UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~March 31,~~June 30, 2021,

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: ~~333-170715~~000-56222

HOME BISTRO, INC.

(Exact Name of Registrant as Specified in Its Charter)

Nevada		27-1517938
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

4014 Chase Avenue, #212

Miami Beach, FL 33140

(631) 964-1111

(Address of Principal Executive Offices and Zip Code)

(Registrant’s telephone number, including area code)

(Former name, former address and formal fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act: None.

Title of each class		Trading Symbol(s)		Name of each exchange on which registered

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, if any, 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 such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, 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 is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of outstanding shares of Home Bistro, Inc.’s common stock as of ~~May 10,~~August 6, 2021 was ~~21,802,819.~~29,319,724.

HOME BISTRO, INC. AND SUBSIDIARY

FORM 10-Q

~~MARCH 31,~~JUNE 30, 2021

TABLE OF CONTENTS

		Page
	PART I - FINANCIAL INFORMATION	1

Item 1.	Financial Statements	1
	Condensed Consolidated Balance Sheets - As of ~~March 31,~~June 30, 2021 (unaudited) and December 31, 2020	1
	Condensed Consolidated Statements of Operations for the Three and Six Months Ended ~~March 31,~~of June 30, 2021 and 2020 (unaudited)	2
	Condensed Consolidated Statements of Changes in Stockholders’ Deficit for the Three and Six Months Ended ~~March 31,~~June 30, 2021 and 2020 (unaudited)	3
	Condensed Consolidated Statements of Cash Flows for the ~~Three~~Six Months Ended ~~September~~June 30, 2021 and 2020 (unaudited)	5
	Condensed Notes to Unaudited Consolidated Financial Statements	6

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3033
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3540
Item 4.	Controls and Procedures	3640

	PART II - OTHER INFORMATION	3741

Item 1.	Legal Proceedings	3741
Item 1A.	Risk Factors	3741
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3741
Item 3.	Defaults Upon Senior Securities	3742
Item 4.	Mine Safety Disclosures	3742
Item 5.	Other Information	3742
Item 6.	Exhibits	3842

Signatures		3944

CAUTIONARY STATEMENT ON FORWARD-LOOKING INFORMATION

This Quarterly Report on Form 10-Q (this “Report”) contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). 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,” “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.

These factors include, among others:

●

current or future financial performance;

●

management’s plans and objectives for future operations;

●

uncertainties associated with product research and development

●

uncertainties associated with dependence upon the actions of government regulatory agencies;

●

product plans and performance;

●

management’s assessment of market factors; and

●

statements regarding our strategy and plans.

Actual results could differ materially from the results described in the forward-looking statements due to the risks and uncertainties set forth in this Report and those described from time to time in our future reports filed with the Securities and Exchange Commission (the “SEC”).

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 Report and include information concerning possible or assumed future results of our operations, including statements about 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 this Report. All subsequent written and oral forward-looking statements concerning other matters addressed in this Report 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 Report.

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 - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

HOME BISTRO, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED BALANCE SHEETS

March 31,
2021 December 31,
2020
ASSETS (Unaudited)

CURRENT ASSETS:
Cash $ 523,592 $ 447,354
Prepaid expenses and other current assets 78,671 28,588
Note receivable 5,000 5,000

Total Current Assets 607,263 480,942

OTHER ASSETS:
Property and equipment, net 116,219 2,728

Total Assets $ 723,482 $ 483,670

LIABILITIES AND STOCKHOLDERS’ DEFICIT

CURRENT LIABILITIES:
Accounts payable $ 479,339 $ 352,466
Accrued expenses and other liabilities 97,710 126,273
Liabilities to be settled with common stock 226,456 -
Convertible notes payable, net of debt discount 342,931 141,476
Convertible notes payable - related party, net of debt discount 31,048 -
Notes payable - current portion 27,203 20,068
Advances payable 65,887 78,497
Derivative liabilities 125,100 180,029
Unredeemed gift cards 36,467 48,311

Total Current Liabilities 1,432,141 947,120

LONG-TERM LIABILITIES:
Notes payable - long-term portion 144,409 151,544
Common stock repurchase obligation 1,154,366 1,300,000

Total Liabilities 2,730,916 2,398,664

Commitments and contingency (Note 10)

STOCKHOLDERS’ DEFICIT:
Preferred Stock: $0.001 par value; 20,000,000 shares authorized;
Convertible Series B Preferred stock: $0.001 Par Value; 500,000 Shares Authorized; nil shares issued and outstanding as of March 31, 2021 and December 31, 2020 - -
Common stock: $0.001 par value; 1,000,000,000 shares authorized; 19,528,152 and 19,123,768 shares issued and outstanding as of March 31, 2021 and December 31, 2020, respectively 19,528 19,123
Additional paid-in capital 4,827,961 4,399,272
Accumulated deficit (6,854,923 ) (6,333,389 )

Total Stockholders’ Deficit (2,007,434 ) (1,914,994 )

Total Liabilities and Stockholders’ Deficit $ 723,482 $ 483,670

	June 30, 2021			December 31, 2020
	(Unaudited)
ASSETS
CURRENT ASSETS:
Cash	$	256,245		$	447,354
Prepaid expenses and other current assets		89,644			28,588
Note receivable		-			5,000

Total Current Assets		345,889			480,942

OTHER ASSETS:
Property and equipment, net		106,357			2,728

Total Assets	$	452,246		$	483,670

LIABILITIES AND STOCKHOLDERS’ DEFICIT

CURRENT LIABILITIES:
Accounts payable	$	355,133		$	352,466
Accrued expenses and other liabilities		94,015			126,273
Liabilities to be settled with common stock		267,308			-
Convertible notes payable, net of debt discount		723,847			141,476
Convertible notes payable - related party, net of debt discount		50,786			-
Notes payable - current portion		13,383			20,068
Advances payable		54,163			78,497
Derivative liabilities		103,858			180,029
Unredeemed gift cards		38,321			48,311

Total Current Liabilities		1,700,814			947,120

LONG-TERM LIABILITIES:
Notes payable - long-term portion		143,617			151,544
Common stock repurchase obligation		1,055,094			1,300,000

Total Liabilities		2,899,525			2,398,664

Commitments and contingency (Note 10):

STOCKHOLDERS’ DEFICIT:
Preferred Stock: $0.001 par value; 20,000,000 shares authorized;
Convertible Series B Preferred stock: $0.001 Par Value; 500,000 Shares Authorized; nil shares issued and outstanding as of June 30, 2021 and December 31, 2020		-			-
Common stock: $0.001 par value; 1,000,000,000 shares authorized; 22,217,359 and 19,123,768 shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively		22,217			19,123
Additional paid-in capital		5,791,377			4,399,272
Accumulated deficit		(8,260,873	)		(6,333,389	)

Total Stockholders’ Deficit		(2,447,279	)		(1,914,994	)

Total Liabilities and Stockholders’ Deficit	$	452,246		$	483,670

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

HOME BISTRO, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

For the Three Months Ended
March 31,
2021 2020

Product sales, net $ 350,474 $ 303,765

Cost of sales 282,386 191,591

Gross profit 68,088 112,174

Operating Expenses:
Compensation and related expenses 76,500 92,519
Professional and consulting expenses 198,188 36,734
Selling and marketing expenses 72,441 31,711
General and administrative expenses 91,210 30,361

Total Operating Expenses 438,339 191,325

Operating Loss from Operations (370,251 ) (79,151 )

Other Income (Expense):
Interest expense, net (327,918 ) (840 )
Change in fair value of derivative liabilities 150,006 -
Gain on extinguishment of debt 26,629 -

Total Other Expense, net (151,283 ) (840 )

Loss from Operations Before Provision for Income Taxes (521,534 ) (79,991 )

Provision for Income Taxes - -

Net Loss $ (521,534 ) $ (79,991 )

BASIC AND DILUTED LOSS PER COMMON SHARE:
Basic and Diluted $ (0.03 ) $ (0.01 )

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic 19,242,568 13,104,561
Diluted 19,242,568 13,104,561

	For the Three Months Ended						For the Six Months Ended
	June 30,						June 30,
	2021			2020			2021			2020

Product sales, net	$	309,161		$	362,001		$	659,635		$	665,766

Cost of sales		256,541			227,129			538,927			418,720

Gross profit		52,620			134,872			120,708			247,046

Operating Expenses:
Compensation and related expenses		94,414			319,770			170,914			412,289
Professional and consulting expenses		771,182			179,706			969,370			216,440
Selling and marketing expenses		125,432			53,277			197,873			84,988
General and administrative expenses		89,267			79,392			180,477			109,753

Total Operating Expenses		1,080,295			632,145			1,518,634			823,470

Loss from Operations		(1,027,675	)		(497,273	)		(1,397,926	)		(576,424	)

Other Income (Expense):
Interest expense, net		(474,136	)		(762	)		(802,054	)		(1,602	)
Change in fair value of derivative liabilities		81,107			-			231,113			-
Gain on extinguishment of debt		-			-			26,629			-
Gain on forgiveness of debt		14,754			-			14,754			-
Other income		-			5,000			-			5,000

Total Other Income (Expense), net		(378,275	)		4,238			(529,558	)		3,398

Net Loss	$	(1,405,950	)	$	(493,035	)	$	(1,927,484	)	$	(573,026	)

BASIC AND DILUTED LOSS PER COMMON SHARE:
Basic and Diluted	$	(0.06	)	$	(0.00	)	$	(0.18	)	$	(0.00	)

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic and Diluted		21,739,404			587,591,570			20,485,667			503,422,892

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

HOME BISTRO, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT

FOR THE T~~HREE~~THREE AND SIX MONTHS ENDED ~~MARCH 31,~~JUNE 30, 2021

(UNAUDITED)

Preferred Stock Common Stock Additional Total
Number of Number of Paid-in Accumulated Stockholders’
Shares Amount Shares Amount Capital Deficit Deficit

Balance at December 31, 2020 - $ - 19,123,767 $ 19,123 $ 4,399,272 $ (6,333,389 ) (1,914,994 )

Common stock issued as commitment fee - - 404,385 405 206,388 - 206,793

Warrants stock issued as commitment fee - - - - 76,667 - 76,667

Reduction of the repurchase obligation pursuant to the Put Option Agreement - - - - 145,634 - 145,634

Net loss - - - - - (521,534 ) (521,534 )

Balance at March 31, 2021 - $ - 19,528,152 $ 19,528 $ 4,827,961 $ (6,854,923 ) $ (2,007,434 )

	Preferred Stock				Common Stock				Additional					Total
	Number of				Number of				Paid-in		Accumulated			Stockholders’
	Shares		Amount		Shares		Amount		Capital		Deficit			Deficit

Balance at December 31, 2020		-	$	-		19,123,767	$	19,123	$	4,399,272	$	(6,333,389	)		(1,914,994	)

Common stock issued as commitment fee		-		-		404,385		405		206,388		-			206,793

Warrants stock issued as commitment fee		-		-		-		-		76,667		-			76,667

Reduction of the repurchase obligation pursuant to the Put Option Agreement		-		-		-		-		145,634		-			145,634

Net loss		-		-		-		-		-		(521,534	)		(521,534	)

Balance at March 31, 2021		-		-		19,528,152		19,528		4,827,961		(6,854,923	)		(2,007,434	)

Common stock issued as stock-based compensation		-		-		25,000		25		24,725		-			24,750

Common stock issued for prepaid services		-		-		2,000,000		2,000		380,500		-			382,500

Common stock issued for cash		-		-		379,207		379		284,026		-			284,405

Common stock issued as commitment fee		-		-		285,000		285		125,131		-			125,416

Warrants stock issued as commitment fee		-		-		-		-		49,762		-			49,762

Reduction of the repurchase obligation pursuant to the Put Option Agreement		-		-		-		-		99,272		-			99,272

Net loss		-		-		-		-		-		(1,405,950	)		(1,405,950	)

Balance at June 30, 2021		-	$	-		22,217,359	$	22,217	$	5,791,377	$	(8,260,873	)	$	(2,447,279	)

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

HOME BISTRO, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT

FOR THE T~~HREE~~THREE AND SIX MONTHS ENDED ~~MARCH 31,~~JUNE 30, 2020

(UNAUDITED)

Preferred Stock Common Stock Additional Total
Number of Number of Paid-in Accumulated Stockholders’
Shares Amount Shares Amount Capital Deficit Deficit

Balance at December 31, 2019 - $ - 419,254,217 $ 419,254 $ 4,400,795 $ (5,091,728 ) $ (271,679 )

Common stock issued for cash - - - - 25,000 - 25,000

Accretion of stock-based compensation - - - - 45,824 - 45,824

Net loss - - - - - (79,991 ) (79,991 )

Balance at March 31, 2020 - $ - 419,254,217 $ 419,254 $ 4,471,619 $ (5,171,719 ) $ (280,846 )

	Preferred Stock				Common Stock				Additional						Total
	Number of				Number of				Paid-in			Accumulated			Stockholders’
	Shares		Amount		Shares		Amount		Capital			Deficit			Deficit

Balance at December 31, 2019		-	$	-		419,254,217	$	419,254	$	4,400,795		$	(5,091,728	)	$	(271,679	)

Common stock issued to a related party for cash		-		-		-		-		25,000			-			25,000

Accretion of stock-based compensation		-		-		-		-		45,824			-			45,824

Net loss		-		-		-		-		-			(79,991	)		(79,991	)

Balance at March 31, 2020		-		-		419,254,217		419,254		4,471,619			(5,171,719	)		(280,846	)

Recapitalization of the Company		250,000		250		60,727,607		60,728		(255,702	)		-			(194,724	)

Common stock and warrants issued to a related party for cash		-		-		47,749		48		74,958			-			75,006

Common stock issued for cash		-		-		127,942,741		127,943		110,325			-			238,268

Accretion of stock-based compensation		-		-		-		-		168,017			-			168,017

Common stock repurchase obligation (see Note 3)		-		-		-		-		(1,300,000	)		-			(1,300,000	)

Net loss		-		-		-		-		-			(493,035	)		(493,035	)

Balance at June 30, 2020		250,000	$	250		607,972,315	$	607,973	$	3,269,217		$	(5,664,754	)	$	(1,787,314	)

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

HOME BISTRO, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

For the Months Ended
March 31,
2021 2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (521,534 ) $ (79,991 )
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation 264 -
Stock-based compensation - 45,824
Gain on extinguishment of debt (26,629 ) -
Amortization of debt discount 295,563 -
Change in fair value of derivative liabilities (150,006 ) -
Change in operating assets and liabilities:
Prepaid expenses and other current assets (50,083 ) -
Accounts payable 126,873 180
Accrued expense and other liabilities (28,652 ) 42,870
Unredeemed gift cards (11,844 ) (5,124 )

Net cash (used in) provided by operating activities (366,048 ) 3,759

CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property and equipment (113,755 ) -

Net cash provided by investing activities (113,755 ) -

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from sale of warrants - 25,000
Proceeds from convertible note payable, net of debt discount 755,000 -
Proceeds from convertible note payable - related party, net of debt discount 100,000 -
Advance payable 23,000 -
Repayment of note payable (286,349 ) -
Repayment of note payable - in default - (500 )
Repayments of advance payable (35,610 ) (2,832 )

Net Cash Provided by Financing Activities 556,041 21,668

Net Change in Cash 76,238 25,427

Cash - beginning of period 447,354 7,137

Cash - end of period $ 523,592 $ 32,564

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $ 16,831 $ 3,064
Income taxes $ - $ -

Non-cash investing and financing activities:
Reduction of the repurchase obligation pursuant to the Put Option Agreement $ 145,634 $ -
Common stock issued as commitment fee $ 206,793 $ -
Warrants issued as commitment fee $ 115,951
Fair value of true-up shares in connection with the commitment fee $ 226,456
Initial derivative liability recorded in connection with convertible notes payable $ 121,706 $ -

	For the Six Months Ended
	June 30,
	2021			2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(1,927,484	)	$	(573,026	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		10,126			-
Stock-based compensation		24,750			213,841
Common stock for services		382,500			238,268
Gain on extinguishment of debt		(26,629	)		-
Gain on forgiveness of debt		(14,754	)		-
Amortization of debt discount		714,626			-
Change in fair value of derivative liabilities		(231,113	)		-
Change in operating assets and liabilities:
Prepaid expenses and other current assets		(56,056	)		2,279
Accounts payable		2,667			69,783
Accrued expense and other liabilities		(32,205	)		-
Unredeemed gift cards		(9,990	)		(1,428	)
Net cash used in operating activities		(1,163,562	)		(50,283	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from acquisition		-			4,917
Acquisition of property and equipment		(113,755	)		-
Net cash (used by) provided by investing activities		(113,755	)		4,917
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from sale of common stock, net of fees		284,405			100,006
Proceeds from notes payable		-			164,612
Proceeds from convertible note payable, net of debt discount		1,263,200			-
Proceeds from convertible note payable - related party, net of debt discount		100,000			-
Advance payable		97,200			10,000
Repayment of convertible notes payable		(537,062	)		-
Repayment of note payable - in default		-			(3,500	)
Repayments of advance payable		(121,535	)		(28,192	)
Net cash provided by financing activities		1,086,208			242,926
Net Change in Cash		(191,109	)		197,560
Cash - beginning of period		447,354			7,137
Cash - end of period	$	256,245		$	204,697
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest	$	55,198		$	4,299
Income taxes	$	-		$	-
Non-cash investing and financing activities:
Initial amount of ROU asset and related liability	$	-		$	32,444
Reduction of the ROU asset and related liability	$	-		$	4,232
Termination of the ROU asset and related liability	$	-		$	25,426
Repurchase obligation pursuant to the Put Option Agreement	$	-		$	1,300,000
Reduction of the repurchase obligation pursuant to the Put Option Agreement	$	244,906		$	-
Common stock issued as commitment fee	$	332,209		$	-
Warrants issued as commitment fee	$	126,429		$	-
Fair value of true-up shares in connection with the commitment fee	$	267,308		$	-
Initial derivative liability recorded in connection with convertible notes payable	$	181,571		$	-
Net Liabilities Assumed in Reverse Acquisition:
Cash	$	-		$	4,917
Prepaid expenses		-			9,776
Operating right-of-use asset		-			32,444
Accounts payable and accrued liabilities		-			(209,417	)
Operating right-of-use liability		-			(32,444	)
Net liability assumed	$	-		$	(194,724	)

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

HOME BISTRO, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~MARCH 31,~~JUNE 30, 2021

NOTE 1 – ORGANIZATION AND NATURE OF OPERATIONS

Home Bistro, Inc. (formerly known as Gratitude Health, Inc.) (the “Company”) was incorporated in the State of Nevada on December 17, 2009. Effective March 23, 2018, the Company changed its name from Vapir Enterprises Inc. to Gratitude Health, Inc. On September 14, 2020, the Company changed its name from Gratitude Health, Inc. to Home Bistro, Inc. The Company is in the business of providing prepackaged and prepared meals to consumers focused on offering a broad array of the highest quality meal delivery, and preparation services. The Company’s primary former operations were in the business of manufacturing, selling, and marketing functional RTD (Ready to Drink) beverages sold under the Company’s trademark (the “RTD Business”). The RTD Business was disposed on September 25, 2020 as discussed below.

On April 7, 2020, the Board of Directors of the Company approved the increase of authorized shares of common stock from 600,000,000 to 1,000,000,000 (see Note 9).

On April 20, 2020, the Company, Fresh Market Merger Sub, Inc., a Delaware corporation and a newly created wholly-owned subsidiary of the Company (“Merger Sub”), and Home Bistro, Inc., a privately-held Delaware corporation formed on April 9, 2013, engaged in the food preparation and home-delivery business (presently known as Home Bistro Holdings, Inc., a Nevada corporation) and now wholly-owned subsidiary of the Company (“Home Bistro Holdings”) (see Note 3), entered into an Agreement and Plan of Merger (the “Merger Agreement”) pursuant to which, among other things, Merger Sub agreed to merge with and into Home Bistro Holdings, with Home Bistro Holdings becoming a wholly-owned subsidiary of the Company and the surviving corporation in the merger (the “Merger”). Pursuant to the terms of the Merger Agreement, Home Bistro Holdings filed a Certificate of Merger with the Nevada Secretary of State on April 20, 2020 (see Note 3).

On April 20, 2020, pursuant to the terms of the Merger Agreement, Roy G. Warren, Jr., Mike Edwards, and Bruce Zanca resigned as directors of the Company and Roy G. Warren, Jr. resigned as Chief Operating Officer of the Company. The resignations were not the result of any disagreement related to the Company’s operations, policies, or practices. Furthermore, on April 20, 2020, Mr. Zalmi Duchman, the Chief Executive Officer of Home Bistro Holdings, Michael Finkelstein and Michael Novielli were appointed as directors of the Company. In addition, Mr. Duchman was appointed Chief Executive Officer.

The Merger constituted a change of control and the majority of the Board of Directors changed with the consummation of the Merger. The Company issued to the stockholders of Home Bistro Holdings shares of common stock and stock warrants which represented approximately 80% of the combined company on a fully converted basis after the closing of the Merger and approximately 51% of voting control. As a result of the above transactions and the Company’s intent to dispose or divest the assets and liabilities associated with the RTD Business, this transaction was accounted for as a reverse recapitalization effected by a share exchange of Home Bistro Holdings. The consolidated financial statements are those of Home Bistro Holdings (the accounting acquirer) prior to the Merger and include the activity of the Company (the accounting acquiree) from the date of the Merger (see Note 3).

On September 14, 2020, the Company filed a Certificate of Amendment to its Articles of Incorporation with the Nevada Secretary of State to effect (i) a 1 for 31.993 reverse stock split of its common stock, par value $0.001 per share, with fractional shares rounding up to the nearest whole share (the “Reverse Stock Split”), and (ii) the change of the Company’s name from “Gratitude Health, Inc.” to “Home Bistro, Inc.”. All share and per-share data and amounts have been retroactively adjusted as of the earliest period presented in the consolidated financial statements to reflect the Reverse Stock Split (see Note 3).

On September 14, 2020, the Financial Industry Regulatory Authority approved the Company’s symbol change from “GRTD” to “HBIS”, effective twenty (20) business days from the approval date (see Note 3).

On September 25, 2020, the Company entered into, and closed the transactions contemplated by, that certain Asset Purchase Agreement (the “Asset Purchase Agreement”), by and among the Company, Gratitude Keto Holdings, Inc., a Florida corporation (the “Buyer” or “Gratitude Keto”), and the holder of 250,000 of the Company’s issued and outstanding shares of Series B Preferred Stock, $0.001 par value per share (such stock, the “Series B Preferred Stock”, and such stockholder, the “Stockholder”). Pursuant to the Asset Purchase Agreement, among other things, the Company agreed to sell to the Buyer all of the Company’s business, assets and properties used, or held or developed for use, in its functional RTD Business, and the Buyer agreed to assume certain debts, obligations and liabilities related to the RTD Business. Furthermore, in connection with the Asset Purchase Agreement, the Buyer returned the 250,000 shares of Series B Preferred Stock held by the Stockholder which was then cancelled by the Company upon return. As a result, the Company has no outstanding shares of preferred stock. Additionally, the RTD Business activities were reclassified and reported as part of “discontinued operations” for all periods presented on the consolidated statements of operations. In addition, the Company assumed an accounts payable liability in the amount of $14,000 related to accounting expenses of the RTD Business for a period prior to the Merger. Pursuant to the Asset Purchase Agreement, the Buyer reimbursed the Company for the accounting expenses in amount of $14,000, of which $7,000 was payable in cash and the balance in form of a promissory note dated September 25, 2020 in the amount of $7,000. The promissory note bears an interest rate of 5% per annum, matures on April 25, 2021 and is payable in monthly installments of $1,000 commencing on October 25, 2020 through maturity (see Note 3).

HOME BISTRO, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~MARCH 31,~~JUNE 30, 2021

The ongoing COVID-19 global and national health emergency has caused significant disruption in the international and United States economies and financial markets. In March 2020, the World Health Organization declared the COVID-19 outbreak a pandemic. The spread of COVID-19 has caused illness, quarantines, cancellation of events and travel, business and school shutdowns, reduction in business activity and financial transactions, labor shortages, supply chain interruptions and overall economic and financial market instability. The COVID-19 pandemic has the potential to significantly impact the Company’s supply chain, food manufacturers, distribution centers, or logistics and other service providers. Additionally, the Company’s service providers and their operations may be disrupted, temporarily closed or experience worker or meat or other food shortages, which could result in additional disruptions or delays in shipments of Home Bistro’s products. To date, the Company has been able to avoid layoffs and furloughs of employees. The Company is not able to estimate the duration of the pandemic and potential impact on the business if disruptions or delays in shipments of product occur. To date, the Company is not aware of any such disruptions. In addition, a severe prolonged economic downturn could result in a variety of risks to the business, including weakened demand for product and a decreased ability to raise additional capital when needed on acceptable terms, if at all. As the situation continues to evolve, the Company will continue to closely monitor market conditions and respond accordingly. The Company has applied for and received certain financial assistance under the Coronavirus, Aid, Relief, and Economic Security Act (“CARES Act”) enacted in March 2020 by the U.S. Government in response to COVID-19 (see Note 5).

