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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

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

For the fiscal year ended: December 31, ~~2023~~2024

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

For the transition period from: _____________ to _____________

HEALTHIER CHOICES MANAGEMENT CORP.

(Exact name of registrant as specified in its charter)

Delaware

001-36469

84-1070932

(State or Other Jurisdiction of

Incorporation or Organization)

(Commission

File Number)

(I.R.S. Employer

Identification No.)

Address of Principal Executive Office: 3800 North 28th Way Hollywood, Florida 33020

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

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

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

None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. ☐ Yes No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. ☐ Yes No ☒

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management assessment of the effectiveness of its internal controls over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report ☒

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

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

The aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold as of the last business day of the registrant’s most recently completed second fiscal quarter was approximately $4647.39 million based on the June 30, ~~2023~~2024 closing price of $0.0001 per share.

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date: ~~478~~481,266,632,384 shares outstanding as of ~~March~~April 2714, ~~2024~~2025.

INDEX

	Page
PART I
Item 1. Business	13
Item 1A. Risk Factors	148
Item 1B. Unresolved Staff Comments	148
Item 1C. Cybersecurity	148
Item 2. Properties	159
Item 3. Legal Proceedings	159
Item 4. Mine Safety Disclosures	159
PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	1610
Item 6. Selected Financial Data	1610
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations	1610
Item 7A. Quantitative and Qualitative Disclosures About Market Risk	2116
Item 8. Financial Statements and Supplementary Data	2116
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	2116
Item 9A. Controls and Procedures	2116
Item 9B. Other Information	2217
PART III
Item 10. Directors, Executive Officers and Corporate Governance	2318
Item 11. Executive Compensation	2621
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholders Matters	2924
Item 13. Certain Relationships and Related Transactions, and Director Independence	3025
Item 14. Principal Accounting Fees and Services	3126
PART IV
Item 15. Exhibits, Financial Statement Schedules	3126
Exhibit Index	3227
SIGNATURES	3428

PART I

Item 1. Business.

Healthier Choices Management Corp. (the “Company”) or “HCMC”) is afocused ~~holding~~on ~~company~~marketing ~~focused~~its oncurrent ~~providing~~product ~~consumers~~offerings, ~~with~~including ~~healthier~~its ~~daily~~patented ~~choices with~~Q-Cup ~~respect~~and Imitine. HCMC also will continue to ~~nutrition~~seek to monetize its intellectual property through royalty and ~~other~~licensing ~~lifestyle~~agreements, ~~alternatives~~facilitated by its wholly owned subsidiary, HCMC Intellectual Property Holdings, LLC. HCMC’s IP portfolio includes patents related to innovative products, such as the Q-Cup and Imitine.

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

~~Through~~The Company continues to promote its ~~wholly~~patented ~~owned~~Q-Cup™ ~~subsidiaries,~~technology ~~Healthy~~directly ~~Choice~~to ~~Markets,~~consumers ~~Inc~~in the vaping market., ~~Healthy~~This ~~Choice~~cutting-edge ~~Markets~~design includes 2,a ~~LLC,~~small ~~Healthy~~quartz ~~Choice~~cup ~~Markets~~that 3,users ~~LLC~~can fill with cannabis or CBD concentrate. Once placed in a Q-Cup™ Tank or Globe, ~~Healthy~~the ~~Choice~~cup ~~Markets~~is 3heated ~~Real~~externally ~~Estate,~~without ~~LLC,~~direct ~~Healthy~~contact ~~Choice~~with ~~Markets~~the ~~IV,~~concentrate. ~~LLC,~~This innovative approach provides greater efficiency and ~~Healthy~~a ~~Choice~~convenient solution ~~Markets~~for V,consumers ~~LLC~~who ~~respectively,~~vape ~~the~~concentrates ~~Company~~for ~~operates:~~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 (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 twoSpin-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).Off

~~Through~~HCMC announced on August 22, 2022 that its ~~wholly~~Board ~~owned~~of ~~subsidiary~~Directors approved the separation of the Grocery business, ~~Healthy~~including ~~Choice~~wellness ~~Wellness~~business, into ~~LLC~~an independent, ~~the~~publicly ~~Company~~traded ~~operates~~company a(the ~~Healthy~~“Spin-Off” ~~Choice~~or ~~Wellness~~“Separation”). ~~Center~~Prior into ~~Kingston~~the Spin-Off, NYthe ~~and~~Grocery ~~has~~segment awas ~~licensing~~operated ~~agreement~~under ~~for~~the aholding company Healthy Choice Wellness ~~Center~~Corp. ~~located~~(“HCWC”). atHCWC was a subsidiary of HCMC, and operated the ~~Casbah~~Ada’s ~~Spa~~Natural Market, Paradise Health & Nutrition, Mother Earth’s Storehouse, Greens Natural Foods, Ellwood Thompson’s, and ~~Salon~~GreenAcres inMarket ~~Fort~~retail ~~Lauderdale~~brands, FLas well as licensed wellness centers and Healthy U Wholesale.

~~Through~~On ~~its~~September ~~wholly owned subsidiary~~13, ~~Healthy~~2024 ~~Choice~~(the ~~Wellness~~“Spin-Off IIDate”), ~~LLC,~~after the ~~Company~~New ~~entered~~York ~~into~~Stock aExchange ~~joint~~American ~~venture~~(“NYSEAM”) ~~with~~market ~~an established~~closing, ~~healthcare~~the ~~provider,~~Spin-Off ~~and~~of the ~~joint~~HCWC ~~venture~~business iswas incompleted. ~~the~~On ~~process~~September of14, ~~creating~~2024, aHCWC ~~structure~~became ~~whereby~~an itindependent, ~~will~~publicly ~~engage~~traded incompany, ~~telemedicine~~and ~~evaluations~~on ofSeptember ~~patients~~16, ~~for semaglutide therapy. The operation will encompass~~2024, ~~generally:~~the ~~medical~~stock ~~evaluations~~commenced oftrading ~~patients;~~on ~~treatment~~the ofNYSEAM ~~patients with~~under ~~semaglutide;~~the ~~coordination~~stock ~~with~~symbol ~~providers and patients~~“HCWC.”

~~Through~~HCWC ~~its~~distributed ~~wholly~~all ~~owned~~the ~~subsidiary~~outstanding shares of Common Stock held by it on a pro rata basis to holders of HCMC’s common stock (the “Distribution”). For each 208,632 ~~Healthy~~shares Uof ~~Wholesale~~HCMC common stock held as of 5:00 p.m., ~~the~~Eastern ~~Company~~Daylight ~~sells~~Time ~~vitamins~~(EDT), ~~and~~on September ~~supplements~~9, as2024, ~~well~~the asrecord ~~health~~date for the Spin-Off (the “Record Date”), ~~beauty~~a HCMC stockholder was entitled to receive one share of Class A common stock and ~~personal~~three shares of Class B common stock. The Distribution was made in book-entry form by a ~~care~~distribution ~~products~~agent onas ~~its~~soon ~~website~~as ~~www~~practicable after the date of the Distribution.~~TheVitaminStore.com.~~

~~Additionally,~~As ~~through~~a ~~its~~result ~~wholly~~of ~~owned~~the ~~subsidiary~~Spin-Off, ~~The~~the ~~Vape~~operating ~~Store,~~results ~~Inc.,~~for the ~~Company~~HCWC ~~markets~~business ~~its~~through ~~patented~~the ~~Q-Unit™~~date ~~and~~of Qthe Spin-~~Cup®~~Off ~~technology~~are reported in Net Loss from Discontinued Operations in the Consolidated Statements of Operations for all periods presented. In addition, the related assets and ~~Information~~liabilities are reported as Assets and Liabilities of Discontinued Operations on ~~these~~the ~~products~~Consolidated Balance Sheets for year ended December 31, 2023. Unless otherwise noted, all amounts and disclosures included in the ~~technology~~Notes isto ~~available~~Consolidated onFinancial Statements reflect only the Company’s ~~website~~continuing atoperations. ~~www~~For additional information, see Note 2, “Discontinued Operations” of the consolidated financial statements.~~theQcup.com.~~

NATURAL AND ORGANIC GROCERIES AND DIETARY SUPPLEMENTS BUSINESS

Local. Organic. Fresh. Three words that define Healthy Choice Markets! With Ada’s Natural Market, a full-service grocery store and Greenleaf Grill, Ada’s flagship fast casual in-store restaurant, serving Fort Myers, FL, along with the eight Greens Natural Foods Stores in New Jersey and New York, three Paradise Health & Nutrition locations in the greater Melbourne, FL area, two Mother Earth’s Storehouse locations in Hudson Valley, NY, and the Ellwood Thompson store located in Richmond Virginia all serving their respective local communities, our stores provide all-natural and organic products in a friendly and helpful atmosphere, with aisles of traditional grocery complete with frozen, healthy home, vitamins & supplements, health & beauty, fresh produce, hormone and antibiotic free meats and bulk foods. Ada’s Natural Market, Greens Natural Foods, Paradise Health & Nutrition, Mother Earth’s Storehouse, and Ellwood Thompson’s all offer chef-prepared ready-to-go foods and fresh-baked-daily baked goods. All store locations, with the exception of Saugerties, NY and Malabar, FL, offer a 100% organic juice & smoothie bar.

Collectively, we focus on providing high-quality products at affordable prices, exceptional customer service, nutrition education and community outreach. We strive to generate long-term relationships with our customers based on quality and service by:

● selling only all-natural and organic groceries;

● offering affordable prices and a shopper-friendly retail environment; and

● providing dine-in options at our Greenleaf Grill, Organic Juice Bar, and our free-trade coffee bar.

Our History and Founding Principles

We are committed to maintaining the following founding principles, which have helped foster our growth:

● Quality. Every product on our shelves must go through a rigorous screening and approval process. Our mission includes providing the highest quality groceries and supplements, Natural Grocers branded products, European and United States Department of Agriculture (USDA) certified organic and fresh produce at the best prices in the industry.

● Community. The Ada’s, Paradise, Mother Earth’s Storehouse, Green’s Natural Foods and now Ellwood Thompson’s brands have each been serving their respective communities for 40+ years.

● Employees. Our employees make our companies great. We work hard to ensure that our employees are able to live a healthy, balanced lifestyle. We support them with free nutrition education programs, competitive pay and excellent benefits.

Our Market

We operate within the natural products retail industry, which is a subset of the United States grocery industry and the dietary supplement business. This industry includes conventional supermarkets, natural, gourmet and specialty food markets, mass and discount retailers, warehouse clubs, independent health food stores, dietary supplement retailers, drug stores, farmers’ markets, food co-ops, mail order and online retailers and multi-level marketers. Industry-wide sales of natural and organic foods and dietary supplements have experienced meaningful growth over the past several years, and we believe that growth will continue for the foreseeable future.

We believe the growth in sales of natural and organic foods and dietary supplements continues to be driven by numerous factors, including:

● greater consumer focus on high-quality nutritional products;

● an increased awareness of the importance of good nutrition to long-term wellness;

● aging communities that are seeking healthy lifestyle alternatives;

● heightened consumer awareness about the importance of food quality and a desire to avoid pesticide residues, growth hormones, artificial ingredients and genetically engineered ingredients in foods;

● growing consumer concerns over the use of harmful chemical additives in body care and household cleaning supplies;

● well-established natural and organic brands, which generate additional industry awareness and credibility with consumers; and

● the growth in the number of consumers with special dietary requirements as a result of allergies, chemical sensitivities, auto-immune disorders and other conditions.

Our Competitive Strengths

We are well-positioned to capitalize on favorable natural and organic grocery and dietary supplement industry dynamics as a result of the following competitive strengths:

Strict focus on high-quality natural and organic grocery products. We offer high-quality products and brands, including an extensive selection of widely-recognized natural and organic food, dietary supplements, body care products, pet care products and books. We offer our customers approximately 10,000 Stock Keeping Units (SKUs) of natural and organic products. We believe our broad product offering enables our customers to shop our stores for substantially all of their grocery and dietary supplement purchases. In our grocery departments, we primarily sell USDA certified organic produce and do not approve for sale grocery products that are known to contain artificial colors, flavors, preservatives or sweeteners or partially hydrogenated or hydrogenated oils. In addition, we only sell pasture-raised, humanely-raised dairy products. Consistent with this strategy, our product selection does not include items that do not meet our strict quality guidelines. Our store managers enhance our robust product offering by customizing their stores’ selections to address the preferences of local customers.

Engaging customer service experience based on education and empowerment. We strive to offer consistently exceptional customer service in a shopper-friendly environment, which we believe creates a differentiated shopping experience, enhances customer loyalty and generates repeat visits from our clientele. A key aspect of our customer service model is to provide free nutrition education to our customers. We believe this focus provides an engaging retail experience while also empowering our customers to make informed decisions about their health. We offer our science-based nutrition education through our trained employees, our newsletter and sales flyer, community out-reach programs, one-on-one nutrition health coaching, nutrition classes and cooking demonstrations.

Our Growth Strategies

We expect to pursue several strategies to help return the overall business to profitable growth, including:

Expand our store base. We intend to expand our store base through the acquisition of new stores.

Increase sales from existing customers. In order to increase our average ticket and the number of customer transactions, we plan to continue offering an engaging customer experience by providing science-based nutrition education and a differentiated merchandising strategy that delivers affordable, high-quality natural and organic grocery products and dietary supplements. We also plan to continue to utilize targeted marketing efforts to reach our existing customers, which we anticipate will drive customer transactions and convert occasional, single-category customers into core, multi-category customers.

Grow our customer base. We plan to implement several measures aimed at building our brand awareness and growing our customer base, including: (i) continuously improving the design of all our websites to enhance functionality, create a more engaging user experience and increase its reach and effectiveness; (ii) introducing customer appreciation programs at all our stores; and (iii) developing new collateral marketing materials. We believe offering nutrition education has historically been one of our most effective marketing strategies for reaching new customers and increasing the demand for natural and organic groceries and dietary supplements in our markets.

Improve operating margins. We expect to continue to improve our operating margins as we benefit from investments we have made or are making in fixed overhead and information technology. As we add additional stores, we expect to achieve greater economies of scale through sourcing and distribution. To achieve additional operating margin expansion, we intend to further optimize performance, maintain appropriate store labor levels and effectively manage product selection and pricing.

Our Products

Product Selection Guidelines. We have a set of strict quality guidelines covering all products we sell. For example:

● we do not approve for sale food known to contain artificial colors, flavors, preservatives or sweeteners or partially hydrogenated or hydrogenated oils or phthalates or parabens, regardless of the proportion of its natural or organic ingredients;

● we sell USDA certified organic produce; and

● we sell meats naturally raised without hormones, antibiotics or treatments and that were not fed animal by-products.

Our product review team analyzes all new products and approves them for sale based on ingredients, price and uniqueness within the current product set. We actively research new products in the marketplace through our product vendors, private label manufacturers, scientific findings, customer requests and general trends in popular media. Our stores are able to fully merchandise all departments by providing an extensive assortment of natural and organic products. We do not believe we need to sell conventional products to fill our selection, increase our margins or attract more customers.

What We Sell. We operate both a full-service natural and organic grocery stores and dietary supplement stores within our retail locations. The following is a breakdown of our product mix:

● Grocery. We offer a broad selection of natural and organic grocery products with an emphasis on minimally processed and single ingredient products that are not known to contain artificial colors, flavors, preservatives or sweeteners or partially hydrogenated or hydrogenated oils. Additionally, we carry a wide variety of products associated with special diets such as gluten free, vegetarian and non-dairy.

● Produce. We sell USDA-certified organic produce and source from local, organic producers whenever feasible. Our selection varies based on seasonal availability, and we offer a variety of organic produce offerings that are not typically found at conventional food retailers.

● Bulk Food and Private Label Products. We sell a wide selection of private label repackaged bulk and other products, including nuts, water, pasta, canned seafood, dried fruits, grains, granolas, honey, eggs, herbs, spices and teas.

● Dry, Frozen and Canned Groceries. We offer a wide variety of natural and organic dry, frozen and canned groceries, including cereals, soups, baby foods, frozen entrees and snack items. We offer a broad selection of natural chocolate bars, and energy, protein and food bars.

● Meats and Seafood. We offer naturally-raised or organic meat products. The meat products we offer come from animals that have never been treated with antibiotics or hormones or fed animal by-products. Additionally, we only buy from companies we believe employ humane animal-raising practices. Our seafood items are generally frozen at the time of processing and sold from our freezer section, thereby ensuring freshness and reducing food spoilage and safety issues.

● Dairy Products and Dairy Substitutes. We offer a broad selection of natural and organic dairy products such as milk, eggs, cheeses, yogurts and beverages, as well as non-dairy substitutes made from almonds, coconuts, rice and soy.

● Prepared Foods. Our stores have a convenient selection of refrigerated prepared fresh food items, including salads, sandwiches, salsa, humus and wraps. The size of this offering varies by location.

● Bread and Baked Goods. We receive regular deliveries of a wide selection of bakery products for our bakery section, which includes an extensive selection of gluten-free items.

● Beverages. We offer a wide variety of non-alcoholic and alcoholic beverages containing natural and organic ingredients.

● Dietary Supplements. We offer a wide selection of vitamins, supplements and natural remedies. Our staff is well educated and trained on multiple aspects of natural medicine.

● Health, Beauty, and Personal Care. We offer a full range of cosmetics, skin care, hair care, fragrance and personal care products containing natural and organic ingredients. Our body care offerings range from bargain-priced basics to high-end formulations.

● Household and General Merchandise. Our offerings include sustainable, hypo-allergenic and fragrance-free household products, including cleaning supplies, paper products, dish and laundry soap and other common household products, including diapers.

Quality Assurance. We endeavor to ensure the quality of the products we sell. We work with reputable suppliers we believe are compliant with established regulatory and industry guidelines. Our purchasing department requires a complete supplier and product profile as part of the approval process. Our dietary supplement suppliers must follow Food and Drug Administration (FDA) current good manufacturing practices supported by quality assurance testing for both the base ingredients and the finished product. We expect our suppliers to comply with industry best practices for food safety.

Many of our suppliers are inspected and certified under the USDA National Organic Program, voluntary industry associations, and other third-party auditing programs with regards to additional ingredients, manufacturing and handling standards. We operate all our stores in compliance with the National Organic Program standards, which restricts the use of certain substances for cleaning and pest control and requires rigorous recordkeeping, among other requirements.

Our Pricing Strategy

We believe our pricing strategy allows our customers to shop our stores on a regular basis for their groceries and dietary supplements.

The key elements of our pricing strategy include:

● heavily advertised discounts supported by manufacturer participation;

● in-store specials generally lasting for 30 days and not advertised outside the store;

● managers’ specials, such as clearance, overstock, short-dated or promotional incentives; and

● specials on seasonally harvested produce.

As we expand our store base, we believe there are opportunities for increased leverage in fixed costs, such as administrative expenses, as well as increased economies of scale in sourcing products. We strive to keep our product, operating and general and administrative costs low, which allows us to continue to offer attractive pricing for our customers.

Store Management and Staffing. Our store staffing includes a manager and assistant manager, with department managers in each of the dietary supplement, grocery, dairy and frozen, produce, body care and receiving departments, as well as several non-management employees. Our regional manager is responsible for monthly store profit and loss, including labor, merchandising and inventory costs.

To ensure a high level of service, all employees receive training and guidance on customer service skills, product attributes and nutrition education. Employees are carefully trained and evaluated based on a requirement that they present nutrition information in an appropriate and legally compliant educational context while interacting with customers. Additionally, store employees are cross-trained in various functions, including cashier duties, stocking and receiving product.

Inventory. We use a robust merchandise management and perpetual inventory system that values goods at the lower of cost and net realizable value using the average cost method. We manage shelf stock based on weeks-on-hand relative to sales, resupply time and minimum economic order quantity.

Sourcing and Vendors. We source from approximately 1,000 suppliers and offer over 4,000 brands. These suppliers range from small independent businesses to multi-national conglomerates. As of December 31, 2023, we purchased approximately 73% of the goods we sell from our top 20 suppliers. For the year ended December 31, 2023, approximately 40% of our total purchases were from one vendor. We maintain good relations with all our suppliers and believe we have adequate alternative supply methods, including self-distribution.

We have longstanding relationships with our suppliers, and we require disclosure from them regarding quality, freshness, potency and safety data information. Our bulk food private label products are packaged by us in pre-packed sealed bags to help prevent contamination while in transit and in our stores. Unlike most of our competitors, most of our private label nuts, trail mix and flour are refrigerated in our warehouse and stores to maintain freshness.

Our Employees

Commitment to our employees is one of our founding principles. Employees are eligible for health, long-term disability, vision and dental insurance coverage, as well as Company paid short-term disability and life insurance benefits, after they meet eligibility requirements. Additionally, our employees are offered a 401(k) retirement savings plan with discretionary contribution matching opportunities. This further offers our employees the opportunity to become more familiar with our products, which we believe improves the customer service our employees are able to provide. We believe these and other factors result in higher retention rates and encourage our employees to appreciate our culture, which helps them better promote our brand.

Our Customers

The growth in the natural and organic grocery and dietary supplement industries and growing consumer interest in health and nutrition have led to an increase in our core customer base. We believe the demands for affordable, nutritious food and dietary supplements are shared attributes of our core customers, regardless of their socio-economic status. Additionally, we believe our core customers prefer a retail store environment that offers carefully selected natural and organic products and dietary supplements. Our customers tend to be interested in health and nutrition, and expect our store employees to be highly knowledgeable about these topics and related products.

Competition

The grocery and dietary supplement retail business is a large, fragmented and highly competitive industry, with few barriers to entry. Our competition varies by market and includes conventional supermarkets such as Publix and Winn-Dixie, mass or discount retailers such as Sprout’s Farmers Market, Wal-Mart and Target, natural and gourmet markets such as Whole Foods and The Fresh Market, specialty food retailers such as Trader Joe’s, independent health food stores, dietary supplement retailers, drug stores, farmers’ markets, food co-ops, mail order and online retailers and multi-level marketers. These businesses compete with us for customers on the basis of price, selection, quality, customer service, shopping experience or any combination of these or other factors. They also compete with us for products and locations. In addition, some of our competitors are expanding to offer a greater range of natural and organic foods. We believe our commitment to carrying only carefully vetted, affordably priced and high-quality natural and organic products and dietary supplements, as well as our focus on providing nutritional education, differentiate us in the industry and provide a competitive advantage.

HEALTHY CHOICE WELLNESS CENTERS and HEALTHY CHOICE WELLNESS II

Healthier choices extend past just healthy eating. HCMC, through its Healthy Choice Wellness Centers, offers premium and optimized whole person-centered care and services, tailored to promote and maximize one’s general health and well-being. Healthy Choice Wellness Centers’ services are designed to address one or more common concerns, including but not limited to immunity, anxiety, mental fortitude, sports recovery, and more. Through these services, which include IV Nutrient Drip Infusions and Intramuscular (IM) Injection Treatments, Healthy Choice Wellness Centers seek to provide healthy alternatives that treat the mind and body to its core, thus offering optimized healthier living.

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.

Defining Healthy Choice Wellness

● HEALTHY – an adjective

○ indicative of, conducive to, or promoting good health

● CHOICE – a noun

○ an act of selecting or making a decision when faced with two or more possibilities

● WELLNESS – a noun

○ the state of being in good health, especially as an actively pursued goal

Our Mission

● To assist in one’s achievement of personal well-being, which is an optimal and dynamic state that allows people to achieve their full potential through both the individual pursuit of wellness and the commitment and support of the communities to which they belong.

● To assist in maximizing overall individual wellness, which is an active process that helps individuals reach their optimal well-being by integrating all the dimensions of wellness into their lives; physical, social, emotional, spiritual, environmental, intellectual, occupational, and financial.

● To provide the highest standards of professionalism, emphasizing on quality of care, ethical behavior, ensuring client confidentiality, and the treatment of all individuals with respect and dignity.

● To provide clients an immaculate wellness facility designed for the optimal benefit of the clients to receive their desired treatments in a clean and sterile environment that fosters a tranquil space to maximize one’s overall wellness and well-being.

● To continue the powerful pursuit of knowledge and education by all of our professionals and practitioners, to better provide consult to our clients for them to best maximize their overall wellness and well-being.

Our Vision

Life comes with a lot of choices - some easier to make than others. Healthier Living should be the easiest of those choices, and so Healthy Choice Wellness Centers offers Health & Wellness services that assist in making those choices a lot easier. Healthy Choice Wellness Centers seek to continue the commitment of its parent company, Healthier Choices Management Corp., in providing consumers with healthier alternatives to everyday lifestyle choices.

Healthy Choice Wellness Centers offer premium and optimized whole person-centered care and services, tailored to promote and maximize one’s general health and well-being. All of our services are designed to address one or more common concerns, including but not limited to immunity, anxiety, mental fortitude, sports recovery, and more. Through these services, Healthy Choice Wellness Centers seek to provide healthy alternatives that treat the mind and body to its core, thus offering optimized healthier living.

Our Values

Healthy Choice Wellness Centers are committed to building a culture of well-being. Our goal is to optimize wellness, both for today and all of our tomorrows.

Healthy Choice Wellness Centers view the communities we serve as being comprised of whole and dynamic individuals. We are sensitive to the communal stresses of life that impact our health, wellness, and overall well-being. We promote and encourage personal responsibility and accountability in one’s pursuit of achieving and maintaining their health and wellness. Our Healthy Choice Wellness team not only participates in the facilitation of services in the process of achieving one’s wellness, but also are present to provide information, care, and knowledge to maintain course and maximize one’s well-being according to their individual health goals, wants, and needs.

Healthy Choice Wellness Center also realizes that the whole is only as strong as its parts when it comes to those communities we serve. Thus, we put forth effort to strengthen the environments in which we live and work as they directly impact our well-being. This effort to support wellness for the individuals (the parts) must include working to create a healthy community at large (the whole) that supports the well-being of its members at large.

Our Growth Strategy

We seek to operate and expand our Healthy Choice Wellness centers by approaching growth via three (3) different pathways:

1) Corporately owned and operated wellness centers

2) Wellness Centers implementing the services of Healthy Choice Wellness Centers by way of licensing agreements

3) Expansion by way of franchised locations

Our Products & Services

Healthy Choice Wellness Centers specialize primarily in IV Nutrient Drip Infusion and Intramuscular (IM) Injection treatments, however we seek to expand these offerings (both in the number of IV and IM options offered, but also by adding additional whole-person centered services for optimizing overall general health).

IV Nutrient Drip Infusion Treatments: Healthy Choice Wellness Center’s IV Nutrient Drip Infusions are used to deliver vitamins and minerals directly into the bloodstream, offering superior absorption over oral supplements. We offer server pre-formulated customized solutions to address a variety of issues including:

● Immune System Strengthening ● Anti-Aging ● Optimal Athletic Performance & Recovery ● Metabolism ● Hangover & Headache Relief ● Cold & Flu Symptoms ● Chronic Fatigue ● Brain Fog

Currently, we offer eleven IV Nutrient Treatment Options: Quench, Get-Up-And-Go, Recovery & Performance, Immunity, Alleviate, Inner Beauty, Myers’ Cocktail, Nad+ (Premium Drip), Reboot, Glutathion, and Brainstorm.

Intramuscular (IM) Injection Treatments: Healthy Choice Wellness Center’s Intramuscular (IM) Injection treatments deliver vitamins and minerals directly into the bloodstream, offering superior absorption over oral supplements. We offer server pre-formulated customized solutions to address a variety of issues including:

● Immune Functioning ● General Health ● Fight Illness ● Boost Metabolism ● Improve Mood ● Increase Energy ● Appetite Suppression ● Burning Fat

Currently we offer four Injection Treatment Options: Vitamin B-12, Vitamin D-3, Glutathione, and our Skinny Shot.

