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What changed in HEALTHY CHOICE WELLNESS CORP.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of HEALTHY CHOICE WELLNESS CORP.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+93 added−59 removedSource: 10-K (2026-03-16) vs 10-K (2025-03-28)

Top changes in HEALTHY CHOICE WELLNESS CORP.'s 2025 10-K

93 paragraphs added · 59 removed · 51 edited across 5 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeThe new VIP program provides members with immediate discounts on qualifying purchases, replacing the accrual of future points. This modification did not require a restatement of prior-period revenue. However, the elimination of future loyalty point accruals reduces the Company’s ongoing contract liability obligations, as discounts under the VIP program are recognized as reductions to revenue at the time of sale.
Biggest changeUnder the original loyalty program, customers earned redeemable loyalty points based on qualifying purchases, which have been discontinued. The new VIP program provides members with immediate discounts on qualifying purchases, replacing the accrual of future points. This modification did not require a restatement of prior-period revenue.
With Ada’s Natural Market, a full-service grocery store and Greenleaf Grill, Ada’s flagship fast casual in-store restaurant, serving Fort Myers, FL, along with the eight Greens Natural Foods Stores in New Jersey and New York, three Paradise Health & Nutrition locations in the greater Melbourne, FL area, one Mother Earth’s Storehouse location in Hudson Valley, NY, one Ellwood Thompson store located in Richmond Virginia, five GreenAcres Market stores located in Oklahoma and Kansas, all serving their respective local communities, our stores provide all-natural and organic products in a friendly and helpful atmosphere, with aisles of traditional grocery complete with frozen, healthy home, vitamins & supplements, health & beauty, fresh produce, hormone and antibiotic free meats and bulk foods.
With Ada’s Natural Market, a full-service grocery store and Greenleaf Grill, Ada’s flagship fast casual in-store restaurant, serving Fort Myers, FL, along with the eight Green’s Natural Foods Stores in New Jersey and New York, three Paradise Health & Nutrition locations in the greater Melbourne, FL area, one Mother Earth’s Storehouse location in Hudson Valley, NY, one Ellwood Thompson store located in Richmond Virginia, five GreenAcres Market stores located in Oklahoma and Kansas, all serving their respective local communities, our stores provide all-natural and organic products in a friendly and helpful atmosphere, with aisles of traditional grocery complete with frozen, healthy home, vitamins & supplements, health & beauty, fresh produce, hormone and antibiotic free meats and bulk foods.
Pursuant to the Securities Purchase Agreement for the HCMC Series E Stock (“HCMC Series E SPA”), the purchasers of HCMC Series E Stock will also be required to purchase Series A Preferred Stock of HCWC in the same subscription amounts that the Purchasers paid for the HCMC Series E Stock (regardless of whether or not such HCMC Series E Stock has been converted into HCMC common stock).
Pursuant to the Securities Purchase Agreement for the HCMC Series E Stock (“HCMC Series E SPA”), the purchasers of HCMC Series E Stock will also be required to purchase Series A Convertible Preferred Stock of HCWC in the same subscription amounts that the Purchasers paid for the HCMC Series E Stock (regardless of whether or not such HCMC Series E Stock has been converted into HCMC common stock).
Ada’s Natural Market, Greens Natural Foods, Paradise Health & Nutrition, Mother Earth’s Storehouse, Ellwood Thompson’s and GreenAcres Market all offer chef-prepared ready-to-go foods and fresh-baked-daily baked goods. 1 Collectively, we focus on providing high-quality products at affordable prices, exceptional customer service, nutrition education and community outreach.
Ada’s Natural Market, Green’s Natural Foods, Paradise Health & Nutrition, Mother Earth’s Storehouse, Ellwood Thompson’s and GreenAcres Market all offer chef-prepared ready-to-go foods and fresh-baked-daily baked goods. 1 Collectively, we focus on providing high-quality products at affordable prices, exceptional customer service, nutrition education and community outreach.
(DBA 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. ● Healthy Choice Markets II, LLC (DBA Paradise Health & Nutrition), operating 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. ● Healthy Choice Markets III, LLC (DBA Mother Earth’s Storehouse), an organic and health food and vitamin chain in New York’s Hudson Valley, which has been in existence for over 40 years. ● Healthy Choice Markets IV, LLC (DBA Greens Natural Foods), managing eight stores in New York and New Jersey, offering a selection of 100% organic produce, all-natural and 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. ● Healthy Choice Markets V, LLC (DBA Ellwood Thompson’s), an organic and natural health food and vitamin store located in Richmond, Virginia. ● Healthy Choice Markets VI, LLC (DBA GreenAcres Market), an organic and natural health food and vitamin chain with five store locations in Kansas and Oklahoma.
(DBA 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. ● Healthy Choice Markets 2, LLC (DBA Paradise Health & Nutrition), operating 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. ● Healthy Choice Markets 3, LLC (DBA Mother Earth’s Storehouse), an organic and health food and vitamin chain in New York’s Hudson Valley, which has been in existence for over 40 years. ● Healthy Choice Markets IV, LLC (DBA Green’s Natural Foods), managing eight stores in New York and New Jersey, offering a selection of 100% organic produce, all-natural and 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. ● Healthy Choice Markets V, LLC (DBA Ellwood Thompson’s), an organic and natural health food and vitamin store located in Richmond, Virginia. ● Healthy Choice Markets VI, LLC (DBA GreenAcres Market), an organic and natural health food and vitamin chain with five store locations in Kansas and Oklahoma.