NOTE 2 - – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying interim unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules and regulations of the United States Securities and Exchange Commission (“SEC”) for interim financial information, which present the unaudited condensed consolidated financial statements of the Company and its wholly-owned subsidiary. All intercompany transactions and balances have been eliminated. It is management’s opinion that all material adjustments (consisting of normal recurring adjustments) have been made, which are necessary for a fair financial statement presentation. Significant intercompany accounts and transactions have been eliminated in consolidation. The results for the interim period are not necessarily indicative of the results to be expected for the year ending December 31, 2021.

These interim unaudited condensed consolidated financial statements for the period ending ~~March 31,~~June 30, 2021 consist of the interim unaudited condensed consolidated balance sheets of the Company as of ~~March 31,~~June 30, 2021 and the related interim unaudited condensed consolidated statements of operations, changes in stockholders’ equity deficit and cash flows for the three and six month periods ended ~~March 31,~~June 30, 2021 and 2020, and the related notes, and reflect the acquisition of the Company’s new wholly-owned subsidiary, Home Bistro Holdings, which was consummated on April 20, 2020 and disposal of discontinued operations of its RTD Business on September 14, 2020, as more fully disclosed in Note 3.

Going Concern

The financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. As reflected in the accompanying unaudited condensed consolidated financial statements, for the ~~three~~six months ended ~~March 31,~~June 30, 2021, the Company had net loss and cash used in operations of ~~$521,534~~$1,927,484 and ~~$366,048,~~$1,163,562, respectively. At ~~March 31,~~June 30, 2021, the Company had an accumulated deficit, stockholders’ deficit, and working capital deficit of ~~$6,854,923, $2,007,434~~$8,260,873, $2,447,279 and ~~$824,878,~~$1,354,925, respectively. These factors raise substantial doubt about the Company’s ability to continue as a going concern for a period of twelve months from the issuance date of this report. The Company’s primary source of operating funds in 2021 was primarily from the third-party advances and convertible notes payable. The Company has experienced net losses from operations since inception but expects these conditions to improve in the near term and beyond as it develops its business model.

Management cannot provide assurance that the Company will ultimately achieve profitable operations or become cash flow positive or raise additional debt and/or equity capital. Management believes that the Company’s capital resources are not currently adequate to continue operating and maintaining its business strategy for a period of twelve months from the issuance date of this report. If the Company is unable to raise additional capital or secure additional lending in the near future, management expects that the Company will need to curtail or cease operations. These consolidated financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

HOME BISTRO, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~MARCH 31,~~JUNE 30, 2021

Use of Estimates

The preparation of the financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. Significant estimates as of ~~March 31,~~June 30, 2021 and December 31, 2020 include the assumptions used in the redemption recognition method for unredeemed gift cards, collectability of receivables and note receivable, estimates of current and deferred income taxes and deferred tax valuation allowances and the fair value of non-cash equity transactions and derivative liabilities.

Cash ~~and Cash Equivalents~~

For purposes of the statements of cash flows, the Company considers all highly liquid instruments with a maturity of three months or less at the purchase date and money market accounts to be cash equivalents. At ~~March 31,~~June 30, 2021 and December 31, 2020, the Company did not have any cash equivalents.

The Company maintains its cash in bank and financial institution deposits that at times may exceed federally insured limits. As of ~~March 31,~~June 30, 2021 and December 31, 2020, the bank balance was in excess of FDIC insured levels by approximately ~~$273,000~~$6,200 and $197,000, respectively. The Company has not experienced any losses in such accounts through ~~March 31,~~June 30, 2021.

Fair Value of Financial Instruments and Fair Value Measurements

FASB ASC 820 - Fair Value Measurements and Disclosures, defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. FASB ASC 820 requires disclosures about the fair value of all financial instruments, whether or not recognized, for financial statement purposes. Disclosures about the fair value of financial instruments are based on pertinent information available to the Company on ~~March 31,~~June 30, 2021. Accordingly, the estimates presented in these financial statements are not necessarily indicative of the amounts that could be realized on disposition of the financial instruments. FASB ASC 820 specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect market assumptions. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement).

The three levels of the fair value hierarchy are as follows:

	Level 1—Inputs are unadjusted quoted prices in active markets for identical assets or liabilities available at the measurement date.

	Level 2—Inputs are unadjusted quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, inputs other than quoted prices that are observable, and inputs derived from or corroborated by observable market data.

	Level 3—Inputs are unobservable inputs which reflect the reporting entity’s own assumptions on what assumptions the market participants would use in pricing the asset or liability based on the best available information.

The carrying amounts reported in the consolidated balance sheets for cash, due from and to related parties, prepaid expenses, accounts payable and accrued liabilities approximate their fair market value based on the short-term maturity of these instruments.

Assets or liabilities measured at fair value or a recurring basis included embedded conversion options in convertible debt (see Note 4) and were as follows at ~~March 31,~~June 30, 2021:

March 31, 2021 December 31, 2020
Description Level 1 Level 2 Level 3 Level 1 Level 2 Level 3
Derivative liabilities $ - $ - $ 125,100 $ - $ - $ 180,029

	June 30, 2021						December 31, 2020
Description	Level 1		Level 2		Level 3		Level 1		Level 2		Level 3
Derivative liabilities	$	—	$	—	$	103,858	$	—	$	—	$	180,029

HOME BISTRO, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~MARCH 31,~~JUNE 30, 2021

A roll forward of the level 3 valuation financial instruments is as follows:

For the Three Months Ended
March 31, 2021
(Unaudited)
Balance at December 31, 2020 $ 180,029
Initial valuation of derivative liabilities included in debt discount 121,706
Reclassification of derivative liability to gain on debt extinguishment (26,629 )
Change in fair value of derivative liabilities (150,006 )
Balance at March 31, 2021 $ 125,100

	Six Months Ended June 30, 2021
	(Unaudited)
Balance at December 31, 2020	$	180,029
Initial valuation of derivative liabilities included in debt discount		181,571
Reclassification of derivative liability to gain on debt extinguishment		(26,629	)
Change in fair value of derivative liabilities		(231,113	)
Balance at June 30, 2021	$	103,858

ASC 825-10 “Financial Instruments” allows entities to voluntarily choose to measure certain financial assets and liabilities at fair value (fair value option). The fair value option may be elected on an instrument-by-instrument basis and is irrevocable unless a new election date occurs. If the fair value option is elected for an instrument, unrealized gains and losses for that instrument should be reported in earnings at each subsequent reporting date. The Company did not elect to apply the fair value option to any outstanding equity instruments.

Derivative Liabilities

The Company has certain financial instruments that are embedded derivatives associated with capital raises. The Company evaluates all its financial instruments to determine if those contracts or any potential embedded components of those contracts qualify as derivatives to be separately accounted for in accordance with ASC 815-10 – Derivative and Hedging – Contract in Entity’s Own Equity. This accounting treatment requires that the carrying amount of any derivatives be recorded at fair value at issuance and marked-to-market at each balance sheet date. In the event that the fair value is recorded as a liability, as is the case with the Company, the change in the fair value during the period is recorded as either other income or expense. Upon conversion, exercise or repayment, the respective derivative liability is marked to fair value at the conversion, repayment, or exercise date and then the related fair value amount is reclassified to other income or expense as part of gain or loss on debt extinguishment.

In July 2017, FASB issued ASU No. 2017-11, Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity (Topic 480); Derivatives and Hedging (Topic 815): (Part I) Accounting for Certain Financial Instruments with Down Round Features. These amendments simplify the accounting for certain financial instruments with down-round features. The amendments require companies to disregard the down-round feature when assessing whether the instrument is indexed to its own stock, for purposes of determining liability or equity classification. For public business entities, the amendments in Part I of the ASU are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018.

Revenue Recognition

The Company’s revenues consist of high quality, direct-to-consumer, ready-made meals that can be ordered by customers through www.homebistro.com, and restaurant quality meats and seafood through its Colorado Prime Brand. Revenues from the Company’s ready-made meals are recognized when the product is delivered to the customer and title has transferred, it is at this point in time that the Company’s performance obligations have been completed. Product sales are recorded net of any discounts or allowances and include shipping charges.

Customers can purchase gift cards via phone or online through the Company’s e-commerce website. Gift card purchases are initially recorded as unredeemed gift card liabilities and are recognized as product sales upon redemption. Historically, the majority of gift cards are redeemed within two years of issuance. The Company does not charge administrative fees on unused gift cards, and its gift cards do not have an expiration date.

Based on historical redemption patterns, a portion of issued gift cards are not expected to be redeemed (breakage). The Company uses the redemption recognition method for recognizing breakage related to unredeemed gift cards for which it has sufficient historical redemption information. Under the redemption recognition method, breakage revenue is recorded in proportion to, and over the time period gift cards are actually redeemed. The estimated breakage rate is based on historical issuance and redemption patterns and is re-assessed by the Company on a regular basis. At least three years of historical data, which is updated annually, is used to estimate redemption patterns. Breakage revenue is included in product sales and the Company recorded nil for the three and six months ended ~~March 31,~~June 30, 2021 and 2020 (see Note 7).

Cost of Sales

The Company’s policy is to recognize product related cost of sales in conjunction with revenue recognition, when the product costs are incurred which is upon delivery of product. Cost of sales includes the food and processing costs directly attributable to fulfillment and the delivery of the product to customers including both inbound and outbound shipping costs. In ~~additional,~~addition, the royalty fee related to the Joint Product Development and Distribution Agreement (see Note 10) was also included in cost of sales.

Shipping and handling costs incurred for product shipped to customers are included in cost of sales and amounted to ~~$80,120~~$149,513 and ~~$30,261~~$87,521 for the six months ended June 30, 2021 and 2020, respectively, and $69,393 and $57,260 for the three months ended ~~March 31,~~June 30, 2021 and 2020, respectively. Shipping and handling costs charged to customers are included in sales.

HOME BISTRO, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~MARCH 31,~~JUNE 30, 2021

Stock-Based Compensation

Stock-based compensation is accounted for based on the requirements of ASC 718 – “Compensation–Stock Compensation”, which requires recognition in the financial statements of the cost of employee, non-employee and director services received in exchange for an award of equity instruments over the period the employee or director is required to perform the services in exchange for the award (presumptively, the vesting period). The ASC also requires measurement of the cost of employee and director services received in exchange for an award based on the grant-date fair value of the award.

Advertising costs

The Company participates in various advertising programs. All costs related to advertising of the Company’s products are expensed in the period incurred. Advertising costs charged to operations were ~~$72,441~~$189,973 and ~~$31,711,~~$84,988, for the six months ended June 30, 2021 and 2020, respectively, and $117,532 and $53,277 for the three months ended ~~March 31,~~June 30, 2021 and 2020, ~~respectively.~~respectively, are presented on the accompanying condensed consolidated statement of operations as selling and marketing expenses.

Income Taxes

The Company accounts for income taxes using the liability method prescribed by ASC 740 - Income Taxes. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial reporting and tax bases of assets and liabilities using enacted tax rates that will be in effect in the year in which the differences are expected to reverse. The Company records a valuation allowance to offset deferred tax assets if based on the weight of available evidence, it is more-likely-than-not that some portion, or all, of the deferred tax assets will not be realized. The effect on deferred taxes of a change in tax rates is recognized as income or loss in the period that includes the enactment date.

The Company follows the accounting guidance for uncertainty in income taxes using the provisions of ASC 740. Using that guidance, tax positions initially need to be recognized in the financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities. For the ~~three~~six months ended ~~March 31,~~June 30, 2021, the Company had no uncertain tax positions that qualify for either recognition or disclosure in the financial statements.

Basic and Diluted Loss Per Share

Pursuant to ASC 260-10-45, basic loss per common share is computed by dividing net loss by the weighted average number of shares of common stock outstanding for the periods presented. 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. Potentially dilutive common shares consist of common stock issuable for stock options and stock warrants (using the treasury stock method), convertible notes and common stock issuable. These common stock equivalents may be dilutive in the future.

The potentially dilutive common stock equivalents as of ~~March 31,~~June 30, 2021 and 2020 were excluded from the dilutive loss per share calculation as they would be antidilutive due to the net loss. The following were the computation of diluted shares outstanding and in periods where the Company has a net loss, all dilutive securities are excluded.

March 31,
2021 2020
Common Stock Equivalents:
Stock Warrants 11,786,461 —
Convertible Notes 2,211,779 —
Total 13,998,240 —

	June 30,
	2021		2020
Common Stock Equivalents:
Stock Warrants		12,071,461		60,638
Convertible Notes		1,512,844		10,967,571
Convertible Preferred Stock		—		1,953,552
Total		13,584,305		12,981,761

Concentration Risk

The Company purchased approximately 100% of its food products from ~~two~~2 vendors during the ~~three~~six months ended ~~March 31,~~June 30, 2021 (100% from ~~one~~1 vendor) and 2020 ~~(66%~~(64% and ~~34%~~36%). The Company is not obligated to purchase from these vendors and, if necessary, there are other vendors from which the Company can purchase food products. As of ~~March 31,~~June 30, 2021 and December 31, 2020, the Company had accounts payable balance of ~~$17,164~~$5,949 and $0, respectively, to these vendors.

~~HOME BISTRO, INC. AND SUBSIDIARY~~
~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~MARCH 31, 2021~~

Recent Accounting Pronouncements

Management does not believe that any other recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on its consolidated financial statements.

HOME BISTRO, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2021

NOTE 3 – ACQUISITION OF HOME BISTRO HOLDINGS AND DISPOSAL OF THE DISCONTINUED OPERATIONS OF THE RTD BUSINESS

Home Bistro, Inc. was formed on April 9, 2013 as a Delaware corporation, under the name DineWise, LLC. On December 1, 2014, it underwent a statutory conversion filed under Section 8-265 of the Delaware Code to convert from a limited liability company to a corporation and changed its name to Home Bistro, Inc.

On September 22, 2020, Home Bistro, Inc. filed a Certificate of Conversion under Section 266 of the Delaware General Corporation Law to convert its state of domicile from Delaware to Nevada and simultaneously filed an Articles of Conversion with the Nevada Secretary of State for the same and changed its name from Home Bistro, Inc. (the now wholly-owned subsidiary of the Company) to Home Bistro Holdings, Inc., each effective as of September 30, 2020.

Home Bistro manufactures, packages, and sells, direct-to-consumer, gourmet meals under the Home Bistro brand and markets restaurant quality meats and seafood under the Prime Chop and Colorado Prime brands. The Company’s meals are freshly prepared, flash-frozen, to preserve freshness, and packaged in its facility located in Miami, Florida. Home Bistro meals are ordered on-line and delivered to consumers in containers designed to keep the products frozen during transport. Orders for restaurant quality meats and seafood through the Company’s Prime Chop and Colorado Prime brands are processed through a third-party co-packer based in North Carolina who fulfills and ships customer orders.

Agreement and Plan of Merger

On April 20, 2020, the Company, Fresh Market Merger Sub, Inc., a Delaware corporation and a newly created wholly-owned subsidiary of the Company, also referred to herein as Merger Sub, and Home Bistro, Inc., a privately-held Delaware corporation engaged in the food preparation and home-delivery business (presently known as Home Bistro Holdings, Inc., a Nevada corporation), also referred to herein also Home Bistro Holdings, entered into an Agreement and Plan of Merger, also referred to herein as the Merger Agreement, pursuant to which, among other things, Merger Sub agreed to merge with and into Home Bistro Holdings, with Home Bistro Holdings becoming a wholly-owned subsidiary of the Company and the surviving corporation in the merger, also referred to herein as the Merger. Pursuant to the terms of the Merger Agreement, Home Bistro Holdings filed a Certificate of Merger with the Nevada Secretary of State on April 20, 2020 (see Note 1).

Prior to the effective time of the Merger, the Company and certain of its existing securityholders entered into an Exchange Agreement providing for, among other things, the exchange (the “Exchange”) of securities held by such securityholders for shares of common stock, as more fully detailed therein. As a result of the Exchange, all of the Company’s issued and outstanding shares of Series A Preferred Stock, Series C Preferred Stock and convertible notes were converted into an aggregate of 5,405,479 shares of common stock on a fully diluted basis, consisting of 1,364,222 shares of common stock and warrants to purchase up to 4,041,258 shares of common stock. The 250,000 shares of Series B Preferred Stock owned by a former officer were cancelled on April 9, 2020 pursuant to a General Release Agreement and 250,000 shares of Series B Preferred Stock held by a related party remained issued and outstanding as of the date of the Merger.

After the Exchange, a total of 1,899,094 shares of common stock, warrants to purchase 4,041,258 shares of common stock and 60,638 stock options were deemed issued and outstanding.

At the effective time of the Merger, and subject to the terms and conditions of the Merger Agreement, each outstanding share of common stock of Home Bistro Holdings was converted into the right to receive approximately four hundred seventy-three (473) shares of common stock. Accordingly, the aggregate shares of the Company’s common stock issued in the Merger to the former securityholders of Home Bistro Holdings is 24,031,453 shares of common stock on a fully diluted basis consisting of 17,105,139 shares of common stock and warrants to purchase up to 6,926,314 shares of common stock.

Subsequent to the Merger, the Company had an aggregate of 30,031,501 shares of common stock issued and outstanding on a fully diluted basis consisting of 19,004,233 shares of common stock, 60,638 stock options and warrants to purchase up to 10,967,572 shares of common stock.

~~HOME BISTRO, INC. AND SUBSIDIARY~~
~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~MARCH 31, 2021~~

HOME BISTRO, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2021

In connection with the Merger, certain Company stockholders entered into a Lock-Up and Leak-Out Agreement with the Company pursuant to which, among other thing, such stockholders agreed to certain restrictions regarding the resale of common stock for a period of two years from the date of the Merger Agreement, as more fully detailed therein.

Additionally, on April 20, 2020, the Company and a stockholder entered into a Put Option Agreement (see Note 10), pursuant to which, among other things, the Company agreed, at the election of the stockholder, to purchase certain shares of common stock from such stockholder no sooner than two years from the date of the Put Option Agreement (the “Market Period”). Pursuant to the Put Option Agreement, in the event that the stockholder does not generate $1.3 million dollars (the “Total Investment”) in gross proceeds from the sale of its shares of common stock by the second anniversary of the Put Option Agreement, then the stockholder has the right to cause the Company to purchase shares held by the stockholder at a price equal to the difference between the Total Investment and the net proceeds actually realized by the stockholder from shares of common stock sold during the Market Period and the number of shares of common stock held by the stockholder on the date the put right is exercised. The put right expires fourteen (14) days from end of the Market Period. In connection with the Put Option Agreement, the Company recorded an initial common stock repurchase obligation in the amount of $1.3 million, reflected in the accompanying consolidated balance sheets as a long-term liability, Common stock repurchase obligation(see Note 10).

Effective April 20, 2020, the Company acquired all the issued and outstanding shares of Home Bistro Holdings pursuant to the Merger Agreement and Home Bistro Holdings became a wholly owned subsidiary of the Company. As a result of the Merger, for financial statement reporting purposes, the Merger between the Company and Home Bistro Holdings has been treated as a reverse acquisition and recapitalization with Home Bistro Holdings deemed the accounting acquirer and the Company deemed the accounting acquiree in accordance with FASB Accounting Standards Codification (“ASC”) Section 805-10-55. At the time of the Merger, both the Company and Home Bistro Holdings had their own separate operating segments. Accordingly, the assets and liabilities and the historical operations that are reflected in the consolidated financial statements after the Merger are those of Home Bistro Holdings and are recorded at the historical cost basis of Home Bistro Holdings. The acquisition process utilizes the capital structure of the Company and the assets and liabilities of Home Bistro Holdings which are recorded at historical cost. The results of operations of the Company are consolidated with results of operations of Home Bistro Holdings starting on the date of the Merger Agreement. The equity of the consolidated entity is the historical equity of Home Bistro Holdings retroactively restated to reflect the number of shares deemed issued by the Company in the reverse acquisition.

The Merger constituted a change of control and the majority of the Board of Directors changed with the consummation of the Merger. The Company issued to the stockholders of Home Bistro Holdings shares of common stock and stock warrants which represented approximately 80% of the combined company on a fully converted basis after the closing of the Merger. As a result of the above transactions and the Company’s intent to dispose or divest the assets and liabilities associated with the RTD Business as discussed below, this transaction was accounted for as a reverse recapitalization of Home Bistro Holdings where Home Bistro Holdings is considered the historical registrant and the historical operations presented will be those of Home Bistro Holdings.

The following assets and liabilities were assumed in the Merger:

Cash	$	4,917
Prepaid expense		9,776
Operating right-of-use asset		32,444
Total assets acquired		47,137

Accounts payable and accrued expenses		(209,417	)
Operating right-of-use liability		(32,444	)
Total liabilities assumed	$	(241,861	)

Net liability assumed	$	(194,724	)

~~HOME BISTRO, INC. AND SUBSIDIARY~~
~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~MARCH 31, 2021~~

Disposal of Discontinued Operations of the RTD Business

On September 25, 2020, pursuant to the Asset Purchase Agreement, among other things, the Company agreed to sell all of the Company’s business, assets and properties used, or held or developed for use, in its functional RTD (Ready to Drink) beverage segment (the “RTD Business”), and the Buyer agreed to assume certain debts, obligations and liabilities related to the RTD Business. The Company assumed an accounts payable liability in the amount of $14,000 related to accounting expense of the RTD Business for a period prior to the Merger. Pursuant to the Asset Purchase Agreement, the Buyer reimbursed the Company for accounting expenses in amount of $14,000 incurred prior to the Merger, of which $7,000 was payable in cash and the balance in form of a promissory note dated September 25, 2020 in the amount of $7,000. The promissory note bears interest at a rate of 5% per annum, matures on April 25, 2021 and is payable in monthly installments of $1,000 commencing on October 25, 2020 through April 25, 2021. As of December 31, 2020, $5,000 remained due on the promissory note. The Company received the $7,000 cash portion of the consideration as of December 31, 2020. The $14,000 reimbursement was recorded to additional paid in capital as reflected in the accompanying consolidated statements of changes in stockholders’ deficit.

HOME BISTRO, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2021

ASC 205-20 “Discontinued Operations” establishes that the disposal or abandonment of a component of an entity or a group of components of an entity should be reported in discontinued operations if the disposal represents a strategic shift that has (or will have) a major effect on an entity’s operations and financial results. As a result, the component’s results of operations have been classified as discontinued operations on a retrospective basis for all periods presented. The results of operations of this component, for all periods, are separately reported as “discontinued operations” on the consolidated statements of operations.

The Asset Purchase Agreement, discussed above under Agreement and Plan of Merger, was intended to be part of the Merger and in effect transferred the RTD Business and the related assets and liabilities to Gratitude Keto, whose CEO, Roy Warren Jr., formerly served as the Company’s director and Chief Operating Officer and was considered a related party, in substance, in the accounting of this transaction. Therefore, the disposal of net liabilities and the reimbursement discussed above in connection with the disposal of the RTD Business was recorded to additional paid in capital as reflected in the accompanying consolidated statements of changes in stockholders’ deficit.

The following table set forth the selected financial data of the net liabilities recorded to additional paid in capital as of September 24, 2020.

