Form 10-Q - Quarterly report [Sections 13 or 15(d)]

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

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

For the quarterly period ended June 30, 2024

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

For the transition period from _____ to _____

Commission file number: 001-36469

HEALTHIER CHOICES MANAGEMENT CORP.

(Exact name of Registrant as specified in its charter)

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

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

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

☒ Yes ☐ No

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

☒ Yes ☐ No

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

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

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

☐ Yes ☒ No

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

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

As of August 5, 2024, there were 479,266,632,384 shares of the registrant’s common stock, par value $0.0001 per share, outstanding.

TABLE OF CONTENTS

	PAGE

PART I FINANCIAL INFORMATION	3

ITEM 1. Financial Statements	3

Condensed Consolidated Balance Sheets as of June 30, 2024 (Unaudited) and December 31, 2023	3

Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2024 and 2023 (Unaudited)	4

Condensed Consolidated Statements of Changes in Convertible Preferred Stock and Stockholders’ Equity for the Three and Six Months Ended June 30, 2024 and 2023 (Unaudited)	5

Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2024 and 2023 (Unaudited)	6

Notes to Condensed Consolidated Financial Statements (Unaudited)	7

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	18

ITEM 3. Quantitative and Qualitative Disclosures about Market Risk	22

ITEM 4. Controls and Procedures	22

PART II OTHER INFORMATION	24

ITEM 1. Legal Proceedings	24

ITEM 1A. Risk Factors	24

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds	24

ITEM 3. Defaults Upon Senior Securities	24

ITEM 4. Mine Safety Disclosures	24

ITEM 5. Other Information	24

ITEM 6. Exhibits	24

Signatures	26

Exhibit 31.1

Exhibit 31.2

Exhibit 32.1

Exhibit 32.2

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

HEALTHIER CHOICES MANAGEMENT CORP.

CONDENSED CONSOLIDATED BALANCE SHEETS

	June 30, 2024			December 31, 2023
		(Unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalent	$	3,353,326		$	5,081,086
Accounts receivable, net		157,335			128,171
Inventories		3,997,246			4,228,889
Prepaid expenses and vendor deposits		2,338,846			1,668,324
Assets held for sale		543,854			-
Other current assets		97,142			65,556
Restricted cash		553,232			553,232
TOTAL CURRENT ASSETS		11,040,981			11,725,258

Property, plant, and equipment, net of accumulated depreciation		2,078,451			2,735,252
Intangible assets, net of accumulated amortization		3,896,098			4,376,682
Right of use asset – operating lease, net		10,017,442			11,511,002
Other assets		579,419			621,385
TOTAL ASSETS	$	27,612,391		$	30,969,579

LIABILITIES, CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses	$	7,853,149		$	8,024,664
Contract liabilities		123,375			207,513
Line of credit		453,232			453,232
Current portion of loan payment		2,495,340			702,701
Operating lease liability, current		2,705,382			2,842,829
TOTAL CURRENT LIABILITIES		13,630,478			12,230,939

Loan payable, net of current portion		2,036,367			2,403,807
Operating lease liability, net of current		7,182,322			8,465,617
TOTAL LIABILITIES		22,849,167			23,100,363

COMMITMENTS AND CONTINGENCIES (SEE NOTE 13)		-			-

CONVERTIBLE PREFERRED STOCK
Series E redeemable convertible preferred stock, $1,000 par value per share, 14,722 shares authorized, 1,111 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively; aggregate liquidation preference of $1.1 million as of June 30, 2024 and December 31, 2023, respectively.		1,111,100			1,111,100
STOCKHOLDERS’ EQUITY
Common Stock, $0.0001 par value per share, 750,000,000,000 shares authorized; 479,266,632,384 and 478,266,632,384 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively.		47,926,663			47,826,663
Additional paid-in capital		23,190,107			21,028,274
Accumulated deficit		(67,464,646	)		(62,096,821	)
TOTAL STOCKHOLDERS’ EQUITY		3,652,124			6,758,116

TOTAL LIABILITIES, CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY	$	27,612,391		$	30,969,579

See notes to unaudited condensed consolidated financial statements

HEALTHIER CHOICES MANAGEMENT CORP.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)


	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2024			2023			2024			2023
SALES
Vapor sales, net	$	174		$	-		$	293		$	38
Grocery sales, net		15,594,575			13,574,896			31,488,933			27,134,602
TOTAL SALES, NET		15,594,749			13,574,896			31,489,226			27,134,640

Cost of sales vapor		42			-			174			653
Cost of sales grocery		9,698,119			8,493,213			19,538,100			17,137,913
Cost of sales		9,698,119			8,493,213			19,538,100			17,137,913
GROSS PROFIT		5,896,588			5,081,683			11,950,952			9,996,074

OPERATING EXPENSES		8,344,526			8,261,343			17,203,543			15,158,780

LOSS FROM OPERATIONS		(2,447,938	)		(3,179,660	)		(5,252,591	)		(5,162,706	)

OTHER INCOME (EXPENSE)
Loss on investment		(136	)		(3,943	)		(993	)		(8,400	)
Change in contingent consideration		-			425,000			-			402,900
Other income, net		3,828			4,600			7,183			9,250
Interest (expense) income, net		(62,432	)		101,248			(121,424	)		198,900
Total other income (expense), net		(58,740	)		526,905			(115,234	)		602,650

NET LOSS	$	(2,506,678	)	$	(2,652,755	)	$	(5,367,825	)	$	(4,560,056	)

Induced conversions of preferred stock		-			(91,500	)		-			(152,500	)

Net loss attributable to common stockholders		(2,506,678	)		(2,744,255	)		(5,367,825	)		(4,712,556	)

NET LOSS PER SHARE-BASIC AND DILUTED	$	0.00		$	0.00		$	0.00		$	0.00

WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING-BASIC AND DILUTED		479,134,764,252			353,854,819,196			478,700,698,318			347,796,604,758

See notes to unaudited condensed consolidated financial statements

HEALTHIER CHOICES MANAGEMENT CORP.

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

FOR THE THREE MONTHS ENDED JUNE 30, 2024 AND 2023

(Unaudited)


	Series E Convertible Preferred Stock					Common Stock				Additional Paid-In			Accumulated
	Shares		Amount			Shares		Amount		Capital			Deficit			Total
Balance – April 1, 2024		1,111	$	1,111,100	-		478,266,632,384	$	47,826,663	$	22,155,025		$	(64,957,968	)	$	5,023,720
Issuance of award stock		-		-	-		1,000,000,000		100,000		(100,000	)		-			-
Stock-based compensation expense		-		-	-		-		-		1,135,082			-			1,135,082
Net loss		-		-	-		-		-		-			(2,506,678	)		(2,506,678	)
Balance – June 30, 2024		1,111	$	1,111,100	-		479,266,632,384	$	47,926,663	$	23,190,107		$	(67,464,646	)	$	3,652,124


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

HEALTHIER CHOICES MANAGEMENT CORP.