The Distribution was made in book-entry form by a distribution agent as soon as practicable after the date of the Distribution. HCMC has secured binding commitments of $13.25 million in equity financing for HCWC from the same group of investors that invested $13.25 million in HCMC Series E Preferred Stock.
The Distribution was made in book-entry form by a distribution agent as soon as practicable after the date of the Distribution. Prior to the Spin-Off, HCMC secured binding commitments of $13.25 million in equity financing for HCWC from the same group of investors that invested $13.25 million in HCMC Series E Preferred Stock.
Net cash used in operating activities increased to $3.1 million in 2024 from $2.5 million cash used in operations in 2023, respectively. The Company’s liquidity needs through December 31, 2024 have been satisfied through the initial public offering and financing agreement with private lenders.
Net cash provided by operating activities increased to $1.0 million in 2025 from $3.1 million cash used in operations in 2024, respectively. The Company’s liquidity needs through December 31, 2025 have been satisfied through the initial public offering and financing agreement with private lenders.
Management has made plans to reduce certain costs and raise needed capital, however there can be no assurance the Company can successfully implement these plans. The 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 recommendations in anticipation of realizing savings and achieving profitability.
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 enacted the consultant’s recommendations to realize savings and achieve profitability.
Cash and cash equivalents increased to approximately $2.1 million as of December 31, 2024, compared to $1.4 million as of December 31, 2023, driven by increased sales and improved sales margin.
Cash and cash equivalents increased to approximately $3.0 million as of December 31, 2025, compared to $2.1 million as of December 31, 2024, driven by increased sales and improved sales margin.
Accordingly, no adjustment has been made to the consolidated financial statements to account for this uncertainty.
Accordingly, no adjustment has been made to the consolidated financial statements to account for this uncertainty. Item 1A. Risk Factors. Not applicable to smaller reporting companies.
Working capital deficit decreased from negative $2.6 million as of December 31, 2023, to negative $2.2 million as of December 31, 2024, primarily due to improvements in cash reserves and inventory management. Net losses improved to $4.5 million for the year ending December 31, 2024 from $9.9 million for the year ended December 31, 2023.
Working capital deficit increased from negative $2.2 million as of December 31, 2024, to negative $2.7 million as of December 31, 2025, primarily due to increase in trade payable and accrued liabilities. Net losses improved to $3.9 million for the year ending December 31, 2025 from $4.5 million for the year ended December 31, 2024.
For the years ended December 31, 2024 and 2023, approximately 25% and 41% of our total purchases were from one vendor. We maintain good relations with all our suppliers and believe we have adequate alternative supply methods, including self-distribution. We have longstanding relationships with our suppliers, and we require disclosure from them regarding quality, freshness, potency and safety data information.
For the year ended December 31, 2024, approximately 25% of our total purchases were from UNFI, 17% from Four Seasons Produce, and 12% from Kehe. We maintain good relations with all our suppliers and believe we have adequate alternative supply methods, including self-distribution.
Competition The grocery and dietary supplement retail business is a large, fragmented and highly competitive industry, with few barriers to entry.
Our customers tend to be interested in health and nutrition, and expect our store employees to be highly knowledgeable about these topics and related products. Competition The grocery and dietary supplement retail business is a large, fragmented and highly competitive industry, with few barriers to entry.
The Company believes its cash on hand and the commitment of $13.25 million anticipated to be raised by May 31, 2025 through its security offering (as noted above) will enable the Company to meet its obligations and capital requirements for at least the twelve months from the date these consolidated financial statements are issued.
The Company believes that its cash on hand, together with the operational initiatives described above, including cost reductions, working capital improvements, store optimization, and the committed $8.0 million equity financing anticipated to be raised by April 1, 2027, will enable the Company to meet its obligations and capital requirements for at least the twelve months from the date these consolidated financial statements are issued.
Employees are eligible for health, long-term disability, vision and dental insurance coverage, as well as Company paid short-term disability and life insurance benefits, after they meet eligibility requirements. Additionally, our employees are offered a 401(k) retirement savings plan with discretionary contribution matching opportunities.
Our employees are central to delivering our mission of providing exceptional service and products to our customers. Commitment to our employees is one of our founding principles. Employees are eligible for health, long-term disability, vision and dental insurance coverage, as well as Company paid short-term disability and life insurance benefits, after they meet eligibility requirements.
Our Customers The growth in the natural and organic grocery and dietary supplement industries and growing consumer interest in health and nutrition have led to an increase in our core customer base. We believe the demands for affordable, nutritious food and dietary supplements are shared attributes of our core customers, regardless of their socio-economic status.
We believe the demands for affordable, nutritious food and dietary supplements are shared attributes of our core customers, regardless of their socio-economic status. Additionally, we believe our core customers prefer a retail store environment that offers carefully selected natural and organic products and dietary supplements.
NATURAL AND ORGANIC GROCERIES AND DIETARY SUPPLEMENTS BUSINESS Local. Organic. Fresh. Three words that define Healthy Choice Markets!
For further details regarding the remaining $8.0 million commitment and its significance to the Company’s liquidity, see Note 2 - Going Concern. NATURAL AND ORGANIC GROCERIES AND DIETARY SUPPLEMENTS BUSINESS Local. Organic. Fresh. Three words that define Healthy Choice Markets!
Our bulk food private label products are packaged by us in pre-packed sealed bags to help prevent contamination while in transit and in our stores. Unlike most of our competitors, most of our private label nuts, trail mix and flour are refrigerated in our warehouse and stores to maintain freshness. New Reward Program.