September 24, 2020
Assets:
Other assets:
Operating lease right-of-use assets, net $ 2,417
Total assets $ 2,417

Liabilities:
Current liabilities:
Accounts payable $ 112,212
Accrued expenses and other liabilities 5,009
Operating lease liabilities, current portion 2,417
Total current liabilities 119,638
Total liabilities $ 119,638

Net liabilities $ 117,221
Expense reimbursement by Buyer 14,000
Disposal of net liabilities to a related party $ 131,221

	September 24, 2020
Assets:
Other assets:
Operating lease right-of-use assets, net	$	2,417
Total assets	$	2,417

Liabilities:
Current liabilities:
Accounts payable	$	112,212
Accrued expenses and other liabilities		5,009
Operating lease liabilities, current portion		2,417
Total current liabilities		119,638
Total liabilities	$	119,638

Net liabilities	$	117,221
Expense reimbursement by Buyer		14,000
Disposal of net liabilities to a related party	$	131,221

NOTE 4 – CONVERTIBLE NOTES

At ~~March 31,~~June 30, 2021, the convertible debt consisted of the following:

March 31, 2021
(Unaudited)
Principal amount $ 995,652
Less: debt discount (652,721 )
Convertible notes payable, net $ 342,931

Principal amount – related party $ 110,000
Less: debt discount – related party (78,952 )
Convertible notes payable - related party, net $ 31,048

Total convertible notes payable balance, net $ 373,979

	June 30, 2021
	(Unaudited)
Principal amount	$	1,326,940
Less: debt discount		(603,093	)
Convertible notes payable, net	$	723,847

Principal amount – related party	$	110,000
Less: debt discount – related party		(59,214	)
Convertible notes payable - related party, net	$	50,786

Total convertible notes payable balance, net	$	774,633

HOME BISTRO, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~MARCH 31,~~JUNE 30, 2021

December 2020 Financing

December 2020 Note I:

On December 18, 2020, the Company entered a Securities Purchase Agreement (the “December 2020 SPA I”) with an investor for the sale of the Company’s convertible note. Pursuant to the December 2020 SPA I, among other things, (i) the Company issued a self-amortization promissory note (the “December 2020 Note I”, and together with the December 2020 SPA I, the “December 2020 Agreements I”) in the aggregate principal amount of $275,000, and (ii) issued a total of 75,546 shares of common stock, as a commitment fee and 183,866 shares (the “Second Commitment Shares”) issued as a returnable commitment fee. Accordingly, the Company deems the Second Commitment Shares as unissued shares for accounting purposes. The 75,546 shares of common stock were recorded as a debt discount of $23,546 based on the relative fair value method. Pursuant to the December 2020 Note I, the Company received net proceeds of $234,100, net of $27,500 OID and $13,400 of issuance costs. The OID, issuance costs and issued commitment fee shares of common stock have been recorded as a debt discount to be amortized into interest expense over the twelve-month term of the note. The December 2020 Note I bears an interest rate of 12% per annum (which shall increase to 16% per annum upon the occurrence of an Event of Default (as defined in the December 2020 Note I) and shall mature on December 18, 2021. The investor has the right, only upon the occurrence of an Event of Default, to convert all or any portion of the then outstanding and unpaid principal amount and interest thereon (including any default interest) into shares of common stock equal to the lesser of (i) 105% multiplied by the closing bid price of the common stock on the trading day immediately preceding the issue date ($1.04) or (ii) the closing bid price of the common stock on the trading day immediately preceding the date of the respective conversion (the “Conversion Price”), subject to certain percentage of ownership limitations. The Second Commitment Shares must be returned to the Company’s treasury if the December 2020 Note I is fully repaid and satisfied on or prior to the maturity date, the. Upon the occurrence and during the continuation of any Event of Default (as defined in December 2020 Note I), the investor is no longer required to return the Second Commitment Shares to the Company and the December 2020 Note I becomes immediately due and payable thereunder in the amount equal to the principal amount then outstanding plus accrued interest (including any default interest) through the date of full repayment multiplied by 125%. The obligations of the Company under the December 2020 Note I rank senior with respect to any and all unsecured indebtedness incurred following the issue date except with respect to the Company’s current and future indebtedness with Shopify and any further loans that may be received pursuant to the CARES Act and the SBA’s Economic Injury Disaster loan program. Further, the December 2020 Note I contain standard anti-dilution provisions and price protections provisions in the event that the Company issues securities for a price per share less than the Conversion Price. The December 2020 Agreements I contain other provisions, covenants, and restrictions common with this type of debt transaction. Furthermore, the Company is subject to certain negative covenants under the December 2020 Agreements I, which the Company also believes are customary for transactions of this type. The December 2020 SPA I also provides the investor with certain “piggyback” registration rights, permitting them to request that the Company include the issued shares for sale in certain registration statements filed by the Company under the Securities Act of 1934, as amended. As of December 31, 2020, the December 2020 Note I had outstanding principal and accrued interest of $275,000 and $1,175, respectively.

On March 18, 2021 (the “Redemption Date”), the Company elected, pursuant to terms of payment as described in the December 2020 Note I, to pay an aggregate amount of 283,615.75 (the “Payoff Amount”) consisting of $275,000 of principal, $7,865.75 of accrued interest and $750.00 in administrative fees (the “Redemption Amount”).The December 2020 Note I is deemed to have been paid in full; the lender will not exercise any of its rights relating to any potential default that may have occurred after the issue date of the December 2020 Note I and the Second Commitment Shares were returned by the lender to the Company’s transfer agent for cancellation as provided for in the December 2020 Agreements I. The fair value of the derivative liability associated with the December 2020 Note I at Redemption Date amounted to $26,629 and was reclassified to gain on debt extinguishment in the accompanying condensed consolidated statement of operation upon redemption. Any remaining unamortized debt discounts were recognized as interest expense on the Redemption Date. As of ~~March 31,~~June 30, 2021, the December 2020 Note I had no outstanding balance.

December 2020 Note II:

On December 28, 2020, the Company entered into a Securities Purchase Agreement (the “December 2020 SPA II”) with an investor for the sale of the Company’s convertible note. Pursuant to the SPA II, among other things, (i) the Company issued a self-amortization promissory note (the “December 2020 Note II”, and together with the December 2020 SPA II, the “December 2020 Agreements II”) in the aggregate principal amount of $172,000, and (ii) issued 45,989 shares of common stock as a commitment fee and 114,667 shares (the “Second Commitment Shares”) issued as a returnable commitment fee. Accordingly, the Company deems the Second Commitment Shares as unissued shares for accounting purposes. The 45,989 shares of common stock issued were recorded as a debt discount of $14,720 based on the relative fair value method. Pursuant to the December 2020 Note II, the Company received net proceeds of $150,000, net of $15,500 OID and $6,500 of issuance costs. The OID, issuance costs and issued commitment fee shares of common stock have been recorded as a debt discount to be amortized into interest expense over the twelve-month term of the note. The December 2020 Note II matures on December 28, 2021 and bears an interest rate of 12% per annum (which shall increase to 16% per annum upon the occurrence of an Event of Default (as defined in the December 2020 Note II). The Company shall make nine monthly cash payments (“Amortization Payments”) in the amount of $19,264 beginning at the end of the third month from the issuance date of the note. The Company can elect to extend the Amortization Payment due date by thirty-days by notifying the holder on or before the of the Amortization Payment due date and pay an extension fee of $1,926, provided that the note is not in default. The first twelve months of interest (equal to $20,640) shall be guaranteed and earned in full as of the issue date, however if the note is repaid in its entirety, on or prior to, the due date of the first Amortization Payment, then the interest shall be accrued on a per annum basis based on the number of days elapsed as of the repayment date from the issue date. As of December 31, 2020, the December 2020 Note II had outstanding principal and accrued interest of $172,000 and $0, respectively. During the ~~three~~six months ended ~~March 31,~~June 30, 2021, the Company paid ~~$11,348~~$63,164 of principal and ~~$7,916~~$14,612 of accrued interest. As of ~~March 31, 2020,~~June 30, 2021, the December 2020 Note II had principal and accrued interest ~~$160,652~~$108,836 and $0, respectively.

HOME BISTRO, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~MARCH 31,~~JUNE 30, 2021

The investor has the right, only upon the occurrence of an Event of Default, to convert all or any portion of the then outstanding and unpaid principal amount and interest thereon (including any default interest) into shares of common stock equal to the lesser of (i) 105% multiplied by the closing bid price of the common stock on the trading day immediately preceding the issue date ($1.00) or (ii) the closing bid price of the common stock on the trading day immediately preceding the date of the respective conversion (the “Conversion Price”), subject to certain percentage of ownership limitations. The Second Commitment Shares must be returned to the Company’s treasury if the December 2020 Note II is fully repaid and satisfied on or prior to the maturity date, the. Upon the occurrence and during the continuation of any Event of Default (as defined in the December 2020 Note II), the investor is no longer required to return the Second Commitment Shares to the Company and the December 2020 Note II becomes immediately due and payable thereunder in the amount equal to the principal amount then outstanding plus accrued interest (including any default interest) through the date of full repayment multiplied by 125%. The December 2020 Note II rank senior with respect to any and all unsecured indebtedness incurred following the issue date except with respect to the Company’s current and future indebtedness with Shopify and any further loans that may be received pursuant to the CARES Act and the SBA’s Economic Injury Disaster loan program. Further, the December 2020 Note II contain standard anti-dilution provisions and price protections provisions in the event that the Company issues securities for a price per share less than the Conversion Price. The December 2020 Agreements II contain other provisions, covenants, and restrictions common with this type of debt transaction. Furthermore, the Company is subject to certain negative covenants under the December 2020 Agreements II, which the Company also believes are also customary for transactions of this type. The December 2020 SPA II also provides the investor with certain “piggyback” registration rights, permitting them to request that the Company include the issued shares for sale in certain registration statements filed by the Company under the Securities Act of 1934, as amended.

The Company also entered into a Registration Rights Agreement (“Registration Agreement”) in connection with the December 2020 Agreements II (see Note 10). Pursuant to which the Company is required to prepare and file with the SEC a Registration Statement or Registration Statements (as is necessary) covering the resale of all of the Registrable Securities , which Registration Statement(s) shall state that, in accordance with Rule 415 promulgated under the Securities Act, such Registration Statement also covers such indeterminate number of additional shares of Securities as may become issuable upon stock splits, stock dividends or similar transactions. The Company shall initially register for resale all of the Registerable Securities, or an amount equal to the maximum amount allowed under Rule 415 (a)(1)(i) as interpreted by the SEC. In the event the Company cannot register sufficient shares of Securities, due to the remaining number of authorized shares of Securities being insufficient, the Company will use its best efforts to register the maximum number of shares it can base on the remaining balance of authorized shares and will use its best efforts to increase the number of its authorized shares as soon as reasonably practicable.

The Company shall use its best efforts to have the Registration Statement filed with the SEC within 60 or 120 days following the closing date of the December 2020 Agreements II (collectively as “Filing Deadline”). The Company shall pay the holder the sum of 1% of the purchase amount of the December 2020 Note II as liquidated damages, and not as a penalty for each time it fails to meet the Filing Deadline. The liquidated damages set forth in the Registration Agreement shall be paid, at the holder’s option, in cash or securities priced at the share price, or portion thereof. Failure of the Company to make payment within five business days of the Filing Date shall be considered a breach of the Registration Agreement.

On March 24, 2021, the December 2020 Note II was amended (“Amendment”) pursuant to which, the Company issued a warrant to purchase up to 78,250 shares of common stock (“December 2020 Warrant II”) as additional commitment fee. The December 2020 Warrant II; (i) was valued at $4,227 using the relative fair value method and recorded as a debt discount to be amortized over the life of the note; (ii) has an exercise price of $2.50; (iii) subject to the adjustments and 4.99%, ownership limitation and; (iv) expires on the fifth-year anniversary from the date of issuance.

In addition, the Amendment also provided for a Commitment Share True-Up provision (as discussed below under Commitment Share True-Up Provision). At the inception of the December 2020 Note II, the Commitment Share True-Up had a fixed monetary value of $22,995 and was recorded as a debt discount to be amortized over the twelve-month term.

The Amendment was accounted for as a debt modification in accordance with ASC 470-50-40-10 - Debt Modification and Extinguishment. The present value of the cash flows under the amended terms is less than 10% different from the present value of the remaining cash flows of the current terms and no gain or loss was recognized on modification on March 24, 2021. The warrant issued as additional commitment fee was capitalized and amortized as of the original issue date based on the Company’s elected accounting policy.

HOME BISTRO, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~MARCH 31,~~JUNE 30, 2021

January 2021 Financings

January 2021 Note I:

On January 12, 2021, the Company entered into a Securities Purchase Agreement (the “January 2021 SPA I”) with an investor for the sale of the Company’s convertible note. Pursuant to the January 2021 SPA I, the Company; (i) issued a self-amortization promissory note (the “January 2021 Note I”, and together with the January 2021 SPA I, the “January 2021 Agreements I”) in the aggregate principal amount of $120,000; (ii) issued a total of 29,385 shares of common stock as a commitment fee and; (iii) shall issue 73,269 shares of common stock which is returnable pursuant to the terms of the January 2021 Agreements I (the “Second Commitment Shares”). The 29,385 shares of common stock issued were recorded as a debt discount of $17,297 based on the relative fair value method. The Company received net proceeds of $105,000, net of $10,000 OID and $5,000 issuance cost. The OID, issuance costs and issued commitment fee shares of common stock have been recorded as a debt discount to be amortized into interest expense over the twelve-month term of the note. The January 2021 Note I matures on January 12, 2022 and bears an interest rate of 10% per annum (which shall increase to 16% per annum upon the occurrence of an Event of Default (as defined in the January 2021 Note I)). The Company shall make nine monthly cash payments (“Amortization Payments”) in the amount of $14,666.66 beginning April 12, 2021. The Company can elect to extend the Amortization Payment due date by thirty-days by notifying the holder on or before the of the due date and pay an extension fee of $3,080, provided that the note is not in default. The first twelve months of interest (equal to $12,000) shall be guaranteed and earned in full as of the issue date, however if the note is repaid in its entirety, on or prior to, the due date of the first Amortization Payment, then the interest shall be accrued on a per annum basis based on the number of days elapsed as of the repayment date from the issue date. During the six months ended June 30, 2021, the Company fully paid the January 2021 Note I. As of ~~March 31,~~June 30, 2021, the January 2021 Note I had ~~principal and accrued interest of $120,000 and $2,564, respectively.~~no outstanding balance.

The investor has the right, only upon the occurrence of an Event of Default, to convert all or any portion of the then outstanding and unpaid principal amount and interest thereon (including any default interest) into shares of common stock equal to the lesser of (i) 105% multiplied by the closing bid price of the common stock on the trading day immediately preceding the issue date or (ii) the closing bid price of the common stock on the trading day immediately preceding the date of the respective conversion (the “Conversion Price”), subject to certain percentage of ownership limitations. The Second Commitment Shares must be returned to the Company’s treasury if the January 2021 Note I is fully repaid and satisfied on or prior to the maturity date. Upon the occurrence and during the continuation of any Event of Default (as defined in the January 2021 Note I), the investor is no longer required to return the Second Commitment Shares to the Company and the January 2021 Note I becomes immediately due and payable thereunder in the amount equal to the principal amount then outstanding plus accrued interest (including any default interest) through the date of full repayment multiplied by 125%. The January 2021 Note I rank senior with respect to any and all unsecured indebtedness incurred following the issue date except with respect to the Company’s current and future indebtedness with e-commerce platform provider and any further loans that may be received pursuant to the CARES Act and the SBA’s Economic Injury Disaster loan program. Further, the January 2021 Note I contain standard anti-dilution provisions and price protections provisions in the event that the Company issues securities for a price per share less than the Conversion Price. The January 2021 Agreements I contain other provisions, covenants, and restrictions common with this type of debt transaction. The January 2021 SPA I also provides the investor with certain “piggyback” registration rights, permitting them to request that the Company include the issued shares for sale in certain registration statements filed by the Company under the Securities Act of 1934, as amended.

On March 31, 2021, the January 2021 Note I was amended (“Amendment”) pursuant to which, the Company issued a warrant to purchase up to 55,000 shares of common stock (“January 2021 Warrant I”) as additional commitment fee. The January 2021 Warrant I; (i) was valued at $6,173 using the relative fair value method and recorded as a debt discount to be amortized over the life of the note; (ii) has an exercise price of $2.50; (iii) subject to the adjustments and 4.99%, ownership limitation and; (iv) expires on the fifth-year anniversary from the date of issuance.

In addition, the Amendment also provided for a Commitment Share True-Up provision as discussed below under Commitment Share True-Up ~~Provision.~~Provision. At the inception of the January 2021 Note I, the Commitment Share True-Up had fixed monetary value of $13,223 which was recorded as a debt discount to be amortize over the twelve-month term of the note.

The Amendment was accounted for as a debt modification in accordance with ASC 470-50-40-10 - Debt Modification and Extinguishment. The present value of the cash flows under the amended terms is less than 10% different from the present value of the remaining cash flows of the current terms and no gain or loss was recognized on modification on March 31, 2021. The warrant issued as additional commitment fee was capitalized and amortized as of the original issue date based on the Company’s elected accounting policy.

HOME BISTRO, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~MARCH 31,~~JUNE 30, 2021

January 2021 Note II:

On January 27, 2021, the Company entered into a Securities Purchase Agreement (the “January 2021 SPA II”) with an investor for the sale of the Company’s convertible note. Pursuant to the January 2021 SPA II, the Company; (i) issued a convertible note with principal amount of $330,000 (the “January 2021 Note II”) with the Company receiving $300,000 in net proceeds, net of $33,000 of OID recorded as a debt discount to be amortized over the twelve-month term of the note; (ii) issued 150,000 shares of common stock, subject to a true-up based upon the trading price of the common stock and the investor’s ownership limitations (“Commitment Share True-up”) (as discussed below under Commitment Share True-Up Provision) and; (iii) a warrant to purchase up to 150,000 shares of common stock (the “January 2021 Warrant II”, and together with the January 2021 SPA II and the January 2021 Note II, the “January 2021 Agreements II”). The 150,000 shares of common stock and 150,000 warrants issued were valued at $85,981 and $31,821, respectively, using the relative fair value method and the Commitment Share True-up had a fixed monetary value of $93,750, all recorded as a debt discount to be amortized over the twelve-month term of the note. The January 2021 Note II matures on February 1, 2022 and a one-time interest charge of 8% was applied on the issue date and will be payable on the maturity date. Upon an event of default, the outstanding balance will immediately and automatically increase to 140% of the outstanding balance under the January 2021 Note II immediately prior to the occurrence of the Event of Default and becomes immediately due and payable. The Company shall make nine monthly cash payments (“Amortization Payments”) in the amount of $39,600 beginning May 1, 2021. If the first day of any calendar month is not on a business day, then the Company shall make monthly payments on the next business day. The investor may only convert the January 2021 Note II at any time or times on or after the occurrence of an Event of Default. The January 2021 Note II is convertible at the rate equal to 105% of the lowest trading price occurring during the twenty-five consecutive trading days immediately preceding the applicable conversion date (“Conversion Price”). The January 2021 Agreements II contain other provisions, covenants, and restrictions common with this type of debt transaction. The January 2021 SPA II also provides the investor with certain “piggyback” registration rights, permitting them to request that the Company include the issued shares for sale in certain registration statements filed by the Company under the Securities Act of 1934, as amended. During the six months ended June 30, 2021, the Company paid $63,714 of principal and $15,485 of accrued interest. As of ~~March 31,~~June 30, 2021, the January 2021 Note II had outstanding principal and accrued interest of ~~$330,000~~$266,286 and ~~$4,557,~~$0, respectively.

The January 2021 Warrant II, issued to the investor as commitment fee, provides for the right to purchase up to 150,000 shares of common stock; (i) valued at $31,821 using the relative fair value method and recorded as a debt discount to be amortized over the twelve-month term of the note; (ii) has an exercise price of $2.50; (iii) subject to the adjustments and 4.99%, ownership limitation and; (iv) expires on the fifth-year anniversary from the date of issuance.

March 2021 Financings

March 2021 Note I:

On March 22, 2021, the Company entered into a Securities Purchase Agreement (the “March 2021 SPA I”) with an investor for the sale of the Company’s convertible note. Pursuant to the March 2021 SPA I, the Company; (i) issued a convertible note with principal amount of $55,000 (the “March 2021 Note I”) with the Company receiving $50,000 in net proceeds, net of $5,000 of OID recorded as a debt discount to be amortized over the twelve-month term of the note; (ii) issued 25,000 shares of common stock, subject to a true-up based upon the trading price of the common stock and the investor’s ownership limitations (“Commitment Share True-up”) (as discussed below under Commitment Share True-Up Provision) and; (iii) a warrant to purchase up to 25,000 shares of common stock (the “March 2021 Warrant I”, and together with the March 2021 SPA I and the March 2021 Note I, the “March 2021 Agreements I”). The 25,000 shares of common stock and 25,000 warrant issued were valued at $6,949 and $1,346, respectively, using the relative fair value method and the Commitment Share True-up had a fixed monetary value of $5,133, all recorded as a debt discount to be amortized over the twelve-month term of the note. The March 2021 Note I mature on March 1, 2022 and a one-time interest charge of 10% was applied on the issue date and will be payable on the maturity date. Upon an event of default, the outstanding balance will immediately and automatically increase to 140% of the outstanding balance under the March 2021 Note I immediately prior to the occurrence of the Event of Default and becomes immediately due and payable. The Company shall make nine monthly cash payments (“Amortization Payments”), in the amount of $6,455 due on the first day of each month, beginning July 1, 2021. If the first day of any calendar month is not on a business day, then the Company shall make monthly payments on the next business day. The investor may only convert the March 2021 Note I at any time or times on or after the occurrence of an Event of Default. The March 2021 Note I is convertible at the rate equal to 105% of the lowest trading price occurring during the twenty-five consecutive trading days immediately preceding the applicable conversion date (“Conversion Price”). The March 2021 Agreements I contain other provisions, covenants, and restrictions common with this type of debt transaction. The March 2021 SPA I also provides the investor with certain “piggyback” registration rights, permitting them to request that the Company include the issued shares for sale in certain registration statements filed by the Company under the Securities Act of 1934, as amended. As of ~~March 31,~~June 30, 2021, the March 2021 Note I had outstanding principal and accrued interest of $55,000 and ~~$136,~~$1,507, respectively.

HOME BISTRO, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2021

The March 2021 Warrant I, issued to the investor as commitment fee, provides for the right to purchase up to 25,000 shares of common stock; (i) valued at $1,346 using the relative fair value method and recorded as a debt discount to be amortized over the twelve-month term of the note; (ii) has an exercise price of $2.50; (iii) subject to the adjustments and 4.99%, ownership limitation and; (iv) expire on the fifth-year anniversary from the date of issuance.

~~HOME BISTRO, INC. AND SUBSIDIARY~~
~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~MARCH 31, 2021~~

March 2021 Note II:

On March 29, 2021, the Company entered into a Securities Purchase Agreement (the “March 2021 SPA II”) with an investor for the sale of the Company’s convertible note. Pursuant to the March 2021 SPA II, the Company; (i) issued a convertible note with principal amount of $110,000 (the “March 2021 Note II”) with the Company receiving $100,000 in net proceeds, net of $10,000 of OID to be amortized over the twelve-month term of the note; (ii) issued 50,000 shares of common stock, subject to a true-up based upon the trading price of the common stock and the investor’s ownership limitations (“Commitment Share True-up”) (as discussed below under Commitment Share True-Up Provision) and; (iii) a warrant to purchase up to 50,000 shares of common stock (the “March 2021 Warrant II”, and together with the March 2021 SPA II and the March 2021 Note II, the “March 2021Agreements II”). The 50,000 shares of common stock and 50,000 warrant issued were valued at $24,504 and $8,350, respectively, using the relative fair value method and the Commitment Share True-up had a fixed monetary value of $23,500, all recorded as a debt discount to be amortized over the twelve-month term of the note. The March 2021 Note II mature on March 21, 2022 and a one-time interest charge of 10% was applied on the issue date and will be payable on the maturity date. Upon an event of default, the outstanding balance will immediately and automatically increase to 140% of the outstanding balance under the March 2021 Note II immediately prior to the occurrence of the Event of Default and becomes immediately due and payable. The Company shall make nine monthly cash payments (“Amortization Payments”), in the amount of $12,911 due on the first day of each month, beginning June 26, 2021. If the first day of any calendar month is not on a business day, then the Company shall make monthly payments on the next business day. The investor may only convert the March 2021 Note II at any time or times on or after the occurrence of an Event of Default. The March 2021 Note II is convertible at the rate equal to 105% of the lowest trading price occurring during the twenty-five consecutive trading days immediately preceding the applicable conversion date (“Conversion Price”). The March 2021 Agreements II contain other provisions, covenants, and restrictions common with this type of debt transaction. The March 2021 SPA II also provides the investor with certain “piggyback” registration rights, permitting them to request that the Company include the issued shares for sale in certain registration statements filed by the Company under the Securities Act of 1934, as amended. During the six months ended June 30, 2021, the Company paid $10,010 of principal and $2,901 of accrued interest. As of ~~March 31,~~June 30, 2021, the March 2021 Note II had outstanding principal and accrued interest of ~~$110,000~~$99,090 and ~~$60,~~$0, respectively.

The March 2021 Warrant II, issued to the investor as commitment fee, provides for the right to purchase up to 50,000 shares of common stock; (i) valued at $8,350 using the relative fair value method and recorded as a debt discount to be amortized over the twelve-month term of the note; (ii) has an exercise price of $2.50; (iii) subject to the adjustments and 4.99%, ownership limitation and; (iv) expires on the fifth-year anniversary from the date of issuance.