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

FOR THE SIX MONTHS ENDED JUNE 30, 2024 AND 2023

(UNAUDITED)


	Series E Convertible Preferred Stock					Common Stock				Additional Paid-In			Accumulated
	Shares		Amount			Shares		Amount		Capital			Deficit			Total
Balance – January 1, 2024		1,111	$	1,111,100	-		478,266,632,384	$	47,826,663	$	21,028,274		$	(62,096,821	)	$	6,758,116
Issuance of award stock		-		-	-		1,000,000,000		100,000		(100,000	)		-			-
Stock-based compensation expense		-		-	-		-		-		2,261,833			-			2,261,833
Net loss		-		-	-		-		-		-			(5,367,825	)		(5,367,825	)
Balance – June 30, 2024		1,111	$	1,111,100	-		479,266,632,384	$	47,926,663	$	23,190,107		$	(67,464,646	)	$	3,652,124


	Series E Convertible Preferred Stock						Convertible Preferred Stock				Common Stock				Additional Paid-In			Accumulated
	Shares			Amount			Shares		Amount		Shares		Amount		Capital			Deficit			Total
Balance – January 1, 2023		14,722		$	14,722,075			800	$	800,000		339,741,632,384	$	33,974,163	$	29,045,802		$	(43,613,941	)	$	20,206,024
Balance		14,722		$	14,722,075			800	$	800,000		339,741,632,384	$	33,974,163	$	29,045,802		$	(43,613,941	)	$	20,206,024
Series E convertible preferred stock redeemed		(11,193	)		(11,192,650	)		-		-		-		-		22,222			-			22,222
Conversion of series E convertible preferred stock		(1,585	)		(1,585,000	)		-		-		15,850,000,000		1,585,000		-			-			1,585,000
Issuance of awarded stock		-			-			-		-		107,675,000,000		10,767,500		(10,767,500	)		-			-
Induced conversions of preferred stock		-			-			-		-		-		-		(152,500	)		-			(152,500	)
Stock-based compensation		-			-			-		-		-		-		1,176,750			-			1,176,750
Net loss		-			-			-		-		-		-		-			(4,560,056	)		(4,560,056	)
Balance – June 30, 2023		1,944		$	1,944,425			800	$	800,000		463,266,632,384	$	46,326,663	$	19,324,774		$	(48,173,997	)	$	18,277,440
Balance		1,944		$	1,944,425			800	$	800,000		463,266,632,384	$	46,326,663	$	19,324,774		$	(48,173,997	)	$	18,277,440

See notes to unaudited condensed consolidated financial statements

HEALTHIER CHOICES MANAGEMENT CORP.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Six Months Ended June 30,
	2024			2023
OPERATING ACTIVITIES
Net loss	$	(5,367,825	)	$	(4,560,056	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		757,695			747,485
Amortization of debt discount		71,293			-
Loss on investment		993			8,400
Amortization of right-of-use asset		1,493,560			1,063,591
Write-down of obsolete and slow-moving inventory		1,484,648			951,373
Stock-based compensation expense		2,261,833			1,176,750
Change in contingent consideration		-			(402,900	)
Changes in operating assets and liabilities:
Accounts receivable		(29,164	)		(36,834	)
Inventories		(1,253,005	)		(899,251	)
Prepaid expenses and vendor deposits		449,261			(670,178	)
Other current assets		(31,586	)		219,362
Other assets		40,973			(5,230	)
Accounts payable and accrued expenses		(845,210	)		(197,306	)
Contract liabilities		(84,138	)		(51,137	)
Lease liability		(1,420,742	)		(1,002,484	)
NET CASH USED IN OPERATING ACTIVITIES		(2,471,414	)		(3,658,415	)

INVESTING ACTIVITIES
Collection of note receivable		-			32,928
Purchases of property and equipment		(164,164	)		(148,027	)
NET CASH USED IN INVESTING ACTIVITIES		(164,164	)		(115,099	)

FINANCING ACTIVITIES
Payments for deferred offering costs		(446,088	)		(218,865	)
Proceeds from security purchase agreement		1,700,000			-
Principal payments on loan payable		(346,094	)		(264,670	)
Payment of induced conversions of preferred stock		-			(152,500	)
Payment for Series E preferred stock redemption		-			(11,170,428	)
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES		907,818			(11,806,463	)

NET DECREASE IN CASH, CASH EQUIVALENT AND RESTRICTED CASH		(1,727,760	)		(15,579,977	)
CASH, CASH EQUIVALENT AND RESTRICTED CASH— BEGINNING OF PERIOD		5,634,318			24,690,124
CASH, CASH EQUIVALENT AND RESTRICTED CASH — END OF PERIOD	$	3,906,558		$	9,110,147

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for interest	$	238,595		$	87,008
Cash paid for income tax	$	-		$	-
NON-CASH INVESTING AND FINANCING ACTIVITIES
Non-cash deferred offering cost	$	673,695		$	384,614
Issuance of common stock in connection with series E preferred stock conversion	$	-		$	1,585,000
Right-of-use assets obtained in exchange for operating lease liabilities	$	-		$	1,093,290
1% stated value reduction on preferred stock redemption	$	-		$	22,222
Issuance of common stock	$	100,000		$	-

See notes to unaudited condensed consolidated financial statements

HEALTHIER CHOICES MANAGEMENT CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1. ORGANIZATION

Organization

Healthier Choices Management Corp. (the “Company”) is a holding company focused on providing consumers with healthier daily choices with respect to nutrition and other lifestyle alternatives.

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

Through its wholly owned subsidiary Healthy Choice Wellness Corp. (“HCWC”), the Company operates:

●	Ada’s Natural Market, a natural and organic grocery store offering fresh produce, bulk foods, vitamins and supplements, packaged groceries, meat and seafood, deli, baked goods, dairy products, frozen foods, health & beauty products and natural household items.

●	Paradise Health & Nutrition’s three stores that likewise offer fresh produce, bulk foods, vitamins and supplements, packaged groceries, meat and seafood, deli, baked goods, dairy products, frozen foods, health & beauty products and natural household items.

●	Mother Earth’s Storehouse, a two-store organic and health food and vitamin chain in New York’s Hudson Valley, which has been in existence for over 40 years.

●	Greens Natural Foods’ eight stores in New York and New Jersey, offering a selection of 100% organic produce and all-natural, non-GMO groceries & bulk foods; a wide selection of local products; an organic juice and smoothie bar; a fresh foods department, which offers fresh and healthy “grab & go” foods; a full selection of vitamins & supplements; as well as health and beauty products.

●	Ellwood Thompson’s, an organic and natural health food and vitamin store located in Richmond, Virginia.

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

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

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

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

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

Spin-Off

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

At the time of the Spin-Off, HCMC would 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 of the record date for the Spin-Off, 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. Please see additional disclosure in Note 12 Stockholder Equity.

