UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

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

For the quarterly period ended ~~June~~September 30, 2024

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

For the transition period from _____ to _____

Commission file number: 001-36469

HEALTHIER CHOICES MANAGEMENT CORP.

(Exact name of Registrant as specified in its charter)

Delaware		84-1070932
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

3800 North 28th Way
Hollywood, Florida		33020
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: 305-600-5004

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 and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, 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

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

Title of each class		Trading Symbol		Name of each exchange on which registered
Common Stock, par value $0.0001 per share		HCMC		OTC Pink Marketplace

As of ~~August~~November 513, 2024, there were ~~479~~481,266,632,384 shares of the registrant’s common stock, par value $0.0001 per share, outstanding.

TABLE OF CONTENTS

PAGE PART I FINANCIAL INFORMATION 3 ITEM 1. Financial Statements 3 Condensed Consolidated Balance Sheets as of ~~June~~September 30, 2024 ~~(Unaudited)~~ and December 31, 2023 (Unaudited) 3 Condensed Consolidated Statements of Operations for the Three and ~~Six~~Nine Months Ended ~~June~~September 30, 2024 and 2023 (Unaudited) 4 Condensed Consolidated Statements of Changes in Convertible Preferred Stock and Stockholders’ Equity for the Three and ~~Six~~Nine Months Ended ~~June~~September 30, 2024 and 2023 (Unaudited) 5 Condensed Consolidated Statements of Cash Flows for the ~~Six~~Nine Months Ended ~~June~~September 30, 2024 and 2023 (Unaudited) 67 Notes to Condensed Consolidated Financial Statements (Unaudited) 78 ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 18 ITEM 3. Quantitative and Qualitative Disclosures about Market Risk 22 ITEM 4. Controls and Procedures 22 PART II OTHER INFORMATION 24 ITEM 1. Legal Proceedings 24 ITEM 1A. Risk Factors 24 ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds 24 ITEM 3. Defaults Upon Senior Securities 24 ITEM 4. Mine Safety Disclosures 24 ITEM 5. Other Information 24 ITEM 6. Exhibits 24 Signatures 26 Exhibit 31.1 Exhibit 31.2 Exhibit 32.1 Exhibit 32.2

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

HEALTHIER CHOICES MANAGEMENT CORP.

CONDENSED CONSOLIDATED BALANCE SHEETS

	June 30, 2024			December 31, 2023
		(Unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalent	$	3,353,326		$	5,081,086
Accounts receivable, net		157,335			128,171
Inventories		3,997,246			4,228,889
Prepaid expenses and vendor deposits		2,338,846			1,668,324
Assets held for sale		543,854			-
Other current assets		97,142			65,556
Restricted cash		553,232			553,232
TOTAL CURRENT ASSETS		11,040,981			11,725,258
Property, plant, and equipment, net of accumulated depreciation		2,078,451			2,735,252
Intangible assets, net of accumulated amortization		3,896,098			4,376,682
Right of use asset – operating lease, net		10,017,442			11,511,002
Other assets		579,419			621,385
TOTAL ASSETS	$	27,612,391		$	30,969,579
LIABILITIES, CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses	$	7,853,149		$	8,024,664
Contract liabilities		123,375			207,513
Line of credit		453,232			453,232
Current portion of loan payment		2,495,340			702,701
Operating lease liability, current		2,705,382			2,842,829
TOTAL CURRENT LIABILITIES		13,630,478			12,230,939
Loan payable, net of current portion		2,036,367			2,403,807
Operating lease liability, net of current		7,182,322			8,465,617
TOTAL LIABILITIES		22,849,167			23,100,363
COMMITMENTS AND CONTINGENCIES (SEE NOTE 13)		-			-
CONVERTIBLE PREFERRED STOCK
Series E redeemable convertible preferred stock, $1,000 par value per share, 14,722 shares authorized, 1,111 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively; aggregate liquidation preference of $1.1 million as of June 30, 2024 and December 31, 2023, respectively.		1,111,100			1,111,100
STOCKHOLDERS’ EQUITY
Common Stock, $0.0001 par value per share, 750,000,000,000 shares authorized; 479,266,632,384 and 478,266,632,384 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively.		47,926,663			47,826,663
Additional paid-in capital		23,190,107			21,028,274
Accumulated deficit		(67,464,646	)		(62,096,821	)
TOTAL STOCKHOLDERS’ EQUITY		3,652,124			6,758,116
TOTAL LIABILITIES, CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY	$	27,612,391		$	30,969,579

(Unaudited)

	September 30, 2024			December 31, 2023

ASSETS
CURRENT ASSETS
Cash and cash equivalent	$	2,533,980		$	3,658,506
Inventories		66,585			66,671
Prepaid expenses and vendor deposits		196,846			1,493,354
Other current assets		40,530			8,714
Restricted cash		553,232			553,232
Current assets of discontinued operations		-			5,944,781
TOTAL CURRENT ASSETS		3,391,173			11,725,258

Property, plant, and equipment, net of accumulated depreciation		86,964			58,613
Intangible assets, net of accumulated amortization		167,932			198,163
Right of use asset – operating lease, net		14,479			98,440
Other assets		124,100			154,329
Other assets of discontinued operations		-			18,734,776
TOTAL ASSETS	$	3,784,648		$	30,969,579

LIABILITIES, CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses	$	2,619,248		$	3,104,253
Line of credit		453,232			453,232
Operating lease liability, current		12,363			94,005
Due to related party		106,841			-
Current liabilities of discontinued operations		-			8,579,449
TOTAL CURRENT LIABILITIES		3,191,684			12,230,939

Due to related party		-			3,753,003
Operating lease liability, net of current		2,117			4,435
Other Long-term Liabilities of Discontinued Operations		-			7,111,986
TOTAL LIABILITIES		3,193,801			23,100,363

COMMITMENTS AND CONTINGENCIES (SEE NOTE 11)		-			-

CONVERTIBLE PREFERRED STOCK
Series E redeemable convertible preferred stock, $1,000 par value per share, 14,722 shares authorized, 1,111 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively; aggregate liquidation preference of $1.1 million as of September 30, 2024 and December 31, 2023, respectively.		1,111,100			1,111,100
STOCKHOLDERS’ EQUITY
Common Stock, $0.0001 par value per share, 750,000,000,000 shares authorized; 481,266,632,384 and 478,266,632,384 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively.		48,126,663			47,826,663
Additional paid-in capital		24,212,690			21,028,274
Accumulated deficit		(72,859,606	)		(62,096,821	)
TOTAL STOCKHOLDERS’ EQUITY		(520,253	)		6,758,116

TOTAL LIABILITIES, CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY	$	3,784,648		$	30,969,579

See notes to unaudited condensed consolidated financial statements

HEALTHIER CHOICES MANAGEMENT CORP.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2024			2023			2024			2023
SALES
	Three Months Ended						Nine Months Ended
Vapor sales, net	$	174		$	-		$	293		$	38
	September 30,						September 30,
Grocery sales, net		15,594,575			13,574,896			31,488,933			27,134,602
	2024			2023			2024			2023
TOTAL SALES, NET		15,594,749			13,574,896			31,489,226			27,134,640
SALES, NET	$	52		$	-		$	345		$	39
Cost of sales vapor		42			-			174			653
COST OF SALES		15			-			190			653
Cost of sales grocery		9,698,119			8,493,213			19,538,100			17,137,913
GROSS PROFIT		37			-			155			(614	)
Cost of sales		9,698,119			8,493,213			19,538,100			17,137,913
OPERATING EXPENSES		2,143,442			2,136,026			6,312,846			5,448,812
GROSS PROFIT		5,896,588			5,081,683			11,950,952			9,996,074
LOSS FROM OPERATIONS		(2,143,405	)		(2,136,026	)		(6,312,691	)		(5,449,426	)
OPERATING EXPENSES		8,344,526			8,261,343			17,203,543			15,158,780
LOSS FROM OPERATIONS		(2,447,938	)		(3,179,660	)		(5,252,591	)		(5,162,706	)
OTHER INCOME (EXPENSE)
Loss on investment		(~~136~~343	)		~~(3,943~~343	)		(~~993~~1,336	)		(8,~~400~~057	)
Change in contingent consideration		-			425,000			-			402,900
Other income, net		260,000			(10,932	)		260,000			(10,932	)
Other income, net		3,828			4,600			7,183			9,250
Interest income (expense), net		15,105			75,299			114,732			358,322
Interest (expense) income, net		(62,432	)		101,248			(121,424	)		198,900
TOTAL OTHER INCOME (EXPENSE), NET		274,762			64,710			373,396			339,333
Total other income (expense), net		(58,740	)		526,905			(115,234	)		602,650
NET LOSS FROM CONTINUING OPERATIONS	$	(1,868,643	)	$	(2,071,316	)	$	(5,939,295	)	$	(5,110,093	)
NET LOSS	$	(2,506,678	)	$	(2,652,755	)	$	(5,367,825	)	$	(4,560,056	)
NET LOSS FROM DISCONTINUED OPERATIONS		(2,478,388	)		(919,673	)		(3,775,559	)		(2,440,952	)
Induced conversions of preferred stock		-			(91,500	)		-			(152,500	)
NET LOSS	$	(4,347,031	)	$	(2,990,989	)	$	(9,714,854	)	$	(7,551,045	)
Net loss attributable to common stockholders		(2,506,678	)		(2,744,255	)		(5,367,825	)		(4,712,556	)
INDUCED CONVERSIONS OF PREFERRED STOCK		-			-			-			(152,500	)
NET LOSS PER SHARE-BASIC AND DILUTED	$	0.00		$	0.00		$	0.00		$	0.00
NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS FROM CONTINUING OPERATIONS		(1,868,643	)		(2,071,316	)		(5,939,295	)		(5,262,593	)
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING-BASIC AND DILUTED		479,134,764,252			353,854,819,196			478,700,698,318			347,796,604,758
NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS FROM DISCONTINUED OPERATIONS		(2,478,388	)		(919,673	)		(3,775,559	)		(2,440,952	)
NET LOSS PER SHARE-BASIC AND DILUTED
Continuing Operations		-			-			-			-
Discontinued Operations		-			-			-			-
TOTAL NET LOSS PER SHARE-BASIC AND DILUTED	$	-		$	-		$	-		$	-
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING-BASIC AND DILUTED		480,092,719,341			358,187,284,558			479,168,092,238			351,298,225,790

See notes to unaudited condensed consolidated financial statements

HEALTHIER CHOICES MANAGEMENT CORP.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY

FOR THE THREE MONTHS ENDED ~~JUNE~~SEPTEMBER 30, 2024 AND 2023

(Unaudited)

		Shares		Amount			Shares		Amount		Capital			Deficit			Total
		Series E Convertible Preferred Stock					Common Stock				Additional Paid-In			Accumulated
		Shares		Amount			Shares		Amount		Capital			Deficit			Total
Balance – April 1, 2024			1,111	$	1,111,100	-		478,266,632,384	$	47,826,663	$	22,155,025		$	(64,957,968	)	$	5,023,720
Balance – July 1, 2024	-		1,111	$	1,111,100	-		479,266,632,384	$	47,926,663	$	23,190,107		$	(67,464,646	)	$	3,652,124
Issuance of award stock			-		-	-		12,000,000,000		~~100~~200,000		(~~100~~200,000	)		-			-
Stock-based compensation expense			-		-	-		-		-		1,135,082			-			1,135,082
HCWC Spin-Off			-		-	-		-		-		-			(1,047,929	)		(1,047,929	)
Net loss			-		-	-		-		-		-			(2,506,678	)		(2,506,678	)
Stock-based compensation expense			-		-	-		-		-		1,222,583			-			1,222,583
Balance – June 30, 2024			1,111	$	1,111,100	-		479,266,632,384	$	47,926,663	$	23,190,107		$	(67,464,646	)	$	3,652,124
Net loss	-		-		-	-		-		-		-			(4,347,031	)		(4,347,031	)
Balance – September 30, 2024	-		1,111	$	1,111,100	-		481,266,632,384	$	48,126,663	$	24,212,690		$	(72,859,606	)	$	(520,253	)

	Series E Convertible Preferred Stock						Convertible Preferred Stock						Common Stock				Additional Paid-In			Accumulated
	Shares			Amount			Shares			Amount			Shares		Amount		Capital			Deficit			Total
Balance – April 1, 2023		13,496		$	13,496,525			800		$	800,000			346,441,632,384	$	34,644,163	$	29,034,802		$	(45,521,242	)	$	18,957,723
	Series E Redeemable Convertible Preferred Stock						Series D Convertible Preferred Stock						Common Stock				Additional Paid-In			Accumulated
Series E convertible preferred stock redeemed		(10,637	)		(10,637,100	)		-			-			-		-		22,222			-			22,222
	Shares			Amount			Shares			Amount			Shares		Amount		Capital			Deficit			Total
Conversion of series E convertible preferred stock		(915	)		(915,000	)		-			-			9,150,000,000		915,000		-			-			915,000
Balance – July 1, 2023		1,944		$	1,944,425			800		$	800,000			463,266,632,384	$	46,326,663	$	19,324,774		$	(48,173,997	)	$	18,277,440
Issuance of award stock		-			-			-			-			107,675,000,000		10,767,500		(10,767,500	)		-			-
Series D Convertible Preferred Stock exercised		-			-			(800	)		(800,000	)		8,000,000,000		800,000		-			-			-
Induced conversions of preferred stock		-			-			-			-			-		-		(91,500	)		-			(91,500	)
Issuance of award stock		-			-			-			-			4,000,000,000		400,000		(400,000	)		-			-
Stock-based compensation expense		-			-			-			-			-		-		1,126,750			-			1,126,750
Net loss		-			-			-			-			-		-		-			(2,~~652~~990,~~755~~989	)		(2,~~652~~990,~~755~~989	)
Balance – June 30, 2023		1,944		$	1,944,425			800		$	800,000			463,266,632,384	$	46,326,663	$	19,324,774		$	(48,173,997	)	$	18,277,440
Balance – September 30, 2023		1,944		$	1,944,425			-			-			475,266,632,384	$	47,526,663	$	20,051,524		$	(51,164,986	)	$	16,413,201

HEALTHIER CHOICES MANAGEMENT CORP.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY

FOR THE ~~SIX~~NINE MONTHS ENDED ~~JUNE~~SEPTEMBER 30, 2024 AND 2023

(UNAUDITED)

	Shares		Amount			Shares		Amount		Capital			Deficit			Total
	Series E Convertible Preferred Stock					Common Stock				Additional Paid-In			Accumulated
	Shares		Amount			Shares		Amount		Capital			Deficit			Total
Balance – January 1, 2024		1,111	$	1,111,100	-		478,266,632,384	$	47,826,663	$	21,028,274		$	(62,096,821	)	$	6,758,116
Issuance of award stock		-		-	-		1,000,000,000		100,000		(100,000	)		-			-
Issuance of awarded stock		-		-			3,000,000,000		300,000		(300,000	)		-			-
Stock-based compensation expense		-		-	-		-		-		2,261,833			-			2,261,833
HCWC Spin-Off		-		-			-		-		-			(1,047,931	)		(1,047,931	)
Net loss		-		-	-		-		-		-			(5,367,825	)		(5,367,825	)
Stock-based compensation		-		-			-		-		3,484,416			-			3,484,416
Balance – June 30, 2024		1,111	$	1,111,100	-		479,266,632,384	$	47,926,663	$	23,190,107		$	(67,464,646	)	$	3,652,124
Net loss		-		-	-		-		-		-			(9,714,854	)		(9,714,854	)
Balance – September 30, 2024		1,111	$	1,111,100	-		481,266,632,384	$	48,126,663	$	24,212,690		$	(72,859,606	)	$	(520,253	)