Our Employees

Each Healthy Choice Wellness Center is led by licensed and accredited medical professionals and practitioners who share a like-minded philosophy with that of the Wellness Centers, as does all our support staff – we do not just practice healthy choices, we live it! We encourage and support all of our professionals and practitioners to continue the powerful pursuit of knowledge and education, to better provide consult to our clients for them to best maximize their overall wellness and well-being.

Our Customers

The client base for our wellness centers is not bound by age groups or genders. Our clients consist of a broad range of individuals all seeking a common universal goal of seeking to improve their overall wellness. These individuals tend to be those who consciously live a healthy lifestyle, and are seeking treatments to maximize and optimize their overall well-being. This includes athletes seeking treatments to help recover quicker from injury and/or rehydrate, middle aged men and women seeking treatments to maximize their cognitive fortitude, those wanting to help alleviate indigestion or stomach pains, and a slew of other individual reasons all ending with the drive for healthier living.

ONLINE SALES

HCMC is your online source for the leading products in the all-natural vitamin and supplement, and health, beauty, and personal care categories of Healthier Living.

Backed by 30+ years of combined experience in the health and nutrition industry, we provide our customers with only the best products on the market — Try our exclusive offering of Ada’s Naturals brand products or any of the top products from the most recognized national natural health brands in the industry.

● VITAMINS & SUPPLEMENTS:

○ Product categories include, but are not limited to: Vitamins, Minerals & Herbals, Immunity, Multivitamins, Sports Nutrition, Protein Powders, Collagen, Stress & Anxiety, Sleep & Relax, Brain Health, Pain & Inflammation, Probiotics, Energy & Stamina, Joint & Bone Support, Digestion, Fish Oils, Just for Men, Kids/Children/Teens, and more.

○ Product varieties include, but are not limited to: Apple Cider Vinegar, BCAA, Biotin, Calcium, Chlorophyll, CLA, Collagen Peptides, Creatine, Elderberry, Omega-3’s, Garlin, Glucosamine, Iron, Magnesium, Melatonin, Potassium, Prenatals, Probiotics, Protein Powders (Plant and Whey), Ashwaghanda Turmeric, Ginseng, Vitamin B,C,D,E,K+, Zinc, and more.

○ Product brands include, but are not limited to: Ada’s Naturals, Enzymedica, Garden of Life, Natural Vitality, New Chapter, Renew Life, Solgar, and more.

● HEALTH, BEAUTY, AND PERSONAL CARE:

○ Product categories include, but are not limited to: Oral Care, Hair Care, Body Wash, Skin & Face, Deodorant, Suncare, Soaps, Shaving, Feminine Hygiene, Lip Balms, Ear Candles, Lotions, Hand Sanitizers, Essential Oils, and more.

○ Product varieties include, but are not limited to: Body Wash, Deodorant, Ear Candles, Shampoos, Conditioners, Toothpaste, Mouthwashes, Shaving, Bar Soaps, Liquid Soaps, Suncare, and more.

● Product brands include, but are not limited to: Ada’s Naturals, Alba Botanica, Aura Cacia, Derma-E, Desert Essence, Dr. Bronners, Every Man Jack, Heritage Store, Himalaya Botanique, Life-Flo, Lily of the Desert, Natracare, Naturally Fresh, Oral Essentials, South of France, Tea Tree Therapy, Thai Deodorant Stone, Thayers, and more.

VAPORIZER BUSINESS

Through its wholly owned subsidiary HCMC Intellectual Property Holdings, LLC, HCMC manages, and intends to expand, its intellectual property portfolio. Additionally, HCMC markets its patented Q-Unit™ and Q-Cup® technology through its wholly owned subsidiary The Vape Store, Inc.. Information on these products and the technology is available on the Company’s website at www.theQcup.com. During 2022, the Company evaluated its retail store operations and management decided to close all retail stores and shift its brick and mortar sales focus towards building a wholesale and online channel business.

Our Improvements and Product Development on Intellectual Property

We have developed, trademarked and are preparing to commercialize additional products. We include product development expenses as part of our operating expenses. In October 2018, we announced the granting of three US patents related to our Q-Cup™ technology. This Q-Cup™ technology provides microdosing potentially more efficiency depending on the vaping method and an “on the go” solution for consumers who prefer to vape concentrates either medicinally or recreationally. In addition, we have a suite of patent applications pending in the United States. There is no assurance that we will be awarded patents for of any of these pending patent applications. From 2019 through December 31, 2023, the Company was granted 9 new patents related to electronic vaporizers.

Business Strategy

WeThe ~~believe~~Company ~~that~~has ~~our~~implemented ~~history~~a ~~with~~comprehensive ~~our~~strategy ~~suppliers,~~to ~~gives~~maximize usthe anvalue ~~advantage~~of ~~over~~its ~~other~~intellectual ~~market~~property ~~participants~~assets. asCentral itto ~~relates~~this tostrategy is ~~favorable~~the ~~pricing~~formation of HCMC Intellectual Property Holdings, ~~priority~~ asLLC, toa ~~inventory~~wholly ~~supply~~owned subsidiary dedicated to managing and ~~delivery~~marketing the Company’s intellectual property. This subsidiary ensures focused efforts on monetization, holding all patents, trademarks, and ~~first~~other ~~access~~intellectual property. toThe ~~new~~Company ~~products~~actively pursues licensing agreements, ~~including~~both ~~first~~exclusive ~~access~~and non-exclusive, to ~~next~~generate ~~generation~~revenue ~~products~~while fostering innovation across various industries. These agreements are tailored to meet the needs of different partners, ensuring flexibility and maximizing ~~technology~~the reach of the Company’s patents. ~~Management~~Additionally, ~~has~~the ~~shifted~~Company seeks strategic partnerships with entities that can benefit from its ~~retail~~patented technologies, ~~sales~~resulting ~~focus~~in tojoint ~~wholesale~~ventures, co-development agreements, and ~~online~~shared ~~channel~~research and development efforts. These collaborations enhance the value of the Company’s intellectual property through shared expertise and resources, contributing to increased revenue and market presence.

WeThe ~~believe~~Company ~~that~~is ~~our~~committed ~~experience~~to inprotecting its intellectual property through active patent enforcement, which involves monitoring the ~~vaporizer~~market for ~~industry~~potential infringements and taking legal action when necessary. Successful enforcement efforts can lead to settlements, ~~from~~licensing fees, aand ~~development~~increased recognition of the Company’s intellectual property. Furthermore, ~~customer~~the ~~service~~Company leverages its patents to develop new products and ~~production~~improve ~~perspective~~existing ones, ~~give~~such usas anthe ~~advantage in~~Q-CUP® ~~attracting~~brand ~~wholesale~~vape ~~customers~~material containers and ~~develop~~related anhardware ~~online~~components, ~~customer~~which ~~base~~are based on patented technology. Continued innovation in product development enhances market competitiveness and drives sales.

The Company is focused on expanding its patent coverage internationally by filing for patents in key global markets, thereby broadening its protection and opening up new opportunities for monetization. International expansion allows the Company to tap into diverse markets and establish a strong global presence. Investing in continuous innovation and research and development is essential for maintaining a robust patent portfolio. Ongoing research ensures that the Company’s patents remain relevant and valuable, enhancing existing patents and leading to the creation of new ones, driving long-term growth. Effective marketing and awareness campaigns are undertaken to showcase the benefits of the Company’s patented technologies, including promotion at industry conferences, through publications, and via digital channels. These efforts raise awareness and attract potential partners and licensees, highlighting the practical applications and value of the Company’s patents.

By implementing these strategies, the Company aims to maximize the commercial and economic value of its patent assets, driving growth and sustainability.

Competition

Competition in the vaporizer and e-liquid industry is intense. We compete with other sellers, most notably Altria Group, Inc., JT International, Imperial Tobacco, and Reynolds American, Inc., which are big tobacco companies that have businesses that compete in the segment. The nature of our competitors is varied as the market is highly fragmented and the barriers to entry into the business are low.

As discussed above, we compete against “big tobacco”, U.S. cigarette manufacturers of both conventional tobacco cigarettes and electronic cigarettes like Altria Group, Inc., JT International, Imperial Tobacco, and Reynolds American, Inc. We believe that “big tobacco” is devoting more attention and resources to developing, acquiring technology patents, and offering electronic cigarettes, vaporizers and e-liquids as these markets grow. Because of their well-established sales and distribution channels, marketing expertise and significant resources, “big tobacco” is better positioned than small competitors like us to capture a larger share of the electronic cigarette market. We also compete against numerous other smaller manufacturers or importers. There can be no assurance that we will be able to compete successfully against any of our competitors, some of whom have far greater resources, capital, experience, market penetration, sales and distribution channels than us.

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Manufacturing

We have no manufacturing capabilities and do not intend to develop any manufacturing capabilities. Third party manufacturers make our products to meet our design specifications. Our customers associate certain characteristics of our products including the weight, feel, draw, unique flavor, packaging and other attributes of our products to the brands we market, distribute and sell. Any interruption in supply and or consistency of our products may harm our relationships and reputation with customers, and have a material adverse effect on our business, results of operations and financial condition. In order to minimize the risk of supply interruption, we currently utilize several third-party manufacturers to manufacture our products to our specifications. We contract with our manufacturers on a purchase order basis. We do not have any output or requirements contracts with any of our manufacturers. Our manufacturers provide us with finished products, which we hold in inventory for distribution, sale and use.

Patent Litigation

Third party patent lawsuits alleging our infringement of patents, trade secrets or other intellectual property rights have and could force us to do one or more of the following:

	●	stop selling products or using technology that contains the allegedly infringing intellectual property;

	●	incur significant legal expenses;

	●	pay substantial damages to the party whose intellectual property rights we may be found to be infringing;

	●	redesign those products that contain the allegedly infringing intellectual property; or

●

attempt to obtain a license to the relevant intellectual property from third parties, which may not be available to us on reasonable terms or at all.

Future third party lawsuits alleging our infringement of patents, trade secrets or other intellectual property rights could have a material adverse effect on our business, results of operations and financial condition.

We are required to obtain licenses to patents or proprietary rights of others and may be required to obtain more in the future and as the product continues to evolve. We cannot assure you that any future licenses required under any such patents or proprietary rights would be made available on terms acceptable to us or at all. If we do not obtain such licenses, we could encounter delays in product market introductions while we attempt to design around such patents, or could find that the development, manufacture, or sale of products requiring such licenses could be foreclosed. Litigation may be necessary to defend against claims of infringement asserted against us by others, or assert claims of infringement to enforce patents issued to us or exclusively licensed to us, to protect trade secrets or know-how possessed by us, or to determine the scope and validity of the proprietary rights of others. In addition, we may become involved in oppositions in foreign jurisdictions, reexamination declared by the United States Patent and Trademark Office, or interference proceedings declared by the United States Patent and Trademark Office to determine the priority of inventions with respect to our patent applications or those of our licensors. Litigation, opposition, reexamination or interference proceedings could result in substantial costs to and diversion of effort by us, and may have a material adverse impact on us. In addition, we cannot assure you that our efforts to maintain or defend our patents will be successful.

Patent Enforcement

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 (“District Court”) for the Northern District of Georgia (the “Complaint”). The lawsuit alleged 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 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’s dismissal of the Company’s patent infringement action against Philip Morris USA, Inc. and Philip Morris Products S.A.

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On ~~April~~ 12September 26, 2023, HCMC filed a patent infringement lawsuit against R.J. Reynolds Vapor Company (“RJR”) in the U.S. District Court ~~of Appeals~~ for the ~~Federal~~Middle ~~Circuit~~District ~~ruled~~of inNorth ~~favor~~Carolina ofin connection with HCMC’s onassertions ~~two~~that ~~separate~~RJR’s ~~appeals~~Vuse itelectronic ~~had~~cigarette ~~filed~~infringes inone ~~its patent~~of ~~infringement~~HCMC’s ~~action~~patents ~~against~~(the ~~Philip~~“HCMC RJR ~~Morris USA, Inc~~Patent”). ~~and~~RJR ~~Philip~~has ~~Morris~~sought ~~Products~~an ~~S.A.~~inter-parties ~~pending~~review inby the ~~district~~Board ~~court~~of ~~for~~ the ~~Northern District~~HCMC ofRJR ~~Georgia~~Patent.

On ~~September~~November 2622, ~~2023~~2024, HCMC ~~filed~~received a ~~patent~~ruling ~~infringement~~from ~~lawsuit~~the ~~against R~~U.JS. ~~Reynolds~~Court ~~Vapor~~of ~~Company~~Appeals for the Federal Circuit (the “~~RJR~~Federal Circuit”) denying inan appeal of HCMC of a decision of the ~~U.S.~~United ~~District~~States Patent and Trademark Office Patent Trial and Appeal Board (the “Board”) ~~Court~~relating ~~for~~to the ~~Middle~~inter ~~District~~partes review of ~~North~~an ~~Carolina~~HCMC inpatent. ~~connection~~The ~~with~~Board had ruled that the previously granted HCMC’s ~~assertions~~patent that ~~RJR~~served as the basis of HCMC’s ~~Vuse~~patent ~~electronic~~infringement ~~cigarette infringes~~action ~~one~~against Philip Morris USA, Inc. and Philip Morris Products S.A. was not patentable and denied of HCMC’s ~~patents~~request to amend the claims if invalidity of the patent was affirmed. This lawsuit was dismissed on December 31, 2024.

Regulations

Since a 2010 U.S. Court of Appeals decision, the Food and Drug Administration (“FDA”) is permitted to regulate electronic cigarettes as “tobacco products” under the Family Smoking Prevention and the Tobacco Control Act. Under this decision, the FDA is not permitted to regulate electronic cigarettes as “drugs” or “devices” or a “combination product” under the Federal Food, Drug and Cosmetic Act unless they are marketed for therapeutic purposes. This is contrary to anti-smoking devices like nicotine patches, which undergo more extensive FDA regulation. Because the Company does not market its electronic cigarettes for therapeutic purposes, the Company’s electronic cigarettes are subject to being classified as “tobacco products” under the Tobacco Control Act. The Tobacco Control Act grants the FDA broad authority over the manufacture, sale, marketing and packaging of tobacco products, although the FDA is prohibited from issuing regulations banning all cigarettes or all smokeless tobacco products, or requiring the reduction of nicotine yields of a tobacco product to zero.

On September 9, 2020 the FDA began enforcing rules that extended its regulatory authority to electronic cigarettes and certain other tobacco products under the Tobacco Control Act. The rules required that electronic cigarette and e-liquid manufacturers (i) register with the FDA and report electronic cigarette products and ingredient listings; (ii) market new electronic cigarette products only after FDA review; (iii) only make direct and implied claims of reduced risk if the FDA confirms that scientific evidence supports the claim and that marketing the electronic cigarette product will benefit public health as a whole; (iv) not distribute free samples; (v) implement minimum age and identification restrictions to prevent sales to individuals under age 21; (vi) include a health warning; and (vii) not sell electronic cigarettes in vending machines, unless in a facility that never admits youth. It is not known how long finalizing and implementing this regulatory process may take. Accordingly, the Company has responded by beginning to take the necessary steps to ensure compliance.

In this regard, total compliance and related costs are not possible to predict and depend substantially on the future requirements imposed by the FDA under the Tobacco Control Act. Costs, however, could be substantial and could have a material adverse effect on the Company’s business, results of operations and financial condition. In addition, failure to comply with the Tobacco Control Act and with FDA regulatory requirements could result in significant financial penalties and could have a material adverse effect on the Company’s business, financial condition and results of operations and ability to market and sell the Company’s products. At present, it is difficult to predict whether the Tobacco Control Act will impact the Company to a greater degree than competitors in the industry, thus affecting the Company’s competitive position.

State and local governments currently legislate and regulate tobacco products, including what is considered a tobacco product, how tobacco taxes are calculated and collected, to whom and by whom tobacco products can be sold and where tobacco products may or may not be smoked. State and local regulation of the e-cigarette market and the usage of e-cigarettes is beginning to accelerate.

At present, neither the Prevent All Cigarette Trafficking Act (which prohibits the use of the U.S. Postal Service to mail most tobacco products, which would require individuals and businesses that make interstate sales of cigarettes or smokeless tobacco to comply with state tax laws) nor the Federal Cigarette Labeling and Advertising Act (which governs how cigarettes can be advertised and marketed) apply to electronic cigarettes. The application of either or both of these federal laws to vaporizers and electronic cigarettes would have a material adverse effect on the Company’s business, results of operations and financial condition.

On July 1, 2015, the FDA published a document entitled “Advanced notice of proposed rulemaking” or the Advance. Through the Advance, the FDA solicited public comments on whether it should issue rules with respect to nicotine exposure warning and child-resistant packaging for e-liquids containing nicotine. Following public comment, the FDA may issue proposed rules in furtherance of the purposes outlined in the Advance and ultimately pass the rules as proposed or in modified form. We cannot predict whether rules will be passed or if they will have a material adverse effect on our future results of operations and financial conditions.

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The Company expects that the tobacco industry will experience significant regulatory developments over the next few years, driven principally by the World Health Organization’s FCTC. The FCTC is the first international public health treaty on tobacco, and its objective is to establish a global agenda for tobacco regulation with the purpose of reducing initiation of tobacco use and encouraging cessation. Regulatory initiatives that have been proposed, introduced or enacted include:

● the levying of substantial and increasing tax and duty charges; ● restrictions or bans on advertising, marketing and sponsorship; ● the display of larger health warnings, graphic health warnings and other labelling requirements; ● restrictions on packaging design, including the use of colors and generic packaging; ● restrictions or bans on the display of tobacco product packaging at the point of sale, and restrictions or bans on cigarette vending machines; ● requirements regarding testing, disclosure and performance standards for tar, nicotine, carbon monoxide and other smoke constituents’ levels; ● requirements regarding testing, disclosure and use of tobacco product ingredients; ● increased restrictions on smoking in public and work places and, in some instances, in private places and outdoors; ● elimination of duty free allowances for travelers; and ● encouraging litigation against tobacco companies.

● restrictions or bans on advertising, marketing and sponsorship;

● the display of larger health warnings, graphic health warnings and other labelling requirements;

● restrictions on packaging design, including the use of colors and generic packaging;

● restrictions or bans on the display of tobacco product packaging at the point of sale, and restrictions or bans on cigarette vending machines;

● requirements regarding testing, disclosure and performance standards for tar, nicotine, carbon monoxide and other smoke constituents’ levels;

● requirements regarding testing, disclosure and use of tobacco product ingredients;

● increased restrictions on smoking in public and work places and, in some instances, in private places and outdoors;

● elimination of duty free allowances for travelers; and

● encouraging litigation against tobacco companies.

If vaporizers, and electronic cigarettes, are subject to one or more significant regulatory initiates enacted under the FCTC, the Company’s business, results of operations and financial condition could be materially and adversely affected.

Seasonality

Our business is active throughout the calendar year and does not experience significant fluctuation caused by seasonal changes in consumer purchasing.

Insurance and Risk Management

We use a combination of insurance and self-insurance to cover workers’ compensation, general liability, product liability, director and officers’ liability, employment practices liability, associate healthcare benefits and other casualty and property risks. Changes in legal trends and interpretations, variability in inflation rates, changes in the nature and method of claims settlement, benefit level changes due to changes in applicable laws, insolvency of insurance carriers and changes in discount rates could all affect ultimate settlements of claims. We evaluate our insurance requirements and providers on an ongoing basis.

~~Information Technology Systems~~7

We have made significant investments in overhead and information technology infrastructure, including purchasing, receiving, inventory, point of sale, accounting automation, reporting and financial systems.

Segment Information

WeThe ~~have~~Company ~~two~~operates ~~reporting~~as ~~segments,~~a ~~natural~~single ~~and~~segment ~~organic~~that ~~retail~~includes ~~stores~~all (“of its continuing operations. The Company previously had two reportable segments: Grocery”) and ~~vapor~~Vape. ~~products~~The ~~(“Vapor”)~~Grocery segment was spun-off on September 13, ~~through which~~2024 weand ~~conduct~~is now reported as discontinued operations for all ofperiods through ~~our~~that ~~business~~date.

The Company has included the results of the Healthy Choice Wellness Centers and Healthy Choice Wellness II, LLC under the grocery segment due to its operations being de minimis.

Going Concern and Management’s Plan

The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”), which contemplate the continuation of the Company as a going concern for the next twelve months from the issuance of this Form 10-K 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 consolidated 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 December 31, ~~2023~~2024, cash totaled ~~approximately~~ approximately $5.1.2 million. ~~The Company anticipates that its current cash~~ and ~~cash~~negative ~~generated~~working ~~from~~capital ~~operations will not be sufficient to meet the projected operating expenses for the foreseeable future through at least twelve months from the issuance~~ of ~~these~~$0.7 ~~consolidated financial statements~~million. InThe ~~order to improve the~~ Company’s liquidity ~~position,~~needs ~~management’s~~through plans include significantly reducing the use of outside consultants, which would result in over $1,000,000 in general and administrative expenses savings based on the actual spend which occurred during the year ended December 31, ~~2023.~~2024 ~~The~~have ~~Company~~been ~~contracted a third party consultant, whose expertise is streamlining~~satisfied ~~operations,~~through tofinancing ~~identify~~agreement ~~areas~~with ofprivate ~~improvement and cost savings~~lenders. The Company will implement the consultant’s recommendation in anticipation of realizing savings and achieving profitability. The Company plans on continuing to expand its Grocery segment via acquisition which will help achieve profitability. Also, the Company is formulating plans to raise capital from outside investors, as it has done in the past, to fund any operating losses and also provide capital for further business acquisitions. 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.

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.

On November 7, 2024, the Company entered into a commitment letter with an investor that will allow the Company to draw up to $5 million from a revolving credit facility (the “Facility”) through August 31, 2025. Any advances will be used for working capital purposes. Any amounts borrowed pursuant to the Facility will be repayable in full on April 30, 2026 and the interest rate on the amounts borrowed is 12% per annum. 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.

Item 1A. Risk Factors.

Not applicable to smaller reporting companies.

Item 1B. Unresolved Staff Comments.

None

Item 1C. Cybersecurity

We believe cybersecurity is critical importance to our success. We are susceptible to a number of significant and persistent cybersecurity threats, including those common to most industries ~~as well as those we face as a retailer~~, operating in an industry characterized by a high volume of customer transactions and collection of sensitive data. These threats, which are constantly evolving, include data breaches, ransomware, and phishing attacks. We, and our vendors and suppliers, regularly face attempts by malicious actors to breach our security and compromise our information technology systems. A cybersecurity incident impacting us or any vendor or supplier could significantly disrupt our operations and result in damage to our reputation, costly litigation and/or government enforcement action. Accordingly, we are committed to maintaining robust cybersecurity and data protection and continuously ~~evaluate~~evaluating the impact of cybersecurity threats, considering both immediate and potential long-term effects of these threats on our business strategy, operations, and financial condition.

Under the oversight of our Board of Directors, our management has established comprehensive processes for identifying, assessing and managing material risks from cybersecurity threats, and these processes are integrated into our overall enterprise risk management program. Our approach is proactive and adaptive, featuring regular security assessments, third-party audits, team member training, and continuous improvement of our cybersecurity infrastructure. We work to align our practices with industry best practices and regulatory standards. Our processes include detailed response procedures to be followed in the event of a cybersecurity incident, which outline steps to be followed from detection to assessment to notification and recovery, including internal notifications to management, the risk committee and the Board, as appropriate.

148

Members of management, including our Chief Operating Officer, provide the Board updates on cybersecurity risk matters on a quarterly basis and more frequently if circumstances dictate. In these updates, members of the Board apprised of cybersecurity incidents that are deemed to have had a moderate or higher impact even if immaterial to us. In addition, management regularly discusses ~~with~~ among themselves the risks related to cybersecurity and critical systems in order to provide input on the appropriate level of risk for our company and reviews management’s strategies for adequately mitigating and managing the identified risks. Management regularly ~~update~~updates our full Board with respect to cybersecurity matters.

Our Chief Operating Officer is primarily responsible for managing material risks from cybersecurity threats, and is supported by third party cybersecurity specialists. Management participates in periodic training and education on cybersecurity related topics. We engage specialized cybersecurity consultants and leverage third-party expertise to bolster our cybersecurity defenses. Our enterprise risk management program is designed to identify, prioritize and assess a broad range of risks, including risks from cybersecurity threats, that may affect our ability to execute our corporate strategy and fulfill our business objectives.

The following is a list of measures that were implemented as part of our increased focus on cybersecurity:

	●	Complete endpoint protection - All endpoints have been covered by an enhanced endpoint protection agent.

	●	Cloud infrastructure - Critical infrastructure started moving to the cloud and protected by enhanced anti-virus and recurring backup policies.

	●	Email services have been put through a rigorous intelligent phishing and spam filter to prevent attacks

In addition, our third-party vendors and service providers play a role in our cybersecurity. These third parties are integral to our operations but pose cybersecurity challenges due to their access to our data and our reliance for various aspects of our operations, including our supply chain. We conduct due diligence before onboarding new vendors and maintain ongoing evaluations to ensure compliance with our security standards.

As of the date of this report, no cybersecurity incidents have had, either individually or in the aggregate, a material adverse effect on our business, financial condition or results of operations. Notwithstanding the extensive approach we take to cybersecurity, we may not be successful in preventing or mitigating a cybersecurity incident that could have a material adverse effect on us.

Item 2. Properties.

The Company operates its business from ~~numerous~~our ~~facilities~~headquarter located in ~~Florida~~Hollywood, ~~Virginia, New York and New Jersey~~Florida. ~~These~~This leased ~~facilities~~property ~~include our~~aggregates ~~headquarters~~approximately ~~location~~10,000 square ~~warehouse~~feet and ~~retail~~includes ~~stores~~headquarter and warehouse.

Grocery Segment. As of December 31, 2023, our Grocery segment had 15 retail stores in Florida, New York, New Jersey, and Virginia which aggregate approximately 122,000 square feet, 14 stores are leased by our grocery segment. The Company owns the property in Saugerties store in New York. The Company believes the properties used by our grocery segment are in good operating condition and are suitable for the conduct of its business.

Our headquarters and warehouse are located in Hollywood, Florida which aggregates approximately 10,000 square feet.

Item 3. Legal Proceedings.

No response is required under Item 103 of Regulation S-K.

Item 4. Mine Safety Disclosures.

None.

159

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

Our common stock is currently listed on the OTC Pink marketplace under the symbol “HCMC”.

As of ~~March~~April 2714, ~~2024~~2025, there were approximately 1,400 stockholders of record for our common stock. A substantially greater number of stockholders may be “street name” or beneficial holders, whose shares are held of record by banks, brokers and other financial institutions.

As of ~~March~~April 2714, ~~2024~~2025, the last reported sale price of our common stock on the OTC Pink Marketplace was $0.0001 per share.

We have never declared or paid, and do not anticipate declaring or paying, any cash dividends on any of our capital stock. We currently intend to retain all available funds and any future earnings for use in the operation of our business and do not anticipate paying any dividends in the foreseeable future. Future determination as to the declaration and payment of dividends, if any, will be at the discretion of our Board and will depend on then existing conditions, including our operating results, financial conditions, contractual restrictions, capital requirements, business prospects and other factors our Board may deem relevant.