Note 2. GOING CONCERN AND MANAGEMENT’S PLANS

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

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

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 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 evaluating non-performing stores and 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. On May 16, 2024, the Company secured a financing commitment with a private lender. This commitment allows the Company to draw up to $5 million from its revolving credit facility to be used for expansion and working capital purposes. The loan will be repayable in full on August 31, 2025 and the interest rate on the loan is 12%. On July 18, 2024, HCWC entered into a $7.5 million loan and security agreement with a private lender to support its expansion plans and funding of any working capital needs, of which $4.2 million was used for the July 18, 2024 purchase of GreenAcres Market. The face amount of the loan is $7,500,000 with 12% annual interest and has a maturity date of July 17, 2027. On July 24, 2024, the Company finalized the closing of Saugerties building sale with all parties involved and received net proceeds of $695,000. Management has made plans to reduce certain costs and raise needed capital, however, there can be no assurance the Company can successfully implement these plans. The result of the capital raise is to improve the Company’s operating and financial performance. The success of these plans is dependent upon various factors, foremost being the ability to reduce outside consulting expenses and the ability to secure additional capital from outside investors. There can be no assurance that such plans will be successful.

Note 3. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and Regulation S-X and do not include all the information and disclosures required by GAAP. The Company has made estimates and judgments affecting the amounts reported in the Company’s unaudited condensed consolidated financial statements and the accompanying notes. The actual results experienced by the Company may differ materially from the Company’s estimates. The condensed consolidated financial information is unaudited but reflects all normal adjustments that are, in the opinion of management, necessary to provide a fair statement of results for the interim periods presented. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, filed with the Securities and Exchange Commission (the “SEC”) on March 27, 2024. The condensed consolidated balance sheet as of December 31, 2023 was derived from the Company’s audited 2023 financial statements contained in the above referenced Form 10-K. Results of the six months ended June 30, 2024, are not necessarily indicative of the results to be expected for the full year ending December 31, 2024.

Significant Accounting Policies

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

Note 4. CONCENTRATIONS

Cash, Cash Equivalent and Restricted Cash

The Company considers all highly liquid instruments with an original maturity of three months or less, when purchased, to be cash and cash equivalent. The majority of the Company’s cash and cash equivalent are concentrated in one large financial institution, which is in excess of Federal Deposit Insurance Corporation (FDIC) coverage. The balance of cash equivalent was approximately $1,209,000 and $0 as of June 30, 2024 and December 31, 2023.

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

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

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

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

SCHEDULE OF CASH AND RESTRICTED CASH

	June 30, 2024		June 30, 2023
Cash and cash equivalent	$	3,353,326	$	8,481,915
Restricted cash		553,232		628,232
Total cash and restricted cash	$	3,906,558	$	9,110,147

Restricted Cash

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

Note 5. SEGMENT INFORMATION AND DISAGGREGATION OF REVENUES

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

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

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.


	Three Months Ended June 30,						Six Months Ended June 30,
	2024			2023			2024			2023
Vapor	$	174		$	-		$	293		$	38
Grocery		15,594,575			13,574,896			31,488,933			27,134,602
Total revenue	$	15,594,749		$	13,574,896		$	31,489,226		$	27,134,640

Retail Grocery	$	13,423,417		$	12,017,526		$	26,902,339		$	24,067,596
Food service/restaurant		2,170,903			1,555,372			4,585,897			3,062,948
Online/eCommerce		429			1,998			990			4,096
Total revenue	$	15,594,749		$	13,574,896		$	31,489,226		$	27,134,640

Loss from operations-Vapor	$	(5,061	)	$	(10,724	)	$	(10,923	)	$	(17,397	)
(Loss) income from operations-Grocery		129,315			(185,923	)		222,776			(462,763	)
Corporate items		(2,572,192	)		(2,983,013	)		(5,464,444	)		(4,682,546	)
Total loss from operations	$	(2,447,938	)	$	(3,179,660	)	$	(5,252,591	)	$	(5,162,706	)

Note 6. ACQUISITION

Ellwood Thompson’s

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

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

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

	October 1, 2023
Purchase Consideration
Cash consideration paid	$	750,000
Promissory note		718,000
Total Purchase Consideration	$	1,468,000

Purchase price allocation
Inventory	$	851,000
Intangible assets		291,000
Right of use asset - Operating lease		1,325,000
Other liabilities		(31,000	)
Operating lease liability		(1,325,000	)
Goodwill		357,000
Net assets acquired	$	1,468,000

Finite-lived intangible assets
Trade Names (8 years)	$	291,000
Total intangible assets	$	291,000

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

Revenue and Earnings

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

For Three Months
Ended June 30, 2023

For Six Months

Ended June 30, 2023

Sales

17,133,109

33,725,149

Net loss

(2,656,072

)

(4,520,654

)

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

Note 7. ASSETS HELD FOR SALE

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

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

Note 8. PROPERTY, PLANT, AND EQUIPMENT

Property, plant, and equipment consist of the following:

	June 30, 2024			December 31, 2023
Displays	$	312,146		$	312,146
Building		-			575,000
Furniture and fixtures		602,750			596,355
Leasehold improvements		1,959,553			1,925,385
Computer hardware & equipment		238,654			190,019
Other		763,738			688,774
Property and equipment, gross		3,876,841			4,287,679
Less: accumulated depreciation and amortization		(1,798,390	)		(1,552,427	)
Total property, plant, and equipment	$	2,078,451		$	2,735,252

The Company incurred approximately $138,000 and $144,000 of depreciation expense for the three months ended June 30, 2024 and 2023, and $277,000 and $286,000 of depreciation expense for the six months ended June 30, 2024 and 2023, respectively.

Note 9. INTANGIBLE ASSETS

Intangible assets, net are as follows:

SCHEDULE OF INTANGIBLE ASSETS, NET

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

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

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

Years ending December 31,
2024 (remaining six months)	$	478,807
2025		953,891
2026		875,910
2027		731,489
2028		412,819
Thereafter		443,182
Total	$	3,896,098

Note 10. CONTRACT LIABILITIES

A summary of the net changes in contract liabilities activity at June 30, 2024 and December 31, 2023 is presented below:

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

Note 11. DEBT

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

SCHEDULE OF BREAKDOWN OF DEBT

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

Promissory Notes

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

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

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

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

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

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

The following table summarizes the 5-year repayment schedule:

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

Note 12. STOCKHOLDERS’ EQUITY

Series E Convertible Preferred Stock

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

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

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

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

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

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

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

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

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

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

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

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

Spin-Off

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Stock Options and Restricted Stock

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

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

The Company recognized stock-based compensation of approximately $1,135,000 and $1,127,000 during the three months ended June 30, 2024 and 2023, and approximately $2,262,000 and $1,177,000 during the six months ended June 30, 2024 and 2023, respectively in connection with amortization of restricted stock and stock options. Stock based compensation is included as part of total operating expenses in the accompanying unaudited condensed consolidated statements of operations.

