceries in a casual and
friendly atmosphere. Your Hometown Delis are designed to be
comfortable community gathering places for customers of all ages.
The Company seeks to create an establishment that will appeal to
local residents and commuting workers, conveniently offering
high-quality products at fair prices. Targeted towards smaller
towns and communities, the Company’s first and only location was
opened in Paulsboro, New Jersey on October 14, 2015.
We have limited advertising using social media and direct mailing
to residents in towns around our store, however, we continue to
place advertisements in a local high school sports calendar, local
newspaper and have attended various local events with food samples
and menus. Events like the Lighthouse Challenge held at Tinicum
Rear Range Lighthouse and various political fundraisers throughout
Gloucester County. We expect our losses to continue during
2021.
Going forward, we intend to seek, investigate and, if such
investigation warrants, engage in a business combination with a
private entity whose business presents an opportunity for our
shareholders. Our objectives discussed below are extremely general
and are not intended to restrict discretion of our Board of
Directors to search for and enter into potential business
opportunities or to reject any such opportunities. We have no
particular business combination in mind and have not entered into
any negotiations regarding such a combination. Neither our officers
nor any of our affiliates has engaged in any negotiations with any
representative of any company regarding the possibility of an
acquisition or combination between our company and such other
company. We have not yet entered into any agreement, nor do we have
any commitment or understanding to enter into or become engaged in
a transaction.
We will not restrict our potential candidate target companies to
any specific business, industry or geographical location and, thus,
may acquire any type of business. Further, we may acquire or
combine with a venture that is in its preliminary or early stages
of development, one that is already in operation or one that is in
a more mature stage of its corporate existence. Accordingly,
business opportunities may be available in many different
industries and at various stages of development, all of which will
make the task of comparative investigation and analysis of such
business opportunities difficult and complex.
The analysis of new business opportunities will be undertaken by or
under the supervision of our executive officers and directors, none
of whom is a business analyst. Therefore, it is anticipated that
outside consultants or advisors may be utilized to assist us in the
search for and analysis of qualified target companies.
Recent Developments
Impact of Current Coronavirus (COVID-19) Pandemic on the
Company
On March 23, 2020, we were forced to temporarily close the
delicatessen due to the stay-at-home order issued by the Governor
of New Jersey on March 9, 2020, resulting from the outbreak of
COVID-19. The delicatessen was re-opened on September 8, 2020, with
a “soft opening” to a limited audience, prior to its “Grand
Re-Opening” to the public on September 22, 2020. The temporarily
closure and other effects of COVID-19 had a material impact on our
business during 2020. Although we are unable to estimate the
ultimate impact, it is anticipated that the COVID-19 pandemic will
continue to effect the flow of customers into the deli throughout
2021. Those customers include commuting workers, local
students and coaches who frequent the sports facility on the
property and the reduced number of people willing to dine outside
the household.
Corporate Developments
On April 14, 2020, the Company consummated a private offer and sale
of an aggregate of 2,500,000 shares of common stock for gross cash
proceeds to us of $2,500,000.
On April 15, 2020, the Company issued to each shareholder of record
on said date: (i) five Class A Warrants, entitling the holder
thereof to purchase five shares of the Company’s common stock at an
exercise price of $1.25 per share (the “Class A Warrants”), (ii)
five Class B Warrants, entitling the holder thereof to purchase
five shares of the Company’s common stock at an exercise price of
$1.50 per share (the “Class B Warrants”), (iii) five Class C
Warrants, entitling the holder thereof to purchase five shares of
the Company’s common stock at an exercise price of $1.75 per share
(the “Class C Warrants”), and (iv) five Class D Warrants, entitling
the holder thereof to purchase five shares of the Company’s common
stock at an exercise price of $2.00 per share (the “Class D
Warrants”), with each warrant expiring on April 15, 2035
(collectively, the “Warrants”)
Effective May 1, 2020, the Company entered into a Consulting
Agreement with Tryon Capital Ventures LLC, a North Carolina limited
liability company (“Tyron”). Tryon was things to support in the
research, development, and analysis of product, financial and
strategic matters. The term of the consulting agreement is one-year
and Tryon shall receive $15,000 per month during the term. We
anticipate extending the term of the Consulting Agreement with
Tryon for an additional one-year term.
Effective May 1, 2020 the Company entered into a Consulting
Agreement with VCH Limited, a company formed under the laws of
Macau (“VCH”) which owns in excess of 10% of our common stock. VCH
was engaged as a consultant to the Company, to, among other things,
create and build a presence with high net worth and institutional
investors. The term of the agreement is one year and VCH shall
receive $25,000 per month during the term. We anticipate extending
the term of the Consulting Agreement with VCH for an additional
one-year term.
On June 8, 2020, the Company filed a registration statement on Form
S-1 with the Securities and Exchange Commission (“SEC”) to register
of an aggregate of 2,783,637 shares of common stock currently
issued and outstanding. The registration statement became effective
October 15, 2020.
The Your Hometown Deli Concept
Your Hometown Deli is a delicatessen concept that will focus on
providing high-quality food products not available in local
supermarkets or take-out restaurants. The delicatessen concept has
a worldwide history with the term first appearing in the English
language in 1889. The word “delicatessen” originates in the German
language and means “delicacies” or “fine foods.” Delicatessens vary
throughout the world, but in the United States a delicatessen (or
“deli”) is a small retail store that is a blend of a grocery and a
fast-food restaurant.
The Company’s Your Hometown Deli concept is patterned after
traditional delicatessens, offering a wider and fresher menu than
found at fast-food restaurants. Sandwiches and green salads are
made fresh to order. Like many delis, Your Hometown Deli serves
some hot foods kept on a steam table, similar to a cafeteria. In
addition to ready-to-eat food, the Your Hometown Deli sells cold
cuts by weight. A wide variety of beverages are also sold together
with potato chips and similar products.
In addition to our food offering, newspapers, limited household
items and small snack items, such as candy, cookies and chewing
gums are planned to be available for purchase. Your Hometown Deli
also provides take-out service and limited seating in the
store.
We have begun generating revenue from the sales of our food and
beverage since our soft opening in mid-October 2015. Besides the
equipment, fixtures, and inventories we purchased for our deli
store, we have limited assets. We had minimal working capital as of
the date of this annual report and used cash in operating
activities for the year then ended. These factors raise substantial
doubt about our ability to continue as a going concern.
Products
Your Hometown Deli provides sandwiches, soups, salads, deli
meats/cheeses, hot/cold drinks, fresh breads/rolls and small retail
items for cooking, baking, and home use. Salads include
made-to-order green salads, prepared pasta, potato, chicken, or
other variety of “wet” salads. Breakfast products include baked
goods (breakfast pastries, bagels, toast), yogurt, and hot
breakfast sandwiches. Fresh coffee, tea and other hot and cold
beverages are also available for purchase.
Strategy
The Company’s business strategy is to create a food-centered social
environment within the local community that offers higher-quality
prepared food and ingredients than is typically found locally. The
Company’s management believes that broader market trends and
certain locality-specific attributes support this strategy. The
average American eats out 4-5 times a week and according to the
United States Department of Labor. Management of the Company
believes the increased popularity of eating out in the United
States is a social trend that is likely to continue in the
future.
Our continued existence is dependent upon our ability to continue
to execute our operating plan and to obtain additional debt or
equity financing. There can be no assurance the necessary debt or
equity financing will be available or will be available on terms
acceptable to our company. If we cannot obtain financing or if
we determine not to proceed with our business plan, we may decide
to exit our existing business and explore potential strategic
alternatives, including establishing a new business, or target an
existing business for acquisition, without restriction to any
specific business, industry or geographical location.
Location
The Company’s sole location is in Paulsboro, a borough in
Gloucester County, New Jersey that was founded in 1904. Paulsboro
is located directly across the Delaware River from the city of
Philadelphia and the Philadelphia airport. Your Hometown Deli is
located on a property in the commercial area of downtown Paulsboro
that has two buildings. The front building is the location of the
new Your Hometown Deli as well as the local Conrail offices. The
rear building is used throughout the week as a practice facility by
the local wrestling club and other sports groups. Paulsboro has a
national reputation for its wrestling activities and one of the
Company’s founders is a leader in the sport of wrestling.
The borough of Paulsboro is undergoing a redevelopment phase from a
petroleum products specialty port into an adaptable “OmniPort” able
to handle a diversity of bulk, break bulk cargo and shipping
containers. Studies completed in 2012 concluded that the port is
well suited to become a center for the manufacturing, assembly, and
transport of wind turbines and platforms for the development of
Atlantic Wind Connection. The port is located approximately one
mile from the site of the Your Hometown Deli. The Company’s
management believes that hundreds of employees around the area will
eventually pass the Your Hometown Deli, the only food establishment
on the main commuter route to the Port.
The Market
The local Paulsboro market is small, but conducive to hosting a
Your Hometown Deli. According to the NJ Gazetteer, there were 5862
people and 2198 households residing in the borough as of July 1,
2020. The median household income was $44,250. The broader
Philadelphia Metropolitan Statistical Area is the eight-largest
metropolitan area in the United States with a population to 6.1
million people.
The Company anticipates drawing customers from people living in
Paulsboro and the adjacent communities of Greenwich, Clarksboro,
and West Deptford, New Jersey. Commuting workers are also
anticipated to be customers.
Local students and coaches who frequently use the sports practice
facility on the property are another group of potential customers.
The practice facility is also home to the “The Monster Factory,” a
professional wrestling training and wrestling match promotions
organization. In business more than 30 years, the Monster Factory
has become “the world’s most famous wrestling school” and has been
featured in the Rolling Stone, NewsWeek,
and Wall Street Journal. The Company believes that the
attendees of Monster Factory wrestling events are potential
customers for Your Hometown Deli.
Local competing delicatessen concept stores include Wawa and Royal
Farms. Other dining and grocery options in the area include locally
owned pizzerias, seafood, and fine dining restaurants. Fast food
options in the vicinity include McDonalds, Burger King, and
Wendy’s. Grocery stores include Dollar General, Heritage’s Dairy
Stores and Save A Lot.
Employees
The Company presently has no full-time employees apart from its
officers and directors, Paul F. Morina, President, and Christine T.
Lindenmuth. Both are currently working for the Company without any
compensation.
Sales and Marketing
The Company relies heavily on word of mouth for its marketing. The
Company’s founders have close ties to the community in which the
first store is located and believe that these relationships will
help the Company’s sales and marketing efforts. We use Facebook to
describe the quality, atmosphere, products, specials, customer
opinions and general information about the Your Hometown Deli’s
operation. All sales and marketing messages will attempt to
describe the unique character of the Your Hometown Deli and its
family-oriented style and old-world feel.
Seasonality
We do not have a seasonal business cycle. However, we may offer
seasonal food items or adjust our menu items depending on the
seasons.
Environmental Matters
Our business currently does not implicate any environmental
regulation.
Intellectual Property
We do not hold any patents, trademarks or other registered
intellectual property on products relating to our business except
that we have a Facebook page.
ITEM 1A. RISK
FACTORS
Risks Related to our Business
Our financial condition and results of operations have been
and are expected to continue to be adversely affected by the recent
coronavirus outbreak.
In December 2019, a novel strain of coronavirus, known as COVID-19,
was first reported and was subsequently declared a pandemic by the
World Health Organization in March 2020. To date, this outbreak has
surfaced in nearly all regions around the world, and as the
pandemic continues to spread, particularly in the United States,
businesses as well as federal, state and local governments have
implemented significant actions to attempt to mitigate this public
health crisis. As a result, on March 23, 2020, we were forced to
temporarily close our delicatessen due to the stay-at-home order
issued by the Governor of New Jersey on March 9, 2020, resulting
from the outbreak of COVID-19, However, on September 8, 2020, the
delicatessen was reopened for business. We experienced a decrease
in revenues as a result of the COVID-19 pandemic even before the
stay-at-home order was issued. Even now that the order is lifted
and the delicatessen is re-opened, we may have a slowdown in
customer’s visit due to the current economic condition. There will
be no assurances that we will be able to generate sufficient
revenues. The further spread of COVID-19, and the requirements to
take action to mitigate the spread of the pandemic, will impact our
ability to carry out our business as usual and may materially
adversely impact global economic conditions, our business, results
of operations, cash flows and financial condition. Even now that we
have reopened our store, we might be subject to modified hours and
conditions. Moreover, should New Jersey fail to fully contain
COVID-19 or suffer a COVID-19 relapse, the market for our deli may
not recover quickly or at all, which could have a material adverse
effect on our business and results of operations. As a result, we
may incur additional impairment charges to our inventory, store and
corporate assets, any of which may have a significant or material
impact on our financial results. The extent to which COVID-19
impacts our results will depend on future developments, which are
highly uncertain and cannot be predicted, including new information
which may emerge concerning the severity of COVID-19 and the scope
and duration of actions to contain COVID-19 or treat its impact,
among others. While such actions may be relaxed or rolled back if
and when the pandemic abates, the actions may be reinstated as it
continues to evolve. The scope and timing of any such
reinstatements are difficult to predict and may materially affect
our future operations.
Economic conditions in the United States could adversely
affect our business and financial results.
As a retailer that is dependent upon consumer discretionary
spending, our results of operations are sensitive to changes in or
uncertainty about macro-economic conditions. Our customers may have
less money for discretionary purchases and may stop or reduce their
purchases of our products or trade down to competitors’ lower
priced foods as a result of job losses, foreclosures, bankruptcies,
increased fuel and energy costs, higher interest rates, inflation,
higher taxes, reduced access to credit, economic uncertainty and
potential negative impacts relating to federal economic policy
changes and recent international trade disputes. These factors may
also result in a general downturn in the restaurant industry.
Decreases in customer traffic and/or average value per transaction
will negatively impact our financial performance as reduced
revenues without a corresponding decrease in expenses result in
sales de-leveraging, which creates downward pressure on margins and
also negatively impacts net revenues, operating income and earnings
per share. There is also a risk that if negative economic
conditions or uncertainty persist for a long period of time or
worsen, consumers may make long-lasting changes to their
discretionary purchasing behavior, including less frequent
discretionary purchases on a more permanent basis.
If our business plans are not successful, we may not be able
to continue operations and our shareholders may lose their entire
investment in us.
Through our wholly-owned subsidiary, Your Hometown Deli, we operate
a delicatessen store that features “home-style” sandwiches and
other entrees in a casual and friendly atmosphere. We planned to
expand our Your Hometown Deli concept, but currently have only one
delicatessen location in Paulsboro, New Jersey. On March 23, 2020,
the Company temporarily closed the delicatessen due to the
stay-at-home order issued by the Governor of New Jersey. Although
the Stay at Home at Home Order has been lifted, on October 24,
2020, the Governor signed Executive Order No. 191 extending
the Public Health Emergency for another 30 days. The deli was
re-opened on September 8, 2020, with a “soft opening” to a limited
audience, prior to its “Grand Re-Opening” to the public on
September 22, 2020.