On August 18, 2022, the Company entered into a Securities Purchase Agreement pursuant to which the Company sold and issued 14,722 ~~shares~~ 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~~ ~~fees.~~ As of ~~March~~April 2714, ~~2024~~2025, 12,026 shares of Series E Redeemable Convertible Preferred Stock were redeemed, ~~and~~ 1,585 shares were converted into common stock, and 1,111 shares outstanding.

Item 6. Selected Financial Data.

Not required for smaller reporting companies.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

You should read the following discussion in conjunction with our audited historical consolidated financial statements, which are included elsewhere in this report. “Management’s Discussion and Analysis of Financial Condition” and “Results of Operations” contains forward-looking statements that reflect our plans, estimates, and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements.

Cautionary Note Regarding Forward Looking Statements

This report includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical facts contained in this report, including statements regarding our future financial position, liquidity, business strategy, plans and objectives of management for future operations, are forward-looking statements.

Forward-looking statements contained in this report include:

● Our liquidity; ● Opportunities for our business; and ● Growth of our business.

~~● Opportunities for our business; and~~10

● Growth of our business.

The words “believe,” “may,” “estimate,” “continue,” “anticipate,” “intend,” “should,” “plan,” “could,” “target,” “potential,” “is likely,” “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, uncertainties and risks that may cause actual results to differ materially from these forward-looking statements are contained in the Risk Factors contained herein. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise. For more information regarding some of the ongoing risks and uncertainties of our business, see the Risk Factors below.

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 Q-Cup™ technology. ~~The~~In ~~Company~~addition, ~~closed~~we ~~its~~have ~~last~~a 4suite ~~remaining~~of ~~retail~~patent ~~vape~~applications ~~stores~~pending ~~during~~in the ~~calendar~~United ~~year~~States. ~~ended~~There ~~December~~is ~~31,~~no ~~2022,~~assurance asthat ~~management~~we ~~had~~will ~~shifted~~be ~~its~~awarded patents ~~retail~~for ~~sales~~any ~~focus~~of tothese ~~the~~pending ~~wholesale~~patent ~~and online channel~~applications. ~~The~~There ~~adverse~~is ~~industry trends~~no ~~and~~assurance ~~increasing federal and state regulations~~ that, ifwe ~~implemented,~~can ~~may~~monetize ~~negatively~~the ~~impact future wholesale and online operations in vapor segment~~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 conventional~~manufacturers ~~supermarkets,~~make ~~national~~our products ~~superstores,~~to ~~alternative~~meet ~~food~~our ~~retailers,~~design ~~natural~~specifications. ~~foods~~We ~~stores,~~depend ~~smaller~~on ~~specialty~~third ~~stores,~~party ~~and~~manufacturers ~~farmers’ markets.~~for Inour ~~addition,~~vaporizer wee-liquid ~~compete with restaurants~~ and ~~other~~accessories. Any ~~dining~~interruption ~~options~~ in ~~the~~supply ~~food-at-home~~ and ~~food-away-from-home~~or ~~markets.~~consistency ~~The opening and closing~~ of ~~competitive~~our ~~stores,~~products asmay ~~well~~harm asour relationships ~~restaurants~~ and ~~other~~reputation ~~dining~~with ~~options~~customers, inand ~~regions~~have ~~where~~a wematerial ~~operate~~adverse ~~will~~effect ~~affect~~on our business, results~~. In~~ ~~addition,~~of ~~changing~~operations ~~consumer~~and ~~preferences~~financial condition. ~~with~~In ~~respect~~order to ~~food~~minimize ~~choices~~the ~~and~~risk toof ~~dining~~supply ~~out~~interruption, orwe atcurrently ~~home~~utilize ~~can~~several ~~impact~~third-party ~~us.~~manufacturers Weto ~~also expect increased~~manufacture ~~product~~our ~~supply~~products ~~and downward pressure on prices~~ to ~~continue and impact~~ our ~~operating results in the future~~specifications.

Results of Operations

The following table sets forth our Consolidated Statements of Operations on a continuing basis for the years ended December 31, ~~2023~~2024 and 2023 ~~2022~~ which is used in the following discussions of our results of operations:

	For the Year Ended December 31,						~~2023~~2024 to ~~2022~~2023
	2023			2022			Change $
	2024			2023			Change $
SALES:
SALES	$	501		$	617		$	(116	)
Vapor sales, net	$	617		$	257,363		$	(256,746	)
COST OF SALES		66,806			787			66,019
Grocery sales, net		55,689,793			29,009,640			26,680,153
GROSS PROFIT		(66,305	)		(170	)		(66,135	)
Total Sales		55,690,410			29,267,003			26,423,407
OPERATING EXPENSES		8,437,425			7,451,439			985,986
Cost of sales vapor		787			112,880			(112,093	)
LOSS FROM OPERATIONS		(8,503,730	)		(7,451,609	)		(1,052,121	)
Cost of sales grocery		35,341,569			18,929,905			16,411,664
OTHER INCOME (EXPENSE)
GROSS PROFIT		20,348,054			10,224,218			10,123,836
Loss on investment		(1,336	)		(8,485	)		7,149
OPERATING EXPENSES
Other income (expense), net		263,782			(1,501,843	)		1,765,625
Selling, general and administrative		32,219,733			18,877,302			13,342,431
Interest income, net		126,000			411,677			(285,677	)
Impairment of goodwill		6,104,000			-			6,104,000
TOTAL OTHER INCOME (EXPENSE), NET		388,446			(1,098,651	)		1,487,097
TOTAL OPERATING EXPENSES		38,323,733			18,877,302			19,446,431
NET LOSS FROM CONTINUING OPERATIONS	$	(8,115,284	)	$	(8,550,260	)	$	434,976
LOSS FROM OPERATIONS		(17,975,679	)		(8,653,084	)		(9,322,595	)
OTHER INCOME (EXPENSES):
Change in contingent consideration		774,900			333,100			441,800
Other (expenses) income, net		(1,485,612	)		913,092			(2,398,704	)
Interest income (expense), net		211,996			202,653			9,343
Loss on investment		(8,485	)		(13,372	)		4,887
Total other income (expense), net		(507,201	)		1,435,473			(1,942,674	)
NET LOSS	$	(18,482,880	)	$	(7,217,611	)	$	(11,265,269	)

1711

Net ~~vapor~~ sales ~~decreased~~and ~~$0.3~~cost ~~million~~of tosales ~~$0.6~~were ~~thousand~~de minimis for the ~~year~~years ended December 31, ~~2023~~2024 asand ~~compared to $0~~2023.3 ~~million for the same period in 2022.~~ The ~~decrease~~Company inclosed ~~sales was primarily due to closing~~ all ~~our~~its ~~retail~~brick-and-mortar retail vape stores ~~throughout 2022~~, as management had shifted its retail sales focus to the wholesale and online channel. The ~~sales~~Company ~~for~~wrote ~~2023~~off ~~were significantly impacted by technical issues associated~~approximately ~~with the processing of credit card payments on the Q-Cup.com website and the inability to bring new products to market via distribution. Net grocery sales increased~~ $~~26.6~~66,600 ~~million~~obsolete toinventory ~~$55.7~~in ~~million for the~~ year ~~ended~~2024 ~~December 31, 2023~~ as ~~compared~~a toresult ~~$29.0~~of ~~million for~~ the ~~same~~ ~~period~~retail instore ~~2022~~closure. The ~~$27.6 million increase in grocery~~ sales ~~was primarily a result of a full year operations~~ for the ~~year~~years ended December 31, 2024 and 2023 ofcontinued ~~Mother~~to ~~Earth’s~~be ~~Storehouse~~significantly ~~acquired~~impacted inby ~~February 2022, Green’s Natural Foods acquired in October 2022 and~~ the ~~acquisition~~inability ofto ~~Ellwood~~bring ~~Thompson’s~~new inproducts ~~October~~to ~~2023,~~market ~~offset~~via ~~by a decrease in same-store sales of $1~~distribution.~~0 million.~~

~~Vapor~~Total ~~cost of goods sold for the year ended December 31~~selling, ~~2023~~general and ~~2022~~administrative ~~were~~expenses increased $01.010 million ~~and~~from $07.15 million, ~~respectively,~~for athe ~~decrease~~year ofended ~~$0.1 million.~~December ~~The decrease in cost of goods sold was primarily due to closing all of our retail vape stores throughout 2022~~31, as2023 ~~management shifted its retail sales focus~~ to ~~build the wholesale and online channel~~$8.4 ~~Grocery store cost of goods sold~~ million for the year ended December 31, ~~2023 and 2022 were $35~~2024.3 ~~million~~The ~~and $18.9 million, respectively, an~~ increase ~~of $17.5 million~~ was primarily adue ~~result~~to ofan ~~full~~increase ~~year operations~~ in ~~2023~~stock of Mother Earth’s Storehouse acquired in February 2022, Green’s Natural Foods acquired in October 2022 and the acquisition of Ellwood Thompson’s in October 2023, offset by a decrease in same-store cost of goods sold of $1compensation.~~1 million.~~

Total ~~selling,~~other ~~general~~income ~~and administrative~~ (expenses), ~~increased~~net ~~$13.3~~of ~~million from~~ $180.94 million for the year ended December 31, ~~2022~~2024 toincludes $320.2 3 million ~~for~~of ~~the~~other ~~year~~income ~~ended~~and ~~December~~interest income ~~31,~~of ~~2023~~$0.1 ~~The~~million, ~~increase~~offset ofby approximately $~~11.3~~1,000 ~~million~~loss ~~was~~on ainvestment. ~~result~~Net ofother ~~full~~expense ~~year~~of ~~operations~~$1.1 million for the year ended December 31, 2023 ofincludes $1.5 ~~Mother~~million ~~Earth’s~~provision ~~Storehouse~~for ~~acquired~~legal insettlement ~~February 2022, Green’s Natural Foods acquired~~ in ~~October~~connection ~~2022~~with asalleged ~~well~~claimed ~~as the~~battery ~~acquisition~~defects offor ~~Ellwood Thompson’s in October 2023. The remaining increase was primarily due to~~ an ~~increase~~electronic incigarette ~~stock~~device, ~~compensation~~and of $~~3.4~~8,500 ~~million~~loss on investment, offset by $0.84 million ~~decrease in professional fees, coupled with a decrease in headquarter payroll and payroll benefits~~ of ~~$0.6~~interest ~~million~~income.

The Company had an impairment of $6.1 million for the year ended December 31, 2023. The Company experienced recurring losses coupled with the reduction in same store revenue, a highly competitive industry and certain operational costs that have impacted our expectations such that future growth and profitability is lower than previous estimates. Furthermore, during the fourth quarter of 2023, the Company operated with negative working capital which, although not a determinant on its own, when combined with the other factors indicated that the Company’s goodwill of $6.1 million was determined to be impaired for the year ended December 31, 2023.

Total other (expenses) income, net of $0.5 million for the year ended December 31, 2023 includes $0.8 million of other income related to the change in fair value of the contingent consideration with Green’s Natural Foods seller’s earn-out, interest income of $0.2 million, offset by $0.01 million loss on investment, and $1.5 million provision for probable and estimable legal matter issue. Net other income of $1.5 million for the year ended December 31, 2022 includes a gain on employee retention tax credit of $0.9 million, change in fair value of the contingent consideration with Green’s Natural Foods seller’s earn-out of $0.3 million, and interest income of $0.2 million, offset by $0.01 million loss on investment.

Liquidity and Capital Resources

	For the year ended December 31,
	2023			2022
Net cash (used in) provided by:
Operating activities	$	(4,739,136	)	$	(3,866,082	)
Investing activities		(768,555	)		(10,726,409	)
Financing activities		(13,548,115	)		12,786,211
	$	(19,055,806	)	$	(1,806,280	)

The following table and the discussion present the Company’s cash activities on continuing basis as of December 31, 2024 and December 31, 2023.

	For the year ended December 31,
	2024			2023
Net cash (used in) provided by:
Operating activities	$	(579,557	)	$	(2,213,782	)
Investing activities		(47,185	)		161,068
Financing activities		(1,838,197	)		(16,405,101	)
Net decrease in cash from continuing operations	$	(2,464,939	)	$	(18,457,815	)
Net decrease in cash from discontinued operations		(1,422,580	)		(597,991	)
Total net decrease in cash	$	(3,887,519	)	$	(19,055,806	)

Our net cash used in operating activities of $4.7 million for the year ended December 31, 2023 resulted from our net loss of $18.5 million and a net cash usage of $1.9 million from changes in operating assets and liabilities, offset by a non-cash adjustments of $15.6 million. Our net cash used in continuing operating activities of $3.8 million for the year ended December 31, 2022 resulted from our net loss of $7.2 million and a net cash usage of $0.2 million from changes in operating assets and liabilities, offset by a non-cash adjustments of $3.5 million.12

~~The~~Our net cash used in ~~investing~~operating activities of $0.86 million for the year ended December 31, ~~2023~~2024 resulted from ~~the~~our ~~acquisition~~net loss of ~~Ellwood~~$8.1 ~~Thompson’s,~~million ~~the~~and ~~collection~~a ofnet acash ~~note~~provided ~~receivable,~~by changes in operating assets and ~~purchases~~liabilities of a$2.8 ~~patent~~million, and ~~property~~a ~~and~~non-cash ~~equipment~~adjustment of $4.8 ~~The~~million. Our net cash used in ~~investing~~continuing operating activities of $102.72 million for the year ended December 31, ~~2022~~2023 resulted from ~~the~~our ~~collection~~net loss of $8.6 million, a ~~note~~net ~~receivable,~~cash ~~the~~provided ~~acquisition~~by ofchanges ~~new~~in ~~businesses~~ operating assets and ~~purchases~~liabilities of a$2.7 ~~patent~~million, and ~~property~~a ~~and~~non-cash ~~equipment~~adjustment of $3.7 million.

The net cash used in ~~financing~~investing activities of $~~13.5~~47,000 ~~million~~ for the year ended December 31, ~~2023~~2024 isresulted ~~due~~from topurchases ~~Series~~of Eproperty ~~Preferred Stock redemptions~~ and ~~exercises, payment for deferred offering cost related with the spin off, and principle payment on loan payable~~equipment. The net cash provided by ~~financing~~investing activities of $~~12.8~~161,000 ~~million~~ for the year ended December 31, ~~2022~~2023 isresulted ~~due~~from tothe ~~proceeds~~collection ~~received~~of ~~from~~a ~~Securities Purchase Agreement~~note receivable of $~~12.8 million~~178,000, ~~partially~~ offset by apurchases ~~principal~~of ~~payment~~a ofpatent ~~$0.09~~and ~~million~~property onand ~~promissory~~equipment ~~note~~of $17,000.

AtThe net cash used in financing activities of $1.8 million for the year ended December 31, ~~2023~~2024 is due to $4.1 million net transfer to HCWC related to Spin-Off and ~~December~~$2.3 ~~31,~~million ~~2022,~~cash weproceeds ~~did~~from ~~not~~related ~~have~~party. ~~any~~The ~~material~~net ~~financial~~cash ~~guarantees~~used orin ~~other~~financing ~~contractual~~activities ~~commitments~~of ~~with~~$16.4 ~~trade~~million for ~~vendors~~the ~~that~~year ~~are~~ended ~~reasonably~~December ~~likely~~31, 2023 is due to ~~have~~Series anE ~~adverse~~Preferred ~~effect~~Stock onredemptions ~~liquidity~~and exercises, payment for deferred offering cost related with the spin off, and net parent investment.

~~Our~~At ~~cash~~December ~~balances~~31, ~~are~~2024 ~~kept liquid to support our growing acquisition~~ and ~~infrastructure~~December ~~needs~~31, ~~for~~2023, ~~operational~~we ~~expansion.~~did ~~The~~not ~~majority~~have ~~of our~~any ~~cash~~material ~~are concentrated in one large~~ financial ~~institution~~guarantees ~~and~~or ~~are~~other ~~generally~~contractual incommitments ~~excess~~with ~~of the Federal Deposit Insurance Corporation~~trade ~~(FDIC)~~vendors ~~insurance~~that ~~limit.~~are ~~The~~reasonably ~~Company~~likely ~~has~~to ~~not~~have ~~experienced~~an ~~any~~adverse ~~losses~~effect on ~~its cash and cash equivalents~~liquidity. ~~The following table presents the Company’s cash position as of December 31, 2023 and December 31, 2022.~~

	December 31, 2023			December 31, 2022
Cash	$	5,081,086		$	22,911,892
Total assets	$	30,969,579		$	55,255,030
Percentage of total assets		16.41	%		41.5	%

Our cash balances are kept liquid to support our growing acquisition and infrastructure needs for operational expansion. The majority of our cash are concentrated in one large financial institution and are generally in excess of the Federal Deposit Insurance Corporation (FDIC) insurance limit. The Company has not experienced any losses on its cash and cash equivalents. The following table presents the Company’s cash position on continuing basis as of December 31, 2024 and December 31, 2023.

As of December 31, 2023, the Company had cash of $5.1 million and negative working capital of $0.5 million. The Company has incurred recurring net losses and operations have not provided cash flows. The Company expects to continue incurring losses for the foreseeable future and may need to raise additional capital to satisfy business obligations, and to continue as a going concern. We believe that current cash on hand and cash flow from operations will not be sufficient to fund our working capital and other cash requirements over the next twelve months.

	December 31, 2024			December 31, 2023

Cash	$	1,193,567		$	3,658,506
Total assets	$	2,220,449		$	6,290,022
Percentage of total assets		53.8	%		58.2	%

As of December 31, 2024, the Company had cash of $1.2 million and negative working capital of $0.7 million. The Company has incurred recurring net losses and operations have not provided cash flows. The Company expects to continue incurring losses for the foreseeable future.

On November 7, 2024, the Company entered into a commitment letter with an investor that will allow the Company to draw up to $5 million from a revolving credit facility (the “Facility”) through August 31, 2025. Any advances will be used for working capital purposes. Any amounts borrowed pursuant to the Facility will be repayable in full on April 30, 2026 and the interest rate on the amounts borrowed is 12% per annum. 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 other than operating leases for retail locations, equipment, and vehicles.

Seasonality

We do not consider our business to be seasonal.

19Climate-Related Considerations

We have evaluated the potential impact of climate change on our business, including regulatory, physical, and market-related risks. Based on our assessment, we do not believe that climate change currently poses a material risk to our operations or financial performance. Our retail sales operations are not significantly affected by climate-related factors, such as extreme weather or emissions regulations. Nevertheless, we will continue to monitor any developments that could indirectly impact on our business, such as changes in consumer behavior or supply chain disruptions related to climate change.

Critical Accounting Policies and Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States (~~U.S.~~ “GAAP”) ~~requires~~ requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. We ~~The~~base ~~financial~~our ~~statements~~estimates ~~include~~on ~~estimates~~our ~~based~~historical onexperience, ~~currently~~knowledge ~~available~~of ~~information~~our business and ~~our~~industry, ~~judgment~~current asand toexpected ~~the~~economic conditions, ~~outcome~~the attributes of ~~future~~our ~~conditions~~products, the regulatory environment, and ~~circumstances.~~in ~~These~~certain ~~estimates~~cases, ~~and~~the ~~assumptions~~results of outside appraisals. These estimates include useful lives and impairment of long-lived assets, ~~goodwill,~~ deferred taxes and related valuation allowances, allocation of corporate general expenses, and the valuation of the assets and liabilities acquired in business combinations. ~~Changes~~We inperiodically ~~the~~re-evaluate ~~status~~our ofestimates and ~~certain~~assumptions ~~facts~~with orrespect ~~circumstances~~to ~~could~~these ~~result~~judgments inand ~~material changes~~modify toour ~~the~~approach when circumstances indicate that modifications are necessary. These estimates ~~used~~and inassumptions form the ~~preparation~~basis offor making judgments about the ~~financial~~carrying ~~statements~~values of assets and ~~actual~~liabilities ~~results~~that ~~could~~are ~~differ~~not readily apparent from ~~the~~other ~~estimates and assumptions~~sources.

Revenue Recognition

The Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers (“ASC 606”), the core principle of which is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to receive in exchange for those goods or services. To achieve this core principle, five basic criteria must be met before revenue can be recognized:

● Identification of the contract, or contracts, with a customer; ● Identification of the performance obligations in the contract; ● Determination of the transaction price; ● Allocation of the transaction price to the performance obligations in the contract; and ● Recognition of revenue when, or as, the Company satisfies a performance obligation.

~~● Identification of the performance obligations in the contract;~~14

● Determination of the transaction price;

● Allocation of the transaction price to the performance obligations in the contract; and

● Recognition of revenue when, or as, the Company satisfies a performance obligation.

Impairment of Long-Lived Assets

We review long-lived assets for impairment including intangible assets with determinable useful lives whenever events or changes in circumstances indicate that the carrying value of the corresponding asset group may not be realizable. The Company estimated future undiscounted cash flows associated with the asset group are compared to the asset group’s carrying amount to determine if an impairment of such asset is necessary. This requires us to make long-term forecasts of the future revenues and costs related to the assets groups subject to review. Forecasts require assumptions about demand for our products and future market conditions. Estimating future cash flows requires significant judgment, and our projections may vary from cash flows eventually realized. Future events and unanticipated changes to assumptions could require a provision for impairment in a future period. The effect of any impairment would be reflected in operating income in the Consolidated Statements of Operations. In addition, we estimate the useful lives of our long-lived assets and other intangibles and periodically review these estimates to determine whether these lives are appropriate.

Goodwill

Goodwill is the excess of consideration paid for an acquired entity over the fair value of the amounts assigned to assets acquired, including other identifiable intangible assets, and liabilities assumed in a business combination. To determine the amount of goodwill resulting from a business combination, the company hires third party valuation firm to perform valuation and assessment to determine the acquisition date fair value of the acquired company’s tangible and identifiable intangible assets and liabilities.

Goodwill is required to be evaluated for impairment on an annual basis or whenever events or changes in circumstances indicate the asset may be impaired. An entity has the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. These qualitative factors include: macroeconomic and industry conditions, cost factors, overall financial performance and other relevant entity-specific events. If the entity determines that this threshold is met, then the company may apply a one-step quantitative test and record the amount of goodwill impairment as the excess of a reporting unit’s carrying amount over its fair value, not to exceed the total amount of goodwill allocated to the reporting unit. The company determines fair value through multiple valuation techniques and weights the results accordingly. The company is required to make certain subjective and complex judgments in assessing whether an event of impairment of goodwill has occurred, including assumptions and estimates used to determine the fair value of its reporting units. The company has elected to perform its annual goodwill impairment review on September 30 of each year or more often if deemed necessary.

Business Combinations

The Company applies the provisions of ASC Topic 805, Business Combinations (“ASC 805”) in the accounting for acquisitions of businesses. ASC 805 requires the Company to use the acquisition method of accounting by recognizing the identifiable tangible and intangible assets acquired and liabilities assumed, measured at their acquisition date fair values. Goodwill as of the acquisition date is measured as the excess of consideration transferred over the aforementioned amounts. Acquisition costs are expensed as incurred and recorded in selling, general and administrative expenses in the consolidated statements of operations.

Deferred Taxes and Valuation Allowance

We account for income taxes pursuant to the asset and liability method of accounting for income taxes pursuant to FASB ASC740, “Income Taxes.” Deferred tax assets and liabilities are recognized for taxable temporary differences and operating loss carry forwards. Temporary differences are the differences between the reported amount of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

Non-GAAP Financial Measures

The following discussion and analysis ~~contains~~contain a non-GAAP financial measure. Generally, a non-GAAP financial measure is a numerical measure of a company’s performance, financial position or cash flows that either excludes or includes amounts that are not normally included or excluded in the most directly comparable measure calculated and presented in accordance with generally accepted accounting principles (GAAP). Non-GAAP financial measures should be viewed as supplemental to, and should not be considered as alternative to, net income, operating income, and cash flow from operating activities, liquidity or any other financial measures. Non-GAAP financial measures may not be indicative of the historical operating results of the Company nor are they intended to be predictive of potential future financial results. Investors should not consider non-GAAP financial measures in isolation or as substitutes for performance measures calculated in accordance with GAAP.

Management believes stockholders benefit from referring to the Adjusted EBITDA in planning, forecasting, and analyzing future periods. Management uses this non-GAAP financial measure in evaluating its financial and operational decision making and as a means of evaluating period to period comparison.

EBITDA, or earnings before interest, taxes, depreciation, and amortization, is an alternate measure of profitability to net income. Management believes Adjusted EBITDA is an important measure of our operating performance because it allows management, investors and analysts to evaluate and assess our core operating results from period to period after removing the impact of significant non-cash and non-recurring charges that effect comparability between reporting periods. We define Adjusted EBITDA as net loss adjusted for non-cash charges for depreciation and amortization, impairment of goodwill, stock compensation, change in contingent consideration, also adjusted for non-recurring other expense (income), net, loss on investment, and interest income. Our management recognizes that Adjusted EBITDA has inherent limitations because of the excluded items.

We have included a reconciliation of our non-GAAP financial measure to net loss as calculated in accordance with GAAP. We believe that providing the non-GAAP financial measure, together with the reconciliation to GAAP, helps investors make comparisons between the Company and other companies. In making any comparisons to other companies, investors need to be aware that companies use different non-GAAP measures to evaluate their financial performance. Investors should pay close attention to specific definitions being used and to the reconciliation between such measures and the corresponding GAAP measures provided by each company under applicable rules of the Securities and Exchange Commission.

	2023			2022
Reconciliation from net loss to adjusted EBITDA:
Operating loss	$	(18,482,880	)	$	(7,217,611	)
Interest expense		205,449			35,730
Depreciation and amortization		1,492,261			1,061,615
EBITDA		(16,785,170	)		(6,120,266	)
Stock-based compensation expense		3,430,250			72,222
Impairment of goodwill		6,104,000			-
Change in contingent consideration		(774,900	)		(333,100	)
Loss on investment		8,485			13,372
Other expense (income), net		1,485,612			(913,092	)
Interest income		(417,445	)		(238,383	)
Adjusted EBITDA	$	(6,949,168	)	$	(7,519,247	)

The following table presents the Company’s Adjusted EBITDA reconciliation on continuing basis as of December 31, 2024 and December 31, 2023.

	2024			2023
Reconciliation from net loss to adjusted EBITDA:
Operating loss	$	(8,115,284	)	$	(8,550,260	)
Interest expense		16,359			5,744
Depreciation and amortization		65,270			60,445
EBITDA		(8,033,655	)		(8,484,071	)
Stock-based compensation expense		4,619,500			3,430,250
Loss on investment		1,336			8,485
Other expense (income), net		(263,782	)		1,501,843
Interest income		(142,359	)		(417,421	)
Adjusted EBITDA	$	(3,818,960	)	$	(3,960,914	)

Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

Not applicable to smaller reporting companies.

Item 8. Financial Statements and Supplementary Data.

See pages F-1 through F-2326.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

None.

Item 9A. 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 during the year ended December 31, ~~2023~~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.

2116

Inherent Limitations of Internal Controls over Financial Reporting. The Company’s internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. The Company’s internal control over financial reporting includes those policies and procedures that: (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the Company’s assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that the Company’s receipts and expenditures are being made only in accordance with authorizations of the Company’s management and directors; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the Company’s financial statements.

Changes in Internal Control Over Financial Reporting. There were no changes in the Company’s internal control over financial reporting that occurred during the ~~quarter~~year ending December 31, ~~2023~~2024, that have materially affected, or are reasonably likely to materially affect, its internal control over financial reporting.