Income (Loss) Per Share

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

SCHEDULE OF DILUTIVE LOSS PER SHARE

	2024		2023
	As of June 30,
	2024		2023
Preferred stock		11,111,000,000		20,694,000,000
Stock options		67,587,222,200		67,587,000,000
Restricted stock		67,796,875,000		5,500,000,000
Total		146,495,097,200		93,781,000,000

Note 13. COMMITMENTS AND CONTINGENCIES

Legal Proceedings

There were two lawsuits in connection with alleged claimed battery defects for an electronic cigarette device. One has been dismissed by the 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 has accrued $1.5 million at June 30, 2024, which was reflected in accounts payable and accrued expenses in the accompanying condensed consolidated balance sheets.

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

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

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

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

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

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

From 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 June 30, 2024. With respect to legal costs, we record such costs as incurred.

Note 14. SUBSEQUENT EVENTS

On July 18, 2024, the Company through its wholly owned subsidiary, Healthy Choice Markets VI, LLC, entered into an Asset Purchase Agreement (the “Purchase Agreement”) with (i) GreenAcres Markets of Oklahoma, LLC, an Oklahoma limited liability company and GACorp, Inc., a Kansas corporation (each, a “Seller”; collectively, the “Sellers”); and (ii) the group of equity holders owning the majority interests of the Sellers. The Company acquired certain assets and assumed certain liabilities of five organic and natural health food and vitamin stores located in Oklahoma and Kansas. The purchase price under the Purchase Agreement is approximately $7,100,000, of which $1,775,000 will be in the form of a promissory note. The Company has engaged a professional valuation firm to perform the valuation of the assets acquired and liabilities assumed. The total purchase price is subject to adjustment based on this inventory count. The purchase price accounting has not been finalized.

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

On July 24, 2024, the Company finalized the closing of Saugerties building sale with all parties involved, and received net proceeds of $695,000. The title and deed were transferred on the closing date.

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

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

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

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

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

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

Company Overview

Healthier Choices Management Corp. is a holding company focused on providing consumers with healthier daily choices with respect to nutrition and other lifestyle alternatives.

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

Through its wholly owned subsidiaries, Healthy Choice Wellness Corp., Healthy Choice Markets, Inc., Healthy Choice Markets 2, LLC, and Healthy Choice Markets 3, LLC, Healthy Choice Markets IV, LLC and Healthy Choice Markets V, LLC respectively, the Company operates:

	●	Ada’s Natural Market, a natural and organic grocery store offering fresh produce, bulk foods, vitamins and supplements, packaged groceries, meat and seafood, deli, baked goods, dairy products, frozen foods, health & beauty products, and natural household items (www.Adasmarket.com).

	●	Paradise Health & Nutrition’s three stores that likewise offer fresh produce, bulk foods, vitamins and supplements, packaged groceries, meat and seafood, deli, baked goods, dairy products, frozen foods, health & beauty products and natural household items (www.ParadiseHealthDirect.com).

	●	Mother Earth’s Storehouse, a two-store organic and health food and vitamin chain in New York’s Hudson Valley, which has been in existence for over 40 years (www.MotherEarthStorehouse.com).

	●	Greens Natural Foods’ eight stores in New York and New Jersey, offering a selection of 100% organic produce and all-natural, non-GMO groceries & bulk foods; a wide selection of local products; an organic juice and smoothie bar; a fresh foods department, which offers fresh and healthy “grab & go” foods; a full selection of vitamins & supplements; as well as health and beauty products (www.Greensnaturalfoods.com).

	●	Ellwood Thompson’s, an organic and natural health food and vitamin store located in Richmond, Virginia. (www.ellwoodthompsons.com).

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

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

Liquidity

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

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 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 evaluating non-performing stores and 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. On May 16, 2024, the Company secured a financing commitment with a private lender. This commitment allows the Company to draw up to $5 million from its revolving credit facility to be used for expansion and working capital purposes. The loan will be repayable in full on August 31, 2025 and the interest rate on the loan is 12%. On July 18, 2024, the Company entered into a $7.5 million loan and security agreement with a private lender to support its expansion plans and funding of any working capital needs, of which $4.2 million was used for the July 18, 2024 purchase of GreenAcres Market. The face amount of the loan is $7,500,000 with 12% annual interest and has a maturity date of July 17, 2027. On July 24, 2024, the Company finalized the closing of Saugerties building sale with all parties involved and received net proceeds of $695,000.

The 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.

Factors Affecting Our Performance

We believe the following factors affect our performance:

Retail: We believe the operating performance of our retail stores will affect our revenue and financial performance. The Company has four natural and organic groceries and dietary supplement stores located in Florida, as well as ten located in New York and New Jersey. The Company has closed retail vape stores, as management has shifted its retail sales focus to the wholesale and online channel. The adverse industry trends and increasing federal and state regulations that, if implemented, may negatively impact future wholesale and online operations in the vapor segment.

Increased Competition: Food retail is a large and competitive industry. Our competition varies and includes national, regional, and local conventional supermarkets, national superstores, alternative food retailers, natural foods stores, smaller specialty stores, and farmers’ markets. In addition, we compete with restaurants and other dining options in the food-at-home and food-away-from-home markets. The opening and closing of competitive stores, as well as restaurants and other dining options, in regions where we operate will affect our results. In addition, changing consumer preferences with respect to food choices and to dining out or at home can impact us. We also expect increased product supply and downward pressure on prices to continue and impact our operating results in the future.

Results of Operations

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

	Three Months Ended June 30,						2024 to 2023
	2024			2023			Change $
SALES
Vapor sales, net	$	174		$	-		$	174
Grocery sales, net		15,594,575			13,574,896			2,019,679
TOTAL SALES, NET		15,594,749			13,574,896			2,019,853

Cost of sales vapor		42			-			42
Cost of sales grocery		9,698,119			8,493,213			1,204,906
GROSS PROFIT		5,896,588			5,081,683			814,905

OPERATING EXPENSES		8,344,526			8,261,343			83,183
LOSS FROM OPERATIONS		(2,447,938	)		(3,179,660	)		731,722

OTHER INCOME (EXPENSE)
Loss on investment		(136	)		(3,943	)		3,807
Change in contingent consideration		-			425,000			(425,000	)
Other income, net		3,828			4,600			(772	)
Interest (expense) income, net		(62,432	)		101,248			(163,680	)
Total other income (expense), net		(58,740	)		526,905			(585,645	)

NET LOSS	$	(2,506,678	)	$	(2,652,755	)	$	146,077

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

Net grocery sales increased $2.0 million to $15.6 million for the three months ended June 30, 2024 as compared to $13.6 million for the same period in 2023. The increase in grocery sales of $2.9 million was primarily due to the acquisition of Ellwood Thompson’s, offset by a decrease in same-store sales of $0.9 million. The decrease in same-store sales was mainly attributable to the closing of the non-performing Saugerties store and the outsourced prepared food service in Ada’s Natural Food store which was an underperforming department.