	Series E Convertible Preferred Stock						Convertible Preferred Stock						Common Stock				Additional Paid-In			Accumulated
	Shares			Amount			Shares			Amount			Shares		Amount		Capital			Deficit			Total
	Series E Redeemable Convertible Preferred Stock						Series D Convertible Preferred Stock						Common Stock				Additional Paid-In			Accumulated
	Shares			Amount			Shares			Amount			Shares		Amount		Capital			Deficit			Total
Balance – January 1, 2023		14,722		$	14,722,075			800		$	800,000			339,741,632,384	$	33,974,163	$	29,045,802		$	(43,613,941	)	$	20,206,024
Balance		14,722		$	14,722,075			800		$	800,000			339,741,632,384	$	33,974,163	$	29,045,802		$	(43,613,941	)	$	20,206,024
Series E convertible preferred stock redeemed		(11,193	)		(11,192,650	)		-			-			-		-		22,222			-			22,222
Conversion of series E convertible preferred stock		(1,585	)		(1,585,000	)		-			-			15,850,000,000		1,585,000		-			-			1,585,000
Issuance of awarded stock		-			-			-			-			107,675,000,000		10,767,500		(10,767,500	)		-			-
Series D Convertible Preferred Stock exercised		-			-			(800	)		(800,000	)		8,000,000,000		800,000		-			-			-
Issuance of awarded stock		-			-			-			-			111,675,000,000		11,167,500		(11,167,500	)		-			-
Induced conversions of preferred stock		-			-			-			-			-		-		(152,500	)		-			(152,500	)
Stock-based compensation		-			-			-			-			-		-		12,~~176~~303,~~750~~500			-			12,~~176~~303,~~750~~500
Net loss		-			-			-			-			-		-		-			(47,~~560~~551,~~056~~045	)		(47,~~560~~551,~~056~~045	)
Balance – June 30, 2023		1,944		$	1,944,425			800		$	800,000			463,266,632,384	$	46,326,663	$	19,324,774		$	(48,173,997	)	$	18,277,440
Balance – September 30, 2023		1,944		$	1,944,425			-		$	-			475,266,632,384	$	47,526,663	$	20,051,524		$	(51,164,986	)	$	16,413,201
Balance		1,944		$	1,944,425			~~800~~-		$	~~800,000~~-			~~463~~475,266,632,384	$	4647,~~326~~526,663	$	1920,~~324~~051,~~774~~524		$	(4851,~~173~~164,~~997~~986	)	$	1816,~~277~~413,~~440~~201

See notes to unaudited condensed consolidated financial statements

HEALTHIER CHOICES MANAGEMENT CORP.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Six Months Ended June 30,
	2024 (a)			2023 (a)
	2024			2023
	Nine Months Ended September 30,
OPERATING ACTIVITIES
	2024 (a)			2023 (a)
Net loss	$	(5,367,825	)	$	(4,560,056	)
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(9,714,854	)	$	(7,551,045	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		~~757~~1,~~695~~119,023			~~747~~1,~~485~~115,396
Amortization of debt discount		71,293			-
Loss on warrant liability extinguishment		1,888,889			-
Loss on investment		993			8,400
Gain on sale of building		(205,146	)		-
Amortization of right-of-use asset		1,493,560			1,063,591
Non-cash interest expense		72,250			-
Write-down of obsolete and slow-moving inventory		1,484,648			951,373
Loss on notes receivable settlement		-			10,931
Stock-based compensation expense		2,261,833			1,176,750
Loss on investment		1,336			8,057
Change in contingent consideration		-			(402,900	)
Amortization of right-of-use asset		2,465,092			1,689,198
Write-down of obsolete and slow-moving inventory		2,032,995			1,581,043
Stock-based compensation expense		3,484,416			2,303,500
Change in contingent consideration		-			(774,900	)
Changes in operating assets and liabilities:
Accounts receivable		(29253,~~164~~460	)		(3675,~~834~~092	)
Inventories		(12,~~253~~000,~~005~~583	)		(~~899~~1,~~251~~317,793	)
Prepaid expenses and vendor deposits		~~449~~1,~~261~~247,815			(~~670~~1,~~178~~626,358	)
Other current assets		(3112,~~586~~632	)		~~219~~825,~~362~~261
Other assets		40,973			(5,230	)
Due from related party		(97,542	)		-
Accounts payable and accrued expenses		(845,210	)		(197,306	)
Other assets		(53,253	)		(34,660	)
Contract liabilities		(84,138	)		(51,137	)
Accounts payable and accrued expenses		513,824			555,280
Lease liability		(1,420,742	)		(1,002,484	)
Contract liabilities		(156,904	)		(53,745	)
NET CASH USED IN OPERATING ACTIVITIES		(2,471,414	)		(3,658,415	)
Lease liability		(2,364,419	)		(1,594,404	)
INVESTING ACTIVITIES
NET CASH USED IN OPERATING ACTIVITIES		(2,033,153	)		(4,939,331	)
Collection of note receivable		-			32,928
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment		(164,164	)		(148,027	)
Payment for acquisition		(5,475,000	)		-
NET CASH USED IN INVESTING ACTIVITIES		(164,164	)		(115,099	)
Proceeds from sale of Saugerties building		749,000			-
FINANCING ACTIVITIES
Collection of note receivable		-			178,294
Payments for deferred offering costs		(446,088	)		(218,865	)
Purchases of property and equipment		(192,865	)		(176,129	)
NET CASH USED IN INVESTING ACTIVITIES		(4,918,865	)		2,165
CASH FLOWS FROM FINANCING ACTIVITIES
Payments for deferred offering costs		-			(264,375	)
Proceeds from acquisition loan		7,500,000			-
Proceeds from security purchase agreement		1,700,000			-
Principal payments on loan payable		(346,094	)		(264,670	)
Payment of induced conversions of preferred stock		-			(152,500	)
Payment for Series E preferred stock redemption		-			(11,170,428	)
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES		907,818			(11,806,463	)
Principal payments on loan payable		(349,082	)		(399,590	)
NET DECREASE IN CASH, CASH EQUIVALENT AND RESTRICTED CASH		(1,727,760	)		(15,579,977	)
Due to related party		204,383			-
Transfers to HCWC related to Spin-Off		(4,650,389	)		-
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES		4,404,912			(11,986,893	)
NET DECREASE IN CASH, CASH EQUIVALENT AND RESTRICTED CASH		(2,547,106	)		(16,924,059	)
CASH, CASH EQUIVALENT AND RESTRICTED CASH— BEGINNING OF PERIOD		5,634,318			24,690,124
CASH, CASH EQUIVALENT AND RESTRICTED CASH — END OF PERIOD	$	3,~~906~~087,~~558~~212		$	97,~~110~~766,~~147~~065
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for interest	$	~~238~~492,~~595~~220		$	87127,~~008~~533
Cash paid for income tax	$	-		$	-
NON-CASH INVESTING AND FINANCING ACTIVITIES
Non-cash deferred offering cost	$	~~673,695~~-		$	~~384~~466,~~614~~463
Issuance of common stock in connection with series E preferred stock conversion	$	-		$	1,585,000
Right-of-use assets obtained in exchange for operating lease liabilities	$	-4,943,269		$	1,~~093~~147,~~290~~616
1% stated value reduction on preferred stock redemption	$	-		$	22,222
Issuance of common stock	$	100,000		$	-

(a)

The cash flows related to discontinued operations have not been segregated. Accordingly, the Consolidated Statements of Cash Flows include the results of continuing and discontinued operations. See Note 2 for cash flows related to Discontinued Operations.

See notes to unaudited condensed consolidated financial statements

HEALTHIER CHOICES MANAGEMENT CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~Note~~NOTE 1. ORGANIZATION

Organization

Healthier Choices Management Corp. (the “Company” or “HCMC”) is a holding company focused on ~~providing~~monetizing ~~consumers~~its ~~with~~intellectual property ~~healthier~~through ~~daily~~royalty ~~choices~~and licensing agreements, facilitated by its wholly owned subsidiary, HCMC Intellectual Property Holdings, LLC. ~~with~~HCMC’s ~~respect~~IP portfolio includes patents related to ~~nutrition~~innovative products, such as the Q-Cup and ~~other~~Imitine, ~~lifestyle~~which ~~alternatives~~the company actively markets. HCMC is engaged in litigation against prominent tobacco industry players, Philip Morris and R.J. Reynolds, asserting claims of patent infringement.

~~Through~~The ~~its~~Company ~~wholly~~administers ~~owned~~and ~~subsidiary~~intends ~~HCMC~~to ~~Intellectual~~augment ~~Property~~its ~~Holdings,~~intellectual ~~LLC,~~property ~~the~~portfolio ~~Company~~via ~~manages~~its ~~and~~wholly ~~intends~~owned tosubsidiary, ~~expand~~HCMC onIntellectual ~~its intellectual property~~Property ~~portfolio~~Holdings, LLC.

~~Through~~The Company continues to promote its ~~wholly~~patented ~~owned~~Q-Cup™ ~~subsidiary~~technology ~~Healthy~~directly ~~Choice~~to ~~Wellness~~consumers ~~Corp~~in the vaping market. ~~(“HCWC”)~~This cutting-edge design includes a small quartz cup that users can fill with cannabis or CBD concentrate. Once placed in a Q-Cup™ Tank or Globe, the ~~Company~~cup is ~~operates:~~heated externally without direct contact with the concentrate. This innovative approach provides greater efficiency and a convenient solution for consumers who vape concentrates for both medicinal and recreational use .

● Ada’s Natural Market, a natural and organic grocery store offering fresh produce, bulk foods, vitamins and supplements, packaged groceries, meat and seafood, deli, baked goods, dairy products, frozen foods, health & beauty products and natural household items. ● Paradise Health & Nutrition’s three stores that likewise offer fresh produce, bulk foods, vitamins and supplements, packaged groceries, meat and seafood, deli, baked goods, dairy products, frozen foods, health & beauty products and natural household items. ● Mother Earth’s Storehouse, a two-store organic and health food and vitamin chain in New York’s Hudson Valley, which has been in existence for over 40 years. ● Greens Natural Foods’ eight stores in New York and New Jersey, offering a selection of 100% organic produce and all-natural, non-GMO groceries & bulk foods; a wide selection of local products; an organic juice and smoothie bar; a fresh foods department, which offers fresh and healthy “grab & go” foods; a full selection of vitamins & supplements; as well as health and beauty products. ● Ellwood Thompson’s, an organic and natural health food and vitamin store located in Richmond, Virginia.

Through its wholly owned subsidiary, Healthy Choice Wellness, LLC, the Company operates a Healthy Choice Wellness Center in Kingston, NY and has a licensing agreement for a Healthy Choice Wellness Center located at the Casbah Spa and Salon in Fort Lauderdale, FL.

These centers offer multiple vitamin drip mixes and intramuscular shots for clients to choose from that are designed to help boost immunity, fight fatigue and stress, reduce inflammation, enhance weight loss, and efficiently deliver antioxidants and anti-aging mixes. Additionally, there are IV vitamin mixes and shots for health, beauty, and re-hydration.

Through its wholly owned subsidiary, Healthy Choice Wellness II, LLC, the Company entered into a joint venture with an established healthcare provider, and the joint venture is in the process of creating a structure whereby it will engage in telemedicine evaluations of patients for semaglutide therapy. The operation will encompass, generally: medical evaluations of patients; treatment of patients with semaglutide; coordination with providers and patients. There was no activity for the three and six months ended June 30, 2024.

Through its wholly owned subsidiary, Healthy U Wholesale, the Company sells vitamins and supplements, as well as health, beauty, and personal care products on its website www.TheVitaminStore.com.

Additionally, the Company markets its patented the Q-Cup™ technology under the vape segment; this patented technology is based on a small, quartz cup called the Q-Cup™, which a customer partially fills with either cannabis or CBD concentrate (approximately 50mg) purchased from a third party. The Q-Cup™ is then inserted into the Q-Cup™ Tank or Globe, that heats the cup from the outside without coming in direct contact with the solid concentrate. This Q-Cup™ technology provides significantly more efficiency and an “on the go” solution for consumers who prefer to vape concentrates either medicinally or recreationally.

Spin-Off

~~The Company~~HCMC ~~intends~~announced toon ~~spin~~August ~~off~~22, 2022 that its ~~grocery~~Board ~~segment~~of ~~and~~Directors ~~wellness~~approved the separation of the Grocery business, including wellness business, into aan ~~new~~independent, publicly traded company (~~hereinafter~~the ~~referred~~“Spin-Off” toor as “~~NewCo~~Separation”). ~~NewCo~~Prior ~~will~~to ~~continue~~the Spin-Off, the ~~path~~Grocery segment ofwas ~~growth~~operated inunder the ~~health~~holding ~~verticals~~company ~~started~~Healthy byChoice ~~HCMC~~Wellness ~~and~~Corp. ~~explore~~(“HCWC”). ~~other~~HCWC ~~growth~~was ~~opportunities that~~a ~~comport~~subsidiary ~~with~~of HCMC, and operated the Ada’s ~~healthier~~Natural ~~lifestyle~~Market, ~~mission.~~Paradise ~~HCMC~~Health ~~will~~& ~~retain~~Nutrition, ~~its~~Mother ~~entire~~Earth’s ~~patent suite~~Storehouse, ~~the~~Greens ~~Q-Cup®~~Natural ~~brand~~Foods, ~~and continue~~Ellwood toThompson’s, ~~develop~~and ~~its~~GreenAcres ~~patent~~Market ~~suite~~retail ~~through~~brands, ~~R&D~~ as well as ~~continuing~~licensed ~~its~~wellness ~~path~~centers ~~of enforcing its patent rights against infringers~~ and ~~attempting to~~Healthy ~~monetize~~U ~~said patents through licensing deals~~Wholesale.

AtOn ~~the~~September ~~time~~13, of2024 (the “Spin-Off Date”), ~~HCMC~~after ~~would distribute all~~ the ~~outstanding~~New ~~shares~~York ~~of Common~~ Stock ~~held~~Exchange byAmerican it(“NYSEAM”) onmarket ~~a pro rata basis to holders~~closing, ~~of HCMC’s common stock. Each share of HCMC’s common stock outstanding as of~~ the ~~record date for the~~ Spin-Off, ~~will~~of ~~entitle~~ the ~~holder~~HCWC ~~thereof~~business towas ~~receive~~completed. ~~shares~~On ofSeptember ~~Common~~14, ~~Stock~~2024, inHCWC ~~NewCo.~~became ~~The~~an ~~distribution~~independent, ~~will~~publicly betraded ~~made~~company, inand ~~book-entry~~on ~~form by a distribution agent.~~September ~~Fractional~~16, ~~shares~~2024, ofthe ~~Common~~stock ~~Stock~~commenced ~~will~~trading ~~not~~on bethe ~~distributed~~NYSEAM inunder the ~~Spin-Off~~stock ~~and~~symbol ~~any fractional amounts will be rounded down~~“HCWC. ~~Please see additional disclosure in Note 12 Stockholder Equity.~~”

~~Note~~HCWC 2.distributed ~~GOING~~all ~~CONCERN~~the ~~AND~~outstanding ~~MANAGEMENT~~shares of Common Stock held by it on a pro rata basis to holders of HCMC’Ss ~~PLANS~~common stock (the “Distribution”). For each 208,632 shares of HCMC common stock held as of 5:00 p.m., New York City time, on September 9, 2024, the record date for the Spin-Off (the “Record Date”), a HCMC stockholder was entitled to receive one share of Class A common stock and three shares of Class B common stock. The Distribution was made in book-entry form by a distribution agent as soon as practicable after the date of the Distribution.

~~The~~As ~~accompanying~~a ~~unaudited~~result ~~condensed~~of ~~consolidated~~the ~~financial~~Spin-Off, ~~statements~~the ~~have~~operating ~~been~~results ~~prepared~~for inthe ~~conformity~~HCWC ~~with~~business ~~accounting~~through ~~principles~~the ~~generally accepted~~date inof the ~~United~~Spin-Off ~~States~~are ofreported ~~America~~in ~~(“GAAP”),~~Loss ~~which~~from ~~contemplate~~Discontinued Operations ~~continuation~~in the Condensed Consolidated Statements of ~~the~~Operations ~~Company~~for asall aperiods ~~going~~presented. ~~concern~~In ~~and~~addition, ~~realization of~~the related assets and ~~satisfaction of~~ liabilities are inreported ~~the~~as ~~normal~~Assets ~~course~~and Liabilities of ~~business~~Discontinued ~~and~~Operations doon ~~not~~the ~~include~~Condensed ~~any~~Consolidated ~~adjustments~~Balance ~~that~~Sheets ~~might~~for ~~result~~year ~~from~~ended December ~~the~~31, ~~outcome~~2023. ofUnless ~~any~~otherwise ~~uncertainties~~noted, ~~related~~all toamounts ~~our~~and ~~going~~disclosures ~~concern~~included ~~assessment.~~in ~~The~~the ~~carrying~~Notes ~~amounts~~to ofCondensed ~~assets~~Consolidated ~~and~~Financial ~~liabilities~~Statements ~~presented in~~reflect only the ~~financial~~Company’s ~~statements~~continuing dooperations. ~~not~~For ~~necessarily~~additional ~~purport~~information, tosee ~~represent~~Note ~~realizable~~2, or“Discontinued ~~settlement values~~Operations.”