The Company experienced a decrease in revenues as a result of the
COVID-19 pandemic even before the stay-at-home order was issued.
Even though the delicatessen has been re-opened, the Company may
have a slowdown in customer’s visit due to the current economic
condition. There will be no assurances that we will generate
sufficient revenues. The Company expects the growth rate and sales
to be volatile in the near term. The Company slowly regains its
customer base after reopening.
On April 14, 2020, the Company consummated a private offer and sale
of an aggregate of 2,500,000 shares of common stock for gross cash
proceeds to us of $2,500,000. On April 24, 2020, the Company fully
repaid the notes payable to Peter L. Coker, Jr., our Chairman, in
the principal amount of $285,126 and $46,978 of accrued interest.
The loans, which were paid in full, were repaid from the proceeds
of private placement. The Company plans to utilize the remainder of
the proceeds for working capital and general corporate purposes,
and to explore and evaluate potential merger candidates for the
Company and to fund general corporate purposes. Management believes
that the current working capital are sufficient to sustain its
current operations at its current spending levels for the next 12
months. If we are not successful in expanding our Your Hometown
Deli concept, or finding a business to merge with, we may need to
cease our operations, which would result in our shareholders losing
their entire investment in us.
We do not have any agreement for a business combination or
other transaction.
We have no arrangement, agreement or understanding with respect to
engaging in a merger with, joint venture with, or acquisition of, a
private or public entity. We cannot assure you that we will
successfully identify and evaluate suitable business opportunities
or that we will conclude a business combination. Management has not
identified any particular industry or specific business within an
industry for evaluation. We cannot guarantee that we will be able
to negotiate a business combination on favorable terms, and there
is consequently a risk that future funds allocated to the purchase
of our shares will not be invested in a company with active
business operations.
Future success is highly dependent on the ability of
management to locate and attract a suitable
acquisition.
The success of our proposed plan of operation will depend to a
great extent on the operations, financial condition and management
of the identified target company. While business combinations with
entities having established operating histories are preferred,
there can be no assurance that we will be successful in locating
candidates meeting such criteria. The decision to enter into a
business combination will likely be made without detailed
feasibility studies, independent analysis, market surveys or
similar information which, if we had more funds available to it,
would be desirable. In the event we complete a business
combination, the success of our operations will be dependent upon
management of the target company and numerous other factors beyond
our control. We cannot assure you that we will identify a target
company and consummate a business combination.
There is competition for those private companies suitable for
a merger or combination transaction of the type contemplated by
management.
We are in a highly competitive market for a small number of
business opportunities which could reduce the likelihood of
consummating a successful business combination. We are and will
continue to be an insignificant participant in the business of
seeking mergers with, joint ventures with, and acquisitions of,
small private and public entities. A large number of established
and well-financed entities, including small public companies and
venture capital firms, are active in mergers and acquisitions of
companies that may be desirable target candidates for us. Nearly
all these entities have significantly greater financial resources,
technical expertise and managerial capabilities than we do.
Consequently, we will be at a competitive disadvantage in
identifying possible business opportunities and successfully
completing a business combination. These competitive factors may
reduce the likelihood of our identifying and consummating a
successful business combination.
We have not conducted market research to identify business
opportunities, which may affect our ability to identify a business
to merge with or acquire.
We have neither conducted nor have others made available to us
results of market research concerning prospective business
opportunities. Therefore, we have no assurances that market demand
exists for a merger or acquisition as contemplated by us. Our
management has not identified any specific business combination or
other transactions for formal evaluation by us, such that it may be
expected that any such target business or transaction will present
such a level of risk that conventional private or public offerings
of securities or conventional bank financing will not be available.
There is no assurance that we will be able to acquire a business
opportunity on terms favorable to us. Decisions as to which
business opportunity to participate in will be unilaterally made by
our management, which may act without the consent, vote or approval
of our stockholders.
Although management intends to devote only a limited amount
of time to seeking a target company, which may adversely impact our
ability to identify a suitable acquisition candidate, our Chairman
intends to devote his full business time to seeking a target
company.
While seeking a business combination, management anticipates
devoting very limited time to our affairs in total. However, Peter
Coker, Jr., our Chairman, intends to devote his full time to
seeking a business combination for the Company. Neither Mr. Coker
nor any of our officers have entered into any written employment
agreements with us and are not expected to do so in the foreseeable
future. This limited commitment may adversely impact our ability to
identify and consummate a successful business combination. We are
dependent on the services of our management to obtain the
additional capital required to implement our business plan and for
investigating, negotiating and integrating potential acquisition
opportunities. The loss of services of our officers could have a
substantial adverse effect on us. The expansion of our business
will be largely contingent on our ability to attract and retain
highly qualified corporate and operations level management team. We
cannot assure you that we will find suitable management personnel
or will have financial resources to attract or retain such people
if found.
The time and cost of preparing a private company to become a
public reporting company may preclude us from entering into a
merger or acquisition with the most attractive private
companies.
Target companies that are private or that fail to comply with SEC
reporting requirements may delay or preclude acquisition. Sections
13 and 15(d) of the Exchange Act require reporting companies to
provide certain information about significant acquisitions,
including audited consolidated financial statements for the company
acquired. The time and additional costs that may be incurred by
some target entities to prepare these statements may significantly
delay or essentially preclude consummation of an acquisition.
Otherwise-suitable acquisition prospects that do not have or are
unable to obtain the required audited statements may be
inappropriate for acquisition.
Any potential acquisition or merger with a foreign company
may subject us to additional risks.
If we enter into a business combination with a foreign concern, we
will be subject to risks inherent in business operations outside of
the United States. These risks include, for example, currency
fluctuations, regulatory problems, punitive tariffs, unstable local
tax policies, trade embargoes, risks related to shipment of raw
materials and finished goods across national borders and cultural
and language differences. Foreign economies may differ favorably or
unfavorably from the United States economy in growth of gross
national product, rate of inflation, market development, rate of
savings, and capital investment, resource self-sufficiency and
balance of payments positions, and in other respects.
We may need to raise additional capital to consummate a
merger or business combination. If our outstanding warrants
operations do not produce the necessary cash needed, or if we
cannot obtain needed funds, we may be forced to reduce or cease our
activities with consequent loss to investors.
There is no assurance that we will be able to obtain additional
funding when it is needed, or that such funding, if available, will
be obtainable on terms acceptable to us. If we cannot obtain needed
funds, we may be forced to reduce or cease our activities with
consequent loss to investors. In addition, should we incur
significant presently unforeseen expenses or delays, we may not be
able to accomplish our goals.
Our shareholders may not be afforded an opportunity to vote
on our proposed business combination.
We might consummate a business combination without obtaining
shareholder approval of such transaction. Although a business
combination might be structured so that obtaining shareholder
approval of the business combination at a meeting called for such
purpose would be a condition to closing, it is possible that we
will consummate a business combination without the need for
obtaining such approval. The decision as to whether we will seek
shareholder approval of a proposed business combination or not will
be made by us, solely in our discretion, and will be based on a
variety of factors such as the structure of the transaction, the
timing of the transaction and whether the terms of the transaction
would otherwise require us to seek shareholder approval.
Our failure to adopt certain corporate governance procedures
may prevent us from obtaining a listing on a national securities
exchange.
We do not have an audit, compensation or nominating and corporate
governance committee. The functions such committees would perform
are performed by the board as a whole. Consequently, there is a
potential conflict of interest in board decisions that may
adversely affect our ability to become a listed security on a
national securities exchange and as a result adversely affect the
liquidity of our Common Stock.
Risks Related to our Common Stock
Since we are traded on the OTC Markets, an active, liquid
trading market for our common stock may not develop or be
sustained. If and when an active market develops the price of our
common stock may be volatile.
Presently, our common stock is traded on the OTCQB tier of the OTC
Markets. Presently there is limited trading in our stock and in the
absence of an active trading market investors may have difficulty
buying and selling or obtaining market quotations, market
visibility for shares of our common stock may be limited, and a
lack of visibility for shares of our common stock may have a
depressive effect on the market price for shares of our common
stock.
The lack of an active market impairs your ability to sell your
shares at the time you wish to sell them or at a price that you
consider reasonable. The lack of an active market may also reduce
the fair market value of your shares. An inactive market may also
impair our ability to raise capital to continue to fund operations
by selling shares.
Trading in stocks quoted on the Pink Markets is often thin and
characterized by wide fluctuations in trading prices, due to many
factors that may have little to do with our operations or business
prospects. The securities market has from time-to-time experienced
significant price and volume fluctuations that are not related to
the operating performance of particular companies. These market
fluctuations may also materially and adversely affect the market
price of shares of our common stock. Moreover, the pink sheets
is not a stock exchange, and trading of securities is often more
sporadic than the trading of securities listed on a quotation
system like Nasdaq or a national stock exchange like the NYSE.
Accordingly, stockholders may have difficulty reselling any shares
of common stock.
There is no assurance that we will be able to pay dividends
to our shareholders, which means that you could receive little or
no return on your investment.
Payment of dividends from our earnings and profits may be made at
the sole discretion of our board of directors. There is no
assurance that we will generate any distributable cash from
operations. Our board may elect to retain cash for operating
purposes, debt retirement, or some other purpose. Consequently, you
may receive little or no return on your investment.
Our shares will be subordinate to all of our debts and
liabilities, which increases the risk that you could lose your
entire investment.
Our shares are equity interests that will be subordinate to all of
our current and future indebtedness with respect to claims on our
assets. In any liquidation, all of our debts and liabilities must
be paid before any payment is made to our shareholders. The amount
of any debt financing we incur creates a substantial risk that in
the event of our bankruptcy, liquidation or reorganization, we may
have no assets remaining for distribution to our shareholders after
payment of our debts.
There is a limited public market for our Common
Stock.
There is currently a limited public market for the common stock.
Holders of our common stock may, therefore, have difficulty selling
their common stock, should they decide to do so. In addition, there
can be no assurances that such markets will continue or that any
shares of common stock will be able to be sold without incurring a
loss. Any such market price of the common stock may not necessarily
bear any relationship to our book value, assets, past operating
results, financial condition or any other established criteria of
value, and may not be indicative of the market price for the common
stock in the future. Further, the market price for the common stock
may be volatile depending on a number of factors, including
business performance, industry dynamics, news announcements or
changes in general.
We may, in the future, issue additional common shares, which
would reduce investors’ percent of ownership and may dilute our
share value.
Our Articles of Incorporation authorizes the issuance of
250,000,000 shares of capital stock. We have an aggregate of
155,940,080 warrants issued and outstanding which are all currently
exercisable. The future issuance of common stock will result in
substantial dilution in the percentage of our common stock held by
our then existing shareholders. We may value any common stock
issued in the future on an arbitrary basis. The issuance of common
stock for future services or acquisitions or other corporate
actions may have the effect of diluting the value of the shares
held by our investors and might have an adverse effect on any
trading market for our common stock.
ITEM 1B. UNRESOLVED STAFF
COMMENTS
Smaller reporting companies are not required to provide the
information required by this item.
ITEM 2.
PROPERTIES
The Company’s principal executive office and mailing address is 25
E. Grant Street, Woodstown, NJ 08098. Our telephone number is (856)
759-9034.
On July 1, 2014, the Company entered into a five-year
non-cancelable operating lease with Mantua Creek Group, LLC
(“Mantua”), a related party, for the store space at 541A Mantua
Ave, Paulsboro, NJ 08066 for a monthly rate of $500. As extended on
March 22, 2021, the term of the lease runs through June 30,
2023.
ITEM 3. LEGAL
PROCEEDINGS
Litigation is subject to inherent uncertainties, and an adverse
result in these or other matters may arise from time to time that
may harm our business. From time to time, we may become involved in
various lawsuits and legal proceedings, which arise, in the
ordinary course of business. However, as of the date of this annual
report, we are currently not involved with any legal proceedings or
claims.
ITEM 4. MINE SAFETY
DISCLOSURES
Not Applicable.
PART II
ITEM 5. MARKET FOR
REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
PURCHASES OF EQUITY SECURITIES.
Market Information
Our common stock is quoted on the OTCQB under the symbol “HWIN”. On
March 22, 2021, the closing price of our common stock reported by
the OTCQB was $13.75.
Holders
As of December 31, 2020, we had approximately 60 holders of common
stock.
Dividends
We have not paid any cash dividends to our shareholders. The
declaration of any future cash dividends is at the discretion of
our Board and depends upon our earnings, if any, our capital
requirements and financial position, our general economic
conditions, and other pertinent conditions. It is our present
intention not to pay any cash dividends in the foreseeable future,
but rather to reinvest earnings, if any, in our business
operations.
Securities Authorized for Issuance Under Equity Compensation
Plans
The Company has no equity compensation plans.
Recent Sales of Unregistered Securities
There were no sales of equity securities during the period covered
by this Report that were not registered under the Securities Act
and were not previously reported in a Quarterly Report on Form 10-Q
or a Current Report on Form 8-K filed by the Company.
Issuer Purchases of Equity Securities
The Company has not purchased any of its securities.
ITEM 6. SELECTED
FINANCIAL DATA.
Smaller reporting companies are not required to provide the
information required by this item.
ITEM 7. MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATION.
You should read the following discussion together with our
financial statements and the related notes included elsewhere in
this annual report on Form 10-K. This discussion contains
forward-looking statements that are based on our current
expectations, estimates and projections about our business and
operations. Our actual results may differ materially from those
currently anticipated and expressed in such forward-looking
statements.
Impact of Current Coronavirus (COVID-19) Pandemic on the
Company
On March 23, 2020, we were forced to temporarily close the
delicatessen due to the stay-at-home order issued by the Governor
of New Jersey on March 9, 2020, resulting from the outbreak of
COVID-19. The delicatessen was re-opened on September 8, 2020, with
a “soft opening” to a limited audience, prior to its “Grand
Re-Opening” to the public on September 22, 2020. The temporarily
closure and other effects of COVID-19 had a material impact on our
business during 2020. Although we are unable to estimate the
ultimate impact, it is anticipated that the COVID-19 pandemic will
continue to effect the flow of customers into the deli throughout
2021. Those customers include commuting workers, local
students and coaches who frequent the sports facility on the
property and the reduced number of people willing to dine outside
the household.
Overview
Incorporated on May 19, 2014 under the laws of the State of Nevada,
Hometown International, Inc. is the originator of a new
Delicatessen concept. Through our wholly-owned subsidiary, Your
Hometown Deli Limited Liability Company (“Your Hometown Deli”), we
operate a delicatessen store that features “home-style” sandwiches
and other entrees in a casual and friendly atmosphere. The store is
designed to offer local patrons of all ages with a comfortable
community gathering places. Targeted towards smaller towns and
communities, the Company’s first and only store is located in
Paulsboro, New Jersey.