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

Grocery cost of goods sold for the three months ended June 30, 2024 and 2023 were $9.7 million and $8.5 million, respectively. The increase of $1.9 million is primarily due to the acquisition of Ellwood Thompson’s, offset by a decrease in same-store cost of goods sold of $0.7 million. Gross profit was $5.9 million and $5.1 million for the three months ended June 30, 2024 and 2023, respectively. Gross margin as a percentage of sales increased approximately 0.4% as compared to the same period in prior year because of the closing of the non-performing Saugerties store and the outsourced prepared food service in Ada’s Natural Food store which was an underperforming department.

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

Total other (expenses) income, net of $59,000 for the three months ended June 30, 2024 consists of net interest expense of $62,000, offset by $3,000 other income. Total other income (expense), net of $527,000 for the three months ended June 30, 2023 primarily consists of interest income of $101,000, and change in contingent consideration of $425,000.

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

	Six Months Ended June 30,						2024 to 2023
	2024			2023			Change $
SALES
Vapor sales, net	$	293		$	38		$	255
Grocery sales, net		31,488,933			27,134,602			4,354,331
TOTAL SALES, NET		31,489,226			27,134,640			4,354,586

Cost of sales vapor		174			653			(479	)
Cost of sales grocery		19,538,100			17,137,913			2,400,187
GROSS PROFIT		11,950,952			9,996,074			1,954,878

OPERATING EXPENSES		17,203,543			15,158,780			2,044,763
LOSS FROM OPERATIONS		(5,252,591	)		(5,162,706	)		(89,885	)

OTHER INCOME (EXPENSE)
Loss on investment		(993	)		(8,400	)		7,407
Change in contingent consideration		-			402,900			(402,900	)
Other income, net		7,183			9,250			(2,068	)
Interest (expense) income, net		(121,424	)		198,900			(320,323	)
Total other income (expense), net		(115,234	)		602,650			(717,884	)

NET LOSS	$	(5,367,825	)	$	(4,560,056	)	$	(807,769	)

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

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

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

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

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

Total other (expenses) income, net of $115,000 for the six months ended June 30, 2024 consists of net interest expense of $121,000, offset by $6,000 other income. Total other (expenses) income, net of $603,000 for the six months ended June 30, 2023 consists of interest income of $199,000, other income of $9,000, change in contingent consideration of $403,000, and offset by loss on investment of $8,000.

Liquidity and Capital Resources

	Six Months Ended June 30,
	2024			2023
Net cash (used in) provided by
Operating activities	$	(2,471,414	)	$	(3,658,415	)
Investing activities		(164,164	)		(115,099	)
Financing activities		907,818			(11,806,463	)
	$	(1,727,760	)	$	(15,579,977	)

Our net cash used in operating activities of approximately $2.5 million for the six months ended June 30, 2024 resulted from a net loss of $5.4 million, offset by a non-cash adjustment of $6.1 million and a net cash usage of $3.2 million from changes in operating assets and liabilities. Our net cash used in operating activities of approximately $3.7 million for the six months ended June 30, 2023 resulted from a net loss of $4.6 million, offset by a non-cash adjustment of $3.5 million and a net cash usage of $2.6 million from changes in operating assets and liabilities

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

The net cash provided by financing activities of $0.9 million for the six months ended June 30, 2024 consists of cash proceeds of $1.7 million from Security Purchase Agreement (“SPA”) signed on January 18, 2024, principal payment on loan payable of $0.3 million, and payment for deferred offering cost of $0.4 million. The net cash used in financing activities of $11.8 million for the six months ended June 30, 2023 is due to Series E Preferred Stock redemption and exercise, payment for deferred offering cost related with spin off, and principal payment on loan payable.

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

Our cash balances are kept liquid to support our growing acquisition and infrastructure needs for operational expansion. Most of our cash and cash equivalent are concentrated in one financial institution and is generally in excess of the FDIC insurance limit. The Company has not experienced any losses on its cash. The following table presents the Company’s cash position as of June 30, 2024 and December 31, 2023.

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

The Company reported a net loss of $5.4 million for the six months ended June 30, 2024. The Company also had negative working capital of $2.6 million. The Company expects to continue incurring losses for the foreseeable future.

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

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements.

Critical Accounting Estimates

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

We base our estimates on our historical experience, knowledge of our business and industry, current and expected economic conditions, the attributes of our products, the regulatory environment, and in certain cases, the results of outside appraisals. We periodically re-evaluate our estimates and assumptions with respect to these judgments and modify our approach when circumstances indicate that modifications are necessary. These estimates and assumptions form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.

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

There have been no material changes to the Company’s critical accounting policies and estimates as compared to the critical accounting policies and estimates described in the 2023 Annual Report, which we believe are the most critical to our business and the understanding of our results of operations and affect the more significant judgments and estimates that we use in the preparation of our condensed consolidated financial statements.

Seasonality

We do not consider our business to be seasonal.

Cautionary Note Regarding Forward-Looking Statements

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

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

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

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable to smaller reporting companies.

ITEM 4. CONTROLS AND PROCEDURES

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

Evaluation of Disclosure Controls and Procedures

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

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

	●	Failure to have properly documented and designed disclosure controls and procedures and testing of the operating effectiveness of our internal control over financial reporting.

	●	Failure to perform periodic and year-end inventory observations in a timely manner and adequate controls to sufficiently perform required rollback procedures of inventory counts to the year-end.

	●	Weakness around purchase orders and inventory procedures, inclusive of year-end physical inventory observation procedures as well as physical count procedures.

	●	Segregation of duties due to lack of personnel.

	●	Failure to follow accounts payable policies and procedures for vendor information updates.

	●	The Company had ineffective design, implementation and, operation of controls over logical access, program change management, and vendor management controls. The Company controls on IT should have included the following:

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

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

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

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

Planned Remediation

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

	●	Continuing to increase headcount across the Company, with a particular focus on hiring individuals with strong internal control backgrounds and inventory expertise.

	●	Increasing its focus on the Company’s purchase order process in order to better manage inventory thereby improving cash management. Utilizing margin analysis to control inventory and purchase, and ultimately leading to more reliable and precise financial reporting.

	●	Establishing policies and procedures in the IT area to mitigate data breach, unauthorized access and address segregation of duties, as well as review key third party service provider SOC reports.

	●	Using business intelligence to combine business analytics, data tools and infrastructure to help the Company quickly identify the issues in POS system and facilitate internal control over financial reporting. Developing dashboards for operation to monitor the margin at store level, department level and sku level.

	●	Establishing procedures and enforcing monthly and quarterly perishable physical inventory count for all retail stores and analyzing the financial impacts to improve efficiency in inventory control and purchase control.

	●	Analyzing stores’ operation by implementing monthly financial statements review with management and store managers. Utilizing the breakeven analysis to better facilitate operation decision.

	●	Providing sufficient training to accounts payable associates and enforcing accounts payable policies and procedures.