Management’s Annual Report on Internal Control over Financial Reporting. 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 December 31, ~~2023~~2024 and noted the material weaknesses as follows:

● ~~Failure~~The toCompany ~~have~~had ~~properly~~ineffective ~~documented~~design, implementation and ~~designed~~operation ~~disclosure~~of controls ~~and~~over ~~procedures~~logical access, program change management, and ~~testing~~vendor ofmanagement ~~the~~controls. ~~operating~~The ~~effectiveness~~Company ofcontrols ~~our~~on ~~internal~~IT ~~control~~should ~~over~~have ~~financial~~included ~~reporting.~~the following:

● 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 our 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, in the aggregate, rise to the level of material weaknesses, we did not maintain effective internal control over financial reporting as of December 31, ~~2023~~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”).

Remediation Efforts

Following this assessment and during the twelve months ended December 31, ~~2023~~2024, we have undertaken an action plan to strengthen internal controls and procedures:

	●	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 and ultimately leading to more reliable and precise financial reporting. The Company implemented an open to buy program by comparing purchases with sales to better control overall inventory purchases.

	●	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. ~~● 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.

Item 9B. Other Information.

None.

2217

PART III

Item 10. Directors, Executive Officers and Corporate Governance

Directors and Executive Officers

The following table sets forth information regarding our executive officers and directors as of December 31, ~~2023~~2024:

Name	Age	Position
Executive Officers:
Jeffrey Holman	5657	Chief Executive Officer, Chairman and Director
John A. Ollet	6162	Chief Financial Officer
Christopher Santi	5354	President and Chief Operating Officer
Non-Employee Directors:
Clifford J. Friedman	6263	Director
Dr. Anthony Panariello	6465	Director

Executive Officers

Jeffrey Holman has been our Chairman of the Board and Chief Executive Officer since April 2014. From February 2013 until March 4, 2015, Mr. Holman serviced as our President. Mr. Holman has been a member of our Board since May 2013 and has served as a member of the Board of Directors of our subsidiary Smoke Anywhere, USA since its inception on March 24, 2008. Mr. Holman has been the Chief Executive Officer of the Healthy Choice Wellness Corp. (“HCWC”) since September 2022 and has served on its board of directors since September 2022. Since 1998, Mr. Holman has been the President of Jeffrey E. Holman & Associates, P.A., a South Florida based law firm. He has also been a Partner in the law firm of Holman, Cohen & Valencia since 2000. Mr. Holman was selected as a director for his business and legal experience. In addition, as one of the founders of Smoke Anywhere, Mr. Holman possesses an in-depth understanding of the challenges, risks and characteristics unique to our industry.

Christopher Santi has been our Chief Operating Officer since December 12, 2012, and has also served as the President since April 11, 2016. Mr. Santi served as the President and Chief Operating Officer of HCWC since September 2022. Previously, Mr. Santi served as Director of Operations of the Company beginning in October 2011. Mr. Santi served as the National Sales Manager of Collages.net from November 2007 to October 2011.

John A. Ollet has been our Chief Financial Officer since December 12, 2016. Mr. Ollet has served as the Chief Financial Officer of HCWC since September 2022 and on the HCWC board of directors since August 2024. Mr. Ollet previously served as Executive Vice President-Finance for Systemax, Inc. (NYSE:SYX) from 2006 to 2016. His prior chief financial officer experience also includes serving as Vice President and Chief Financial Officer of Arrow Cargo Holdings, Inc., an airline logistics company, and VP Finance /CFO - The Americas - Cargo Division, KLM Royal Dutch Airlines, an airline company. He also previously served as Vice President Finance/Administration at Sterling-Starr Maritime Group, Inc. and served on the audit staff of Arthur Andersen & Co. Mr. Ollet received a bachelor’s degree in Finance/Economics and a master’s degree in business administration from Florida International University. Mr. Ollet is a Certified Public Accountant.

Non-Employee Directors

Anthony Panariello, M.D. has been a director since April 15, 2016. Dr. Panariello is a Board Certified in Pulmonology and Internal Medicine in Florida and has been in private practice since 1996, serving as an attending physician at a number of hospitals. Dr. Panariello is a member of the College of Physicians and the American College of Chest Physicians. Additionally, Dr. Panariello currently serves as a Lieutenant Commander in the Medical Corps of the United States Navy Reserve. Dr. Panariello received his Bachelor of Science from the State University of New York at Stony Brook and his medical degree from the Autonomous University of Guadalajara.

Clifford J. Friedman has been a director since April 15, 2016. Mr. Friedman is a certified public accountant in Coral Springs, Florida and manages his own public accounting, tax and consulting practice since 2001. From 1992 to 2000, Mr. Friedman was Vice President - Finance and Administration of the Box Worldwide, Inc., a Viacom company. He received an M.B.A. from Nova Southeastern University and his B.B.A. from Pace University.

2318

Corporate Governance

Board Responsibilities

The Board oversees, counsels, and directs management in the long-term interest of the Company and its stockholders. The Board’s responsibilities include establishing broad corporate policies and reviewing the overall performance of the Company. The Board is not, however, involved in the operating details on a day-to-day basis.

Board Committees and Charters

The Board and its Committees meet throughout the year and act by written consent from time-to-time as appropriate. The Board delegates various responsibilities and authority to different Board Committees. Committees regularly report on their activities and actions to the Board.

The Board currently has and appoints the members of: The Audit Committee, the Compensation Committee and the Nominating and Corporate Governance Committee. Each of these committees have a written charter which can be found on our corporate website at www.healthiercmc.com/committee-charters/.

The following table identifies the independent and non-independent current Board and committee members:

Name	Independent	Audit	Compensation	Nominating And Corporate Governance
Jeffrey Holman
Dr. Anthony Panariello	X	X	X	X
Clifford J. Friedman	X	X	X	X

Director Independence

Our Board has determined that Clifford J. Friedman and Dr. Anthony Panariello are independent in accordance with standards under the OTC Pink Marketplace. Our Board determined that as a result of being an executive officer, Messrs. Jeffrey Holman is not independent under the OTC Pink Marketplace ~~Bulletin Boards~~. Our Board has also determined that Clifford J. Friedman and Dr. Anthony Panariello are independent under the OTC Pink Marketplace independence standards for Audit and Compensation Committee members.

Committees of the Board

Audit Committee

The Audit Committee, which currently consists of Clifford J. Friedman (chair) and Dr. Anthony Panariello, reviews the Company’s financial reporting process on behalf of the Board and administers our engagement of the independent registered public accounting firm. The Audit Committee approves all audit and non-audit services, and reviews the independence of our independent registered public accounting firm.

Audit Committee Financial Expert

Our Board has determined that Clifford J. Friedman is qualified as an Audit Committee Financial Expert, as that term is defined by the rules of the SEC and in compliance with the Sarbanes-Oxley Act of 2002.

Compensation Committee

The function of the Compensation Committee is to determine the compensation of our executive officers. The Compensation Committee has the power to set performance targets for determining periodic bonuses payable to executive officers and may review and make recommendations with respect to stockholder proposals related to compensation matters. Additionally, the Compensation Committee is responsible for administering the Company’s equity compensation plans including the Company’s 2015 Equity Incentive Plan, as amended.

The members of the Compensation Committee are all independent directors within the meaning of applicable Nasdaq Listing Rules and all of the members are “non-employee directors” within the meaning of Rule 16b-3 under the Exchange Act.

2419

Nominating and Corporate Governance Committee

The responsibilities of the Nominating and Corporate Governance Committee include the identification of individuals qualified to become Board members, the selection of nominees to stand for election as directors, the oversight of the selection and composition of committees of the Board, establish procedures for the nomination process including procedures and the oversight of the evaluations of the Board and management. The Nominating and Corporate Governance Committee has not established a policy with regard to the consideration of any candidates recommended by stockholders since no stockholders have made any recommendations. If we receive any stockholder recommended nominations, the Nominating Committee will carefully review the recommendation(s) and consider such recommendation(s) in good faith.

Compensation Committee Interlocks and Insider Participation

None of the members of our compensation committee has ever been an officer or employee of the Company. None of our executive officers serve, or have served during the last fiscal year, as a member of our compensation committee or other Board committee performing equivalent functions of any entity that has one or more executive officers serving on our Board or on our compensation committee.

Board Assessment of Risk

The Board is actively involved in the oversight of risks that could affect the Company. This oversight is conducted primarily through the Audit Committee, but the full Board has retained responsibility for general oversight of risks. The Audit Committee considers and reviews with our independent public accounting firm and management the adequacy of our internal controls, including the processes for identifying significant risks and exposures, and elicits recommendations for the improvements of such procedures where desirable. In addition to the Audit Committee’s role, the full Board is involved in oversight and administration of risk and risk management practices. Members of our senior management have day-to-day responsibility for risk management and establishing risk management practices, and members of management are expected to report matters relating specifically to the Audit Committee directly thereto, and to report all other matters directly to the Board as a whole. Members of our senior management have an open line of communication to the Board and have the discretion to raise issues from time-to-time in any manner they deem appropriate, and management’s reporting on issues relating to risk management typically occurs through direct communication with directors or committee members as matters requiring attention arise. Members of our senior management regularly attend portions of the Board’s meetings, and often discuss the risks related to our business.

Code of Ethics

The Company has a code of ethics, “Business Conduct: “Code of Conduct and Policy,” that applies to all of the Company’s employees, including its principal executive officer, principal financial officer and principal accounting officer, and the Board. A copy of this code is available on the Company’s website at http://www.healthiercmc.com/code-of-conduct. The Company intends to disclose any changes in or waivers from its code of ethics by posting such information on its website or by filing a Current Report on Form 8-K.

Stockholder Communications

Although we do not have a formal policy regarding communications with our Board, stockholders may communicate with the Board by writing to us at Healthier Choices Management Corp., 3800 N 28th Way, Hollywood, FL 33020, Attention: Corporate Secretary, or by facsimile (~~305~~954) ~~600~~251-~~5004~~3057. Stockholders who would like their submission directed to a member of the Board may so specify, and the communication will be forwarded, as appropriate.

2520

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act requires our officers and directors, and persons who own more than 10% of a registered class of our equity securities, to file with the SEC initial reports of ownership and reports of changes in ownership of common stock and the other equity securities. Officers, directors and greater than ten percent stockholders are required by SEC rules to furnish us with copies of all Section 16(a) reports they file.

Based solely on a review of the reports furnished to us, or written representations from reporting persons that all reportable transactions were reported and that no Form 5s were required, we believe that during ~~2023~~2024 our officers, directors and greater than 10% owners timely filed all reports they were required to file under Section 16(a).

ITEM 11. Executive Compensation

The following information is related to the compensation paid, distributed or accrued by us for fiscal ~~2023~~2024 to all Chief Executive Officers (principal executive officers) serving during the last fiscal year and the other most highly compensated executive officers serving at the end of the last fiscal year whose compensation exceeded $100,000. We refer to these individuals as our “named executive officers.”

Summary Compensation Table

Name and Principal Position

Year

Salary ($)

Bonus ($)

Restricted Stock/ (Forfeited) (1)$

Restricted Stock Awards(1) $

All Other Compensation ($)

Total

Jeffrey Holman

~~2023~~2024

~~688~~695,~~149~~169

~~5,000,000~~-

5695,~~688,149~~169

Chief Executive Officer

~~2022~~2023

~~598~~688,~~379~~149

~~350,000~~

-5,000,000

~~948~~5,~~379~~688,149

Christopher Santi

~~2023~~2024

405,~~321~~352

~~2,500,000~~-

2405,~~905,321~~352

President and Chief Operating Officer

~~2022~~2023

~~394~~405,~~832~~321

~~200,000~~-

-2,500,000

~~594~~2,~~832~~905,321

John Ollet

~~2023~~2024

~~304~~331,~~616~~723

~~1,800,000~~-

2331,~~104,616~~723

Chief Financial Officer

~~2022~~2023

~~260~~304,616

~~125,000~~

-1,800,000

~~385~~2,104,616

(1) Amounts reflect the aggregate grant date fair value, without regard to forfeitures, computed in accordance with ASC 718. These amounts represent options and restricted stock of the Company’s common stock and do not reflect the actual amounts that may be realized by the Named Executive Officers. Our assumptions with respect to the calculation of the stock options and restricted stock value are set forth in Note 2 to the consolidated financial statements contained herein.

On September 13, 2024, HCMC completed the Spin-Off of its grocery segment into a separate publicly traded company HCWC. As part of the Spin-Off, HCMC and HCWC entered into a Transition Services Agreement (“TSA”), under which each company agreed to provide certain transitional support services to the other for a specified period to ensure an orderly separation. Throughout fiscal year 2024, certain executives of HCMC continued to provide services to both HCMC and HCWC while remaining employed and compensated by HCMC. Pursuant to the TSA, HCMC allocated $0.7 million of the total compensation costs for these executives to HCWC based on the time spent supporting HCWC’s business operations. The allocation covered base salary, annual incentives, benefits, and other applicable compensation elements.

Named Executive Officer Employment Agreements

On August 13, 2018, the Company amended and restated its existing employment agreement with Jeffrey Holman, the Company’s Chief Executive Officer (the “Holman Employment Agreement”). The Holman Employment Agreement provides for an annual base salary of $450,000 and a target bonus only in an amount ranging from 20% to 200% of his base salaries subject to the Company meeting certain earnings before interest, taxes depreciation and amortization performance milestones. The Holman Employment Agreement automatically renews each year unless terminated by either party on 30 days’ prior notice. Mr. Holman is entitled to receive severance payments, including two years of his then base salary and other benefits in the event of a change of control, termination by the Company without cause, termination for good reason by the executive or non-renewal by the Company. Mr. Holman was also granted 11 billion shares of restricted common stock pursuant to the Holman Employment Agreement Amendment on the condition that 11 billion of his options to purchase Company common stock are forfeited. This restricted stock will vest one year following the date of issuance provided that the grantee remains an employee of the Company through each applicable vesting date. On August 12, 2019, the Company agreed to extend the expiration date of the vesting period for the restricted stock by six months to February 13, 2020. On August 12, 2020, the Company agreed to extend for a second time the expiration date of the vesting period for the restricted stock by six months to February 13, 2021. The Term ~~shall~~is be automatically renewed for successive one-year terms unless notice of non-renewal is given by either party at least 30 days before the end of the Term. The current Term expires on August 13, 2025. The above description of the terms of the Holman Employment Agreement is not complete and is qualified by reference to the complete document.

2621

On February 26, 2021, the Company entered into an amended and restated employment agreement (the “Santi Employment Agreement”) with the Company’s President and Chief Operating Officer, Christopher Santi. Pursuant to the Employment Agreement Amendment. Mr. Santi received a base salary of $0.4 million for ~~2021~~2024 and his salary has increased 10% in each subsequent year. The term ~~shall~~is be automatically renewed for successive one-year terms unless notice of non-renewal is given by either party at least 30 days before the end of the Term. The current Term expires on February 26, 2026. The above description of the terms of the Santi Employment Agreement is not complete and is qualified by reference to the complete document.

On February 2, 2022, the Company entered into a second amended and restated employment agreement (the “Ollet Employment Agreement”) with the Company’s Chief Financial Officer, John Ollet. Pursuant to the Employment Agreement Amendment, Mr. Ollet will continue to be employed as the Company’s Chief Financial Officer through February 14, 2025. Mr. Ollet received a base salary of $~~300,000~~ 0.3 million for ~~2022~~2024 and his salary will increase 10% in each subsequent calendar year. The term ~~shall~~is be automatically renewed for successive one-year terms unless notice of non-renewal is given by either party at least 30 days before the end of the Term. The current Term expires on February 2, 2026. The above description of the terms of the Ollet Employment Agreement is not complete and is qualified by reference to the complete document.

Termination Provisions

The table below describes the severance payments that our Named Executive Officers are entitled to in connection with a termination of their employment upon death, disability, dismissal without cause, Change of Control or for Good Reason. All of the termination provisions are intended to comply with Section 409A of the Internal Revenue Code of 1986 and the Regulations thereunder.

	Holman	Santi/Ollet
Death or Total Disability	Any amounts due at time of termination plus full vesting of equity awards	Any amounts due at time of termination

Dismissal Without Cause or Termination by Executive for Good Reason or upon a Change of Control (1)	Two years of Base Salary, full vesting of equity awards, benefit continuation for eighteen months plus pro-rated bonus if, any, that would have been earned for the fiscal year in which the termination occurs	Fifteen months of Base Salary plus one additional month for every additional four months of service, up to eighteen months’ maximum

Termination upon a Change of Control (2)	Two years of Base Salary, full vesting of equity awards, benefit continuation for eighteen months plus pro-rated bonus if, any, that would have been earned for the fiscal year in which the termination occurs	Eighteen months of Base Salary

(1) Good reason is generally (with certain exceptions) defined, in the case of Holman, as (i) a material diminution in their authority, duties or responsibilities, (y) the Company failing to maintain an office in the stated area or (ii) any other action or inaction that constitutes a material breach by the Company of the Employment Agreement. Messrs. Ollet and Santi’s employment agreement do not include the concept of good reason.

(2) Change of Control is generally defined (i) in the case of Holman, as any Change of Control Event as defined in Treasury Regulation Section 1.409A-3(i)(5); and (ii) in the case of Santi, as (w) a sale of substantially all of the Company, (x) any “person” (as such term is defined under the Exchange Act) becomes the beneficial owners of over 50% of the Company’s voting power, (y) a change in the majority of the composition of the Board or (z) a transaction that results in over 50% of the Company’s voting power ceasing to hold a majority of the voting power post-transaction.

2722

Risk Assessment Regarding Compensation Policies and Practices as they Relate to Risk Management

Our compensation program for employees does not create incentives for excessive risk taking by our employees or involve risks that are reasonably likely to have a material adverse effect on us. Our compensation has the following risk-limiting characteristics:

● Our base pay programs consist of competitive salary rates that represent a reasonable portion of total compensation and provide a reliable level of income on a regular basis, which decreases incentive on the part of our executives to take unnecessary or imprudent risks; and ● Cash bonus awards are not tied to formulas that could focus executives on specific short-term outcomes.

● Cash bonus awards are not tied to formulas that could focus executives on specific short-term outcomes.

Outstanding Awards at Fiscal Year End

Listed below is information with respect to unexercised options that have not vested, and equity incentive plan awards for each named executive officer outstanding as of December 31, ~~2023~~2024:

Outstanding Equity Awards at ~~2023~~2024 Fiscal Year-End

	Number of Shares Issued Under Stock Options		Number of Shares Issued Under Restricted Stock		Stock Options and Restricted Stock Exercise Price ($) Per Share of Stock		Expiration Date	Number of Shares That Have Not Vested (#)		Market Value of Shares That Name Have Not Vested ($)
Jeffrey Holman		-		59,075,000,000		0.0001	8/13/2028		5018,~~000~~750,000,000		51,~~000~~875,000
Jeffrey Holman		39,000,000,000		-		0.0001	2/1/2027		-		-
Christopher Santi		-		31,600,000,000		0.0001	8/13/2028		259,~~000~~375,000,000		2937,500~~,000~~
Christopher Santi		17,000,000,000		-		0.0001	2/1/2027		-		-
John Ollet		-		20,475,000,000		0.0001	8/13/2028		186,~~000~~750,000,000		1675,~~800,~~000
John Ollet		1,000,000,000		-		0.0001	12/9/2026		-		-
John Ollet		4,000,000,000		-		0.0001	8/30/2027		-		-

Director Compensation

Non-employee directors are paid an annual fee of $10,000 or $15,000, plus a fee of $1,000 and $1,500 for each meeting attended. OnThe ~~December 14, 2022, the~~ Company ~~granted~~did ~~2,000,000,000~~not issue ~~shares~~stock ofaward ~~Restricted Stock (the “Award”)~~ to ~~each~~ non-employee ~~director.~~directors ~~Commencing on~~for the ~~first~~twelve ~~anniversary~~months ofended ~~the~~December ~~date of Grant~~31, ~~the Award will vest in 12~~2024.5% ~~increments on the last day of each quarter thereafter.~~ Because we do not pay any compensation to employee directors, Mr. Holman is omitted from the following table. Non-employee members of our Board of Directors were compensated for as follows:

Fiscal ~~2023~~2024 Director Compensation

Name	Fees Earned or Paid in Cash ($)
Dr. Anthony Panariello	$	4038,~~000~~500
Clifford J. Friedman	$	4543,~~000~~500

2823

Equity Compensation Plan Information

The 2015 Equity Incentive Plan (the “Plan”) was approved by the Company’s stockholders at the June 26, 2015 stockholders meeting. On November 21, 2016, the Company’s Board of Directors increased the number of shares of common stock available for issuance pursuant to the Plan to 100,000,000,000. On April 23, 2023, the Board of Directors (the “Board”) of HCMC approved the Second Amendment to the 2015 Equity Incentive Plan (the “Amended Plan”). The Amended Plan increased the number of shares of HCMC common stock authorized for issuance under the Amended Plan to 225,000,000,000 shares. The Plan is a broad-based plan in which all employees, consultants, officers, and directors of the Company are eligible to participate. The purpose of the Plan is to further the growth and development of the Company by providing, through ownership of stock of the Company and other equity-based awards, an incentive to its officers and other key employees and consultants who are in a position to contribute materially to the prosperity of the Company, to increase such persons’ interests in the Company’s welfare, by encouraging them to continue their services to the Company, and by enabling the Company to attract individuals of outstanding ability to become employees, consultants, officers and directors of the Company.

The following chart reflects the number of awards granted under equity compensation plans approved and not approved by stockholders and the weighted average exercise price for such plans as of December 31, ~~2023~~2024.

Name of Plan

Number of securities to be issued upon exercise of outstanding options, warrants and rights (a)

Weighted average exercise price of outstanding options, warrants and rights

Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))

Equity compensation plans approved by security holders

2015 Equity Incentive Plan

~~199~~202,824,722,200

0.0001

2522,175,277,800

Total

~~199~~202,824,722,200

-0.0001

2522,175,277,800

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholders Matters.

The following table sets forth the number of shares of our common stock beneficially owned as of ~~March~~April 2714, ~~2024~~2025, by (i) those persons ~~known~~ known by us to be owners of more than 5% of our common stock, (ii) each director, (iii) our Named Executive Officers and (iv) all of our executive officers and directors of as a group. Unless otherwise specified in the notes to this table, the address for each person is: c/o Healthier Choices Management Corp., 3800 North 28th Way, Hollywood, Florida 33020.

Title of Class	Beneficial Owner	Amount and Nature of Beneficial ~~Owner~~Ownership (1)		Percent of Class (1)
Directors and Executive Officers:
Common Stock	Jeffrey E. Holman (2)		56,300,000,000		11.7770	%
Common Stock	Christopher Santi (3)		30,225,000,000		6.3228	%
Common Stock	John Ollet (4)		19,725,000,000		4.1210	%
Common Stock	Dr. Anthony Panariello (5)		5,242,500,000		1.1009	%
Common Stock	Clifford J. Friedman (6)		5,490,000,000		1.1514	%
All directors and officers as a group (5 persons) (7)			116,982,500,000		24.4631	%
5% Stockholders:
None			-		0	%
Common Stock	Jeffrey E. Holman		56,300,000,000		11.70	%
Total:			116,982,500,000		24.46	%
Common Stock	Christopher Santi		30,225,000,000		6.28	%

2924

(1) Beneficial Ownership. Applicable percentages are based on ~~478~~481,266,632,384 shares of common stock outstanding as of ~~March~~April 2714, ~~2024~~2025. ~~Beneficial~~ Beneficial ownership is determined under the rules of the SEC and generally includes voting or investment power with respect to securities. ~~Shares~~ Shares of common stock subject to options, warrants, convertible notes and preferred stock currently exercisable or convertible or exercisable or convertible within 60 days are deemed outstanding for computing the percentage of the person holding such securities but are not deemed outstanding for computing the percentage of any other person. The table includes shares of common stock, options, warrants, and preferred stock exercisable or convertible into common stock and vested or vesting within 60 days. Unless otherwise indicated in the footnotes to this table, we believe that each of the stockholders named in the table has sole voting and investment power with respect to the shares of common stock indicated as beneficially owned by them. The table does not include: (i) restricted stock units that do not have the right to vote until they vest, and the shares are delivered or (ii) unvested options that do not vest within 60 days of the date listed above in this footnote.

(2) Holman. Chairman and Chief Executive Officer. Includes 39,000,000,000 vested options, 940,~~075~~325,000,000 shares of vested restricted Common Stock and 5018,~~000~~750,000,000 shares of unvested restricted Common Stock.

(3) Santi. President and Chief Operation Officer. Includes 17,000,000,000 vested options, 622,~~600~~225,000,000 shares of vested restricted Common Stock and 259,~~000~~375,000,~~000shares~~000 shares of unvested restricted Common Stock.

(4) Ollet. Chief Financial Officer. Includes 5,000,000,000 vested options. He also holds 213,~~475~~725,000,000 shares of vested restricted Common Stock and 186,~~000~~750,000,000 shares of unvested restricted Common Stock.

(5) Panariello. A director. Includes 1,000,000,000 vested options. He also holds ~~662~~3,537,500,000 shares of vested restricted Common Stock and 41,~~750~~875,000,000 shares of unvested restricted Common Stock .

(6) Friedman. A director. Includes 990,000,000 vested options, ~~750~~3,625,000,000 shares of vested restricted Common Stock and 41,~~750~~875,000,000 shares of unvested restricted Common Stock.

(7) Directors and Executive Officers. Includes executive officers who are not Named Executive Officers under the SEC’s rules and regulations.

Item 13. Certain Relationships and Related Transactions, and Director Independence.

~~For~~As of September 13, 2024, HCMC and HCWC operate as separate publicly traded entities following the ~~years~~completion ~~ended~~of ~~December~~the 31spin-off transaction. In connection with the separation, ~~2023~~the companies entered into a Transition Services Agreement, under which HCMC continues to provide certain administrative and executive management services to HCWC on a transitional basis. Generally, these services will be provided for a period of up to one year following the Spin-Off. HCWC reimburses HCMC for this portion of shared cost monthly. Following the Spin-Off, the Company ~~did~~recognized ~~not~~a ~~have~~reduction ~~any~~of ~~related~~costs ~~party~~of ~~transactions~~$0.4 million for services provided to HCWC pursuant to the transition services agreement.

Policies and Procedures for Related Party Transactions

We have adopted a policy that our executive officers, directors, nominees for election as a director, beneficial owners of more than 5% of any class of our common stock and any members of the immediate family of any of the foregoing persons are not permitted to enter into a related person transaction with us without the prior consent of our audit committee. Our audit committee will review and oversee all transactions with an executive officer, director, nominee for election as a director, beneficial owner of more than 5% of any class of our common stock or any member of the immediate family of any of the foregoing persons and such person would have a direct or indirect interest. In approving or rejecting any such transactions, our audit committee is to consider the material facts of the transaction, including, but not limited to, whether the transaction is on terms no less favorable than terms generally available to an unaffiliated third party under the same or similar circumstances and the extent of the related person’s interest in the transaction.

3025

Item 14. Principal Accounting Fees and Services.

Our Audit Committee pre-approves audit and permissible non-audit services performed by its independent registered public accounting firm, as well as the fees charged for such services. All services related to audit fees and audit-related fees charged were pre-approved by the Audit Committee. The following table shows the fees for the years ended December 31, ~~2023~~2024 and ~~2022~~2023.

	2023		2022
	2024		2023
Audit (1)	$	1561,~~122,~~000	$	~~594~~1,122,000
Audit - Related		-		-
Tax		-		-
Other		-		-
Total	$	1561,~~122,~~000	$	~~594~~1,122,000

Audit fees — these fees relate to the audit of our annual financial statements and the review of our interim quarterly financial statements and our registration statements.

Audit-related fees - the aggregate fees billed for assurance and related services by the principal accountant that are related to the performance of the audit or review of the registrant’s financial statements and are not reported under paragraph (1) above.