On January 18, 2014, Your Hometown Deli, LLC. was formed under the
laws of State of New Jersey. On May 29, 2014, Your Hometown Deli,
LLC, entered into a Membership Interest Purchase Agreement with our
Company and is now a wholly-owned subsidiary of our Company. We
introduced the delicatessen concept under the Your Hometown Deli
brand name.
We began generating revenue from the sales of our food and beverage
since our soft opening in mid-October 2015. Besides the equipment,
fixtures, and inventories we purchased for our deli store, we have
limited assets. We had minimal working capital as of the date of
this annual report and used cash in operating activities for the
reporting period then ended. These factors raise substantial doubt
from our auditor about our ability to continue as a going
concern.
During the year ended December 31, 2020, we continued to refine our
menu and operating hours. We have limited advertising using social
media and word of mouth; however, we continue to place an
advertisement in a local high school sports calendar and have
attended various local events with food samples and menus. We
have attended events like the Lighthouse Challenge held at Tinicum
Rear Range Lighthouse and various political fundraisers throughout
Gloucester County. We expect our losses to continue.
As reflected in the financial statements, the Company used cash in
operations of $668,668 and has a net loss from operations of
$631,356 and an accumulated deficit of $1,438,276 for the fiscal
year ended December 31, 2020.
Critical Accounting Policies and Estimates
Use of Estimate
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, Revenue from Contracts with Customers
(Topic 606). 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.
Recent Accounting Pronouncements
All other newly issued accounting pronouncements, but not yet
effective, have been deemed either immaterial or not
applicable.
Results of Operations
For the years ended December 31, 2020 and December 31,
2019
Comparison for the Fiscal Year Ended December 31, 2020 and
2019
We generated revenue of $13,976 and $21,772 for the years ended
December 31, 2020 and 2019, respectively. The decrease in revenue
is attributed to the deli being closed due to COVID-19. The deli
was re-opened on September 8, 2020, with a “soft opening” to a
limited audience, prior to its “Grand Re-Opening” to the public on
September 22, 2020.
The total cost and expenses was $638,414 for the year ended
December 31, 2020, compared to $153,930 for the year ended December
31, 2019. This increase in costs and expenses is primarily due to
$320,000 of consulting fees paid to related parties during the year
ended December 31, 2020, an increase of $113,991 in professional
resulting from the registration statement filed by the Company
during the year ended December 31, 2020 and an increase of $59,909
in general and administrative expenses. Increase in general and
administrative fees was attributable to fees required in connection
with filing with the Security and Exchange Commission and an
increase in general business expenses.
We incurred loss from operations of $624,438 and $132,158 for the
years ended December 31, 2020 and 2019, respectively. This increase
in loss from operations was due to a reduction in revenues and an
increase in operating costs.
Other income for the year ended December 31, 2020 was $1,000
resulting from the New Jersey Economic Development Authority grant
received from the NJEDA Small Business Emergency Assistance Phase 2
Grant assistance program in light of the impact of the coronavirus
pandemic.
Interest
income increased by $1,173 to $1,173 for the year ended December
31, 2020 from $0 for the year ended December 31, 2019. The
increase
was primarily due to interest on note receivable – related
party.
Interest expense was $9,091 for the year ended December 31, 2020,
compared to $27,183 for the year ended December 31, 2019. This
decrease was due to a lower interest expense on the loans as a
result of a decrease in debt outstanding.
Due to the described factors above, we had a net loss of $631,356
and $149,341 for the years ended December 31, 2020 and 2019,
respectively.
Liquidity and Capital Resources
As of December 31, 2020, we had current assets of $1,556,426,
consisting of $1,398,006 in cash, $6,594 in prepaid expenses, $954
in inventory, $150,000 in note receivable - related party and $872
in interest receivable – related party. Our current liabilities as
of December 31, 2020, were $70,051, which is comprised of $64,749
due to certain officers, $2,388 in accounts payable and accrued
expenses, and $2,914 in current operating lease liability.
The following is a summary of our cash flows provided by (used in)
operating, investing, and financing activities for the years ended
December 31, 2020 and 2019:
| |
|
For the year
ended
December 31,
2020 |
|
|
For the year
ended
December 31,
2019 |
|
| Net Cash Used in Operating
Activities |
|
$ |
(668,668 |
) |
|
$ |
(156,671 |
) |
| Net Cash Used in Investing
Activities |
|
$ |
(150,000 |
) |
|
$ |
— |
|
| Net Cash
Provided by Financing Activities |
|
$ |
2,211,292 |
|
|
$ |
161,444 |
|
| Net Increase in
Cash and Cash Equivalents |
|
$ |
1,392,624 |
|
|
$ |
4,773 |
|
For the year ended December 31, 2020, we had used cash of $668,668
for operating activities, used cash of $150,000 in investing
activities and financing activities provided $2,211,292. We had a
net increase in cash and cash equivalents of $1,392,624 for the
year ended December 31, 2020.
For the year ended December 31, 2020, net cash used in operations
of $668,668 was the result of a net loss of $631,356 and a decrease
of accounts payable and accrued expenses of $66,593, offset by
in-kind contribution of services of $30,856, depreciation expense
of $5,801 and an increase in prepaid expenses of $6,594.
For the year ended December 31, 2019, net cash used in operations
of $156,671 was the result of a net loss of $149,341 and a decrease
of accounts payable and accrued expenses of $55,363 offset by
in-kind contribution of services of $30,856, depreciation expense
of $7,315, and a gain on debt settlement of $10,000.
Net cash used in our investing activities were $150,000 and $0 for
the years ended December 31, 2020 and December 31, 2019,
respectively. The increase was attributable to issuance of note
receivable -related party of $150,000.
Our financing activities resulted in a cash inflow of $2,211,292
for the year ended December 31, 2020, which is represented by
$2,500,000 proceeds from issuance of common stock, $11,732 proceeds
from/due to related parties, $332,104 loan repayment to related
party, $70,000 proceeds from note payable- related party and
$38,336 repurchase of stock. Our financing activities resulted in a
cash inflow of $161,444 for the year ended December 31, 2019, which
is represented by $19,054 proceeds from a shareholder loan payable,
repayment of note payable of $81,000, repayment of note payable –
related party of $31,710 and $255,100 proceeds, net of repayment
from note payable- related party.
As reflected in the accompanying consolidated financial statements,
the Company used cash in operations of $668,668, has an accumulated
deficit of $1,438,276 and has a net loss of $631,356 for the year
ended December 31, 2020.
On March 23, 2020, the Company temporarily closed the delicatessen
due to the stay-at-home order issued by the Governor of New Jersey.
Although the Stay at Home at Home Order has been lifted, on October
24, 2020, the Governor signed Executive Order No. 191
extending the Public Health Emergency for another 30 days. The deli
was re-opened on September 8, 2020, with a “soft opening” to a
limited audience, prior to its “Grand Re-Opening” to the public on
September 22, 2020.
The Company experienced a decrease in revenues as a result of the
COVID-19 pandemic even before the stay-at-home order was issued.
Even though the delicatessen has been re-opened, the Company may
have a slowdown in customer’s visit due to the current economic
condition. There will be no assurances that we will generate
sufficient revenues. The Company expects the growth rate and sales
to be volatile in the near term. The Company slowly regains its
customer base after reopening.
On April 14, 2020, the Company consummated a private offer and sale
of an aggregate of 2,500,000 shares of common stock for gross cash
proceeds to us of $2,500,000. On April 24, 2020, the Company fully
repaid the notes payable to Peter L. Coker, Jr., our Chairman, in
the principal amount of $285,126, and $46.978 of accrued interest.
The loans, which were paid in full, were repaid from the proceeds
of private placement. The Company plans to utilize the remainder of
the proceeds to explore and evaluate potential merger candidates
for the Company and to fund general corporate purposes. As of
December 31, 2020, we had approximately $1,398,000 of cash on hand,
and a cash burn rate of approximately $70,000 per month. Management
believes that the current working capital are sufficient to sustain
its current operations for the next 12 months. Management believes
that the actions taken in respect of the COVID-19 pandemic and
current working capital are sufficient to sustain its current
operations at its current spending levels for the next 12 months.
However, we are unable to estimate the ultimate impact of the
COVID-19 pandemic on our financial condition and future results of
operations.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements.
ITEM 7A. QUANTITATIVE AND
QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Smaller reporting companies are not required to provide the
information required by this item.
ITEM 8. FINANCIAL
STATEMENTS AND SUPPLEMENTARY DATA
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To
the Stockholders and Board of Directors of:
Hometown International, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of
Hometown International, Inc. and Subsidiary (the “Company”) as of
December 31, 2020 and 2019, the related consolidated statements of
operations, changes in stockholders’ equity (deficit) and cash
flows for each of the two years in the period ended December 31,
2020, and the related notes (collectively referred to as the
“consolidated financial statements”). In our opinion, the
consolidated financial statements present fairly, in all material
respects, the financial position of the Company as of December 31,
2020 and 2019, and the results of its operations and its cash flows
for each of the two years in the period ended December 31, 2020, in
conformity with accounting principles generally accepted in the
United States of America.
Basis for Opinion
These consolidated financial statements are the responsibility of
the Company’s management. Our responsibility is to express an
opinion on the Company’s consolidated 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 consolidated
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 controls over
financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of
material misstatement of the consolidated 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
consolidated financial statements. Our audits also included
evaluating the accounting principles used and significant estimates
made by management, as well as evaluating the overall consolidated
financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising
from the current period audit of the consolidated 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 consolidated financial statements and (2)
involved our especially challenging, subjective, or complex
judgments. The communication of critical audit matters does not
alter in any way our opinion on the consolidated financial
statements, taken as a whole, and we are not, by communicating the
critical audit matters below, providing separate opinions on the
critical audit matters or on the accounts or disclosures to which
they relate.
Warrants issued to shareholders of record
As described in Note 6 to the consolidated financial statements,
on April 15, 2020, the Company issued
twenty warrants for every one share of common stock held to
shareholders of record as of April 15, 2020. The warrants were
issued to the shareholders of record on a pro-rata basis on the
issuance date.
To determine the fair value of warrants, the Company determines the
appropriate valuation methodology and assumptions, including
unobservable inputs. The Company estimates the fair value of each
warrant using the Black-Scholes option pricing model, that uses
significant assumptions, including the Company's stock price,
historical volatility of the Company's shares, risk-free interest
rate and probability of exercise occurrence through expiration date
of warrant. There was no consideration in exchange for the issuance
of these warrants and therefore, these are treated as shareholder’s
distribution with a net effect of zero on stockholder’s equity.
Auditing management's estimate for the
fair value of warrants was complex and highly judgmental as
it involved our assessment of the significant assumptions used by
management because the fair value
calculations were sensitive to changes in assumptions described
above, and certain inputs used in the determination of fair values
were based on unobservable data, including, but not limited to, the
historical volatility and probability of conversion.
To test the fair value of the Company's financial assets and
liabilities, we performed audit procedures that included, among
others, evaluating the methodologies used in the valuation model
and the significant assumptions used by the Company.
Notes receivable from related party
As discussed in Notes 3 and 11 to the consolidated financial
statements, the Company received unsecured promissory notes from
related parties in exchange for cash.
Evaluating the identification of related party transactions was
highly judgmental as it involved our assessment to determine such
transactions were identified by the Company.
We obtained an understanding of the Company’s certain internal
controls related to the identification of related party
transactions. We evaluated the sufficiency of audit evidence
obtained by assessing the results of procedures performed over the
identification of related party transactions.
/s/
Liggett & Webb, P.A.
LIGGETT & WEBB, P.A.
