HEALTHY CHOICE WELLNESS CORP.

NOTE 1. ORGANIZATION

Organization

Healthy Choice Wellness Corp. (the “Company” or “HCWC” or “we” or “our” or “us”) is a holding company focused on providing consumers with healthier daily choices with respect to nutrition and other lifestyle alternatives.

Through its wholly owned subsidiaries, the Company operates:

Through its wholly owned subsidiary, Healthy Choice Wellness, LLC, the Company operates a Healthy Choice Wellness Center in Kingston, NY.

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

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

Sourcing and Vendors

We source from multiple suppliers. These suppliers range from small independent businesses to multinational conglomerates. For the years ended December 31, 2025 and 2024, approximately 31% and 25% of our total purchases were from one vendor, respectively.

Spin-Off

Healthier Choices Management Corp. (“HCMC” or the “Parent”) announced on August 22, 2022 that its Board of Directors approved the separation of the grocery business, including wellness business, into an independent, publicly traded company (the “Spin-Off” or “Separation”). Prior to the Spin-Off, HCWC was a subsidiary under HCMC, which operated the Ada’s Natural Market, Paradise Health & Nutrition, Mother Earth’s Storehouse, Green’s Natural Foods, Ellwood Thompson’s, and GreenAcres Market retail brands, as well as licensed wellness centers and Healthy U Wholesale.

On September 13, 2024 (the “Spin-Off Date”), after the New York Stock Exchange American (“NYSEAM”) market closing, the Spin-Off of the HCWC business was completed. On September 14, 2024, HCWC became an independent, publicly traded company, and on September 16, 2024, the stock commenced trading on the NYSEAM under the stock symbol “HCWC.”

HCMC distributed all the outstanding shares of common stock held by it on a pro rata basis to holders of HCMC’s common stock. For each 208,632 shares of HCMC common stock held as of 5:00 p.m., New York City time, on September 9, 2024, the record date for the Spin-Off (the “Record Date”), a HCMC stockholder was entitled to receive one (1) share of Class A common stock and three (3) shares of Class B common stock. The Distribution was made in book-entry form by a distribution agent as soon as practicable after the date of the Distribution.

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. 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). 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. 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 (the “Shares”) of its HCWC Preferred Stock to the same institutional investors for an aggregate subscription price of $3,250,000. 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. As of December 31, 2025, the Company closed a $5.25 million offering, with binding commitments to purchase an additional $8.0 million in Preferred Stock from the same investors who purchased HCMC Series E Preferred Stock. On October 30, 2025, HCMC and the parties 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. 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.

NOTE 2. GOING CONCERN

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

Conditions Giving Rise to Substantial Doubt

The Company currently and historically has reported net losses and cash outflows from operations. 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. 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 increased trade payable and accrued liabilities. Net losses improved to $3.9 million for the year ended December 31, 2025 from $4.5 million for the year ended December 31, 2024. Cash provided by operating activities was $1.0 million for the year ended December 31, 2025, compared to cash used in operating activities of $3.1 million for the year ended December 31, 2024

Management’s Plans to Alleviate Substantial Doubt

Management has developed and initiated several operational and financing plans to mitigate the conditions that raise substantial doubt. Operationally, the Company has engaged a third-party operations consultant to identify cost-saving opportunities, the recommendations of which have been implemented. Management is also evaluating the performance of existing stores and rightsizing or closing underperforming locations as necessary, while pursuing strategic acquisitions to expand the Company’s store base and achieve economies of scale.

On the financing front, the Company has secured binding commitments from institutional investors to purchase $8.0 million of its Series A Convertible Preferred Stock. As of December 31, 2025, the Company has received $5.25 million of this committed financing, with the remaining $8.0 million commitment extended to April 1, 2027 pursuant to the Ninth Amendment to the HCMC Series E Securities Purchase Agreement (see Note 17). Additionally, on July 18, 2024, the Company entered into a $7.5 million loan and security agreement with a private lender, of which $4.2 million was used for the acquisition of GreenAcres Market. The loan bears interest at 12% per annum and matures on July 17, 2027.

Management believes that the combination of these operational initiatives and committed equity financing will enable the Company to meet its obligations and capital requirements for at least twelve months from the date these financial statements are issued.

Conclusion

Based on the above, management has concluded that its plans alleviate the substantial doubt raised by the Company’s historical operating results and financial condition. The Company believes its cash on hand and the commitment of $8.0 million raised through its security offering noted above will enable the Company to meet its obligations and capital requirements for at least twelve months from the date these financial statements are issued. Accordingly, no adjustment has been made to the financial statements to account for this uncertainty.

NOTE 3. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying consolidated financial statements are prepared in accordance with U.S. GAAP.

The Company has historically operated as part of HCMC and not as a standalone company. Financial statements representing the historical operations of HCMC’s grocery segment have been derived from HCMC’s historical accounting records and are presented on a carve-out basis through the Spin-Off date. The Company’s financial statements for the period September 14, 2024 through December 31, 2024 and whole year of 2025 are consolidated financial statements based on the reported results of HCWC as a stand-alone company. HCMC completed steps to spin off its grocery segment and wellness business into HCWC on September 13, 2024. The entities under the grocery segment and wellness business were contributed (100%) to HCWC, as such the accompanying consolidated financial statements through the Spin-Off date have been contributed to HCWC using their carryover basis in accordance with Accounting Standard Codification (“ASC”) Topic 805, Business Combinations (“ASC 805”) for entities under common control. All revenues and costs as well as assets and liabilities directly associated with the business activity of the Company are included in the consolidated financial statements. The consolidated financial statements also include allocations of certain general, administrative, sales and marketing expenses from HCMC through the Spin-Off date. However, the amounts recognized by the Company are not necessarily representative of the amounts that would have been reflected in the consolidated financial statements had the Company operated independently of HCMC. Related-party allocations are discussed further in Note 19.

Segment Reporting

Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the operating decision makers, or decision-making group, in making decisions on how to allocate resources and assess performance. The Company operates as a single reportable segment, as the CODM reviews financial performance and makes decisions on a consolidated basis.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Healthy Choice Markets, Inc. (“Ada’s Natural Market”), Healthy Choice Markets 2, LLC (“Paradise Health and Nutrition”), Healthy Choice Markets 3, LLC (“Mother Earth’s Storehouse”), Healthy Choice Markets IV, LLC (Green’s Natural Foods), Healthy Choice Markets V, LLC (Ellwood Thompson’s), Healthy Choice Markets VI, LLC (GreenAcres Market), Healthy Choice Wellness, LLC, and Healthy U Wholesale, Inc (“The Vitamin Store, LLC”). All intercompany accounts and transactions have been eliminated in consolidation.