March 2021 Note III – Related Party:

On March 30, 2021, the Company entered into a Securities Purchase Agreement (the “March 2021 SPA III”) with an investor, who is also a major stockholder and director and considered to be a related party, for the sale of the Company’s convertible note. Pursuant to the March 2021 SPA III, the Company; (i) issued a convertible note with principal amount of $110,000 (the “March 2021 Note III”) with the Company receiving $100,000 in net proceeds, net of $10,000 of OID recorded as a debt discount to be amortize over the twelve-month term of the note; (ii) issued 50,000 shares of common stock, subject to a true-up based upon the trading price of the common stock and the investor’s ownership limitations (“Commitment Share True-up”) (as discussed below under Commitment Share True-Up Provision)and; (iii) a warrant to purchase up to 50,000 shares of common stock (the “March 2021 Warrant III”, and together with the March 2021 SPA III and the March 2021 Note III, the “March 2021 Agreements III”). The 50,000 shares of common stock and 50,000 warrant issued were valued at $23,718 and $7,924, respectively, using the relative fair value method and the Commitment Share True-up had a fixed monetary value of $22,250, all recorded as a debt discount to be amortized over the twelve-month term of the note. The March 2021 Note III mature on March 30, 2022 and a one-time interest charge of 10% was applied on the issue date and will be payable on the maturity date. Upon an event of default, the outstanding balance will immediately and automatically increase to 140% of the outstanding balance under the March 2021 Note III immediately prior to the occurrence of the Event of Default and becomes immediately due and payable. The Company shall make nine monthly cash payments (“Amortization Payments”), in the amount of $12,911 due on the first day of each month, beginning July 1, 2021. If the first day of any calendar month is not on a business day, then the Company shall make monthly payments on the next business day. The investor may only convert the March 2021 Note III at any time or times on or after the occurrence of an Event of Default. The March 2021 Note III is convertible at the rate equal to 105% of the lowest trading price occurring during the twenty-five consecutive trading days immediately preceding the applicable conversion date (“Conversion Price”). The March 2021 Agreements III contain other provisions, covenants, and restrictions common with this type of debt transaction. The March 2021 SPA III also provides the investor with certain “piggyback” registration rights, permitting them to request that the Company include the issued shares for sale in certain registration statements filed by the Company under the Securities Act of 1934, as amended. As of ~~March 31,~~June 30, 2021, the March 2021 Note III had outstanding principal and accrued interest of $110,000 and ~~$30,~~$2,773, respectively.

HOME BISTRO, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2021

The March 2021 Warrant III, issued to the investor as commitment fee, provides for the right to purchase up to 50,000 shares of common stock; (i) valued at $7,924 using the relative fair value method and recorded as a debt discount to be amortized over the twelve-month term of the note; (ii) has an exercise price of $2.50; (iii) subject to the adjustments and 4.99%, ownership limitation and; (iv) expires on the fifth-year anniversary from the date of issuance.

~~HOME BISTRO, INC. AND SUBSIDIARY~~
~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~MARCH 31, 2021~~

March 2021 Note IV:

On March 30, 2021, the Company entered into a Securities Purchase Agreement (the “March 2021 SPA IV”) with an investor for the sale of the Company’s convertible note. Pursuant to the March 2021 SPA IV, the Company; (i) issued a convertible note with principal amount of $55,000 (the “March 2021 Note IV”) with the Company receiving $50,000 in net proceeds, net of $5,000 of OID recorded as a debt discount to be amortized over the twelve-month term of the note; (ii) issued 25,000 shares of common stock, subject to a true-up based upon the trading price of the common stock and the investor’s ownership limitations (“Commitment Share True-up”) (as discussed below under Commitment Share True-Up Provision) and; (iii) a warrant to purchase up to 25,000 shares of common stock (the “March 2021 Warrant IV”, and together with the March 2021 SPA IV and the March 2021 Note IV, the “March 2021Agreements IV”). The 25,000 shares of common stock and 25,000 warrant issued were valued at $11,845 and $3,957, respectively, using the relative fair value method and the Commitment Share True-up had a fixed monetary value of $11,125, all recorded as a debt discount to be amortized over the twelve-month term of the note. The March 2021 Note IV mature on March 21, 2022 and a one-time interest charge of 10% was applied on the issue date and will be payable on the maturity date. Upon an event of default, the outstanding balance will immediately and automatically increase to 140% of the outstanding balance under the March 2021 Note IV immediately prior to the occurrence of the Event of Default and becomes immediately due and payable. The Company shall make nine monthly cash payments (“Amortization Payments”), in the amount of $6,455 due on the first day of each month, beginning June 26, 2021. If the first day of any calendar month is not on a business day, then the Company shall make monthly payments on the next business day. The investor may only convert the March 2021 Note IV at any time or times on or after the occurrence of an Event of Default. The March 2021 Note IV is convertible at the rate equal to 105% of the lowest trading price occurring during the twenty-five consecutive trading days immediately preceding the applicable conversion date (“Conversion Price”). The March 2021 Agreements IV contain other provisions, covenants, and restrictions common with this type of debt transaction. The March 2021 SPA IV also provides the investor with certain “piggyback” registration rights, permitting them to request that the Company include the issued shares for sale in certain registration statements filed by the Company under the Securities Act of 1934, as amended. During the six months ended June 30, 2021, the Company paid $5,171 of principal and $1,284 of accrued interest. As of ~~March 31,~~June 30, 2021, the March 2021 Note IV had outstanding principal and accrued interest of ~~$55,000~~$49,829 and ~~$15,~~$102, respectively.

The March 2021 Warrant IV, issued to the investor as commitment fee, provides for the right to purchase up to 25,000 shares of common stock; (i) valued at $3,957 using the relative fair value method and recorded as a debt discount to be amortized over the twelve-month term of the note; (ii) has an exercise price of $2.50; (iii) subject to the adjustments and 4.99%, ownership limitation and; (iv) expires on the fifth-year anniversary from the date of issuance.

March 2021 Note V:

On March 31, 2021, the Company entered into a Securities Purchase Agreement (the “March 2021 SPA V”) with an investor for the sale of the Company’s convertible note. Pursuant to the March 2021 SPA V, the Company; (i) issued a convertible note with principal amount of $165,000 (the “March 2021 Note V”) with the Company receiving $150,000 in net proceeds, net of $15,000 of OID recorded as a debt discount to be amortized over the twelve-month term of the note; (ii) issued 75,000 shares of common stock, subject to a true-up based upon the trading price of the common stock and the investor’s ownership limitations (“Commitment Share True-up”) (as discussed below under Commitment Share True-Up Provision) and; (iii) a warrant to purchase up to 75,000 shares of common stock (the “March 2021 Warrant V”, and together with the March 2021 SPA V and the March 2021 Note V, the “March 2021Agreements V”). The 75,000 shares of common stock and 75,000 warrant issued were valued at $36,499 and $12,352, respectively, using the relative fair value method and the Commitment Share True-up had a fixed monetary value of $34,500, all recorded as a debt discount to be amortized over the twelve-month term of the note. The March 2021 Note V mature on March 1, 2022 and a one-time interest charge of 10% was applied on the issue date and will be payable on the maturity date. Upon an event of default, the outstanding balance will immediately and automatically increase to 140% of the outstanding balance under the March 2021 Note V immediately prior to the occurrence of the Event of Default and becomes immediately due and payable. The Company shall make nine monthly cash payments (“Amortization Payments”), in the amount of $20,167 due on the first day of each month, beginning July 1, 2021. If the first day of any calendar month is not on a business day, then the Company shall make monthly payments on the next business day. The investor may only convert the March 2021 Note V at any time or times on or after the occurrence of an Event of Default. The March 2021 Note V is convertible at the rate equal to 105% of the lowest trading price occurring during the twenty-five consecutive trading days immediately preceding the applicable conversion date (“Conversion Price”). The March 2021 Agreements V contain other provisions, covenants, and restrictions common with this type of debt transaction. The March 2021 SPA V also provides the investor with certain “piggyback” registration rights, permitting them to request that the Company include the issued shares for sale in certain registration statements filed by the Company under the Securities Act of 1934, as amended. As of ~~March 31,~~June 30, 2021, the March 2021 Note V had outstanding principal and accrued interest of $165,000 and ~~$0,~~$4,114, respectively.

HOME BISTRO, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2021

The March 2021 Warrant V, issued to the investor as commitment fee, provides for the right to purchase up to 75,000 shares of common stock; (i) valued at $12,352 using the relative fair value method and recorded as a debt discount to be amortized over the twelve-month term of the note; (ii) has an exercise price of $2.50; (iii) subject to the adjustments and 4.99%, ownership limitation and; (iv) expires on the fifth-year anniversary from the date of issuance.

April 2021 Financing

On April 7, 2021, the Company closed a Securities Purchase Agreement dated March 29, 2021 (the “April 2021 SPA”) with an investor for the sale of the Company’s convertible note. Pursuant to the April 2021 SPA, the Company; (i) issued a convertible note with principal amount of $165,000 (the “April 2021 Note”) with the Company receiving $146,500 in net proceeds, net of $15,000 of OID and $3,500 of legal fees; (ii) issued 75,000 shares of common stock, subject to a true-up based upon the trading price of the common stock and the investor’s ownership limitations (“Commitment Share True-up”) and; (iii) issued warrant to purchase up to 75,000 shares of common stock (the “April 2021 Warrant”, and together with the April 2021 SPA and the April 2021 Note, the “April 2021Agreements”). The 75,000 shares of common stock and 75,000 warrant issued were valued at $31,913 and $9,669, respectively, using the relative fair value method and the Commitment Share True-up had a fixed monetary value of $27,375, recorded as a debt discount to be amortized over the twelve-month term of the note. The April 2021 Note I mature on March 30, 2022 and a one-time interest charge of 8% was applied on the issue date and will be payable on the maturity date. Upon an event of default, the outstanding balance will immediately and automatically increase to 140% of the outstanding balance under the April 2021 Note immediately prior to the occurrence of the Event of Default and becomes immediately due and payable. The Company shall make nine monthly cash payments (“Amortization Payments”), in the amount of $19,800 due on the first day of each month, beginning July 1, 2021. If the first day of any calendar month is not on a business day, then the Company shall make monthly payments on the next business day. The investor may only convert the April 2021 Note at any time or times on or after the occurrence of an Event of Default. The April 2021 Note is convertible at the rate equal to 105% of the lowest trading price occurring during the twenty-five consecutive trading days immediately preceding the applicable conversion date (“Conversion Price”). The April 2021 Agreements contain other provisions, covenants, and restrictions common with this type of debt transaction. The April 2021 SPA also provides the investor with certain “piggyback” registration rights, permitting them to request that the Company include the issued shares for sale in certain registration statements filed by the Company under the Securities Act of 1934, as amended. As of June 30, 2021, the April 2021 Note had outstanding principal and accrued interest of $165,000 and $3,037, respectively.

The April 2021 Warrant, issued to the investor as commitment fee, provides for the right to purchase up to 75,000 shares of common stock; (i) valued at $9,669 using the relative fair value method and recorded as a debt discount to be amortized over the twelve-month term of the note; (ii) has an exercise price of $2.50; (iii) subject to the adjustments and 4.99%, ownership limitation and; (iv) expires on the fifth-year anniversary from the date of issuance.

May 2021 Financings

May 2021 Note I:

On May 17, 2021, the Company closed a Securities Purchase Agreement (the “May 2021 SPA I”) with an investor for the sale of the Company’s convertible note. Pursuant to the May 2021 SPA I, the Company; (i) issued a convertible note with principal amount of $132,000 (the “May 2021 Note I”) with the Company receiving $111,700 in net proceeds, net of $12,000 of OID and $8,300 of legal fees; (ii) issued 60,000 shares of common stock (the “First Commitment Shares”) as commitment fee and shall issue 165,000 shares of common stock (the “Second Commitment Shares”) issued as a returnable commitment fee, accordingly, the Company deems the Second Commitment Shares as unissued for accounting purposes and; (iii) issued warrant to purchase up to 60,000 shares of common stock (the “May 2021 Warrant I”, and together with the May 2021 SPA I and the May 2021 Note I, the “May 2021 Agreements I”). The 60,000 shares of common stock and 60,000 warrant issued were valued at $26,824 and $9,767, respectively, using the relative fair value method and the Commitment Share True-up had a fixed monetary value of $26,700, recorded as a debt discount to be amortized over the twelve-month term of the note. The May 2021 Note I matures on May 10, 2022 and a one-time interest charge of 10% was applied on the issue date and will be payable on the maturity date; in an event of default, the interest rate shall increase to 16% per annum. Upon an event of default, the outstanding balance will immediately and automatically increase to 140% of the outstanding balance under the May 2021 Note I immediately prior to the occurrence of the event of default and becomes immediately due and payable. The Company shall make nine monthly cash payments (“Amortization Payments”), in the amount of $15,667 due on the first day of each month, beginning August 9, 2021. If the first day of any calendar month is not on a business day, then the Company shall make monthly payments on the next business day. The investor may only convert the May 2021 Note I at any time or times on or after the occurrence of an event of default. The May 2021 Note I is convertible at the rate equal to 105% of the lowest trading price occurring during the twenty-five consecutive trading days immediately preceding the applicable conversion date (“Conversion Price”). The May 2021 Agreements I contain other provisions, covenants, and restrictions common with this type of debt transaction. The May 2021 SPA I also provides the investor with certain “piggyback” registration rights, permitting them to request that the Company include the issued shares for sale in certain registration statements filed by the Company under the Securities Act of 1934, as amended. As of June 30, 2021, the May 2021 Note I had outstanding principal and accrued interest of $132,000 and $1,591, respectively.

HOME BISTRO, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2021

The May 2021 Warrant I, issued to the investor as commitment fee, provides for the right to purchase up to 60,000 shares of common stock; (i) valued at $9,767 using the relative fair value method and recorded as a debt discount to be amortized over the twelve-month term of the note; (ii) has an exercise price of $2.50; (iii) subject to the adjustments and 4.99%, ownership limitation and; (iv) expires on the fifth-year anniversary from the date of issuance.

~~MARCH 31,~~

May 2021 Note II:

On May 28, 2021, the Company closed a Securities Purchase Agreement (the “May 2021 SPA II”) with an investor for the sale of the Company’s convertible note. Pursuant to the May 2021 SPA II, the Company; (i) issued a convertible note with principal amount of $285,000 (the “May 2021 Note II”) with the Company receiving $250,000 in net proceeds, net of $28,500 of OID and $6,500 of legal fees; (ii) issued 150,000 shares of common stock (the “Commitment Shares”) as commitment fee and; (iii) issued warrant to purchase up to 150,000 shares of common stock (the “May 2021 Warrant II”, and together with the May 2021 SPA II and the May 2021 Note II, the “May 2021Agreements II”). The 150,000 shares of common stock and 150,000 warrant issued were valued at $69,583 and $30,326, respectively, using the relative fair value method, all recorded as a debt discount to be amortized over the twelve-month term of the note. The May 2021 Note II matures on May 26, 2022 and a one-time interest charge of 10% was applied on the issue date and will be payable on the maturity date. Upon an event of default, the outstanding balance will immediately and automatically increase to 140% of the outstanding balance under the May 2021 Note II immediately prior to the occurrence of the event of default and becomes immediately due and payable. The Company shall make nine monthly cash payments (“Amortization Payments”), in the amount of $31,350 due on the first day of each month, beginning August 26, 2021. If the first day of any calendar month is not on a business day, then the Company shall make monthly payments on the next business day. The investor may only convert the May 2021 Note II at any time or times on or after the occurrence of an event of default. The May 2021 Note II is convertible at a conversion price of $0.70 (“Conversion Price”). The May 2021 Agreements II contain other provisions, covenants, and restrictions common with this type of debt transaction. The May 2021 SPA II also provides the investor with certain “piggyback” registration rights, permitting them to request that the Company include the issued shares for sale in certain registration statements filed by the Company under the Securities Act of 1934, as amended. As of June 30, 2021, the May 2021 Note II had outstanding principal and accrued interest of $285,000 and $2,577, respectively.

The May 2021 Warrant II, issued to the investor as commitment fee, provides for the right to purchase up to 150,000 shares of common stock; (i) valued at $30,326 using the relative fair value method and recorded as a debt discount to be amortized over the twelve-month term of the note; (ii) has an exercise price of $1.50; (iii) subject to the adjustments and 4.99%, ownership limitation and; (iv) expires on the fifth-year anniversary from the date of issuance.

The Company uses the Binomial Valuation Model to determine the fair value of its stock warrants which requires the Company to make several key judgments including:

	●	the value of the Company’s common stock;
	●	the expected life of issued stock warrants;
	●	the expected volatility of the Company’s stock price;
	●	the expected dividend yield to be realized over the life of the stock warrants; and
	●	the risk-free interest rate over the expected life of the stock warrants.

The Company’s computation of the expected life of issued stock warrants was based on the simplified method as the Company does not have adequate exercise experience to determine the expected term. The interest rate was based on the U.S. Treasury yield curve in effect at the time of grant. The computation of volatility was based on the historical volatility of the Company’s common stock.

During the six months ended June 30, 2021, the fair value of the stock warrants was estimated at issuance using the Binomial Valuation Model with the following assumptions:

	June 30, 2021
Dividend rate		—	%
Term (in years)		5 year	s
Volatility		60% to 70	%
Risk—free interest rate		0.14 to 0.24	%

HOME BISTRO, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2021

Commitment Share True-Up Provision

The Amended December Note I, Amended January Note I, January Note II, ~~and~~ March Financings, April 2021 Financing and May 2021 Note I (collectively as “Notes”), as discussed above, included a Commitment Share True-Up provision whereby if during the period beginning on the six-month anniversary of the date of the closing date and ending on the later of (i) the maturity date, or (ii) the date on which the Notes, is fully satisfied and cancelled (the “True-Up Period”), the then lowest traded price of the Company’s common stock (“Common Stock”) for any Trading Day within the True-Up Period (“Subsequent Share Price”), as reported on the Company’s principal market, is less than the closing price of the Company’s common stock on the closing date of each Note, then the Company shall, within three (3) trading days of holder’s provision of written notice in (“True-Up Notice”), issue and deliver to the holder an additional number of duly and validly issued, fully paid and non-assessable shares of Common Stock equal to (X) the quotient of the Commitment Value (as defined below) divided by the Subsequent Share Price, multiplied by 1.5, less (Y) the Commitment Shares. The “Commitment Value” shall mean the product of the Commitment Shares multiplied by the closing price of the Company’s common stock on the Closing Date of each Note. Any additional shares of Common Stock issuable as defined in the Notes (“True-up Shares”), if required to be issued shall be issued provided however, that in no event shall the holder be entitled to receive shares of common stock in excess of the amount that would result in beneficial ownership by the holder and its affiliates of 4.99% of the outstanding shares of Common Stock at that time. For purposes of the provision to the immediately preceding sentence, beneficial ownership shall be determined in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Regulations 13D-G thereunder. The Company shall at all times reserve shares of its Common Stock for Holder in an amount equal to 300% multiplied by (X) the quotient of the Commitment Value divided by the lowest traded price of the Common Stock during the five Trading Days immediately preceding the respective date of calculation, multiplied by 1.5, less (Y) the Original Shares. At the inception of the respective Notes, the value of the true-up shares is based on a fixed monetary amount known at inception to be settled with a variable number of shares if triggered which reflects stock settled debt. Therefore, the Commitment Share True-up had an aggregate fixed monetary value of ~~$226,456~~$267,308 which is reflected as liability to be settled with common stock in the accompanying condensed consolidated balance sheets.

Derivative Liabilities Pursuant to Convertible Notes

In connection with the issuance of the January 2021 Financings, March 2021 Financings, April 2021 Financing and ~~March~~May 2021 Financings (collectively referred to as “Notes”), the Company determined that the terms of the Notes contain an embedded conversion option to be accounted for as derivative liabilities due to the holder having the potential to gain value upon an event of default, which includes events not within the control of the Company. Accordingly, under the provisions of ASC 815-40 –Derivatives and Hedging – Contracts in an Entity’s Own Stock, the embedded conversion option contained in the convertible instruments were accounted for as derivative liabilities at the date of issuance and shall be adjusted to fair value through earnings at each reporting date. The fair value of the embedded conversion options was determined using the Monte Carlo valuation model. At the end of each period and on note conversion date or repayment, the Company revalues the derivative liabilities resulting from the embedded option.

During the ~~three~~six months ended ~~March 31,~~June 30, 2021, in connection with the issuance of the Notes, on the initial measurement date, the fair values of the embedded conversion option of ~~$121,706~~$181,571 was recorded as derivative liabilities and debt discount.

Additionally, in connection with the Notes, Company issued an aggregate of ~~404,385~~689,385 shares of common stock and an aggregate of ~~375,000~~660,000 warrants as commitment fees (see Note 9). The Company also issued additional 133,250 warrants as commitment fees (see Note 9), in connection with a debt modification of the December Note II and January Note I. ~~These~~The common shares and warrants issued during the six months ended June 30, 2021 were valued, in aggregate, at ~~$322,744~~$458,638 using the relative fair value method and recorded as debt discount to be amortized over the term of the Notes.

At ~~the end of the period,~~June 30, 2021, the Company revalued the embedded conversion option derivative liabilities. In connection with these revaluations, the Company recorded a gain from the change in the derivative liabilities fair value of ~~$150,006~~$231,113 for the ~~three~~six months ended ~~March 31,~~June 30, 2021.

During the ~~three~~six months ended ~~March 31,~~June 30, 2021, the fair value of the derivative liabilities was estimated at issuance and at the ~~March 31,~~June 30, 2021, using the Monte Carlo Valuation Model with the following assumptions:

	June 30, 2021		~~March 31, 2021~~
Dividend rate		—	—	%
Term (in years)		0.49 to 0.91 year	~~0.74 to 1 year~~
Volatility		90	~~100~~	%
Risk—free interest rate			~~0.07~~0.04 to 0.11	%
Default probability		25	~~25% to 30~~	%

For the three and six months ended ~~March 31,~~June 30, 2021, amortization of debt discounts related to the convertible notes amounted to ~~$295,563,~~$419,063 and $714,626, respectively, included as interest expense on the accompanying condensed consolidated statements of operations. At ~~March 31,~~June 30, 2021, and December 31, 2020 the unamortized debt discount was ~~$731,673~~$662,307 and $305,524, respectively.

HOME BISTRO, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~MARCH 31,~~JUNE 30, 2021

NOTE 5 - – NOTES PAYABLE

Notes payable is summarized below:

March 31, 2020
(Unaudited)
Principal amount $ 171,612
Less: current portion (27,203 )
Notes payable - long term portion $ 144,409

	June 30, 2021
	(Unaudited)
Principal amount	$	157,000
Less: current portion		(13,383	)
Notes payable - long term portion	$	143,617

Minimum principal payments under notes payable are as follows:

Remaining in December 31, 2021	$	8,738
Year ended December 31, 2022		3,068
Year ended December 31, 2023		3,185
Year ended December 31, 2024		3,307
Year ended December 31, 2025		3,433
Thereafter		135,269
Total principal payments	$	157,000

Remaining in December 31, 2021 $ 20,068
Year ended December 31, 2022 6,350
Year ended December 31, 2023 3,185
Year ended December 31, 2024 3,307
Year ended December 31, 2025 3,433
Thereafter 135,269
Total principal payments $ 171,612

Paycheck Protection Program Loan

On April 8, 2020, the Company received federal funding in the amount of $14,612 through the Paycheck Protection Program (the “PPP”) of the CARES Act, administered by the U.S. Small Business Administration (“SBA”). The PPP note bears an interest rate 0.98% per annum and accrues on the unpaid principal balance computed on the basis of the actual number of days elapsed in a year of 360 days. Commencing six months after the effective date of the PPP note, the Company is required to pay the lender equal monthly payments of principal and interest as required to fully amortize any unforgiven principal balance of the loan by the two-year anniversary of the effective date of the PPP note (the “Maturity Date”). The Maturity Date can be extended to five years if mutually agreed upon by both the lender and the Company. The PPP note contains customary events of default relating to, among other things, payment defaults, making materially false or misleading representations to the SBA or the lender, or breaching the terms of the PPP note. The occurrence of an event of default may result in the repayment of all amounts outstanding under the PPP note, collection of all amounts owing from the Company, or filing suit and obtaining judgment against the Company. Under the terms of the CARES Act, PPP loan recipients can apply for and be granted forgiveness for all or a portion of the loan granted under the PPP. Such forgiveness will be determined, subject to limitations, based on the use of loan proceeds for payment of payroll costs and any payments of mortgage interest, rent, and utilities. Recent modifications to the PPP by the U.S. Treasury and Congress have extended the time period for loan forgiveness beyond the original eight-week period, making it possible for the Company to apply for forgiveness of its PPP note. No assurance can be given that the Company will be successful in obtaining forgiveness of the loan in whole or in part. As of March 31, 2021, the PPP note had an outstanding principal balance of $14,612 and accrued interest of $142, reflected in the accompanying condensed consolidated balance sheets under accrued expense and other liabilities.

On April 28, 2021, the SBA authorized forgiveness of the outstanding principal balance of $14,612 and ~~all~~$142 of accrued interest payable of the Company’s PPP loan ~~(see Note 11).~~which has been recorded as a gain on debt forgiveness in the accompanying condensed consolidated statements of operations. As of June 30, 2021, the PPP note had no outstanding balance.