We have longstanding relationships with our suppliers, and we require disclosure from them regarding quality, freshness, potency and safety data information. Our bulk food private label products are packaged by us in pre-packed sealed bags to help prevent contamination while in transit and in our stores.
The Company’s operations are managed as one integrated business unit with similar economic characteristics and are similar in the nature of the products sold, the product acquisition process, the types of customers products are sold to, the methods used to distribute the products, and the nature of the regulatory environment.
These operating segments have been aggregated into a single reportable segment in accordance with Accounting Standards Codification (“ASC”) 280 Segment Reporting, because they have similar economic characteristics and are similar with respect to the nature of the products sold, the product acquisition process, the types of customers served, the methods used to distribute products, and the nature of the regulatory environment.
This further offers our employees the opportunity to become more familiar with our products, which we believe improves the customer service our employees are able to provide. We believe these and other factors result in higher retention rates and encourage our employees to appreciate our culture, which helps them better promote our brand.
Additionally, our employees are offered a 401(k) retirement savings plan with discretionary contribution matching opportunities. This further offers our employees the opportunity to become more familiar with our products, which we believe improves the customer service our employees are able to provide.
New Marketing Program . HCWC has established a robust COOP marketing revenue program generated through a collaborative approach that emphasizes community engagement and shared values. The revenue in this context is driven by promoting national and locally sourced, organic, and sustainable products, which align with the priorities of the HCWC.
The revenue in this context is driven by promoting national and locally sourced, organic, and sustainable products, which align with the priorities of the HCWC. Our Employees As of December 31, 2025, HCWC employed approximately 430 employees across its retail, warehouse, and corporate operations.
Removed
In August 2024, the Company transitioned its customer loyalty program from a points-based system to a VIP membership structure. Under the original loyalty program, customers earned redeemable loyalty points based on qualifying purchases, which have been discontinued. Existing unredeemed loyalty points remain valid for redemption until January 31, 2025.
Added
On October 30, 2025, the parties to the HCMC Series E SPA entered into a Ninth Amendment to HCMC Series E SPA, pursuant to which HCMC and such parties agreed to amend the Completion Date to April 1, 2027.
Removed
Our Employees As of December 31, 2024, HCWC employed approximately 450 employees across its retail, warehouse, and corporate operations. Our employees are central to delivering our mission of providing exceptional service and products to our customers. Commitment to our employees is one of our founding principles.
Added
As of December 31, 2025, HCWC has received $5.25 million of the committed $13.25 million, leaving the contractually obligated $8.0 million binding commitments to be fulfilled. The parties, which comprise of the institutional investors that participated in the Spin-off as described above, have communicated their intent to further extend the Completion Date.
Removed
Additionally, we believe our core customers prefer a retail store environment that offers carefully selected natural and organic products and dietary supplements. Our customers tend to be interested in health and nutrition, and expect our store employees to be highly knowledgeable about these topics and related products.
Added
For the years ended December 31, 2025, approximately 31% of our total purchases were from Kehe Distributors, LLC (“Kehe”), 17% of purchases were from Four Seasons Produce, and 10% of our total purchases were from UNFI.
Removed
In accordance with ASC 280 Segment Reporting, the Company has aggregated its Grocery and Wellness operating segments into a single reportable segment, as management reviews financial results and allocates resources at the consolidated level.
Added
Unlike most of our competitors, most of our private label nuts, trail mix and flour are refrigerated in our warehouse and stores to maintain freshness. New Reward Program. In August 2024, the Company transitioned its customer loyalty program from a points-based system to a VIP membership structure.
Added
However, the elimination of future loyalty point accruals reduces the Company’s ongoing contract liability obligations, as discounts under the VIP program are recognized as reductions to revenue at the time of sale. New Marketing Program . HCWC has established a robust COOP marketing revenue program generated through a collaborative approach that emphasizes community engagement and shared values.
Added
We believe these and other factors result in higher retention rates and encourage our employees to appreciate our culture, which helps them better promote our brand. Our Customers The growth in the natural and organic grocery and dietary supplement industries and growing consumer interest in health and nutrition have led to an increase in our core customer base.
Added
On May 12, 2025, the Company entered into a Securities Purchase Agreement to issue 3,250 shares of HCWC Preferred Stock with a stated value of $1,000 per share and par value of $0.001 per share.
Added
On June 20, 2025, HCWC entered into an Amended and Restated Securities Purchase Agreement (the “SPA”), pursuant to which the Company sold 3,250 shares of its HCWC Preferred Stock to the same institutional investors for an aggregate subscription price of $3,250,000.
Added
On November 11, 2025, the Company entered into a Securities Purchase Agreement, pursuant to which the Company agreed to sell 2,000 shares of the HCWC Preferred Stock to investors for an aggregate subscription price of $2,000,000.
Added
As of December 31, 2025, the Company has sold $5.25 million of HCWC Preferred Stock, with binding commitments to purchase an additional $8.0 million in Preferred Stock from the same investors who purchased HCMC Series E Preferred Stock.
Added
On October 30, 2025, HCMC and the parties who participated the HCMC Series E SPA entered into a Ninth Amendment to HCMC Series E SPA, pursuant to which HCMC and such parties agreed to amend the Completion Date to April 1, 2027.