Net Parent Investment

The accompanying consolidated financial statements for year ended December 31, 2024 were derived from the consolidated financial statements of HCMC on a carve-out basis though the Spin-Off date, and the consolidated financial statements also include allocations of certain general, administrative, legal, and marketing expenses from HCMC. The primary components of the Net Parent Investment are intercompany balances other than related party payables, the allocation of shared costs, and funding received to cover any shortfall in operating cash requirements. Balances between HCMC and the Company that were not historically cash settled are included in Net Parent Investment. Net Parent Investment represents the cumulative investment by HCMC in the Company through the Spin-Off date. Upon Spin-Off, the Company reclassed the balance in net parent investment to additional paid-in capital.

Use of Estimates in the Preparation of the Financial Statements

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

Revenue Recognition

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

The Company 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. 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. 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.

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

The Company does not have significant revenue recognized over time due to the nature of retail store operation. The Company recognizes revenue at a point in time when control of goods or services transfers to the customer.

Shipping and Handling

Shipping charges billed to customers are included in net sales and the related shipping and handling costs are included in cost of sales. For the years ended December 31, 2025 and 2024, shipping and handling costs of approximately $119,000 and $132,000, were included in cost of sales, respectively.

Cash and Cash Equivalents

The Company considers all highly liquid instruments with an original maturity of three months or less, when purchased, to be cash and cash equivalents. Our cash equivalents are comprised of money market funds held in a brokerage account. The Company’s cash is deposited with major financial institutions, and at times, account balances may exceed federally insured limits. The Company has not experienced any losses on its cash accounts and believes it is not exposed to any significant credit risk on its cash. The Company’s money market funds are not insured by the Federal Deposit Insurance Corporation (“FDIC”). This account is protected by the Securities Investor Protection Corporation (“SIPC”), which protects against the loss of cash and securities in the event of a brokerage failure, subject to certain limitations. SIPC protection does not cover market losses on investments.

Accounts Receivable, Contract Assets and Contract Liabilities

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

The majority of arrangements with customers contain one performance obligation: to provide a distinct set of products or services. Most performance obligations are satisfied simultaneously as the Company exchanges products or services for customer payment. Exceptions include gift cards and loyalty rewards, for which the Company has a performance obligation to deliver products or services at a future date. As gift cards are purchased and loyalty points earned, contract liabilities are recorded until the performance obligations are satisfied through delivery of products or services or breakage based on gift card and loyalty reward program term limits. For the years ended December 31, 2025 and 2024, the contract liability balances were approximately $28,000 and $80,000, respectively.

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

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 remained valid for redemption until January 31, 2025. The new VIP program provides members with immediate discounts on qualifying purchases, replacing the accrual of future points. 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.

Other Current Assets

Other current assets are the non-trade related assets that the Company owns, benefits from, or uses to generate income that can be converted into cash within one year of the operating cycle, whichever is longer. Included in “Other current assets” on our consolidated balance sheets are amounts primarily related to other receivables or non-trade receivable from other companies. These financial assets are subject to the Current Expected Credit Loss (“CECL”) model under ASC 326, Financial Instruments—Credit Losses. Management has determined that no allowance for credit losses is required as of December 31, 2025 and December 31, 2024, due to the short-term nature of these receivables, the creditworthiness of the counterparties, and historical collection experience indicating no credit losses. The Company will continue to monitor credit risk and adjust the allowance if conditions change.

Deferred Offering Costs

The Company capitalizes certain legal, accounting, underwriting, and other costs directly associated with in-process equity financings, including costs related to shelf registration statements, until such time as the financing is completed. Upon completion of an equity offering, these costs are reclassified to additional paid-in capital as a reduction of the gross proceeds received. Should a financing be abandoned, the deferred offering costs are expensed immediately in the consolidated statements of operations. Costs incurred in connection with the preparation and filing of shelf registration statements are deferred and expensed ratably over the period during which the shelf is available for use, or charged to operations if the shelf is abandoned.

Inventories

Inventories are measured at the lower of cost and net realizable value using the average cost method. If the cost of the inventories exceeds their net realizable value, adjustments are recorded to write down excess carrying value to their net realizable value. The Company’s inventories consist primarily of merchandise available for resale, such as fresh produce, perishable grocery items and non-perishable consumable goods. Slow-moving inventory is rotated out and obsolete inventory is removed (expensed) on a monthly basis.

Property, Plant, and Equipment

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

Identifiable Intangible Assets

Identifiable intangible assets are recorded at cost, or when acquired as part of a business acquisition, at estimated fair value. Finite-lived intangible assets are amortized over 4 to 13 years. Similar to tangible personal property and equipment, the Company periodically evaluates identifiable intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.

Goodwill

Goodwill represents the excess of the purchase price over the fair value of net assets acquired in business combinations. As of December 31, 2025, the Company had goodwill of $2,212,000, all of which resulted from the acquisition of GreenAcres Market in July 2024. The Company operates as a single reporting unit for purposes of goodwill impairment testing. Goodwill is tested for impairment annually on September 30, or more frequently if events or changes in circumstances indicate that the fair value of the reporting unit may be less than its carrying amount, using a fair value-based test.

Impairment of Long-Lived Assets and Goodwill

Our long-lived assets include property and equipment, finite-lived intangible assets (such as trade names, customer relationships, and non-compete agreements), and goodwill. Long-lived assets, other than goodwill, are depreciated or amortized over their estimated useful lives. The assets and liabilities of acquired businesses are recorded under the acquisition method of accounting at their estimated fair values at the dates of acquisition. Goodwill represents the excess of purchase price over the fair values assigned to the underlying identifiable net assets of acquired businesses.

Long-lived assets, such as property and equipment and finite-lived intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable. Recoverability is measured by comparing the carrying amount of the asset or asset group to the estimated undiscounted future cash flows expected to be generated by the asset or asset group. If the carrying amount exceeds the undiscounted cash flows, an impairment loss is recognized for the excess of the carrying amount over the asset’s or asset group’s estimated fair value. Fair value is determined based on quoted market prices, discounted cash flows, or appraisals, as appropriate. Long-lived assets to be disposed of are reported at the lower of their carrying amount or fair value less costs to sell.

Goodwill is reviewed annually for impairment unless circumstances dictate the need for more frequent assessment. We perform our annual goodwill impairment testing as of September 30 of each year. The accounting guidance provides entities an option of performing a qualitative assessment (the “Step-zero” test) before performing a quantitative analysis. If the entity determines, on the basis of certain qualitative factors, that it is more-likely-than-not that the goodwill is not impaired, the entity would not need to proceed to the quantitative goodwill impairment testing process. For our single reporting unit’s annual testing, we performed a qualitative assessment and considered various macroeconomic, industry, and company-specific factors. Based on this assessment, management concluded that it was not more likely than not that the fair value of the reporting unit was less than its carrying amount. Accordingly, no quantitative impairment test was required and no impairment was identified.