~~The~~Segment Company currently and historically has reported net losses and cash outflows from operations. As of June 30, 2024, the Company had cash and cash equivalent of approximately $3.4 million and negative working capital of $2.6 million. These conditions give rise to substantial doubt about the Company’s ability to continue as a going concern. The Company anticipates its current cash and cash generated from operations will not be sufficient to meet projected operating expenses for the foreseeable future through at least twelve months from the issuance of the condensed consolidated financial statements.Reporting

~~Management~~The ~~has made plans to reduce certain costs and raise needed capital, however there can be no assurance the~~ Company ~~can~~operates ~~successfully~~as ~~implement these plans. The Company contracted~~ a ~~third-party~~single ~~consultant,~~segment ~~whose~~that ~~expertise~~includes isall ~~streamlining operations, to identify areas~~ of ~~improvement and~~its ~~cost savings. The Company will enact the consultant’s recommendation in anticipation of realizing savings and achieving profitability. The Company plans on evaluating non-performing stores and~~ continuing tooperations, ~~expand via acquisition~~ which ~~will help achieve profitability. Also, the Company~~ is ~~formulating~~designed ~~plans~~ to ~~raise~~enable ~~capital~~customers ~~from outside investors, as it has done in the past,~~ to ~~fund operating losses~~purchase ~~and~~its ~~also~~products ~~provide~~through ~~capital~~stores ~~for~~or ~~further~~digital ~~business acquisitions~~channels. OnThe ~~May 16, 2024, the~~ Company ~~secured~~previously ahad ~~financing~~two ~~commitment~~reportable ~~with~~segments: aGrocery ~~private lender. This commitment allows the Company to draw up to $5 million from its revolving credit facility to be used for expansion~~ and ~~working capital purposes~~Vape. The ~~loan~~Grocery ~~will be repayable in full on~~segment ~~August~~was ~~31,~~spun-off ~~2025 and the interest rate~~ on ~~the~~September ~~loan is 12%. On July 18~~13, 2024, ~~HCWC entered into a $7.5 million loan~~ and ~~security~~is ~~agreement with~~now areported ~~private~~as ~~lender~~discontinued tooperations ~~support its expansion plans and funding of any working capital needs, of which $4.2 million was used~~ for the July 18, 2024 purchase of GreenAcres Market. The face amount of the loan is $7,500,000 with 12% annual interest and has a maturity date of July 17, 2027. On July 24, 2024, the Company finalized the closing of Saugerties building sale with all ~~parties~~periods ~~involved~~through and received net proceeds of $695,000. Management has made plans to reduce certain costs and raise needed capital, however, there can be no assurance the Company can successfully implement these plans. The result of the capital raise is to improve the Company’s operating and financial performance. The success of these plans is dependent upon various factors, foremost being the ability to reduce outside consulting expenses and the ability to secure additional capital from outside investors. There can be no assurance that ~~such plans will be successful~~date.

~~Note~~NOTE 32. ~~BASIS~~DISCONTINUED ~~OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES~~OPERATIONS

~~The~~On ~~accompanying~~September ~~unaudited~~13, ~~condensed~~2024, ~~consolidated~~the ~~financial~~Company ~~statements~~completed ~~have been prepared in accordance with~~ the ~~instructions~~previously toannounced ~~Form~~separation ~~10-Q~~ and ~~Regulation~~distribution ~~S-X~~of ~~and~~its doGrocery ~~not~~segment ~~include~~into ~~all~~an independent ~~the~~publicly ~~information~~traded ~~and~~company, ~~disclosures required by GAAP~~HCWC. The ~~Company~~separation ~~has~~was ~~made~~structured ~~estimates~~as ~~and~~a ~~judgments affecting~~tax-free ~~the~~spin-off, ~~amounts~~which ~~reported~~occurred inby ~~the~~way ~~Company’s~~of ~~unaudited~~a ~~condensed~~pro ~~consolidated~~rata distribution ~~financial~~to ~~statements~~HCMC ~~and the accompanying notes~~stockholders. Each ~~The~~of ~~actual results experienced by~~ the ~~Company~~HCMC ~~may~~stockholders ~~differ~~received ~~materially~~one ~~from~~share ~~the~~of ~~Company’s~~HCWC ~~estimates.~~Class ~~The~~A ~~condensed~~common ~~consolidated~~stock ~~financial information~~and isthree ~~unaudited~~shares ~~but~~of ~~reflects~~Class ~~all~~B ~~normal~~common ~~adjustments~~stock ~~that~~for ~~are~~every 208,632 shares ~~in the opinion~~ of ~~management,~~HCMC ~~necessary~~common tostock ~~provide~~held ~~a fair statement~~ of ~~results~~record ~~for~~as ~~the~~of ~~interim periods presented. These condensed consolidated financial statements should be read in conjunction with~~ the ~~consolidated~~ ~~financial~~close ~~statements~~of inbusiness ~~the Company’s Annual Report~~ on ~~Form~~September ~~10-K~~13, ~~for~~2024. ~~the~~HCWC ~~year~~is ~~ended~~now ~~December~~an ~~31, 2023, filed with~~independent ~~the~~public ~~Securities~~company ~~and~~listed ~~Exchange~~under ~~Commission (~~the symbol “~~SEC~~HCWC”) on ~~March~~the ~~27, 2024~~NYSEAM. The ~~condensed consolidated balance sheet as of December 31, 2023 was derived from the~~ Company’s ~~audited~~retained ~~2023~~no ~~financial~~ownership ~~statements~~interest ~~contained~~ in ~~the above referenced Form 10-K. Results~~HCWC offollowing the ~~six months ended June 30, 2024, are not necessarily indicative of the results to be expected for the full year ending December 31, 2024~~Separation.

Cash of $2.2 million held by HCWC and its subsidiary were transferred to HCWC on the Distribution Date. HCMC and HCWC settled intercompany balances in the amount of $1.2 million on the Spin-Off date.

During the third quarter of 2024, the Company recognized a net reduction to retained earnings of $1.0 million as a result of the Separation, primarily related to the transfer of certain assets and liabilities associated with its grocery business to HCWC.

In connection with the Separation, the Company entered into several agreements with HCWC that govern the relationship of the parties following the Spin-Off. These agreements include:

	●	a Separation Agreement that will set forth HCMC’s and the Company’s agreements regarding the principal actions that both parties will take in connection with the Spin-Off and aspects of our relationship following the Spin-Off;
	●	a Transition Services Agreement pursuant to which HCMC and the Company will provide each other specified services on a transitional basis to help ensure an orderly transition following the Spin-Off.
	●	a Tax Matters Agreement that will govern the respective rights, responsibilities and obligations of HCMC and the Company after the Spin-Off with respect to all tax matters and will include restrictions to preserve the tax-free status of the Spin-Off; and
	●	an Employee Matters Agreement that will address employment, compensation and benefits matters, including the allocation and treatment of assets and liabilities arising out of employee compensation and benefits programs in which our employees participated prior to the Spin-Off.

Under the terms of the transition services agreement, HCMC will provide to HCWC, on a transitional basis, certain services or functions, including information technology, accounting, human resources, and payroll functions. Generally, these services will be provided for a period of up to one year following the Spin-Off. Consideration and costs for the transition services will be determined using several billing methodologies as described in the agreements, including customary billing and pass-through billing. Costs for transition services provided to HCWC are recorded within the Consolidated Statements of Operations based on the nature of the services. Following the Spin-Off, the Company recognized a reduction of costs of $0.1 million for services provided to HCWC in the third quarter of 2024 pursuant to the transition services agreement.

Financial Information of Discontinued Operations

Loss from Discontinued Operations in the Consolidated Statements of Operations reflects the financial results of the HCWC and includes allocation of general corporate overhead expense of the Company.

The following table summarizes the significant line items included in Loss from Discontinued Operations, in the Consolidated Statements of Operations for the three and nine months ended September 30, 2024 and 2023:

SCHEDULE OF DISCONTINUED OPERATION

	2024			2023			2024			2023
	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2024			2023			2024			2023
SALES, NET	$	14,860,975		$	12,704,600		$	46,349,908		$	39,839,202
COST OF SALES		9,152,971			8,061,966			28,691,071			25,199,879
GROSS PROFIT		5,708,004			4,642,634			17,658,837			14,639,323

OPERATING EXPENSES, NET
Selling, general and administrative		6,178,849			5,897,769			19,212,987			17,743,763
Gain on sale of asset		(205,146	)		-			(205,146	)		-
TOTAL OPERATING EXPENSES, NET		5,973,703			5,897,769			19,007,841			17,743,763

LOSS FROM OPERATIONS		(265,699	)		(1,255,135	)		(1,349,004	)		(3,104,440	)

OTHER INCOME (EXPENSE)		(2,212,689	)		335,462			(2,426,555	)		663,488

NET LOSS FROM DISCONTINUED OPERATIONS	$	(2,478,388	)	$	(919,673	)	$	(3,775,559	)	$	(2,440,952	)

The information presented as discontinued operations on the Condensed Consolidated Balance Sheets includes certain assets and liabilities that were transferred to HCWC pursuant to the Separation agreements.

There were no assets or liabilities classified as discontinued operations as of September 30, 2024. The following table summarizes the carrying value of the significant classes of assets and liabilities classified as discontinued operations as of December 31, 2023:

	December 31, 2023

Cash and cash equivalents	$	1,422,580
Accounts receivable, net		128,171
Inventories		4,162,218
Prepaid expenses and vendor deposits		174,970
Other current assets		56,842
Current Assets of Discontinued Operations		5,944,781

Property and equipment, net of accumulated depreciation		2,676,639
Intangible assets, net of accumulated amortization		4,178,519
Right of use asset - operating lease		11,412,562
Other assets		467,056
Other Assets of Discontinued Operations	$	18,734,776

Accounts payable and accrued expenses	$	4,920,411
Contract Liabilities		207,513
Current portion of loan payable		702,701
Lease liability, current		2,748,824
Current Liabilities of Discontinued Operations		8,579,449

Due from related party		(3,753,003	)
Loan Payable, net of current portion		2,403,807
Lease liability, net of current		8,461,182
Other Long-term Liabilities of Discontinued Operations	$	7,111,986

The following table summarizes the significant operating cash and noncash items, capital expenditures and financing activities of discontinued operations for the nine months ended September 13, 2024 and September 30, 2023:

	Nine Months Ended September 13, 2024			Nine Months Ended September 30, 2023
Net loss	$	(3,775,559	)	$	(2,440,952	)
Depreciation and amortization		1,069,958			1,070,686
Loss on warrant liability extinguishment		1,888,889			-
Gain on sale of building		(205,146	)		-
Non-cash interest expense		72,250			-
Amortization of right-of-use asset		2,381,131			1,687,522
Write-down of obsolete and slow-moving inventory		2,032,995			1,581,043
Change in contingent consideration		-			(774,900	)
Accounts receivable		(253,460	)		(75,677	)
Inventories		(2,000,669	)		(1,317,816	)
Prepaid expenses and vendor deposits		(48,693	)		(41,034	)
Other current assets		20,520			48,336
Due to related party		(2,736,272	)		(542,718	)
Other assets		(83,482	)		(3,060	)
Accounts payable and accrued expenses		998,829			(119,384	)
Contract liabilities		(156,904	)		(53,745	)
Lease liability		(2,280,459	)		(1,592,729	)
NET CASH USED IN OPERATING ACTIVITIES OF DISCONTINUED OPERATIONS		(3,076,072	)		(2,574,428	)

Payment for acquisition		(5,475,000	)		-
Proceeds from sale of Saugerties building		749,000			-
Purchases of property and equipment		(145,680	)		(173,475	)
NET CASH USED IN INVESTING ACTIVITIES OF DISCONTINUED OPERATIONS		(4,871,680	)		(173,475	)

Proceeds from security purchase agreement		1,700,000			-
Proceeds from acquisition loan		7,500,000			-
Principal payments on loan payable		(349,082	)		(399,590	)
Due to related party		(1,819,570	)		-
Investment from parent company		1,736,412			2,068,725
NET CASH PROVIDED BY FINANCING ACTIVITIES OF DISCONTINUED OPERATIONS		8,767,760			1,669,135

NET INCREASE (DECREASE) IN CASH	$	820,008		$	(1,078,768	)

NOTE 3. GOING CONCERN AND MANAGEMENT’S PLANS

The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”), which contemplate continuation of the Company as a going concern and realization of assets and satisfaction of liabilities in the normal course of business and do not include any adjustments that might result from the outcome of any uncertainties related to our going concern assessment. The carrying amounts of assets and liabilities presented in the financial statements do not necessarily purport to represent realizable or settlement values.

The Company currently and historically has reported net losses and cash outflows from operations. As of September 30, 2024, the Company had cash and cash equivalent of approximately $2.5 million and positive working capital of $0.2 million. The Company’s liquidity needs through September 30, 2024 have been satisfied through financing agreement with private lenders.

Management has made plans to reduce certain costs and raise needed capital, however there can be no assurance the Company can successfully implement these plans. The success of these plans is dependent upon various factors, foremost being the ability to reduce outside consulting expenses and the ability to secure additional capital from outside investors. There can be no assurance that such plans will be successful.

The Company believes its cash on hand and its ability to draw on its $5 million line of credit will enable the Company to meet its obligations and capital requirements for at least the twelve months from the date these financial statements are issued. Accordingly, no adjustment has been made to the financial statements to account for this uncertainty.

NOTE 4. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

Basis of Consolidation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and Regulation S-X and do not include all the information and disclosures required by GAAP. The Company has made estimates and judgments affecting the amounts reported in the Company’s unaudited condensed consolidated financial statements and the accompanying notes. The actual results experienced by the Company may differ materially from the Company’s estimates. The condensed consolidated financial information is unaudited but reflects all normal adjustments that are, in the opinion of management, necessary to provide a fair statement of results for the interim periods presented.

On September 13, 2024, the Company completed the previously announced separation and distribution of its grocery segment and wellness centers into an independent publicly traded company, and the historical results of the grocery segment and wellness centers have been reflected as discontinued operations in the Company’s condensed consolidated financial statements for all periods prior to the separation and distribution. Assets and liabilities associated with the grocery segment are classified as assets and liabilities of discontinued operations in the Company’s Condensed Consolidated Balance Sheets. Additional disclosures regarding the separation and distribution are provided in Note 2.

These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, filed with the Securities and Exchange Commission (the “SEC”) on March 27, 2024. The condensed consolidated balance sheet as of December 31, 2023 was derived from the Company’s audited 2023 financial statements contained in the above referenced Form 10-K, adjusted for the discontinued operations. Results of the nine months ended September 30, 2024, are not necessarily indicative of the results to be expected for the full year ending December 31, 2024.

Significant Accounting Policies

There have been no material changes in the Company’s significant accounting policies to those previously disclosed in the 2023 Annual Report.

~~Note~~NOTE 45. CONCENTRATIONS

Cash, Cash Equivalent and Restricted Cash

The Company considers all highly liquid instruments with an original maturity of three months or less, when purchased, to be cash and cash equivalent. The majority of the Company’s cash and cash equivalent are concentrated in one large financial institution, which is in excess of Federal Deposit Insurance Corporation (FDIC) coverage. The balance of cash equivalent was approximately $1301,~~209,~~000 and $0 as of ~~June~~September 30, 2024 and December 31, 2023.

A summary of the financial institution that had cash, ~~and~~ cash equivalent and restricted cash in excess of FDIC limits of $250,000 on ~~June~~ September 30, 2024 and December 31, 2023 is presented below:

SCHEDULE OF CASH AND CASH ~~EQUIVALENTS~~EQUIVALENT AND RESTRICTED CASH IN EXCESS OF FDIC LIMIT

	June 30, 2024		December 31, 2023
	September 30, 2024		December 31, 2023
Total cash and cash equivalent in excess of FDIC limits of $250,000	$	2,~~213~~283,~~872~~980	$	3,~~814~~402,~~426~~782

The Company continually monitors its positions with, and the credit quality of, the financial institutions with which it invests, as deposits are held in excess of federally insured limits. The Company has not experienced any losses in such accounts.