Added
The Ninth Amendment to the HCMC Series E SPA extends the timeframe for these same institutional investors to fulfill their remaining contractual commitment to purchase the additional $8.0 million of HCWC Series A Preferred Stock.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeAccordingly, we are committed to maintaining robust cybersecurity and data protection and continuously evaluating the impact of cybersecurity threats, considering both immediate and potential long-term effects of these threats on our business strategy, operations, and financial condition. 8 Our Chief Operating Officer is primarily responsible for managing material risks from cybersecurity threats, and is supported by third party cybersecurity specialists.
Biggest changeAccordingly, we are committed to maintaining robust cybersecurity and data protection and continuously evaluating the impact of cybersecurity threats, considering both immediate and potential long-term effects of these threats on our business strategy, operations, and financial condition. Our Chief Operating Officer is primarily responsible for managing material risks from cybersecurity threats, and is supported by third party cybersecurity specialists.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeItem 2. Properties. The Company operates its business from numerous facilities in Florida, Virginia, New York, New Jersey, Kansas and Oklahoma. These leased facilities include our headquarters location, warehouse and retail stores.
Biggest changeItem 2. Properties. The Company operates its business from numerous facilities in Florida, Virginia, New York, New Jersey, Kansas and Oklahoma. These leased facilities include our headquarters location, warehouse and retail stores. In addition to real estate leases, the Company also leases mission-critical data center equipment under a long-term finance lease to support its corporate and store operations.
As of December 31, 2024, we had 19 retail stores in Florida, New York, New Jersey, Virginia, Kansas and Oklahoma, which aggregate approximately 181,000 square feet, 19 stores are leased by our grocery stores. The Company considers these retail store locations strategically important to its operations, serving key markets in the Southeastern, Northeastern, and Midwestern United States.
As of December 31, 2025, we had 19 retail stores in Florida, New York, New Jersey, Virginia, Kansas and Oklahoma, which aggregate approximately 181,000 square feet, 19 stores are leased by our grocery stores. The Company considers these retail store locations strategically important to its operations, serving key markets in the Southeastern, Northeastern, and Midwestern United States.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeA substantially greater number of stockholders may be “street name” or beneficial holders, whose shares are held of record by banks, brokers and other financial institutions. As of March 27, 2025 , the last reported sale price of our common stock on the NYSE American was $0.52 per share.
Biggest changeA substantially greater number of stockholders may be “street name” or beneficial holders, whose shares are held of record by banks, brokers and other financial institutions. As of March 16, 2026, the last reported sale price of our common stock on the NYSE American exchange was $0.28 per share.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Our common stock is currently listed on the NYSE American under the symbol “HCWC”. As of March 27, 2025 , there were approximately 171 stockholders of record for our common stock.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Our common stock is currently listed on the NYSE American exchange under the symbol “HCWC”. As of March 16, 2026, there were approximately 177 stockholders of record for our common stock.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeResults of Operations The following table sets forth our Consolidated Statements of Operations for the years ended December 31, 2024 and 2023 which is used in the following discussions of our results of operations: For the Years Ended December 31, 2024 to 2023 2024 2023 Change $ SALES $ 69,370,803 $ 55,689,793 $ 13,681,010 COST OF SALES 42,305,494 35,341,569 6,963,925 GROSS PROFIT 27,065,309 20,348,224 6,717,085 OPERATING EXPENSES, NET Selling, general and administrative 29,047,933 24,768,293 4,279,640 Impairment of goodwill - 6,104,000 (6,104,000 ) Gain on sale of asset (205,146 ) - (205,146 ) TOTAL OPERATING EXPENSES, NET 28,842,787 30,872,293 (2,029,506 ) LOSS FROM OPERATIONS (1,777,478 ) (10,524,069 ) 8,746,591 OTHER INCOME (EXPENSE) Loss on debt extinguishment (1,888,889 ) - (1,888,889 ) Change in contingent consideration - 774,900 (774,900 ) Other income, net 8,552 16,230 (7,678 ) Interest (expense) income, net (848,651 ) (199,681 ) (648,970 ) TOTAL INCOME (EXPENSE), NET (2,728,988 ) 591,449 (3,320,437 ) NET LOSS $ (4,506,466 ) $ (9,932,620 ) $ 5,426,154 11 Sales increased $13.7 million to $69.4 million for the year ended December 31, 2024 as compared to $55.7 million for the same period in 2023.
Biggest changeResults of Operations The following table sets forth our Consolidated Statements of Operations for the years ended December 31, 2025 and 2024 which is used in the following discussions of our results of operations: For the Years Ended December 31, 2025 to 2024 2025 2024 Change $ SALES $ 78,205,678 $ 69,370,803 $ 8,834,875 COST OF SALES 47,548,514 42,305,494 5,243,020 GROSS PROFIT 30,657,164 27,065,309 3,591,855 OPERATING EXPENSES, NET Selling, general and administrative 33,141,280 29,047,933 4,093,347 Gain on sale of asset - (205,146 ) 205,146 TOTAL OPERATING EXPENSES, NET 33,141,280 28,842,787 4,298,493 LOSS FROM OPERATIONS (2,484,116 ) (1,777,478 ) (706,638 ) OTHER INCOME (EXPENSE) Loss on debt extinguishment (441,130 ) (1,888,889 ) 1,447,759 Other income, net 2,315 8,552 (6,237 ) Interest (expense) income, net (1,012,871 ) (848,651 ) (164,220 ) TOTAL OTHER (EXPENSE) INCOME, NET (1,451,686 ) (2,728,988 ) 1,277,302 NET LOSS $ (3,935,802 ) $ (4,506,466 ) $ 570,664 11 Sales increased $8.8 million to $78.2 million for the year ended December 31, 2025 as compared to $69.4 million for the same period in 2024.