During the fourth quarter of 2025, the Company’s stock price traded below its book value per share for a sustained period. As a sustained decline in market capitalization below book value is a potential indicator of impairment, management concluded that a triggering event had occurred. As a result of this triggering event, the Company performed an interim quantitative goodwill impairment assessment as of December 31, 2025. For this interim assessment, we elected to utilize the quantitative goodwill impairment testing process, as permitted in the accounting guidance, by comparing the estimated fair value of the reporting unit to its carrying value. The interim impairment testing resulted in an implied fair value for the reporting unit that exceeded its carrying value, including goodwill.

The goodwill impairment test requires judgment, including identifying reporting units, assigning assets and liabilities to reporting units, and determining the fair value of the reporting unit. Significant judgments required to estimate the fair value of our reporting unit include estimating future cash flows, determining appropriate discount rates and other assumptions, including assumptions about secular economic and market conditions. We use internal discounted cash flow models to estimate fair value. These cash flow estimates are derived from historical experience, third-party market data and a market approach, and future long-term business plans and include assumptions of future sales growth, gross margin, operating margin, terminal growth rate, and the application of an appropriate discount rate.

Equity Method Investments

The Company accounts for investments in entities over which it has the ability to exercise significant influence, but not control, using the equity method of accounting in accordance with ASC 323, Investments—Equity Method and Joint Ventures. Significant influence is presumed when ownership exceeds 20%, but is evaluated based on qualitative factors as outlined in ASC 323-10-15-6, including representation on the investee’s board of directors, participation in policy-making processes, material intra-entity transactions, and interchange of managerial personnel. Under the equity method, the investment is initially recorded at cost and subsequently adjusted to recognize the Company’s proportionate share of the investee’s net income or loss, which is recognized in the consolidated statements of operations. These investments are reviewed for impairment whenever events or changes in circumstances indicate that a decrease in the value of the investment has occurred that is other-than-temporary.

Debt

The Company accounts for debt in accordance with ASC 470, Debt and records specific incremental costs paid to third parties in connection with the issuance of long-term debt are deferred as a direct deduction from the carrying value of the associated debt liability on its consolidated balance sheet. The deferred financing costs are amortized as interest expense over the term of the related debt using the effective interest method.

For convertible debt instruments, the Company evaluates embedded features within convertible debt that will be settled in shares upon conversion under ASC 815, Derivatives and Hedging (“ASC 815”) to determine whether the embedded feature(s) should be bifurcated from the host instrument and accounted for as a derivative at fair value with changes in fair value recorded in earnings. If an embedded derivative is bifurcated from share-settled convertible debt, then the Company records the debt component at cost less a debt discount equal to the bifurcated derivative’s fair value. The Company amortizes the debt discount over the life of the debt instrument as additional non-cash interest expense utilizing the effective interest method. The convertible debt and the derivative liability are presented in aggregate on the Consolidated Balance Sheets. The derivative liability is remeasured at each reporting period with changes in fair value recorded in the Consolidated Statements of Operations and Comprehensive Income within other income (expense), net.

Advertising

Advertising expense is classified as selling, general and administrative expense on the consolidated statements of operations. The Company expenses advertising costs as incurred. For the years ended December 31, 2025 and 2024, the company incurred advertising expenses of $423,000 and $581,000, respectively.

401(k) retirement savings plan

The Company’s employees are offered a 401(k)-retirement savings plan with discretionary contribution matching opportunities. 401K employer expense amounted to $163,000 and $94,000 for the years ended December 31, 2025 and 2024, respectively.

Earnings per share

Basic earnings per share is computed using the weighted average number of common shares outstanding during the periods presented. Diluted earnings per share is computed using the weighted average number of common shares outstanding adjusted to include the potentially dilutive effect of stock awards. There is no dilution for the years ended December 31, 2025 and 2024.

The following table sets forth the computation of basic and diluted earnings per share attributable to the Company’s stockholders.

Income Taxes

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

ASC 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. There wereno unrecognized tax benefits andno amounts accrued for interest and penalties as of December 31, 2025 or 2024. The Company had no uncertain tax positions as of December 31, 2025 and 2024.

Leases

The Company leases retail stores, warehouse space, and office facilities under non-cancellable operating leases. Additionally, the Company has a finance lease for data center equipment.

Operating lease liabilities are recognized at the lease commencement date based on the present value of the fixed lease payments using the Company’s incremental borrowing rates. Related lease Right-of-use (“ROU”) assets are recognized based on the initial present value of the fixed lease payments, reduced by contributions from landlords, plus any prepaid rent and direct costs from executing the leases.

At the adoption of ASC 842 Leases, the Company elected the following practical expedients, which continue to be applied as part of its accounting policies:

Leases with an initial term of 12 months or less are not recorded on the balance sheet. The Company recognizes lease expense for these leases on a straight-line basis over the lease term. Variable lease cost primarily represents the difference between the actual property tax obligations for the period and the initial estimates included in the Company’s lease liability. The Company’s lease liability includes an estimate for future property tax payments over the lease term. Variable lease payments are recognized as lease expense as they are incurred.

Fair Value Measurements

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

Transactions involving related parties cannot be presumed to be carried out on an arm’s-length basis, as the requisite conditions of competitive, free-market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent to those that prevail in arm’s-length transactions unless such representations can be substantiated.

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.

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. Any resulting asset impairment would require that the asset be recorded at its fair value. The resulting fair value measurement of the assets are considered to be Level 3 measurements.

Variable Interest Entities

The Company evaluates its ownership, contractual and other interests in entities to determine if it has any variable interest in a variable interest entity (“VIE”). These evaluations are complex and involve judgment. If the Company determines that an entity in which it holds a contractual or ownership interest is a VIE and that the Company is the primary beneficiary, the Company consolidates such entity in its consolidated financial statements. The primary beneficiary of a VIE is the party that meets both of the following criteria: (i) has the power to make decisions that most significantly affect the economic performance of the VIE; and (ii) has the obligation to absorb losses or the right to receive benefits that in either case could potentially be significant to the VIE. Management performs ongoing reassessments of whether changes in the facts and circumstances regarding the Company’s involvement with a VIE will cause the consolidation conclusion to change. Changes in consolidation status are applied prospectively.