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

Changes in Internal Controls over Financing Reporting

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

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

There were two lawsuits in connection with alleged claimed battery defects for an electronic cigarette device. One had been dismissed by the 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 of the Company to $1.5 million which was reflected in accounts payable and accrued expenses, representing management’s estimate of the probable settlement amount based on the current status of discussions. This arrangement was formalized by a signed agreement on July 1, 2024 and the Company has accrued $1.5 million at June 30, 2024, which was reflected in accounts payable and accrued expenses in the accompanying condensed consolidated balance sheets.

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

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

ITEM 1A. RISK FACTORS.

Not Applicable.

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

In connection with the Bridge Financing, in addition to the Notes, HCWC issued Bridge Warrants which entitle the holders thereof to purchase 188,889 shares of HCWC’s Class A common stock (the “Bridge Warrant Shares”) at a nominal exercise price of $0.01 per share, at any time on or after HCWC’s registration statement on Form S-1 for the initial registration of the Class A common stock (the “IPO”) is declared effective by the United State Securities and Exchange Commission. HCWC has agreed to register all of the Bridge Warrant Shares in connection with the IPO. The issuance of the Notes and the Bridge Warrants are exempt from registration pursuant to the provisions Section 4(a)(2) of the Securities Act of 1933, as amended, and Rule 506(b) of Regulation D, as promulgated by the Commission, on the basis that the Issuer and HCWC had a pre-existing relationship with the investor and there was no public offering. The Bridge Warrants may not be offered or sold absent their registration for resale or the availability of an exemption therefrom. HCWC expects to use the proceeds from the sale of the Securities for general working capital purposes.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4. MINE SAFETY DISCLOSURES.

Not Applicable.

ITEM 5. OTHER INFORMATION.

Not Applicable.

ITEM 6. EXHIBITS.

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

INDEX TO EXHIBITS

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

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

SIGNATURES

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

	HEALTHIER CHOICES MANAGEMENT CORP.

Date: August 6, 2024	By:	/s/ Jeffrey Holman
		Jeffrey Holman
		Chief Executive Officer

Date: August 6, 2024	By:	/s/ John Ollet
		John Ollet
		Chief Financial Officer

Exhibit 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

I, Jeffrey Holman, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Healthier Choices Management Corp.;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

	a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

	b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;

	c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

	d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;

5.	The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

	a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

	b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 6, 2024

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

Exhibit 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

I, John Ollet, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Healthier Choices Management Corp.;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

	a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

	b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;

	c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

	d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;

5.	The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

	a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

	b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 6, 2024

	/s/ John Ollet
	John Ollet
	Chief Financial Officer
	(Principal Financial Officer)

Exhibit 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the quarterly report of Healthier Choices Management Corp. (the “Company”) on Form 10-Q for the period ending June 30, 2024, as filed with the Securities and Exchange Commission on the date hereof, I, Jeffrey Holman, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

	1.	The quarterly report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and

	2.	The information contained in the quarterly report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: August 6, 2024

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

Exhibit 32.2

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the quarterly report of Healthier Choices Management Corp. (the “Company”) on Form 10-Q for the period ending June 30, 2024, as filed with the Securities and Exchange Commission on the date hereof, I, John Ollet, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

	1.	The quarterly report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and

	2.	The information contained in the quarterly report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: August 6, 2024

	/s/ John Ollet
	John Ollet
	Chief Financial Officer
	(Principal Financial Officer)

Cover - $ / shares	6 Months Ended
Cover - $ / shares	Jun. 30, 2024	Aug. 05, 2024
Cover [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Jun. 30, 2024
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2024
Current Fiscal Year End Date	--12-31
Entity File Number	001-36469
Entity Registrant Name	HEALTHIER CHOICES MANAGEMENT CORP.
Entity Central Index Key	0000844856
Entity Tax Identification Number	84-1070932
Entity Incorporation, State or Country Code	DE
Entity Address, Address Line One	3800 North 28th Way
Entity Address, City or Town	Hollywood
Entity Address, State or Province	FL
Entity Address, Postal Zip Code	33020
City Area Code	305
Local Phone Number	600-5004
Title of 12(b) Security	Common Stock, par value $0.0001 per share
Trading Symbol	HCMC
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		479,266,632,384
Entity Listing, Par Value Per Share	$ 0.0001

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

Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Millions	Jun. 30, 2024	Dec. 31, 2023
Statement of Financial Position [Abstract]
Series E convertible preferred stock, par value	$ 1,000	$ 1,000
Series E convertible preferred stock, authorized	14,722	14,722
Series E convertible preferred stock, issued	1,111	1,111
Series E convertible preferred stock, outstanding	1,111	1,111
Series E convertible preferred stock, aggregate liquidation preference	$ 1.1	$ 1.1
Common stock, par value	$ 0.0001	$ 0.0001
Common stock, shares authorized	750,000,000,000	750,000,000,000
Common stock, shares issued	479,266,632,384	478,266,632,384
Common stock, shares outstanding	479,266,632,384	478,266,632,384

Condensed Consolidated Statements of Operations (Unaudited) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
SALES
TOTAL SALES, NET	$ 15,594,749	$ 13,574,896	$ 31,489,226	$ 27,134,640
GROSS PROFIT	5,896,588	5,081,683	11,950,952	9,996,074
OPERATING EXPENSES	8,344,526	8,261,343	17,203,543	15,158,780
LOSS FROM OPERATIONS	(2,447,938)	(3,179,660)	(5,252,591)	(5,162,706)
OTHER INCOME (EXPENSE)
Loss on investment	(136)	(3,943)	(993)	(8,400)
Change in contingent consideration		425,000		402,900
Other income, net	3,828	4,600	7,183	9,250
Interest (expense) income, net	(62,432)	101,248	(121,424)	198,900
Total other income (expense), net	(58,740)	526,905	(115,234)	602,650
NET LOSS	(2,506,678)	(2,652,755)	(5,367,825)	(4,560,056)
Induced conversions of preferred stock		(91,500)		(152,500)
Net loss attributable to common stockholders	$ (2,506,678)	$ (2,744,255)	$ (5,367,825)	$ (4,712,556)
NET LOSS PER SHARE-BASIC	$ 0.00	$ 0.00	$ 0.00	$ 0.00
NET LOSS PER SHARE-DILUTED	$ 0.00	$ 0.00	$ 0.00	$ 0.00
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING-BASIC	479,134,764,252	353,854,819,196	478,700,698,318	347,796,604,758
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING-DILUTED	479,134,764,252	353,854,819,196	478,700,698,318	347,796,604,758
Vapor [Member]
SALES
TOTAL SALES, NET	$ 174		$ 293	$ 38
Cost of sales	42		174	653
Grocery [Member]
SALES
TOTAL SALES, NET	15,594,575	13,574,896	31,488,933	27,134,602
Cost of sales	$ 9,698,119	$ 8,493,213	$ 19,538,100	$ 17,137,913