Certified Public Accountants
We
have served as the Company’s auditor since 2015
Boynton Beach, Florida
March 26, 2021
HOMETOWN INTERNATIONAL, INC. AND SUBSIDIARY
Consolidated Balance Sheets
| |
|
December 31,
2020 |
|
|
December 31,
2019 |
|
| |
|
|
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
| |
|
|
|
|
|
|
| Current Assets |
|
|
|
|
|
|
|
Cash |
|
$ |
1,398,006 |
|
|
$ |
5,382 |
|
| Prepaid
expenses |
|
|
6,594 |
|
|
|
- |
|
| Inventory |
|
|
954 |
|
|
|
1,044 |
|
| Note
receivable - related party, net |
|
|
150,000 |
|
|
|
- |
|
|
Interest receivable - related party |
|
|
872 |
|
|
|
- |
|
| Total
Current Assets |
|
|
1,556,426 |
|
|
|
6,426 |
|
| |
|
|
|
|
|
|
|
|
|
Leasehold improvements and equipment, net |
|
|
237 |
|
|
|
6,038 |
|
|
Operating lease asset, net |
|
|
2,914 |
|
|
|
8,324 |
|
| |
|
|
|
|
|
|
|
|
|
Total Assets |
|
$ |
1,559,577 |
|
|
$ |
20,788 |
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) |
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
Current Liabilities |
|
|
|
|
|
|
|
|
| Accounts
payable and accrued expenses |
|
$ |
2,388 |
|
|
$ |
68,981 |
|
|
Operating lease liability, current |
|
|
2,914 |
|
|
|
5,411 |
|
| Due to
Officers - related parties |
|
|
64,749 |
|
|
|
53,017 |
|
|
Note payable - related party |
|
|
- |
|
|
|
362,104 |
|
| Total
Current Liabilities |
|
|
70,051 |
|
|
|
489,513 |
|
| |
|
|
|
|
|
|
|
|
|
Long Term Liabilities |
|
|
|
|
|
|
|
|
|
Operating lease liability, net of current |
|
|
- |
|
|
|
2,913 |
|
| |
|
|
|
|
|
|
|
|
|
Total Liabilities |
|
|
70,051 |
|
|
|
492,426 |
|
| |
|
|
|
|
|
|
|
|
|
Commitments and Contingencies (See Note 7) |
|
|
- |
|
|
|
- |
|
| |
|
|
|
|
|
|
|
|
|
Stockholders’ Equity (Deficit) |
|
|
|
|
|
|
|
|
| Common
stock, $0.0001 par value; 250,000,000 shares authorized,
7,797,004 and 5,235,340 issued and outstanding,
respectively |
|
|
780 |
|
|
|
523 |
|
|
Additional paid-in capital |
|
|
2,927,022 |
|
|
|
334,759 |
|
|
Accumulated deficit |
|
|
(1,438,276 |
) |
|
|
(806,920 |
) |
|
|
|
|
|
|
|
|
|
|
|
Total Stockholders’ Equity (Deficit) |
|
|
1,489,526 |
|
|
|
(471,638 |
) |
| |
|
|
|
|
|
|
|
|
|
Total Liabilities and Stockholders’ Equity (Deficit) |
|
$ |
1,559,577 |
|
|
$ |
20,788 |
|
See accompanying notes to consolidated financial statements
HOMETOWN INTERNATIONAL, INC. AND SUBSIDIARY
Consolidated Statements of Operations
| |
|
For the
Year Ended
December 31,
2020 |
|
|
For the
Year Ended
December 31,
2019 |
|
| |
|
|
|
|
|
|
|
Sales |
|
$ |
13,976 |
|
|
$ |
21,772 |
|
| |
|
|
|
|
|
|
|
|
|
Costs and Expenses |
|
|
|
|
|
|
|
|
| Food,
beverage and supplies |
|
|
10,124 |
|
|
|
15,824 |
|
| Labor |
|
|
126 |
|
|
|
102 |
|
| Direct
operating and occupancy |
|
|
7,220 |
|
|
|
9,446 |
|
|
Depreciation |
|
|
5,801 |
|
|
|
7,315 |
|
|
Consulting - related parties |
|
|
320,000 |
|
|
|
- |
|
|
Professional fees |
|
|
170,767 |
|
|
|
56,776 |
|
|
General and administrative |
|
|
124,376 |
|
|
|
64,467 |
|
|
Total cost and expenses |
|
|
638,414 |
|
|
|
153,930 |
|
| |
|
|
|
|
|
|
|
|
|
Loss from Operations |
|
|
(624,438 |
) |
|
|
(132,158 |
) |
| |
|
|
|
|
|
|
|
|
|
Other Income (Expenses) |
|
|
|
|
|
|
|
|
| Gain on
debt settlement |
|
|
- |
|
|
|
10,000 |
|
| Other
Income |
|
|
1,000 |
|
|
|
- |
|
| Interest
Income |
|
|
1,173 |
|
|
|
- |
|
|
Interest Expense |
|
|
(9,091 |
) |
|
|
(27,183 |
) |
|
Total Other (Expenses) |
|
|
(6,918 |
) |
|
|
(17,183 |
) |
| |
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
LOSS FROM OPERATIONS BEFORE INCOME TAXES |
|
|
(631,356 |
) |
|
|
(149,341 |
) |
| |
|
|
|
|
|
|
|
|
|
Provision for Income Taxes |
|
|
- |
|
|
|
- |
|
| |
|
|
|
|
|
|
|
|
|
NET LOSS |
|
$ |
(631,356 |
) |
|
$ |
(149,341 |
) |
| |
|
|
|
|
|
|
|
|
|
Net Loss Per Share - Basic and Diluted |
|
$ |
(0.09 |
) |
|
$ |
(0.03 |
) |
| |
|
|
|
|
|
|
|
|
|
Weighted average number of shares outstanding - Basic and
Diluted |
|
|
7,081,731 |
|
|
|
5,235,340 |
|
See accompanying notes to consolidated financial statements
HOMETOWN INTERNATIONAL, INC. AND SUBSIDIARY
Consolidated Statement of Stockholders’ Equity (Deficit)
For the years ended December 31, 2020 and 2019
|
|
|
|
|
|
Additional |
|
|
|
|
|
Total
Stockholders’ |
|
|
|
|
Common stock |
|
|
paid-in |
|
|
Accumulated |
|
|
Equity |
|
|
|
|
Shares |
|
|
Amount |
|
|
capital |
|
|
Deficit |
|
|
(Deficit) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balance,
December 31, 2018 |
|
|
5,235,340 |
|
|
$ |
523 |
|
|
$ |
303,903 |
|
|
$ |
(657,579 |
) |
|
$ |
(353,153 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| In
kind contribution of services |
|
|
- |
|
|
|
- |
|
|
|
30,856 |
|
|
|
- |
|
|
|
30,856 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss for the year ended December 31, 2019 |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(149,341 |
) |
|
|
(149,341 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2019 |
|
|
5,235,340 |
|
|
$ |
523 |
|
|
$ |
334,759 |
|
|
$ |
(806,920 |
) |
|
$ |
(471,638 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conversion of note payable - related party to common shares
($1.00/share) |
|
|
100,000 |
|
|
|
10 |
|
|
|
99,990 |
|
|
|
- |
|
|
|
100,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Repurchase
of common shares ($1.00/share) |
|
|
(38,336 |
) |
|
|
(3 |
) |
|
|
(38,333 |
) |
|
|
- |
|
|
|
(38,336 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued for cash ($1.00/share) |
|
|
2,500,000 |
|
|
|
250 |
|
|
|
2,499,750 |
|
|
|
- |
|
|
|
2,500,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| In
kind contribution of services |
|
|
- |
|
|
|
- |
|
|
|
30,856 |
|
|
|
- |
|
|
|
30,856 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss for the year ended December 31, 2020 |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(631,356 |
) |
|
|
(631,356 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2020 |
|
|
7,797,004 |
|
|
$ |
780 |
|
|
$ |
2,927,022 |
|
|
$ |
(1,438,276 |
) |
|
$ |
1,489,526 |
|
See accompanying notes to consolidated financial statements
HOMETOWN INTERNATIONAL, INC. AND SUBSIDIARY
Consolidated Statements of Cash Flows
| |
|
For the
Year Ended
December 31,
2020 |
|
|
For the
Year Ended
December 31,
2019 |
|
|
Cash Flows From Operating Activities: |
|
|
|
|
|
|
|
|
|
Net Loss |
|
$ |
(631,356 |
) |
|
$ |
(149,341 |
) |
|
Adjustments to reconcile net loss to net cash used in
operations |
|
|
|
|
|
|
|
|
| In-kind
contribution of services |
|
|
30,856 |
|
|
|
30,856 |
|
|
Depreciation expense |
|
|
5,801 |
|
|
|
7,315 |
|
| Gain on
debt settlement |
|
|
- |
|
|
|
10,000 |
|
|
Amortization of operating lease assets |
|
|
5,410 |
|
|
|
2,102 |
|
| Changes
in operating assets and liabilities: |
|
|
|
|
|
|
|
|
|
(Increase) in prepaid expenses |
|
|
(6,594 |
) |
|
|
- |
|
|
(Increase) Decrease in inventory |
|
|
90 |
|
|
|
(138 |
) |
|
Increase in interest receivable |
|
|
(872 |
) |
|
|
- |
|
|
Decrease in accounts payable and accrued expenses |
|
|
(66,593 |
) |
|
|
(55,363 |
) |
|
Decrease in operating lease liability |
|
|
(5,410 |
) |
|
|
(2,102 |
) |
|
Net Cash Used In Operating Activities |
|
|
(668,668 |
) |
|
|
(156,671 |
) |
| |
|
|
|
|
|
|
|
|
|
Cash Flows From Investing Activities: |
|
|
|
|
|
|
|
|
|
Issuance of Note receivable - related party |
|
|
(150,000 |
) |
|
|
- |
|
|
Net Cash Used In Investing Activities |
|
|
(150,000 |
) |
|
|
- |
|
| |
|
|
|
|
|
|
|
|
|
Cash Flows From Financing Activities: |
|
|
|
|
|
|
|
|
| Proceeds
from common stock issuance for cash |
|
|
2,500,000 |
|
|
|
- |
|
| Proceeds
from/due to officers |
|
|
11,732 |
|
|
|
19,054 |
|
|
Repayment of note payable |
|
|
- |
|
|
|
(81,000 |
) |
|
Repayment of note payable - related party |
|
|
(332,104 |
) |
|
|
(31,710 |
) |
| Proceeds
from note payable - related party, net of repayment |
|
|
70,000 |
|
|
|
255,100 |
|
|
Repurchase of stock |
|
|
(38,336 |
) |
|
|
- |
|
|
Net Cash Provided by Financing Activities |
|
|
2,211,292 |
|
|
|
161,444 |
|
| |
|
|
|
|
|
|
|
|
|
Net Increase in Cash |
|
|
1,392,624 |
|
|
|
4,773 |
|
| |
|
|
|
|
|
|
|
|
|
Cash at Beginning of Year |
|
|
5,382 |
|
|
|
609 |
|
| |
|
|
|
|
|
|
|
|
|
Cash at End of Year |
|
$ |
1,398,006 |
|
|
$ |
5,382 |
|
| |
|
|
|
|
|
|
|
|
|
Supplemental disclosure of cash flow information: |
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
Cash paid for interest |
|
$ |
9,091 |
|
|
$ |
44,367 |
|
|
Cash paid for taxes |
|
$ |
- |
|
|
$ |
- |
|
| |
|
|
|
|
|
|
|
|
|
Supplemental disclosure of non-cash investing and financing
activities: |
|
|
|
|
|
|
|
|
|
Accrued interest converted to note payable principal |
|
$ |
- |
|
|
$ |
25,196 |
|
|
Operating lease asset obtained for operating lease liability |
|
$ |
- |
|
|
$ |
10,426 |
|
|
Note payable - related party, converted into 100,000 shares of
common stock |
|
$ |
100,000 |
|
|
$ |
- |
|
See accompanying notes to consolidated financial statements
HOMETOWN INTERNATIONAL, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2020 AND 2019
|
NOTE 1 |
SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES AND ORGANIZATION |
Hometown International, Inc. (the “Company”) was incorporated under
the laws of the State of Nevada on May 19, 2014. The Company is the
originator of a new “Delicatessen” concept (“Your Hometown Deli”).
The Company intends that its delicatessens will feature
“home-style” sandwiches and other entrees in a casual friendly
atmosphere. Hometown Delis are designed to be comfortable community
gathering places for guests of all ages.
On January 18, 2014, Your Hometown Deli, LLC. was formed under the
laws of the State of New Jersey. On May 29, 2014, Your Hometown
Deli, LLC, entered into a Membership Interest Purchase Agreement
with Hometown International, Inc. For accounting purposes, this
transaction is being accounted for as a merger of entities under
common control and has been treated as a recapitalization of
Hometown International, Inc. with Your Hometown Deli, LLC, as the
accounting acquirer). The historical financial statements of the
accounting acquirer became the financial statements of the
registrant. The Company did not recognize goodwill or any
intangible assets in connection with the transaction. The 5,000,000
shares issued to the shareholder of Your Hometown Deli, LLC, in
conjunction with the share exchange transaction has been presented
as outstanding for all periods.
The Company’s accounting year end is December 31, which is the year
end of Your Hometown Deli, LLC.
On March 23, 2020, we temporarily closed the delicatessen due to
the stay-at-home order issued by the Governor of New Jersey on
March 9, 2020. As of the date of this report, the Stay-at-Home
Order has been lifted, however, on October 24, 2020, the
Governor signed Executive Order No. 191 extending the Public
Health Emergency for another 30 days. The deli was re-opened on
September 8, 2020, with a “soft opening” to a limited audience,
prior to its “Grand Re-Opening” to the public on September 22,
2020.
(B) Principles of Consolidation
The accompanying December 31, 2020 and 2019 consolidated financial
statements include the accounts of Hometown International, Inc. and
its wholly owned subsidiary, Your Hometown Deli, LLC. All
intercompany accounts have been eliminated upon consolidation.
(C) Use of Estimates
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.
(D) Cash and Cash Equivalents
The Company considers all highly liquid temporary cash investments
with an original maturity of 90 days or less to be cash
equivalents. At December 31, 2020 and December 31, 2019, the
Company had no cash equivalents.
HOMETOWN INTERNATIONAL, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2020 AND 2019
(E) Loss Per Share
Basic and diluted net loss per common share is computed based upon
the weighted average common shares outstanding as defined by FASB
ASC No. 260, “Earnings Per Share.” Diluted loss per share is
computed by dividing net loss by the weighted average number of
shares of common stock, common stock equivalents and potentially
dilutive securities outstanding during the period”. For December
31, 2020 and December 31, 2019, warrants were not included in the
computation of income/ (loss) per share because their inclusion is
anti-dilutive.
The computation of basic and diluted loss per share for December
31, 2020 and December 31, 2019 excludes the common stock
equivalents of the following potentially dilutive securities
because their inclusion would be anti-dilutive:
| |
|
|
December 31,
2020 |
|
|
December 31,
2019 |
|
| |
Class A Warrants (Exercise price - $1.25/share) |
|
|
38,985,020 |
|
|
|
- |
|
| |
Class B Warrants (Exercise price - $1.50/share) |
|
|
38,985,020 |
|
|
|
- |
|
| |
Class C Warrants (Exercise price - $1.75/share) |
|
|
38,985,020 |
|
|
|
- |
|
| |
Class D Warrants (Exercise price
- $2.00/share) |
|
|
38,985,020 |
|
|
|
- |
|
| |
|
|
|
|
|
|
|
|
|
| |
Total |
|
|
155,940,080 |
|
|
|
- |
|
(F) Income Taxes
The Company accounts for income taxes under FASB Codification Topic
740-10-25 (“ASC 740-10-25”). Under ASC 740-10-25, deferred tax
assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and
their respective tax bases. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are
expected to be recovered or settled. Under ASC 740-10-25, the
effect on deferred tax assets and liabilities of a change in tax
rates is recognized in income in the period that includes the
enactment date.
The Company’s income tax expense differed from the statutory rates
(federal 21% and state 9%) as follows:
| |
|
|
December 31,
2020 |
|
|
December 31,
2019 |
|
| |
|
|
|
|
|
|
|
| |
Expected tax expense (benefit) -
Federal |
|
$ |
(120,652 |
) |
|
$ |
(28,539 |
) |
| |
Expected tax expense (benefit) -
State |
|
|
(56,822 |
) |
|
|
(13,441 |
) |
| |
Permanent difference |
|
|
66,789 |
|
|
|
- |
|
| |
Non-deductible expenses |
|
|
13,458 |
|
|
|
8,674 |
|
| |
Change in
valuation allowance |
|
|
97,227 |
|
|
|
33,306 |
|
| |
Actual tax
expense (benefit) |
|
$ |
- |
|
|
$ |
- |
|
The net deferred taxes in the accompanying balance sheets includes
the following amounts of deferred tax assets and liabilities:
| |
Gross deferred tax assets: |
|
|
|
|
|
|
| |
Net operating
loss carryforwards |
|
$ |
206,992 |
|
|
$ |
176,554 |
|
| |
Total deferred tax assets |
|
|
206,992 |
|
|
|
176,554 |
|
| |
Less: valuation
allowance |
|
|
(206,992 |
) |
|
|
(176,554 |
) |
| |
Net deferred tax
asset recorded |
|
$ |
- |
|
|
$ |
- |
|
HOMETOWN INTERNATIONAL, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2020 AND 2019
As of December 31, 2020 and 2019, the Company has a net operating
loss carry forward of approximately $736,336 and $628,084 available
to offset future taxable income through December 31, 2040. The
valuation allowance was established to reduce the deferred tax
asset to the amount that will more likely than not be realized.