Economic Injury Disaster Loan

On June 17, 2020, the Company entered into a Loan Authorization and Agreement (“SBA Loan Agreement”) with the SBA, under the SBA’s Economic Injury Disaster Loan assistance program in light of the impact of the COVID-19 pandemic. Pursuant to the SBA Loan Agreement, the Company received an advanced of $150,000, to be used for working capital purposes only. Pursuant to the SBA Loan Agreement, the Company executed; (i) a note for the benefit of the SBA (“SBA Note”), which contains customary events of default; and (ii) a Security Agreement, granting the SBA a security interest in all tangible and intangible personal property of the Company, which also contains customary events of default. The SBA Note bears an interest rate of 3.75% per annum which accrue from the date of the advance. Instalment payments, including principal and interest, are due monthly beginning June 17, 2021 (twelve months from the date of the SBA Note) in the amount of $731. The balance of principal and interest is payable thirty years from the date of the SBA Note. As of ~~March 31,~~June 30, 2021, the SBA Note had an outstanding principal balance of $150,000 and accrued interest of ~~$4,423,~~$5,825, reflected in the accompanying condensed consolidated balance sheets under accrued expense and other liabilities.

On June 26, 2020, in connection SBA Loan Agreement, the Company received a grant that does not have to be repaid, in the amount of $5,000 ~~and~~which was recorded as other ~~income.~~income in the accompanying condensed consolidated statements of operations.

~~HOME BISTRO, INC. AND SUBSIDIARY~~
~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~MARCH 31, 2021~~

November Note Payable

On November 12, 2020, the Company entered into a Note Agreement with an investor for the sale of the Company’s note (the “Note”). Pursuant to the terms provided for in the Note Agreement, the Company issued to the investor a Note and the Company received proceeds in the amount of $7,000. The Note bears an interest of 5% per annum and matures on November 12, 2021. The Company may prepay all or any portion of the interest and the unpaid principal balance of this Note at any time, or from time to time, without penalty or premium. As of ~~March 31,~~June 30, 2021, the Note had an outstanding principal balance of $7,000 and accrued interest of ~~$133,~~$221, reflected in the accompanying condensed consolidated balance sheets under accrued expense and other liabilities.

HOME BISTRO, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2021

NOTE 6 – ADVANCE PAYABLE

On August 5, 2020, the Company entered into a capital advance agreement (the “Third Advance Agreement”) with Shopify. Under the terms of the Third Advance Agreement, the Company has received $49,000 of principal and will repay $55,370 by remitting 17% of the total customer payments processed daily by the e-commerce platform provider until the advance is repaid in full. In 2020, the Company paid $47,328 of the principal balance and the advance had an outstanding balance $1,672. During the ~~three~~six months ended ~~March 31,~~June 30, 2021, the Company paid the advance in full and there was no balance outstanding as of ~~March 31,~~June 30, 2021.

On November 17, 2020, the Company entered into a capital advance agreement (the “Fourth Advance Agreement”) with Shopify. Under the terms of the Fourth Advance Agreement, the Company has received $63,000 of principal and will repay $71,190 by remitting 17% of the total customer payments processed daily by the e-commerce platform provider until the advance is repaid in full. As of December 31, 2020, the advance had outstanding principal balance of $63,000. During the ~~three~~six months ended ~~March 31,~~June 30, 2021, the Company paid ~~$23,759 of the principal balance. As of March 31, 2021,~~ the advance ~~had an~~in full and there was no balance outstanding ~~balance~~as of ~~$39,241, presented in advances payable on the accompanying condensed consolidated balance sheets.~~June 30, 2021.

On December 10, 2020, the Company entered into a working capital agreement (the “First PayPal Advance Agreement”) with PayPal. Under the terms of the Fifth Advance Agreement, the Company received net proceeds of $17,000, net of $1,840 loan fee for a total principal amount of $18,840. and will repay the principal and by remitting The Company shall pay a minimum payment every 90-days beginning at the end of the Cancellation Period and ending when the Total Payment Amount has been delivered to Lender. The minimum payment is due in each 90-day period, irrespective of the amount paid in any previous 90-day period. The minimum payment is 5% of the principal amount for loans expected to be repaid in 12 months or more and 10% of the principal amount for loans expected to be repaid in less than 12 months (based on the Company’s account history). In 2020, the Company paid $5,015 of principal balance and the advance had an outstanding balance of $13,825 as of December 31, 2020. During the ~~three~~six months ended ~~March 31,~~June 30, 2021, the Company paid ~~$10,179 of the principal balance. As of March 31, 2021,~~ the advance ~~had an~~in full and there was no balance outstanding ~~balance~~as of ~~$3,646, presented in advance payable on the accompanying condensed consolidated balance sheets.~~June 30, 2021.

On March 29, 2021, the Company entered into a capital advance agreement (the “Fifth Advance Agreement”) with Shopify. Under the terms of the Fifth Advance Agreement, the Company has received $23,000 of principal and will repay $25,990 by remitting 17% of the total customer payments processed daily by the e-commerce platform provider until the advance is repaid in full. ~~The~~As of June 30, 2021, the advance had an outstanding balance of $23,000, presented as advances payable on the accompanying condensed consolidated balance sheets.

On March 30, 2021, the Company closed a Revenue Share Agreement (“Agreement”) with a lender pursuant to which the Company agreed to sell, assign and transfer to the lender and the lender agreed to purchase from the Company, all of the Company’s right, title and interest in its future receivables amounting to $74,200 (“Specified Amount”) and $70,000 (“Purchase Price” or “Advance”) of this amount shall be made available to the Company. Pursuant to the Agreement, prior to the lender making the amount of the Advance available for use (even if the Company choose not to spend any or all of the Advance); (a) the Company will deliver, and will cause to be delivered, on each day to the lender, 20% of future receivables and 25% of future receivables after the 121^st day from and including the closing date (“Applicable Percentage”) until the lender receive the specified Amount and; (b) the Company acknowledge that good, sufficient and valuable consideration has been received. The Company will only use the Advance for the purchase of products or services necessary to operate its business as defined in the Agreement. On April 1, 2021, an advance of $74,200 of which $70,000 was made available to the Company and $4,200 OID was charged to interest expense. During the three months ended June 30, 2021, the Company paid the $43,037 of the principal balance. As of June 30, 2021, the advance had an outstanding balance of $31,163, presented as advances payable on the accompanying condensed consolidated balance sheets.

NOTE 7 – UNREDEEMED GIFT CARDS

Unredeemed gift cards activities as of ~~March 31,~~June 30, 2021 and December 31, 2020 are summarized as follows:

	June 30, 2021			December 31, 2020
	(Unaudited)
Beginning balance	$	48,311		$	10,365
Sale of gift cards		35,275			99,322
Revenue from breakage		—			(17,114	)
Total gift card redemptions		(45,265	)		(44,262	)
Ending balance	$	38,321		$	48,311

March 31, 2021 December 31, 2020
(Unaudited)
Beginning balance $ 48,311 $ 10,365
Sale of gift cards 19,675 99,322
Revenue from breakage — (17,114 )
Total gift card redemptions (31,519 ) (44,262 )
Ending balance $ 36,467 $ 48,311

HOME BISTRO, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~MARCH 31,~~JUNE 30, 2021

NOTE 8 – RELATED PARTY TRANSACTION

The Company utilizes the shipping carrier account of a related entity, owned 50% by the Company’s current chief executive officer and principal stockholder for its inbound and outbound shipping needs. The related entity bills the Company for the direct cost of the shipping charges plus a 10% fee. The total amount paid to the related entity during the ~~three~~six months ended ~~March 31,~~June 30, 2021 and 2020 were ~~$42,335~~$53,838 and ~~$18,582,~~$51,485, respectively, which is included in cost of goods sold on the statement of operations.

See also disposal of the RTD Business with related party in Note 3 – Acquisition of Home Bistro Holdings and Disposal of the Discontinued Operations of the RTD Business.

See also related party convertible note in Note 4 - March 2021 Note III – Related Party.

NOTE 9 – STOCKHOLDERS’ DEFICIT

On September 14, 2020, the Company filed a Certificate of Amendment to its Articles of Incorporation with the Nevada Secretary of State to effect a 1 for 31.993 reverse stock split of its common stock. Proportional adjustments for the reverse stock split were made to the Company’s outstanding stock options, stock warrants and equity incentive plans. All share and per-share data and amounts have been retroactively adjusted as of the earliest period presented in the condensed consolidated financial statements to reflect the reverse stock split (see Note 1 and Note 3).

Shares Authorized

On April 7, 2020, the Board of Directors of the Company approved the increase of the authorized shares of the common stock to 1,000,000,000 from 600,000,000 (see Note 1).

Preferred Stock

As of ~~March 31,~~June 30, 2021, ~~and December 31, 2020,~~ there were no outstanding shares of Series A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock (see above Stocks Issued Pursuant to Recapitalization).

As of June 30, 2020, there were 250,000 shares of Series B Preferred stock issued and outstanding (see above Stocks Issued Pursuant to Recapitalization).

Common Stock and Warrants Issued Pursuant to Recapitalization

On April 20, 2020, in connection with the Exchange Agreement and Merger (see Note 3):

●

519,000 shares of Series A Preferred stock, were exchanged for aggregate of 42,395,542 shares of common stock and 87,354,458 of stock warrants. The 87,354,458 stock warrants issued are exercisable at $0.001 and expire on April 20, 2030. As of June 30, 2020, there were no outstanding shares of Series A Preferred stock.

●

250,000 shares of Series B Convertible Preferred stock owned by a former officer were cancelled on April 9, 2020 pursuant to a General Release Agreement and the remaining 250,000 shares of Series B Convertible Preferred stock remain issued and outstanding as of June 30, 2020.

	●	2,250 and 250 of the Company’s shares of Series C Preferred stock, were exchanged for 11,250,000 of stock warrants and 1,250,000 shares of common stock, respectively, for an aggregate of 2,500 shares of Series C Preferred exchanged. The 11,250,000 stock warrants are exercisable at $0.001 and expire on April 20, 2030. As of June 30, 2020, there were no outstanding shares of Series C Preferred stock.

	●	a lender converted $1,127,500 of outstanding convertible note balance into 28,187,500 of stock warrants, exercisable at $0.001 and expire on April 20, 2030.

●

2,500,000 shares of commons stock held by a stockholder were exchanged for 2,500,000 of stock warrants, exercisable at $0.001 and expire on April 20, 2030.

As a result, in connection with the Exchange Agreement and Merger (see Note 3), Gratitude Health, Inc is deemed to have issued a total of 250,000 shares of Series B Convertible Preferred stock, 60,727,607 shares of common stock, 1,940,000 stock options, 129,291,958 stock warrants which represent the outstanding preferred stock, common stock (issued and issuable), stock options and stock warrants of the Company on the date of the Merger.

●

On April 20, 2020, pursuant to the Merger (see Note 3), the Company issued 129,291,958 stock warrants with exercise price of $0.001 and expiration date of April 20, 2030 (see above Stocks Issued Pursuant to Recapitalization), in exchange for certain outstanding shares of the Company’s common stock on the date of the Merger.

●

On April 20, 2020, pursuant to the Exchange Agreement (see Note 3), the Company issued 221,593,553 stock warrants with exercise price of $0.001 and expiration date of April 20, 2030 in exchange for certain outstanding common stock shares of Home Bistro on the date of the Merger.

HOME BISTRO, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2021

Common Stock

Common stock issued for cash:

●

During the six months ended June 30, 2021, the Company issued an aggregate of 379,207 shares of common stock, to non-affiliate investors for aggregate net cash proceeds of $284,405.

●

During the six months ended June 30, 2020, the Company issued an aggregate of 47,749 shares of common stock, to a related party for aggregate cash proceeds of $100,006.

Common stock issued for services:

●

On April 20, 2021, the Company issued an aggregate of 2,000,000 shares of common stock with an aggregate grant date fair value of $1,530,000 or $0.765 per share based on the market price of common stock on grant date, to two consultants pursuant to a consulting agreement. The fair value of the common stock was recorded in equity as deferred compensation which will be amortized over the twelve-month service period. During the three months ended June 30, 2021, $382,500 of the deferred compensation was amortized which was charged to professional and consulting fee in the accompanying condensed consolidated statements of operations.

~~Common Stock~~

Stock-based compensation:

●

On April 29, 2021, the Company issued 25,000 shares of common stock with an aggregate grant date fair value of $24,750 or $0.99 per share based on the market price of common stock on grant date, to a board member for services rendered and was charged to compensation and related expenses in the accompanying condensed consolidated statements of operations.

●

During the six months ended June 30, 2020, the Company recorded stock-based compensation of $213,841, related to common stock issued to an executive pursuant to an employment agreement and was charged as compensation and related expenses in the accompanying statements of operations. As of June 30, 2020, there was no unamortized compensation expense related to these common shares.

●

During the six months ended June 30, 2020, the Company recorded stock-based compensation of $238,268 related to an aggregate of 127,942,741 shares of common stock issued to employees and various consultants, of which $102,332 was charged as compensation and related expenses, $124,219 as professional and consulting expenses and $11,717 as selling and marketing expenses in the accompanying condensed consolidated statements of operations.

Common stock issued for commitment fee with convertible notes ~~payable~~payable:

●

On January 12, 2021, the Company issued 29,385 shares of common stock to a non-affiliate investor as commitment fee, pursuant to a securities purchase agreement (see Note 4), valued at $17,297 using the relative fair value method and was recorded as debt discount to be amortized over the life of the note.

●

On January 27, 2021, the Company issued 150,000 shares of common stock to a non-affiliate investor as commitment fee, pursuant to a securities purchase agreement (see Note 4), valued at $85,981 using the relative fair value method and was recorded as debt discount to be amortized over the life of the note.

●

On March 22, 2021, the Company issued 25,000 shares of common stock to a non-affiliate investor as commitment fee pursuant to a securities purchase agreement (see Note 4), valued at $6,949 using the relative fair value method and was recorded as debt discount to be amortized over the life of the note.

HOME BISTRO, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2021

●

On March 29, 2021, the Company issued 50,000 shares of common stock to a non-affiliate investor as commitment fee pursuant to a securities purchase agreement (see Note 4), valued at $24,504 using the relative fair value method and was recorded as debt discount to be amortized over the life of the note.

●

On March 30, 2021, the Company issued 50,000 shares of common stock to a related party investor as commitment fee pursuant to a securities purchase agreement (see Note 4), valued at $23,718 using the relative fair value method and was recorded as debt discount to be amortized over the life of the note.

●

On March 30, 2021, the Company issued 25,000 shares of common stock to a non-affiliate investor as commitment fee pursuant to a securities purchase agreement (see Note 4), valued at $11,845 using the relative fair value method and was recorded as debt discount to be amortized over the life of the note.

●

On March 31, 2021, the Company granted 75,000 shares of common stock to a non-affiliate investor as commitment fee pursuant to a securities purchase agreement (see Note 4), valued at $36,499 using the relative fair value method and was recorded as debt discount to be amortized over the life of the note.

●

On April 7, 2021, the Company granted 75,000 shares of common stock to a non-affiliate investor as commitment fee pursuant to a securities purchase agreement (see Note 4), valued at $30,947 using the relative fair value method and was recorded as debt discount to be amortized over the life of the note.

●

On May 17, 2021, the Company granted 60,000 shares of common stock to a non-affiliate investor as commitment fee pursuant to a securities purchase agreement (see Note 4), valued at $26,824 using the relative fair value method and was recorded as debt discount to be amortized over the life of the note.

●

On May 28, 2021, the Company granted 150,000 shares of common stock to a non-affiliate investor as commitment fee pursuant to a securities purchase agreement (see Note 4), valued at $67,645 using the relative fair value method and was recorded as debt discount to be amortized over the life of the note.

~~HOME BISTRO, INC. AND SUBSIDIARY~~
~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~Cancellation of common stock issuable:

~~MARCH 31, 2021~~

●

On April 20, 2020, in connection with the Exchange Agreement and Merger (see Note 3), 2,600,000 shares of common stock issuable at the closing of the acquisition were cancelled during the three months ended June 30, 2020. As of June 30, 2020, the Company did not have any common stock issuable.

Stock Options

A summary of the Company’s outstanding stock options as of ~~March 31,~~June 30, 2021 and changes during the period ended are presented below:

	Number of Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Years)		Aggregate Intrinsic Value
Balance at December 31, 2020		60,638		$	3.20		0.03	$	—
Expired		(60,368	)	$	—		—		—
Balance at June 30, 2021		—		$	—		—	$	—

Number of
Options Weighted Average
Exercise
Price Weighted Average Remaining
Contractual Life
(Years) Aggregate
Intrinsic
Value
Balance at December 31, 2020 60,638 $ 3.20 0.03 $ —
Expired (60,368 ) $ — — —
Balance at March 31, 2021 — $ — — $ —

HOME BISTRO, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2021

Stock Warrants

Warrants issued for commitment fee with convertible notes payable (see Note 4) :

●

On January 27, 2021, the Company issued a warrant to purchase up to 150,000 shares of common stock to a non-affiliate investor as additional commitment fee pursuant to a note amendment (see Note 4). The warrant; (i) was valued at $31,821 using the relative fair value method and recorded as a debt discount to be amortized over the life of the note; (ii) has an exercise price of $2.50; (iii) subject to the adjustments and 4.99%, ownership limitation and; (iv) expires on the fifth-year anniversary from the date of issuance.

●

On March 22, 2021, the Company issued a warrant to purchase up to 25,000 shares of common stock to a non-affiliate investor as additional commitment fee pursuant to a note amendment (see Note 4). The warrant; (i) was valued at $1,346 using the relative fair value method and recorded as a debt discount to be amortized over the life of the note; (ii) has an exercise price of $2.50; (iii) subject to the adjustments and 4.99%, ownership limitation and; (iv) expires on the fifth-year anniversary from the date of issuance.

●

On March 25, 2021, the Company issued warrant to purchase up to 78,250 shares of common to a non-affiliate investor as additional commitment fee pursuant to a note amendment (see Note 4). The warrant; (i) was valued at ~~$4,227~~$4,744 using the relative fair value method and recorded as a debt discount to be amortized over the life of the note; (ii) has an exercise price of $2.50; (iii) subject to the adjustments and 4.99%, ownership limitation and; (iv) expires on the fifth-year anniversary from the date of issuance.

●

On March 29, 2021, the Company issued a warrant to purchase up to 50,000 shares of common stock to a non-affiliate investor as additional commitment fee pursuant to a note amendment (see Note 4). The warrant; (i) was valued at $8,350 using the relative fair value method and recorded as a debt discount to be amortized over the life of the note; (ii) has an exercise price of $2.50; (iii) subject to the adjustments and 4.99%, ownership limitation and; (iv) expires on the fifth-year anniversary from the date of issuance.

●

On March 29, 2021, the Company issued a warrant to purchase up to 50,000 shares of common stock to a related party investor as additional commitment fee pursuant to a note amendment (see Note 4). The warrant; (i) was valued at $7,924 using the relative fair value method and recorded as a debt discount to be amortized over the life of the note; (ii) has an exercise price of $2.50; (iii) subject to the adjustments and 4.99%, ownership limitation and; (iv) expires on the fifth-year anniversary from the date of issuance.

●

On March 30, 2021, the Company issued a warrant to purchase up to 25,000 shares of common stock to a non-affiliate investor as additional commitment fee pursuant to a note amendment (see Note 4). The warrant; (i) was valued at $3,957 using the relative fair value method and recorded as a debt discount to be amortized over the life of the note; (ii) has an exercise price of $2.50; (iii) subject to the adjustments and 4.99%, ownership limitation and; (iv) expires on the fifth-year anniversary from the date of issuance.

●

On March 31, 2021, the Company issued a warrant to purchase up to 75,000 shares of common stock to a non-affiliate investor as additional commitment fee pursuant to a note amendment (see Note 4). The warrant; (i) was valued at $12,352 using the relative fair value method and recorded as a debt discount to be amortized over the life of the note; (ii) has an exercise price of $2.50; (iii) subject to the adjustments and 4.99%, ownership limitation and; (iv) expires on the fifth-year anniversary from the date of issuance.

●

On March 31, 2021, the Company issued a warrant to purchase up to 55,000 shares of common stock to a non-affiliate investor as additional commitment fee pursuant to a note amendment (see Note 4). The warrant; (i) was valued at $6,173 using the relative fair value method and recorded as a debt discount to be amortized over the life of the note; (ii) has an exercise price of $2.50; (iii) subject to the adjustments and 4.99%, ownership limitation and; (iv) expires on the fifth-year anniversary from the date of issuance.

●

On April 7, 2021, the Company issued a warrant to purchase up to 75,000 shares of common stock to a non-affiliate investor as additional commitment fee pursuant to a note amendment (see Note 4). The warrant; (i) was valued at $9,669 using the relative fair value method and recorded as a debt discount to be amortized over the life of the note; (ii) has an exercise price of $2.50; (iii) subject to the adjustments and 4.99%, ownership limitation and; (iv) expires on the fifth-year anniversary from the date of issuance.

●

On May 17, 2021, the Company issued a warrant to purchase up to 60,000 shares of common stock to a non-affiliate investor as additional commitment fee pursuant to a note amendment (see Note 4). The warrant; (i) was valued at $9,767 using the relative fair value method and recorded as a debt discount to be amortized over the life of the note; (ii) has an exercise price of $2.50; (iii) subject to the adjustments and 4.99%, ownership limitation and; (iv) expires on the fifth-year anniversary from the date of issuance.

●

On May 28, 2021, the Company issued a warrant to purchase up to 150,000 shares of common stock to a non-affiliate investor as additional commitment fee pursuant to a note amendment (see Note 4). The warrant; (i) was valued at $30,326 using the relative fair value method and recorded as a debt discount to be amortized over the life of the note; (ii) has an exercise price of $1.50; (iii) subject to the adjustments and 4.99%, ownership limitation and; (iv) expires on the fifth-year anniversary from the date of issuance.

HOME BISTRO, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~MARCH 31,~~JUNE 30, 2021

~~The Company used the Binomial pricing model to determine the fair value of its warrants which requires the Company to make several key judgments including:~~

	●	~~the expected life of issued stock warrants;~~

	●	~~the expected volatility of the Company’s stock price;~~

	●	~~the expected dividend yields to be realized over the life of the stock warrants; and~~

	●	~~the risk-free interest rate over the expected life of the stock warrants.~~

The Company’s computation of the expected life of issued stock warrants was based on the simplified method as the Company does not have adequate exercise experience to determine the expected term and was estimated to be 2.5 years. The interest rate was based on the U.S. Treasury yield curve in effect at the time of grant. The computation of volatility was based on the average historical volatility of comparative companies and expected divided yield was estimated to be zero.

~~Dividend rate~~	—	%
~~Term (in years)~~	~~2.5 years~~
~~Volatility~~	~~69% to 70~~	%
~~Risk-free interest rate~~	~~0.15% to 0.26~~	%

A summary of the Company’s outstanding stock warrants as of ~~March 31,~~June 30, 2021 and changes during the period ended are presented below:

Number of Stock
Warrants Weighted Average
Exercise
Price Weighted Average
Remaining
Contractual Life
(Years)
Balance on December 31, 2020 11,278,212 $ 0.03 9.3
Issued pursuant to note amendment (see Note 4) 133,250 2.50 4.9
Issued pursuant to financing (see Note 4) 375,000 2.50 4.9
Balance on March 31, 2021 11,786,462 $ 0.14 8.9
Stock warrants exercisable on March 31, 2021 11,786,462 $ 0.14 8.9

	Number of Stock Warrants		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Years)
Balance on December 31, 2020		11,278,212	$	0.03		9.3
Issued pursuant to convertible debt (see Note 4)		793,250		2.31		4.8
Balance on June 30, 2021		12,071,462	$	0.18		8.6
Stock warrants exercisable on June 30, 2021		12,071,462	$	0.18		8.6

Certain exercisable stock warrants had per share intrinsic value of ~~$0.89 to $0.92~~$0.97 at ~~March 31,~~June 30, 2021, ~~totalling $10,014,980.~~totaling $10,916,386.

NOTE 10 – COMMITMENTS AND CONTINGENCIES

Lease Obligation Settlement

On February 22, 2018, the Company entered into a Surrender Agreement with a former landlord for rental obligations dating back to the year ended December 31, 2017 until the space was vacated by the Company on March 31, 2017. Upon executing the Surrender Agreement, the former landlord and the Company agreed that the total rental obligation due was $109,235. The former landlord agreed to $50,000 as full satisfaction of all obligations owed at the time of the Surrender Agreement. The Company agreed to make regular payments on the outstanding rental obligation until paid in full through September 2019; however, there is no penalty if the obligation is not fully paid by such date. As of ~~March 31,~~June 30, 2021 and December 31, 2020, the balance remaining due on this obligation were ~~$25,400~~$24,900 and $26,400, respectively, included in accounts payable on the accompanying condensed consolidated balance sheets.