Condensed Consolidated Statements of Changes in Convertible Preferred Stock and Stockholders' Equity (Unaudited) - USD ($)	Preferred Stock [Member] Convertible Preferred Stock [Member]	Preferred Stock [Member] Series E Redeemable Convertible Preferred Stock [Member]	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Total
Balance at Dec. 31, 2022	$ 800,000		$ 33,974,163	$ 29,045,802	$ (43,613,941)	$ 20,206,024
Balance, shares at Dec. 31, 2022		14,722
Balance at Dec. 31, 2022		$ 14,722,075
Balance,shares at Dec. 31, 2022	800		339,741,632,384
Issuance of awarded stock			$ 10,767,500	(10,767,500)
Issuance of awarded stock,shares			107,675,000,000
Stock-based compensation				1,176,750		1,176,750
Net loss					(4,560,056)	(4,560,056)
Series E convertible preferred stock redeemed				22,222		22,222
Temporary equity,Series E convertible preferred stock redeemed, shares		(11,193)
Temporary equity,Series E convertible preferred stock redeemed		$ (11,192,650)
Conversion of series E convertible preferred stock			$ 1,585,000			1,585,000
Temporary equity,Conversion of series E convertible preferred stock, shares		(1,585)
Temporary equity,Conversion of series E convertible preferred stock		$ (1,585,000)
Conversion of series E convertible preferred stock, shares			15,850,000,000
Induced conversions of preferred stock				(152,500)		(152,500)
Balance at Jun. 30, 2023	$ 800,000		$ 46,326,663	19,324,774	(48,173,997)	18,277,440
Balance, shares at Jun. 30, 2023		1,944
Balance at Jun. 30, 2023		$ 1,944,425
Balance,shares at Jun. 30, 2023	800		463,266,632,384
Balance at Mar. 31, 2023	$ 800,000		$ 34,644,163	29,034,802	(45,521,242)	18,957,723
Balance, shares at Mar. 31, 2023		13,496
Balance at Mar. 31, 2023		$ 13,496,525
Balance,shares at Mar. 31, 2023	800		346,441,632,384
Issuance of awarded stock			$ 10,767,500	(10,767,500)
Issuance of awarded stock,shares			107,675,000,000
Stock-based compensation				1,126,750		1,126,750
Net loss					(2,652,755)	(2,652,755)
Series E convertible preferred stock redeemed				22,222		22,222
Temporary equity,Series E convertible preferred stock redeemed, shares		(10,637)
Temporary equity,Series E convertible preferred stock redeemed		$ (10,637,100)
Conversion of series E convertible preferred stock			$ 915,000			915,000
Temporary equity,Conversion of series E convertible preferred stock, shares		(915)
Temporary equity,Conversion of series E convertible preferred stock		$ (915,000)
Conversion of series E convertible preferred stock, shares			9,150,000,000
Induced conversions of preferred stock				(91,500)		(91,500)
Balance at Jun. 30, 2023	$ 800,000		$ 46,326,663	19,324,774	(48,173,997)	18,277,440
Balance, shares at Jun. 30, 2023		1,944
Balance at Jun. 30, 2023		$ 1,944,425
Balance,shares at Jun. 30, 2023	800		463,266,632,384
Balance at Dec. 31, 2023			$ 47,826,663	21,028,274	(62,096,821)	$ 6,758,116
Balance, shares at Dec. 31, 2023		1,111				1,111
Balance at Dec. 31, 2023		$ 1,111,100				$ 1,111,100
Balance,shares at Dec. 31, 2023			478,266,632,384
Issuance of awarded stock			$ 100,000	(100,000)
Issuance of awarded stock,shares			1,000,000,000
Stock-based compensation				2,261,833		2,261,833
Net loss					(5,367,825)	(5,367,825)
Induced conversions of preferred stock
Balance at Jun. 30, 2024			$ 47,926,663	23,190,107	(67,464,646)	$ 3,652,124
Balance, shares at Jun. 30, 2024		1,111				1,111
Balance at Jun. 30, 2024		$ 1,111,100				$ 1,111,100
Balance,shares at Jun. 30, 2024			479,266,632,384
Balance at Mar. 31, 2024			$ 47,826,663	22,155,025	(64,957,968)	5,023,720
Balance, shares at Mar. 31, 2024		1,111
Balance at Mar. 31, 2024		$ 1,111,100
Balance,shares at Mar. 31, 2024			478,266,632,384
Issuance of awarded stock			$ 100,000	(100,000)
Issuance of awarded stock,shares			1,000,000,000
Stock-based compensation				1,135,082		1,135,082
Net loss					(2,506,678)	(2,506,678)
Induced conversions of preferred stock
Balance at Jun. 30, 2024			$ 47,926,663	$ 23,190,107	$ (67,464,646)	$ 3,652,124
Balance, shares at Jun. 30, 2024		1,111				1,111
Balance at Jun. 30, 2024		$ 1,111,100				$ 1,111,100
Balance,shares at Jun. 30, 2024			479,266,632,384

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)	6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023
OPERATING ACTIVITIES
Net loss	$ (5,367,825)	$ (4,560,056)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	757,695	747,485
Amortization of debt discount	71,293
Loss on investment	993	8,400
Amortization of right-of-use asset	1,493,560	1,063,591
Write-down of obsolete and slow-moving inventory	1,484,648	951,373
Stock-based compensation expense	2,261,833	1,176,750
Change in contingent consideration		(402,900)
Changes in operating assets and liabilities:
Accounts receivable	(29,164)	(36,834)
Inventories	(1,253,005)	(899,251)
Prepaid expenses and vendor deposits	449,261	(670,178)
Other current assets	(31,586)	219,362
Other assets	40,973	(5,230)
Accounts payable and accrued expenses	(845,210)	(197,306)
Contract liabilities	(84,138)	(51,137)
Lease liability	(1,420,742)	(1,002,484)
NET CASH USED IN OPERATING ACTIVITIES	(2,471,414)	(3,658,415)
INVESTING ACTIVITIES
Collection of note receivable		32,928
Purchases of property and equipment	(164,164)	(148,027)
NET CASH USED IN INVESTING ACTIVITIES	(164,164)	(115,099)
FINANCING ACTIVITIES
Payments for deferred offering costs	(446,088)	(218,865)
Proceeds from security purchase agreement	1,700,000
Principal payments on loan payable	(346,094)	(264,670)
Payment of induced conversions of preferred stock		(152,500)
Payment for Series E preferred stock redemption		(11,170,428)
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES	907,818	(11,806,463)
NET DECREASE IN CASH, CASH EQUIVALENT AND RESTRICTED CASH	(1,727,760)	(15,579,977)
CASH, CASH EQUIVALENT AND RESTRICTED CASH— BEGINNING OF PERIOD	5,634,318	24,690,124
CASH, CASH EQUIVALENT AND RESTRICTED CASH — END OF PERIOD	3,906,558	9,110,147
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for interest	238,595	87,008
Cash paid for income tax
NON-CASH INVESTING AND FINANCING ACTIVITIES
Non-cash deferred offering cost	673,695	384,614
Issuance of common stock in connection with series E preferred stock conversion		1,585,000
Right-of-use assets obtained in exchange for operating lease liabilities		1,093,290
1% stated value reduction on preferred stock redemption		22,222
Issuance of common stock	$ 100,000

ORGANIZATION

6 Months Ended

Jun. 30, 2024

Organization, Consolidation and Presentation of Financial Statements [Abstract]

ORGANIZATION

Note 1. ORGANIZATION

Organization

Healthier Choices Management Corp. (the “Company”) is a holding company focused on providing consumers with healthier daily choices with respect to nutrition and other lifestyle alternatives.