This is necessary due to the Company’s continued operating loss and
the uncertainty of the Company’s ability to utilize approximately
$199,000 of the net operating loss carryforwards before they will
expire through the year 2037 and approximately $537,000 of net
operating loss carryforwards that can be carry forward indefinitely
subject to limitation.
The net change in the valuation allowance for the years ended
December 31, 2020 and 2019 was an increase of $97,227 and $33,306,
respectively.
The company’s federal income tax returns for the years 2017-2020
remain subject to examination by the Internal Revenue Service
through 2025.
(G) Property and Equipment
Property and equipment is recorded at cost and depreciated or
amortized using the straight-line method over the estimated useful
life of the asset or the underlying lease term for leasehold
improvements, whichever is shorter onset the property and equipment
is put into service.
(H) Revenue Recognition
The Company recognizes revenue in accordance with Accounting
Standards Codification, Revenue from Contracts with Customers
(Topic 606). 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.
(I) Fair Value of Financial Instruments
The Company measures its financial assets and liabilities in
accordance with GAAP. For certain of our financial instruments,
including cash, accounts payable, and the short-term portion of
long-term debt, the carrying amounts approximate fair value due to
their short maturities.
We adopted accounting guidance for financial and non-financial
assets and liabilities (ASC 820). The adoption did not have a
material impact on our results of operations, financial position or
liquidity. This standard defines fair value, provides guidance for
measuring fair value and requires certain disclosures. This
standard does not require any new fair value measurements, but
rather applies to all other accounting pronouncements that require
or permit fair value measurements. This guidance does not apply to
measurements related to share-based payments. This guidance
discusses valuation techniques, such as the market approach
(comparable market prices), the income approach (present value of
future income or cash flow), and the cost approach (cost to replace
the service capacity of an asset or replacement cost). The guidance
utilizes a fair value hierarchy that prioritizes the inputs to
valuation techniques used to measure fair value into three broad
levels. The following is a brief description of those three
levels:
| |
● |
Level
1: Observable inputs such as quoted prices (unadjusted) in active
markets for identical assets or liabilities. |
| |
|
|
| |
● |
Level
2: Inputs other than quoted prices that are observable, either
directly or indirectly. These include quoted prices for similar
assets or liabilities in active markets and quoted prices for
identical or similar assets or liabilities in markets that are not
active. |
| |
|
|
| |
● |
Level
3: Unobservable inputs in which little or no market data exists,
therefore developed using estimates and assumptions developed by
us, which reflect those that a market participant would
use. |
HOMETOWN INTERNATIONAL, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2020 AND 2019
(J) Concentrations
The Company maintains various bank accounts at one bank, which, at
times, may have balances that exceed federally insured limits. The
Company believes it is not exposed to any significant credit risk
on its cash balances and has not experienced any losses in such
accounts. At December 31, 2020 and December 31, 2019, the Company
had cash balances in excess of FDIC limits of $1,147,290 and $0,
respectively.
(K) Recent Accounting Pronouncements
All other newly issued accounting pronouncements but not yet
effective have been deemed either immaterial or not applicable.
(L) Business Segments
The Company operates in one segment and therefore segment
information is not presented.
(M) Inventories
Inventories consist of food and beverages, and are stated at
cost.
(N) Advertising
Advertising costs are expensed as incurred. These costs are
included in direct operating & occupancy expenses and totaled
$824 and $0 for the years ended December 31, 2020 and 2019,
respectively.
| NOTE
2 |
LEASEHOLD IMPROVEMENT AND
EQUIPMENT |
Leasehold improvement and equipment consist of the following at
December 31, 2020 and December 31, 2019:
| |
|
|
December 31, |
|
|
December 31, |
|
| |
|
|
2020 |
|
|
2019 |
|
| |
Leasehold
Improvements |
|
|
33,455 |
|
|
|
33,455 |
|
| |
Equipment |
|
|
3,120 |
|
|
|
3,120 |
|
| |
Leasehold
Improvements and Equipment |
|
|
36,575 |
|
|
|
36,575 |
|
| |
Less: Accumulated Depreciation |
|
|
(36,338 |
) |
|
|
(30,537 |
) |
| |
Leasehold Improvements and Equipment, Net |
|
$ |
237 |
|
|
$ |
6,038 |
|
Depreciation expense was $5,801 and $7,315 for the years ended
December 31, 2020 and 2019, respectively.
| NOTE
3 |
NOTE RECEIVABLE – RELATED
PARTY |
On November 25, 2020, the Company received an unsecured promissory
note from a related party in exchange for $150,000. Pursuant to the
terms of the note, the note is bearing interest at the rate of 6%
and is due on or before November 25, 2021. For the year ended
December 31, 2020, the Company recorded an interest receivable of
$872 (See Note 8).
HOMETOWN INTERNATIONAL, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2020 AND 2019
| NOTE
4 |
NOTE PAYABLE – RELATED
PARTY |
On March 18, 2020, the Company entered into an unsecured promissory
note with Peter L. Coker, Jr., Chairman in the amount of $50,000.
Pursuant to the terms of the note, the note is bearing 8% interest,
unsecured and is due on March 31, 2021. As of April 24, 2020, the
Company accrued $406 in interest expense. On April 24, 2020, the
note principal and accrued interest were repaid in full (See Note
8).
On February 13, 2020, the Company entered into an unsecured
promissory note with Peter L. Coker, Jr., Chairman in the amount of
$20,000. Pursuant to the terms of the note, the note is bearing 8%
interest, unsecured and is due on February 13, 2021. As of April
24, 2020, the Company accrued $315 in interest expense. On April
24, 2020, the note principal and accrued interest were repaid in
full (See Note 8).
On December 31, 2019, the Company entered into an unsecured
promissory note with Peter L. Coker, Jr., our Chairman of the Board
in the amount of $10,000. Pursuant to the terms of the note, the
note is bearing 8% interest, unsecured and is due on December 31,
2020. As of April 24, 2020, the Company accrued $255 in interest
expense. On April 24, 2020, the note principal and accrued interest
were repaid in full (See Note 8).
On December 31, 2019, the Company entered into an unsecured
promissory note with Peter L. Coker, Jr., our Chairman of the Board
in the amount of $175,000. Pursuant to the terms of the note, the
note is bearing 8% interest, unsecured and is due on June 30, 2020.
As of April 24, 2020, the Company accrued $4,462 in interest
expense. On April 24, 2020, the note principal and accrued interest
were repaid in full (See Note 8).
On December 31, 2019, the Company and a related party note holder
agreed to combine the principal and accrued interest of multiple
notes and issued a new unsecured promissory note in the amount of
$144,979. The note is bearing 8% interest, unsecured and due on
December 31, 2020. On March 18, 2020, the Company, entered into a
Debt Exchange Agreement with a related party pursuant to which
$100,000 of the principal amount of debt owed by the Company was
converted to 100,000 shares of the Company’s common stock. The
remaining principal balance owed to such party in the amount of
$44,978.54, plus any accrued and unpaid interest, is due and
payable on December 31, 2020. As of April 24, 2020, the Company
accrued $2,885 in interest expense. On April 24, 2020, the
remaining note principal and accrued interest were repaid in full
(See Note 6 (E) and 8).
On December 31, 2019, the Company and Peter L. Coker, Jr., our
Chairman of the Board agreed to combine the principal and accrued
interest of a note and issued a new unsecured promissory note in
the amount of $30,126. The note is bearing 8% interest, unsecured
and due on December 31, 2020. As of April 24, 2020, the Company
accrued $768 in interest expense. On April 24, 2020, the note
principal and accrued interest were repaid in full (See Note
8).
On October 16, 2014, the Company entered into an unsecured
promissory note with a related party in the amount of $2,000.
Pursuant to the terms of the note, the note is non-interest
bearing, unsecured and is due on demand. On January 25, 2020, the
note principal was repaid in full (See Note 8).
| NOTE
5 |
DUE TO OFFICERS – RELATED
PARTY |
During the year ended December 31, 2020, certain officers paid an
aggregate $8,280 in expenses on Company’s behalf as an advance.
Pursuant to the terms of the note, the note was non-interest
bearing, unsecured and was due on demand. As of December 31, 2020,
the balance due to officers was $61,297 (See Note 8).
For the year ended December 31, 2020, the Company owed to the
Chairman $3,452 for corporate expense reimbursements. The amount
was repaid on January 20, 2021 (See Notes 8 and 11).
HOMETOWN INTERNATIONAL, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2020 AND 2019
| NOTE
6 |
STOCKHOLDERS’ EQUITY
(DEFICIT) |
(A) Increase in Authorized Shares
On March 23, 2020, the Company filed a Certificate of Amendment to
the Company’s Articles of Incorporation with the Secretary of State
of the State of Nevada increasing the number of shares of common
stock the Company is authorized to issue from 100,000,000 to
250,000,000 with a par value of $0.0001 per share.
(B) In kind contribution of services
For the years ended December 31, 2020 and 2019, the Company
recorded $30,856 and $30,856, respectively, as in-kind contribution
of services provided by President and Vice President of the Company
(See Note 8).
(C) Common stock repurchase
On March 18, 2020, the Company repurchased an aggregate of 38,336
shares of the Company’s common stock from a total of 11
shareholders, at a purchase price of $1.00 per share. These shares
were returned to the Company’s number of authorized but unissued
shares of common stock.
(D) Warrant Issuance
On March 18, 2020, the Board of Directors of the Company authorized
the issuance of warrants to the shareholders of record as of
issuance date. As of such date, the Company shall send each
shareholder of record (i) five Class A Warrants entitling the
holder thereof to purchase five shares of common stock at an
exercise price of $1.25 per share, (ii) five Class B Warrants
entitling the holder thereof to purchase five shares of common
stock at an exercise price of $1.50 per share, (iii) five Class C
Warrants entitling the holder thereof to purchase five shares of
common stock at an exercise price of $1.75 per share and (iv) five
Class D Warrants entitling the holder thereof to purchase five
shares of common stock at an exercise price of $2.00 per share,
with each warrant expiring on March 31, 2035.
On April 15, 2020, the Company issued twenty warrants for every one
share of common stock held to shareholders of record as of April
15, 2020. The warrants were issued to the shareholders of record on
a pro-rata basis on the issuance date. There was no consideration
in exchange for the issuance of these warrants and therefore, these
are treated as shareholder’s distribution with a net effect of zero
on the stockholder’s equity.
The Company issued the following warrants:
| |
● |
38,985,020 Class A Warrants |
| |
|
|
| |
● |
38,985,020 Class B Warrants |
| |
|
|
| |
● |
38,985,020 Class C Warrants |
| |
|
|
| |
● |
38,985,020 Class D Warrants |
As of the date of this report, no warrants have been exercised.
| |
|
|
Number of
Warrants |
|
|
Weighted
Average
Exercise
Price |
|
|
Weighted
Average
Remaining
Contractual
Life
(in Years) |
|
| |
Balance, December 31, 2019 |
|
|
- |
|
|
|
- |
|
|
|
- |
|
| |
Granted |
|
|
155,940,080 |
|
|
$ |
1.625 |
|
|
|
14.51 |
|
| |
Exercised |
|
|
- |
|
|
|
- |
|
|
|
- |
|
| |
Cancelled/Forfeited |
|
|
- |
|
|
|
- |
|
|
|
- |
|
| |
Balance, December 31, 2020 |
|
|
155,940,080 |
|
|
$ |
1.625 |
|
|
|
14.25 |
|
| |
Intrinsic Value |
|
$ |
1,812,803,430 |
|
|
|
- |
|
|
|
- |
|
HOMETOWN INTERNATIONAL, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2020 AND 2019
For the year ended December 31, 2020, the following warrants were
outstanding:
| |
Exercise Price
Warrants
Outstanding |
|
|
Warrants
Exercisable |
|
|
Weighted Average
Remaining
Contractual Life |
|
|
Aggregate
Intrinsic Value |
|
| |
$ |
1.25 |
|
|
|
38,985,020 |
|
|
|
14.25 |
|
|
$ |
467,820,240 |
|
| |
$ |
1.50 |
|
|
|
38,985,020 |
|
|
|
14.25 |
|
|
$ |
458,073,985 |
|
| |
$ |
1.75 |
|
|
|
38,985,020 |
|
|
|
14.25 |
|
|
$ |
448,327,730 |
|
| |
$ |
2.00 |
|
|
|
38,985,020 |
|
|
|
14.25 |
|
|
$ |
438,581,475 |
|
(E) Common Stock Issued on Debt Conversion
On March 18, 2020, the Company, entered into a Debt Exchange
Agreement with a related party pursuant to which $100,000 of the
principal amount of debt owed by the Company was converted to
100,000 shares of the Company’s common stock (See Note 4).
(F) Common Stock Issued for Cash
In April 2020, the Company sold 663,750 shares of common stock to
unrelated party for $663,750 in cash. The funds were received by
the Company on April 14, 2020.
In April 2020, the Company sold 1,380,000 shares of common stock to
unrelated party for $1,380,000 in cash. The funds were received by
the Company on April 15, 2020.
In April 2020, the Company sold 456,250 shares of common stock to
unrelated party for $456,250 in cash. The funds were received by
the Company on April 14, 2020.
| NOTE
7 |
COMMITMENTS AND
CONTINGENCIES |
Consulting Agreements
Effective as of May 1, 2020, we entered into a Consulting Agreement
with Tryon Capital Ventures LLC, a North Carolina limited liability
company (“Tryon”) which is 50% owned by the father of Peter L.
Coker, Jr., our Chairman of the Board. Pursuant to this agreement,
Tryon was engaged as a consultant to the Company, to, among other
things, support in the research, development, and analysis of
product, financial and strategic matters. The term of the Tryon
Consulting Agreement is one year; provided, however,
that each party has the right to terminate the agreement upon 30
days’ prior written notice to the other. Pursuant to the agreement,
Tryon shall receive $15,000 per month during the term of the
agreement, in addition to reimbursement of expenses approved in
advance by the Company (See Note 8).
Effective as of May 1, 2020, we also entered into a Consulting
Agreement with VCH Limited, a company formed under the laws of
Macau (“VCH”) which owns in excess of 10% of our common stock.
Pursuant to this agreement, VCH was engaged as a consultant to the
Company, to, among other things, create and build a presence with
high net worth and institutional investors. The term of the
agreement is one year; provided, however, that each
party has the right to terminate the agreement upon 30 days’ prior
written notice to the other. Pursuant to the agreement, VCH shall
receive $25,000 per month during the term of the agreement, in
addition to reimbursement of expenses approved in advance by the
Company (See Note 8).
Operating Lease Agreement
On July 1, 2014, the Company entered into a five-year
non-cancelable operating lease with a related party for its store
space at a monthly rate of $500. On September 21, 2015, the Company
executed the lease and opened the store on October 14, 2015. On
December 29, 2015, the Company signed an addendum to the lease for
the lease agreement to start 30 days after the opening of the deli.