~~HOME BISTRO, INC. AND SUBSIDIARY~~
~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~MARCH 31, 2021~~

Put Option Agreement

On April 20, 2020, the Company and a stockholder entered into a Put Option Agreement (see Note 3), pursuant to which, among other things, the Company agreed, at the election of the stockholder, to purchase certain shares of common stock from such stockholder no sooner than two years from the date of the Put Option Agreement also referred to herein as Market Period. Pursuant to the Put Option Agreement, in the event that the stockholder does not generate $1.3 million dollars also referred to herein as Total Investment in gross proceeds from the sale of its shares of common stock by the second anniversary of the Put Option Agreement, then the stockholder has the right to cause the Company to purchase shares held by the stockholder at a price equal to the difference between the Total Investment and the net proceeds actually realized by the stockholder from shares of common stock sold during the Market Period and the number of shares of common stock held by the stockholder on the date the put right is exercised. The put right expires fourteen (14) days from end of the Market Period. In connection with the Put Option Agreement, the Company recorded a common stock repurchase obligation in the amount of $1.3 million, reflected in the accompanying condensed consolidated balance sheets as a long-term liability, Common stock repurchase obligation, and reduction of additional paid in capital upon entering the Put Option Agreement. The repurchase obligation is re-assessed by the Company each reporting period and adjusted for the proceeds received by the stockholder from sale of common stock. During the ~~three~~six months ended ~~March 31,~~June 30, 2021, the Company re-assessed the repurchase obligation and pursuant to the agreement recorded a reduction of ~~$145,634~~$244,906 for net proceeds realized by the stockholder on sale of Company common stock which was reclassified to additional paid in capital. As of ~~March 31,~~June 30, 2021 and December 31, 2020, the Company had ~~$1.2~~$1.1 and $1.3 million of common stock repurchase obligation outstanding, respectively.

Joint Product Development and Distribution Agreement

Corlich Enterprises, Inc

On September 22, 2020, the Company and Corlich Enterprises, Inc., a New Jersey corporation (“Corlich”) entered into a Joint Product Development and Distribution Agreement (the “Development Agreement”), effective the same date, pursuant to which, among other things, Corlich agreed to provide certain commercial services (the “Services”) of Cat Cora, an American professional chef, in order for the Company and Corlich to collaboratively develop a brand of meals (the “Cat Cora Meals”). In consideration for the Services, the Company agreed to (i) pay Corlich a royalty on net revenues generated from (A) the Cat Cora Meals, and (B) Home Bistro and Prime Chop brand orders where a dedicated code is used at purchase, and (ii) issue a warrant to purchase up to 300,000 shares of common stock. The Development Agreement has a three-year term, unless sooner terminated pursuant to its terms.

HOME BISTRO, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2021

During the first year of the Development Agreement’s term, Corlich is guaranteed a minimum royalty payment of $109,210. For the second and third year of the Development Agreement’s term, the Development Agreement estimates that Corlich will be guaranteed a minimum royalty payment of $218,380 and $436,770, respectively, subject to the achievement of the prior year’s guaranteed minimum royalty payment and the parties’ agreement to negotiate in good faith a lower guaranteed minimum royalty if such guaranteed minimum royalty payment is not achieved or to otherwise terminate the Development Agreement. Royalties above the guaranteed minimum royalty are based on an increasing percentage of net revenues generated from the sale of Cat Cora Meals as certain revenue milestones are met as defined in the Distribution Agreement. Royalties will be accrued over the term of the Development Agreement, to be included in cost of sale. In 2020, the Company accrued $36,403 of royalty fee. During the ~~three~~six months ended ~~March 31,~~June 30, 2021, the Company accrued ~~$27,303~~$54,606 of royalty ~~fee.~~fee and paid an aggregate of $67,340. As of ~~March~~December 31, 2020 and June 30, 2021, a total of ~~$63,706~~$36,403 and $23,668 accrued royalty fee, respectively, was reflected as accrued expense and other liabilities in the accompanying condensed consolidated balance sheets.

Red Velvet XOXO, LLC

On March 19, 2021, the Company and Red Velvet XOXO LLC, a New York corporation (“Red Velvet”) (collectively as “Parties”) entered into a Joint Product Development and Distribution Agreement (the “Development Agreement”), effective the same date. The Development Agreement shall remain in effect for twelve months from the effective date unless sooner terminated as hereinafter provided, or unless extended by mutual agreement of the Parties. Pursuant to the Development Agreement, the Parties shall collaboratively develop a brand of desserts, marketed and sold exclusively utilizing Red Velvet’s recipes (the “Red Velvet Desserts”) under the Home Bistro label, under the terms and conditions of the Development Agreement.

~~HOME BISTRO, INC. AND SUBSIDIARY~~
~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~MARCH 31, 2021~~

For the use of Red Velvet Desserts and all associated intellectual property for the benefit of the Red Velvet Desserts, Bistro shall pay to Red Velvet the following: (i) 10% of all Net Revenue generated from the sale of the Red Velvet Desserts (the “Velvet Desserts Royalty”). For the purpose of this agreement “Net Revenue” shall be defined as gross sales generated on Red Velvet Desserts less discounts and returns. The Velvet Desserts Royalty generated during each calendar month in which an agreement is in effect shall be due and payable by the 10th business day of the following month in which the Velvet Desserts Royalty was earned and; (ii) 10% of all Net Revenue generated from the sale of Home Bistro and Prime Chop brand orders in which a Red Velvet Desserts dedicated code was used at the time of purchase (“Velvet Desserts Commission”). The Velvet Desserts Commission generated during each calendar month in which an agreement is in effect shall be due and payable by the 10th business day of the following month in which the Velvet Desserts Commission was earned. As of ~~March 31,~~June 30, 2021, there were no payments accrued or paid under the Development Agreement.

Chef Roblé & Co.

On April 13, 2021, the Company and Roblé Ali (“Roblé”), celebrity chef and reality TV personality “Chef Roblé & Co.” (collectively as “Parties”) entered into a Joint Product Development and Distribution Agreement (the “Development Agreement”), effective the same date. The Development Agreement shall remain in effect for two years from the effective date unless sooner terminated as defined in the agreement. Pursuant to the Development Agreement, the Parties shall jointly contribute and be responsible for the development of the Roblé Meals, under the terms and conditions of the Development Agreement.

For the use of Roblé Meals and all associated intellectual property for the benefit of the Roblé Meals, the Company shall pay to Roblé the following: (i) 10% of all Net Revenue generated from the sale of the Roblé Meals (the “Roblé Royalty”). For the purpose of this agreement “Net Revenue” shall be defined as gross sales generated on Roblé Meals less discounts and returns. The Roblé Royalty generated during each calendar month in which an agreement is in effect shall be due and payable by the 10th business day of the following month in which the Roblé Royalty was earned and; (ii) 10% of all Net Revenue generated from the sale of Home Bistro and Prime Chop brand orders in which a Roblé dedicated code was used at the time of purchase (“Roblé Commission”). Upon execution of the Development Agreement, the Company shall provide Roblé with a dedicated code to publicly share for a mutually agreed upon percent off any purchase of Home Bistro and Prime Chop brand orders. The Company shall ensure that the code is valid and in effect for the entire Term. The Roblé Commission generated during each calendar month in which an agreement is in effect shall be due and payable by the 10^th business day of the following month in which the Roblé Commission was earned.

In addition, subject to the terms and conditions of this Development Agreement, the Company shall pay to Roblé a guaranteed minimum compensation of $36,000 for twelve months (the “GMC”) as follows: (i) $9,000 upon Bistro’s receipt and approval of all recipes submitted by Roblé; (ii) $9,000 upon the commencement of selling of the Roblé Meals (“Selling Date”); (iii) $3,000 per month for a period of six months, commencing the month immediately following the Selling Date. The total aggregate compensation paid to Roblé shall be reduced by the GMC. As of June 30, 2021, there were no payments accrued or paid under the Development Agreement.

License Intellectual Agreement

On April 25, 2021, the Company entered into a nonexclusive and nontransferable License Intellectual Agreement (“License”) with Homemade Meals, LL C (“Homemade Meals”) to sublicense or use in design, promotion, production, marketing, selling, and distribution of meal kits, and other similar and related goods and products, the trade name “Homemade Meals” (“Licensed Intellectual Property”). Pursuant to the License the Company shall pay Homemade Meals a license fee equal to 4% of the Company’s total revenue generated from the use and/or sublicense of the Licensed Intellectual Property and the license shall be perpetual, commencing upon the Effective Date unless terminated in accordance the provisions of the License Agreement. As of June 30, 2021, there were no payments accrued or paid under the License (see Note 11).

HOME BISTRO, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2021

Registration Rights Agreement

The Company also entered into a Registration Rights Agreement (“Registration Agreement”) in connection with the December 2020 Agreements II (see Note 4). Pursuant to which the Company is required to prepare and file with the SEC a Registration Statement or Registration Statements (as is necessary) covering the resale of all of the Registrable Securities, which Registration Statement(s) shall state that, in accordance with Rule 415 promulgated under the Securities Act, such Registration Statement also covers such indeterminate number of additional shares of Securities as may become issuable upon stock splits, stock dividends or similar transactions. The Company shall initially register for resale all of the Registerable Securities, or an amount equal to the maximum amount allowed under Rule 415 (a)(1)(i) as interpreted by the SEC. In the event the Company cannot register sufficient shares of Securities, due to the remaining number of authorized shares of Securities being insufficient, the Company will use its best efforts to register the maximum number of shares it can base on the remaining balance of authorized shares and will use its best efforts to increase the number of its authorized shares as soon as reasonably practicable.

~~Revenue Share Agreement~~

On March 30, 2021, the Company closed a Revenue Share Agreement (“Agreement”) with a lender pursuant to which the Company agreed to sell, assign and transfer to the lender and the lender agreed to purchase from the Company, all of the Company’s right, title and interest in its future receivables amounting to $74,200 (“Specified Amount”) and $70,000 (“Purchase Price” or “Advance”) of this amount shall be made available to the Company. Pursuant to the Agreement, prior to the lender making the amount of the Advance available for use (even if the Company choose not to spend any or all of the Advance); (a) the Company will deliver, and will cause to be delivered, on each day to the lender, 20% of future receivables and 25% of future receivables after the 121^st day from and including the closing date (“Applicable Percentage”) until the lender receive the specified Amount and; (b) the Company acknowledge that good, sufficient and valuable consideration has been received. The Company will only use the Advance for the purchase of products or services necessary to operate its business as defined in the Agreement. As of March 31, 2021, no receivables were sold, assigned or transferred to the lender and no Advance was made available to the Company.

NOTE 11 - – SUBSEQUENT EVENTS

Acquisitions

On July 6, 2021, the Company entered into an Agreement and Plan of Merger with the members of Model Meals, LLC (“Model Meals”), acquiring Model Meals through a reverse triangular merger, whereby Model Meals merged with Model Meals Acquisition Corp., a wholly owned subsidiary of the Company, with Model Meals being the surviving entity (the “Acquisition”). As a result, Model Meals became a wholly owned subsidiary of the Company, and the members of Model Meals received and aggregate of 2,008,310 shares of common stock and were paid $60,000 in cash. Pursuant to the Acquisition, the Company issued 2,008,310 shares of common stock with grant date fair value of $2,028,393 or $1.01 per share based on the market price of common stock on grant date. The shares are subject to a 24-month Lockup and Leak-Out Agreement and were issued pursuant to Section 4(a)(2) of the Securities Act.

Further, on August 12, 2021, the Company filed, in an amended current report Form 8-K/A, Model Meals’; (i) audited balance sheets and audited statement of operations as of December 31, 2020 and 2019 and for the years ended December 31, 2020 and 2019, respectively,; (ii) balance sheet and statement of operations as of March 31, 2021 and for the three months ended March 31, 2021, respectively, and; (iii) unaudited pro forma combined financial information derived by the application of pro forma adjustments to the historical consolidated financial statements of the Company and Model Meals which gives effect to the Acquisition between the Company and Model Meals as if the Acquisition had occurred on January 1, 2020 with respect to the unaudited annual pro forma combined statement of operation, and as of January 1, 2021 for the three months ended March 31, 2021 unaudited pro forma combined statement of operation, and as of March 31, 2021 with respect to the unaudited pro forma combined balance sheets. The final purchase price allocation is subject to the final determination of the fair values of acquired assets, assumed liabilities and consideration paid, therefore, the allocation and the resulting effect on the financial statements may differ materially from the unaudited pro forma amounts included in the amended current report Form 8-K/A.

HOME BISTRO, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~MARCH 31,~~JUNE 30, 2021

In connection with the Acquisition, the assets acquired and liabilities assumed shall be recorded at their estimated fair values on the acquisition date, subject to adjustment during the measurement period with subsequent changes recognized in earnings or loss. These estimates are inherently uncertain and are subject to refinement. Management develops estimates based on assumptions as a part of the purchase price allocation process to value the assets acquired and liabilities assumed as of the business acquisition date. As a result, during the purchase price measurement period, which may be up to one year from the business acquisition date, the Company may record adjustments to the assets acquired and liabilities assumed based on completion of valuations, with the corresponding offset to goodwill. After the purchase price measurement period, the Company will record any adjustments to assets acquired or liabilities assumed in operating expenses in the period in which the adjustments may have been determined. Based upon the purchase price allocation, the following table summarizes the preliminary estimated fair value of the assets acquired and liabilities assumed at the date of the respective acquisition:

	Total
Assets acquired:
Current assets	$	77,454
Intangible assets and goodwill		2,262,798
Total assets acquired at fair value		2,340,252
Less: total liabilities assumed		(251,859	)
Net asset acquired	$	2,088,393

Purchase consideration paid:
Fair value of common shares issued	$	2,028,393
Cash consideration		60,000
Total purchase consideration paid	$	2,088,393

~~Common Stock Issuance~~

The following unaudited pro forma consolidated results of operations for the six months ended June 30, 2021 and 2020 have been prepared as if the acquisition of Model Meals had occurred as of the beginning of the following periods:

	Six Months Ended			Six Months Ended
	June 30, 2021			June 30, 2020
Net Revenues	$	1,749,159		$	1,846,773
Net Loss	$	(1,802,081	)	$	(591,083	)
Net Loss per Share	$	(0.17	)	$	(0.00	)

Pro forma data does not purport to be indicative of the results that would have been obtained had these events actually occurred at the beginning of the periods presented and is not intended to be a projection of future results.

On ~~April 20,~~July 12, 2021, the Company ~~issued an aggregate~~entered into a Membership Interest Purchase Agreement (“Agreement”) with the members of ~~2,000,000~~Homemade Meals, LLC (“Homemade Meals”), a, Delaware limited liability company, whereby the Company agreed to issue to 4,266,666 shares of the Company’s common stock with ~~an aggregate~~ grant date fair value of ~~$1,530,000~~$5,119,999 or ~~$0.765~~$1.2 per share per share based on the market price of common stock on grant date, in exchange for 100% of the membership interests of Homemade Meals. As a result, Homemade Meals has become a wholly owned subsidiary of the Company. Homemade Meals’ activity was not significant prior to ~~two consultants pursuant~~the acquisition and will be allocated to ~~a consulting agreement.~~goodwill and other identifiable intangible assets yet to be determined.

Sale of Common Stock

~~On April 29,~~

Subsequent to June 30, 2021, the Company issued ~~25,000 shares~~and aggregate of ~~common stock with an aggregate grant date fair value of $24,750 or $0.99 per share, to a board member as stock-based compensation.~~

~~Convertible Debt~~

~~April Financing~~

On April 7, 2021, the Company closed a Securities Purchase Agreement dated March 29, 2021 (the “April 2021 SPA I”) with an investor for the sale of the Company’s convertible note. Pursuant to the April 2021 SPA I, the Company; (i) issued a convertible note with principal amount of $165,000 (the “April 2021 SPA I”) with the Company receiving $150,000 in net proceeds, net of $15,000 of OID; (ii) issued 75,000 shares of common stock, subject to a true-up based upon the trading price of the common stock and the investor’s ownership limitations (“Commitment Share True-up”) and; (iii) issued warrant to purchase up to 75,000 shares of common stock (the “April 2021 Warrant I”, and together with the April 2021 SPA I and the April 2021 Note I, the “April 2021Agreements I”). The 75,000 shares of common stock and 75,000 warrant issued shall be valued, using the relative fair value method and recorded as a debt discount. The April 2021 Note I mature on March 30, 2022 and a one-time interest charge of 8% was applied on the issue date and will be payable on the maturity date. Upon an event of default, the outstanding balance will immediately and automatically increase to 140% of the outstanding balance under the April 2021 Note I immediately prior to the occurrence of the Event of Default and becomes immediately due and payable. The Company shall make nine monthly cash payments (“Amortization Payments”), in the amount of $19,800 due on the first day of each month, beginning July 1, 2021. If the first day of any calendar month is not on a business day, then the Company shall make monthly payments on the next business day. The investor may only convert the April 2021 Note I at any time or times on or after the occurrence of an Event of Default. The April 2021 Note I is convertible at the rate equal to 105% of the lowest trading price occurring during the twenty-five consecutive trading days immediately preceding the applicable conversion date (“Conversion Price”). The April 2021 Agreements I contain other provisions, covenants, and restrictions common with this type of debt transaction. The April 2021 SPA I also provides the investor with certain “piggyback” registration rights, permitting them to request that the Company include the issued shares for sale in certain registration statements filed by the Company under the Securities Act of 1934, as amended.

The April 2021 Warrant I, issued to the investor as commitment fee, provides for the right to purchase up to 75,000 shares of common stock; (i) shall be valued using the relative fair value method and recorded as a debt discount; (ii) has an exercise price of $2.50; (iii) subject to the adjustments and 4.99%, ownership limitation and; (iv) expires on the fifth-year anniversary from the date of issuance.

April 2021 Agreements I, included a Commitment Share True-Up provision whereby if during the period beginning on the six-month anniversary of the date of the closing date and ending on the later of (i) the maturity date, or (ii) the date on which the April 2021 Note I, is fully satisfied and cancelled (the “True-Up Period”), the then lowest traded price of the Company’s common stock (“Common Stock”) for any Trading Day within the True-Up Period (“Subsequent Share Price”), as reported on the Company’s principal market, is less than the closing price of the Company’s common stock on the closing date of the note, then the Company shall, within three (3) trading days of holder’s provision of written notice in (“True-Up Notice”), issue and deliver to the holder an additional number of duly and validly issued, fully paid and non-assessable shares of Common Stock equal to (X) the quotient of the Commitment Value (as defined below) divided by the Subsequent Share Price, multiplied by 1.5, less (Y) the Commitment Shares. The “Commitment Value” shall mean the product of the Commitment Shares multiplied by the closing price of the Company’s common stock on the Closing Date of the note. Any additional shares of Common Stock issuable as defined in the April 2021 Note I (“True-up Shares”), if required to be issued shall be issued provided however, that in no event shall the holder be entitled to receive shares of827,389 common stock in ~~excess~~exchange for $597,144 of the amount that would result in beneficial ownership by the holder and its affiliates of 4.99% of the outstanding shares of Common Stock at that time. For purposes of the provision to the immediately preceding sentence, beneficial ownership shall be determined in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Regulations 13D-G thereunder. The Company shall at all times reserve shares of its Common Stock for Holder in an amount equal to 300% multiplied by (X) the quotient of the Commitment Value divided by the lowest traded price of the Common Stock during the five Trading Days immediately preceding the respective date of calculation, multiplied by 1.5, less (Y) the Original Shares.

net proceeds.

~~HOME BISTRO, INC. AND SUBSIDIARY~~
~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~MARCH 31, 2021~~

~~May Financing~~

On May 10, 2021, the Company closed a Securities Purchase Agreement (the “May 2021 SPA I”) with an investor for the sale of the Company’s convertible note. Pursuant to the May 2021 SPA I, the Company; (i) issued a convertible note with principal amount of $132,000 (the “May 2021 SPA I”) with the Company receiving $120,000 in net proceeds, net of $12,000 of OID; (ii) issued 60,000 shares of common stock (the “First Commitment Shares”) as commitment fee and shall issue 165,000 shares of common stock (the “Second Commitment Shares”) issued as a returnable commitment fee, subject to a true-up based upon the trading price of the common stock and the investor’s ownership limitations (“Commitment Share True-up”) and; (iii) issued warrant to purchase up to 60,000 shares of common stock (the “May 2021 Warrant I”, and together with the May 2021 SPA I and the May 2021 Note I, the “May 2021Agreements I”). The 60,000 shares of common stock and 60,000 warrant issued shall be valued, using the relative fair value method and recorded as a debt discount. The May 2021 Note I mature on May 10, 2022 and a one-time interest charge of 10% was applied on the issue date and will be payable on the maturity date; in an event of default, the interest rate shall increase to 16% per annum. Upon an event of default, the outstanding balance will immediately and automatically increase to 140% of the outstanding balance under the May 2021 Note I immediately prior to the occurrence of the event of default and becomes immediately due and payable. The Company shall make nine monthly cash payments (“Amortization Payments”), in the amount of $15,667 due on the first day of each month, beginning August 9, 2021. If the first day of any calendar month is not on a business day, then the Company shall make monthly payments on the next business day. The investor may only convert the May 2021 Note I at any time or times on or after the occurrence of an event of default. The May 2021 Note I is convertible at the rate equal to 105% of the lowest trading price occurring during the twenty-five consecutive trading days immediately preceding the applicable conversion date (“Conversion Price”). The May 2021 Agreements I contain other provisions, covenants, and restrictions common with this type of debt transaction. The May 2021 SPA I also provides the investor with certain “piggyback” registration rights, permitting them to request that the Company include the issued shares for sale in certain registration statements filed by the Company under the Securities Act of 1934, as amended.

The May 2021 Warrant I, issued to the investor as commitment fee, provides for the right to purchase up to 60,000 shares of common stock; (i) shall be valued using the relative fair value method and recorded as a debt discount; (ii) has an exercise price of $2.50; (iii) subject to the adjustments and 4.99%, ownership limitation and; (iv) expires on the fifth-year anniversary from the date of issuance.

May 2021 Agreements I, included a Commitment Share True-Up provision whereby if during the period beginning on the six-month anniversary of the date of the closing date and ending on the later of (i) the maturity date, or (ii) the date on which the May 2021 Note I, is fully satisfied and cancelled (the “True-Up Period”), the then lowest traded price of the Company’s common stock (“Common Stock”) for any Trading Day within the True-Up Period (“Subsequent Share Price”), as reported on the Company’s principal market, is less than the closing price of the Company’s common stock on the closing date of the note, then the Company shall, within three (3) trading days of holder’s provision of written notice in (“True-Up Notice”), issue and deliver to the holder an additional number of duly and validly issued, fully paid and non-assessable shares of Common Stock equal to (X) the quotient of the Commitment Value (as defined below) divided by the Subsequent Share Price, multiplied by 1.5, less (Y) the Commitment Shares. The “Commitment Value” shall mean the product of the Commitment Shares multiplied by the closing price of the Company’s common stock on the Closing Date of the note. Any additional shares of Common Stock issuable as defined in the May 2021 Note I (“True-up Shares”), if required to be issued shall be issued provided however, that in no event shall the holder be entitled to receive shares of common stock in excess of the amount that would result in beneficial ownership by the holder and its affiliates of 4.99% of the outstanding shares of Common Stock at that time. For purposes of the provision to the immediately preceding sentence, beneficial ownership shall be determined in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Regulations 13D-G thereunder. The Company shall at all times reserve shares of its Common Stock for Holder in an amount equal to 300% multiplied by (X) the quotient of the Commitment Value divided by the lowest traded price of the Common Stock during the five Trading Days immediately preceding the respective date of calculation, multiplied by 1.5, less (Y) the Original Shares.

~~PPP Note Payable Forgiveness~~

On May 28, 2021, the Small Business Administration (SBA) has authorized forgiveness of the outstanding principal balance of $14,612 and all accrued interest payable of the Company’s PPP loan (see Note 5).

~~Joint Product Development and Distribution Agreement~~

For the use of Roblé Meals and all associated intellectual property for the benefit of the Roblé Meals, the Company shall pay to Roblé the following: (i) 10% of all Net Revenue generated from the sale of the Roblé Meals (the “Roblé Royalty”). For the purpose of this agreement “Net Revenue” shall be defined as gross sales generated on Roblé Meals less discounts and returns. The Roblé Royalty generated during each calendar month in which an agreement is in effect shall be due and payable by the 10th business day of the following month in which the Roblé Royalty was earned and; (ii) 10% of all Net Revenue generated from the sale of Home Bistro and Prime Chop brand orders in which a Roblé dedicated code was used at the time of purchase (“Roblé Commission”). Upon execution of the Development Agreement, the Company shall provide Roblé with a dedicated code to publicly share for a mutually agreed upon percent off any purchase of Home Bistro and Prime Chop brand orders. The Company shall ensure that the code is valid and in effect for the entire Term. The Roblé Commission generated during each calendar month in which an agreement is in effect shall be due and payable by the 10^th ~~business day of the following month in which the Roblé Commission was earned.~~

In addition, subject to the terms and conditions of this Development Agreement, The Company shall pay to Roblé a guaranteed minimum compensation of $36,0000 for twelve months (the “GMC”) as follows: (i) $9,000 upon Bistro’s receipt and approval of all recipes submitted by Roblé; (ii) $9,000 upon the commencement of selling of the Roblé Meals (“Selling Date”); (iii) $3,000 per month for a period of six months, commencing the month immediately following the Selling Date. The total aggregate compensation paid to Roblé shall be reduced by the GMC.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Except for the historical information, the following discussion contains forward-looking statements that are subject to risks and uncertainties. We caution you not to put undue reliance on any forward-looking statements, which speak only as of the date of this Report. Our actual results or actions may differ materially from these forward-looking statements for many reasons. Our discussion and analysis of our financial condition and results of operations should be read in conjunction with the financial statements and related notes and with the understanding that our actual future results may be materially different from what we currently expect. See “CAUTIONARY STATEMENT ON FORWARD-LOOKING INFORMATION” above. As used herein, the terms “we,” “us,” “our” and the “Company” refers to Home Bistro, Inc., a Nevada corporation and its subsidiaries unless otherwise stated.