Tax fees - the aggregate fees billed for professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning.

Other fees - the aggregate fees billed other than the services reported in audit, audit-related and tax fees.

PART IV

Item 15. Exhibits, Financial Statement Schedules.

(a)	Documents filed as part of the report.

(1)

Financial Statements. See Index to Consolidated Financial Statements, which appears on page F-1 hereof. The financial statements listed in the accompanying Index to Consolidated Financial Statements are filed herewith in response to this Item.

(2)

Financial Statements Schedules. All schedules are omitted because they are not applicable or because the required information is contained in the consolidated financial statements or notes included in this report.

(3)

Exhibits. The exhibits listed in the accompanying Exhibit Index are filed or incorporated by reference as part of this report.

3126

FINANCIAL STATEMENT INDEX

Report of Independent Registered Public Accounting Firm (PCAOB ID # 688)	F-2
Report of Independent Registered Public Accounting Firm (PCAOB ID # 5854)		F-2
Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm (PCAOB ID # 688)		F-3
Consolidated Balance Sheets as of December 31, 2023 and 2022	F-4
Consolidated Financial Statements
Consolidated Statements of Operations for the Years Ended December 31, 2023 and 2022	F-5
Consolidated Balance Sheets as of December 31, 2024 and 2023		F-4
Consolidated Statements of Changes in Convertible Preferred Stock and Stockholders’ Equity for the Years Ended December 31, 2023 and 2022	F-6
Consolidated Statements of Operations for the Years Ended December 31, 2024 and 2023		F-5
Consolidated Statements of Cash Flows for the Years Ended December 31, 2023 and 2022	F-7
Consolidated Statements of Changes in Convertible Preferred Stock and Stockholders’ Equity for the Years Ended December 31, 2024 and 2023		F-6
Notes to Consolidated Financial Statements	F-8
Consolidated Statements of Cash Flows for the Years Ended December 31, 2024 and 2023		F-7
Notes to Consolidated Financial Statements		F-8

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and Board of Directors of

Healthier Choices Management Corp.

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheet of Healthier Choices Management Corp. (the “Company”) as of December 31, 2024 and the related consolidated statement of operations, convertible preferred stock and stockholders’ equity, and cash flows for the year ended December 31, 2024 and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024, and the results of its operations and its cash flows for the year ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America. We also have audited the adjustments to the 2023 consolidated financial statements to retrospectively apply the discontinued operations of the Grocery segment, as described in Note 2. In our opinion, such adjustments are appropriate and have been properly applied. We were not engaged to audit, review, or apply any procedures to the 2023 consolidated financial statements of the Company other than with respect to the adjustments and, accordingly, we do not express an opinion or any other form of assurance on the 2023 financial statements taken as a whole.

Going Concern

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the financial statements, The Company has incurred recurring net losses and operations have not provided cash flows. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 3. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Discontinued Operations – Retroactive Adjustments

As discussed in Note 2 to the consolidated financial statements, the Company has discontinued its Grocery segment and has retroactively adjusted the financial statements for all prior periods presented to reflect the discontinuation of this segment. Previously issued consolidated financial statements of the Company as of December 31, 2023, were audited by other auditors whose report dated March 27, 2024 expressed an unqualified opinion on those statements before the adjustments.

Segment Information – Retroactive Adjustments

As discussed in Note 5 to the consolidated financial statements, the Company adopted ASU 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures”, effective January 1, 2024 applying it retrospectively to all periods. Previously issued consolidated financial statements of the Company as of December 31, 2023, were audited by other auditors whose report dated March 27, 2024 expressed an unqualified opinion on those statements before the adjustments.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audit provides a reasonable basis for our opinion.

Critical Audit Matters

We determined that there are no critical audit matters.

/s/ TAAD LLP

TAAD LLP

We have served as the Company’s auditor since 2025.

Diamond Bar, CA

April 14, 2025

F-2

Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Directors of

Healthier Choices Management Corp.

Opinion on the Financial Statements

We have audited, before the effects of the retrospective adjustments for the adoption of ASU 2023-07, Segment Reporting (Topic 280): Improvement to Reportable Segment Disclosures (“ASU 2023-07”) discussed in Note 5 and discontinued operations presentation discussed in Note 2 to the consolidated financial statements, the accompanying consolidated balance ~~sheets~~sheet of Healthier ~~Choices~~ Choices Management Corp. (the “Company”) as of December 31, 2023 ~~and 2022~~, the related consolidated ~~statements~~statement of operations, changes in convertible preferred stock and stockholders’ equity and cash flows for ~~each of~~ the ~~two~~year ~~years in the period~~ ended December 31, 2023, and the related notes (collectively referred to as the “financial statements”), (the 2023 financial statements, before the effects of the adjustments discussed in Note 2 and Note 5 are not presented herein). In our opinion, the 2023 financial statements, before the effects of the retrospective ~~present~~adjustment for the adoption of ASU 2023-07 discussed in Note 5 and discontinued operations presentation discussed in Note 2, present fairly, in all material respects, the financial position of the Company as of December 31, 2023 ~~and 2022~~, and the results of its operations and its cash flows for ~~each of~~ the ~~two~~year ~~years in the period~~ ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.

We were not engaged to audit, review, or apply any procedures to the retrospective adjustments for the adoption of ASU 2023-07 discussed in Note 5 and discontinued operations presentation discussed in Note 2 to the consolidated financial statements, and accordingly, we do not express an opinion or any other form of assurance whether such retrospective adjustments are appropriate and have been appropriately applied. These retrospective adjustments were audited by TAAD LLP.

Explanatory Paragraph – Going Concern

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As more fully described in Note 23, the Company has a working capital deficiency, has incurred significant losses and needs to raise additional funds to meet its obligations to sustain its operations. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans regarding these matters are described in Note 23. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our ~~audits~~audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our ~~audits~~audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the ~~audits~~audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our ~~audits~~ audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our ~~audits~~ audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our ~~audits~~audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our ~~audits provide~~audit provides a reasonable basis for our opinion.

Critical Audit ~~Matter~~Matters

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates.

F-2

Valuation of Intangible Assets for Business Combination

Description of the Matter

As disclosed in Note 8 to the financial statements, during the year ended December 31, 2023, the Company completed the acquisition of Ellwood Thompson’s Natural Market, L.C. for total consideration of approximately $1.5 million. The transaction was accounted for as a business combination in accordance with Accounting Standards ASC 805, Business Combinations. Accordingly, the purchase price was allocated to the assets acquired and liabilities assumed, based on their respective fair values identified, including intangible assets with an aggregate fair value (excluding goodwill) of approximately $0.3 million. The Company, with the assistance of a third-party valuation specialist, estimated the fair value of the identified intangible assets using valuation models which require significant assumptions. The significant assumptions used to estimate the fair value of the identified intangible assets included discount rates, royalty rates, economic lives, and financial projections.

Auditing management’s assessment of the acquisition date fair value of the identified intangible assets is highly subjective and judgmental. Based on the level of management judgment, we have determined the evaluation of the acquisition date fair value of the acquired intangible assets to be a critical audit matter.

How We Addressed the Matter in our Audit

Our audit procedures related to the accounting for valuation of intangible assets for business combinations to address this critical audit matter included the following:

●	We gained an understanding of the Company’s process with regards to the methodology used, and the factors considered around the inputs, sources of data used, assumptions and estimates used to determine the acquisition date fair value of the intangible assets acquired.
●	We tested the mathematical accuracy of the underlying schedules used in the valuation report. We tested the completeness, accuracy and relevance of source information underlying the data used in the models.
●	We evaluated the Company’s future revenue growth rates by comparing them to historical results and performed a sensitivity calculation to ensure the reasonableness of these forecasts.
●	We assessed the appropriateness of the overall approach and models used in determining the fair value of the intangible assets acquired.
●	We evaluated the reasonableness of the assumptions used by management.
●	We involved valuation professionals with specialized skills and knowledge in performing audit procedures to evaluate the reasonableness of the Company’s estimates and assumptions used by the specialist to determine the selection of revenue growth rates, discount rates, royalty rates and economic useful life.

/s/ Marcum LLP

Marcum LLP

We have served as the Company’s auditor ~~since~~from 2017 through December 4, 2024.

Saddle Brook, NJ

March 27, 2024

F-3

HEALTHIER CHOICES MANAGEMENT CORP.

CONSOLIDATED BALANCE SHEETS

	December 31, 2023			December 31, 2022
	December 31, 2024			December 31, 2023
ASSETS
CURRENT ASSETS
Cash	$	5,081,086		$	22,911,892
Cash and cash equivalent	$	1,193,567		$	3,658,506
Accounts receivable		128,171			55,815
Inventories		40,460			66,671
Notes receivable		-			189,225
Prepaid expenses and vendor deposits		161,563			1,493,354
Inventories		4,228,889			3,817,192
Other current assets		-			8,714
Prepaid expenses and vendor deposits		1,668,324			322,182
Restricted cash		553,232			553,232
Other current assets		65,556			1,233,942
Current assets of discontinued operations		-			5,944,781
Restricted cash		553,232			1,778,232
TOTAL CURRENT ASSETS		1,948,822			11,725,258
TOTAL CURRENT ASSETS		11,725,258			30,308,480
Property, plant, and equipment, net of accumulated depreciation		80,541			58,613
Property, plant, and equipment, net of accumulated depreciation		2,735,252			3,112,908
Intangible assets, net of accumulated amortization		158,151			198,163
Intangible assets, net of accumulated amortization		4,376,682			5,005,511
Right of use asset – operating lease, net		4,435			98,440
Goodwill		-			5,747,000
Other assets		28,500			154,329
Right of use asset – operating lease, net		11,511,002			10,604,935
Other assets of discontinued operations		-			18,734,776
Other assets		621,385			476,196
TOTAL ASSETS	$	2,220,449		$	30,969,579
TOTAL ASSETS	$	30,969,579		$	55,255,030
LIABILITIES, CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses	$	82,~~024~~022,~~664~~572		$	53,~~715~~104,~~234~~253
Contingent consideration		-			774,900
Contract liabilities		207,513			198,606
Operating lease liability, current		2,842,829			2,228,852
Line of credit		453,232			453,232
Current portion of loan payment		702,701			536,542
Operating lease liability, current		3,105			94,005
TOTAL CURRENT LIABILITIES		12,230,939			9,907,366
Due to related party		190,268			-
Loan payable, net of current portion		2,403,807			2,378,061
Current liabilities of discontinued operations		-			8,579,449
Operating lease liability, net of current		8,465,617			8,041,504
TOTAL CURRENT LIABILITIES		2,669,177			12,230,939
TOTAL LIABILITIES		23,100,363			20,326,931
Due to related party		-			3,753,003
COMMITMENTS AND CONTINGENCIES (SEE NOTE 13)		-			-
Operating lease liability, net of current		1,330			4,435
Other Long-term Liabilities of Discontinued Operations		-			7,111,986
TOTAL LIABILITIES		2,670,507			23,100,363
COMMITMENTS AND CONTINGENCIES (SEE NOTE 9)		-			-
CONVERTIBLE PREFERRED STOCK
Series E convertible preferred stock, $1,000 par value per share, 14,722 shares authorized, 1,111 shares and 14,722 shares issued and outstanding as of December 31, 2023 and 2022; aggregate liquidation preference of $1.1 million and $14.7 million as of December 31, 2023 and 2022, respectively.		1,111,100			14,722,075
Series E redeemable convertible preferred stock, $1,000 par value per share, 14,722 shares authorized, 1,111 shares issued and outstanding as of December 31, 2024 and 2023, respectively; aggregate liquidation preference of $1.1 million as of December 31, 2024 and 2023, respectively.		1,111,100			1,111,100
STOCKHOLDERS’ EQUITY
Series D convertible preferred stock, $1,000 par value per share, 5,000 shares authorized; 0 and 800 shares issued and outstanding as of December 31, 2023 and 2022, respectively.		-			800,000
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 December 31, 2024 and 2023, respectively.		48,126,663			47,826,663
Common Stock, $0.0001 par value per share, 750,000,000,000 shares authorized; 478,266,632,384 and 339,741,632,384 shares issued and outstanding as of December 31, 2023 and 2022, respectively.		47,826,663			33,974,163
Additional paid-in capital		25,347,774			21,028,274
Additional paid-in capital		21,028,274			29,045,802
Accumulated deficit		(75,035,595	)		(62,096,821	)
Accumulated deficit		(62,096,821	)		(43,613,941	)
TOTAL STOCKHOLDERS’ EQUITY		(1,561,158	)		6,758,116
TOTAL STOCKHOLDERS’ EQUITY		6,758,116			20,206,024
TOTAL LIABILITIES, CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY	$	2,220,449		$	30,969,579
TOTAL LIABILITIES, CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY	$	30,969,579		$	55,255,030

See notes to consolidated financial statements.

F-4

HEALTHIER CHOICES MANAGEMENT CORP.

CONSOLIDATED STATEMENTS OF OPERATIONS

	2023			2022
	2024			2023
	For the Year Ended December 31,
	2023			2022
	2024			2023
SALES:
SALES, NET	$	501		$	617
Vapor sales, net	$	617		$	257,363
COST OF SALES		66,806			787
Grocery sales, net		55,689,793			29,009,640
GROSS PROFIT		(66,305	)		(170	)
TOTAL SALES, NET		55,690,410			29,267,003
OPERATING EXPENSES		8,437,425			7,451,439
Cost of sales vapor		787			112,880
LOSS FROM OPERATIONS		(8,503,730	)		(7,451,609	)
Cost of sales grocery		35,341,569			18,929,905
OTHER INCOME (EXPENSE)
GROSS PROFIT		20,348,054			10,224,218
Loss on investment		(1,336	)		(8,485	)
OPERATING EXPENSES
Other income, net		263,782			(1,501,843	)
Selling, general and administrative		32,219,733			18,877,302
Interest income (expense), net		126,000			411,677
Impairment of goodwill		6,104,000			-
TOTAL OTHER INCOME (EXPENSE), NET		388,446			(1,098,651	)
TOTAL OPERATING EXPENSES		38,323,733			18,877,302
NET LOSS FROM CONTINUING OPERATIONS	$	(8,115,284	)	$	(8,550,260	)
LOSS FROM OPERATIONS		(17,975,679	)		(8,653,084	)
NET LOSS FROM DISCONTINUED OPERATIONS		(3,775,559	)		(9,932,620	)
OTHER INCOME (EXPENSE):
NET LOSS	$	(11,890,843	)	$	(18,482,880	)
Change in contingent consideration		774,900			333,100
INDUCED CONVERSIONS OF PREFERRED STOCK		-			(152,500	)
Other (expense) income, net		(1,485,612	)		913,092
NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS FROM CONTINUING OPERATIONS		(8,115,284	)		(8,702,760	)
Interest income (expense), net		211,996			202,653
NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS FROM DISCONTINUED OPERATIONS		(3,775,559	)		(9,932,620	)
Loss on investment		(8,485	)		(13,372	)
NET LOSS PER SHARE-BASIC AND DILUTED
Total other income (expense), net		(507,201	)		1,435,473
Continuing Operations		-			-
NET LOSS		(18,482,880	)		(7,217,611	)
Discontinued Operations		-			-
Induced conversions of preferred stock		(152,500	)		-
TOTAL NET LOSS PER SHARE-BASIC AND DILUTED	$	-		$	-
Net loss attributable to common stockholders	$	(18,635,380	)	$	(7,217,611	)
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING-BASIC AND DILUTED		479,695,594,133			429,919,440,601
NET LOSS PER SHARE BASIC AND DILUTED	$	0.00		$	0.00
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
BASIC AND DILUTED		429,919,440,601			339,741,632,384

See notes to consolidated financial statements.

F-5

HEALTHIER CHOICES MANAGEMENT CORP.

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

FOR THE YEARS ENDED DECEMBER 31, ~~2023~~2024 AND ~~2022~~2023

	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, 2022		-		$	-			800		$	800,000			339,741,632,384	$	33,974,163	$	30,855,824		$	(36,396,330	)	$	29,233,657
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
Issuance of Series E Convertible Preferred stock in connection with the Securities Purchase Agreement, net of offering costs		14,722			14,722,075			-			-			-		-		(1,882,244	)		-			(1,882,244	)
Series E convertible preferred stock redeemed		(12,026	)		(12,025,975	)					-			-		-		22,222			-			22,222
Stock-based compensation expense		-			-			-			-							72,222			-			72,222
Conversion of series E convertible preferred stock		(1,585	)		(1,585,000	)					-			15,850,000,000		1,585,000		-			-			1,585,000
Net loss		-			-			-			-			-		-		-			(7,217,611	)		(7,217,611	)
Balance – December 31, 2022		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		(12,026	)		(12,025,975	)		-			-			-		-		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
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 expense		-			-						-			-		-		3,430,250			-			3,430,250
Issuance of common stock for legal service		-			-			-			-			3,000,000,000		300,000		(150,000	)		-			150,000
Issuance of common stock for legal service														3,000,000,000		300,000		(150,000	)					150,000
Stock-based compensation expense		-			-			-			-			-		-		3,430,250			-			3,430,250
Net loss		-			-			-			-			-		-		-			(18,482,880	)		(18,482,880	)
Balance – December 31, 2023		1,111		$	1,111,100			-		$	-			478,266,632,384	$	47,826,663	$	21,028,274		$	(62,096,821	)	$	6,758,116
Balance		1,111		$	1,111,100			-		$	-			478,266,632,384	$	47,826,663	$	21,028,274		$	(62,096,821	)	$	6,758,116
Issuance of awarded stock		-			-			-			-			3,000,000,000		300,000		(300,000	)		-			-
Stock-based compensation expense		-			-			-			-			-		-		4,619,500			-			4,619,500
HCWC Spin-Off		-			-			-			-			-		-		-			(1,047,931	)		(1,047,931	)
Net loss		-			-			-			-			-		-		-			(11,890,843	)		(11,890,843	)
Balance – December 31, 2024		1,111		$	1,111,100			-		$	-			481,266,632,384	$	48,126,663	$	25,347,774		$	(75,035,595	)	$	(1,561,158	)
Balance		1,111		$	1,111,100			-		$	-			481,266,632,384	$	48,126,663	$	25,347,774		$	(75,035,595	)	$	(1,561,158	)

See notes to consolidated financial statements.

F-6

HEALTHIER CHOICES MANAGEMENT CORP.

CONSOLIDATED STATEMENTS OF CASH FLOWS

	2023			2022
	2024(a)			2023(a)
	For the year ended December 31,
	2023			2022
	2024(a)			2023(a)
OPERATING ACTIVITIES:
Net loss	$	(1811,~~482~~890,~~880~~843	)	$	(718,~~217~~482,~~611~~880	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		1,~~492~~135,~~261~~228			1,~~061~~492,~~615~~261
Change in allowance for credit losses		~~15,425~~-			-15,425
Loss on disposal of assets		~~2,073~~-			-2,073
Loss on notes receivable settlement		~~10,931~~-			-10,931
Loss on vendor settlement		~~91,291~~-			91,291
Issuance common stocks for services		~~150,000~~-			-150,000
Amortization of right-of-use asset		2,590,325			1,164,027
Gain on sale of building		(205,146	)		-
Loss on investment		8,485			13,372
Amortization of right-of-use asset		2,475,136			2,590,325
Write-down of obsolete and slow-moving inventory		2,471,653			1,507,213
Loss on investment		1,336			8,485
Stock-based compensation expense		3,430,250			72,222
Write-down of obsolete and slow-moving inventory		1,966,472			2,471,653
Change in contingent consideration		(774,900	)		(333,100	)
Stock-based compensation expense		4,619,500			3,430,250
Non-cash interest expense		32,000			-
Change in contingent consideration		-			(774,900	)
Write off intangible assets		-			53,958
Non-cash interest expense		72,250			32,000
Impairment of Goodwill		6,104,000			-
Loss on warrant liability extinguishment		1,888,889			-
Impairment of Goodwill		-			6,104,000
Changes in operating assets and liabilities:
Accounts receivable		(87253,~~781~~460	)		(2787,~~334~~781	)
Inventories		(21,~~032~~907,~~838~~935	)		(12,~~357~~032,~~169~~838	)
Prepaid expenses and vendor deposits		~~(177~~1,~~374~~283,098	)		~~134~~(177,~~215~~374	)
Other current assets		1,068,610			(1,224,171	)
Due from related party		(296,178	)		-
Other assets		(145,189	)		(390,759	)
Other current assets		27,898			1,068,610
Accounts payable and accrued liabilities		1,974,429			4,072,386
Other assets		42,347			(145,189	)
Contract liabilities		(21,604	)		(317,921	)
Accounts payable and accrued liabilities		(82,853	)		1,974,429
Lease liability		(2,458,303	)		(1,077,025	)
Contract liabilities		(156,904	)		(21,604	)
NET CASH USED IN OPERATING ACTIVITIES		(4,739,136	)		(3,866,082	)
Lease liability		(2,374,464	)		(2,458,303	)
NET CASH USED IN OPERATING ACTIVITIES		(3,655,629	)		(4,739,136	)
INVESTING ACTIVITIES:
Payment for acquisition		(~~750~~5,475,000	)		(10750,~~291,674~~000	)
Collection of note receivable		178,294			58,690
Proceeds from sale of Saugerties building		749,000			-
Purchases of patent		(12,500	)		(12,500	)
Collection of note receivable		-			178,294
Purchases of property and equipment		(184,349	)		(480,925	)
Purchases of patent		-			(12,500	)
NET CASH USED IN INVESTING ACTIVITIES		(768,555	)		(10,726,409	)
Purchases of property and equipment		(192,865	)		(184,349	)
NET CASH USED IN INVESTING ACTIVITIES		(4,918,865	)		(768,555	)
FINANCING ACTIVITIES:
Proceeds from line of credit		-			35,196
Proceeds from acquisition loan		7,500,000			-
Payments for deferred offering costs		~~(833,767~~-	)		-(833,767	)
Principal payments on loan payable		(~~558~~349,~~095~~082	)		(88558,~~816~~095	)
Proceeds from issuance of preferred stock		-			12,839,831
Proceeds from security purchase agreement		1,700,000			-
Payment for series E preferred stock redemption		(12,003,753	)		-
Due to related party		486,446			-
Payment of induced conversions of preferred stock		(152,500	)		-
Net transfers to HCWC related to Spin-Off		(4,650,389	)		-
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES		(13,548,115	)		12,786,211
Payment for series E preferred stock redemption		-			(12,003,753	)
NET DECREASE IN CASH AND RESTRICTED CASH		(19,055,806	)		(1,806,280	)
Payment of induced conversions of preferred stock		-			(152,500	)
CASH AND RESTRICTED CASH — BEGINNING OF YEAR		24,690,124			26,496,404
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES		4,686,975			(13,548,115	)
CASH AND RESTRICTED CASH — END OF YEAR	$	5,634,318		$	24,690,124
NET DECREASE IN CASH AND RESTRICTED CASH		(3,887,519	)		(19,055,806	)
CASH AND RESTRICTED CASH — BEGINNING OF YEAR		5,634,318			24,690,124
CASH AND RESTRICTED CASH — END OF YEAR	$	1,746,799		$	5,634,318
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest	$	~~205~~497,~~449~~028		$	35205,~~730~~449
Cash paid for income tax	$	-		$	-
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Issuance of common stock in connection with series E preferred stock conversion	$	~~1,585,000~~-		$	-1,585,000
1% stated value reduction on preferred stock redemption		~~22,222~~-			-22,222
Non-cash deferred offering cost		~~335,001~~-			-335,001
Issuance of promissory note in connection with acquisition	$	~~718,000~~-		$	3718,000~~,000~~
Lease acquired	$	14,~~325~~609,~~409~~608		$	81,~~225~~325,~~033~~409
Contingent consideration relating to acquisition	$	-		$	1,108,000

(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 consolidated financial statements

F-7

HEALTHIER CHOICES MANAGEMENT CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~Note~~NOTE 1. ORGANIZATION~~, BASIS OF PRESENTATION, AND RECENT DEVELOPMENTS~~

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 player 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™ ~~subsidiaries~~technology directly to consumers in the vaping market. 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. (www.ellwoodthompsons.com).

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 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.

F-8

Sourcing and Vendors

We source from multiple suppliers. These suppliers range from small independent businesses to multinational conglomerates. For the years ended December 31, 2023 and 2022, approximately 40% and 36% of our total purchases were from one vendor.

Spin-Off

~~The~~HCMC ~~Company~~announced ison ~~planning~~August to22, ~~spin~~2022 ~~off~~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” ~~to as~~or “~~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. HCMC~~Paradise ~~will~~Health ~~retain~~& ~~its~~Nutrition, ~~entire~~Mother ~~patent~~Earth’s ~~suite~~Storehouse, ~~the~~Greens ~~Q-Cup®~~Natural ~~brand~~Foods, ~~and~~Ellwood ~~continue~~Thompson’s, toand ~~develop~~GreenAcres ~~its~~Market ~~patent~~retail ~~suite~~brands, ~~through R&D~~ as well as ~~continuing~~licensed ~~its~~wellness ~~path~~centers ~~of enforcing its patent rights against infringers~~ and ~~attempting~~Healthy toU ~~monetize said patents through licensing deals~~Wholesale.

AtOn ~~the~~September ~~time~~13, of2024 (the “Spin-Off Date”), ~~HCMC~~after ~~will distribute all~~ the ~~outstanding~~New ~~shares~~York ~~of Common~~ Stock ~~held~~Exchange byAmerican it(“NYSEAM”) onmarket ~~a pro rata basis to holders of~~closing, ~~HCMC’s common stock. Each share of HCMC’s common stock outstanding as of~~ the ~~record date for the~~ Spin-Off ~~(the~~of ~~“Record Date”), will entitle~~ the ~~holder~~HCWC ~~thereof~~business towas ~~receive shares of Common Stock in NewCo~~completed. ~~The~~On ~~distribution~~September ~~will~~14, be2024, ~~made~~HCWC inbecame ~~book-entry form~~an byindependent, apublicly ~~distribution~~traded ~~agent.~~company, ~~Fractional shares of Common Stock will not be distributed in the Spin-Off~~ and ~~any~~on ~~fractional amounts will~~September be16, ~~rounded~~2024, ~~down.~~the ~~See~~stock ~~more~~commenced ~~disclosure~~trading inon ~~Note~~the 14NYSEAM ~~Stockholders’~~under ~~Equity~~the ~~and~~stock ~~Note~~symbol ~~19 Subsequent Events~~“HCWC.”

~~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., Eastern Daylight Time (EDT), 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 ~~consolidated~~result ~~financial~~of ~~statements~~the ~~have~~Spin-Off, ~~been~~the ~~prepared~~operating inresults ~~conformity~~for ~~with~~the ~~accounting~~HCWC ~~principles~~business ~~generally~~through ~~accepted in~~ the ~~United~~ ~~States~~date of ~~America~~the ~~(“GAAP”),~~Spin-Off ~~which~~are ~~contemplate~~reported ~~continuation~~in ofLoss ~~the~~from ~~Company~~Discontinued Operations asin athe ~~going~~Consolidated ~~concern~~Statements ~~and~~of ~~realization~~Operations offor ~~assets and~~all ~~satisfaction~~periods ofpresented. ~~liabilities~~In inaddition, the ~~normal~~related ~~course~~assets ~~of business~~ and doliabilities ~~not~~are reported ~~include~~as ~~any~~Assets ~~adjustments~~and ~~that~~Liabilities ~~might~~of ~~result~~Discontinued ~~from~~Operations on the ~~outcome of~~Consolidated ~~any~~Balance ~~uncertainties~~Sheets ~~related~~for toyear ~~our~~ended ~~going~~December ~~concern~~31, ~~assessment~~2023. ~~The~~Unless otherwise ~~carrying~~noted, all amounts ~~of assets~~ and ~~liabilities~~disclosures ~~presented~~included in the ~~financial statements~~Notes doto ~~not~~Consolidated ~~necessarily~~Financial ~~purport~~Statements toreflect ~~represent~~only ~~realizable~~the orCompany’s continuing ~~settlement~~operations. ~~values~~For additional information, see Note 2, “Discontinued Operations.”