The following table provides a reconciliation of cash, cash equivalent and restricted cash to amounts shown in unaudited condensed consolidated statements of cash flow:

SCHEDULE OF RECONCILIATION OF CASH, CASH EQUIVALENT AND RESTRICTED CASH

	June 30, 2024		June 30, 2023
	September 30, 2024		September 30, 2023
Cash and cash equivalent	$	32,~~353~~533,~~326~~980	$	86,~~481~~196,~~915~~030
Restricted cash		553,232		628,232
Total cash and restricted cash	$	3,~~906~~087,~~558~~212	$	96,~~110~~824,~~147~~262

Restricted Cash

The Company’s restricted cash consisted of cash balances which were restricted as to withdrawal or usage under the August 18, 2022 securities purchase agreement for the purpose of funding any amounts due under the Series E Certificate of Designation upon the redemption of the Series E Preferred Stock. The balance also included cash held in the collateral account to cover the cash draw from the line of credit.

Note 56. SEGMENT INFORMATION AND DISAGGREGATION OF REVENUES

In accordance with FASB ASC 280, “Disclosures about Segment of an enterprise and related information”, the Company determined it ~~has~~operates ~~two~~as ~~reportable~~a ~~segments:~~single ~~grocery~~reportable ~~and vapor. There are no inter-~~segment ~~revenues~~.

~~The Company’s general and administrative costs are not segment specific. As a result, all operating expenses are not managed on segment basis.~~13

9NOTE 7. PROPERTY AND EQUIPMENT

~~The~~Property ~~Company reports the following segments in accordance with management guidance: Vapor~~ and ~~Grocery.~~equipment ~~When~~consist ~~the~~of ~~Company prepares its internal management reporting to evaluate business performance, we disaggregate revenue into~~ the following ~~categories that depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors.~~:

SCHEDULE OF INFORMATION ABOUT REPORTABLE SEGMENTS

	Three Months Ended June 30,						Six Months Ended June 30,
	2024			2023			2024			2023
Vapor	$	174		$	-		$	293		$	38
Grocery		15,594,575			13,574,896			31,488,933			27,134,602
Total revenue	$	15,594,749		$	13,574,896		$	31,489,226		$	27,134,640
Retail Grocery	$	13,423,417		$	12,017,526		$	26,902,339		$	24,067,596
Food service/restaurant		2,170,903			1,555,372			4,585,897			3,062,948
Online/eCommerce		429			1,998			990			4,096
Total revenue	$	15,594,749		$	13,574,896		$	31,489,226		$	27,134,640
Loss from operations-Vapor	$	(5,061	)	$	(10,724	)	$	(10,923	)	$	(17,397	)
(Loss) income from operations-Grocery		129,315			(185,923	)		222,776			(462,763	)
Corporate items		(2,572,192	)		(2,983,013	)		(5,464,444	)		(4,682,546	)
Total loss from operations	$	(2,447,938	)	$	(3,179,660	)	$	(5,252,591	)	$	(5,162,706	)

Note 6. ACQUISITION

Ellwood Thompson’s

On October 1, 2023, the Company through its wholly owned subsidiary, Healthy Choice Markets V, LLC, entered into an Asset Purchase Agreement with (i) ET Holding, Inc., d/b/a Ellwood Thompson’s Local Market, a Virginia corporation, (ii) Ellwood Thompson’s Natural Market, L.C., a Virginia limited liability company, and (iii) Richard T. Hood, an individual resident of the Commonwealth of Virginia. Pursuant to the Purchase Agreement, the Company acquired certain assets and assumed certain liabilities related to Ellwood Thompson’s grocery stores in Richmond, Virginia. The Company intends to continue to operate the grocery stores under their existing name.

The cash purchase price under the Asset Purchase Agreement was $750,000, and a promissory note provided to the seller of $750,000, with a fair value of $718,000. The Company expensed the discount associated with the promissory note and recognized interest expense of approximately $32,000 for the year ended December 31, 2023. In addition, the Company entered into a new lease agreement with the landlord and entered into an employment agreement with the store manager.

The following table summarizes the purchase price allocation based on fair values of the net assets acquired at the acquisition date:

SUMMARY OF PURCHASE PRICE ALLOCATION BASED ON FAIR VALUES OF THE NET ASSETS ACQUIRED

	October 1, 2023
Purchase Consideration
Cash consideration paid	$	750,000
Promissory note		718,000
Total Purchase Consideration	$	1,468,000
Purchase price allocation
Inventory	$	851,000
Intangible assets		291,000
Right of use asset - Operating lease		1,325,000
Other liabilities		(31,000	)
Operating lease liability		(1,325,000	)
Goodwill		357,000
Net assets acquired	$	1,468,000
Finite-lived intangible assets
Trade Names (8 years)	$	291,000
Total intangible assets	$	291,000

The acquisition is structured as asset purchase in a business combination, and goodwill is tax-deductible, and amortizable over 15 years for tax purposes.

Revenue and Earnings

The following unaudited pro forma summary presents consolidated information of the Company, including Ellwood Thompson’s, as if the business combinations had occurred on January 1, 2023, the earliest period presented herein:

SCHEDULE OF SUPPLEMENTAL PRO FORMA INFORMATION

	For Three Months Ended June 30, 2023			For Six Months Ended June 30, 2023
Sales	$	17,133,109		$	33,725,149
Net loss	$	(2,656,072	)	$	(4,520,654	)

The pro forma financial information includes adjustments that are directly attributable to the business combinations and are factually supportable. The pro forma adjustments include incremental amortization of intangible. The proforma data gives effects to actual operating results prior to the acquisition. These proforma amounts do not purport to be indicative of the results that would have actually been obtained if the acquisitions occurred as of the beginning of each period presented or that may be obtained in future periods.

Note 7. ASSETS HELD FOR SALE

On February 7, 2024, the Company closed the operation of the Saugerties store. The decision was based on management’s plan to maximize the profitability of the grocery segment. The Company transferred all operating assets and liabilities to other neighboring stores. The building, which is owned by the Company, has a net carrying value of approximately $544,000 and was put up for sale in February at its fair market value. The Company has classified the building as held for sale in accordance with ASC 360, “Property, Plant, and Equipment.” The building was previously classified as property, plant, and equipment (PP&E) and included in long-term assets.

On July 24, 2024, the Company finalized the closing of Saugerties building sale with all parties involved and received net proceeds of $695,000. The building was sold at fair market value of $749,000 and the company paid approximately $54,000 legal fee, commission and other miscellaneous expenses. The title and deed were transferred on the closing date.

Note 8. PROPERTY, PLANT, AND EQUIPMENT

Property, plant, and equipment consist of the following:

	June 30, 2024			December 31, 2023
	September 30, 2024			December 31, 2023
Displays	$	312,146		$	312,146
Furniture and fixtures		90,919			90,919
Building		-			575,000
Computer hardware & equipment		50,521			48,337
Furniture and fixtures		602,750			596,355
Other		53,056			8,056
Leasehold improvements		1,959,553			1,925,385
Property and equipment, gross		194,496			147,312
Computer hardware & equipment		238,654			190,019
Less: accumulated depreciation and amortization		(107,532	)		(88,699	)
Other		763,738			688,774
Total property, plant, and equipment	$	86,964		$	58,613
Property and equipment, gross		3,876,841			4,287,679
Less: accumulated depreciation and amortization		(1,798,390	)		(1,552,427	)
Total property, plant, and equipment	$	2,078,451		$	2,735,252

The Company incurred approximately $~~138~~7,000 and $~~144~~5,000 of depreciation expense for the three months ended ~~June~~September 30, 2024 and 2023, and $~~277~~19,000 and $~~286~~16,000 of depreciation expense for the ~~six~~nine months ended September ~~June~~ 30, 2024 and 2023, respectively.

11NOTE 8. INTANGIBLE ASSETS

Note 9. INTANGIBLE ASSETS

Intangible assets, net are as follows:

SCHEDULE OF INTANGIBLE ASSETS, NET

June 30, 2024	Useful Lives (Years)	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
September 30, 2024	Useful Lives (Years)	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Trade names	8-10 years	$	2,860,000	$	(1,203,943	)	$	1,656,057
Patent	10 years	$	397,165	$	(229,233	)	$	167,932
Customer relationships	4-6 years		2,669,000		(1,479,806	)		1,189,194
Intangible assets, net			397,165		(229,233	)		167,932
Patents	10 years		397,165		(219,452	)		177,713
Non-compete	4-5 years		1,602,000		(728,866	)		873,134
Intangible assets, net		$	7,528,165	$	(3,632,067	)	$	3,896,098

December 31, 2023	Useful Lives (Years)	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Trade names	8-10 years	$	2,860,000	$	(1,035,443	)	$	1,843,277
Patents	10 years		397,165		(199,002	)		198,163
Customer relationships	4-6 years		2,669,000		(1,330,972	)		1,338,028
Intangible assets, net		$	397,165	$	(199,002	)	$	198,163
Patents	10 years		397,165		(199,001	)		198,164
Non-compete	4-5 years		1,602,000		(586,067	)		1,015,933
Intangible assets, net		$	7,528,165	$	(3,151,483	)	$	4,376,682

Intangible assets are amortized on a straight-line basis over their estimated useful lives. Amortization expense was approximately $~~241~~10,000 ~~and $230,000~~ for the three months ended ~~June~~September 30, 2024 and 2023, and $~~481~~30,000 and $~~461~~29,000 for the ~~six~~nine months ended ~~June~~September 30, 2024 and 2023, respectively. Future annual estimated amortization expense is as follows:

Years ending December 31,
2024 (remaining six months)	$	478,807
2024 (remaining three months)	$	8,893
2025		~~953~~39,~~891~~124
2026		~~875~~38,~~910~~180
2027		~~731~~32,~~489~~564
2028		~~412~~23,~~819~~333
Thereafter		~~443~~25,~~182~~838
Total	$	3167,~~896,098~~932

~~Note 10. CONTRACT LIABILITIES~~14

ANOTE ~~summary~~9. ~~of the net changes in contract liabilities activity at June 30, 2024 and December 31, 2023 is presented below:~~DEBT

~~SUMMARY~~Revolving OFLine ~~CONTRACT~~of ~~LIABILITIES ACTIVITY~~Credit

	June 30, 2024			December 31, 2023
Beginning balance as January 1,	$	207,513		$	198,606
Issued		698,242			891,060
Redeemed		(719,204	)		(812,694	)
Breakage recognized		(63,176	)		(69,459	)
Ending balance	$	123,375		$	207,513

On November 3, 2021, the Company entered into an agreement for a new revolving line of credit of $2.0 million and a blocked/restricted deposit account (“blocked account”) with Professional Bank in Coral Gables, Florida. The agreement included a variable interest rate that it is based on a rate of 4.7% over what is earned on the collateral account. Based on the agreement with the bank, each draw request from the credit line will be 100% cash secured with moneys held from the blocked account. The outstanding balances were $453,232 as of September 30, 2024 and December 31, 2023, respectively.

~~Note~~NOTE 1110. ~~DEBT~~STOCKHOLDERS’ EQUITY

A breakdown of the Company’s debt as of June 30, 2024 and December 31, 2023 is presented below:

SCHEDULE OF BREAKDOWN OF DEBT

	June 30, 2024			December 31, 2023
Promissory notes	$	4,649,303		$	3,106,508
Debt discount		(117,596	)		-
Line of credit		453,232			453,232
Total debt, net of debt discount	$	4,984,939		$	3,559,740
Current portion of long-term debt		(2,948,572	)		(1,155,933	)
Long-term debt	$	2,036,367		$	2,403,807

Promissory Notes

In connection with the Green’s Natural Foods acquisition, on October 14, 2022, the Company issued a secured promissory note (the “Greens Note”) in the principal amount of $3,000,000 as a portion of the purchase price. The Greens Note has a five-year term, an interest rate of 6.0% per annum and is secured by the assets of the Green’s Natural Foods. The outstanding balance was approximately $2,098,000 and $2,378,000 as of June 30, 2024 and December 31, 2023, respectively. The Company incurred approximately $33,000 and $41,000 interest expense for the three months ended June 30, 2024 and 2023, and $68,000 and $84,000 interest expense for the six months ended June 30, 2024 and 2023, respectively.

In connection with the Ellwood Thompson’s acquisition, on October 1, 2023, the Company issued a secured promissory note (the “Ellwood Note”) in the principal amount of $750,000, and discounted present value of $718,000 as a portion of the purchase price. The Ellwood Note has a five-year term, an interest rate of 6.0% per annum. The outstanding balance of the Ellwood Note was approximately $662,000 and 728,000 in principal amount as of June 30, 2024 and December 31, 2023, respectively. The Company recognized interest expense of approximately $10,000 and $0 for the three months ended June 30, 2024, and 2023, and $21,000 and $0 for the six months ended June 30, 2024, and 2023, respectively.

On January 18, 2024, HCWC entered into a Securities Purchase Agreement (the “Bridge Financing”) with institutional investors whereby (a) HCWC issued a total of approximately $1,889,000 in unsecured promissory notes (the “Notes) and (b) on the date of the pricing of HCWC’s initial public offering (“IPO”), HCWC shall deliver shares of its common stock equal to approximately $1,889,000 divided by the IPO price (“Bridge Shares”). If HCWC does not consummate its IPO, it will have no obligation to issue Bridge Shares to the investors. The aggregate gross proceeds received from the investors in connection with the SPA was $1,700,000. The Notes were issued at a 10% original issue discount (“OID”) and accrue interest at a rate of 10% per annum beginning 60 days after issuance of the Notes. All accrued and unpaid principal and interest shall be due and payable upon the earlier of (1) the closing of the IPO, (2) January 18, 2025 or (3) upon an event of default as defined in the Notes.

On April 8, 2024, HCWC and the institutional investors entered into an amendment to the January 18, 2024 agreement whereby HCWC agreed to issue warrants (the “Bridge Warrants”) exercisable at $0.01 per share to purchase 188,889 shares of Class A common stock (the “Bridge Warrant Shares”) in lieu of the 188,889 shares of Class A common stock. The parties agreed to terminate any existing obligations of the institutional investors to acquire HCWC Bridge Shares as part of the IPO transaction.

The Company used the intrinsic value model to determine the fair value of the Bridge Warrants on April 18, 2024 and remeasured the fair value on June 30, 2024, and concluded that the fair value of the Bridge Warrants at June 30, 2024 was $1,887,001. The Bridge Warrants represent a contingent obligation that was not recognized in the Company’s unaudited consolidated financial statements as of June 30, 2024 since it was not probable that the IPO would close as of such date. HCWC incurred approximately $23,500 of debt issuance costs in connection with the issuance of the Notes, which, together with the OID of approximately $189,000, was recorded as a debt discount and was amortized over the life of the Notes using the straight-line method since such method was not materially different from the interest method. For the three and six-months ended June 30, 2024, approximately $57,000 and $144,000 of interest expense was recognized in the accompanying condensed consolidated statements of operations. At June 30, 2024, the outstanding principal balance was approximately $1,889,000, accrued interest was approximately $49,000 and debt discount was approximately $118,000.

The Company may, at its option, at any time or from time to time prepay the outstanding principal amount or any accrued but unpaid interest, in each case in whole or in part, without penalty or premium, provided that any such prepayment of any outstanding amount of principal shall be accompanied by the payment of all accrued but unpaid interest on the amount of principal being prepaid, plus any costs and fees incurred.

The following table summarizes the 5-year repayment schedule:

SCHEDULE OF MATURITIES OF LONG TERM DEBT

For the years ending December 31,
2024 (remaining six months)	$	356,607
2025		2,634,931
2026		792,056
2027		724,333
2028		141,376
Total	$	4,649,303

Note 12. STOCKHOLDERS’ EQUITY

Series E Convertible Preferred Stock

On August 18, 2022, the Company entered into a Securities Purchase Agreement (“Series E Preferred Stock”) pursuant to which the Company sold and issued 14,722 shares of its Series E Redeemable Convertible Preferred Stock to institutional investors for $1,000 per share or an aggregate subscription of $13.25 million. The number of shares issued to each participant is based on subscription amount multiplied by conversion rate of 1.1111. The Company also incurred offering costs of approximately $410,000, which covers legal and consulting fee.