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

Through its wholly owned subsidiary Healthy Choice Wellness Corp. (“HCWC”), the Company operates:

●	Ada’s Natural Market, a natural and organic grocery store offering fresh produce, bulk foods, vitamins and supplements, packaged groceries, meat and seafood, deli, baked goods, dairy products, frozen foods, health & beauty products and natural household items.

●	Paradise Health & Nutrition’s three stores that likewise offer fresh produce, bulk foods, vitamins and supplements, packaged groceries, meat and seafood, deli, baked goods, dairy products, frozen foods, health & beauty products and natural household items.

●	Mother Earth’s Storehouse, a two-store organic and health food and vitamin chain in New York’s Hudson Valley, which has been in existence for over 40 years.

●	Greens Natural Foods’ eight stores in New York and New Jersey, offering a selection of 100% organic produce and all-natural, non-GMO groceries & bulk foods; a wide selection of local products; an organic juice and smoothie bar; a fresh foods department, which offers fresh and healthy “grab & go” foods; a full selection of vitamins & supplements; as well as health and beauty products.

●	Ellwood Thompson’s, an organic and natural health food and vitamin store located in Richmond, Virginia.

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

Spin-Off

GOING CONCERN AND MANAGEMENT’S PLANS

6 Months Ended

Jun. 30, 2024

Organization, Consolidation and Presentation of Financial Statements [Abstract]

GOING CONCERN AND MANAGEMENT’S PLANS

Note 2. GOING CONCERN AND MANAGEMENT’S PLANS

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

6 Months Ended

Jun. 30, 2024

Accounting Policies [Abstract]

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

Note 3. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

Significant Accounting Policies

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

CONCENTRATIONS

6 Months Ended

Jun. 30, 2024

Risks and Uncertainties [Abstract]

CONCENTRATIONS

Note 4. CONCENTRATIONS

Cash, Cash Equivalent and Restricted Cash

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

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

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

SCHEDULE OF CASH AND RESTRICTED CASH

	June 30, 2024		June 30, 2023
Cash and cash equivalent	$	3,353,326	$	8,481,915
Restricted cash		553,232		628,232
Total cash and restricted cash	$	3,906,558	$	9,110,147

Restricted Cash

SEGMENT INFORMATION AND DISAGGREGATION OF REVENUES

6 Months Ended

Jun. 30, 2024

Segment Reporting [Abstract]

SEGMENT INFORMATION AND DISAGGREGATION OF REVENUES

Note 5. SEGMENT INFORMATION AND DISAGGREGATION OF REVENUES

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


	Three Months Ended June 30,						Six Months Ended June 30,
	2024			2023			2024			2023
Vapor	$	174		$	-		$	293		$	38
Grocery		15,594,575			13,574,896			31,488,933			27,134,602
Total revenue	$	15,594,749		$	13,574,896		$	31,489,226		$	27,134,640

Retail Grocery	$	13,423,417		$	12,017,526		$	26,902,339		$	24,067,596
Food service/restaurant		2,170,903			1,555,372			4,585,897			3,062,948
Online/eCommerce		429			1,998			990			4,096
Total revenue	$	15,594,749		$	13,574,896		$	31,489,226		$	27,134,640

Loss from operations-Vapor	$	(5,061	)	$	(10,724	)	$	(10,923	)	$	(17,397	)
(Loss) income from operations-Grocery		129,315			(185,923	)		222,776			(462,763	)
Corporate items		(2,572,192	)		(2,983,013	)		(5,464,444	)		(4,682,546	)
Total loss from operations	$	(2,447,938	)	$	(3,179,660	)	$	(5,252,591	)	$	(5,162,706	)

ACQUISITION

6 Months Ended

Jun. 30, 2024

Business Combination, Asset Acquisition, and Joint Venture Formation [Abstract]

ACQUISITION

Note 6. ACQUISITION

Ellwood Thompson’s

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

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

Revenue and Earnings

For Three Months
Ended June 30, 2023

For Six Months

Ended June 30, 2023

Sales

17,133,109

33,725,149

Net loss

(2,656,072

)

(4,520,654

)

ASSETS HELD FOR SALE

6 Months Ended

Jun. 30, 2024

Property, Plant and Equipment [Abstract]

ASSETS HELD FOR SALE

Note 7. ASSETS HELD FOR SALE

PROPERTY, PLANT, AND EQUIPMENT

6 Months Ended

Jun. 30, 2024

Property, Plant and Equipment [Abstract]

PROPERTY, PLANT, AND EQUIPMENT

Note 8. PROPERTY, PLANT, AND EQUIPMENT

Property, plant, and equipment consist of the following:

	June 30, 2024			December 31, 2023
Displays	$	312,146		$	312,146
Building		-			575,000
Furniture and fixtures		602,750			596,355
Leasehold improvements		1,959,553			1,925,385
Computer hardware & equipment		238,654			190,019
Other		763,738			688,774
Property and equipment, gross		3,876,841			4,287,679
Less: accumulated depreciation and amortization		(1,798,390	)		(1,552,427	)
Total property, plant, and equipment	$	2,078,451		$	2,735,252

INTANGIBLE ASSETS

6 Months Ended

Jun. 30, 2024

Goodwill and Intangible Assets Disclosure [Abstract]

INTANGIBLE ASSETS

Note 9. INTANGIBLE ASSETS

Intangible assets, net are as follows:

SCHEDULE OF INTANGIBLE ASSETS, NET

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

December 31, 2023	Useful Lives (Years)	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Trade names	8-10 years	$	2,860,000	$	(1,035,443	)	$	1,843,277
Customer relationships	4-6 years		2,669,000		(1,330,972	)		1,338,028
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

Years ending December 31,
2024 (remaining six months)	$	478,807
2025		953,891
2026		875,910
2027		731,489
2028		412,819
Thereafter		443,182
Total	$	3,896,098

CONTRACT LIABILITIES

6 Months Ended

Jun. 30, 2024

Contract Liabilities

CONTRACT LIABILITIES

Note 10. CONTRACT LIABILITIES

A summary of the net changes in contract liabilities activity at June 30, 2024 and December 31, 2023 is presented below:

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

DEBT

6 Months Ended

Jun. 30, 2024

Debt Disclosure [Abstract]

DEBT

Note 11. DEBT

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

SCHEDULE OF BREAKDOWN OF DEBT

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

Promissory Notes

The following table summarizes the 5-year repayment schedule:

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

STOCKHOLDERS’ EQUITY

6 Months Ended

Jun. 30, 2024

Equity [Abstract]

STOCKHOLDERS’ EQUITY