The Company has four natural and organic groceries and dietary supplement stores located in Florida, nine located in New York and New Jersey, one store in Virgina, as well as five stores in Kansas and Oklahoma. Increased Competition : Food retail is a large and competitive industry.
The Company has four natural and organic groceries and dietary supplement stores located in Florida, nine located in New York and New Jersey, one store in Virginia, as well as five stores in Kansas and Oklahoma. Increased Competition : Food retail is a large and competitive industry.
At December 31, 2024 and December 31, 2023, we did not have any material financial guarantees or other contractual commitments with trade 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.
At December 31, 2025 and December 31, 2024, we did not have any material financial guarantees or other contractual commitments with trade vendors that are reasonably likely to have an adverse effect on liquidity. Our cash and cash equivalents balances are kept liquid to support our growing acquisition and infrastructure needs for operational expansion.
The net cash provided by financing activities of $8.7 million for the year ended December 31, 2024 consists of cash proceeds of $1.7 million from Security Purchase Agreement (“SPA”) signed on January 18, 2024, $7.5 million cash proceeds from Loan and Security Agreement signed on July 18, 2024, $2.6 million cash proceed from initial public offering, $1.7 million net parent investment from HCMC, $2,000 cash proceed from warrant exercise, offset by principal payment on loan payable of $2.5 million and $2.3 million payment to related party.
The net cash provided by financing activities of $8.7 million for the year ended December 31, 2024 consists of cash proceeds of $1.7 million from Security Purchase Agreement signed on January 18, 2024, $7.5 million cash proceeds from Loan and Security Agreement signed on July 18, 2024, $2.6 million cash proceeds from initial public offering, $1.7 million net parent investment from HCMC, $2,000 cash proceeds from warrant exercise, offset by principal payment on loan payable of $2.5 million and $2.3 million payment to HCMC.
The Company’s liquidity needs through December 31, 2024 have been satisfied through initial public offering and financing agreement with private lenders. Also, the Company is formulating plans to raise capital from outside investors and from equity offerings, as it has done in the past, to fund operating losses and also provide capital for further business acquisitions.
The Company’s liquidity needs through December 31, 2025 have been satisfied through initial public offering and financing agreements with private lenders and investors. Also, the Company is formulating plans to raise capital from outside investors and from equity offerings, as it has done in the past, to fund operating losses and also provide capital for further business acquisitions.
Deferred Taxes and Valuation Allowance We account for income taxes pursuant to the asset and liability method of accounting for income taxes pursuant to FASB ASC740, “Income Taxes.” Deferred tax assets and liabilities are recognized for taxable temporary differences and operating loss carry forwards.
Deferred Taxes and Valuation Allowance We account for income taxes pursuant to the asset and liability method of accounting for income taxes pursuant to FASB ASC 740, “Income Taxes.” Deferred tax assets and liabilities are recognized for taxable temporary differences and operating loss carry forwards.
Total other (expenses) income, net of $2.7 million for the year ended December 31, 2024 consists of $1.9 million loss on debt extinguishment, and net interest expense of $0.8 million.
Total other (expenses) income, net of $1.5 million for the year ended December 31, 2025 consists of $0.4 million loss on debt extinguishment, and net interest expense of $1.1 million. Total other (expenses) income, net of $2.7 million for the year ended December 31, 2024 consists of $1.9 million loss on debt extinguishment, and net interest expense of $0.8 million.
Generally, a non-GAAP financial measure is a numerical measure of a company’s performance, financial position or cash flows that either excludes or includes amounts that are not normally included or excluded in the most directly comparable measure calculated and presented in accordance with GAAP.
Non-GAAP Financial Measures The following discussion and analysis contain a non-GAAP financial measure. Generally, a non-GAAP financial measure is a numerical measure of a company’s performance, financial position or cash flows that either excludes or includes amounts that are not normally included or excluded in the most directly comparable measure calculated and presented in accordance with GAAP.
Our net cash used in continuing operating activities of $2.5 million for the year ended December 31, 2023 resulted from our net loss of $9.9 million and a net cash usage of $4.5 million from changes in operating assets and liabilities, offset by a non-cash adjustments of $11.9 million.
Our net cash used in operating activities of $3.1 million for the year ended December 31, 2024 resulted from our net loss of $4.5 million and a net cash usage of $7.6 million from changes in operating assets and liabilities, offset by a non-cash adjustments of $9.0 million.
Cost of goods sold for the years ended December 31, 2024 and 2023 were $42.3 million and $35.3 million, respectively, an increase of $5.4 million was primarily a result of full year operations in 2024 of Ellwood Thompson’s acquired in October 2023, an increase of $3.8 million was a result of GreenAcres Market acquisition acquired in July 2024, offset by a decrease in same-store cost of goods sold of $2.3 million.
Cost of goods sold for the years ended December 31, 2025 and 2024 were $47.5 million and $42.3 million, respectively, an increase of $4.8 million was primarily a result of full year operations in 2025 of GreenAcres Market acquisition acquired in July 2024, and $0.4 million increase in same-store cost of goods sold.
Based on our assessment, we do not believe that climate change currently poses a material risk to our operations or financial performance. Our retail sales operations are not significantly affected by climate-related factors, such as extreme weather or emissions regulations.
Climate-Related Considerations We have evaluated the potential impact of climate change on our business, including regulatory, physical, and market-related risks. Based on our assessment, we do not believe that climate change currently poses a material risk to our operations or financial performance. Our retail sales operations are not significantly affected by climate-related factors, such as extreme weather or emissions regulations.