The HCMC Series E Preferred Stock shall have voting rights on as converted basis at the Company’s next stockholders’ meeting. However, as long as any shares of HCMC Series E Preferred Stock are outstanding, the Company shall not, without the affirmative vote of the holders of a majority of the then outstanding shares of the HCMC Series E Preferred Stock, (a) alter or change adversely the powers, preferences or rights given to the HCMC Series E Preferred Stock or alter or amend the Certificate of Designation, (b) increase the number of authorized shares of HCMC Series E Preferred Stock, or (c) enter into any agreement with respect to any of the foregoing. Each share of Series E Preferred Stock shall be convertible, at any time and from time to time at the option of the Holder thereof, into that number of shares of Common Stock (subject to the beneficial ownership limitations). The initial conversion price for the HCMC Series E Preferred Stock shall equal $0.0001.

Upon any liquidation, dissolution or winding-up of the Company, whether voluntary or involuntary that is not a Fundamental Transaction (as defined in the Certificate of Designation), the holders of HCMC Series E Preferred Stock shall be entitled to receive out of the assets, whether capital or surplus, of the Company an amount equal to $1,000 per share of Series E Preferred Stock.

Unless earlier converted or extended as set forth below, a holder may require the redemption of all or a portion of the stated value of the HCMC Series E Preferred Stock either (1) six months after closing or (2) the time at which the balance is due and payable upon an event of default.

On March 1, 2023, the Company entered into a First Amendment to HCMC Series E Preferred Stock with each purchaser (“Purchaser”) identified as those who participated in the HCMC Series E Preferred Stock, dated as of August 18, 2022. The parties amended the HCMC Preferred Stock related to the conversion payment whereby upon conversion of the Series E Preferred Stock prior to the record date for the Spin-Off, the Company will pay the Purchaser ten percent (10%) of the stated value of the Series E Preferred Stock converted. The record date is May 1, 2023.

On May 15, 2023, the Company and the Purchaser entered into the Second Amendment to the Securities Purchase Agreement, pursuant to which the Company agreed to extend the time period for the Conversion Payment eligibility to December 1, 2023. The Company filed an amendment to the Certificate of Designation to make the redemption price of the Preferred Stock (the “Redemption Price”) equal the Stated Value regardless of the date on which it is redeemed. Prior to this amendment, the Redemption Price was discounted by 1% for each month after the seven-month anniversary of the Issue Date that the Purchaser elected not to redeem.

On October 30, 2023, the Company entered into a Third Amendment to the Securities Purchase Agreement with its Series E Redeemable Convertible Preferred Stock purchasers. The parties agreed to: (1) set the initial conversion price for the Series A Preferred Stock to be the 5-day volume weighted average price measured using the 5 trading days preceding the purchase of the Series A Preferred Stock, (2) on the 40th calendar day (the “Reset Date”) after the sale of the Series A Preferred Stock, reset the conversion price in the event the closing price of the Class A common stock on such date is less than the initial conversion, (3) have the reset conversion price equal a 10% discount to the 5-day volume weighted average price measured using the 5 trading days preceding the Reset Date; provided, however, in no instance will the conversion price be reset below 30% of the initial conversion price, and (4) amend the date on which the obligation to acquire the Series A Preferred Stock ceases to March 1, 2024.

1415

On February 20, 2024, the Company entered into a Fourth Amendment to the Securities Purchase Agreement with its Series E Redeemable Convertible Preferred Stock purchasers, pursuant to which the Company and such parties agreed to amend the date on which the obligation to acquire the Series A Preferred Stock ceases to June 1, 2024.

On April 8, 2024, the Company entered into a Fifth Amendment to the Securities Purchase Agreement with its Series E Redeemable Convertible Preferred Stock purchasers, pursuant to which the Company and such parties agreed to amend the Completion Date to August 1, 2024.

On July 26, 2024, the Company entered into a Sixth Amendment to the Securities Purchase Agreement with its Series E Redeemable Convertible Preferred Stock purchasers, pursuant to which the Company and such parties agreed to amend the Completion Date to November 1, 2024.

Through ~~June~~September 30, 2024, 1,585 shares of Series E preferred stock have been cumulatively converted into 15,850,000,000 shares of common stock as as a result of the Series E preferred stock conversion, and 12,026 shares of Series E preferred stock have been cumulatively redeemed, ~~and~~ and approximately $12,004,000 has been paid for redemption.

Pursuant to the Securities Purchase Agreement, purchasers of the Series E Convertible Preferred Stock will also be required to purchase ~~Series~~ Series A Convertible Preferred Stock of HCWC resulting from ~~spin~~the ~~off~~Spin-Off of HCMC’s grocery and wellness businesses in the same ~~subscription~~ subscription amounts that the Purchasers paid for the HCMC Series E Preferred Stock.

Spin-Off

The Company is planning to spin off its grocery segment and wellness business, which will include HCWC and its subsidiaries (hereinafter also referred to as “NewCo”). NewCo will continue the path of growth in the health verticals started by HCMC and explore other growth opportunities that comport with HCMC’s healthier lifestyle mission. HCMC will retain its entire patent suite, the Q-Cup® brand, and continue to develop its patent suite through R&D as well as continuing its path of enforcing its patent rights against infringers and attempting to monetize said patents through licensing deals.

At the time of the Spin-Off, HCMC will distribute all the outstanding shares of HCWC Common Stock held by it on a pro rata basis to holders of HCMC’s common stock. Each share of HCMC’s common stock outstanding as the record date for the Spin-Off (the “Record Date”), will entitle the holder thereof to receive shares of HCWC Common Stock. The distribution will be made in book-entry form by a distribution agent. Fractional shares of HCWC Common Stock will not be distributed in the Spin-Off and any fractional amounts will be rounded down.

Pursuant to the Securities Purchase Agreement, purchasers of the Series E Convertible Preferred Stock will also be required to purchase Series A Convertible Preferred HCWC Stock (“HCWC Series A Stock”) resulting from spin off of HCMC’s grocery and wellness businesses in the same subscription amounts that the Purchasers paid for the HCMC Preferred Stock.

On October 27, 2023, the Company filed a new registration statement on Form S-1 (the “Spin-off S-1”) in connection with the spin-off of all of the existing HCWC common stock by Healthier Choices Management Corp. with the Securities and Exchange Commission (the “Commission”).

On October 30, 2023, the Company filed Amendment No. 1 to its registration statement on Form S-1 (the “IPO S-1”) with the Commission.

On December 20, 2023, the Company filed Amendment No. 1 to its Spin-off S-1 with the Commission.

On December 21, 2023, the Company filed Amendment No. 2 to its IPO S-1 with the Commission.

On February 13, 2024, the Company filed Amendment No. 2 to its Spin-off S-1 with the Commission with respect to the Spin-Off.

On February 13, 2024, the Company filed Amendment No. 3 to its IPO S-1 with the Commission with respect to the IPO.

On May 24, 2024, the Company filed Amendment No. 3 to its registration statement on Form S-1 with the Commission with respect to the Spin-Off.

On May 24, 2024, the Company filed Amendment No. 4 to its registration statement on Form S-1 with the Commission with respect to the IPO.

On June 26, 2024, the Company filed Amendment No. 4 to its registration statement on Form S-1 with the Commission with respect to the Spin-Off.

On June 26, 2024, the Company filed Amendment No. 5 to its registration statement on Form S-1 with the Commission with respect to the IPO.

On July 25, 2024, the Company filed Amendment No. 5 to its registration statement on Form S-1 with the Commission with respect to the Spin-Off.

On July 25, 2024, the Company filed Amendment No. 6 to its registration statement on Form S-1 with the Commission with respect to the IPO.

Stock Options and Restricted Stock

During the three and ~~six~~nine months ended ~~June~~September 30, 2024 and 2023, no stock options of the Company were exercised into common stock.

On August 23, 2023, the Company granted 2,000,000,000 shares of restricted stocks to the Company’s third-party inventors with no vesting requirement.

On November 13, 2023, the Company granted 1,000,000,000 shares of restricted stocks to an employee. The award commences vesting of 12.5% on February 1, 2024 and remainder will vest 12.5% increments on the last day of each calendar quarter thereafter through September 30, 2025.

The Company recognized stock-based compensation of approximately $1,~~135~~223,000 and $1,127,000 during the three months ended ~~June~~September 30, 2024 and 2023, and approximately $23,~~262~~484,000 and $12,~~177~~304,000 during the ~~six~~nine months ended ~~June~~September 30, 2024 and 2023, respectively in connection with amortization of restricted stock and stock options. Stock based compensation is included as part of total operating expenses in the accompanying unaudited condensed consolidated statements of operations.

1516

Income (Loss) Per Share

The following table summarizes the Company’s securities, in common share equivalents, which have been excluded from the calculation of dilutive loss per share as their effect would be anti-dilutive:

SCHEDULE OF DILUTIVE LOSS PER SHARE

	2024		2023
	As of June 30,
	As of September 30,
	2024		2023
Preferred stock		11,111,000,000		2019,~~694~~444,000,000
Stock options		673,~~587~~000,~~222~~000,~~200~~000		67,587,~~000~~230,~~000~~680
Restricted stock		6754,~~796~~712,~~875~~500,000		51,500,000,000
Total		~~146~~133,~~495~~410,~~097~~722,200		9388,~~781~~531,~~000~~230,~~000~~680

~~Note~~NOTE 1311. COMMITMENTS AND CONTINGENCIES

Legal Proceedings

There were two lawsuits in connection with alleged claimed battery defects for an electronic cigarette device. One has been dismissed by ~~the~~ the court wherein the plaintiff settled with the Company’s insurance carrier with no economic impact to the Company. In the ~~second~~ second lawsuit, as of December 31, 2023, the Company had reached an arrangement with the plaintiff to resolve the matter, limiting ~~potential~~ potential exposure to $1.5 million which was reflected in accounts payable and accrued expenses, representing management’s estimate of the ~~probable~~ probable settlement amount based on the current status of discussions. This arrangement was formalized by a signed agreement on July 1, 2024 and the Company has accrued $1.5 million at June 30, 2024. As of September 30, ~~which~~2024, ~~was~~the ~~reflected~~Company already paid $700,000, and the remaining balance of $800,000 was in accounts payable and accrued expenses in the accompanying condensed consolidated balance sheets.

On November 30, 2020, the Company filed a patent infringement lawsuit against Philip Morris USA, Inc., and Philip Morris Products S.A. in the U.S. District Court for the Northern District of Georgia. The lawsuit alleges infringement on HCMC-owned patent(s) by the Philip Morris product known and marketed as “IQOS®”. Philip Morris claims that it is currently approaching 14 million users of its IQOS® product and has reportedly invested over $3 billion in their smokeless tobacco products. On December 3, 2021, the District Court for the Northern District of Georgia effectively dismissed HCMC’s patent infringement action against Philip Morris USA, Inc., and Philip Morris Products S.A. On December 14, 2021, the Company filed an appeal of the District Court for the Northern District of Georgia’s dismissal of the Company’s patent infringement action against Philip Morris USA, Inc., and Philip Morris Products S.A.

On December 31, 2021, the District Court for the Northern District of Georgia effectively dismissed HCMC’s patent infringement action against Philip Morris USA, Inc. and Philip Morris Products S.A. In connection with such dismissal, the defendants sought to recover attorney’s fees from the Plaintiff. On February 22, 2022, the District Court for the Northern District of Georgia granted the defendant’s an award of approximately $575,000 in attorneys’ fees to be paid by the Company. The Company fully provisioned this amount as of December 31, 2021. HCMC appealed this ruling on June 22, 2022.

On April 12, 2023, the U.S. Court of Appeals for the Federal Circuit ruled in favor of HCMC on two separate appeals it had filed in its patent infringement action against Philip Morris USA, Inc. and Philip Morris Products S.A. pending in the district court for the Northern District of Georgia.

In the first appeal, HCMC appealed the ruling of the District Court dismissing HCMC’s patent infringement action and denying HCMC’s motion to amend its pleading. In the second appeal, HCMC appealed the District Court’s award of attorneys’ fees to Philip Morris. In its decisions, the Federal Circuit ruled for HCMC by reversing both of those decisions and remanded the case back to the District Court for further proceedings. As a result of the ruling, the Company reversed the $575,000, which was previously fully provisioned, during the three months ended March 31, 2023.

On July 7, 2023, the Company entered into a patent licensing agreement for one of its patents in the vape segment. The Company as the licensor, grants to licensee during the term a non-exclusive right and license under the Licensed Patents to make, use, offer to sell, sell, and import licensed products in the territory of the United States of America. The licensee will pay to the licensor a royalty based on net sales of all licensed products in the territory during the term of the agreement. Either party can cancel the agreement with 60-days written notice. The Company is still in the process of building this operation, and no product sales or no royalties earned as of the date of this filing.

On September 26, 2023, HCMC filed a patent infringement lawsuit against R.J. Reynolds Vapor Company (“RJR”) in the U.S. District Court for the Middle District of North Carolina in connection with HCMC’s assertions that RJR’s Vuse electronic cigarette infringes one of HCMC’s patents.

~~From~~On ~~time~~November to17, ~~time~~2023, ~~the~~RJR ~~Company~~filed isa ~~involved~~motion into ~~legal~~dismiss ~~proceedings arising in~~ the ~~ordinary course of our business~~action. WeHCMC ~~believe~~opposed ~~that~~on ~~there~~December ~~is no other litigation pending that is likely to have~~22, ~~individually~~2023. orTo indate the ~~aggregate,~~court ahas ~~material~~not ~~adverse~~ruled ~~effect~~ on ~~our financial condition~~the ~~or results of operations as of June 30, 2024~~motion. ~~With respect to legal costs, we record such costs as incurred.~~

~~Note~~On September 18, 2024, RJR filed an inter 14partes review of the patent-in-suit at the United States Patent and Trademark Office (“USPTO”). ~~SUBSEQUENT~~A ~~EVENTS~~decision on institution will be made by the USPTO sometime after January 2025.

OnFrom ~~July~~time ~~18,~~to ~~2024,~~time the Company ~~through~~is ~~its~~involved ~~wholly~~in ~~owned~~legal ~~subsidiary,~~proceedings ~~Healthy~~arising ~~Choice~~in ~~Markets VI, LLC, entered into an Asset Purchase Agreement (~~the ~~“Purchase~~ordinary ~~Agreement”)~~course ~~with (i) GreenAcres Markets~~ of ~~Oklahoma,~~our ~~LLC, an Oklahoma limited liability company and GACorp, Inc~~business., aWe ~~Kansas~~believe ~~corporation~~that ~~(each,~~there ais ~~“Seller”; collectively, the “Sellers”); and (ii) the group of equity holders~~no ~~owning~~other ~~the~~litigation ~~majority~~pending ~~interests~~that of the Sellers. The Company acquired certain assets and assumed certain liabilities of five organic and natural health food and vitamin stores located in Oklahoma and Kansas. The purchase price under the Purchase Agreement is ~~approximately $7,100,000,~~likely ofto ~~which $1~~have,~~775,000~~ ~~will~~individually beor in the ~~form~~aggregate, of a ~~promissory~~material ~~note.~~adverse ~~The~~effect ~~Company~~on ~~has~~our ~~engaged~~financial ~~a professional valuation firm to perform~~condition ~~the~~or ~~valuation~~results of ~~the~~operations ~~assets~~as ~~acquired~~of ~~and~~September ~~liabilities~~30, ~~assumed~~2024. ~~The~~With ~~total~~respect ~~purchase price is subject~~ to ~~adjustment~~legal ~~based~~costs, onwe ~~this~~record ~~inventory count.~~such ~~The~~costs ~~purchase~~as ~~price accounting has not been finalized~~incurred.