The store opened on October 14, 2015, the first payments would have
been due on November 15, 2015, however since the deli was not fully
functioning, the first monthly rent payment was due January 1,
2016. On August 12, 2019, the Company was granted a two-year
extension of non-cancelable operating lease with a related party
for its store space at a monthly rate of $500. For the years ended
December 31, 2020 and 2019, the Company had a rent expense of
$6,000 and $6,000, respectively On March 22, 2021, the Company was
granted an additional two-year extension of non-cancelable
operating lease with a related party for its store space at a
monthly rate of $500 (See Notes 8 and 11). The Company
accounts for lease in accordance with ASC Topic 842.
HOMETOWN INTERNATIONAL, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2020 AND 2019
Supplemental consolidated balance sheet information related to
leases was as follows:
| |
|
|
December 31,
2020 |
|
| |
Operating lease
assets - right of use |
|
$ |
2,914 |
|
| |
|
|
|
|
|
| |
Lease Liability |
|
$ |
2,914 |
|
| |
Less: operating
lease liability, current |
|
|
(2,914 |
) |
| |
Long term
operating lease liability |
|
$ |
- |
|
Maturities of lease liabilities at December 31, 2020 are as
follows:
| |
2021 |
|
$ |
3,000 |
|
| |
Total lease
liability |
|
|
3,000 |
|
| |
Less: present value discount |
|
|
(86 |
) |
| |
Total
lease liability |
|
$ |
2,914 |
|
Supplemental disclosures of cash flow information related to leases
were as follows:
| |
|
|
For the
years ended
December 31,
2020 |
|
|
For the
years ended
December 31,
2019 |
|
| |
|
|
|
|
|
|
|
|
|
| |
Cash paid for operating lease
liabilities |
|
$ |
6,000 |
|
|
$ |
6,000 |
|
For the years ended December 31, 2020 and 2019, the total lease
cost were $6,000 and $6,000, respectively. The Company did not
incur any variable lease cost for both periods.
| NOTE
8 |
RELATED PARTY
TRANSACTIONS |
On July 1, 2014, the Company entered into a five-year
non-cancelable operating lease with a related party for its store
space at a monthly rate of $500. On September 21, 2015, the Company
executed the lease and opened the store on October 14, 2015. On
December 29, 2015, the Company signed an addendum to the lease for
the lease agreement to start 30 days after the opening of the deli.
The store opened on October 14, 2015, the first payments would have
been due on November 15, 2015, however since the deli was not fully
functioning, the first monthly rent payment was due January 1,
2016. On August 12, 2019, the Company was granted a two-year
extension of non-cancelable operating lease with a related party
for its store space at a monthly rate of $500. For the years ended
December 31, 2020 and 2019, the Company had a rent expense of
$6,000 and $6,000, respectively. On March 22, 2021, the Company was
granted an additional two-year extension of non-cancelable
operating lease with a related party for its store space at a
monthly rate of $500 (See Notes 7 and 11).
On October 16, 2014, the Company entered into an unsecured
promissory note with a related party in the amount of $2,000.
Pursuant to the terms of the note, the note is non-interest
bearing, unsecured and is due on demand. On January 25, 2020, the
note principal was repaid in full (See Note 4).
HOMETOWN INTERNATIONAL, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2020 AND 2019
For the years ended December 31, 2020 and 2019, the Company
recorded $30,856 and $30,856, respectively, as in-kind contribution
of services provided by President and Vice President of the Company
(See Note 6(B)).
During the year ended December 31, 2020, certain officers paid an
aggregate $8,280 in expenses on Company’s behalf as an advance.
Pursuant to the terms of the note, the note was non-interest
bearing, unsecured and was due on demand. As of December 31, 2020,
the balance due to officers was $61,297 (See Note 5).
For the year ended December 31, 2020, the Company owed to the
Chairman $3,452 for corporate expense reimbursements. The amount
was repaid on January 20, 2021 (See Notes 5 and 11).
On December 31, 2019, the Company entered into an unsecured
promissory note with Peter L. Coker, Jr., our Chairman of the Board
in the amount of $10,000. Pursuant to the terms of the note, the
note is bearing 8% interest, unsecured and is due on December 31,
2020. As of April 24, 2020, the Company accrued $255 in interest
expense. On April 24, 2020, the note principal and accrued interest
were repaid in full (See Note 4)
On December 31, 2019, the Company entered into an unsecured
promissory note with Peter L. Coker, Jr., our Chairman of the Board
in the amount of $175,000. Pursuant to the terms of the note, the
note is bearing 8% interest, unsecured and is due on June 30, 2020.
As of April 24, 2020, the Company accrued $4,462 in interest
expense. On April 24, 2020, the note principal and accrued interest
were repaid in full (See Note 4).
On December 31, 2019, the Company and a related party note holder
agreed to combine the principal and accrued interest of multiple
notes and issued a new unsecured promissory note in the amount of
$144,979. The note is bearing 8% interest, unsecured and due
on December 31, 2020. On March 18, 2020, the Company, entered into
a Debt Exchange Agreement with a related party pursuant to which
$100,000 of the principal amount of debt owed by the Company was
converted to 100,000 shares of the Company’s common stock. The
remaining principal balance owed to such party in the amount of
$44,979, plus any accrued and unpaid interest, is due and payable
on December 31, 2020. As of April 24, 2020, the Company accrued
$2,885 in interest expense. On April 24, 2020, the remaining note
principal and accrued interest were repaid in full (See Note 4 and
6(E)).
On December 31, 2019, the Company and Peter L. Coker, Jr., our
Chairman of the Board agreed to combine the principal and accrued
interest of a note and issued a new unsecured promissory note in
the amount of $30,126. The note is bearing 8% interest,
unsecured and due on December 31, 2020. As of April 24, 2020, the
Company accrued $768 in interest expense. On April 24, 2020, the
note principal and accrued interest were repaid in full (See Note
4).
On March 18, 2020, the Company entered into an unsecured promissory
note with Peter L. Coker, Jr., Chairman in the amount of $50,000.
Pursuant to the terms of the note, the note is bearing 8% interest,
unsecured and is due on March 31, 2021. As of April 24, 2020, the
Company accrued $406 in interest expense. On April 24, 2020, the
note principal and accrued interest were repaid in full (See Note
4).
On February 13, 2020, the Company entered into an unsecured
promissory note with Peter L. Coker, Jr., Chairman in the amount of
$20,000. Pursuant to the terms of the note, the note is bearing 8%
interest, unsecured and is due on February 13, 2021. As of April
24, 2020, the Company accrued $315 in interest expense. On April
24, 2020, the note principal and accrued interest were repaid in
full (See Note 3).
Effective as of May 1, 2020, we entered into a Consulting Agreement
with Tryon Capital Ventures LLC, a North Carolina limited liability
company (“Tryon”) which is 50% owned by the father of Peter L.
Coker, Jr., our Chairman of the Board. Pursuant to this agreement,
Tryon was engaged as a consultant to the Company, to, among other
things, support in the research, development, and analysis of
product, financial and strategic matters. The term of the Tryon
Consulting Agreement is one year; provided, however,
that each party has the right to terminate the agreement upon 30
days’ prior written notice to the other. Pursuant to the agreement,
Tryon shall receive $15,000 per month during the term of the
agreement, in addition to reimbursement of expenses approved in
advance by the Company (See Note 7).
HOMETOWN INTERNATIONAL, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2020 AND 2019
Effective as of May 1, 2020, we also entered into a Consulting
Agreement with VCH Limited, a company formed under the laws of
Macau (“VCH”) which owns in excess of 10% of our common stock.
Pursuant to this agreement, VCH was engaged as a consultant to the
Company, to, among other things, create and build a presence with
high net worth and institutional investors. The term of the
agreement is one year; provided, however, that each
party has the right to terminate the agreement upon 30 days’ prior
written notice to the other. Pursuant to the agreement, VCH shall
receive $25,000 per month during the term of the agreement, in
addition to reimbursement of expenses approved in advance by the
Company (See Note 7).
On November 25, 2021, the Company received an unsecured promissory
note from a related party in exchange for $150,000. Pursuant to the
terms of the note, the note is bearing interest at the rate of 6%
and is due on or before November 25, 2021. For the year ended
December 31, 2020, the Company recorded an interest receivable of
$872 (See Note 3).
| NOTE
9 |
NEW JERSEY ECONOMIC DEVELOPMENT AUTHORITY
GRANT |
In June 2020, Your Hometown Deli, LLC executed the New Jersey
Economic Development Authority Grant Application required for
securing a Grant from the NJEDA Small Business Emergency Assistance
Phase 2 Grant assistance program in light of the impact of the
coronavirus (“COVID-19”) pandemic on the Company’s business. In
connection therewith, Your Hometown Deli, LLC received a $1,000
Grant in July 2020, which does not have to be repaid. The amount is
included in “Other Income” in our consolidated statements of
operations.
As reflected in the accompanying consolidated financial statements,
the Company used cash in operations of $668,668, has an accumulated
deficit of $1,438,276, and has a net loss of $631,356 for the years
ended December 31, 2020.
On March 23, 2020, the Company temporarily closed the delicatessen
due to the stay-at-home order issued by the Governor of New Jersey.
Although the Stay at Home at Home Order has been lifted, on October
24, 2020, the Governor signed Executive Order No. 191
extending the Public Health Emergency for another 30 days. The deli
was re-opened on September 8, 2020, with a “soft opening” to a
limited audience, prior to its “Grand Re-Opening” to the public on
September 22, 2020.
The Company experienced a decrease in revenues as a result of the
COVID-19 pandemic even before the stay-at-home order was issued.
Even though the delicatessen has been re-opened, the Company may
have a slowdown in customer’s visit due to the current economic
condition. There will be no assurances that we will generate
sufficient revenues. The Company expects the growth rate and sales
to be volatile in the near term as the Company slowly regains its
customer base after reopening.
On April 14, 2020, the Company consummated a private offer and sale
of an aggregate of 2,500,000 shares of common stock for gross cash
proceeds to us of $2,500,000. On April 24, 2020, the Company fully
repaid the notes payable to Peter L. Coker, Jr., our Chairman, in
the principal amount of $285,126 and $46,978 of accrued interest.
The loans, which were paid in full, were repaid from the proceeds
of private placement. The Company plans to utilize the remainder of
the proceeds to explore and evaluate potential merger candidates
for the Company and to fund general corporate purposes. As of
December 31, 2020, we had approximately $1,398,000 of cash on hand,
and a cash burn rate of approximately $70,000 per month. Management
believes that the current working capital are sufficient to sustain
its current operations for the next 12 months. Management believes
that the actions taken in respect of the COVID-19 pandemic and
current working capital are sufficient to sustain its current
operations at its current spending levels for the next 12 months.
However, we are unable to estimate the ultimate impact of the
COVID-19 pandemic on our financial condition and future results of
operations.
| NOTE
11 |
SUBSEQUENT EVENTS |
On February 12, 2021, the Company received an unsecured promissory
note from a related party in exchange for $150,000. Pursuant to the
terms of the note, the note is bearing interest at the rate of 6%
and is due on or before February 11, 2022.
On January 20, 2021, the Company repaid $3,452 the Chairman for
corporate expense owed for the year ended December 31, 2020 (See
Notes 5 and 8).
On March 22, 2021, the Company was granted an additional two-year
extension of non-cancelable operating lease with a related party
for its store space at a monthly rate of $500 (See Notes 7 and
8).
ITEM 9. CHANGES IN AND
DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE.
None.
ITEM 9A. CONTROLS AND
PROCEDURES.
Evaluation of Disclosure Controls and Procedures
Pursuant to Rule 13a-15(b) under the Securities Exchange Act of
1934 (“Exchange Act”), the Company carried out an evaluation, with
the participation of the Company’s management, including the
Company’s Chief Executive Officer (“CEO”) and Chief Financial
Officer (“CFO”), of the effectiveness of the Company’s disclosure
controls and procedures (as defined under Rule 13a-15(e) under the
Exchange Act) as of the end of the period covered by this report.
Based upon that evaluation, the Company’s CEO and CFO concluded
that our disclosure controls and procedures were not effective as
of December 31, 2020 for the material weakness describe below.
Management’s Report on Internal Control over Financial
Reporting
The management of the Company is responsible for establishing and
maintaining adequate internal control over financial reporting for
the Company. Our internal control system was designed to, in
general, provide reasonable assurance to the Company’s management
and board regarding the preparation and fair presentation of
published financial statements, but because of its inherent
limitations, internal control over financial reporting may not
prevent or detect misstatements. Also, projections of any
evaluation of effectiveness to future periods are subject to the
risk that controls may become inadequate because of changes in
conditions, or that the degree of compliance with the policies or
procedures may deteriorate.
Our management assessed the effectiveness of the Company’s internal
control over financial reporting as of December 31, 2020. The
framework used by management in making that assessment was the
criteria set forth in the document entitled “Internal Control –
Integrated Framework” issued by the Committee of Sponsoring
Organizations of the Treadway Commission (2013 framework). Based on
this assessment, our management has concluded that our internal
controls were not effective as of December 31, 2020 for the
material weaknesses describe as follows: (i) lack of an independent
board of directors, (ii) our accounting personnel lack U.S. GAAP
expertise and (iii) lack of segregated duties.
This annual report does not include an attestation report of the
Company’s registered public accounting firm regarding internal
control over financial reporting. Management’s report was not
subject to attestation by the Company’s registered public
accounting firm pursuant to temporary rules of the Securities and
Exchange Commission that permit the Company to provide only
management’s report in this annual report.
Changes in Internal Controls over financial reporting
No change in our internal control over financial reporting occurred
during the fourth fiscal quarter of the year ended December 31,
2020 that has materially affected, or is reasonably likely to
materially affect, our internal control over financial
reporting.
ITEM 9B. OTHER
INFORMATION
Not applicable.
PART III
ITEM 10. DIRECTORS,
EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.
Directors and Executive Officers
The following table sets forth the names and ages of our officers
and directors. Our executive officers are elected annually by our
Board of Directors. Our executive officers hold their offices
until they resign, are removed by the Board, or a successor is
elected and qualified.
|
Name |
|
Age |
|
Position |
| Peter
L. Coker, Jr. |
|
52 |
|
Chairman
of the Board of Directors |
| Paul
F. Morina |
|
62 |
|
President,
Chief Executive Officer, Chief Financial Officer, Treasurer and
Director |
| Christine
T. Lindenmuth |
|
46 |
|
Vice
President, Secretary and Director |
Set forth below is a brief description of the background and
business experience of our executive officers and directors for the
past five years.