Business Combination

The Company applies the provisions of ASC 805 in the accounting for acquisitions of businesses. ASC 805 requires the Company to use the acquisition method of accounting by recognizing identifiable assets and liabilities, including intangible assets of acquired businesses at their fair value at the date of acquisition. When the Company acquires control of a business, any previously held equity interest also is remeasured to fair value. The excess of the purchase consideration and any previously held equity interest over the fair value of identifiable net assets acquired is goodwill. If the fair value of identifiable net assets acquired exceeds the purchase consideration and any previously held equity interest, the difference is recognized in the consolidated statements of operations immediately as a gain or loss on acquisition. Acquisition-related expenses are expensed as incurred and the expenses are recorded in operating expenses in the consolidated statements of operations.

Stock-Based Compensation

The Company accounts for stock-based compensation in accordance with ASC 718, Compensation—Stock Compensation. Compensation cost for restricted stock awards and other equity instruments granted to employees and directors is measured based on the grant-date fair value of the award. The fair value of restricted stock is determined based on the closing market price of the Company’s common stock on the grant date. Compensation cost is recognized on a straight-line basis over the requisite service period, which is generally the vesting period (ranging from one to three years). The Company accounts for forfeitures as they occur; therefore, compensation expense is recognized only for awards that ultimately vest, and no estimation of future forfeitures is made. For awards granted to non-employees, the Company follows ASC 505-50, Equity—Equity-Based Payments to Non-Employees, and measures the awards at fair value on the measurement date.

Related Party Transactions and Nonmonetary Exchanges

Transactions involving related parties, as defined by ASC 850, Related Party Disclosures, are recorded based on the substance of the transaction rather than merely its legal form. Related party transactions cannot be presumed to be carried out on an arm’s-length basis, as the requisite conditions of competitive, free-market dealings may not exist.

When the Company exchanges a monetary asset for a nonmonetary asset (such as equity securities) in a transaction with a related party, if the fair value of the asset received cannot be determined within reasonable limits in an arm’s-length context, and the transaction is with a related party, it is appropriate to default to the recorded amount of the asset surrendered. Gains are not recognized on such transactions when the substance is a capital contribution or conversion of intercompany funding rather than an income-generating event.

Recent Accounting Pronouncements

Public companies in the United States are subject to the accounting and reporting requirements of various authorities, including FASB and the SEC.

On December 14, 2023, the FASB issued Accounting Standards Update (“ASU”) 2023-09 “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” related to improvements to income tax disclosures. The amendments in this update require enhanced jurisdictional and other disaggregated disclosures for the effective tax rate reconciliation and income taxes paid. The amendments in this update are effective for fiscal years beginning after December 15, 2024. The Company adopted this standard effective January 1, 2025 on a retrospective basis, applying the new disclosure requirements to all periods presented. The adoption resulted in additional disclosures in the income tax footnote but did not impact the Company’s consolidated financial position, results of operations, or cash flows.

On November 27, 2023, FASB issued ASU 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures”, which requires public entities to consider relevant qualitative and quantitative factors when determining whether segment expense categories and amounts are significant, and identify segment expenses on the basis of amounts that are regularly provided to the CODM, and included in reported segment profit or loss. The ASU is effective for fiscal years beginning after Dec. 15, 2023, and interim periods within fiscal years beginning after Dec. 15, 2024. The Company adopted this standard effective January 1, 2024, applying it retrospectively to all periods presented. As the Company has one reportable segment, the adoption had no material impact on the Company’s financial statements, but resulted in additional expense disclosures and reconciliations in the financial statement footnotes. See Note 5 for details.

In November 2024, the FASB issued ASU 2024-03 (“ASU 2024-03”), Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40). ASU 2024-03 requires that public business entities disclose additional information about specific expense categories in the notes to financial statements at interim and annual reporting periods. The prescribed categories include purchases of inventory, employee compensation, depreciation, intangible asset amortization, and depletion. This authoritative guidance is effective for annual periods beginning after December 15, 2026 and interim periods beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the effect of this new guidance on its consolidated financial statements.

Subsequent to the end of the second quarter of 2025, on July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was signed into law, extending key provisions of the 2017 Tax Cuts and Jobs Act including, but not limited to, the restoration of 100% bonus depreciation, the introduction of new Section 174A permitting immediate expensing of domestic research and experimental expenditures, modifications to Section 163(j) interest expense limitations, updates to the rules governing global intangible low-taxed income, amendments to energy credit provisions, and the expansion of Section 162(m) aggregation requirements. The Company has evaluated the impact of the OBBBA and does not currently expect it to have a material impact on its consolidated financial statements.

In July 2025, the FASB issued ASU 2025-05, Financial Instruments—Credit Losses (Topic 326):* *Measurement of Credit Losses for Accounts Receivable and Contract Assets. The amendments in this Update provide (1) guidance on measuring expected credit losses using a probabilistic method and (2) a practical expedient for all entities that simplifies the estimation of expected credit losses for current trade accounts receivable and contract assets arising from revenue transactions. The Update is effective for public business entities for fiscal years beginning after December 15, 2025, including interim periods within those fiscal years. Early adoption is permitted. The Company early adopted this ASU effective for the fiscal year beginning January 1, 2025. The Company has elected the practical expedient provided therein. Accordingly, the Company’s estimate of expected credit losses on its trade accounts receivable and other receivables is now based solely on historical loss experience and current asset-specific conditions. This change has been applied retrospectively as of the beginning of the annual period of adoption. The adoption of this ASU did not have a material impact on the Company’s consolidated financial statements.

In September 2025, the FASB issued ASU 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software. The amendments in this Update clarify and expand the existing guidance on capitalizing implementation costs for cloud computing arrangements that are service contracts. The Update is effective for public business entities for fiscal years beginning after December 15, 2027, and interim periods within those fiscal years. Early adoption is permitted for any interim period. The Company is currently evaluating the impact of this guidance on its accounting for cloud-based software arrangements.

NOTE 4. CONCENTRATIONS

Cash and Cash Equivalents

A summary of the financial institutions that had cash in excess of FDIC limits of $250,000 on December 31, 2025 and December 31, 2024 is presented below:

A summary of the financial institution that had cash in excess of SIPC limits of $500,000 on December 31, 2025 and 2024 is presented below:

Our investments in money market funds are recorded at fair value, and funds are classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices. The following table summarizes cash equivalents that are measured at fair value on a recurring basis and are categorized using the fair value hierarchy:

The following table provides a reconciliation of cash and cash equivalents to amounts shown in the audited consolidated statements of cash flows:

Sourcing and Vendors

We source from approximately 1,000 suppliers and offer well-over 4,000 brands. These suppliers range from small independent businesses to multi-national conglomerates. We purchased approximately 74% and 70% of the goods we sell from our top 20 suppliers for the years ended December 31, 2025 and 2024, respectively. For the year ended December 31, 2025, approximately 31% of our total purchases were from KeHe,17% from Four Seasons Produce, and 10% of our total purchases were from UNFI. For the year ended December 31, 2024, approximately 25% of our total purchases were from UNFI,17% of our total purchases were from Four Seasons Produce, and 12% of our total purchases were from KeHe. We maintain good relations with all our suppliers and believe we have adequate alternative supply methods, including self-distribution.