OnNOTE July 18, 2024 (the “Effective Date”), HCWC entered into a loan and security agreement with a private lender to support its expansion plans and funding of any working capital needs. The face amount of the loan (the “Acquisition Loan’) is $7,500,000 with 12~~% annual interest and 3 years in term~~. ~~The~~SUBSEQUENT loan is guaranteed by all of the subsidiaries of HCWC (the “Guarantors”) and secured by substantially all of the assets of HCWC and the Guarantors. The Acquisition Loan maybe prepaid at any time at a premium in the amount of ten percent (10%) of the principal amount of the Acquisition Loan outstanding prior to such prepayment. Payments on the Acquisition Loan are required to be made as follows: $1,125,000 on first anniversary of the Loan Effective Date, $1,875,000 on the second anniversary of the Loan Effective Date, and the remaining outstanding principal balance of principal and accrued interest on the third anniversary of the Loan Effective Date.EVENTS

On ~~July~~ 24November 7, 2024, the Company ~~finalized~~entered ~~the~~into ~~closing~~a commitment ofletter ~~Saugerties~~with ~~building~~an ~~sale~~investor ~~with~~that ~~all~~will ~~parties~~allow ~~involved,~~the ~~and~~Company ~~received~~to ~~net~~draw ~~proceeds~~up of to $~~695~~5 million from a revolving credit facility (the “Facility”) through August 31,~~000~~ 2025. Any advances will be used for working ~~The~~capital ~~title~~purposes. ~~and~~Any ~~deed~~amounts ~~were~~borrowed ~~transferred~~pursuant to the Facility will be repayable in full on April 30, 2026 and the ~~closing~~interest ~~date~~rate on the amounts borrowed is 12% per annum.

On July 25, 2024, the Company filed Amendment No. 5 to its registration statement on Form S-1 with the Commission with respect to the Spin-Off.

On July 25, 2024, the Company filed Amendment No. 6 to its registration statement on Form S-1 with the Commission with respect to the IPO.

On July 29, 2024, the Company entered into a Sixth Amendment to the Securities Purchase Agreement with its Series E Redeemable Convertible Preferred Stock purchasers, pursuant to which the Company and such parties agreed to amend the Completion Date to November 1, 2024.

On July 31, 2024, one of the Company’s subsidiaries, Healthy Choice Markets IV, LLC, was served with a lawsuit filed by a former employee alleging violations of state and federal wage and hour laws. The Company believes the claims are without merit and intends to vigorously defend against the lawsuit. While the outcome of this litigation cannot be predicted with certainty, the Company does not believe that the lawsuit, if adversely resolved, would have a material adverse effect on its financial condition, results of operations, or cash flows.

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

The following discussion and analysis should be read in conjunction with our unaudited interim condensed consolidated financial statements and related notes appearing elsewhere in this report on Form 10-Q. In addition to historical information, this discussion and analysis contains forward-looking statements that involve risks, uncertainties, and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements. The terms “we,” “us,” “our,” and the “Company” refer to Healthier Choices Management Corp. and its wholly-owned subsidiaries, Healthy Choice Wellness Corp., Healthy Choice Markets, Inc., Healthy Choice Markets 2, LLC (“Paradise Health and Nutrition”), Healthy Choice Markets 3, LLC (“Mother Earth’s Storehouse”), Healthy Choices Markets 3 Real Estate LLC, Healthy Choice Markets IV, LLC (“Green’s Natural Foods”), Healthy Choice Markets V, LLC (“Ellwood Thompson’s), HCMC Intellectual Property Holdings, LLC, ~~Healthy Choice Wellness, LLC, Healthy Choice Wellness II, LLC, The Vitamin Store, LLC, Healthy U Wholesale, Inc.,~~ and The Vape Store, Inc. (“Vape Store”). All intercompany accounts and transactions have been eliminated in consolidation.

HCWC Spin-Off

On September 13, 2024, HCMC completed the Spin-off of our Grocery business into an independent publicly traded company HCWC. As a result, the operating results for the HCWC through the date of the Spin-off are reported in Loss from Discontinued Operations in the Consolidated Statements of Operations for all periods presented. In addition, the related assets and liabilities are reported as Assets and Liabilities of Discontinued Operations on the Consolidated Balance Sheets.

Unless otherwise noted, all amounts, percentages and discussion reflect only the results of operations and financial condition from our continuing operations.

Company Overview

Healthier Choices Management Corp. is a holding company focused on ~~providing~~monetizing ~~consumers~~its ~~with~~intellectual property ~~healthier~~through ~~daily~~royalty ~~choices~~and ~~with~~licensing ~~respect~~agreements, facilitated by its wholly owned subsidiary, HCMC Intellectual Property Holdings, LLC. HCMC’s IP portfolio includes patents related to ~~nutrition~~innovative products, such as the Q-Cup and Imitine, which the company actively ~~other~~markets. ~~lifestyle~~In ~~alternatives~~addition, HCMC is engaged in legal actions against major companies like Philip Morris and R.J. Reynolds for patent infringement.

Through its wholly owned subsidiary HCMC Intellectual Property Holdings, LLC, the Company manages and intends to expand on its intellectual property portfolio.

~~Through~~Additionally, the Company markets its ~~wholly~~patented ~~owned~~the ~~subsidiaries,~~Q-Cup™ ~~Healthy~~technology ~~Choice~~under ~~Wellness~~the ~~Corp.~~vape segment; this patented technology is based on a small, ~~Healthy~~quartz cup ~~Choice~~called ~~Markets~~the Q-Cup™, ~~Inc~~which a customer partially fills with either cannabis or CBD concentrate (approximately 50mg) purchased from a third party., ~~Healthy~~The ~~Choice~~Q-Cup™ ~~Markets~~is 2,then ~~LLC~~inserted into the Q-Cup™ Tank or Globe, ~~and~~that ~~Healthy~~heats the cup from the outside without ~~Choice~~coming ~~Markets~~in 3,direct ~~LLC,~~contact ~~Healthy~~with ~~Choice~~the ~~Markets~~solid ~~IV,~~concentrate. ~~LLC~~This ~~and~~Q-Cup™ ~~Healthy~~technology ~~Choice~~provides ~~Markets~~significantly V,more ~~LLC~~efficiency ~~respectively,~~and an “on the ~~Company~~go” ~~operates:~~solution for consumers who prefer to vape concentrates either medicinally or recreationally.

● Ada’s Natural Market, a natural and organic grocery store offering fresh produce, bulk foods, vitamins and supplements, packaged groceries, meat and seafood, deli, baked goods, dairy products, frozen foods, health & beauty products, and natural household items (www.Adasmarket.com). ● Paradise Health & Nutrition’s three stores that likewise offer fresh produce, bulk foods, vitamins and supplements, packaged groceries, meat and seafood, deli, baked goods, dairy products, frozen foods, health & beauty products and natural household items (www.ParadiseHealthDirect.com). ● Mother Earth’s Storehouse, a two-store organic and health food and vitamin chain in New York’s Hudson Valley, which has been in existence for over 40 years (www.MotherEarthStorehouse.com). ● Greens Natural Foods’ eight stores in New York and New Jersey, offering a selection of 100% organic produce and all-natural, non-GMO groceries & bulk foods; a wide selection of local products; an organic juice and smoothie bar; a fresh foods department, which offers fresh and healthy “grab & go” foods; a full selection of vitamins & supplements; as well as health and beauty products (www.Greensnaturalfoods.com). ● Ellwood Thompson’s, an organic and natural health food and vitamin store located in Richmond, Virginia. (www.ellwoodthompsons.com).

Through its wholly owned subsidiary, Healthy U Wholesale Inc., the Company sells vitamins and supplements, as well as health, beauty and personal care products on its website www.TheVitaminStore.com.

Additionally, the Company markets its patented Q-Unit™ and Q-Cup® technology. Information on these products and the technology is available on the Company’s website at www.theQcup.com.

Liquidity

The unaudited condensed consolidated financial statements included elsewhere in this Form 10-Q have been prepared in conformity with GAAP, which contemplate continuation of the Company as a going concern and realization of assets and satisfaction of liabilities in the normal course of business and do not include any adjustments that might result from the outcome of any uncertainties related to our going concern assessment. The carrying amounts of assets and liabilities presented in the financial statements do not necessarily purport to represent realizable or settlement values. The unaudited consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties.

The Company currently and historically has reported net losses and cash outflows from operations. As of ~~June~~September 30, 2024, the Company had ~~cash~~ cash and cash equivalent of approximately $32.45 million and ~~negative~~positive working capital of $20.62 million. ~~These~~The ~~conditions give rise to substantial doubt about the~~ Company’s ~~ability~~liquidity ~~to continue as a going concern. The Company anticipates its current cash and cash~~needs ~~generated~~through ~~from~~September ~~operations~~30, ~~will~~2024 ~~not~~have bebeen ~~sufficient~~satisfied ~~to meet projected operating expenses for the foreseeable future~~ through atfinancing ~~least~~agreement ~~twelve months~~with ~~from~~private ~~the issuance of the consolidated financial statements~~lenders.

Management has made plans to reduce certain costs and raise needed capital, however there can be no assurance the Company can successfully implement these plans. The ~~Company~~success ~~contracted~~of athese ~~third-party~~plans ~~consultant,~~is ~~whose~~dependent ~~expertise~~upon isvarious ~~streamlining operations~~factors, ~~to identify~~foremost ~~areas~~being ~~of improvement and cost savings. The Company will enact~~ the ~~consultant’s recommendation in anticipation of~~ability ~~realizing~~to ~~savings~~reduce ~~and~~outside ~~achieving~~consulting ~~profitability.~~expenses ~~The Company plans on evaluating non-performing stores~~ and ~~continuing to expand via acquisition which will help achieve profitability. Also,~~ the ~~Company~~ability ~~is formulating plans~~ to ~~raise~~secure additional capital from outside investors~~, as it has done in the past, to fund operating losses and also provide capital for further business acquisitions~~. OnThere ~~May~~can ~~16,~~be ~~2024, the~~no ~~Company~~assurance ~~secured a financing commitment with a private lender. This commitment allows the Company to draw up to $5 million from~~that ~~its~~such ~~revolving~~plans ~~credit facility to be used for expansion and working capital purposes. The loan~~ will be ~~repayable in full on August 31, 2025 and the interest rate on the loan is 12%~~successful. On July 18, 2024, the Company entered into a $7.5 million loan and security agreement with a private lender to support its expansion plans and funding of any working capital needs, of which $4.2 million was used for the July 18, 2024 purchase of GreenAcres Market. The face amount of the loan is $7,500,000 with 12% annual interest and has a maturity date of July 17, 2027. On July 24, 2024, the Company finalized the closing of Saugerties building sale with all parties involved and received net proceeds of $695,000.

The Company ~~result~~believes ofits ~~the~~cash ~~capital~~on ~~raise~~hand isand toits ~~improve~~ability ~~the~~to ~~Company’s~~draw ~~operating~~on ~~and~~its ~~financial~~$5 ~~performance. The~~million ~~success~~line of ~~these~~credit ~~plans~~will isenable ~~dependent~~the ~~upon~~Company ~~various~~to ~~factors,~~meet ~~foremost~~its ~~being~~obligations and ~~the~~capital ~~ability~~requirements tofor ~~reduce~~at ~~outside~~least ~~consulting~~the ~~expenses~~twelve ~~and~~months from the ~~ability~~ todate ~~secure~~these ~~additional~~financial ~~capital~~statements ~~from~~are ~~outside investors~~issued. ~~There~~Accordingly, ~~can~~no beadjustment has nobeen ~~assurance~~made ~~that~~to ~~such~~the ~~plans~~financial ~~will~~statements beto ~~successful~~account for this uncertainty.

Factors Affecting Our Performance

We believe the following factors affect our performance:

~~Retail:~~Pending Patent: We ~~believe~~have ~~the~~developed, ~~operating~~trademarked ~~performance~~and ofare ~~our~~preparing ~~retail~~to ~~stores~~commercialize ~~will~~additional ~~affect our revenue and financial performance~~products. ~~The~~We ~~Company~~include ~~has~~product ~~four natural~~development ~~and~~expenses ~~organic~~as ~~groceries~~part ~~and~~of ~~dietary~~our ~~supplement~~operating ~~stores~~expenses. ~~located~~In inOctober ~~Florida~~2018, aswe ~~well~~announced asthe ~~ten~~granting ~~located~~of inthree ~~New~~US ~~York~~patents ~~and~~related ~~New~~to ~~Jersey.~~our ~~The Company~~Q-Cup™ ~~has~~technology. ~~closed~~In ~~retail vape stores~~addition, aswe ~~management~~have ~~has~~a ~~shifted~~suite ~~its~~of ~~retail~~patent ~~sales~~applications ~~focus~~pending toin the ~~wholesale~~United ~~and~~States. ~~online~~There ~~channel.~~is ~~The~~no ~~adverse~~assurance ~~industry trends~~that ~~and~~we ~~increasing~~will ~~federal~~be ~~and~~awarded patents ~~state~~for ~~regulations~~any ~~that,~~of ifthese ~~implemented,~~pending ~~may~~patent ~~negatively~~applications. ~~impact~~There ~~future~~is ~~wholesale~~no ~~and~~assurance ~~online~~that ~~operations in~~we ~~the~~can ~~vapor~~monetize ~~segment~~the patents.

~~Increased Competition~~Manufacturing: We ~~Food~~have ~~retail~~no ismanufacturing acapabilities ~~large~~ and ~~competitive~~do ~~industry.~~not ~~Our~~intend ~~competition~~to ~~varies~~develop ~~and~~any ~~includes~~manufacturing ~~national,~~capabilities. ~~regional,~~Third ~~and~~party ~~local~~manufacturers make our ~~conventional~~products ~~supermarkets,~~to ~~national~~meet ~~superstores,~~our ~~alternative~~design ~~food~~specifications. ~~retailers,~~We ~~natural~~depend ~~foods~~on ~~stores,~~third ~~smaller~~party ~~specialty~~manufacturers ~~stores,~~for ~~and~~our ~~farmers’ markets.~~vaporizer Ine-liquid ~~addition,~~and weaccessories. ~~compete~~Our ~~with~~customers associate ~~restaurants~~certain ~~and~~characteristics ~~other~~of ~~dining~~our ~~options~~products inincluding the ~~food-at-home~~weight, ~~and~~feel, ~~food-away-from-home~~draw, ~~markets.~~unique ~~The~~flavor, ~~opening~~ packaging and ~~closing~~other attributes of our ~~competitive~~products ~~stores,~~to asthe ~~well~~brands aswe ~~restaurants~~market, distribute and ~~other~~sell. ~~dining~~Any ~~options,~~interruption in ~~regions~~supply ~~where~~and weor ~~operate~~consistency ~~will~~of ~~affect~~ our ~~results. In~~products ~~addition,~~may ~~changing~~harm ~~consumer~~our relationships ~~preferences~~and reputation with ~~respect~~customers, toand ~~food~~have ~~choices~~a ~~and~~material toadverse ~~dining~~effect ~~out~~on orour atbusiness, ~~home~~results ~~can~~of ~~impact~~operations usand financial condition. WeIn ~~also~~order ~~expect~~to ~~increased product~~minimize ~~supply~~the ~~and~~risk ~~downward~~of ~~pressure~~supply oninterruption, ~~prices~~we tocurrently ~~continue~~utilize ~~and~~several ~~impact~~third-party ~~our~~manufacturers ~~operating~~to ~~results~~manufacture our inproducts ~~the~~to ~~future~~our specifications.

Results of Operations

The following table sets forth our unaudited condensed consolidated Statements of Operations for the three months ended ~~June~~September 30, 2024 ~~and~~ and 2023 that is used in the following discussions of our results of operations:

	Three Months Ended June 30,						2024 to 2023
	Three Months Ended September 30,						2024 to 2023
	2024			2023			Change $
SALES	$	52		$	-		$	52
Vapor sales, net	$	174		$	-		$	174
COST OF SALES		15			-			15
Grocery sales, net		15,594,575			13,574,896			2,019,679
GROSS PROFIT		37			-			37
TOTAL SALES, NET		15,594,749			13,574,896			2,019,853
OPERATING EXPENSES		2,143,442			2,136,026			7,416
Cost of sales vapor		42			-			42
LOSS FROM OPERATIONS		(2,143,405	)		(2,136,026	)		(7,379	)
Cost of sales grocery		9,698,119			8,493,213			1,204,906
GROSS PROFIT		5,896,588			5,081,683			814,905
OPERATING EXPENSES		8,344,526			8,261,343			83,183
LOSS FROM OPERATIONS		(2,447,938	)		(3,179,660	)		731,722
OTHER INCOME (EXPENSE)
Loss on investment		(~~136~~343	)		~~(3,943~~343	)		~~3,807~~(686	)
Change in contingent consideration		-			425,000			(425,000	)
Other income (expense), net		260,000			(10,932	)		270,932
Other income, net		3,828			4,600			(772	)
Interest income, net		15,105			75,299			(60,194	)
Interest (expense) income, net		(62,432	)		101,248			(163,680	)
Total other income (expense), net		274,762			64,710			210,052
Total other income (expense), net		(58,740	)		526,905			(585,645	)
NET LOSS	$	(1,868,643	)	$	(2,071,316	)	$	202,673
NET LOSS	$	(2,506,678	)	$	(2,652,755	)	$	146,077

Net ~~vapor~~sales and cost of sales ~~was~~were de minimis for the three months ended ~~June~~September 30, 2024 and 2023. The Company closed all its brick-and-mortar retail vape stores, as management had shifted its retail sales focus to the wholesale and online channel. The sales and cost of sales for the three months ended ~~June~~ September 30, 2024 and 2023 continued to be significantly impacted by the inability to bring new products to market via distribution.