Liquidity and Capital Resources For the Years Ended December 31, 2024 2023 Net cash provided by (used in): Operating activities $ (3,064,842 ) $ (2,525,354 ) Investing activities (4,977,793 ) (929,623 ) Financing activities 8,676,527 2,856,986 Net increase (decrease) in cash $ 633,892 $ (597,991 ) 12 Our net cash used in operating activities of $3.1 million for the year ended December 31, 2024 resulted from our net loss of $4.5 million and a net cash usage of $7.6 million from changes in operating assets and liabilities, offset by a non-cash adjustments of $9.1 million.
Liquidity and Capital Resources For the Years Ended December 31, 2025 2024 Net cash provided by (used in): Operating activities $ 996,054 $ (3,064,842 ) Investing activities (4,136,956 ) (4,977,793 ) Financing activities 4,104,048 8,676,527 Net increase in cash $ 963,146 $ 633,892 12 Our net cash provided by operating activities of $1.0 million for the year ended December 31, 2025 resulted from our net loss of $3.9 million and a net cash usage of $3.8 million from changes in operating assets and liabilities, offset by a non-cash adjustments of $8.7 million.
The Company believes its cash on hand and the plan to raise capital through its security offering will enable the Company to meet its obligations and capital requirements for at least the twelve months from the date these consolidated financial statements are issued.
Based on its cash on hand, positive cash flow from operations, and planned security offerings, management believes the Company will be able to meet its obligations and capital requirements for at least twelve months from the date these consolidated financial statements are issued.
Changes in the status of certain facts or circumstances could result in material changes to the estimates used in the preparation of the consolidated financial statements and actual results could differ from the estimates and assumptions.
Changes in the status of certain facts or circumstances could result in material changes to the estimates used in the preparation of the consolidated financial statements and actual results could differ from the estimates and assumptions. Revenue Recognition The Company recognizes revenue in accordance with the Financial Accounting Standards Board (FASB) ASC 606, Revenue from Contracts with Customers.
Investors should pay close attention to specific definitions being used and to the reconciliation between such measures and the corresponding GAAP measures provided by each company under applicable rules of the Securities and Exchange Commission. 2024 2023 Reconciliation from net loss to adjusted EBITDA: Net loss $ (4,506,466 ) $ (9,932,620 ) Interest expense 848,651 199,681 Depreciation and amortization 1,576,457 1,431,815 EBITDA (2,081,358 ) (8,301,124 ) Impairment of goodwill - 6,104,000 Change in contingent consideration - (774,900 ) Loss on debt extinguishment 1,888,889 - Other expenses (income), net (8,552 ) (16,230 ) Adjusted EBITDA $ (201,021 ) $ (2,988,254 )
Investors should pay close attention to specific definitions being used and to the reconciliation between such measures and the corresponding GAAP measures provided by each company under applicable rules of the Securities and Exchange Commission. 2025 2024 Reconciliation from net loss to adjusted EBITDA: Net loss $ (3,935,802 ) $ (4,506,466 ) Interest expense 1,012,871 848,651 Depreciation and amortization 1,717,461 1,576,457 EBITDA (1,205,470 ) (2,081,358 ) Stock compensation 97,500 - Loss on debt extinguishment 441,130 1,888,889 Other expenses (income), net (2,315 ) (8,552 ) Adjusted EBITDA $ (669,155 ) $ (201,021 )
Off-Balance Sheet Arrangements We do not have any off-balance sheet arrangements other than operating leases for retail locations, equipment, and vehicles. Seasonality We do not consider our business to be seasonal. Climate-Related Considerations We have evaluated the potential impact of climate change on our business, including regulatory, physical, and market-related risks.
Off-Balance Sheet Arrangements We do not have any off-balance sheet arrangements other than operating leases for retail locations, equipment, and vehicles. Seasonality We do not consider our business to be seasonal. Cybersecurity We recognize that cybersecurity is of critical importance to our success.
Total operating expenses decreased $2.0 million from $30.9 million for the year ended December 31, 2023 to $28.8 million for the year ended December 31, 2024.
Total operating expenses increased $4.3 million from $28.8 million for the year ended December 31, 2024 to $33.1 million for the year ended December 31, 2025.
The majority of our cash are concentrated in one large financial institution and are generally in excess of the Federal Deposit Insurance Corporation (FDIC) insurance limit. The Company has not experienced any losses on its cash and cash equivalents. The following table presents the Company’s cash position as of December 31, 2024 and December 31, 2023.
Most of our cash and cash equivalents are concentrated in two financial institutions. The portion of our balance held as cash deposits in these institutions is generally in excess of the Federal Deposit Insurance Corporation (FDIC) insurance limit. The Company has not experienced any losses on its cash or cash equivalents.
The consolidated financial statements include estimates based on currently available information and our judgment as to the outcome of future conditions and circumstances. These estimates and assumptions include useful lives and impairment of long-lived assets, goodwill, deferred taxes and related valuation allowances, and the valuation of the assets and liabilities acquired in business combinations.
The consolidated financial statements include estimates based on currently available information and our judgment as to the outcome of future conditions and circumstances.
The $8.7 million increase in sales was primarily a result of a full year operations for the year ended December 31, 2024 of Ellwood Thompson’s acquired in October 2023, $6.8 million increase in sales was a result of GreenAcres Market acquisition acquired in July 2024, offset by a decrease in same-store sales of $1.7 million.