As mentioned, KeHe replaced UNFI and becomes our primary supplier of dry grocery and frozen food products starting from January 2025. Our customer distribution agreement with KeHe commenced from March 1, 2024 and has an initial term through February 28, 2027. Either party may terminate the agreement for defaults by the other party of certain provisions of the agreement. We are obligated to purchase a minimum annual volume of products from KeHe, except in certain defined circumstances when such purchasing obligation is excused. Pricing under our agreement with KeHe is on a “cost plus” basis. We believe KeHe has sufficient warehouse capacity and distribution technology to service our existing stores’ distribution needs for natural foods and products. Unlike certain other key suppliers, our relationship with Four Seasons Produce is not governed by a long-term contractual agreement, and purchases are made on a purchase-order basis.

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

NOTE 5. SEGMENT REPORTING AND DISAGGREGATION OF REVENUES

The Company operates intwo operating segments: Grocery and Wellness. In accordance with ASC 280, these segments have been aggregated into a single reportable segment because they share similar economic characteristics and meet all aggregation criteria, including similar nature of products sold, product acquisition process, customer base, distribution methods, and regulatory environment.

The Company’s CODM reviews financial results and allocates resources at the consolidated level, as the aggregated segments operate as one integrated business unit. No segment-specific financial metrics are used by the CODM to assess performance.

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

The following table summarizes the significant segment expenses:

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

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, including the nature of products sold, product acquisition processes, customer types, distribution methods, and regulatory environments.

The Company does not have significant revenue recognized over time due to the nature of retail store operation. The Company recognizes revenue at a point in time when control of goods or services transfers to the customer. Revenue is recognized as follows:

NOTE 6. ACCOUNTS RECEIVABLE, NET

Accounts receivable is mainly related to CO-OP billing from each of the HCWC entities. HCWC bills its vendors for advertising vendors’ products in our sales channels. Advertising revenue is included in sales revenue in the consolidated statement of operations. The Company recorded advertising revenue of approximately $2,584,000 and $970,000 for the years ended December 31, 2025 and 2024, respectively. The Company’s accounts receivable totaled approximately $364,000 and $510,000 at December 31, 2025 and December 31, 2024, respectively. The accounts receivable balance at January 1, 2024 was approximately $128,000.

The Company’s credit loss is attributable to accounts receivable, and the Company determines the required allowance for expected credit losses using information such as customer credit history, current conditions, and reasonable and supportable forecasts about the future. Amounts are recorded to the allowance when it is determined that expected credit losses may occur. The Company reserved approximately $10,000 and $28,000 for credit loss for the years ended December 31, 2025 and 2024, respectively.

NOTE 7. INVENTORIES

Inventories are measured at the lower of cost and net realizable value using the average cost method. If the cost of the inventories exceeds their market value, adjustments are recorded to write down excess inventory to its net realizable value. The Company, as a result of its physical inventory observations recorded the write down of inventories amounting to approximately $2.6 million and $2.5 million in 2025 and 2024, respectively. The Company’s inventories consist primarily of merchandise available for resale.

NOTE 8. ACQUISITIONS

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

GreenAcres Market

On July 18, 2024, the Company through its wholly owned subsidiary, Healthy Choice Markets VI, LLC, entered into an Asset Purchase Agreement with (i) GreenAcres Markets of Oklahoma, LLC, an Oklahoma limited liability company, (ii) GACorp, Inc., a Kansas corporation; and (iii) the group of equity holders owning the majority interests of the Sellers. Pursuant to the Purchase Agreement, the Company acquired certain assets and assumed certain liabilities related to five GreenAcres Market’s grocery stores in Kansas and Oklahoma. The Company continued to operate the grocery stores under their existing name.

The cash purchase price under the Asset Purchase Agreement was $5,475,000, and a promissory note provided to the seller of $1,825,000. In addition, the Company entered into five new lease agreements with the landlords of the grocery stores.

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

Revenue and Earnings

The following unaudited pro forma summary presents consolidated information of the Company including GreenAcres Market, as if the business combinations had occurred on January 1, 2024, the earliest period presented herein:

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, fixed assets depreciation and lease amortization. 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 9. ASSETS HELD FOR SALE

On February 7, 2024, the Company closed the operation of the Saugerties, NY 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, NY 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 in legal fees, commission and other miscellaneous expenses. The title and deed were transferred on the closing date.

NOTE 10. PROPERTY, PLANT, AND EQUIPMENT

Property, plant, and equipment consist of the following as of December 31, 2025 and 2024:

The Company incurred approximately $0.5 million of depreciation expense for the years ended December 31, 2025 and 2024, respectively.

NOTE 11. INTANGIBLE ASSETS

Intangible assets, net consist of the following as of December 31, 2025 and 2024:

Intangible assets are amortized on a straight-line basis. Amortization expense was approximately $1.2 million and $1.0 million for the years ended December 31, 2025 and 2024, respectively.

The weighted-average remaining amortization period of the Company’s amortizable intangible assets is approximately 5 years as of December 31, 2025. The estimated future amortization of the intangible assets is as follows:

NOTE 12. GOODWILL

Goodwill represents the excess of the purchase price over the fair value of net assets acquired in business combinations. As of December 31, 2025, the Company had goodwill of $2,212,000, all of which resulted from the acquisition of GreenAcres Market in July 2024.

The Company tests goodwill for impairment annually on September 30 or more frequently if there are indicators that the carrying amount of the goodwill exceeds its estimated fair value. During the fourth quarter of 2025, the Company’s stock price traded below its book value per share for a sustained period. As a decline in market capitalization below book value is a potential indicator of impairment, management concluded that a triggering event had occurred, necessitating an interim quantitative impairment test as of December 31, 2025. For this interim test, the fair value of the single reporting unit was estimated using a combination of an income approach and a market approach, consistent with the methodology used in the annual test. The Company used significant judgment to estimate the fair value of this single reporting unit including estimating future cash flows, determining appropriate discount rates and other assumptions, including assumptions about secular economic and market conditions, future sales growth, gross margin, operating margin, terminal growth rate, and the application of an appropriate discount rate. As of December 31, 2025, the estimated fair value of the Company’s single reporting unit exceeded its carrying value. The income approach and market approach yielded consistent fair value estimates, providing a sufficient margin of safety despite the recent decline in the Company’s stock price. Accordingly, no goodwill impairment was recognized for the year ended December 31, 2025.