Overview

The Company was incorporated in the State of Nevada on December 17, 2009. Effective March 23, 2018, the Company changed its name to Gratitude Health, Inc. from Vapir Enterprises Inc. Effective September 14, 2019, the Company changed its name to Home Bistro, Inc. from Gratitude Health, Inc.

On May 20, 2020, the Company, Fresh Market Merger Sub, Inc., a Delaware corporation and a newly created wholly-owned subsidiary of the Company (“Merger Sub”), and Home Bistro, Inc., a privately-held Delaware corporation engaged in the food preparation and home-delivery business (presently known as Home Bistro Holdings, Inc., a Nevada corporation) (“Home Bistro Holdings”), entered into an Agreement and Plan of Merger (the “Merger Agreement”) pursuant to which, among other things, Merger Sub agreed to merge with and into Home Bistro Holdings, with Home Bistro Holdings becoming a wholly-owned subsidiary of the Company and the surviving corporation in the merger (the “Merger”). Pursuant to the terms of the Merger Agreement, Home Bistro Holdings filed a Certificate of Merger with the Nevada Secretary of State on May 20, 2020.

The Merger constituted a change of control and the majority of the Board of Directors changed with the consummation of the Merger. The Company issued to Home Bistro Holdings stockholders shares of common stock and stock warrants which represented approximately 80% of the combined company on a fully converted basis after the closing of the Merger. As a result of the above transactions and the Company’s intent to dispose or divest of the assets and liabilities associated with the RTD Business, in the subsequent period, this transaction was accounted for as a reverse recapitalization effected by a share exchange of Home Bistro Holdings.

On May 20, 2020, Mr. Zalmi Duchman was appointed the Chief Executive Officer of Home Bistro Holdings and a member of the Board of Directors, and Michael Finkelstein and Michael Novielli were appointed as directors of the Company, replacing Roy G. Warren, Jr., Mike Edwards and Bruce Zanca, who resigned as directors of the Company subsequent to the Merger.

On September 14, 2020, the Company filed a Certificate of Amendment to its Articles of Incorporation with the Nevada Secretary of State to effect (i) a 31.993-for-1 reverse stock split of its common stock, par value $0.001 per share, with fractional shares rounding up to the nearest whole share (the “Reverse Stock Split”), and (ii) the change of the Company’s name from “Gratitude Health, Inc.” to “Home Bistro, Inc.”. The new CUSIP number for the Common Stock following the Reverse Stock Split is 43706U100.

On September 25, 2020, the Company entered into, and closed the transactions contemplated by, that certain Asset Purchase Agreement (the “Asset Purchase Agreement”), by and among the Company, Gratitude Keto Holdings, Inc., a Florida corporation (the “Buyer” or “Gratitude Keto”), and the holder of 250,000 of the Company’s issued and outstanding shares of Series B Preferred Stock, $0.001 par value per share (such stock, the “Series B Preferred Stock”, and such stockholder, the “Stockholder”). Pursuant to the Asset Purchase Agreement, among other things, the Company agreed to sell to the Buyer all of the Company’s business, assets and properties used, or held or developed for use, in its functional RTD Business, and the Buyer agreed to assume certain debts, obligations and liabilities related to the RTD Business. Furthermore, in connection with the Asset Purchase Agreement, the Buyer returned the 250,000 shares of Series B Preferred Stock held by the Stockholder which was then cancelled by the Company upon return. As a result, the Company has no outstanding shares of preferred stock. Additionally, the RTD Business activities were reclassified and reported as part of “discontinued operations” for all periods presented on the consolidated statements of operations. In addition, the Company assumed an accounts payable liability in the amount of $14,000 related to accounting expenses of the RTD Business for a period prior to the Merger. Pursuant to the Asset Purchase Agreement, the Buyer reimbursed the Company for the accounting expenses in amount of $14,000, of which $7,000 was payable in cash and the balance in form of a promissory note dated September 25, 2020 in the amount of $7,000. The promissory note bears an interest rate of 5% per annum, matures on May 25, 2021 and is payable in monthly instalments of $1,000 commencing on Prior the Merger, the Company was solely engaged in manufacturing, selling and marketing functional RTD Business sold under the Company’s trademarks. Following the Merger and prior to the Divestiture (as defined below), the Company provided high quality, direct-to-consumer, ready-made meals at www.homebistro.com, and restaurant quality meats and seafood through its Colorado Prime brand. Following the Divestiture, this became the sole business of the Company. Home Bistro Holdings is uniquely positioned to take advantage of the developing market opportunity generated by consumers’ growing demand for prepared meals ordered online and delivered to their homes.

On September 22, 2020, the Company implemented its strategy to produce and market celebrity chef inspired gourmet meals with the signing of a joint product development and distribution agreement with Corlich Enterprises, Inc. to collaboratively develop a brand of meals created by Iron Chef, Cat Cora (see Note 10 – Commitments and Contingencies). In furtherance of its celebrity chef inspired meal strategy, on March 15, 2021, the Company entered into partnership with celebrity chef Daina Falk, the author of “The Hungry Fan’s Game Day Cookbook” whereby Home Bistro will collaborate with Ms. Falk to create a line of meals inspired by her unique tailgate food technique. On March 30, 2021, the Company announced its partnership with Red Velvet NYC, a provider of do-it-yourself gourmet banking kits through which Home Bistro will offer fully prepared desserts from recipes created and developed by Red Velvet NYC.

~~Recent Developments~~

~~Subsequent to March 31,~~On April 13, 2021, ~~Home Bistro announced a partnership with~~the Company and Roblé Ali (“Roblé”), celebrity chef ~~Roblé Ali, founder of~~and reality TV personality “Chef Roblé & Co.” (collectively as “Parties”) entered into a Joint Product Development and Distribution Agreement (the “Development Agreement”), effective the same date. The Development Agreement shall remain in effect for two years from the effective date unless sooner terminated as defined in the agreement. Pursuant to the Development Agreement, the Parties shall jointly contribute and be responsible for the development of the Roblé Meals, under the terms and conditions of the Development Agreement.

Recent Developments

On July 6, 2021, the Company entered into an Agreement and Plan of Merger with the members of Model Meals, LLC (“Model Meals”), acquiring Model Meals through a reverse triangular merger, whereby Model Meals merged with Model Meals Acquisition Corp., a ~~cater~~wholly owned subsidiary of the Company, with Model Meals being the surviving entity (the “Acquisition”). As a result, Model Meals became a wholly owned subsidiary of the Company, and the members of Model Meals received and aggregate of 2,008,310 shares of common stock and $60,000 in cash. Pursuant to ~~celebrities~~the Acquisition, the Company issued 2,008,310 shares of common stock with grant date fair value of $2,028,393 or $1.01 per share. The shares are subject to a 24-month Lockup and ~~VIPs, on May 19, 2021. The~~Leak-Out Agreement and were issued pursuant to Section 4(a)(2) of the Securities Act.

On August 16, 2021, the Company ~~also announced its plans to upgrade its packaging to “vacuum skin-packaging” to enhance~~filed, in an amended current report Form 8-K/A, Model Meals’; (i) audited balance sheets and audited statement of operations as of December 31, 2020 and 2019 and for the ~~visual~~years ended December 31, 2020 and ~~convenience~~2019, respectively,; (ii) balance sheet and statement of ~~its meal offerings.~~

~~Results~~operations as of ~~Operations~~

~~For the Three Months Ended~~ March 31, 2021 and ~~2020~~

~~Product Sales~~

~~During~~for the three months ended March 31, 2021, respectively, and; (iii) unaudited pro forma combined financial information derived by the application of pro forma adjustments to the historical consolidated financial statements of the Company and Model Meals which gives effect to the Acquisition between the Company and Model Meals as if the Acquisition had occurred on January 1, 2020 with respect to the unaudited annual pro forma combined statement of operation, and as of January 1, 2021 for the three months ended March 31, 2021 unaudited pro forma combined statement of operation, and as of March 31, 2021 with respect to the unaudited pro forma combined balance sheets. The final purchase price allocation is subject to the final determination of the fair values of acquired assets, assumed liabilities and consideration paid, therefore, the allocation and the resulting effect the financial statements may differ materially from the unaudited pro forma amounts included in the amended current report Form 8-K/A.

On July 12, 2021, the Company entered into a Membership Interest Purchase Agreement (“Agreement”) with the members of Homemade Meals, LLC (“Homemade Meals”), a, Delaware limited liability company, whereby the Company agreed to issue to 4,266,666 shares of the Company’s common stock with grant date fair value of $5,119,999 or $1.2 per share, in exchange for 100% of the membership interests of Homemade Meals. As a result, Homemade Meals has become a wholly owned subsidiary of the Company. The final purchase price allocation is subject to the final determination of the fair values of acquired assets, assumed liabilities and consideration paid.

Results of Operations

For the Three and Six Months Ended June 30, 2021 and 2020

Product Sales

During the three months ended June 30, 2021 and 2020, revenues were ~~$350,474~~$309,161 and ~~$305,765,~~$362,001, respectively, ~~an increase~~a decrease of ~~approximately $46,700~~$52,840 or 15%. ~~The current year sales include $49,963 related to~~

During the ~~Company’s celebrity chef program, Cat Cora Meals.~~six months ended June 30, 2021 and 2020, revenues were $659,635 and $665,766, respectively, a decrease of $6,131 or 1%.

Cost of Sales

Since the Company implemented its own kitchen operations in July 2020, its primary components of cost of sales are raw materials and direct kitchen labor and, with the introduction of the Company’s celebrity chef program in the fourth quarter of 2020, it now incurs associated royalty fees.

During the three months ended ~~March 31,~~June 30, 2021 and 2020, the Company had total cost of sales of ~~$282,386~~$256,541 and ~~$191,591, respectively. In 2021 $27,303~~$227,129, respectively, an increase of royalty fees associated with the Company’s celebrity chef program was included in cost of sales and in 2020 the Company relied on third-party co-packers to prepare, fulfill and ship customer orders. Excluding royalty fees, cost of sales as a percent of product sales increased to 73% in 2021from 63% in the comparable in 2020.$29,412 or 13%. The increase was due to the Company’s decision to conduct a trial test of free shipping. With the completion of the test, the Company is assessing its results. In 2021 and 2020, $27,303 and $36,403, respectively, of royalty fees associated with the Company’s celebrity chef program were included in cost of sales.

During the six months ended June 30, 2021 and 2020, the Company had total cost of sales of $538,927 and $418,720, respectively, an increase of $120,207 or 29%. The increase was due to the Company’s decision to conduct a trial test of free shipping. With the completion of the test, the Company is assessing its results. In 2021 and 2020, $54,606 and $36,403, respectively, of royalty fees associated with the Company’s celebrity chef program were included in cost of sales.

Operating Expenses

For the three and six months ended ~~March 31,~~June 30, 2021 and 2020, operating expenses consisted of the following:

Three Months Ended
March 31,
2021 2020
Compensation and related expenses $ 76,500 $ 92,519
Professional and consulting expenses 198,188 36,734
Selling and marketing expenses 72,441 31,711
General and administrative expenses 91,210 30,361
Total $ 438,339 $ 191,325

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Compensation and related expenses	$	94,414	$	319,770	$	170,914	$	412,289
Professional and consulting expenses		771,182		176,706		969,370		216,440
Selling and marketing expenses		125,432		53,277		197,873		84,988
General and administrative expenses		89,267		79,392		180,477		109,753
Total	$	1,080,295	$	632,145	$	1,518,634	$	823,470

Compensation and related expenses:

	●	~~Compensation~~During the three months ended June 30, 2021, compensation and related ~~expenses:~~expenses amounted to $94,414 as compared to $319,770 for the three months ended June 30, 2020, a decrease of $225,356 or 70%. The decrease was primarily attributable to employees’ stock-based compensation of $270,352 in 2020.

	●	During the six months ended June 30, 2021, compensation and related expenses amounted to $170,914 as compared to $412,289 for the six months ended June 30, 2020, a decrease of $241,375 or 59%. The decrease was primarily attributable to employee stock-based compensation of $316,174 in 2020.

~~During the three months ended March 31, 2021, compensation~~Professional and related expenses amounted to $76,500 as compared to $92,519 for the three months ended March 31, 2020, a decrease of $16,019 or 17%. The decrease was primarily attributable to employees’ stock-based compensation during the three months ended March 31, 2020. consulting expenses:

●

~~Professional~~During the three months ended June 30, 2021, professional and consulting ~~expenses:~~expenses amounted to $771,182 as compared to $179,706 for the three months ended June 30, 2020, an increase of $591,476 or 329%. The increase was primarily due to stock-based compensation to consultants of $382,500, investor relations fee of $117,150, escrow fees of $11,935 and accounting and auditing fees of $58,367 incurred in 2021 in connection with being a public company.

~~During the three months ended March 31,~~

●

During the six months ended June 30, 2021, professional and consulting expenses amounted to $969,370 as compared to $216,440 for the six months ended June 30, 2020, an increase of $752,930 or 348%. The increase was primarily due to stock-based compensation to consultants of $382,500, investor relations fee of $325,450 and escrow fees of $11,935 incurred in 2021 in connection with being a public company.

Selling and consulting expenses amounted to $198,188 as compared to $36,734 for the three months ended March 31, 2020, an increase of $161,454 or 440%. The increase was primarily due to increase in investor relations expenses of $118,300 in 2021 associated with the filing of our Form 1-A on May 1, 2021.marketing expenses:

●

During the three months ended June 30, 2021, selling and marketing expenses amounted to $125,432 as compared to $53,277 for the three months ended June 30, 2020, an increase of $72,155, or 135%. The increase was primarily due to the expansion of our multi-channel digital marketing strategy and the introduction of our celebrity chef program in 2021.

●

During the six months ended June 30, 2021, selling and marketing expenses amounted to $197,873 as compared to $84,988 for the six months ended June 30, 2020, an increase of $112,885 or 133%. The increase was primarily due to the expansion of our multi-channel digital marketing strategy and the introduction of our celebrity chef program in 2021.

General and administrative expenses:

●

During the three months ended June 30, 2021, general and administrative expenses amounted to $89,267 as compared to $79,392 for the three months ended June 30, 2020, an increase of $9,875 or 12%. The increase was primarily due to increase in administrative expenses. The increase was primarily due an increase in travel expense of $8,774, an increase in transfer agent fees of $6,441, an increase in depreciation expense of $9,862, an increase in kitchen related expenses of $35,191 resulting from the expansion of our multi-channel digital marketing strategy and the introduction of our celebrity chef program in 2021 offset by a decrease in business licensing fees of $12,582.

●

During the six months ended June 30, 2021, general and administrative expenses amounted to $180,477 as compared to $109,753 for the six months ended June 30, 2020, an increase of $70,724 or 64%. The increase was primarily due an increase in utilities and office expense of $3,492, an increase in travel expense of $9,299, an increase in transfer agent fees of $23,034, an increase in depreciation expense of $10,126, an increase in insurance expense of $2,324, an increase in kitchen related expenses of $68,842 resulting from the expansion of our multi-channel digital marketing strategy and the introduction of our celebrity chef program in 2021 offset by a decrease in business licensing fees of $13,890.

Loss from Operations

●

~~Selling and marketing expenses:~~During the three months ended June 30, 2021, operating loss from operations amounted to $1,027,675 as compared to $497,273 for the three months ended June 30, 2020, an increase of $530,402 or 107%. The increase was due to the changes discussed above.

During the three months ended March 31, 2021, selling and marketing expenses amounted to $72,441 as compared to $31,711 for the three months ended March 31, 2020, an increase of $40,730, or 128%. The increase was primarily due expansion of our multi-channel digital marketing strategy and the introduction of its celebrity chef program.

●

~~General and administrative expenses:~~During the six months ended June 30, 2021, loss from operations amounted to $1,397,926 as compared to $576,424 for the six months ended June 30, 2020, an increase of $821,502 or 143%. The increase was due to the changes discussed above.

During the three months ended March 31, 2021, general and administrative expenses amounted to $91,210 as compared to $30,360 for the three months ended March 31, 2020, an increase of $60,849 or 200%. The increase primarily due to the inclusion of the Company’s kitchen operations launched in July 2020.

~~Loss from Operations~~

During the three months ended March 31, 2021, operating loss from operations amounted to $370,251 as compared to $79,151 for the three months ended March 31, 2020, an increase of $291,100 or 368%. The increase was due to the changes discussed above.

Other ~~Expense,~~Income (Expense), net

●

During the three months ended June 30, 2021, other (expense), net amounted to $(378,275) as compared to other income, net of $4,238 for the three months ended June 30, 2020, an increase other (expense), net of $382,513 or 9,026%. The change was primarily due to increase in interest expense in connection with convertible notes issued in 2021 of $473,374 offset by an increase in gain on forgiveness of debt of $14,754 and an increase in gain from change in fair value of derivative liabilities of $81,107 and decrease in other income of $5,000.

During the three months ended March 31, 2021, other expense, net amounted to $151,283 as compared to other expense, net of $840 for the three months ended March 31, 2020, an increase in other income, net of $150,443 or 17,910%. The change was primarily due to increase in interest expense of $327,078 offset by an increase in gain on extinguishment of debt of $26,629 and an increase in gain from change in fair value of derivative liabilities of $150,006.

●

During the six months ended June 30, 2021, other (expense), net amounted to $(529,558) as compared to other income, net of $3,398 for the six months ended June 30, 2020, an increase other (expense), net of $532,956 or 15,684%. The change was primarily due to increase in interest expense in connection with convertible notes issued in 2021 of $800,452 offset by an increase in gain on forgiveness of debt of $14,754, increase in gain on extinguishment of debt of $26,629 and an increase in gain from change in fair value of derivative liabilities of $231,113 and decrease in other income of $5,000.

Net Loss

●

During the three months ended June 30, 2021, we had a net loss of $1,405,950 or $(0.06) per common share (basic and diluted), compared to a net loss of $493,035 or $(0.00) per common share (basic and diluted) for the three months ended June 30, 2020, an increase of $912,915 or 185%. The increase was due to the changes discussed above.

During the three months ended March 31, 2021, we had a net loss of $521,534 or $(0.03) per common share (basic and diluted), compared to a net loss of $79,991 or $(0.01) per common share (basic and diluted) for the three months ended March 31, 2020, an increase of $441,543 or 552%. The increase was due to the changes discussed above.

●

During the six months ended June 30, 2021, we had a net loss of $1,927,484 or $(0.18) per common share (basic and diluted), compared to a net loss of $573,026 or $(0.00) per common share (basic and diluted) for the six months ended June 30, 2020, an increase of $1,354,458 or 236%. The increase was due to the changes discussed above.

Liquidity and Capital Resources

Liquidity is the ability of an enterprise to generate adequate amounts of cash to meet its needs for cash requirements. We had a working capital deficit of ~~$824,878~~$1,354,925 and cash of ~~$523,592~~$256,245 as of ~~March 31,~~June 30, 2021 and a working capital deficit of $466,178 and cash of $447,354 as of December 31, 2020.

March 31,
2021
December 31,
2020 Change Percentage
Change
Working capital deficit:
Total current assets $ 607,263 $ 480,942 $ (126,321 ) 26 %
Total current liabilities (1,432,141 ) (947,120 ) 485,021 51 %
Working capital deficit: $ (824,878 ) $ (466,178 ) $ 358,700 77 %

	June 30, 2021			December 31, 2020			Change			Percentage Change
Working capital deficit:
Total current assets	$	345,889		$	480,942		$	(135,053	)		28	%
Total current liabilities		(1,700,814	)		(947,120	)		(753,694	)		80	%
Working capital deficit:	$	(1,354,925	)	$	(466,178	)	$	(888,747	)		191	%

The increase in working capital deficit was primarily attributable to ~~an increase~~a decrease in current assets of ~~$(126,321)~~$135,053 offset by increase in current liabilities of ~~$485,021,~~$753,694, due to the issuance of convertible notes ~~due within twelve months.~~and advances payables.

Cash Flows

The following table provides detailed information about our net cash flows:

Three Months Ended
March 31,
2021 2020
Net cash provided by (used in) operating activities $ (366,048 ) $ 3,759
Net cash used in investing activities (113,755 ) -
Net cash provided by financing activities 556,041 21,668
Net change in cash $ 76,238 $ 25,427

	Six Months Ended June 30,
	2021			2020
Net cash used in operating activities	$	(1,163,562	)	$	(50,283	)
Net cash (used in) provided by investing activities		(113,755	)		4,917
Net cash provided by financing activities		1,086,208			242,926
Net change in cash	$	(191,109	)	$	197,560

Net Cash ~~Provided by (Used in)~~Used in Operating Activities:

Net cash ~~(used in)~~used in operating activities was ~~$(366,048)~~$1,163,562 for the ~~three~~six months ended ~~March 31,~~June 30, 2021 as compared to ~~net cash provided by operating activities of $3,759~~$50,283 for the ~~three~~six months ended ~~March 31,~~June 30, 2020, ~~a change~~an increase of ~~$369,807~~$1,113,297 or ~~9,838%~~2,214%.

●

Net cash used in operating activities for the ~~three~~six months ended ~~March 31,~~June 30, 2021 primarily reflected our net loss of ~~$521,534~~$1,927,484 adjusted for the add-back on non-cash items such as depreciation expense of ~~$264,~~$10,126, stock-based compensation of $24,750, common stock issued for services of $382,500, gain on ~~debt~~ extinguishment of debt of $26,629, gain on forgiveness of debt of $14,754, amortization of debt discount of ~~$295,563,~~$714,626, gain on change in fair value of derivative liability of ~~$150,006~~$231,113 and changes in operating asset and liabilities consisting of an increase of prepaid expenses and other current assets of ~~$50,083,~~$56,056, and an increase accounts payable of ~~$126,873~~$2,667 offset by a decrease in accrued expense and other liabilities of ~~$28,652~~$32,205 and a decrease in unredeemed gift cards of ~~$11,844.~~$9,990.

●

Net cash used in operating activities for the ~~three~~six months ended ~~March 31,~~June 30, 2020 primarily reflected our net loss of ~~$79,991~~$573,026 adjusted for the add-back on non-cash items such as stock-based compensation of ~~$45,824~~$213,841 and stock issued to consultants of $238,268 and changes in operating asset and liabilities consisting primarily of ~~an increase in accounts payable~~a decrease of ~~$180, and an increase in accrued expense~~prepaid expenses and other ~~liabilities~~current assets of ~~$42,870 offset by~~$2,279 and a decrease in unredeemed gift cards of ~~$5,124.~~$1,428 offset by an increase in accounts payable and other liabilities of $69,783.

Net Cash ~~Used in~~(Used in) Provided by Investing Activities:

Net cash ~~used in~~(used by) investing activities was ~~$113,755~~$(113,755) for the ~~three~~six months ended ~~March 31,~~June 30, 2021 as compared to ~~nil~~net cash provided by investing activities $4,917 for the ~~three~~six months ended ~~March 31,~~June 30, 2020, an increase net cash used of ~~$113,775~~$118,672 or ~~100%~~2,414%.

●

Net cash used in investing activities for the ~~three~~six months ended ~~March 31,~~June 30, 2021 consisted of acquisition of property and equipment in the amount of ~~$113,775.~~$113,755.

●

Net cash provided by investing activities for the six months ended June 30, 2020 amounted to $4,917 related to proceeds from an acquisition.

Net Cash Provided by Financing Activities:

Net cash provided by financing activities was ~~$556,041~~$1,086,208 for the ~~three~~six months ended ~~March 31,~~June 30, 2021 as compared to ~~$21,668~~$242,926 for the ~~three~~six months ended ~~March 31,~~June 30, 2020, ~~an increase~~a change of ~~$534,373~~$843,282 or ~~2,466%~~347%.

●

Net cash provided by financing activities for the ~~three~~six months ended ~~March 31,~~June 30, 2021 consisted of net proceeds from sale of common stock of $284,405, proceeds from notes payable, net of discount of ~~$755,000,~~$1,263,200, notes payable – related party, net of discount of $100,000 and advance payable of ~~$23,000~~$97,200 offset by repayments of ~~note~~convertible notes payable of ~~$286,349~~$537,062 and advance payable of ~~$35,610.~~$121,535.