As of December 31, 2023, the Company had cash of approximately $5.1 million and negative working capital of $0.5 million. 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 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.F-8

~~The~~NOTE ~~Company has incurred recurring net losses and operations have not provided cash flows~~2. InDISCONTINUED view of these matters, there is substantial doubt about our ability to continue as a going concern. In order to improve the Company’s liquidity position, management’s plans include significantly reducing the use of outside consultants, which would result in a reduction of over $1,000,000 in general and administrative expenses savings based on the actual spend for the year ended December 31, 2023. The Company contracted a third party consultant, whose expertise is streamlining operations, to identify areas of improvement and cost savings. The Company will enact the consultant’s recommendation in anticipation of realizing savings and achieving profitability. The Company plans on continuing to expand via acquisition which will help achieve profitability. Also, the Company is formulating plans to raise capital from outside investors, as it has done in the past, to fund operating losses and also provide capital for further business acquisitions. 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.OPERATIONS

On September 13, 2024, the Company completed the previously announced separation and distribution of its Grocery segment into an independent publicly traded company, HCWC. The separation was structured as a tax-free spin-off, which occurred by way of a pro rata distribution to HCMC stockholders. Each of the HCMC stockholders received one share of HCWC Class A common stock and three shares of Class B common stock for every 208,632 shares of HCMC common stock held of record as of the close of business on September 13, 2024. HCWC is now an independent public company listed under the symbol “HCWC” on the NYSEAM. The Company retained no ownership interest in HCWC following the 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.

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

	●	a Separation Agreement (“SA”) that will set forth HCWC’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 HCWC 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 HCWC 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 $0.4 million for services provided to HCWC in the third and fourth quarters of 2024 pursuant to the transition services agreement.

F-9

~~Note~~Financial 3.Information ~~BASIS~~of OFDiscontinued ~~PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES~~Operations

Net 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 Net Loss from Discontinued Operations, in the Consolidated Statements of Operations for the thirty-six-week period ended September 13, 2024 and for the twelve months ended December 31, 2023:

SCHEDULE OF DISCONTINUED OPERATION

	Thirty-Six-Week Period Ended September 13, 2024			Twelve Months Ended December 31, 2023
SALES, NET	$	46,349,908		$	55,689,793
COST OF SALES		28,691,071			35,341,569
GROSS PROFIT		17,658,837			20,348,224

OPERATING EXPENSES, NET
Selling, general and administrative		19,212,986			24,768,293
Gain on sale of asset		(205,146	)		-
Impairment of intangible assets		-			6,104,000
TOTAL OPERATING EXPENSES, NET		19,007,840			30,872,293

LOSS FROM OPERATIONS		(1,349,003	)		(10,524,069	)

OTHER INCOME (EXPENSE)		(2,426,556	)		591,449

NET LOSS FROM DISCONTINUED OPERATIONS	$	(3,775,559	)	$	(9,932,620	)

The information presented as discontinued operations on the 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 December 31, 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

F-10

The following table summarizes the significant operating cash and noncash items, capital expenditures and financing activities of discontinued operations for the period ended September 13, 2024 and December 31, 2023:

	Thirty-Six-Week Period Ended September 13, 2024			Twelve Months Ended December 31, 2023
Net loss	$	(3,775,559	)	$	(9,932,620	)
Depreciation and amortization		1,069,958			1,431,816
Loss on warrant liability extinguishment		1,888,889			-
Gain on sale of building		(205,146	)		-
Non-cash interest expense		72,250			32,000
Change in allowance for credit losses		-			15,425
Loss on vendor settlement		-			91,291
Amortization of right-of-use asset		2,381,131			2,570,202
Write-down of obsolete and slow-moving inventory		2,032,995			2,471,653
Change in contingent consideration		-			(774,900	)
Impairment of goodwill		-			6,104,000
Accounts receivable		(253,460	)		(88,366	)
Inventories		(2,000,669	)		(2,032,996	)
Prepaid expenses and vendor deposits		(48,693	)		(92,016	)
Other current assets		20,520			140,801
Due from related party		(2,736,272	)		(1,416,638	)
Other assets		(83,482	)		(16,090	)
Accounts payable and accrued expenses		998,829			1,430,867
Contract liabilities		(156,904	)		(21,604	)
Lease liability		(2,280,459	)		(2,438,179	)
NET CASH USED IN OPERATING ACTIVITIES OF DISCONTINUED OPERATIONS		(3,076,072	)		(2,525,354	)

Payment for acquisition		(5,475,000	)		(750,000	)
Proceeds from sale of Saugerties building		749,000			-
Purchases of property and equipment		(145,680	)		(179,623	)
NET CASH USED IN INVESTING ACTIVITIES OF DISCONTINUED OPERATIONS		(4,871,680	)		(929,623	)

Proceeds from security purchase agreement		1,700,000			-
Proceeds from acquisition loan		7,500,000			-
Principal payments on loan payable		(349,082	)		(558,095	)
Due from related party		(1,819,570	)		-
Net transfers to HCWC related to Spin-Off		(506,176	)		3,415,081
NET CASH PROVIDED BY FINANCING ACTIVITIES OF DISCONTINUED OPERATIONS		6,525,172			2,856,986

NET DECREASE IN CASH	$	(1,422,580	)	$	(597,991	)

F-11

NOTE 3. GOING CONCERN AND MANAGEMENT’S PLANS

The accompanying 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.

As of December 31, 2024, the Company had cash of approximately $1.2 million and negative working capital of $0.7 million. 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 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.

The Company has incurred recurring net losses and operations have not provided cash flows. In view of these matters, there is substantial doubt about our ability to continue as a going concern. In order to improve the Company’s liquidity position, management’s plans include significantly reducing the use of outside consultants, which would result in a reduction of over $1,000,000 in general and administrative expenses savings based on the actual spend for the year ended December 31, 2024.

The Company is formulating plans to raise capital from outside investors, as it has done in the past, to fund operating losses and also provide capital for further business acquisitions. 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.

F-12

NOTE 4. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Principles of Consolidation

The Company’s consolidated financial statements are prepared in accordance with ~~accounting principles generally accepted in the United States (“~~GAAP”). The consolidated financial statements include the accounts of all subsidiaries in which the Company holds a controlling financial interest as of the financial statement date.

~~The~~On ~~consolidated~~September ~~financial~~13, ~~statements~~2024, ~~include~~ the ~~accounts~~Company ofcompleted the ~~Company~~previously ~~Healthier~~announced ~~Choices~~separation ~~Management~~and ~~Corp.,~~distribution ~~and~~of its ~~wholly-owned~~grocery ~~subsidiaries, Healthy~~segment ~~Choice~~and ~~Markets,~~wellness ~~Inc.,~~centers into ~~Healthy~~an ~~Choice~~independent ~~Markets~~publicly 2traded company, ~~LLC (“Paradise Health~~ and ~~Nutrition”),~~the ~~Healthy~~historical ~~Choice~~results ~~Markets~~of ~~3, LLC~~the ~~(“Mother~~grocery ~~Earth’s~~segment ~~Storehouse”),~~and ~~Healthy~~wellness ~~Choices~~centers ~~Markets~~have 3been ~~Real~~reflected as ~~Estate~~discontinued ~~LLC,~~operations ~~Healthy~~in ~~Choice~~the ~~Markets IV, LLC (Green~~Company’s ~~Natural~~ ~~Foods),~~consolidated ~~Healthy~~financial ~~Choice~~statements ~~Markets~~for V,all ~~LLC~~periods ~~(Ellwood~~prior ~~Thompson’s),~~to ~~HCMC~~the ~~Intellectual~~separation ~~Property~~and ~~Holdings,~~distribution. Assets ~~LLC,~~and ~~Healthy~~liabilities ~~Choice~~associated ~~Wellness, LLC,~~with ~~Healthy~~the ~~Choice~~grocery ~~Wellness~~segment ~~II,~~are ~~LLC,~~classified ~~The~~as ~~Vitamin~~assets ~~Store,~~and ~~LLC,~~liabilities ~~Healthy~~of Udiscontinued ~~Wholesale,~~operations ~~Inc.,~~in ~~and~~the Company’s ~~The~~Consolidated ~~Vape~~Balance ~~Store, Inc~~Sheets. ~~(“Vape~~Additional ~~Store”). All~~disclosures ~~intercompany~~regarding ~~accounts~~the separation and ~~transactions~~distribution ~~have~~are ~~been~~provided ~~eliminated~~ in ~~consolidation~~Note 2.

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, HCMC Intellectual Property Holdings, LLC, and The Vape Store, Inc. (“Vape Store”). All intercompany accounts and transactions have been eliminated in consolidation. Unless otherwise indicated, the information in the notes to the Consolidated Financial Statements refer only to HCMC’s continuing operations.

Segment Reporting

Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the operating decision makers, or decision-making group, in making decisions on how to allocate resources and assess performance. The Company’s ~~decision-making~~operates ~~group~~as ~~are~~a ~~the~~single ~~senior~~reportable ~~executive~~segment, ~~management~~as ~~team.~~the ~~The~~chief ~~Company~~operating ~~and the~~ decision~~-making~~ ~~group~~maker ~~view~~(“CODM”, the Company’s ~~operations~~Chief ~~and~~Executive ~~manage~~Officer, ~~its~~Jeffrey ~~business~~Holman) asreviews ~~two~~financial ~~operating~~performance ~~segments.~~and ~~All~~makes ~~long-lived~~decisions ~~assets~~on ofa ~~the Company reside in the U~~consolidated basis.S.

Use of Estimates in the Preparation of the Financial Statements

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that ~~affect~~ affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of net revenue and expenses during the reporting periods. Actual results could differ from those estimates. These estimates and assumptions include inventory provisions, useful lives and impairment of long-lived assets, ~~goodwill,~~and deferred taxes and related valuation allowances~~, and the valuation of the assets and liabilities acquired in business combinations~~. Certain of management’s estimates could be affected by external conditions, including those unique to our industry, and general economic conditions. It is possible that these external factors could have an effect on our ~~estimates~~ estimates that could cause actual results to differ from our estimates. The Company re-evaluates all of its accounting estimates at least quarterly based on these conditions and records adjustments when necessary.

Revenue Recognition

Revenues from product sales and services rendered, net of promotional discounts, manufacturer coupons and rebates, return allowances, and sales and consumption taxes, are recorded when products are delivered, title passes to customers and collection is likely to occur. Title passes to customers at the point of sale for retail and upon delivery of products for wholesale. Return allowances, which reduce revenue, are estimated using historical experience.

The Company recognizes revenue in accordance with the following five-step model:

	●	identify arrangements with customers;

	●	identify performance obligations;

	●	determine transaction price;

	●	allocate transaction price to the separate performance obligations in the arrangement, if more than one exists; and

	●	recognize revenue as performance obligations are satisfied.

F-1013

Shipping and Handling

Shipping charges billed to customers are included in net sales and the related shipping and handling costs are included in cost of sales. For the years ended December 31, 2023 and 2022, shipping and handling costs of approximately $117,000 and $98,000, were included in cost of sales, respectively.

Cash and Cash Equivalents

The Company considers all highly liquid instruments with an original maturity of three months or less, when purchased, to be cash and cash equivalents. The majority of the Company’s cash are concentrated in one large financial institution, which is in excess of Federal Deposit Insurance Corporation (FDIC) coverage. ~~The Company did not have any cash equivalents as of December 31, 2023 and 2022.~~

A summary of the financial institutions that had a cash in excess of FDIC limits of $250,000 as of December 31, ~~2023~~2024 and ~~2022~~2023 is presented below:

	December 31, 2023		December 31, 2022
	December 31, 2024		December 31, 2023
Total cash and restricted cash in excess of FDIC limits	$	3,814,426	$	21,682,144
Total cash and cash equivalents in excess of FDIC limits	$	943,567	$	3,402,782

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 and restricted cash to amounts shown in consolidated statements of cash flow:

SCHEDULE OF CASH AND RESTRICTED CASH

	December 31, 2023		December 31, 2022
	December 31, 2024		December 31, 2023
Cash	$	51,~~081~~193,~~086~~567	$	223,~~911~~658,~~892~~506
Restricted cash		553,232		1553,~~778,~~232
Total cash and restricted cash	$	51,~~634~~746,~~318~~799	$	244,~~690~~211,~~124~~738

Restricted Cash

The Company’s restricted cash consisted of cash balances which were restricted as to withdrawal or usage under the August 18, 2022 security 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 Stocks. The balance also included cash held in the collateral account to cover the cash draw from the line of credit.

Accounts Receivable, Contract Assets and Contract Liabilities

Accounts receivables are claims to consideration which are unconditional; meaning no performance obligations remain for the Company and only the passage of time is necessary before collection. Contract assets are distinguished from accounts receivable as performance obligations remain before claims to consideration become unconditional. By nature of the Company’s operations, contract assets are typically not recognized. Contract liabilities are recorded when customers transfer consideration in advance of delivery of products or services, which the Company records for gift cards and loyalty reward programs. When one party to an arrangement performs before the other(s), the Company records an account receivable, contract asset or contract liability.

The majority of arrangements with customers contain one performance obligation: to provide a distinct set of products or services. Most performance obligations are satisfied simultaneously as the Company exchanges products or services for customer payment. Exceptions include gift cards and loyalty rewards, for which the Company has a performance obligation to deliver products or services at a future date. As gift cards are purchased and loyalty points earned, contract liabilities are recorded until the performance obligations are satisfied through delivery of products or services or breakage based on gift card and loyalty reward program term limits.

F-11

The Company’s breakage policy is twenty-four months for gift cards, twelve months for Grocery loyalty rewards, and six months for Vapor loyalty rewards. Loyalty rewards are earned at five percent on qualifying purchases and the reward functions as an allocation of transaction price from the period earned by the customer to the period the performance obligation is satisfied by the Company. As such, all contract liabilities are expected to be recognized within a twenty-four month period.

Accounts receivable balance represents credit sales, sales on account and billing to vendors for advertising vendors’ products in our stores. Concentration of accounts receivable consist of the following:

SCHEDULE OF ACCOUNTS RECEIVABLE REPRESENTS CREDIT SALES

	December 31, 2023			December 31, 2022
Customer A		2	%		17	%
Customer B		4	%		-	%
Customer C		-	%		6	%
Customer		-	%		6	%

Other Current Assets

Other current assets are the non-trade related assets that the Company owns, benefits from, or uses to generate income that can be converted into cash within one business cycle. Included in “Other current assets” on our consolidated balance sheets are amounts primarily related to other receivables or non-trade receivable from government and other companies.

~~Inventories~~F-14

Inventories are measured at the lower of cost and net realizable value using the average cost method. If the cost of the inventories exceeds their net realizable value, adjustments are recorded to write down excess inventory to their net realizable value. The Company’s inventories consist primarily of merchandise available for resale, such as vitamins, fresh produce, perishable grocery items and non-perishable consumable goods.

Property, Plant, and Equipment

Property, plant, and equipment are stated at cost less accumulated depreciation. Depreciation is calculated using the straight-line method over the expected useful life of the respective asset, after the asset is placed in service. Revenue earning property, plant, and equipment includes signage, furniture and fixtures, building, computer hardware, appliance, cooler, displays with useful lives range from ~~two~~two2 to ten years. Leasehold improvements are amortized over the shorter of the life of the asset or the term of the lease.

Identifiable Intangible Assets and Goodwill

Identifiable intangible assets are recorded at cost, or when acquired as part of a business acquisition, at estimated fair value. Certain identifiable intangible assets are amortized over various periods of time, ranging from 4 years to 10 years. Similar to tangible personal property and equipment, the Company periodically evaluates identifiable intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Indefinite-lived intangible assets, such as goodwill are not amortized.

Impairment of Long-Lived Assets

The Company reviews all long-lived assets such as property, plant, and equipment and definite-lived intangible assets for impairment whenever events or changes in circumstances indicate that the carrying value of the asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the estimated future cash flows expected to be generated by the asset or asset group. Impairment is measured by the amount by which the carrying value of the asset(s) exceeds their fair value. The Company conducted the long-lived assets impairment test, and based on Step 1 qualitative assessment, the Company concluded that the recurring losses coupled with the reduction in same store revenue and negative working capital were triggering events at December 31, 2023. The Company hired a third-party valuation firm to perform Step 2 quantitative assessment on long-lived assets. The Company used undiscounted cash flow method at weighted average cost of capital of 16.5% as discount rate to calculate the fair value of the total assets. Based on the Step 2 quantitative assessment, the Company’s long-lived assets were not impaired as of December 31, 2023.

F-12

Goodwill

The Company assesses the carrying amounts of goodwill for recoverability on at least an annual basis or when events or changes in circumstances indicate evidence of potential impairment exists, using a fair value based test. Application of the goodwill impairment test requires significant judgments including estimation of future cash flows, which is dependent on internal forecasts, estimation of the long-term rate of growth for the businesses, and the useful life over which cash flows will occur. Changes in these estimates and assumptions could materially affect the determination of fair value and/or conclusions on goodwill impairment for the Company. Our annual impairment test is conducted on September 30 of each year or more often if deemed necessary.

The Company experienced recurring losses coupled with the reduction in same store revenue, a highly competitive industry and certain operational costs that have impacted our expectations such that future growth and profitability is lower than previous estimates. Furthermore, during the fourth quarter of 2023, the Company operated with negative working capital which, although not a determinant on its own, when combined with the other factors indicated that the Company’s goodwill of $6.1 million was determined to be impaired for the year ended December 31, 2023. See Note 10 - Goodwill and Intangibles. There was no impairment of goodwill during the year ended December 31, 2022.

Advertising

The Company expenses advertising costs as incurred. For the years ended December 31, 2023 and 2022, the company incurred advertising expenses of $564,000 and $146,000, respectively.

Income Taxes

The Company uses the asset and liability method of accounting for income taxes in accordance with ASC 740, “Income Taxes” (“ASC 740”). Under this method, income tax expense is recognized as the amount of: (i) taxes payable or refundable for the current year and (ii) future tax consequences attributable to differences between financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is provided to reduce the deferred tax assets reported if based on the weight of available evidence it is more likely than not that some portion or all of the deferred tax assets will not be realized.

ASC 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. There were no unrecognized tax benefits and no amounts accrued for interest and penalties as of December 31, ~~2023~~2024 or ~~2022~~2023. The Company had no uncertain tax positions as of December 31, ~~2023~~2024 and ~~2022~~2023.

Leases

Operating lease liabilities are recognized at the lease commencement date based on the present value of the fixed lease payments using the Company’s incremental borrowing rates. Related ~~operating~~lease right-of-use (“ROU”) assets are recognized based on the initial present value of the fixed lease payments, reduced by contributions from landlords, plus any prepaid rent and direct costs from executing the leases. Leases with an initial term of 12 months or less are not recorded on the balance sheet. The Company recognizes lease expense for these leases on a straight-line basis over the lease term. Variable lease payments are recognized as lease expense as they are incurred.

The Company did not have finance leases in year ~~2023~~2024 and ~~2022~~2023. If the Company enters into a finance lease in the future, it will be accounted for in accordance with ASC Topic 842, Leases.

F-1315

Stock-Based Compensation

The Company accounts for stock-based compensation for employees and directors under ASC Topic ~~No.~~ 718, “Compensation-Stock Compensation” (“ASC 718”). These standards define a fair value -based method of accounting for stock-based compensation. In accordance with ASC 718, the cost of stock-based compensation is measured at the grant date based on the value of the award and is recognized over the vesting period. The value of the stock-based award is determined using an appropriate valuation model, whereby compensation cost is the fair value of the award as determined by the valuation model at the grant date. The resulting amount is charged to expense on ~~the~~a straight-line basis over the period in which the Company expects to receive the benefit, which is generally the vesting period. The Company recognize forfeitures as they ~~are incur~~occur.

Fair Value Measurements

The fair value framework under FASB’s guidance requires the categorization of assets and liabilities into three levels based upon the assumptions used to measure the assets or liabilities. Level 1 provides the most reliable measure of fair value, whereas Level 3, if applicable, would generally require significant management judgment. The three levels for categorizing assets and liabilities under the fair value measurement requirements are as follows:

	●	Level 1: Fair value measurement of the asset or liability using observable inputs such as quoted prices in active markets for identical assets or liabilities;

	●	Level 2: Fair value measurement of the asset or liability using inputs other than quoted prices that are observable for the applicable asset or liability, either directly or indirectly, such as quoted prices for similar (as opposed to identical) assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active; and

	●	Level 3: Fair value measurement of the asset or liability using unobservable inputs that reflect the Company’s own assumptions regarding the applicable asset or liability.

Nonfinancial assets such as goodwill, other intangible assets, and long-lived assets held and used are measured at fair value when there is an indicator of impairment and recorded at fair value when impairment is recognized or for a business combination.

Business Combination

The Company applies the provisions of ASC Topic 805, Business Combinations (“ASC 805”) in the accounting for acquisitions of businesses. ASC 805 requires the Company to use the acquisition method of accounting by recognizing the identifiable tangible and intangible assets acquired and liabilities assumed, and measured at their acquisition date fair values. Goodwill as of the acquisition date is measured as the excess of consideration transferred over the aforementioned amounts. Acquisition-related expenses were expensed as incurred and recorded in selling, general, and administrative expenses in the consolidated statements of operations.

Recent Accounting Pronouncements

Public companies in the United States are subject to the accounting and reporting requirements of various authorities, including the Financial Accounting Standards Board (“FASB”) and the Securities and Exchange Commission (“SEC”). These authorities issue numerous pronouncements, most of which are not applicable to the Company’s current or reasonably foreseeable operating structure.

In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-13, “Financial Instruments - Credit Losses (ASC 326)” This standard replaced the incurred loss methodology with an expected loss methodology that is referred to as the current expected credit loss (“CECL”) methodology. CECL requires an estimate of credit losses for the remaining estimated life of the financial asset using historical experience, current conditions, and reasonable and supportable forecasts and generally applies to certain financial assets. The Company adopted ASC 326 on January 1, 2023, and estimated expected credit losses based on aging schedule, and provisioned approximately $15,000 credit loss for the year ended December 31, 2023.

F-14

On December 14, 2023, the FASB issued ASU 2023-09 “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” related to improvements to income tax disclosures. The amendments in this update require enhanced jurisdictional and other disaggregated disclosures for the effective tax rate reconciliation and income taxes paid. The amendments in this update are effective for fiscal years beginning after December 15, 2024. The adoption of this pronouncement is not expected to have a material impact on the Company’s consolidated financial statements.

Reclassification

Certain amounts in the consolidated financial statements and related notes have been reclassified to conform to the current year presentation. Such reclassifications do not impact the Company’s previously reported financial position or net loss. Below summarized reclassifications we made:

	●	Change in contingent consideration of $333,100 was previously presented in the consolidated statement of operations in other (expense) income, net for the year ended December 31, 2022, and was reclassified out of other (expense) income, net, and presented under change in contingent consideration.
	●	Investment for the amount of $9,771 was previously presented as Investment within total current assets in the December 31, 2022 consolidated balance sheet was reclassified to other current assets.

Note 4. DISAGGREGATION OF REVENUES

The Company reports the following segments in accordance with management guidance: Vapor and Grocery. When the 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 DISAGGREGATION OF REVENUES

	December 31, 2023		December 31, 2022
Vapor sales, net	$	617	$	257,363
Grocery sales, net		55,689,793		29,009,640
Total revenue	$	55,690,410	$	29,267,003
Retail Vapor	$	-	$	257,363
Retail Grocery		47,243,163		25,867,061
Food service/restaurant		8,440,245		3,126,709
Online/e-Commerce		6,385		15,870
Wholesale Vapor		617		-
Total revenue	$	55,690,410	$	29,267,003

Note 5. INVESTMENT

In 2018, the Company invested $150,000 in 85,714 common stock shares at MJ Holdings, Inc. (“MJNE”), a publicly traded company. The investment was made based on the assumption of an increase in MJNE stock due to the sales agreement with the Company. The Company recorded the investment in MJNE at fair value with changes in the fair value reported through the income statement as the stock is traded on the OTC market. Investment is classed with Level 1 of the valuation hierarchy. Fair value for the investment is based on quoted prices in active markets. Investment is presented in other current assets in consolidated balance sheets.

F-15

The following table summarizes the investment measured at fair value on a recurring basis as of December 31, 2023 and 2022:

SCHEDULE OF FAIR VALUE OF INVESTMENT

Description		Fair Value Measurements Using Quoted Prices in Active Market (Level 1)				Mark to Market				December 31, 2023
Investment		$	9,771			$	(8,485	)		$	1,286

Description		Fair Value Measurements Using Quoted Prices in Active Market (Level 1)				Mark to Market				December 31, 2022
Investment		$	23,143			$	(13,372	)		$	9,771

Note 6. INVENTORIES

Inventories are measured at the lower of cost and net realizable value using the average cost method. If the cost of the inventories exceeds their market value, adjustments are recorded to write down excess inventory to its net realizable value. The Company, as a result of its physical inventory observations recorded the write down of inventories amounting to approximately $2.5 million and $1.5 million in 2023 and 2022, respectively. The Company’s inventories consist primarily of merchandise available for resale.

SCHEDULE OF INVENTORIES

	December 31, 2023		December 31, 2022
Vapor Business	$	66,671	$	66,828
Grocery Business		4,162,218		3,750,364
Total	$	4,228,889	$	3,817,192

Note 7. NOTES RECEIVABLE AND OTHER INCOME

On September 6, 2018, the Company entered into a secured, 36-month promissory note (the “Note”) with VPR Brands L.P. for $582,260. The Note bears an interest rate of 7%, which payments thereunder are $4,141 weekly. The Company records all proceeds related to the interest of the Note as interest income as proceeds are received.

On August 31, 2022, the Company amended and restated the Secured Promissory Note (the “Amended Note”) to extend the maturity date for one year. The outstanding balance for the amended note is $211,355. The Amended Note bears an interest rate of 7%, which payments thereunder are $1,500 weekly, with such payments commencing as of September 3, 2022. The Amended Note has a balloon payment of $145,931 for all remaining accrued interest and principal balance due in the final week of the 1-year extension of the Amended Note.

In August 2023, VPR Brands L.P. settled with the Company for the remaining notes receivable balance of $145,931 by making a balloon payment of $135,000 cash. The Company recognized a loss of $10,931 from this settlement which is included in other (expense) income net in the accompanying unaudited condensed consolidated statements of operations.

A summary of the Amended Note as of December 31, 2023 and 2022 is presented below:

SUMMARY OF AMENDED NOTES

	December 31,
Description	2023		2022
Promissory Note	$	-	$	189,225

For the years ended December 31, 2023 and 2022, the Company had notes receivable collections of approximately $178,000 and $59,000, respectively.