The increase was primarily due to a full year of operations from the GreenAcres Market acquisition (acquired in July 2024), which contributed approximately $7.8 million, and a $1.0 million increase in same-store sales.
We also expect increased product supply and the downward pressure on prices to continue and impact our operating results in the future.
We also expect increased product supply and the downward pressure on prices to continue and impact our operating results in the future. Overview and Significant Events The following material events significantly affected the Company’s financial condition and results of operations for the year ended December 31, 2025: 1.
December 31, 2024 December 31, 2023 Cash $ 2,056,472 $ 1,422,580 Total assets $ 34,112,517 $ 28,432,560 Percentage of total assets 6.0 % 5.0 % As of December 31, 2024, the Company had cash of $2.1 million and negative working capital of $2.2 million. The Company expects to continue incurring losses for the foreseeable future.
December 31, 2025 December 31, 2024 Cash and cash equivalents $ 3,019,618 $ 2,056,472 Total assets $ 33,497,719 $ 34,112,517 Cash and cash equivalents as a percentage of total assets 9.0 % 6.0 % As of December 31, 2025, the Company had cash and cash equivalents of $3.0 million and negative working capital of $2.7 million.
The net cash used in investing activities of $0.9 million for the year ended December 31, 2023 resulted from $0.7 million payment for Ellwood Thompson’s acquisition and $0.2 million payment for purchase of property and equipment.
The net cash used in investing activities of $4.1 million for the year ended December 31, 2025 consists of $3.8 million payment to related party, and $0.3 million purchases of property and equipment, offset by the proceeds from sale of equipment.
Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. Non-GAAP Financial Measures The following discussion and analysis contain a non-GAAP financial measure.
Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. Fair Value Measurements The fair value framework under FASB’s guidance requires the categorization of assets and liabilities into three levels based upon the assumptions used to measure the assets or liabilities.
The increase of $2.6 million was a result of full year operations for the year ended December 31, 2024 of Ellwood Thompson’s acquired in October 2023, the increase of $2.4 million was a result of GreenAcres Market acquisition acquired in July 2024, and the increase of $0.2 million was due to gain on sale on Saugerties building, The increases were offset by $6.1 million decrease in goodwill impairment charge, $0.4 million decrease in HCMC corporate overhead allocation, and $0.2 million in same-store expense reduction.
The increase of $3.0 million was a result of full year operations for the year ended December 31, 2025 of GreenAcres Market acquisition acquired in July 2024, $1.2 million increase in professional fee, taxes, license and permit, and $0.1 million increase in stock-based compensation expense.
Removed
The Company had an impairment of $6.1 million for the year ended December 31, 2023. The Company experienced recurring losses coupled with the reduction in the same store revenue, a highly competitive industry and certain operational costs that have impacted our expectations such that future growth and profitability is lower than previous estimates.
Added
Standalone Operations: Following the Spin-Off from HCMC in September 2024, the Company operated as an independent, publicly-traded entity for the full year, incurring standalone public company costs. 2. Strategic Acquisition: The acquisition of GreenAcres Market in July 2024 was the primary driver of revenue growth, adding five stores and contributing significantly to sales. 3.
Removed
Furthermore, during the fourth quarter of 2023, the Company operated with negative working capital which, although not a determinant on its own, when combined with the other factors indicated that the Company’s goodwill of $6.1 million was determined to be impaired for the year ended December 31, 2023.
Added
Liquidity and Capital Resources: The Company has incurred net losses and negative working capital. Management’s plans to address this, including cost-reduction initiatives and a committed equity financing, are critical to continuing as a going concern (see detailed discussion in Liquidity and Capital Resources ). 4.
Removed
Total other income (expense), net of $0.6 million for the year ended December 31, 2023 primarily consists of change in contingent consideration of $0.8 million and other miscellaneous income of $16,000, offset by interest expense of $0.2 million.
Added
Related-Party Transaction: The settlement of an intercompany receivable with HCMC resulted in a non-cash investment asset. 5. Internal Controls: The Company is remediating material weaknesses in internal controls identified during the year.
Removed
Revenue Recognition The Company recognizes revenue in accordance with the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 606, Revenue from Contracts with Customers (“ASC 606”).
Added
The year-over-year improvement in net loss was impacted by several significant items in 2024 that are not expected to recur with similar magnitude: ● 2024 benefited from a non-recurring gain of $0.2 million on the sale of our Saugerties, NY building.
Added
No similar gain was recorded in 2025. ● 2024 incurred certain non-recurring costs associated with the Spin-Off from HCMC and our initial public offering. While public company costs continue, the discrete, incremental costs of those transactions are not expected to repeat. Lease Commitments, Known Trends and Uncertainties Our retail operations are substantially dependent on leased facilities.
Added
As of December 31, 2025, we had total lease liabilities of $10.7 million, comprised of $10.6 million for operating leases (primarily for our 19 retail stores and headquarters) and $0.1 million for a finance lease on data center equipment. The weighted-average remaining lease term for operating lease is 4 years, with a weighted-average discount rate of 5.30%.
Added
Lease expense for the year ended December 31, 2025 was $3.9 million, compared to $4.2 million in 2024. The overall decrease is primarily attributable to a significant reduction in variable lease costs, which are primarily based on property taxes and are expensed as incurred.
Added
Looking forward, we expect overall lease expense to be influenced by two key factors: the expiration of certain leases and potential new commitments at market rates, and fluctuations in variable costs, primarily property taxes, which are inherently uncertain but have trended lower in the current year. Rising interest rates and inflation could increase the cost of future lease obligations.