The changes in the carrying amount of goodwill as of December 31, 2025 and December 31, 2024 are as follows:

NOTE 13. INVESTMENT IN OTHER ENTITY-RELATED PARTY

The Company accounts for its investments in other entities under the equity method of accounting if the Company has the ability to exercise significant influence, but not control, over the entity. Equity method investments are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the investments may not be recoverable.

On December 31, 2025, the Company entered into a Stock Purchase and Satisfaction of Debt Agreement with its former parent HCMC. Pursuant to this agreement, the Company settled an intercompany receivable due from HCMC with a carrying value of approximately $4.0 million by accepting 43,889,786,222 shares of HCMC common stock in full satisfaction of the receivable.

Initial Measurement

Transactions involving related parties cannot be presumed to be carried out on an arm’s-length basis, as the requisite conditions of competitive, free-market dealings may not exist. Accordingly, the Company measured the investment at the carrying amount of the receivable surrendered. This treatment is consistent with the principle that when fair value cannot be determined within reasonable limits in a related party context, defaulting to the recorded amount of the asset relinquished is appropriate. The substance of this transaction is a conversion of intercompany funding to equity, not an income-generating event; therefore, no gain was recognized.

Equity Method Assessment

Although the Company’s ownership interest in HCMC is approximately 8.4%, which is below the 20% presumptive threshold for significant influence, ASC 323-10-15-6 requires consideration of qualitative indicators.

A member of the Company’s senior management serves as Chairman of the Board of HCMC. Given that HCMC’s board consists of only three members, this represents disproportionate board representation relative to the Company’s ownership percentage and demonstrates that the Company has the ability to exercise significant influence over HCMC’s operating and financial policies. While the board representation is temporary in nature, as the Company and HCMC have committed to separate their boards and management teams in early 2026, under U.S. GAAP the equity method is applied regardless of whether the ability to exercise significant influence is intended to be temporary.

Accordingly, the investment is accounted for using the equity method from the date of acquisition, December 31, 2025. The Company will apply the equity method prospectively beginning in the fiscal year ending December 31, 2026, recognizing its proportionate share of HCMC’s earnings or losses in future periods. For the year ended December 31, 2025, no equity method earnings or losses were recognized because the investment was acquired on the last day of the fiscal year. HCMC’s pre-acquisition losses are not attributable to the Company, as the ownership period did not commence until the acquisition date.

Impairment Assessment

The Company evaluates equity method investments for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. To assess recoverability as of December 31, 2025, the Company obtained a third-party valuation of the HCMC shares received.

The fair value of the shares was estimated using a multi-method approach in accordance with ASC 820. The valuation utilized unobservable inputs (Level 3), including a probability-weighted litigation asset model, and was cross-referenced against an observable arm’s-length transaction and the OTC Markets closing price at December 31, 2025. Based on this valuation, the estimated fair value of the investment exceeded its carrying amount. Accordingly, no impairment was recognized as of December 31, 2025.

Related Party Considerations

HCMC is a related party as the Company’s former parent prior to the Spin-Off completed on September 13, 2024, and due to the common board representation and management overlap described above. The terms of the settlement were negotiated and approved by the Company’s Board of Directors.

Variable Interest Entities (Unconsolidated)

The Company has evaluated its investment in its former parent HCMC under ASC 810 Consolidation and determined that HCMC meets the definition of a VIE. HCMC is considered a VIE due to its negative equity position, which indicates that the equity at risk is insufficient to permit the entity to finance its activities without additional subordinated financial support.

The Company holds a variable interest in HCMC through its ownership of approximately 8% of HCMC’s outstanding common stock. The Company does not consolidate HCMC because it is not the primary beneficiary. The Company does not have the power to direct the activities that most significantly impact HCMC’s economic performance; this power resides with HCMC’s Board of Directors, whose independent members hold the majority vote. We will absorb portions of HCMC’s expected losses and/or gains commensurate with our 8% equity interest in HCMC.

The Company’s maximum exposure to loss as a result of its involvement with this unconsolidated VIE is limited to its equity investment. As of December 31, 2025, the carrying value of this investment was $4.0 million, recorded under investments on the Company’s consolidated balance sheet. The Company does not have any future funding commitments, guarantees, or other arrangements that could require it to provide additional financial support to HCMC.

NOTE 14. ACCOUNTS PAYABLE AND ACCRUED EXPENSES

At December 31, 2025 and December 31, 2024, accounts payable and accrued expenses consisted of:

NOTE 15. DEBT

The following table provides a breakdown of the Company’s debt as of December 31, 2025 and 2024 is presented below:

Promissory Note

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 afive-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 $1,205,000 and $1,809,000 as of December 31, 2025 and December 31, 2024, respectively. The Company incurred approximately $92,000 and $127,000 interest expense for the year ended December 31, 2025 and 2024, 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 afive-year term, an interest rate of 6.0% per annum. The outstanding balance of the Ellwood Note was approximately $452,000 and $595,000 in principal amount as of December 31, 2025 and December 31, 2024, respectively. The Company recognized interest expense of approximately $32,000 and $40,000 for the years ended December 31, 2025, and 2024, 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 would deliver shares of its common stock equal to approximately $1,889,000 divided by the IPO price (“Bridge Shares”). The aggregate gross proceeds received from the investors in connection with the Security Purchase Agreement (“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 Bridge Shares. The parties agreed to terminate any existing obligations of the institutional investors to acquire HCWC Bridge Shares as part of the IPO transaction.

On the Spin-Off Date, after the NYSEAM market closing, the Spin-Off of the HCWC business was completed. On September 14, 2024, HCWC became an independent, publicly traded company, and on September 16, 2024, the stock was traded on the NYSEAM under the stock symbol “HCWC.”

Upon the completion of the IPO, HCWC paid in full the principal amount of Notes and OID. At December 31, 2024, the outstanding principal balance of the Notes and debt discount related with the Notes were at $0. 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 year ended December 31, 2024, approximately $298,000 of interest expense was recognized in the accompanying consolidated statements of operations.

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 September 16, 2024, and concluded that the fair value of the Bridge Warrants at September 16, 2024 was $1,887,001. Due to the fact that Bridge Warrants exercise was contingent upon the IPO, the Company did not recognize the warrant liability until the Spin-off date. The Bridge Warrants were exercised on September 17, 2024 by institutional investors. Upon warrant exercise,188,889 shares of Class A common stock were issued and the warrant liability was eliminated against the loss on debt extinguishment in the amount of $1,888,889.