●

Net cash provided by financing activities for the ~~three~~six months ended ~~March 31,~~June 30, 2020 consisted ~~of repayments~~ of proceeds from sale of ~~warrants~~common stock of ~~$25,000~~$100,006, notes payable of $164,612 and advance payable of $10,000 offset by repayments of ~~notes~~note payable – in default ~~of $500~~ and advance payable in total amount of ~~$2,832.~~$31,692.

Cash Requirements

We currently have no external sources of liquidity, such as arrangements with credit institutions or off-balance sheet arrangements that will have or are reasonably likely to have a current or future effect on our financial condition or immediate access to capital. Notwithstanding the foregoing, the Company received a loan in the aggregate amount of $14,612 under the Paycheck Protection Program of the Coronavirus Aid, Relief, and Economic Security Act (“PPP Loan”), and a loan in the aggregate amount of $150,000 from the SBA under its Economic Injury Disaster Loan assistance program in light of the impact of the COVID-19 pandemic. ~~Subsequent to March 31,~~In April 2021, the SBA forgave the outstanding principal of $14,612 and all accrued interest payable of the PPP Loan.

We are dependent on our product sales to fund our operations and may require the sale of additional common stock and preferred stock to maintain operations. Our officers and directors have made no written commitments with respect to providing a source of liquidity in the form of cash advances, loans, and/or financial guarantees.

Going Concern

The financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. As reflected in the accompanying unaudited condensed consolidated financial statements, for the ~~three~~six months ended ~~March 31,~~June 30, 2021, the Company had net loss and cash used in operations of ~~$521,534~~$1,927,484 and ~~$366,048,~~$1,163,562, respectively. At ~~March 31,~~June 30, 2021, the Company had an accumulated deficit, stockholders’ deficit, and working capital deficit of ~~$6,854,923, $2,007,434~~$8,260,873, $2,447,279 and ~~$824,878,~~$1,354,925, respectively. These factors raise substantial doubt about the Company’s ability to continue as a going concern for a period of twelve months from the issuance date of this report. The Company’s primary source of operating funds in 2021 was primarily from the third-party advances and ~~sale of common stock.~~convertible notes payable. The Company has experienced net losses from operations since inception but expects these conditions to improve in the near term and beyond as it develops its business model.

Inflation and Changing Prices

Neither inflation nor changing prices for the ~~three~~six months ended ~~March 31,~~June 30, 2021 had a material impact on our operations.

Off-Balance Sheet Arrangements

None.

Quantitative and Qualitative Disclosures About Market Risk

Not applicable.

Critical Accounting Policies

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires our management to make assumptions, estimates, and judgments that affect the amounts reported, including the notes thereto, and related disclosures of commitments and contingencies, if any. We have identified certain accounting policies that are significant to the preparation of our financial statements. These accounting policies are important for an understanding of our financial condition and results of operations. Critical accounting policies are those that are most important to the portrayal of our financial condition and results of operations and require management’s difficult, subjective, or complex judgment, often as a result of the need to make estimates about the effect of matters that are inherently uncertain and may change in subsequent periods. Certain accounting estimates are particularly sensitive because of their significance to financial statements and because of the possibility that future events affecting the estimate may differ significantly from management’s current judgments.

We believe the following critical accounting policies involve the most significant estimates and judgments used in the preparation of our unaudited condensed consolidated financial statements. We believe the critical accounting policies in Note 2 to the condensed consolidated financial statements appearing in the consolidated financial statements for the ~~three~~six months ended ~~March 31,~~June 30, 2021 affect our more significant judgments and estimates used in the preparation of our condensed consolidated financial statements.

Use of Estimates

Fair Value of Financial Instruments and Fair Value Measurements

The three levels of the fair value hierarchy are as follows:

	Level 1—Inputs are unadjusted quoted prices in active markets for identical assets or liabilities available at the measurement date.

	Level 2—Inputs are unadjusted quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, inputs other than quoted prices that are observable, and inputs derived from or corroborated by observable market data.

	Level 3—Inputs are unobservable inputs which reflect the reporting entity’s own assumptions on what assumptions the market participants would use in pricing the asset or liability based on the best available information.

Derivative Liabilities

Revenue Recognition

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As a smaller reporting company, we are not required to provide this information.

ITEM 4. CONTROLS AND PROCEDURES

We maintain “disclosure controls and procedures,” as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act that are designed to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive and Financial Officer, to allow timely decisions regarding required disclosure. In designing and evaluating our disclosure controls and procedures, management recognized that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Additionally, in designing disclosure controls and procedures, our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. The design of any disclosure controls and procedures also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

With respect to the quarterly period ending ~~March 31,~~June 30, 2021, under the supervision and with the participation of our management, we conducted an evaluation of the effectiveness of the design and operations of our disclosure controls and procedures. Based upon this evaluation, our management has concluded that our disclosure controls and procedures were not effective as of ~~March 31,~~June 30, 2021 due to our limited internal resources and lack of ability to have multiple levels of transaction review. In connection with this evaluation, management identified the following control deficiencies that represent material weaknesses as of ~~March 31,~~June 30, 2021:

	(1)	Lack of an independent audit committee or audit committee financial expert. Although our board of directors serves as the audit committee, it has only one independent director. These factors are counter to corporate governance practices as defined by the various stock exchanges and lead to less supervision over management.

	(2)	We do not have sufficient experience from our accounting personnel with the requisite U.S. GAAP public company reporting experience that is necessary for adequate controls and procedures due to our limited resources with appropriate skills, training and experience to perform the review processes to ensure the complete and proper application of generally accepted accounting principles.

	(3)	Need for greater integration, oversight, communication and financial reporting of the books and records of our office.

	(4)	Lack of sufficient segregation of duties such that the design over these areas relies primarily on detective controls and could be strengthened by adding preventative controls to properly safeguard company assets.

Changes in internal control over financial reporting

There was no change in the Company’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Securities Exchange Act of 1934) for the period ended ~~March 31,~~June 30, 2021 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The Company is not currently involved in any legal proceedings. However, from time to time, the Company may be involved in litigation matters relating to claims arising from the ordinary course of business. While the results of such claims and legal actions cannot be predicted with certainty, the Company’s management does not believe that there are claims or actions, pending or threatened against the Company, the ultimate disposition of which would have a material effect on our business, results of operations, financial condition or cash flows.

ITEM 1A. RISK FACTORS

None.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Except for provided below, all unregistered sales of our securities during the three months ended ~~March 31,~~June 30, 2021, were previously disclosed in a Quarterly Report on Form 10-Q or in a Current Report on Form 8-K.

On ~~January 12,~~April 20, 2021, the Company issued ~~29,385~~an aggregate of 2,000,000 shares of common stock with an aggregate grant date fair value of $1,530,000 or $0.765 per share, to two consultants pursuant to a consulting agreement. The fair value of the common stock was recorded as deferred compensation and will be amortized over the twelve-month service period. During the three months ended June 30, 2021, $382,500 of the deferred compensation was amortized which was charged to professional and consulting fee in the accompanying condensed consolidated statements of operations.

On April 29, 2021, the Company issued 25,000 shares of common stock with an aggregate grant date fair value of $24,750 or $0.99 per share, to a board member and was charged as compensation and related expenses in the accompanying statements of operations.

On April 7, 2021, the Company granted 75,000 shares of common stock to a non-affiliate investor as commitment ~~fees~~fee pursuant to a ~~Securities Purchase Agreement,~~securities purchase agreement, valued at ~~$17,297~~$30,947 using the relative fair value method ~~which~~and was recorded as debt discount to be amortized over the life of the note.

2.4.

On ~~January 27,~~April 7, 2021, the Company issued ~~150,000~~a warrant to purchase up to 75,000 shares of common stock to a non-affiliate investor as additional commitment fee pursuant to a note amendment. The warrant; (i) was valued at $9,669 using the relative fair value method and ~~150,000 warrant~~recorded as a debt discount to ~~purchase~~be amortized over the life of the note; (ii) has an exercise price of $2.50; (iii) subject to the adjustments and 4.99%, ownership limitation and; (iv) expires on the fifth-year anniversary from the date of issuance.

On May 17, 2021, the Company granted 60,000 shares of ~~the Company’s~~ common stock to a non-affiliate investor as commitment ~~fees~~fee pursuant to a ~~Securities Purchase Agreement,~~securities purchase agreement, valued at ~~$85,981 and $31,821, respectively,~~$26,824 using the relative fair value method ~~which~~and was recorded as debt discount to be amortized over the life of the note.

3.6.

On ~~March 22,~~May 17, 2021, the Company issued ~~25,000~~a warrant to purchase up to 60,000 shares of common stock to a non-affiliate investor as additional commitment fee pursuant to a note amendment. The warrant; (i) was valued at $9,767 using the relative fair value method and ~~25,000~~recorded as a debt discount to be amortized over the life of the note; (ii) has an exercise price of $2.50; (iii) subject to the adjustments and 4.99%, ownership limitation and; (iv) expires on the fifth-year anniversary from the date of issuance.

On May 28, 2021, the Company issued a warrant to purchase up to 150,000 shares of common stock to a non-affiliate investor as additional commitment fee pursuant to a note amendment. The warrant; (i) was valued at $30,326 using the ~~Company’s~~relative fair value method and recorded as a debt discount to be amortized over the life of the note; (ii) has an exercise price of $1.50; (iii) subject to the adjustments and 4.99%, ownership limitation and; (iv) expires on the fifth-year anniversary from the date of issuance.

On May 28, 2021, the Company granted 150,000 shares of common stock to a non-affiliate investor as commitment ~~fees~~fee pursuant to a ~~Securities Purchase Agreement,~~securities purchase agreement, valued at ~~$6,949 and $1,346, respectively,~~$67,647 using the relative fair value method ~~which~~and was recorded as debt discount to be amortized over the life of the note.

4.9.

~~On March 25, 2021,~~During the Company issued 78,250 warrant to purchase shares of the Company’s common stock, to a non-affiliate investor as additional commitment fees pursuant to a note amendment, valued at $4,227, using the relative fair value method which was recorded as debt discount to be amortized over the life of the note.

On March 29, 2021, the Company issued 50,000 shares of common stock and 50,000 warrant to purchase shares of the Company’s common stock, to a non-affiliate investor as commitment fees pursuant to a Securities Purchase Agreement, valued at $24,504 and $8,350, respectively, using the relative fair value method which was recorded as debt discount to be amortized over the life of the note.

~~On March~~three months ended June 30, 2021, the Company issued ~~50,000~~an aggregate of 285,000 shares of common stock, ~~and 50,000 warrant~~ to ~~purchase shares~~non-affiliate investors for aggregate net cash proceeds of the Company’s common stock, to related party investor as commitment fees pursuant to a Securities Purchase Agreement, valued at $23,718 and $7,924, respectively, using the relative fair value method which was recorded as debt discount to be amortized over the life of the note.$284,405.

On March 30, 2021, the Company issued 25,000 shares of common stock and 25,000 warrant to purchase shares of the Company’s common stock, to a non-affiliate investor as commitment fees pursuant to a Securities Purchase Agreement, valued at $11,845 and $3,957, respectively, using the relative fair value method which was recorded as debt discount to be amortized over the life of the note.

On March 31, 2021, the Company issued 75,000 shares of common stock and 75,000 warrant to purchase shares of the Company’s common stock, to a non-affiliate investor as commitment fees pursuant to a Securities Purchase Agreement, valued at $36,499 and $12,352, respectively, using the relative fair value method which was recorded as debt discount to be amortized over the life of the note.

On March 31, 2021, the Company issued 55,000 warrant to purchase shares of the Company’s common stock, to a non-affiliate investor as additional commitment fees pursuant to a note amendment, valued at $6,173, using the relative fair value method which was recorded as debt discount to be amortized over the life of the note.

The shares of common stock referenced herein were issued in reliance upon the exemption from securities registration afforded by the provisions of Section 4(a)(2) of the Securities Act of 1933, as amended, (“Securities Act”).

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURE

Not applicable.

ITEM 5. OTHER INFORMATION

None

ITEM 6. EXHIBITS

Exhibit No		Description
2.1		Agreement and Plan of Merger dated May 20, 2020, by and among Gratitude Health, Inc., Fresh Market Merger Sub, Inc. and Home Bistro, Inc. (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed with the SEC on May 22, 2020).
3.1		Certificate of Amendment to Articles of Incorporation (incorporated by reference to Exhibit 3.A.1 to the Company’s Current Report on Form 8-K filed with the SEC on May 28, 2017).
3.2		Certificate of Amendment to Articles of Incorporation (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the SEC on March 28, 2018).
3.3		Certificate of Amendment to Articles of Incorporation (incorporated by reference Exhibit 3.2 to the Company’s Current Report on Form 8-K filed with the SEC on May 22, 2020).
3.4		Bylaws of the Company (incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K/A filed with the SEC on March 31, 2015).
4.1		Certificate of Designation of Series A Preferred Stock (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed with the SEC on March 28, 2018).
4.2		Certificate of Designation of Series B Preferred Stock (incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K filed with the SEC on March 28, 2018).
4.3		Certificate of Designation of Series C Preferred Stock (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the SEC on August 21, 2018).
4.4		Amendment to Certificate of Designation of Series C Preferred Stock (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the SEC on October 24, 2018).
10.1		Loan Authorization and Agreement, dated June 17, 2020, by and between Home Bistro, Inc. and the U.S. Small Business Administration (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed with the SEC on June 29, 2020).
10.2		Note, dated June 17, 2020, by Home Bistro, Inc. for the benefit of the U.S. Small Business Administration (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q filed with the SEC on June 29, 2020).
10.3		Security Agreement, dated June 17, 2020, by and between Home Bistro, Inc. and the U.S. Small Business Administration (incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q filed with the SEC on June 29, 2020).
10.4		Form of Exchange Agreement (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on May 22, 2020).
10.5		Form of Warrant (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed with the SEC on May 22, 2020).
10.6		Form of Lock-Up and Leak-Out Agreement (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed with the SEC on May 22, 2020).
10.7		Put Option Agreement, dated May 20, 2020, between the Company and the stockholder named therein (incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K filed with the SEC on May 22, 2020).

10.8		Securities Purchase Agreement dated December 18, 2020, by and between Home Bistro, Inc. and Labrys Fund, LP. (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on January 6, 2021).
10.9		Self-Amortization Promissory Note, dated December 18, 2020, issued to Labrys Fund, LP. (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed with the SEC on January 6, 2021).
10.10		Securities Purchase Agreement dated December 28, 2020, by and between Home Bistro, Inc. and FirstFire Global Opportunities Fund, LLC. (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed with the SEC on January 6, 2021).
10.11		Self-Amortization Promissory Note dated December 28, 2020, issued to FirstFire Global Opportunities Fund, LLC. (incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K filed with the SEC on January 6, 2021)
10.12		Registration Rights Agreement dated December 28, 2020, by and between Home Bistro, Inc. and FirstFire Global Opportunities Fund, LLC. (incorporated by reference to Exhibit 10.5 to the Company’s Current Report on Form 8-K filed with the SEC on January 6, 2021)
10.13		Securities Purchase Agreement dated January 27, 2021, by and between Home Bistro, Inc. and Vista Capital Investments, LLC. (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on February 8, 2021)
10.14		Convertible Note, dated January 27, 2021, issued to Vista Capital Investments, LLC. (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed with the SEC on February 8, 2021)
10.15		Warrant to Purchase Shares of Common Stock, dated January 27, 2021, issued to Vista Capital Investments, LLC. (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed with the SEC on February 8, 2021)
10.16		Securities Purchase Agreement dated January 12, 2021, by and between Home Bistro, Inc. and GS Capital Partners, LLC. (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on January 19, 2021)
10.17		Self-Amortization Promissory Note, dated January 12, 2020, issued to GS Capital Partners, LLC. (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed with the SEC on January 19, 2021)
31.110.18		Securities Purchase Agreement dated March 30, 2021, by and between Home Bistro, Inc. and Geneva Roth Remark Holdings, Inc
10.19*		Self-Amortization Promissory Note dated March 30, 2021, by and between Home Bistro, Inc. and Geneva Roth Remark Holdings, Inc
10.20*		Warrant to Purchase Shares of Common Stock dated March 30, 2021, by and between Home Bistro, Inc. and Geneva Roth Remark Holdings, Inc
10.21*		Securities Purchase Agreement dated May 10, 2021, by and between Home Bistro, Inc. and Fourth Man LLC
10.22*		Self-Amortization Promissory Note dated May 10, 2021, by and between Home Bistro, Inc. and Fourth Man LLC
10.23*		Warrant to Purchase Shares of Common Stock, dated May 10, 2021, by and between Home Bistro, Inc. and Fourth Man LLC
10.24*		Securities Purchase Agreement dated May 26, 2021, by and between Home Bistro, Inc. and Auctus Fund LLC.
10.25*		Self-Amortization Promissory Note dated May 26, 2021, by and between Home Bistro, Inc. and Auctus Fund LLC
10.26*		Warrant to Purchase Shares of Common Stock May 26, 2021, by and between Home Bistro, Inc. and Auctus Fund LLC
10.27*		Membership Interest Purchase Agreement dated July 12, 2021, between Home Bistro, Inc and Homemade Meals, LLC
10.28		Agreement and Plan of Merger between Model Meals LLC, Model Meals Acquisition Corp., and Home Bistro Inc. dated July 6, 2021 (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K/A filed with the SEC on August 12, 2021)
31.1*		Section 302 Certification by the Registrant’s Principal Executive Officer and Principal Financial Officer
32.1*		Section 906 Certification by the Registrant’s Principal Executive Officer and Principal Financial Officer
101.INS		XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
~~101.ins~~101.SCH		Inline XBRL ~~Instance~~Taxonomy Extension Schema Document
~~101.sch~~101.CAL		Inline XBRL Taxonomy ~~Schema~~Extension Calculation Linkbase Document
~~101.cal~~101.DEF		Inline XBRL Taxonomy ~~Calculation~~Extension Definition Linkbase Document
~~101.def~~101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document
~~101.lab~~101.PRE		Inline XBRL Taxonomy ~~Label~~Extension Presentation Linkbase Document
~~101.pre~~104		Cover Page Interactive Data File (formatted as Inline XBRL ~~Taxonomy Presentation Linkbase Document~~and contained in Exhibit 101)

Filed herein

~~SIGNATURES~~

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Exchange Act, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	HOME BISTRO, INC.

Date: ~~May 17,~~August 16, 2021	By:	/s/s/ Zalmi Duchman
		Zalmi Duchman
		Chief Executive Officer (Principal Executive Officer and Principal Financial Officer)

3944

0001489588 hbis:SecuritiesPurchaseAgreementNineMember 2021-04-30 iso4217:USD xbrli:shares

	March 31, 2021			December 31, 2020
ASSETS	(Unaudited)

CURRENT ASSETS:
Cash	$	523,592		$	447,354
Prepaid expenses and other current assets		78,671			28,588
Note receivable		5,000			5,000

Total Current Assets		607,263			480,942

OTHER ASSETS:
Property and equipment, net		116,219			2,728

Total Assets	$	723,482		$	483,670

LIABILITIES AND STOCKHOLDERS’ DEFICIT

CURRENT LIABILITIES:
Accounts payable	$	479,339		$	352,466
Accrued expenses and other liabilities		97,710			126,273
Liabilities to be settled with common stock		226,456			-
Convertible notes payable, net of debt discount		342,931			141,476
Convertible notes payable - related party, net of debt discount		31,048			-
Notes payable - current portion		27,203			20,068
Advances payable		65,887			78,497
Derivative liabilities		125,100			180,029
Unredeemed gift cards		36,467			48,311

Total Current Liabilities		1,432,141			947,120

LONG-TERM LIABILITIES:
Notes payable - long-term portion		144,409			151,544
Common stock repurchase obligation		1,154,366			1,300,000

Total Liabilities		2,730,916			2,398,664

Commitments and contingency (Note 10)

STOCKHOLDERS’ DEFICIT:
Preferred Stock: $0.001 par value; 20,000,000 shares authorized;
Convertible Series B Preferred stock: $0.001 Par Value; 500,000 Shares Authorized; nil shares issued and outstanding as of March 31, 2021 and December 31, 2020		-			-
Common stock: $0.001 par value; 1,000,000,000 shares authorized; 19,528,152 and 19,123,768 shares issued and outstanding as of March 31, 2021 and December 31, 2020, respectively		19,528			19,123
Additional paid-in capital		4,827,961			4,399,272
Accumulated deficit		(6,854,923	)		(6,333,389	)

Total Stockholders’ Deficit		(2,007,434	)		(1,914,994	)

Total Liabilities and Stockholders’ Deficit	$	723,482		$	483,670

	For the Three Months Ended
	March 31,
	2021			2020

Product sales, net	$	350,474		$	303,765

Cost of sales		282,386			191,591

Gross profit		68,088			112,174

Operating Expenses:
Compensation and related expenses		76,500			92,519
Professional and consulting expenses		198,188			36,734
Selling and marketing expenses		72,441			31,711
General and administrative expenses		91,210			30,361

Total Operating Expenses		438,339			191,325

Operating Loss from Operations		(370,251	)		(79,151	)

Other Income (Expense):
Interest expense, net		(327,918	)		(840	)
Change in fair value of derivative liabilities		150,006			-
Gain on extinguishment of debt		26,629			-

Total Other Expense, net		(151,283	)		(840	)

Loss from Operations Before Provision for Income Taxes		(521,534	)		(79,991	)

Provision for Income Taxes		-			-

Net Loss	$	(521,534	)	$	(79,991	)

BASIC AND DILUTED LOSS PER COMMON SHARE:
Basic and Diluted	$	(0.03	)	$	(0.01	)

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic		19,242,568			13,104,561
Diluted		19,242,568			13,104,561

	For the Months Ended
	March 31,
	2021			2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(521,534	)	$	(79,991	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		264			-
Stock-based compensation		-			45,824
Gain on extinguishment of debt		(26,629	)		-
Amortization of debt discount		295,563			-
Change in fair value of derivative liabilities		(150,006	)		-
Change in operating assets and liabilities:
Prepaid expenses and other current assets		(50,083	)		-
Accounts payable		126,873			180
Accrued expense and other liabilities		(28,652	)		42,870
Unredeemed gift cards		(11,844	)		(5,124	)

Net cash (used in) provided by operating activities		(366,048	)		3,759

CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property and equipment		(113,755	)		-

Net cash provided by investing activities		(113,755	)		-

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from sale of warrants		-			25,000
Proceeds from convertible note payable, net of debt discount		755,000			-
Proceeds from convertible note payable - related party, net of debt discount		100,000			-
Advance payable		23,000			-
Repayment of note payable		(286,349	)		-
Repayment of note payable - in default		-			(500	)
Repayments of advance payable		(35,610	)		(2,832	)

Net Cash Provided by Financing Activities		556,041			21,668

Net Change in Cash		76,238			25,427

Cash - beginning of period		447,354			7,137

Cash - end of period	$	523,592		$	32,564

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest	$	16,831		$	3,064
Income taxes	$	-		$	-

Non-cash investing and financing activities:
Reduction of the repurchase obligation pursuant to the Put Option Agreement	$	145,634		$	-
Common stock issued as commitment fee	$	206,793		$	-
Warrants issued as commitment fee	$	115,951
Fair value of true-up shares in connection with the commitment fee	$	226,456
Initial derivative liability recorded in connection with convertible notes payable	$	121,706		$	-

	March 31, 2021						December 31, 2020
Description	Level 1		Level 2		Level 3		Level 1		Level 2		Level 3
Derivative liabilities	$	-	$	-	$	125,100	$	-	$	-	$	180,029

	September 24, 2020
Assets:
Other assets:
Operating lease right-of-use assets, net	$	2,417
Total assets	$	2,417

Liabilities:
Current liabilities:
Accounts payable	$	112,212
Accrued expenses and other liabilities		5,009
Operating lease liabilities, current portion		2,417
Total current liabilities		119,638
Total liabilities	$	119,638

Net liabilities	$	117,221
Expense reimbursement by Buyer		14,000
Disposal of net liabilities to a related party	$	131,221

	March 31, 2020
	(Unaudited)
Principal amount	$	171,612
Less: current portion		(27,203	)
Notes payable - long term portion	$	144,409

	Three Months Ended March 31,
	2021		2020
Compensation and related expenses	$	76,500	$	92,519
Professional and consulting expenses		198,188		36,734
Selling and marketing expenses		72,441		31,711
General and administrative expenses		91,210		30,361
Total	$	438,339	$	191,325

	March 31, 2021			December 31, 2020			Change			Percentage Change
Working capital deficit:
Total current assets	$	607,263		$	480,942		$	(126,321	)		26	%
Total current liabilities		(1,432,141	)		(947,120	)		485,021			51	%
Working capital deficit:	$	(824,878	)	$	(466,178	)	$	358,700			77	%