~~Net~~Total ~~grocery~~operating ~~sales~~expenses ~~increased~~of $2.01 million ~~to $15.6 million~~ for the three months ended ~~June~~September 30, 2024 asremained ~~compared~~consistent towith ~~$13.6 million for~~ the same period in 2023. The increase in grocery sales of $2.9 million was primarily due to the acquisition of Ellwood Thompson’s, offset by a decrease in same-store sales of $0.9 million. The decrease in same-store sales was mainly attributable to the closing of the non-performing Saugerties store and the outsourced prepared food service in Ada’s Natural Food store which was an underperforming department.

~~Vapor~~Total ~~cost~~other ofincome ~~goods~~(expense), ~~sold~~net of $275,000 for the three months ended ~~June~~September 30, 2024 ~~and~~consists ~~2023~~of ~~was~~net deinterest ~~minimis.~~income ~~The~~of ~~Company~~$15,000, ~~closed all its brick-~~and~~-mortar retail~~ ~~vape stores~~$260,000 asreversal ~~management~~of ~~has~~accrued ~~shifted~~professional ~~its~~fee. ~~retail~~Total ~~sales~~other ~~focus~~income to(expense), ~~the~~net ~~wholesale and online channel. The cost~~ of ~~goods~~$65,000 ~~sold~~ for the three months ended ~~June~~September 30, ~~2024 and~~ 2023 ~~continued~~primarily toconsists beof ~~significantly~~interest ~~impacted~~income byof ~~the~~$75,000, ~~inability~~and toother ~~bring~~expense ~~new~~of ~~products to market via distribution~~$11,000.

~~Grocery cost of goods sold for the three months ended June 30, 2024 and 2023 were $9.7 million and $8.5 million, respectively.~~ The ~~increase of~~ ~~$1.9~~following ~~million~~table issets ~~primarily~~forth ~~due~~our tounaudited ~~the~~consolidated ~~acquisition~~Statements of ~~Ellwood~~Operations ~~Thompson’s, offset by a decrease in same-store cost of goods sold of $0.7 million. Gross profit was $5.9 million and $5.1 million~~ for the ~~three~~nine months ended ~~June~~September 30, 2024 and 2023~~, respectively. Gross margin~~ asthat ais ~~percentage~~used ofin ~~sales increased approximately 0.4% as compared to~~ the ~~same~~following ~~period~~discussions ~~in prior year because~~ of ~~the~~our ~~closing~~results of ~~the non-performing Saugerties store and the outsourced prepared food service in Ada’s Natural Food store which was an underperforming department.~~operations:

Total operating expenses for the three months ended June 30, 2024 remained consistent with the same period in 2023. The increase of $0.8 million from the acquisition of Ellwood Thompson’s offset by $0.8 million savings in professional fees and payroll and benefits expense.

	Nine Months Ended September 30,						2024 to 2023
	2024			2023			Change $
SALES	$	345		$	39		$	307
COST OF SALES		190			653			(463	)
GROSS PROFIT		155			(614	)		770

OPERATING EXPENSES		6,312,846			5,448,812			864,034
LOSS FROM OPERATIONS		(6,312,691	)		(5,449,426	)		(863,264	)

OTHER INCOME (EXPENSE)
Loss on investment		(1,336	)		(8,057	)		6,721
Other income (expense), net		260,000			(10,932	)		270,932
Interest income, net		114,732			358,322			(243,590	)
Total other income (expense), net		373,396			339,333			34,063

NET LOSS FROM CONTINUING OPERATIONS	$	(5,939,295	)	$	(5,110,093	)	$	(829,201	)

~~Total~~Net ~~other~~sales ~~(expenses)~~and ~~income,~~cost ~~net~~ of ~~$59,000~~sales were de minimis for the ~~three~~nine months ended ~~June~~September 30, 2024 ~~consists~~and of2023. ~~net~~The ~~interest~~Company ~~expense~~closed ofall ~~$62,000,~~its ~~offset~~brick-and-mortar byretail $3vape stores,~~000~~ ~~other~~as ~~income.~~management ~~Total~~had ~~other~~shifted ~~income~~its ~~(expense),~~retail ~~net~~sales offocus ~~$527,000~~to the wholesale and online channel. The sales for the ~~three~~nine months ended ~~June~~September 30, 2024 and 2023 ~~primarily~~continued ~~consists~~to ~~of interest~~be ~~income~~significantly ofimpacted ~~$101,000,~~by ~~and~~the ~~change~~inability into ~~contingent~~bring ~~consideration~~new ofproducts ~~$425,000~~to market via distribution.

~~The~~Total ~~following~~operating ~~table~~expenses ~~sets~~increased ~~forth~~$0.9 ~~our~~million ~~unaudited~~to ~~consolidated~~$6.3 ~~Statements~~million ~~of Operations~~ for the ~~six~~nine months ended ~~June~~September 30, 2024 ~~and~~compared to $5.4 million for the same period in 2023. ~~that~~The increase is ~~used~~ primarily due to $1.2 million increase in ~~the~~stock ~~following~~compensation ~~discussions~~expense ofand ~~our~~$0.1 ~~results~~million ofincrease ~~operations:~~in payroll and benefit expense, offset by $0.5 million decrease in legal fees.

	Six Months Ended June 30,						2024 to 2023
	2024			2023			Change $
SALES
Vapor sales, net	$	293		$	38		$	255
Grocery sales, net		31,488,933			27,134,602			4,354,331
TOTAL SALES, NET		31,489,226			27,134,640			4,354,586
Cost of sales vapor		174			653			(479	)
Cost of sales grocery		19,538,100			17,137,913			2,400,187
GROSS PROFIT		11,950,952			9,996,074			1,954,878
OPERATING EXPENSES		17,203,543			15,158,780			2,044,763
LOSS FROM OPERATIONS		(5,252,591	)		(5,162,706	)		(89,885	)
OTHER INCOME (EXPENSE)
Loss on investment		(993	)		(8,400	)		7,407
Change in contingent consideration		-			402,900			(402,900	)
Other income, net		7,183			9,250			(2,068	)
Interest (expense) income, net		(121,424	)		198,900			(320,323	)
Total other income (expense), net		(115,234	)		602,650			(717,884	)
NET LOSS	$	(5,367,825	)	$	(4,560,056	)	$	(807,769	)

Net vapor sales was de minimis for the six months ended June 30, 2024 and 2023. The Company closed all its brick-and-mortar retail vape stores, as management had shifted its retail sales focus to the wholesale and online channel. The sales for the six months ended June 30, 2024 and 2023 continued to be significantly impacted by the inability to bring new products to market via distribution.

Net grocery sales increased $4.4 million to $31.5 million for the six months ended June 30, 2024 as compared to $27.1 million for the same period in 2023. The increase in grocery sales of $5.9 million was primarily due to the acquisition of Ellwood Thompson’s, offset by a decrease in same-store sales of $1.5 million. The decrease in same-store sales was primarily attributable to the closing of the non-performing Saugerties store and the outsourced prepared food service in Ada’s Natural Food store which was an underperforming department.

Vapor cost of goods sold for the six months ended June 30, 2024 and 2023 was de minimis. The Company closed all its brick-and-mortar retail vape stores, as management has shifted its retail sales focus to the wholesale and online channel. The cost of goods sold for the six months ended June 30, 2024 and 2023 continued to be significantly impacted by the inability to bring new products to market via distribution.

Grocery cost of goods sold for the six months ended June 30, 2024 and 2023 were $19.5 million and $17.1 million, respectively. The increase of $3.7 million is primarily due to the acquisition of Ellwood Thompson’s, offset by a decrease in same-store cost of goods sold of $1.3 million. Gross profit was $12.0 million and $10.0 million for the six months ended June 30, 2024 and 2023, respectively. Gross margin as a percentage of sales increased approximately 1.2% as compared to the same period in prior year because of the closing of the non-performing Saugerties store and the outsourced prepared food service in Ada’s Natural Food store which was an underperforming department.

Total operating expenses increased $2.0 million to $17.2 million for the six months ended June 30, 2024 compared to $15.2 million for the same period in 2023. The increase is primarily due to the acquisition of Ellwood Thompson’s on October 1, 2023 which accounted for $1.7 million, $1.1 million increase in stock compensation expense, $0.3 million increase in occupancy, tax and other selling and general administration expense, offset by $1.1 million savings in payroll and benefits expense and professional fees.

Total other income (~~expenses~~expense) ~~income~~, net of $~~115~~374,000 for the ~~six~~nine months ended ~~June~~September 30, 2024 consists of net interest ~~expense~~income of $~~121~~115,000 and other income of $260,000 related with professional fee accrual reversal, offset by $61,000 ~~other~~loss ~~income~~on investment. Total other ~~(expenses)~~ income, net of $~~603,000~~0.3 million for the ~~six~~nine months ended ~~June~~September 30, 2023 ~~consists~~includes ofa ~~interest~~loss ~~income of~~on ~~$199,000,~~investment ~~other income~~ of $98,000, ~~change~~other inexpense ~~contingent consideration~~ of $~~403~~11,000, and ~~offset~~an interest byincome ~~loss on investment~~ of $8358,000.

Liquidity and Capital Resources

	Six Months Ended June 30,
	Nine Months Ended September 30,
	2024			2023
Net cash (used in) provided by
Operating activities	$	(21,~~471~~042,~~414~~919	)	$	(32,~~658~~364,~~415~~903	)
Investing activities		(~~164~~47,~~164~~185	)		~~(115~~175,~~099~~640	)
Financing activities		~~907~~(2,~~818~~120,260	)		(1113,~~806~~656,~~463~~029	)
	$	(1,~~727~~124,~~760~~526	)	$	(15,~~579~~845,~~977~~292	)

~~Our net~~The ~~cash~~following ~~used~~table insets ~~operating~~forth ~~activities~~our ofunaudited ~~approximately~~consolidated ~~$2.5~~statements ~~million for the six months ended June 30, 2024 resulted from a net loss~~ of ~~$5.4~~ ~~million, offset by a non-~~cash ~~adjustment~~flows ofon ~~$6.1~~continuing ~~million~~basis ~~and a net cash usage of $3.2 million from changes in operating assets and liabilities. Our net cash used in operating activities of approximately $3.7 million~~ for the ~~six~~ nine months ended ~~June~~September 30, ~~2023~~2024 ~~resulted from a net loss of $4.6 million, offset by a non-cash adjustment of $3.5 million~~ and ~~a net cash usage of $2~~2023.~~6 million from changes in operating assets and liabilities~~

The net cash used in investing activities of $0.2 million for the six months ended June 30, 2024 resulted from purchases of property and equipment. The net cash used in investing activities of $0.1 million for the six months ended June 30, 2023 resulted from collection on a note receivable and purchases of property and equipment.

	Nine Months Ended September 30,
	2024			2023
CASH FLOWS FROM OPERATING ACTIVITIES OF
Net loss	$	(5,939,295	)	$	(5,110,093	)
Adjustments to reconcile net loss to net cash used in operating activities:					-
Depreciation and amortization		49,065			44,710
Loss on notes receivable settlement		-			10,931
Loss on investment		1,336			8,057
Amortization of right-of-use asset		83,961			1,676
Stock-based compensation expense		3,484,416			2,303,500
Accounts receivable		-			585
Inventories		86			23
Prepaid expenses and vendor deposits		1,296,508			(1,585,324	)
Due from related party		2,638,730			542,718
Other current assets		(33,152	)		776,925
Other assets		30,229			(31,600	)
Accounts payable and accrued expenses		(485,005	)		674,664
Lease liability		(83,960	)		(1,675	)
NET CASH USED IN OPERATING ACTIVITIES OF		1,042,919			(2,364,903	)

CASH FLOWS FROM INVESTING ACTIVITIES
Collection of note receivable		-			178,294
Purchases of property and equipment		(47,185	)		(2,654	)
NET CASH USED IN INVESTING ACTIVITIES		(47,185	)		175,640

CASH FLOWS FROM FINANCING ACTIVITIES
Payments for deferred offering costs		-			(264,375	)
Payment of induced conversions of preferred stock		-			(152,500	)
Net transfers to HCWC related to Spin-Off		(4,144,213	)		(13,239,154	)
Due from related party		2,023,953			-
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES		(2,120,260	)		(13,656,029	)

NET DECREASE IN CASH, CASH EQUIVALENT AND RESTRICTED CASH		(1,124,526	)		(15,845,292	)
CASH, CASH EQUIVALENT AND RESTRICTED CASH— BEGINNING OF PERIOD		4,211,738			22,669,553
CASH, CASH EQUIVALENT AND RESTRICTED CASH — END OF PERIOD	$	3,087,212		$	6,824,261

~~The~~Our net cash provided by ~~financing~~operating activities of approximately $01.90 million for the ~~six~~nine months ended ~~June~~September 30, 2024 ~~consists~~resulted offrom ~~cash~~a ~~proceeds~~net loss of $15.79 million ~~from Security Purchase Agreement (“SPA”) signed on January 18~~, ~~2024,~~offset ~~principal~~by ~~payment~~a onnon-cash ~~loan~~adjustment ~~payable~~ of $0.3.6 million, and ~~payment~~ ~~for~~a ~~deferred~~net ~~offering~~cash ~~cost~~change of $03.4 million from changes in operating assets and liabilities. ~~The~~Our net cash used in ~~financing~~operating activities of approximately $112.84 million for the ~~six~~nine months ended ~~June~~ September 30, 2023 isresulted ~~due~~from toa ~~Series~~net Eloss ~~Preferred~~of ~~Stock~~$5.1 ~~redemption~~million, ~~and~~offset ~~exercise,~~by ~~payment~~a ~~for~~non-cash ~~deferred~~adjustment ~~offering~~of ~~cost~~$2.4 ~~related~~million ~~with~~and ~~spin~~a ~~off,~~net ~~and~~cash change of $0.4 million ~~principal~~from ~~payment~~changes onin ~~loan~~operating ~~payable~~assets and liabilities.

AtThe ~~June~~net cash used in investing activities of $47,000 for the nine months ended September 30, 2024 resulted from purchases of property and equipment. ~~December~~The ~~31,~~net ~~2023,~~cash weprovided ~~did~~by ~~not~~investing ~~have~~activities ~~any~~of ~~material~~$176,000 ~~financial~~for ~~guarantees~~the ornine ~~other~~months ~~contractual~~ended ~~commitments~~September ~~with~~30, ~~vendors that~~2023 ~~are~~resulted ~~reasonably~~from ~~likely~~collection on toa ~~have~~note anreceivable ~~adverse~~and ~~effect~~purchases onof ~~liquidity~~property and equipment.

~~Our~~The net cash ~~balances~~used ~~are~~in ~~kept~~financing ~~liquid~~activities toof ~~support~~$2.1 ~~our~~million ~~growing~~for ~~acquisition~~the ~~and~~nine ~~infrastructure~~months ~~needs~~ended ~~for~~September ~~operational~~30, ~~expansion.~~2024 ~~Most~~is ofprimarily ~~our~~due ~~cash and~~to ~~cash~~$4.1 ~~equivalent~~million net ~~are~~transfer ~~concentrated~~to inHCWC ~~one~~related ~~financial~~to ~~institution~~Spin-Off and is$2.0 ~~generally~~million incash ~~excess~~proceeds offrom ~~the~~related ~~FDIC~~party. ~~insurance~~Net ~~limit.~~cash ~~The~~used ~~Company has~~in ~~not~~financing ~~experienced~~activities ~~any~~of approximately ~~losses~~$13.7 onmillion ~~its~~for ~~cash.~~the ~~The~~nine ~~following~~months ~~table~~ended ~~presents~~September ~~the~~30, ~~Company’s~~2023 ~~cash~~is ~~position~~due asto ofSeries ~~June~~E ~~30,~~Preferred ~~2024~~Stock redemption and ~~December~~exercise, 31payment for deferred offering cost related with Spin-Off, ~~2023~~and net parent investment.