F-16

On November 27, 2023, FASB issued ASU 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures”, which requires public entities to consider relevant qualitative and quantitative factors when determining whether segment expense categories and amounts are significant, and identify segment expenses on the basis of amounts that are regularly provided to CODM, and included in reported segment profit or loss. The ASU is effective for fiscal years beginning after December. 15, 2023, and interim periods within fiscal years beginning after December. 15, 2024. The Company does not believe this will have a material impact on the consolidated financial statements. The Company adopted this standard effective January 1, 2024, applying it retrospectively to all periods presented. As the Company has one reportable segment, the adoption had no material impact on the Company’s consolidated financial statements, but resulted in additional expense disclosures and reconciliations in the financial statement footnotes. See Note 5 for details.

NOTE 5. SEGMENT INFORMATION

In accordance with FASB ASC 280 Segment Reporting, the Company operates as a single reporting segment. The Company’s corporate general and administrative costs are not segment specific. As a result, all corporate operating expenses are not managed on a segment basis.

The Company adopted ASU 2023-07 effective January 1, 2024, on a retrospective basis. As the Company operates as a single reportable segment, the adoption did not have an impact on the Company’s consolidated financial statements. However, it did result in enhanced disclosures related to segment expenses and reconciliations to consolidated totals. Specifically, the Company has begun disclosing segment-specific expenses that are regularly reviewed by the CODM (the Company’s Chief Executive Officer Jeffrey Holman) in accordance with the new standard. This adoption did not have an impact on the Company’s consolidated financial statements.

The following table summarizes the significant segment expenses on continuing basis:

	2024		2023
	For the Years Ended December 31,
	2024		2023
Depreciation and Amortization	$	58,196	$	57,527
Other operating expense		4,202		11,609
Total significant reporting segment expenses	$	62,398	$	69,136
Unallocated amount		8,375,027		7,382,303
Consolidated reporting segment expense	$	8,437,425	$	7,451,439

The following table summarizes the reconciliations of reportable segment profit or loss and assets to the Company’s consolidated totals on continuing basis:

	2024			2023
	For the Years Ended December 31,
	2024			2023
Segment net operating income (loss)	$	(128,703	)	$	(69,306	)
Unallocated amount		(8,375,027	)		(7,382,303	)
Consolidated loss from operation	$	(8,503,730	)	$	(7,451,609	)

	2024		2023
Total reporting segment assets	$	195,935	$	341,934
Unallocated amount		2,024,514		5,948,088
Consolidated total assets	$	2,220,449	$	6,290,022

NOTE 6. PROPERTY, PLANT, AND EQUIPMENT

Property, plant, and equipment consist of the following:

	December 31, 2024			December 31, 2023
Furniture and fixtures		90,919			90,919
Computer hardware & equipment		50,522			48,337
Other		53,056			8,056
Property and equipment, gross		194,497			147,312
Less: accumulated depreciation and amortization		(113,956	)		(88,699	)
Total property, plant, and equipment	$	80,541		$	58,613

The Company incurred approximately $25,000 and $21,000 of depreciation expense for the years ended December 31, 2024 and 2023, respectively.

F-17

NOTE 7. INTANGIBLE ASSET

The Company’s intangible assets consist of patents and capitalized legal fees related to the patents. Intangible assets, net are as follows:

December 31, 2024	Useful Lives (Years)	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Patent	10 years		397,165		(239,014	)		158,151
Intangible assets, net		$	397,165	$	(239,014	)	$	158,151

December 31, 2023	Useful Lives (Years)	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Patents	10 years		397,165		(199,002	)		198,163
Intangible assets, net		$	397,165	$	(199,002	)	$	198,163

Amortization expense was approximately $40,000 and $39,000 for the years ended December 31, 2024 and 2023, respectively.

The weighted-average remaining amortization period of the Company’s amortizable intangible assets is approximately 5 years as of December 31, 2024. The estimated future amortization of the intangible assets is as follows:

For the years ending December 31,
2025	$	39,124
2026		38,180
2027		32,564
2028		23,333
2029		12,475
Thereafter		12,475
Total	$	158,151

Note 8. ACQUISITIONS

The purchase method of accounting in accordance with ASC 805, Business Combinations, was applied for the Mother Earth’s Storehouse, Green’s Natural Foods and Ellwood Thompson’s acquisitions. This requires the total cost of an acquisition to be allocated to the tangible and identifiable intangible assets acquired and liabilities assumed based on their respective fair values at the date of acquisition with the excess cost accounted for as goodwill. Goodwill arising from the acquisition is attributable to expected operational synergies from combining the operations of the acquired business with those of the Company. Acquisition costs are expensed as incurred and recorded in selling, general and administrative expenses in the consolidated statements of operations.

Mother Earth’s Storehouse

On February 9, 2022, the Company through its wholly owned subsidiary, Healthy Choice Markets 3, LLC (“HCM3”), entered into an Asset Purchase Agreement with Mother Earth’s Storehouse Inc. and its shareholders. Pursuant to the Purchase Agreement, HCM3 acquired certain assets and assumed certain liabilities related to Mother Earth’s grocery stores in Kingston and Saugerties, New York. The Company intends to continue to operate the grocery stores under their existing name. The cash purchase price under the Asset Purchase Agreement was $4,472,500, with an additional $677,500 paid for inventory at closing. In addition, the Company assumed a lease obligation for the Kingston, NY store 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

Purchase Consideration
Cash consideration paid	$	5,150,000
Purchase price allocation
Inventory	$	805,000
Property, plant, and equipment		1,278,000
Intangible assets		1,609,000
Right of use asset - operating lease		1,797,000
Other liabilities		(283,000	)
Operating lease liability		(1,797,000	)
Goodwill		1,741,000
Net assets acquired	$	5,150,000
Finite-lived intangible assets
Trade Names (8 years)	$	513,000
Customer Relationships (6 years)		683,000
Non-Compete Agreement (5 years)		413,000
Total intangible assets	$	1,609,000

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

The results of operations of Mother’s Earth have been included in the consolidated statements of operations as of the effective date of operations.

F-17

Revenue and net income for year ended December 31, 2022 from date of acquisition were $11.9 million and $0.30 million, respectively. Acquisition-related expenses of $157,000 were expensed as incurred and recorded in selling, general and administrative expenses in the consolidated statements of operations for the year ended December 31, 2022. The expenses primarily related to legal and other professional fees.

Green’s Natural Foods

On October 14, 2022, the Company through its wholly owned subsidiary, Healthy Choice Markets IV, LLC, entered into an Asset Purchase Agreement (the “Purchase Agreement”) with Dean’s Natural Food Market of Shrewsbury, Inc., a New Jersey corporation, Green’s Natural Foods, Inc., a Delaware corporation, Dean’s Natural Food Market of Chester, LLC, a New Jersey limited liability company, Dean’s Natural Food Market of Basking Ridge, LLC, a New Jersey limited liability company, and Dean’s Natural Food Market, Inc., a New Jersey corporation (collectively, the “Sellers”), and shareholders of the Sellers. Pursuant to the Purchase Agreement, the Company acquired certain assets and assumed certain liabilities of an organic and natural health food and vitamin chain with eight store locations in New York and northern and central New Jersey (the “Stores”).

The cash purchase price under the Asset Purchase Agreement was $5,142,000, with an additional $3,000,000 provided by the seller financing in the form of a promissory note. In addition, the seller is entitled to a contingent earn-out based on a certain revenue threshold within the one-year period of the closing.

The Company recorded $1,108,000 of contingent consideration based on the estimated financial performance for the one year following closing. The contingent consideration was discounted at an interest rate of 3.8%, which represents the Company’s weighted average discount rate. Contingent consideration related to the acquisition is recorded at fair value (level 3) with changes in fair value recorded in other expense (income), net.

The following table summarizes the change in fair value of contingent consideration from acquisition date to December 31, 2023:

SCHEDULE OF CHANGE IN FAIR VALUE OF CONTINGENT CONSIDERATION

	Fair Market Value - Level 3
Balance as of October 14, 2022	$	1,108,000
Remeasurement		(333,100	)
Balance as of December 31, 2022	$	774,900
Remeasurement		(774,900	)
Balance as of December 31, 2023	$	-

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 14, 2022
Purchase Consideration
Cash consideration paid	$	5,142,000
Promissory note		3,000,000
Contingent consideration issued to Green’s Natural seller		1,108,000
Total Purchase Consideration	$	9,250,000
Purchase price allocation
Inventory	$	1,642,000
Property and equipment		1,478,000
Intangible assets		3,251,000
Right of use asset - Operating lease		6,427,000
Other liabilities		(211,000	)
Operating lease liability		(6,427,000	)
Goodwill		3,090,000
Net assets acquired	$	9,250,000
Finite-lived intangible assets
Trade Names (8 years)	$	1,133,000
Customer Relationships (6 years)		1,103,000
Non-Compete Agreement (5 years)		1,015,000
Total intangible assets	$	3,251,000

F-18

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

Revenue and net income for year ended December 31, 2022 were $6.3 million and $0.05 million, respectively, from the date of acquisition through December 31, 2022. Acquisition-related expenses of $906,000 were expensed as incurred and recorded in selling, general and administrative expenses in the consolidated statements of operations for the year ended December 31, 2022. The expenses primarily related to legal and other professional fees.

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 with a fair value of $718,000 provided by the seller. The principle amount of the promissory note was $750,000 with a fair value was $718,000, and 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:

	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

F-19

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 net income were $3.1 million and $0.3 million, respectively, from the date of acquisition through December 31, 2023. Acquisition-related expenses of $131,000 were expensed as incurred and recorded in selling, general and administrative expenses in the consolidated statements of operations for the year ended December 31, 2023. The expenses primarily related to legal and other professional fees.

~~Revenue and~~HCWC ~~Earnings~~Spin-off

~~The~~On September 13, 2024, the Company completed ~~following~~the ~~unaudited~~spinoff ~~pro~~of ~~forma~~HCWC, ~~summary~~a ~~presents~~former ~~consolidated~~subsidiary. ~~information~~As part of ~~the~~this ~~Company~~transaction, ~~including~~Healthy ~~Mother~~Choice ~~Earth’s~~Markets ~~Storehouse~~V, ~~Green’s Natural~~LLC ~~Foods~~(the ~~and~~subsidiary ~~Ellwood~~holding Ellwood Thompson’s net assets, asincluding ifinventory, ~~the~~intangible ~~business~~assets, ~~combinations~~operating ~~had~~lease ~~occurred~~rights/liabilities, onand ~~January~~goodwill) 1,were ~~2022~~transferred to HCWC. Consequently, the ~~earliest~~net ~~period~~assets ~~presented~~acquired in the Ellwood Thompson’s acquisition are no longer consolidated in HCMC’s ~~herein:~~financial statements as of the spin-off date.

~~SCHEDULE OF SUPPLEMENTAL PRO FORMA INFORMATION~~F-18

	2023			2022
	December 31,
	2023			2022
Sales	$	65,262,783		$	68,786,398
Net loss		(18,670,111	)		(4,171,713	)

NOTE 9. DEBT

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 and remove non-recurring transaction costs directly associated with the acquisitions, such as legal and other professional service fees. 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. For the year ended December 31, 2022, the pro forma financial information excludes $1,063,000 of non-recurring acquisition-related expenses. For the year ended December 31, 2023, the pro forma financial information excludes $131,000 of non-recurring acquisition-related expenses.

Note 9. PROPERTY, PLANT, AND EQUIPMENT

Property, plant, and equipment consist of the following:

SCHEDULE OF PROPERTY PLANT AND EQUIPMENT

	2023			2022
	Year Ended December 31,
	2023			2022
Displays	$	312,146		$	312,146
Building		575,000			575,000
Furniture and fixtures		596,355			560,256
Leasehold improvements		1,925,385			1,910,719
Computer hardware & equipment		190,019			160,210
Other		688,774			587,602
Property and equipment, gross		4,287,679			4,105,933
Less: accumulated depreciation and amortization		(1,552,427	)		(993,025	)
Total property, plant, and equipment	$	2,735,252		$	3,112,908

The Company incurred approximately $0.6 million and $0.3 million of depreciation expense for the years ended December 31, 2023 and 2022, respectively.

F-20

Note 10. GOODWILL AND INTANGIBLE ASSETS

The Company tests goodwill for impairment annually on September 30 or more frequently if there are indicators that the carrying amount of the goodwill exceeds its estimated fair value.

Because the qualitative test indicated that the Company’s goodwill was determined to be impaired, a second phase of the goodwill impairment test (“Step 2”) was performed. Under Step 2, the fair value of the Company was estimated for the purpose of deriving an estimate of the implied fair value of goodwill. The implied fair value of the goodwill was then compared to the recorded goodwill to determine the amount of the impairment. The Company evaluated the fair value of its equity through the use of Guideline Public Company Method and Discounted Cash Flow Method. These two methods first calculated market value of invested capital, then the Company applied 50% of weighting to each method to derive the weight equity value. The Guideline Public Company Method calculated the Company’s equity using public markets’ relevant comparable set with market multiples that are applicable to the company. The Discounted Cash Flow Method discounted projected free cashflows of the Company at a computed weighted average cost of capital of 16.5% as the discount rate. The Discounted Cash Flow Method requires the use of significant estimates and assumptions to calculate projected future cash flow, weighted average cost of capital, and future economic and market conditions. The Company based the forecasts on its knowledge of the industry, recent performance and expected future performance, and other assumptions management believes to be reasonable but that are unpredictable and inherently uncertain. Actual future results may differ from those estimates.

As a result, the entire $6.1 million carrying amount of the Company’s goodwill was recognized as a non-cash impairment charge during the year ended December 31, 2023. There was no impairment of goodwill during the year ended December 31, 2022.

The changes in the carrying amount of goodwill for the years ended December 31, 2023 and 2022 are as follows:

SCHEDULE OF CHANGES IN CARRYING AMOUNT OF GOODWILL

	December 31, 2023			December 31, 2022
Beginning balance	$	5,747,000		$	916,000
Acquisitions		357,000			4,831,000
Impairment		(6,104,000	)		-
Ending balance	$	-		$	5,747,000

Intangible assets, net are as follows:

SCHEDULE OF INTANGIBLE ASSETS, NET

December 31, 2023	Useful Lives (Years)	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Customer relationships	4-6 years	$	2,669,000	$	(1,330,972	)	$	1,338,028
Trade names	8-10 years		2,860,000		(1,035,443	)		1,824,557
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

F-21

December 31, 2022	Useful Lives (Years)	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Customer relationships	4-6 years	$	2,669,000	$	(1,033,306	)	$	1,635,694
Trade names	8-10 years		2,569,000		(725,723	)		1,843,277
Patents	10 years		384,665		(159,658	)		225,007
Non-compete	4-5 years		1,602,000		(300,467	)		1,301,533
Intangible assets, net		$	7,224,665	$	(2,219,154	)	$	5,005,511

Amortization expense was approximately $0.9 million and $0.8 million for the years ended December 31, 2023 and 2022, respectively.

The weighted-average remaining amortization period of the Company’s amortizable intangible assets is approximately 5 years as of December 31, 2023. The estimated future amortization of the intangible assets is as follows:

SCHEDULE OF FUTURE ANNUAL ESTIMATED AMORTIZATION EXPENSE

	-
For the years ending December 31,
2024	$	959,391
2025		953,891
2026		875,910
2027		731,489
2028		412,819
Thereafter		443,182
Total	$	4,376,682

Note 11. CONTRACT LIABILITIES

The Company’s contract liabilities consist of customer deposits, gift cards and loyalty rewards, for which the Company has a performance obligation to deliver products when customers redeem balances or terms expire through breakage.

A summary of the contract liabilities activity for the years ended December 31, 2023 and 2022 is presented below:

SUMMARY OF CONTRACT LIABILITIES ACTIVITY

	2023			2022
	Year ended December 31,
	2023			2022
Beginning balance as of January1,	$	198,606		$	23,178
Issued		891,060			859,383
Redeemed		(812,694	)		(628,012	)
Breakage recognized		(69,459	)		(55,943	)
Ending balance as of December 31,	$	207,513		$	198,606

Note 12. DEBT

The following table provides a breakdown of the Company’s debt as of December 31, 2023 and 2022 is presented below:

SCHEDULE OF BREAKDOWN OF DEBT

	2023			2022
	December 31,
	2023			2022
Promissory note	$	3,106,508		$	2,460,556
Line of credit		453,232			453,232
Other debt		-			815
Total debt		3,559,740			2,914,603
Current portion of long-term debt		(1,155,933	)		(536,542	)
Long-term debt	$	2,403,807		$	2,378,061

F-22

Revolving Line of Credit

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 1.0% 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 balance was $453,232 as of December 31, ~~2023~~2024 and ~~2022~~2023, respectively. The line of credit ~~will~~expired ~~expire~~ in ~~November~~December 2024, and the Company paid off the credit line balance in full on January 3, 2025.

~~Promissory~~NOTE ~~Note~~10. COMMITMENTS AND CONTINGENCIES

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 $2,378,000 and $2,914,000 as of December 31, 2023 and 2022, respectively. The Company incurred approximately $160,000 and $30,000 interest expense for the years ended December 31, 2023 and 2022, 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 $728,000 in principle amount as of December 31, 2023. The Company expensed the discount on promissory note and recognized interest expense of approximately $39,000 for the year ended December 31, 2023.

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	$	702,701
2025		746,042
2026		792,056
2027		724,333
2028		141,376
Total	$	3,106,508

Note 13. COMMITMENTS AND CONTINGENCIES

Employment Agreements

On August 13, 2018, the Company amended and restated its existing employment agreement with Jeffrey Holman, the Company’s Chief Executive Officer (the “Holman Employment Agreement”). The Holman Employment Agreement is for an additional three-year6 ~~year~~ term and provides for an annual base salary of $450,000 and a target bonus for 2020 only in an amount ranging from 20% to 200% of his base salaries subject to the Company meeting certain earnings before interest, taxes depreciation and amortization performance milestones. Mr. Holman is entitled to receive severance payments, including two years of his then base salary and other benefits in the event of a change of control, termination by the Company without cause, termination for good reason by the executive or non-renewal by the Company. Mr. Holman was also granted 11 billion shares of restricted common stock pursuant to the Holman Employment Agreement Amendment on the condition that 11 billion of his options to purchase Company common stock are forfeited. This restricted stock will vest one year following the date of issuance provided that the grantee remains an employee of the Company through each applicable vesting date. On August 12, 2019, the Company agreed to extend the expiration date of the vesting period for the restricted stock by six months to February 13, 2020. On August 12, 2020, the Company agreed to extend for a second time the expiration date of the vesting period for the restricted stock by six months to February 13, 2021. The term of the employment agreement shall be automatically renewed for successive one-year terms unless notice of non-renewal is given by either party at least 30 days before the end of the Term.

F-23

On February 26, 2021, the Company entered into an amended and restated employment agreement (the “Employment Agreement Amendment”) with the Company’s President and Chief Operating Officer, Christopher Santi. Pursuant to the Employment Agreement Amendment, Mr. Santi will continue to be employed as the Company’s President and Chief Operating Officer through January 30, 2024. Mr. Santi will receive a base salary of $0.4 million for 2021 and his salary will increase 10% in each subsequent year. The term of the amended employment agreement shall be automatically renewed for successive one-year terms unless notice of non-renewal is given by either party at least 30 days before the end of the Term.

On February 022, 2022, the Company entered into a second amended and restated employment agreement (the “Employment Agreement Amendment”) with the Company’s Chief Financial Officer, John Ollet. Pursuant to the Employment Agreement Amendment, Mr. Ollet will continue to be employed as the Company’s Chief Financial Officer through February 14, 2025. Mr. Ollet will receive a base salary of $0.3 million for 2022 and his salary will increase 10% in each subsequent calendar year. The term of the amended and restated employment agreement shall be automatically renewed for successive one-year terms unless notice of non-renewal is given by either party at least 30 days before the end of the Term.

Legal Proceedings

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.

~~F-24~~On November 22, 2024, HCMC received a ruling from the U.S. Court of Appeals for the Federal Circuit (the “Federal Circuit”) denying an appeal of HCMC of a decision of the United States Patent and Trademark Office Patent Trial and Appeal Board (the “Board”) relating to the inter partes review of an HCMC patent. The Board had ruled that the previously granted HCMC patent that served as the basis of HCMC’s patent infringement action against Philip Morris USA, Inc. and Philip Morris Products S.A. was not patentable and denied of HCMC’s request to amend the claims if invalidity of the patent was affirmed.

There were two lawsuits in connection with alleged claimed battery defects for an electronic cigarette device. One has been dismissed by the court wherein the plaintiff settled with the Company’s insurance carrier with no economic impact to the Company. In the second lawsuit, as of December 31, 2023, the Company has reached an arrangement with the plaintiff to resolve the matter, limiting potential exposure to $1.5 million. While this arrangement is presently not formalized by a signed agreement, the Company has accrued a liability of $1.5 million, reflected in accounts payable and accrued expenses, to represent management’s estimate of the probable settlement amount based on the current status of discussions. The settlement remains subject to finalization, and until a definitive agreement is executed, no assurance can be given that the outcome will differ from this accrual. The case has been removed from the courts trial calendar.F-19

There were two lawsuits in connection with alleged claimed battery defects for an electronic cigarette device. One has been dismissed by the court wherein the plaintiff settled with the Company’s insurance carrier with no economic impact to the Company. In the second lawsuit, as of December 31, 2023, the Company had reached an arrangement with the plaintiff to resolve the matter, limiting potential exposure 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 accrued $1.5 million at June 30, 2024. As of December 31, 2024, the Company already paid $1.0 million, and the remaining balance of $500,000 was in accounts payable and accrued expenses in the accompanying consolidated balance sheets.

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 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 December 31, ~~2023~~2024, with respect to legal costs, we record such costs as incurred.

OnNOTE ~~July 7, 2023, the Company entered into a patent licensing agreement for one of its patents in the vape segment~~11. ~~The~~STOCKHOLDERS’ 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.EQUITY

Note 14. STOCKHOLDERS’ EQUITY

Equity Compensation Plans

The Company’s 2015 Equity Incentive Plan, as amended (the “2015 Plan”), awards grants to employees. On April 23, 2023, the Board of Directors (the “Board”) of HCMC approved the Second Amendment to the 2015 Equity Incentive Plan (the “Amended Plan”). The Amended Plan increased the number of shares of HCMC common stock authorized for issuance under the Amended Plan to 225,000,000,000 shares, and currently ~~2.5~~22 billion shares are available for grant as of December 31, ~~2023~~2024.

The Company’s 2009 Equity Incentive Plan (the “2009 Plan”) awards grants to employees, non-employee directors and consultants in connection with their retention and/or continued employment by the Company. The 2009 Plan had no shares of common stock available for grant as of December 31, ~~2023~~2024.

Series D Convertible Preferred Stock

On February 7, 2021, the Company entered into a Securities Purchase Agreement, pursuant to which the Company sold and issued 5,000 shares of its Series D Convertible Preferred Stock (the “Preferred Stock”) to accredited investors for $1,000 per share or an aggregate subscription of $5.0 million. In 2021, 4,200 shares of Series D Convertible Preferred Stock were exercised and converted into common stocks. As of December 31, 2023, the Company issued 8.0 billion shares of the Company’s common stock in connection with the exercise of the remaining 800 shares of the Series D Convertible Preferred Stock at a conversion price of $0.0001 per share. As of December 31, 2023, all Series D preferred stocks have been converted. The Series D Stocks have no voting rights.

Series E Redeemable Convertible Preferred Stock

On August 18, 2022, the Company entered into a Securities Purchase Agreement (“HCMC Preferred Stock”) pursuant to which the Company sold and issued 14,722 shares of its Series E 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 fees.

F-2520

~~For~~As ~~the~~of ~~year ended~~ December 31, ~~2023~~2024, 1,585 shares of Series E preferred stock were converted into 15,850,000,000 shares of common stock as a result of the Series E preferred stock conversion. 12,026 shares of Series E preferred stock were redeemed and approximately $12,004,000 ~~was~~ was paid for redemption. As of December 31, 2024, 1,111 shares of Series E preferred stock remained outstanding.

The HCMC Preferred Stock have voting rights on as converted basis at the Company’s next stockholders’ meeting. However, as long as any shares of HCMC 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 Preferred Stock, (a) alter or change adversely the powers, preferences or rights given to the HCMC Preferred Stock or alter or amend the Certificate of Designation, (b) increase the number of authorized shares of HCMC Preferred Stock, or (c) enter into any agreement with respect to any of the foregoing. Each share of 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 conversion price for the HCMC 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 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 HCMC 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 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 was 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.

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.

~~Spin-Off~~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.

~~The~~On ~~Company~~July is26, ~~planning~~2024, tothe ~~spin~~Company ~~off~~entered ~~its grocery segment and wellness business~~ into a ~~new~~Sixth ~~publicly~~Amendment ~~traded company (hereinafter referred~~ to as ~~“NewCo”). NewCo will continue~~ the ~~path~~Securities ofPurchase ~~growth~~Agreement ~~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~~Series ~~patent~~E ~~suite,~~Redeemable ~~the~~Convertible Preferred ~~Q-Cup®~~Stock ~~brand~~purchasers, ~~and continue~~pursuant to ~~develop~~which ~~its~~the ~~patent~~Company ~~suite~~and ~~through~~such ~~R&D~~parties asagreed ~~well~~to asamend ~~continuing~~the ~~its~~Completion ~~path~~Date ~~of enforcing its patent rights against infringers and attempting~~ to ~~monetize~~November ~~said~~1, ~~patents through licensing deals~~2024.

~~F-26~~On November 27, 2024, the Company entered into a Seventh 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 May 31, 2025.

~~At the time of the Spin~~F-Off, HCMC will distribute all the outstanding shares of 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 Common Stock in NewCo. The distribution will be made in book-entry form by a distribution agent. Fractional shares of Common Stock will not be distributed in the Spin-Off and any fractional amounts will be rounded down.21

Pursuant to the Securities Purchase Agreement, purchasers of the Series E Convertible Preferred Stock will also be required to purchase Series A Convertible Preferred Stock (“NewCo Series A Stock”) of a newly created NewCo 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.

Restricted Stock

On ~~January~~April 123, ~~2022~~2023, HCMC’s board of directors has approved the ~~Company~~issuance ~~granted~~of 1approximately 107,~~500~~675,000,000 ~~restricted~~ shares of ~~common~~restricted common stock to athe ~~non-employee~~employees ~~for~~and ~~service~~executive ~~rendered~~officers ~~with~~of ~~fair value~~HCMC. Each grant of ~~$150~~restricted common stock commenced vesting of 12.5% of the award on February 1,~~000~~ ~~that~~2024 ~~would~~and will vest 25in 12.5% ~~each~~increments ~~quarter~~on ~~starting~~the ~~from~~last ~~June~~day ~~30,~~of ~~2023~~each calendar quarter thereafter through ~~March~~September 3130, ~~2024~~2025.

On ~~December~~August 1423, ~~2022~~2023, the Company granted 4 2,000,000,000 shares of restricted stocks ~~with fair value of $400,000~~ to the ~~two Directors of the~~ Company’s ~~that~~third-party ~~would~~inventors ~~vest~~with ~~starting~~no ~~from the first anniversary of the grant date at 12.5%~~vesting ~~for each calendar quarter for two years~~requirement.