Peter L. Coker Jr., Chairman – Peter L. Coker Jr.,
Chairman – Since February 2013, Mr. Coker has been the Chairman
(Executive Director) of South Shore Holdings Limited, a Hong Kong
listed company. He is also a member of that company’s Finance and
Investment Committee, Disclosure Committee and Executive Committee,
and a director of its various subsidiaries. Mr. Coker was the
Managing Partner of Pacific Advisers, and was also a partner of TDR
Capital Investment Ltd (a Shenzhen-based private equity firm) from
2009 to 2013. From 2006 to 2009, Mr. Coker served as Chairman of
Global Trading Offshore Pte (Singapore). From 2002 to 2005, Mr.
Coker served as the Chairman of Wellington Securities (New
Zealand). Mr. Coker served as an officer of the Bridge Companies
prior to joining Wellington Securities (New Zealand) in 2002.
During his service with the Bridge Companies, Mr. Coker held the
title of Managing Director-Asia, Chief Executive Officer of
E-Bridge and Managing Director of Bridge Asia where he was
responsible for the firm’s equity business in Japan and South East
Asia/Australia. From 2000 to 2001, Mr. Coker served as the Chairman
of IRESS Market Technology Limited (formerly BridgeDFS) (ASX: IRE).
Mr. Coker graduated from Lehigh University in the United States
with a Bachelor of Arts degree in 1990. Our board of directors
believes Mr. Coker’s industry experience, as well as his extensive
finance and operations experience, uniquely position him to lead
the Company through our next phase as a company. Our board of
directors believes Mr. Coker’s industry experience, as well as his
extensive finance and operations experience, uniquely position him
to lead the Company through our next phase as a company.
Paul F. Morina, President, CEO, CFO, Treasurer and
Director - Paul F. Morina, President, CEO, CFO, Treasurer
and Director - Since 2008, Mr. Morina has been the Principal of
Paulsboro (NJ) High School and as the Head Wrestling Coach since
1986. Mr. Morina has spent his entire career in the Paulsboro
Public School District where he began as an Elementary School
Physical Education Teacher and Health Instructor in 1982. He has
held the positions of High School Physical Education and Health
Instructor, Head Coach, and High School Athletic Director. While at
James Madison University, he was a two-time NCAA Eastern Regional
champion. Mr. Morina has been highly successful coaching high
school wrestling for over 27 years in his hometown of Paulsboro, N.
J. Named the 1994 State Wrestling Man-of-the-Year by Wrestling USA
Magazine, his teams have won 25 class state championships, 24
district championships and 25 conference titles. He has a 550-34-4
overall record and has led the Paulsboro wrestling program to
exceed 1,000 victories. In addition to his work within the
Paulsboro public school systems, Mr. Morina served as a Member of
Paulsboro Town Council from 2005 to 2011. Mr. Morina earned his B.
A. from James Madison University and his M. Ed. degree from Widener
University. We believe that Mr. Morina’s in-depth knowledge and
extensive experience makes him a valuable member of our board of
directors. We believe that Mr. Morina’s in-depth knowledge and
extensive experience makes him a valuable member of our board of
directors.
Christine T. Lindenmuth, Vice President, Secretary and
Director - Since September 2012, Ms. Lindenmuth has been a
Math Teacher at Paulsboro High School, where she is also active in
the Paulsboro Education Association, Mentor Club, Renaissance
Committee and Alternative Education Program. Prior to Paulsboro
High, Ms. Lindenmuth was a Student Advisor at Salem Community
College from 2010 through 2012. She has also served as a School
Counselor at Gateway Regional High School, Lindenwold High School
and Salem County Vocational School. Ms. Lindenmuth started her
career as a Math Teacher in 1997 at the PG-CP Regional High School,
where she taught accelerated students at the Academy of Science and
Engineering. Ms. Lindenmuth currently serves on Salem County School
Employee Federal Credit Union Loan Committee, as an Association
Representative for the Penns Grove Chapter of the New Jersey
Teachers Union, and as a representative on the State Educational
Policy Committee for the New Jersey Education Association. Ms.
Lindenmuth earned her B.A. from Rider University and her M. Ed.
from Wilmington University. We believe that Ms. Lindenmuth’s
in-depth knowledge and extensive experience makes her a valuable
member of our board of directors. We believe that Ms. Lindenmuth’s
in-depth knowledge and extensive experience makes her a valuable
member of our board of directors.
Term of Office
Our directors are appointed for a one-year term to hold office
until the next annual general meeting of our shareholders or until
removed from office in accordance with our bylaws. Our officers are
appointed by our board of directors and hold office until removed
by the board.
Family Relationships
There are no family relationships between any of our directors or
executive officers.
Certain Legal Proceedings
To our knowledge, no director, nominee for director, or executive
officer of the Company has been a party in any legal proceeding
material to an evaluation of his ability or integrity during the
past ten years.
Code of Ethics
The company has not adopted a Code of Ethics applicable to its
Principal Executive Officer and Principal Financial Officer
ITEM 11. EXECUTIVE
COMPENSATION
Our executive officers have not received any compensation for
services rendered to us, and are not accruing any compensation
pursuant to any agreement with us.
We do not expect to pay any compensation to any of our officers
until sufficient and sustainable revenues and profits are
realized.
No retirement, pension, profit sharing, insurance programs,
long-term incentive plans or other similar programs have been
adopted by us for the benefit of our employees. We had no
outstanding equity awards as of the date of this annual report.
ITEM 12. SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table lists, as of March 17, 2021, the number shares
of Common Stock beneficially owned by (i) each person or entity
known to the Company to be the beneficial owner of more than 5% of
the Company’s outstanding common stock; (ii) each executive
officer; and (iii) all officers and directors as a group.
Information relating to beneficial ownership of Common Stock by our
principal shareholders and management is based upon information
furnished by each person using “beneficial ownership” concepts
under the rules of the SEC. Under these rules, a person is deemed
to be a beneficial owner of a security if that person has or shares
voting power, which includes the power to vote or direct the voting
of the security, or investment power, which includes the power to
vote or direct the voting of the security. The person is also
deemed to be a beneficial owner of any security of which that
person has a right to acquire beneficial ownership within 60 days.
Under the SEC rules, more than one person may be deemed to be a
beneficial owner of the same securities, and a person may be deemed
to be a beneficial owner of securities as to which he or she may
not have any pecuniary beneficial interest. Except as noted below,
each person has sole voting and investment power with respect to
the shares beneficially owned.
Unless otherwise indicated, the business address of each such
person is c/o Hometown International, Inc., 25 E. Grant Street,
Woodstown, New Jersey 08098. The percentages below are calculated
based on 7,797,004 shares of Common Stock issued and outstanding as
of March 17, 2021.
|
Name and Address of Beneficial Owner |
|
Amount
and
Nature of
Beneficial
Ownership |
|
|
Percent |
|
|
Peter L. Coker, Jr. |
|
|
0 |
|
|
|
0 |
|
| Paul
F. Morina(1) |
|
|
31,500,000 |
|
|
|
83.34 |
% |
|
Christine T. Lindenmuth |
|
|
0 |
|
|
|
0 |
|
| All
Executive Officers and Directors as a group (3 persons) |
|
|
31,500,000 |
|
|
|
83.34 |
% |
Blackwell Partners LLC – Series A(2)
8/F Printing House
6 Duddell Street
Central Hong Kong, Hong Kong |
|
|
28,980,000 |
(3) |
|
|
81.87 |
% |
STAR V
Partners LLC(4)
8/F Printing House
6 Duddell Street
Central Hong Kong, Hong Kong |
|
|
13,938,750 |
(5) |
|
|
66.15 |
% |
Maso
Capital Investments Limited(6)
8/F Printing House
6 Duddell Street
Central Hong Kong, Hong Kong |
|
|
9,581,250 |
(7) |
|
|
56.62 |
% |
Global
Equity Limited(8)
Avenida Da Praia Grande
No. 759, 1 Andar
Macau, China |
|
|
42,000,000 |
(9) |
|
|
87.87 |
% |
IPC-Trading Company(10)
Avenida Da Praia Grande
No. 759, 1 Andar
Macau, China |
|
|
10,500,000 |
(11) |
|
|
57.39 |
% |
RTO
Limited(12)
Avenida Da Praia Grande
No. 759, 1 Andar
Macau, China |
|
|
10,500,000 |
(13) |
|
|
57.39 |
% |
VCH
Limited(14)
Avenida Da Praia Grande
No. 759, 1 Andar
Macau, China |
|
|
10,500,000 |
(15) |
|
|
57.39 |
% |
Europa
Capital Investments, LLC (16)
610 Jones Ferry Road, Suite 207
Carrboro, North Carolina 27510 |
|
|
1,988,300 |
(17) |
|
|
20.50 |
% |
Peter
L. Coker, Sr.(18)
12804 Morehead
Chapel Hill, North Carolina 27517 |
|
|
1,325,680 |
(19) |
|
|
14.63 |
% |
| (1) |
Includes
1,500,000 shares of common stock issued and outstanding, 7,500,000
shares issuable upon the exercise of the Class A Warrants,
7,500,000 shares issuable upon the exercise of the Class B
Warrants, 7,500,000 shares issuable upon the exercise of the Class
C Warrants, and 7,500,000 shares issuable upon the exercise of the
Class D Warrants. |
| |
|
| (2) |
Manoj Jain, authorized signatory of Maso Capital Partners Limited
(“Maso”), has sole voting and investment power over the securities
of the Company held by Blackwell Partners LLC – Series A
(“Blackwell”). Mr. Jain and Maso disclaim beneficial ownership over
the securities of the Company held by Blackwell.
|
| |
|
| (3) |
Includes
1,380,000 shares of common stock issued and outstanding, 6,900,000
shares issuable upon the exercise of the Class A Warrants,
6,900,000 shares issuable upon the exercise of the Class B
Warrants, 6,900,000 shares issuable upon the exercise of the Class
C Warrants, and 6,900,000 shares issuable upon the exercise of the
Class D Warrants. |
| |
|
| (4) |
Manoj
Jain, authorized signatory of Maso, has sole voting and investment
power over the securities of the Company held by STAR V Partners
LLC (“Star”). Mr. Jain and Maso disclaim beneficial ownership over
the securities of the Company held by Star. |
| |
|
| (5) |
Includes
663,750 shares of common stock issued and outstanding, 3,318,750
shares issuable upon the exercise of the Class A Warrants,
3,318,750 shares issuable upon the exercise of the Class B
Warrants, 3,318,750 shares issuable upon the exercise of the Class
C Warrants, and 3,318,750 shares issuable upon the exercise of the
Class D Warrants. |
| |
|
| (6) |
Manoj
Jain, authorized signatory of Maso, has sole voting and investment
power over the securities of the Company held by Maso Capital
Investments Limited. |
| |
|
| (7) |
Includes
456,250 shares of common stock issued and outstanding, 2,281,250
shares issuable upon the exercise of the Class A Warrants,
2,281,250 shares issuable upon the exercise of the Class B
Warrants, 2,281,250 shares issuable upon the exercise of the Class
C Warrants, and 2,281,250 shares issuable upon the exercise of the
Class D Warrants. |
| |
|
| (8) |
Michael
R. Tyldesley and Ibrahima Thiam, the owners of Global Equity
Limited (“Global”), have joint voting and investment power over the
securities of the Company held by Global. |
| |
|
| (9) |
Includes
2,000,000 shares of common stock issued and outstanding, 10,000,000
shares issuable upon the exercise of the Class A Warrants,
10,000,000 shares issuable upon the exercise of the Class B
Warrants, 10,000,000 shares issuable upon the exercise of the Class
C Warrants, and 10,000,000 shares issuable upon the exercise of the
Class D Warrants. Global Equity purchased the 2,000,000 shares of
common stock from Peter L. Coker, Jr., our Chairman, in April
2020. |
| |
|
| (10) |
Ibrahima
Thiam and Lan Moi Lilia, the owners of IPC-Trading Company Ltd.
(“IPC”), have joint voting and investment power over the securities
of the Company held by IPC. |
| |
|
| (11) |
Includes
500,000 shares of common stock issued and outstanding, 2,500,000
shares issuable upon the exercise of the Class A Warrants,
2,500,000 shares issuable upon the exercise of the Class B
Warrants, 2,500,000 shares issuable upon the exercise of the Class
C Warrants, and 2,500,000 shares issuable upon the exercise of the
Class D Warrants. |
| |
|
| (12) |
Nathalie
Tina Pasyawon, the owner of RTO Limited (“RTO”), has sole voting
and investment power over the securities of the Company held by
RTO. |
| |
|
| (13) |
Includes
500,000 shares of common stock issued and outstanding, 2,500,000
shares issuable upon the exercise of the Class A Warrants,
2,500,000 shares issuable upon the exercise of the Class B
Warrants, 2,500,000 shares issuable upon the exercise of the Class
C Warrants, and 2,500,000 shares issuable upon the exercise of the
Class D Warrants. |
| |
|
| (14) |
Michael
Tyldesley, the managing director of VCH Limited (“VCH”), has sole
voting and investment power over the securities of the Company held
by VCH. |
| |
|
| (15) |
Includes
500,000 shares of common stock issued and outstanding, 2,500,000
shares issuable upon the exercise of the Class A Warrants,
2,500,000 shares issuable upon the exercise of the Class B
Warrants, 2,500,000 shares issuable upon the exercise of the Class
C Warrants, and 2,500,000 shares issuable upon the exercise of the
Class D Warrants. |
| |
|
| (16) |
Peter
L. Coker, Sr. and Peter Reichard, managing members of Europa
Capital Investments, LLC (“Europa”) have joint voting and
investment power over the securities of the Company held by Europa.
Peter Coker, Sr. is the father of our Chairman, Peter Coker,
Jr. |
| |
|
| (17) |
Includes 90,400 shares of common stock issued and outstanding,
475,000 shares issuable upon the exercise of the Class A Warrants,
475,000 shares issuable upon the exercise of the Class B Warrants,
475,000 shares issuable upon the exercise of the Class C Warrants,
and 475,000 shares issuable upon the exercise of the Class D
Warrants.
|
| |
|
| (18) |
Peter
L. Coker, Sr. is a managing member of Europa and the father of our
Chairman, Peter L. Coker, Jr. |
| |
|
| (19) |
Includes 63,334 shares of common stock issued and outstanding,
316,670 shares issuable upon the exercise of the Class A Warrants,
316,670 shares issuable upon the exercise of the Class B Warrants,
316,670 shares issuable upon the exercise of the Class C Warrants,
and 316,670 shares issuable upon the exercise of the Class D
Warrants.
|
Changes in Control
We are not aware of any arrangements that may result in “changes in
control”, as that term is defined by the provisions of Item 403(c)
of Regulation S-K.
ITEM 13. CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE.