	June 30, 2024			December 31, 2023
Cash and cash equivalent	$	3,353,326		$	5,081,086
Total assets	$	27,612,391		$	30,969,579
Cash and cash equivalent as a percentage of total assets		12.14	%		16.41	%

At September 30, 2024 and December 31, 2023, we did not have any material financial guarantees or other contractual commitments with vendors that are reasonably likely to have an adverse effect on liquidity.

~~The~~Our ~~Company~~cash ~~reported~~balances aare ~~net~~kept ~~loss~~liquid ofto ~~$5.4~~support ~~million~~our growing acquisition and infrastructure needs for ~~the~~operational ~~six~~expansion. ~~months~~Most ~~ended~~of ~~June~~our ~~30,~~cash and ~~2024~~cash equivalent are concentrated in one financial institution and is generally in excess of the FDIC insurance limit. The Company has ~~also~~not ~~had~~experienced ~~negative~~any ~~working~~losses ~~capital~~on ~~of $2.6~~its ~~million~~cash. The following table presents the Company’s ~~expects~~cash toposition ~~continue~~as ~~incurring~~of ~~losses~~September ~~for~~30, ~~the~~2024 ~~foreseeable~~and December ~~future~~31, 2023.

On May 16, 2024, the Company secured a financing commitment with a private lender. This commitment allowed the Company to draw up to $5 million from its revolving credit facility to be used for expansion and working capital purposes. The loan will be repayable in full on August 31, 2025 and the interest rate on the loan is 12%. On July 18, 2024, HCWC entered into a $7.5 million loan and security agreement with a private lender to support its expansion plans and funding of any working capital needs, of which $4.2 million was used for the July 18, 2024 purchase of GreenAcres Market. The face amount of the loan is $7,500,000 with 12% annual interest and has a maturity date of July 17, 2027. On July 24, 2024, the Company finalized the closing of Saugerties building sale with all parties involved and received net proceeds of $695,000. The Company anticipates its current cash and cash generated from operations will not be sufficient to meet projected operating expenses for the foreseeable future through at least twelve months from the issuance of the consolidated financial statements.

	September 30, 2024			December 31, 2023
Cash and cash equivalent	$	2,533,980		$	3,658,506
Total assets	$	3,784,648		$	6,290,022
Cash and cash equivalent as a percentage of total assets		67.0	%		58.2	%

The Company reported a net loss from continuing operation of $5.9 million for the nine months ended September 30, 2024. The Company also had positive working capital of $0.2 million. The Company expects to continue incurring losses for the foreseeable future.

The Company anticipates its current cash and its ability to draw from the $5 million credit line with private lender will be sufficient to meet projected operating expenses for the foreseeable future through at least twelve months from the issuance of the consolidated financial statements.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements.

Critical Accounting Estimates

Our management’s discussion and analysis of financial condition and results of operations is based on our unaudited condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States, or U.S. GAAP. The preparation of these condensed consolidated financial statements requires us to exercise considerable judgment with respect to establishing sound accounting policies and in making estimates and assumptions that affect the reported amounts of our assets and liabilities, our recognition of revenues and expenses, and disclosure of commitments and contingencies at the date of the condensed consolidated financial statements.

We base our estimates on our historical experience, knowledge of our business and industry, current and expected economic conditions, ~~the~~ the attributes of our products, the regulatory environment, and in certain cases, the results of outside appraisals. These estimates include useful lives and impairment of long-lived assets, deferred taxes and related valuation allowances, allocation of corporate general expenses, and the valuation of the assets and liabilities acquired in business combinations. We periodically re-evaluate ~~our~~ our estimates and assumptions with respect to these judgments and modify our approach when circumstances indicate that modifications ~~are~~ are necessary. These estimates and assumptions form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.

While we believe that the factors we evaluate provide us with a meaningful basis for establishing and applying sound accounting policies, we cannot guarantee that the results will always be accurate. Since the determination of these estimates requires the exercise of judgment, actual results could differ from such estimates.

There have been no material changes to the Company’s critical accounting policies and estimates except allocation of corporate general expense as compared to the critical accounting policies and estimates described in the 2023 Annual Report, which we believe are the most critical to our business and the understanding of our results of operations and affect the more significant judgments and estimates that we use in the preparation of our condensed consolidated financial statements. Allocation of corporate general expenses to HCWC was a result of recently completed spin-Off of HCWC, which led to a reevaluation of how corporate general expenses were allocated. The Company adopted a proportional cost allocation method to allocate parent expense to the carve-out entity.

Seasonality

We do not consider our business to be seasonal.

Cautionary Note Regarding Forward-Looking Statements

This report includes forward-looking statements including statements regarding retail expansion, the future demand for our products, the transition to vaporizer and other products, competition, the adequacy of our cash resources and our authorized Common Stock, and our continued ability to raise capital.

The words “believe,” “may,” “estimate,” “continue,” “anticipate,” “intend,” “should,” “plan,” “could,” “target,” “potential,” “is likely,” “will,” “expect” and similar expressions, as they relate to us, are intended to identify forward-looking statements. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs.

The results anticipated by any or all of these forward-looking statements might not occur. Important factors that could cause actual ~~results~~ results to differ from those in the forward-looking statements include our future common stock price, ~~the timing of future Series D preferred stock exercises and stock sales,~~ customer acceptance of our products, and proposed federal and state regulation. We undertake no obligation to publicly update or revise any forward-looking statements, whether as the result of new information, future events or otherwise.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable to smaller reporting companies.

ITEM 4. CONTROLS AND PROCEDURES

We are required to report under Section 404(a) of Sarbanes-Oxley regarding the effectiveness of our internal control over financial reporting.

Evaluation of Disclosure Controls and Procedures

Our management, including our Principal Executive Officer and Principal Financial Officer, did not carry out an evaluation on internal controls as of ~~June~~September 30, 2024 in regard to the effectiveness of our disclosure controls and procedures as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, or the Exchange Act. As an evaluation was not carried out, our Principal Executive Officer and Principal Financial Officer concluded that our disclosure controls and procedures were ineffective as of the end of the period covered by this report.

The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting. Under the supervision and with the participation of the Company’s management, including the Chief Executive Officer and Chief Financial Officer, the Company evaluated the effectiveness of the design and operation of its internal control over financial reporting based on the framework established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework). Based on that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s internal control over financial reporting was ineffective as of ~~June~~September 30, 2024 and noted the material weaknesses as follows:

● Failure to have properly documented and designed disclosure controls and procedures and testing of the operating effectiveness of our internal control over financial reporting. ~~● Failure to perform periodic and year-end inventory observations in a timely manner and adequate controls to sufficiently perform required rollback procedures of inventory counts to the year-end.~~

● ~~Weakness around purchase orders and inventory procedures, inclusive of year-end physical inventory observation procedures as well as physical count procedures. ●~~ Segregation of duties due to lack of personnel. ● ~~Failure to follow accounts payable policies and procedures for vendor information updates. ●~~ The Company had ineffective design, implementation and, operation of controls over logical access, program change management, and vendor management controls. The Company controls on IT should have included the following:

	○	Appropriate restrictions that would adequately prevent users from gaining inappropriate access to the financially relevant systems.

	○	IT program and data changes affecting the Company’s financial IT applications and underlying accounting records, should be identified, tested, authorized and implemented appropriately to validate that data produced by its relevant IT system(s) were complete and accurate.

	○	Obtaining and reviewing key third party service provider SOC reports.

Our management concluded that considering internal control deficiencies that, in the aggregate, rise to the level of material weaknesses, we did not maintain effective internal control over financial reporting as of ~~June~~September 30, 2024 based on the criteria set forth in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).

Planned Remediation

Management continues to work to improve its controls related to our material weaknesses listed above. In order to achieve the timely implementation of the above, management has commenced the following actions and will continue to assess additional opportunities for remediation on an ongoing basis:

● Continuing to increase headcount across the Company, with a particular focus on hiring individuals with strong internal control backgrounds and inventory expertise. ● Increasing its focus on the Company’s purchase order process in order to better manage inventory thereby improving cash management. Utilizing margin analysis to control inventory and purchase, and ultimately leading to more reliable and precise financial reporting. ● Establishing policies and procedures in the IT area to mitigate data breach, unauthorized access and address segregation of duties, as well as review key third party service provider SOC reports. ● Using business intelligence to combine business analytics, data tools and infrastructure to help the Company quickly identify the issues in POS system and facilitate internal control over financial reporting. Developing dashboards for operation to monitor the margin at store level, department level and sku level. ● Establishing procedures and enforcing monthly and quarterly perishable physical inventory count for all retail stores and analyzing the financial impacts to improve efficiency in inventory control and purchase control. ● Analyzing stores’ operation by implementing monthly financial statements review with management and store managers. Utilizing the breakeven analysis to better facilitate operation decision. ● Providing sufficient training to accounts payable associates and enforcing accounts payable policies and procedures.

We are currently working to improve and simplify our internal processes and implement enhanced controls, as discussed above, to address the material weaknesses in our internal control over financial reporting and to remedy the ineffectiveness of our disclosure controls and procedures. These material weaknesses will not be considered to be remediated until the applicable remediated controls are operating for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively.

Changes in Internal Controls over Financing Reporting

Except as detailed above, during the quarter ended ~~June~~September 30, 2024, there were no significant changes in our internal control over financial ~~reporting~~ reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act that have materially affected or are reasonably ~~likely~~ likely to materially affect our internal control over financial reporting.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

There were two lawsuits in connection with alleged claimed battery defects for an electronic cigarette device. One had been dismissed by ~~the~~ the court wherein the plaintiff settled with the Company’s insurance carrier with no economic impact to the Company. In the ~~second~~ second lawsuit, as of December 31, 2023, the Company had reached an arrangement with the plaintiff to resolve the matter, limiting ~~potential~~ potential exposure of the Company to $1.5 million which was reflected in accounts payable and accrued expenses, representing management’s estimate of the probable settlement amount based on the current status of discussions. This arrangement was formalized by a signed agreement on July 1, 2024 and the Company has accrued $1.5 million at June 30, 2024. As of September 30, ~~which~~2024, the Company already paid $700,000, and the remaining balance of $800,000 was reflected in accounts payable and accrued expenses in the accompanying condensed consolidated balance sheets.

On November 30, 2020, the Company filed a patent infringement lawsuit against Philip Morris USA, Inc. and Philip Morris Products S.A. in the U.S. District Court for the Northern District of Georgia. The lawsuit alleges infringement on HCMC-owned patent(s) by the Philip Morris product known and marketed as “IQOS®”. Philip Morris claims that it is currently approaching 14 million users of its IQOS® product and has reportedly invested over $3 billion in their smokeless tobacco products. On December 3, 2021, the District Court for the Northern District of Georgia effectively dismissed HCMC’s patent infringement action against Philip Morris USA, Inc. and Philip Morris Products S.A. On December 14, 2021, the Company filed a notice of appeal of the District Court for the Northern District of Georgia’s dismissal of the Company’s patent infringement action against Philip Morris USA, Inc. and Philip Morris Products S.A. The appeal brief was filed on February 28, 2022.

In connection with such dismissal, the defendants sought to recover attorney’s fees from the Plaintiff. On February 22, 2022, the District Court for the Northern District of Georgia granted the defendant’s an award of approximately $575,000 in attorneys’ fees to be paid by the Company. HCMC appealed this ruling on June 22, 2022.

On ~~July 31,~~November ~~2024~~17, ~~one of the Company’s subsidiaries~~2023, ~~Healthy~~RJR ~~Choice Markets IV, LLC, was served with a lawsuit~~ filed by a ~~former~~motion ~~employee alleging violations of state and federal wage and hour laws. The Company believes the claims are without merit and intends~~ to ~~vigorously~~dismiss ~~defend against~~ the ~~lawsuit~~action. ~~While~~HCMC ~~the~~opposed ~~outcome~~on ofDecember ~~this~~22, ~~litigation~~2023. ~~cannot~~To bedate ~~predicted with certainty,~~ the ~~Company~~court ~~does~~has not ~~believe~~ruled ~~that the lawsuit, if adversely resolved, would have a material adverse effect~~ on ~~its~~the ~~financial condition, results of operations, or cash flows~~motion.

~~From time~~On toSeptember ~~time~~18, ~~the~~2024, ~~Company~~RJR isfiled ~~involved~~an ininter ~~legal~~partes ~~proceedings~~review ~~arising~~of in the ~~ordinary~~patent-in-suit ~~course~~at ofthe ~~our~~United ~~business.~~States WePatent ~~believe~~and ~~that there is no~~Trademark ~~other~~Office ~~litigation~~(“USPTO”). ~~pending~~A ~~that~~decision ison ~~likely~~institution towill ~~have,~~be ~~individually~~made orby in the ~~aggregate,~~USPTO asometime ~~material~~after ~~adverse~~January ~~effect on our financial condition or results of operations as of June 30, 2024~~2025. ~~With respect to legal costs, we record such costs as incurred.~~

From time to time the Company is involved in legal proceedings arising in the ordinary course of our business. We believe that there is no other litigation pending that is likely to have, individually or in the aggregate, a material adverse effect on our financial condition or results of operations as of September 30, 2024. With respect to legal costs, we record such costs as incurred.

ITEM 1A. RISK FACTORS.

Not Applicable.

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

InNot connection with the Bridge Financing, in addition to the Notes, HCWC issued Bridge Warrants which entitle the holders thereof to purchase 188,889 shares of HCWC’s Class A common stock (the “Bridge Warrant Shares”) at a nominal exercise price of $0Applicable.01 per share, at any time on or after HCWC’s registration statement on Form S-1 for the initial registration of the Class A common stock (the “IPO”) is declared effective by the United State Securities and Exchange Commission. HCWC has agreed to register all of the Bridge Warrant Shares in connection with the IPO. The issuance of the Notes and the Bridge Warrants are exempt from registration pursuant to the provisions Section 4(a)(2) of the Securities Act of 1933, as amended, and Rule 506(b) of Regulation D, as promulgated by the Commission, on the basis that the Issuer and HCWC had a pre-existing relationship with the investor and there was no public offering. The Bridge Warrants may not be offered or sold absent their registration for resale or the availability of an exemption therefrom. HCWC expects to use the proceeds from the sale of the Securities for general working capital purposes.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4. MINE SAFETY DISCLOSURES.

Not Applicable.

ITEM 5. OTHER INFORMATION.

Not Applicable.

ITEM 6. EXHIBITS.

See the exhibits listed in the accompanying “Index to Exhibits.”

INDEX TO EXHIBITS

Exhibit		Incorporated by Reference			Filed or Furnished
No.	Exhibit Description	Form	Date	Number	Herewith
31.1	Certification of Principal Executive Officer (302)				Filed
31.2	Certification of Principal Financial Officer (302)				Filed
32.1	Certification of Principal Executive Officer (906)				Furnished *
32.2	Certification of Principal Financial Officer (906)				Furnished *
101.INS	Inline XBRL Instance Document				Filed
101.SCH	Inline XBRL Taxonomy Extension Schema Document				Filed
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document				Filed
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document				Filed
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document				Filed
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document				Filed
104	Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)				Filed

* This exhibit is being furnished rather than filed and shall not be deemed incorporated by reference into any filing, in accordance with Item 601 of Regulation S-K.

SIGNATURES

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

	HEALTHIER CHOICES MANAGEMENT CORP.
Date: August 6, 2024	By:	/s/ Jeffrey Holman
Date: November 14, 2024	By:	/s/ Jeffrey Holman
		Jeffrey Holman
		Chief Executive Officer
Date: August 6, 2024	By:	/s/ John Ollet
Date: November 14, 2024	By:	/s/ John Ollet
		John Ollet
		Chief Financial Officer

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