In connection with the GreenAcres Market acquisition, on August 23, 2024, the Company issued a secured promissory note (the “GreenAcres Note”) in the principal amount of $1,825,000 as a portion of the purchase price. The GreenAcres Note has afive-year term, an interest rate of 6.0% per annum and is secured by the assets of the GreenAcres Market. The outstanding balance was approximately $1,390,000 and $1,720,000 as of December 31, 2025 and 2024, respectively. The Company incurred approximately $94,000 and $36,000 interest expense for the years ended December 31, 2025 and 2024, respectively.

Convertible Note

On July 18, 2024 (the “Loan Effective Date”), the Company entered into a loan and security agreement with a private lender for a $7,500,000 loan (the “Acquisition Loan”). The Acquisition Loan has a three-year term, maturing in July 2027, and bears interest at a rate of 12% per annum. The loan is guaranteed by all of the subsidiaries of the Company (the “Guarantors”) and secured by all of the assets of the Company and the Guarantors.

Throughout the year ended December 31, 2025, the Company entered into a series of exchange agreements (the “Exchange Agreements”) with the holders of the Acquisition Loan (the “Noteholders”), who are unrelated third parties, to convert portions of the outstanding principal and accrued interest into shares of the Company’s Class A common stock. These conversions were accounted for as debt extinguishments. The difference between the carrying amount of the extinguished debt and the fair value of the common stock issued was recognized as a loss on debt extinguishment.

In summary, as a result of these exchange agreements during the year ended December 31, 2025, the Company exchanged approximately $3.0 million of outstanding principal of the Acquisition Loan in exchange for 7,575,001 shares of the Company’s common stock.

The following table summarizes the conversion activity during the year ended December 31, 2025:

As a result of these debt conversions, the Company recorded a net loss on extinguishment of debt of approximately $0.4 million within loss on debt extinguishment in the Consolidated Statement of Operations for the year ended December 31, 2025. Following these transactions, $4,465,685 in principal remains outstanding under the Acquisition Loan as of December 31, 2025.

As of December 31, 2025, the Company had $1,090,685 of outstanding debt under the October 24, 2025 exchange agreement, which contains an embedded conversion feature allowing holders to convert debt into shares of common stock at a conversion price equal to the stock price on the day prior to conversion. Under ASC 815, Derivatives and Hedging, this embedded derivative is required to be recognized at fair value. The NYSE American approved a maximum of 2,985,075 shares for this conversion, of which 2,325,000 shares had been issued as of December 31, 2025, leaving 660,075 shares available. Based on the December 31, 2025 closing stock price of $0.251 per share, the fair value of the remaining shares was $165,678. Accordingly, the embedded conversion feature had a fair value of $0.00 as of the balance sheet date, and no derivative liability was recorded. All remaining shares available under the NYSE American cap were subsequently converted in January and February 2026.

Future Principal Payments

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:

NOTE 16. COMMITMENTS AND CONTINGENCIES

Legal Proceedings

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 successfully resolved the complaint for a $5,000 settlement fee in September 2025. The Company recognized $5,000 in litigation settlement expense in the Condensed Consolidated Statements of Operations.

From time to time the Company is involved in legal proceedings arising in the ordinary course of our business. We believe that there is no other litigation pending that is likely to have, individually or in the aggregate, a material adverse effect on our financial condition or results of operations as of December 31, 2025. With respect to legal costs, we record such costs as incurred.

NOTE 17. STOCKHOLDERS’ EQUITY

Spin-Off

HCMC announced on August 22, 2022 that its Board of Directors approved separation of the Grocery business, including wellness business, into an independent, publicly traded company (the “Spin-Off”). Prior to the Spin-Off, HCWC was a subsidiary under HCMC, which operated the Ada’s Natural Market, Paradise Health & Nutrition, Mother Earth’s Storehouse, Green’s Natural Foods, Ellwood Thompson’s, and GreenAcres Market retail brands, as well as licensed wellness centers and Healthy U Wholesale.

On the Spin-Off Date, after the NYSEAM market closing, the Spin-Off of the HCWC business was completed. On September 14, 2024, HCWC became an independent, publicly traded company, and on September 16, 2024, the stock was traded on the NYSEAM under the stock symbol “HCWC.”

HCMC distributed all the outstanding shares of Common Stock held by it on a pro rata basis to holders of HCMC’s common stock. For each 208,632 shares of HCMC common stock held as of 5:00 p.m., New York City time, on September 9, 2024, the record date for the Spin-Off (the “Record Date”), a HCMC stockholder was entitled to receive one (1) share of Class A common stock and three (3) shares of Class B common stock. The Distribution was made in book-entry form by a distribution agent as soon as practicable after the date of the Distribution.

Debt Conversion

On March 2, 2025, the Company entered into an agreement with certain note holders to exchange $450,000 of outstanding principal under its existing Loan and Security Agreement dated July 18, 2024 for 750,000 shares of the Company’s Class A common stock.

On April 3, 2025, the Company entered into an agreement with certain note holders to exchange $500,000 of outstanding principal under its existing Loan and Security Agreement dated July 18, 2024 for 1,136,364 shares of the Company’s Class A common stock.

On May 1, 2025, the Company entered into an agreement with the same note holders to exchange $175,000 of outstanding principal and $187,726 accrued interest under its existing Loan and Security Agreement dated July 18, 2024 for 863,637 shares of the Company’s Class A common stock.

On July 15, 2025, the Company entered into an agreement with the same note holders to exchange $1,000,000 of outstanding principal under its existing Loan and Security Agreement dated July 18, 2024 for 2,500,000 shares of the Company’s Class A common stock.

All of the above debt conversion agreements were completed on their respective dates, and the related shares of Class A common stock were issued accordingly.

On October 24, 2025, the Company entered into an agreement with the same note holders to exchange $2,000,000 of outstanding principal under its existing Loan and Security Agreement dated July 18, 2024 for variable shares of the Company’s Class A common stock. As of December 31, 2025,2,325,000 shares of the Company’s Class A common stock were issued in exchange of $909,315 outstanding principal.

Series A Convertible Preferred Stock

The Company is authorized to issue 40,000,000 shares of Series A convertible preferred stock with par value of $0.001, none of which have been previously issued.

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. 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). On October 30, 2025, the parties to the 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. 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. For further details regarding the remaining $8.0 million commitment and its significance to the Company’s liquidity, see Note 2 - Going Concern.