On ~~April~~November 2313, 2023, ~~HCMC’s board of directors has approved~~ the ~~issuance~~Company ofgranted ~~approximately 107~~1,~~675~~000,000,000 shares of restricted ~~common stock~~stocks to ~~the~~an ~~employees and executive officers of HCMC~~employee. ~~Each~~The ~~grant~~award ofcommences ~~restricted common stock will commence~~ vesting of 12.5% ~~of the award~~ on February 1, 2024 and remainder will vest in 12.5% increments on the last day of each calendar quarter thereafter through September 30, 2025. ~~All shares of restricted common stock related to the April 23, 2023 issuance remain unvested as of December 31, 2023.~~

The following table reflects the activity for all unvested restricted stocks during ~~2023~~2024:

SCHEDULE OF UNVESTED RESTRICTED STOCK

	Shares			Weighted Average Grant Date Fair Value
Unvested at January 1, 2023		5,500,000,000		$	550,000
Unvested at January 1, 2024		111,550,000,000		$	11,155,000
Granted		~~107~~3,~~675~~000,000,000			10300,~~767,500~~000
Vested		(173,~~625~~921,~~000~~875,000	)		(~~162~~7,~~500~~392,188	)
Forfeited		-			-
Unvested at December 31, 2023		111,550,000,000		$	11,155,000
Unvested at December 31, 2024		40,628,125,000		$	4,062,812

F-2722

Stock Options

A summary of option activity during the years ended December 31, ~~2023~~2024 and ~~2022~~2023 is as follows:

SUMMARY OF OPTION ACTIVITY

	Number of Options			Weighted Average Exercise Price		Weighted Average Remaining Term (Yrs.)		Aggregate Intrinsic Value
Outstanding, January 1, 2022		67,587,230,680		$	0.0001		5	$	-
Outstanding, January 1, 2023		67,587,222,200		$	0.0001		3	$	-
Options granted		-			0.0001				-
Options forfeited or expired		-			0.0001				-
Outstanding, December 31, 2022		67,587,230,680		$	0.0001		4	$	-
Outstanding, December 31, 2023		67,587,222,200		$	0.0001		3	$	-
Options granted		-			0.0001				-
Options exercised		-			0.0001				-
Options forfeited or expired		~~(8,480~~-	)		0.0001				-
Outstanding, December 31, 2023		67,587,222,200		$	0.0001		3		-
Outstanding, December 31, 2024		67,587,222,200		$	0.0001		2		-
Exercisable on December 31, 2023		67,587,222,200		$	0.0001		3	$	-
Exercisable on December 31, 2024		67,587,222,200		$	0.0001		2	$	-

During the years ended December 31, ~~2023~~2024 and ~~2022~~2023, the Company recognized stock-based compensation expense of approximately $34,~~430~~620,000 and $723,430,000, respectively, in connection with the amortization of restricted stocks and stock options. Stock-based compensation expense is included as part of selling, general and administrative expense in the accompanying consolidated statements of operations.

Income (Loss) per Share

Basic income (loss) per share is computed by dividing the net income (loss) available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted income (loss) per share is computed using the weighted average number of common shares and, if dilutive, potential common shares outstanding during the period. Potential common shares consist of the incremental common shares issuable upon (a) the exercise of stock options (using the treasury stock method); (b) the conversion of Series D and Series E convertible preferred stocks; (c) the exercise of warrants (using the if-converted method); (d) the vesting of restricted stock units; and (e) the conversion of convertible notes payable. Diluted income (loss) per share excludes the potential common shares, as their effect is antidilutive. The following table summarizes the Company’s securities that have been excluded from the calculation of basic and dilutive income (loss) per share as their effect would be anti-dilutive:

SCHEDULE OF DILUTIVE LOSS PER SHARE

	2023		2022
	2024		2023
	December 31,
	2023		2022
	2024		2023
Preferred stock		11,111,000,000		~~148~~11,~~470~~111,000,000
Stock options		67,587,222,200		67,587,~~230~~222,~~680~~200
Restricted stock		~~113~~40,~~175~~628,~~000~~125,000		5113,~~500~~175,000,000
Total		~~191~~119,~~873~~326,~~222~~347,200		~~221~~191,~~557~~873,~~230~~222,~~680~~200

F-2823

~~Note~~NOTE 1512. ~~LEASES~~RELATED PARTY TRANSACTIONS

~~The~~Prior ~~Company~~to ~~has~~the ~~various~~Spin-Off, ~~lease~~HCWC ~~agreements~~was ~~with~~a ~~terms~~subsidiary upof toHCMC. 20After ~~years~~Spin-Off, ~~including~~HCWC ~~leases~~operated ofas ~~retail~~a ~~stores~~separate, ~~headquarters~~stand-alone ~~and~~company, ~~equipment~~accordingly has had various relationships with HCMC whereby HCMC provided services to HCWC as noted below. ~~All~~Related party transactions prior to the ~~leases~~Spin-Off ~~are~~include ~~classified~~allocation asof ~~operating~~general ~~leases~~corporate expenses and cash advances between HCMC and HCWC.

~~The~~Allocation ~~following table presents information about the amount, timing and uncertainty~~ of ~~cash~~General ~~flows~~Corporate ~~arising from the Company’s operating leases as of December 31, 2023.~~Expenses

~~SCHEDULE~~The OFCompany ~~MATURITY~~provided OFhuman ~~LEASE~~resources, ~~LIABILITIES~~accounting, payroll processing, legal and other managerial services to HCWC prior to the Spin-Off. The accompanying consolidated financial statements include allocations of these expenses. Following the Spin-Off, HCWC and HCMC entered into a TSA, under which both companies agreed to provide certain transitional services to one another to ensure smooth separation. These services are provided on a transitional basis and will continue for a period of up to one year following the Spin-Off.

Maturity of Lease Liabilities by Fiscal Year
2024	$	3,212,909
2025		2,862,488
2026		2,521,339
2027		1,535,080
2028		834,710
Thereafter		1,363,363
Total undiscounted operating lease payments	$	12,329,889
Less: Imputed interest		(1,021,443	)
Present value of operating lease liabilities	$	11,308,446

Management adopted a proportional cost allocation method to allocate the shared expenses to HCWC. The allocation method calculates the appropriate share of overhead costs to HCWC based on management’s estimate that the sum of management time and resources spent managing HCWC is approximately equal to the amount of time and resources spent managing HCMC and its subsidiaries. As a result, 50% of HCMC overhead on a weighted average basis was allocated to HCWC based on the fact that management spent an equal amount of time managing both companies. The Company believes the allocation methodology used is reasonable and has been consistently applied, and results in an appropriate allocation of costs incurred. However, these allocations may not be indicative of the cost had HCWC been a stand-alone entity or of future services. HCMC allocated approximately $2.1 million and $2.5 million for the years ended December 31, 2024 and 2023, respectively. The pre Spin-Off allocated amount will not be cash settled and are included in the Net Parent’s Investment.

~~The~~Investment ~~following~~in ~~summarizes the Company’s operating leases:~~Subsidiary

~~SCHEDULE~~For OFthe ~~BALANCE~~thirty-six ~~SHEET~~weeks ~~CLASSIFICATION~~ended ~~AND~~September ~~OTHER~~13, ~~INFORMATION~~2024, the net operating expenses of $1.7 million incurred by HCMC on behalf of the HCWC was included in Investment in Subsidiary. For the year ended December 31, 2023, the net operating expenses of $2.5 million incurred by HCMC on behalf of HCWC, $0.8 million cash advance attributable to the Ellwood Thompson’ acquisition and $0.1 million HCMC loan payment on behalf of Green’s Natural Foods were included in the Investment in Subsidiary. Upon the Spin-Off, the Company wrote off the investment in subsidiary balance to retained earnings.

Balance Sheet Classification	December 31, 2023		December 31, 2022
Right of use asset	$	11,511,002	$	10,604,935
Operating lease liability, current	$	2,842,829	$	2,228,852
Operating lease liability, net of current		8,465,617		8,041,504
Total operating lease liabilities	$	11,308,446	$	10,270,356

Intercompany Receivable and Payable

~~The~~Prior ~~amortization~~to of the ~~right~~Spin-Off, there was no intercompany agreement between the Company and HCWC. Management has determined those intercompany receivables and payables will be settled within twelve months after the balance sheet date. As a result, the Company’s intercompany balances are reflected as “due to” or “due from” accounts in the consolidated balance sheets. At the time of Spin-~~use~~ff, the ~~asset~~Company ofhad ~~approximately~~a net receivable balance from HCWC in the amount of $1.2 million,~~590~~ and HCWC paid the balance in full to settle on the Spin-Off date of September 13,~~000~~ 2024. The Company had a net intercompany balance of $0.2 million and $~~1,164,000~~3.8 million ~~for~~from ~~the~~HCWC ~~years~~as ~~ended~~of December 31, ~~2023~~2024 and December ~~2022~~31, ~~respectively~~2023, ~~were~~ ~~included in operating cash flows~~respectively.

Other Information
Weighted-average remaining lease term for operating leases	5 years
Weighted-average discount rate for operating leases	3.98	%

F-24

~~Rent~~NOTE ~~expense~~13. ~~for~~INCOME the years ended December 31, 2023 and 2022 was approximately $3,500,000 and $1,500,000, respectively, is included in selling, general and administrative expenses in the accompanying consolidated statement of operations.TAXES

~~The~~Prior ~~following~~to ~~table~~the ~~represents~~legal reorganization on September 13, 2024, HCMC included certain Carve-out entities in its consolidated tax reporting within the ~~components~~respective ofentity’s ~~lease~~tax ~~cost~~jurisdiction, ~~are~~and as ~~follows~~a ~~for~~result, ~~twelve~~these ~~months~~entities ~~ended~~did not file separate tax returns. Accordingly, the income tax provision reflected in these carve-out basis financial statements was determined using a method consistent with the standalone basis, as if the Carve-out business had been a separate taxpayer. As of December 31, ~~2023:~~2024, all amounts related to the Company’s tax positions are recognized on the carve-out Balance Sheet. Income taxes are accounted for under the asset and liability method.

~~SCHEDULE~~The Company OFdid ~~LEASE~~not ~~EXPENSE~~ have tax expense (benefit) at the U.S. statutory rate to the actual tax expense (benefit) reflected in the accompanying statement of operations:

	December 31, 2023
Operating lease cost	$	2,265,820
Variable lease cost		944,987
Short-term lease cost		324,507
Total rent expense	$	3,535,313

The aggregate cash payments under the leasing arrangement was approximately $2,458,000 for the year ended December 31, 2023 and was included in operating cash flows.

F-29

Note 16. INCOME TAXES

The Company did not have s expected tax expense (benefit) at the U.S. statutory rate to the actual tax expense (benefit) reflected in the accompanying statement of operations:

	2023			2022
	2024			2023
	Year Ended December 31,
	2023			2022
	2024			2023
U.S. federal statutory rate	$	(31,~~881~~704,~~403~~209	)	$	(12,~~515~~330,~~700~~862	)
State and local taxes, net of federal benefit		(1351,~~036,963~~765	)		(~~359~~482,~~643~~302	)
Change in valuation allowance		42,~~999~~051,~~204~~899			2,~~733~~810,~~655~~101
True-up & deferred adjustment		~~(19,998~~-	)		~~144~~-
Other permanent items		24,~~928~~075			-2,509
Change in tax rate		~~(63,768~~-	)		~~(252,392~~-	)
Other		-			~~(606,064~~554	)
Total income tax benefit	$	-		$	-

As of December 31, ~~2023~~2024 and ~~2022~~2023, the Company’s deferred tax assets and liabilities consisted of the effects of temporary differences attributable to the following:

	2023			2022
	2024			2023
	Year Ended December 31,
	2023			2022
	2024			2023
Deferred tax assets:
Net operating losses	$	1918,~~684~~918,~~763~~516		$	1716,~~030~~766,~~852~~937
Unrealized loss on investment		3938,~~580~~030			3637,~~436~~692
Accrued Expenses and Deferred Income		-174,687			~~149,402~~-
Charitable contribution		87,~~330~~933			57,~~737~~933
Stock based compensation		32,~~029~~593,~~964~~511			2,~~099~~885,~~241~~422
Net book value of intangible assets		15,~~801,150~~841			~~314~~5,~~775~~133
UNICAP 263a Adjustment		5316,~~284~~860			-
ASC 842 - Lease Accounting		6577,~~172~~152			4475,~~484~~080
Total deferred tax assets		2421,~~682~~832,~~243~~530			19,~~680~~778,~~927~~197
Deferred tax liabilities:
Net book value of fixed assets		(2910,~~652~~539	)		(278,~~540~~106	)
Total deferred tax liabilities		(2910,~~652~~539	)		(278,~~540~~106	)
Net deferred tax assets		2421,~~652~~821,~~591~~991			19,~~653~~770,~~387~~091
Valuation allowance		(2421,~~652~~821,~~591~~991	)		(19,~~653~~770,~~387~~091	)
Net deferred tax assets	$	-		$	-

In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. After consideration of all of the positive and negative evidence available, management has determined that a valuation allowance is required at December 31, ~~2023~~2024 and ~~2022~~2023 to reduce the deferred tax assets to amounts that are more likely than not to be realized. The Company’s valuation increased by approximately $42,~~999~~052,~~204~~00 and $2,~~733~~810,~~655~~00 for the tax years ended ~~2023~~2024 and ~~2022~~2023, respectively. Should the factors underlying management’s analysis change, future valuation adjustments to the Company’s net deferred tax assets may be necessary.

F-3025

At December 31, ~~2023~~2024 the Company had U.S. federal and state net operating loss carryforwards (“~~NOLS~~NOLs”) of $7977.57 million and $6459.89 million, respectively. Federal NOLs of $46.3 million expire beginning in 2030 through 2037 and $3331.23 million do not expire and are subject to 80% of taxable income under Internal Revenue Code Section 172. ~~State~~Florida state NOLs of $36.3 million expire beginning in 2030 through 2037 and $2823.5 million do not expire and maybe subject to income limitations under ~~each~~ State statute. Utilization of our ~~NOLS~~NOLs may be subject to an annual limitation under section 382 and similar state provisions of the Internal Revenue Code due to changes of ownership that may have occurred or that could occur in the future, as defined under the regulations.

On August 16, 2022, the Inflation Reduction Act of 2022 (“IRA”) was signed into law. Among other provisions, the IRA includes a 15% corporate alternative minimum tax on applicable corporations and 1% excise tax on stock repurchases made after December 31, 2022. The IRA is not expected to have a material impact on the consolidated financial statements.

The Company files a federal income tax return and income tax ~~returns~~return in ~~various~~Florida ~~state tax jurisdictions~~ and the Company is generally no longer subject examinations by federal and ~~state~~Florida tax authorities for years before ~~2020~~2021.

~~Note~~NOTE 1714. ~~SEGMENT~~SUBSEQUENT ~~INFORMATION~~EVENTS

~~Management~~On ~~determines~~January ~~the~~3, ~~reportable~~2025, ~~segments based on~~ the ~~internal~~Company ~~reporting~~fully ~~used~~repaid bythe ~~our~~outstanding ~~executives~~balance toof ~~evaluate~~its ~~performance~~credit ~~and~~line, toincluding ~~assess~~all ~~where to~~accrued ~~allocate~~interest, ~~resources.~~for ~~The~~a ~~Company~~total ~~evaluates~~payment of ~~segment performance based on the segment gross profit before corporate expenses~~$475,255.

~~Summarized below are the total net sales and segment operating results for each reporting segment:~~F-26

SCHEDULE OF INFORMATION ABOUT REPORTABLE SEGMENTS

	Year Ended
	Net Sales				Segment Gross Profit
	December 31, 2023		December 31, 2022		December 31, 2023			December 31, 2022
Vapor	$	617	$	257,363	$	(170	)	$	144,483
Grocery		55,689,793		29,009,640		20,348,224			10,079,735
Total	$	55,690,410	$	29,267,003		20,348,054			10,224,218
Corporate expenses						38,323,733			18,877,302
Operating loss						(17,975,679	)		(8,653,084	)
Corporate other (expense) income, net						(507,201	)		1,435,473
Net loss						(18,482,880	)		(7,217,611	)

For the year ended December 31, 2023 depreciation and amortization was approximately $18,000 and $1.5 million for Vapor and Grocery, respectively.

For the year ended December 31, 2022 depreciation and amortization was approximately $19,000 and $1.0 million for Vapor and Grocery, respectively.

Note 18. EMPLOYEE RETENTION CREDITS

Congress passed programs to provide financial assistance to companies during the COVID-19 pandemic, including the employee retention credit (ERC). The ERC provides eligible employers with credits per employee based on qualified wages and health insurance benefits paid. In December 2022, the Company filed application for Employee Retention Credits with the Internal Revenue Service. The company is reasonably assured the eligibility is met. The total amount eligible is $930,000. The amount was recorded in other current assets in consolidated balance sheet and other income in statement of operation in 2022. As of December 31, 2023, the Company received the payment in full eligible amount.

Note 19. SUBSEQUENT EVENTS

In connection with the spin off, on January 18, 2024, the Company entered into Securities Purchase Agreement with institutional investors whereby the Company issued a total of approximately $1.9 million in unsecured promissory notes (the “Notes). The Notes were issued at a 10% original issue discount and accrue interest at a rate of 10% per annum. All principle and accrued interest on the Notes shall be due and payable upon the earlier of (1) the closing of the potential initial public offering (“IPO”), (2) the one-year anniversary of issuance or (3) the time at which the balance is due and payable upon an event of default. The investors agreed to acquire $1,700,000 of Class A common stock in the IPO, and the Company will issue 188,889 shares of Class A common stock (assuming an IPO offering price of $10 per share) to institutional investors upon IPO.

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 February 9, 2024, in order to maximize profitability and improve operation efficiency, management made decision to close the Saugerties store. The building that the store is located is owned by the Company, and it is currently for sale. At the time of the filing, no sales agreement has been signed.

F-31

EXHIBIT INDEX

Exhibit		Incorporated by Reference			Filed or Furnished
No.	Exhibit Description	Form	Date	Number	Herewith
1.1	Form of Underwriting Agreement	S-1	7/10/15	1.1
2.1(a)	Business Sale Offer and Acceptance Agreement, dated April 11, 2016, by and between Vapor Corp. and Ada’s Whole Food Market LLC	8-K	5/23/16	2.1
2.1(b)	Asset Purchase Agreement, dated July 29, 2016, by and between Vapor Corp. and VPR Brands, L.P.	8-K	8/3/16	1.1
2.1(c)	Asset Purchase Agreement, dated November 19, 2018, by and among the Company and Paradise Health Foods, Inc.	8-K	11/21/18	2.1
2.1(d)	Membership Interest Purchase Agreement, dated December 14, 2018, by and among Healthy U Wholesale, Inc. and the Sellers named therein	8-K	12/26/18	2.2
2.1(e)	Asset Purchase Agreement, dated February 8, 2022, by and among the Healthy Choice Markets 3, LLC, Mother Earth’s Storehouse Inc., Christopher Schneider and Kevin Schneider	8-K	2/8/22	2.1
2.1(f)	Commercial Contract of Sale, dated of 9th day of February, 2022, between Mother Earth’s Storehouse, Inc. and Healthy Choice Markets 3 Real Estate LLC
3.1	Certificate of Incorporation	10-Q	11/16/15	3.1
3.1(a)	Certificate of Amendment to Certificate of Incorporation	8-K	3/03/17	3.1
3.1(b)	Certificate of Amendment to Certificate of Incorporation	S-1	7/10/15	3.2
3.1(c)	Certificate of Amendment to Certificate of Incorporation	S-4	12/11/15	3.2
3.1(d)	Certificate of Amendment to Certificate of Incorporation	8-K	2/2/16	3.1
3.1(e)	Certificate of Amendment to Certificate of Incorporation	8-K	3/9/16	3.1
3.1(f)	Certificate of Amendment to Certificate of Incorporation	8-K	6/1/16	3.1
3.1(g)	Certificate of Amendment to Certificate of Incorporation	8-K	8/5/16	3.1
3.1(h)	Certificate of Designation of Preferences, Rights And Limitations of Series D Convertible Preferred Stock	8-K	2/8/21	2.1
3.1(i)	Cancellation of Certificate of Designations	10-K	3/31/22	3.1(i)
3.2	Bylaws	8-K	12/31/13	3.4
10.1	Form of Securities Purchase Agreement dated March 3, 2015	8-K	3/05/15	10.1
10.2*	2015 Equity Incentive Plan	S-1	6/01/15	10.28
10.3	Form of Letter Agreement dated June 19, 2015	8-K	6/25/15	10.4
10.11*	Amendment to Vapor Corp. 2015 Equity Incentive Plan	S-8	2/8/17	4.2
10.4	Form of Letter Agreement dated June 19, 2015	8-K	6/25/15	10.5
10.12*	Form of Restricted Stock Award Agreement	8-K	8/20/18	10.4
10.9	RLOC Credit Agreement, dated December 23, 2021, by and among Healthier Choices Management Corp. and Professional Bank
10.13*	Second Amended and Restated Employment Agreement, entered into as of February 26, 2021 by and between the Company and Christopher Santi	8-K	3/5/21	10.1
10.10	Revolving Credit Note, dated December 31, 2019, issued by Healthier Choices Management Corp. in favor of Professional Bank
10.14*	Third Amended and Restated Restricted Stock Agreement dated as of February 12, 2021 by and between Healthier Choices Management Corp. and Jeffrey Holman	10-K	3/8/21	10.12
10.17*	Third Amended and Restated Restricted Stock Agreement dated as of February 12, 2021 by and between Healthier Choices Management Corp. and Anthony Panariello	10-K	3/8/21	10.15
10.18*	Second Amended and Restated Employment Agreement, dated as of February 2, 2022 by and between the Company and John Ollet	8-K	2/2/22	10.1
10.20	Securities Purchase Agreement, dated as of August 18, 2022, by and between Healthier Choices Management Corp. and the purchasers named therein	8-K	8/18/2022	10.1
10.21	First Amendment to Securities Purchase Agreement, dated as of March 1, 2023, by and between Healthier Choices Management Corp. and the purchasers named therein	8-K/A	3/6/23	10.1
10.22	Second Amendment to Securities Purchase Agreement, dated as of May 15, 2023, by and between Healthier Choices Management Corp. and the purchasers named therein	8-K/A	5/19/23	10.1
10.23	Third Amendment to Securities Purchase Agreement, dated as of October 30, 2023, by and between Healthier Choices Management Corp. and the purchasers named therein	8-K/A	11/3/23	10.1
10.24	Fourth Amendment to Securities Purchase Agreement, dated as of February 20, 2024, by and between Healthier Choices Management Corp. and the purchasers named therein	8-K/A	2/23/24	10.1
10.25	Fifth Amendment to Securities Purchase Agreement, dated as of February 20, 2024, by and between Healthier Choices Management Corp. and the purchasers named therein	8-K/A	4/9/24	10.1
10.26	Sixth Amendment to Securities Purchase Agreement, dated as of February 20, 2024, by and between Healthier Choices Management Corp. and the purchasers named therein	8-K/A	7/29/24	10.1
10.27	Seventh Amendment to Securities Purchase Agreement, dated as of February 20, 2024, by and between Healthier Choices Management Corp. and the purchasers named therein	8-K/A	12/5/24	10.1
21.1	List of Subsidiaries				X
23.1	Consent of TAAD LLP				X
23.2	Consent of Marcum LLP				X
31.1	Certification of Principal Executive Officer (302)				X
31.2	Certification of Principal Financial Officer (302)				X
32.1	Certification of Principal Executive Officer and Principal Financial Officer (906)				Furnished**
101.INS	Inline XBRL Instance Document				X
101.SCH	Inline XBRL Taxonomy Extension Schema Document				X
101.CAL	Inline XBRL Taxonomy Extension Calculation Link base Document				X
101.DEF	Inline XBRL Taxonomy Extension Definition Link base Document				X
101.LAB	Inline XBRL Taxonomy Extension Label Link base Document				X
101.PRE	Inline XBRL Taxonomy Extension Presentation Link base Document				X
104	Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)				X

Exhibit		Incorporated by Reference			Filed or Furnished
No.	Exhibit Description	Form	Date	Number	Herewith
10.11*	Amendment to Vapor Corp. 2015 Equity Incentive Plan	S-8	2/8/17	4.2
10.12*	Form of Restricted Stock Award Agreement	8-K	8/20/18	10.4
10.13*	Second Amended and Restated Employment Agreement, entered into as of February 26, 2021 by and between the Company and Christopher Santi	8-K	3/5/21	10.1
10.14*	Third Amended and Restated Restricted Stock Agreement dated as of February 12, 2021 by and between Healthier Choices Management Corp. and Jeffrey Holman	10-K	3/8/21	10.12
10.15*	Third Amended and Restated Restricted Stock Agreement dated as of February 12, 2021 by and between Healthier Choices Management Corp. and Christopher Santi	10-K	3/8/21	10.13
10.16*	Third Amended and Restated Restricted Stock Agreement dated as of February 12, 2021 by and between Healthier Choices Management Corp. and John Ollet	10-K	3/8/21	10.14
10.17*	Third Amended and Restated Restricted Stock Agreement dated as of February 12, 2021 by and between Healthier Choices Management Corp. and Anthony Panariello	10-K	3/8/21	10.15
10.18*	Second Amended and Restated Employment Agreement, dated as of February 2, 2022 by and between the Company and John Ollet	8-K	2/2/22	10.1
10.19*	Amended and Restated Employment Agreement, dated as of March 13, 2018 by and between the Company and Jeffrey Holman	8-K	8/20/18	10.3
10.20	Securities Purchase Agreement, dated as of August 18, 2022, by and between Healthier Choices Management Corp. and the purchasers named therein	8-K	8/18/2022	10.1
10.21	First Amendment to Securities Purchase Agreement, dated as of March 1, 2023, by and between Healthier Choices Management Corp. and the purchasers named therein	8-K/A	3/6/23	10.1
10.22	Second Amendment to Securities Purchase Agreement, dated as of May 15, 2023, by and between Healthier Choices Management Corp. and the purchasers named therein	8-K/A	5/19/23	10.1
10.23	Third Amendment to Securities Purchase Agreement, dated as of October 30, 2023, by and between Healthier Choices Management Corp. and the purchasers named therein	8-K/A	11/3/23	10.1
10.24	Fourth Amendment to Securities Purchase Agreement, dated as of February 20, 2024, by and between Healthier Choices Management Corp. and the purchasers named therein	8-K/A	2/23/24	10.1
21.1	List of Subsidiaries				X
23.1	Consent of Marcum LLP				Filed
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 and Principal Financial Officer (906)				Furnished**
101.INS	XBRL Instance Document				Filed
101.SCH	XBRL Taxonomy Extension Schema Document				Filed
101.CAL	XBRL Taxonomy Extension Calculation Link base Document				Filed
101.DEF	XBRL Taxonomy Extension Definition Link base Document				Filed
101.LAB	XBRL Taxonomy Extension Label Link base Document				Filed
101.PRE	XBRL Taxonomy Extension Presentation Link base Document				Filed

* Management contract or compensatory plan or arrangement.

** 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.

Copies of this report (including the financial statements) and any of the exhibits referred to above will be furnished at no cost to our stockholders who make a written request to our Corporate Secretary at 3800 North 28th Way, Hollywood, Florida 33020.

3327

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on ~~March~~April 2714, ~~2024~~2025.

	Healthier Choices Management Corp.

	By:	/s/ Jeffrey Holman
		Jeffrey Holman
		Chief Executive Officer
		(Principal Executive Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature	Title	Date
/s/ Jeffrey Holman	Principal Executive Officer and Director	~~March~~April 2714, ~~2024~~2025
Jeffrey Holman
/s/ John A. Ollet	Chief Financial Officer	~~March~~April 2714, ~~2024~~2025
John A. Ollet	(Principal Financial and Accounting Officer)
/s/ Clifford J. Friedman	Director	~~March~~April 2714, ~~2024~~2025
Clifford J. Friedman
/s/ Anthony Panariello	Director	~~March~~April 2714, ~~2024~~2025
Anthony Panariello

3428

Filing Compare · Healthier Choices Management Corp.