Except as disclosed below, since the beginning of January 1, 2018,
none of the following persons has had any direct or indirect
material interest in any transaction to which our Company was or is
a party, or in any proposed transaction to which our Company
proposes to be a party:
| |
● |
any
Director or officer of our Company; |
| |
|
|
| |
● |
any
proposed Director of officer of our Company; |
| |
|
|
| |
● |
any
person who beneficially owns, directly or indirectly, shares
carrying more than 5 percent of the voting rights attached to our
common stock; or |
| |
|
|
| |
● |
any
member of the immediate family of any of the foregoing persons
(including a spouse, parents, children, siblings, and
in-laws). |
On February 12, 2021, the Company received an unsecured promissory
note from a related party in exchange for $150,000. Pursuant to the
terms of the note, the note is bearing interest at the rate of 6%
and is due on or before February 11, 2022.
On November 25, 2020, the Company received an unsecured promissory
note from a related party in exchange for $150,000. Pursuant to the
terms of the note, the note is bearing interest at the rate of 6%
and is due on or before November 25, 2021. For the year ended
December 31, 2020, the Company recorded an interest receivable of
$872.
Effective as of May 1, 2020, we entered into a Consulting Agreement
with Tryon Capital Ventures LLC, a North Carolina limited liability
company (“Tryon”) which is 50% owned by Peter Coker, Sr., the
father of Peter L. Coker, Jr., our Chairman of the Board. Pursuant
to the agreement, Tryon shall receive $15,000 per month during the
term of the agreement, in addition to reimbursement of expenses
approved in advance by the Company.
Effective as of May 1, 2020, we entered into a Consulting Agreement
with VCH Limited, a company formed under the laws of Macau (“VCH”)
which owns in excess of 10% of our common stock. Pursuant to this
agreement, VCH shall receive $25,000 per month during the term of
the agreement, in addition to reimbursement of expenses approved in
advance by the Company.
On March 18, 2020, the Company entered into an unsecured promissory
note with Peter L. Coker, Jr., our Chairman, in the amount of
$50,000. Pursuant to the terms of the note, the note is bearing 8%
interest, unsecured and is due on March 31, 2021. The note
principal and accrued interest were repaid in full on April 24,
2020.
On February 13, 2020, the Company entered into an unsecured
promissory note with Peter L. Coker, Jr., our Chairman, in the
amount of $20,000. Pursuant to the terms of the note, the note is
bearing 8% interest, unsecured and is due on February 13, 2021. As
of March 31, 2020, the Company accrued $142 in interest expense. On
April 24, 2020, the note principal and accrued interest were repaid
in full.
On February 1, 2020, Christine Lindenmuth, an officer and director
of the Company, granted Peter L. Coker, Jr., Chairman of our Board,
an option to purchase all of her 1,500,000 shares in the Company
for $500. On March 19, 2020, Mr. Coker exercised the option and
paid Ms. Lindenmuth $1,500 for the 1,500,000 shares. Mr. Coker
simultaneously sold all of the 1,500,00 shares to three separate
purchasers.
On December 31, 2019, each of Paul F. Morina and Christine T.
Lindenmuth, the principal officers and directors and majority
shareholders of the Company, entered into separate Stock Purchase
Agreements with Peter Coker, Jr., which provided for the sale by
each of them of 1,000,000 shares of common stock of the Company
(the “Purchased Shares”) to Mr. Coker. The consideration paid for
the Purchased Shares, which represents approximately 38% of the
issued and outstanding share capital of the Company, was an
aggregate of $3,000. The source of the cash consideration for the
Purchased Shares was personal funds of Mr. Coker. On February 17,
2020, we appointed Mr. Coker as our Chairman.
On April 16, 2020, the 2,000,000 shares which Peter L. Coker, Jr.
had purchased from Mr. Morina and Ms. Lindenmuth were sold to
Global Equity.
On December 31, 2019, the Company entered into an unsecured
promissory note with Peter L. Coker, Jr. in the amount of $10,000.
Pursuant to the terms of the note, the note is bearing 8% interest,
unsecured and is due on December 31, 2020. The note principal and
accrued interest repaid in full on April 24, 2020.
On December 31, 2019, the Company entered into an unsecured
promissory note with Peter L. Coker, Jr. in the amount of $175,000.
Pursuant to the terms of the note, the note is bearing 8% interest,
unsecured and is due on June 30, 2020. The note principal and
accrued interest repaid in full on April 24, 2020.
On December 31, 2019, the Company and Europa agreed to combine the
principal and accrued interest of multiple notes and issued a new
unsecured promissory note in the amount of $144,979. The note is
bearing 8% interest, unsecured and due on December 31, 2020. On
March 18, 2020, $100,000 of the principal amount of debt owed was
converted to 100,000 shares of the Company’s common stock and the
remaining principal balance owed in the amount of $44,979, plus any
accrued and unpaid interest, is due and payable on December 31,
2020. The note principal and accrued interest repaid in full on
April 24, 2020.
On December 31, 2019, the Company and Peter L. Coker, Jr. agreed to
combine the principal and accrued interest of a note and issued a
new unsecured promissory note in the amount of $30,126. The note is
bearing 8% interest, unsecured and due on December 31, 2020. The
note principal and accrued interest repaid in full on April 24,
2020.
On July 1, 2014, the Company entered into a five-year
non-cancelable operating lease with Mantua Creek Group LLC, for
which our Paul Morina, our President, is a member of, for its store
space at a monthly rate of $500. The amount of rent was determined
by current market rate for retail space in the area and discounted
slightly because the tenants would be financing most of the
leasehold improvements. As of the date hereof, the operating lease
agreement has been fully executed but Mantua has granted the
Company an extension to start paying rent starting on January 1,
2016. On August 12, 2019, Mantua granted the Company an extension
of the term of the lease for two additional years. For the years
ended December 31, 2020 and 2019, the Company had a rent expense of
$6,000 and $6,000, respectively. On March 22, 2021, the Company was
granted an additional two-year extension of non-cancelable
operating lease with a related party for its store space at a
monthly rate of $500.
On October 16, 2014, the Company entered into an unsecured
promissory note with Christine Lindemuth in the amount of $2,000.
Pursuant to the terms of the note, the note is non-interest
bearing, unsecured and is due on demand. The note was paid in full
on January 27, 2020.
During the year ended December 31, 2020, certain officers paid an
aggregate $8,280 in expenses on Company’s behalf as an advance.
Pursuant to the terms of the note, the note was non-interest
bearing, unsecured and was due on demand. As of December 31, 2020,
the balance due to officers was $61,297.
For the year ended December 31, 2020, the Company owed to the
Chairman $3,452 for corporate expense reimbursements. The amount
was repaid on January 20, 2021.
During the year ended December 31, 2019, certain officers paid an
aggregate $19,054 in expenses on Company’s behalf as an advance.
Pursuant to the terms of the note, the note was non-interest
bearing, unsecured and was due on demand. As of December 31, 2019,
the balance due to officers was $53,017.
For the years ended December 31, 2020 and 2019, the Company
recorded $30,856 and $30,856, respectively, as in-kind contribution
of services provided by President and Vice President of the
Company.
Director Independence
We are not subject to listing requirements of any national
securities exchange or national securities association and, as a
result, we are not at this time required to have our Board
comprised of a majority of “Independent Directors.” We do not
believe that our directors currently meet the definition of
“independent” as promulgated by the rules and regulations of
NASDAQ.
ITEM 14. PRINCIPAL
ACCOUNTANT FEES AND SERVICES
Audit Fees
The aggregate fees billed for each of the last two fiscal years for
professional services rendered by the principal accountant for the
audit of the Company’s annual financial statements and review of
financial statements included in the Company’s Form 10-K or 10-Q or
services that are normally provided by the accountant in connection
with statutory and regulatory filings was $21,013 and $19,846 for
the fiscal year ended December 31, 2020 and 2019, respectively.
Audit Related Fees
For the Company’s fiscal years ended December 31, 2020 and 2019, we
were billed $3,500 and $0 for audit related fees for the S-1
filing.
Tax Fees
For the Company’s fiscal years ended December 31, 2020 and 2019, we
were billed $0 and $0, respectively, for professional services
rendered for tax return preparation.
All Other Fees
The Company did not incur any other fees related to services
rendered by our principal accountant for the fiscal years ended
December 31, 2020 and 2019.
Effective May 6, 2003, the Securities and Exchange Commission
adopted rules that require that before our auditor is engaged by us
to render any auditing or permitted non-audit related service, the
engagement be:
- approved by our audit committee; or
- entered into pursuant to pre-approval policies and procedures
established by the audit committee, provided the policies and
procedures are detailed as to the
particular service, the audit committee is informed
of each service, and such policies and procedures do not include
delegation of the audit committee’s responsibilities to
management.
We do not have an audit committee. Our entire board of
directors pre-approves all services provided by our independent
auditors.
All of the above services and fees were reviewed and approved by
the entire board of directors before the respective services were
rendered.
PART IV
ITEM 15. EXHIBITS,
FINANCIAL STATEMENT SCHEDULES.
a) Documents filed as part of this Annual Report
1. Financial Statements
2. Financial Statement Schedules
3. Exhibits
|
Exhibits
# |
|
Title |
| |
|
|
| 3.1 |
|
Articles
of Incorporation (1) |
| 3.2 |
|
By-Laws
(1) |
| 3.3 |
|
Certificate
of Amendment to the Articles of Incorporation dated March 23, 2020
(7) |
| 4.1 |
|
Promissory
Note, dated December 31, 2019, in the original principal amount of
$175,000 (5) |
| 4.2 |
|
Form
of Class A Warrant (6) |
| 4.3 |
|
Form
of Class B Warrant (6) |
| 4.4 |
|
Form
of Class C Warrant (6) |
| 4.5 |
|
Form
of Class D Warrant (6) |
| 4.6* |
|
Description
of Capital Stock |
| 10.3 |
|
Lease
Agreement dated July 1, 2014 by and between Mantua Creek Group, LLC
and Your Hometown Deli, LLC (2) |
| 10.4 |
|
Rent
extension granted by Mantua Creek Group, LLC to Your Hometown Deli,
LLC (3) |
| 10.5 |
|
Stock
Repurchase Agreement dated as of January 22, 2018 by and among
Hometown International Inc. and Benchmark Capital LLC
(4) |
| 10.6 |
|
Promissory
Note dated as of January 22, 2018 in the original principal amount
of $5,250 issued to Benchmark Capital LLC
(4) |
| 10.7 |
|
Stock
Purchase Agreement, dated December 31,2019, by and between Paul F.
Morina and Peter Coker, Jr. (5) |
| 10.8 |
|
Stock
Purchase Agreement, dated December 31,2019, by and between
Christine T. Lindenmuth and Peter Coker, Jr.
(5) |
| 10.9 |
|
Lease Addendum dated August 12, 2019 by and between Mantua Creek
Group, LLC and Your Hometown Deli,
LLC(8) |
| 10.10 |
|
Form
of Subscription Agreement (9) |
| 10.11 |
|
Form
of Registration Rights Agreement (9) |
| 10.12 |
|
Consulting
Agreement, effective as of May 1, 2020, by and between Tryon
Capital Ventures LLC and Hometown International, Inc.
(10) |
| 10.13 |
|
Consulting
Agreement, effective as of May 1, 2020, by and between VCH Limited
and Hometown International, Inc. (10) |
| 21.1 |
|
List
of Subsidiary (1) |
| 31.1/31.2* |
|
Certification
of Principal Executive Officer and Principal Accounting Officer
Pursuant to Section 302 of the Sarbanes-Oxley Act of
2002 |
| 32.1/32.2* |
|
Certification
of Principal Executive Officer Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 |
| 101.INS* |
|
XBRL
Instance Document |
| 101.SCH* |
|
XBRL
Taxonomy Extension Schema |
| 101.CAL* |
|
XBRL
Taxonomy Calculation Linkbase |
| 101.DEF* |
|
XBRL
Definition Linkbase Document |
| 101.LAB* |
|
XBRL
Taxonomy Label Linkbase |
| 101.PRE* |
|
XBRL
Definition Linkbase Document |
| (1) |
Incorporated
by reference to the Company’s draft registration statement on Form
S-1 filed with the SEC on June 8, 2015. |
| (2) |
Incorporated
by reference to the Company’s draft registration statement on Form
S-1 filed with the SEC on October 19, 2015. |
| (3) |
Incorporated
by reference to the Company’s registration statement on Form S-1
filed with the SEC on January 4, 2016. |
| (4) |
Incorporated
by reference to the Company’s Annual Report on Form 10-K filed with
the SEC on March 28, 2018. |
| (5) |
Incorporated
by reference to the Company’s Current Report on Form 8-K filed with
the SEC on January 7, 2020. |
| (6) |
Incorporated
by reference to the Company’s Current Report on Form 8-K filed with
the SEC on March 20, 2020. |
| (7) |
Incorporated
by reference to the Company’s Current Report on Form 8-K filed with
the SEC on March 25, 2020. |
| (8) |
Incorporated
by reference to the Company’s Annual Report on Form 10-K filed with
the SEC on March 30, 2020. |
| (9) |
Incorporated
by reference to the Company’s Current Report on Form 8-K filed with
the SEC on April 17, 2020. |
| (10) |
Incorporated
by reference to the Company’s Current Report on Form 8-K filed with
the SEC on May 7, 2020. |
| (11) |
Incorporated
by reference to Amendment No. 1 to the Company’s registration
statement on Form S-1 filed with the SEC on July 7,
2020. |
Item 16. Form 10-K
Summary.
None.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
| |
HOMETOWN
INTERNATIONAL, INC. |
| |
|
| Date:
March 26, 2021 |
By: |
/s/
Paul F. Morina |
| |
|
Paul
F. Morina |
| |
|
President,
Chief Executive Officer,
Chief Financial Officer and Director
(Principal Executive Officer and
Principal Accounting Officer) |
Pursuant to the requirements of the Securities Act of 1933, this
annual report has been signed by the following persons in the
capacities and on the dates indicated.
|
Signature |
|
Title |
|
Date |
| |
|
|
|
|
| /s/
Paul F. Morina |
|
President,
Chief Executive Officer, |
|
March
26, 2021 |
| Paul
F. Morina |
|
Chief
Financial Officer and Director
(Principal Executive Officer and Principal Accounting
Officer) |
|
|
| |
|
|
|
|
|
Signature |
|
Title |
|
Date |
| |
|
|
|
|
| /s/
Peter L. Coker, Jr. |
|
Chairman
of the Board of Directors |
|
March
26, 2021 |
| Peter
L. Coker, Jr. |
|
|
|
|
| |
|
|
|
|
|
Signature |
|
Title |
|
Date |
| |
|
|
|
|
| /s/
Christine Lindenmuth |
|
Director |
|
March
26, 2021 |
| Christine
Lindenmuth |
|
|
|
|
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