Added
While the weighted-average discount rate increased marginally to 5.30% from 5.19% in 2024, a sustained rate hike environment may elevate borrowing costs for future lease liabilities.
Added
On December 31, 2025, the Company settled the outstanding $4.0 million receivable from HCMC (including the $3.8 million advanced during 2025 plus prior period amounts) by accepting 43.9 billion shares of HCMC common stock. This non-cash transaction converted the related party receivable into an equity method investment (see Note 13).
Added
The investment was initially recorded at the carrying amount of the receivable surrendered ($4.0 million), with no gain recognized, consistent with related party accounting guidance. The Company obtained a third-party valuation of the investment and determined that no impairment was necessary as of December 31, 2025.
Added
This transaction did not impact the Company’s cash position but reduced the related party receivable balance to zero as of year-end.
Added
The net cash provided by financing activities of $4.1 million for the year ended December 31, 2025 consists of net cash proceeds of $5.1 million from HCWC Series A Preferred Stock offering and principal payment on loan payable of $1.0 million.
Added
The following table presents the Company’s cash position as of December 31, 2025 and December 31, 2024.
Added
While the Company may continue to report net losses in the near term due to non-cash charges such as depreciation, amortization, and stock-based compensation, the Company generated positive cash flow from operations of $1.0 million for the year ended December 31, 2025, reflecting improved operating performance.
Added
We are committed to maintaining robust cybersecurity and data protection and continuously evaluating the impact of cybersecurity threats, considering both immediate and potential long-term effects of these threats on our business strategy, operations, and financial condition. Our board oversees cybersecurity risks through quarterly updates from the Chief Operating Officer.
Added
These estimates and assumptions include promotional discounts, manufacturer coupons and rebates, return allowances that are netted against revenue, useful lives and impairment of long-lived assets, goodwill and impairment, equity method investments, allowance for credit losses, inventory provisions, deferred taxes and related valuation allowances, allocation of corporate general expenses, and the valuation of the assets and liabilities acquired in business combinations.
Added
Revenues from product sales and services rendered, net of promotional discounts, manufacturer coupons and rebates, return allowances, and sales and consumption taxes, are recorded when products are delivered, title passes to customers and collection is likely to occur. Title passes to customers at the point of sale for retail and upon delivery of products for wholesale.
Added
Return allowances, which reduce revenue, are estimated using historical experience. The Company promotes its products with trade incentives and promotions. These programs include sales discounts, rebates, coupons, volume-based incentives, refunds, and returns, which represent variable considerations. The estimation of variable consideration involves judgment and is constrained to avoid overstatement of revenue.
Added
The Company applies the expected value method or the most likely amount method, depending on which better predicts the consideration to which it will be entitled. Management evaluates these estimates on a quarterly basis.
Added
The trade incentives and promotions are recorded as a reduction to the transaction price based on amounts estimated as being due to customers at the end of the period. The Company derives these estimates based on historical experience. The Company does not receive a distinct service in relation to the trade incentives and promotions.
Added
The Company does not have significant revenue recognized over time due to the nature of retail store operations. The Company recognizes revenue at a point in time when control of goods or services transfers to the customer.
Added
Level 1 provides the most reliable measure of fair value, whereas Level 3, if applicable, would generally require significant management judgment.
Added
The three levels for categorizing assets and liabilities under the fair value measurement requirements are as follows: ● Level 1: Fair value measurement of the asset or liability using observable inputs such as quoted prices in active markets for identical assets or liabilities; ● Level 2: Fair value measurement of the asset or liability using inputs other than quoted prices that are observable for the applicable asset or liability, either directly or indirectly, such as quoted prices for similar (as opposed to identical) assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active; and ● Level 3: Fair value measurement of the asset or liability using unobservable inputs that reflect the Company’s own assumptions regarding the applicable asset or liability.
Added
Recurring Fair Value Measurements The Company’s financial instruments consist primarily of cash and cash equivalents, accounts receivable, accounts payable, and borrowings. Management believes that the carrying value of cash and cash equivalents, accounts receivable, accounts payable, and borrowings are representative of their respective fair values.
Added
Nonrecurring Fair Value Measurements The Company’s assets measured at fair value on a nonrecurring basis include long-lived assets, indefinite-lived intangible assets, goodwill and equity method investment. The Company reviews the carrying amounts of such assets at least annually or whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.
Added
Any resulting asset impairment would require that the asset be recorded at its fair value. Equity Method Investment and Other-Than-Temporary Impairment Assessment The Company accounts for investments in entities over which it has the ability to exercise significant influence using the equity method of accounting.
Added
These investments are initially recorded at cost and subsequently adjusted to recognize the Company’s proportionate share of the investee’s net income or loss. The Company evaluates its equity method investments for impairment whenever events or changes in circumstances indicate that a decline in value may have occurred that is other-than-temporary.
Added
This assessment requires significant judgment, including: ● Estimating the fair value of the investment, which often involves the use of unobservable (Level 3) inputs when quoted market prices are not available or are not considered representative of fair value; ● Analyzing the financial condition, operating results, and business prospects of the investee; ● Assessing the severity and duration of any decline in value; and ● Evaluating specific factors affecting the investee, such as liquidity constraints, legal proceedings, or changes in the regulatory environment.
Added
If a decline is determined to be other-than-temporary, the Company recognizes an impairment charge in the consolidated statements of operations equal to the excess of the investment’s carrying amount over its estimated fair value. Future changes in the assumptions underlying these estimates could result in material impairment charges.