Restricted Stock

On August 19, 2025, the Compensation Committee of the Company’s Board of Directors approved the grant of an aggregate of 2.6 million shares of restricted Class A common stock to certain employees, directors, and service providers of the Company, pursuant to the Company’s 2024 Equity Incentive Plan. The restricted stock awards, which are subject to the execution of individual Restricted Stock Award Agreements, are generally scheduled to vest in eight equal quarterly installments over a two-year period, commencing three months from the issuance date. The awards also contain an accelerated vesting provision in connection with a material transaction of the Company. As of December 31, 2025,2.6 million shares of restricted Class A common stock were issued, approximately $98,000 of stock-based compensation expense related to these awards has been recognized in the accompanying consolidated financial statements.

The following table reflects the activity for all unvested restricted stocks during 2025:

As of December 31, 2025, there was approximately $1,462,500 of total unrecognized compensation cost related to unvested restricted stock awards granted under the 2024 Equity Incentive Plan. This cost is expected to be recognized over a weighted-average period of approximately 1.0 years. The weighted-average grant-date fair value of restricted stock awards granted during 2025 was $0.60 per share.

The Company accounts for forfeitures of restricted stock awards in accordance with ASC 718, Compensation—Stock Compensation. The Company has elected to account for forfeitures as they occur. Under this policy, compensation cost is recognized only for awards that ultimately vest. Shares that are forfeited due to an employee’s failure to satisfy a service condition (such as termination of employment prior to vesting) become available for future grant under the 2024 Equity Incentive Plan, consistent with the terms of the plan.

As of December 31, 2025,19,990,750 shares of common stock and 5,250 shares of Series A Convertible Preferred Stock are outstanding.

For information regarding restricted stock grants approved subsequent to December 31, 2025, see Note 21, Subsequent Events.

NOTE 18. LEASES

The Company has various lease agreements with terms of up to 20 years, including operating leases of retail stores, headquarters, and a finance lease for data center equipment.

The following table presents information about the amount, timing and uncertainty of cash flows arising from the Company’s operating leases as of December 31, 2025.

The following summarizes the Company’s leases:

The amortization of the right-of-use asset for operating lease of approximately $3,729,000 and $3,274,000 for the years ended December 31, 2025 and 2024, respectively, were included in operating cash flows.

The following table provides a summary of other information related to the leases at December 31, 2025 and 2024:

Rent expense under operating lease for the years ended December 31, 2025 and 2024 was approximately $3,894,000 and $4,196,000, respectively, and was included in selling, general and administrative expenses in the accompanying consolidated statement of operations.

The following table represents the components of lease expense for twelve months ended December 31, 2025 and 2024:

The aggregate cash payments under the operating leasing arrangement was approximately $3,597,000 for the year ended December 31, 2025. The aggregate cash payments under the finance leasing arrangement was approximately $7,000 for the year ended December 31, 2025 and the payments were included in financing cash flows.

NOTE 19. RELATED PARTY TRANSACTIONS

Prior to the Spin-Off, the Company has not historically operated as a separate, stand-alone company and, accordingly has had various relationships with HCMC whereby HCMC provided services to the Company as noted below. Related party transactions prior to Spin-Off include allocation of general corporate expenses and advances from parent.

Allocation of General Corporate Expenses

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

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

Investment by Parent

For the thirty-six weeks ended September 13, 2024, the net operating expenses of $1.7 million incurred by HCMC on behalf of the Company was included in the Net Parent’s Investment. Upon Spin-Off, the Company wrote off the net parent investment balance to additional paid-in capital.

Due from Related Party

Prior to Spin-Off, there was no intercompany agreement between the Company and HCMC. Management has determined those intercompany receivables and payables will be settled within twelve months after the balance sheet date. As a result, the Company’s intercompany balances are reflected as “due to” or “due from” accounts in the consolidated balance sheets. At the time of Spin-Off, the Company had a net payable balance to HCMC in the amount of $1.2 million, and the Company paid the balance in full to settle on the Spin-Off date of September 13, 2024. The Company had a net intercompany balance of $4.0 million and $0.2 million from HCMC as of December 31, 2025 and December 31, 2024, respectively.

On December 31, 2025, the Company entered into a Stock Purchase and Satisfaction of Debt Agreement with HCMC, pursuant to which the Company settled the outstanding $4.0 million intercompany receivable by accepting 43,889,786,222 shares of HCMC common stock. Upon settlement, the related party receivable was derecognized and the Company recorded an investment in HCMC accounted for under the equity method (see Note 13). As of December 31, 2025, the due from related party balance is $0.

Agreements with HCMC

The Company entered into several agreements with the former parent that, among other things, effect the separation and govern the relationship of the parties following the Spin-Off. These agreements include:

Under the terms of the transition services agreement, HCMC provides to the Company, on a transitional basis, certain services or functions, including information technology, accounting, human resources, and payroll functions. Generally, these services are provided for a period of up to one year following the Spin-Off. Consideration and costs for the transition services are determined using several billing methodologies as described in the agreements, including customary billing and pass-through billing. Costs for transition services provided by the former parent are recorded within the Consolidated Statements of Operations based on the nature of the services. Following the Spin-Off, the Company recognized costs of $0.4 million for services provided by the former parent in 2024 pursuant to the transition services agreement.

NOTE 20. INCOME TAXES

Overview and Spin-Off

Prior to September 13, 2024, the date of the Spin-Off of HCWC as a stand-alone entity, separate tax returns were not filed as they were included in the consolidated tax reporting of the former parent entity HCMC. On September 13, 2024, HCWC completed its separation from HCMC through a tax-free distribution of HCWC common stock to HCMC shareholders. The Spin-Off was structured to qualify as tax-free under Sections 355(a) and 368(a)(1)(D) of the Internal Revenue Code (IRC).

Pursuant to the Tax Matters Agreement (TMA) executed with HCMC in December 2023:

For periods prior to the Spin-Off, HCWC’s tax provision was calculated using the separate return method, as if HCWC had operated as a standalone taxpayer. Deferred tax assets and liabilities, including net operating losses (NOLs), were allocated to HCWC based on the carryover tax basis of assets and liabilities transferred in the Spin-Off. This method preserves the tax-free nature of the transaction.

As of December 31, 2025 and 2024, all amounts related to the Company’s tax positions are recognized on the Consolidated Balance Sheet. Income taxes are accounted for under the asset and liability method.

Correction of Prior Period Amounts (ASC 250)

During the fiscal year ended December 31, 2025, the Company completed its analysis of the tax consequences of the Spin-Off and the TMA. Based on information and analyses that became available in 2025, including the finalization of HCMC’s 2024 consolidated tax returns, the Company determined that certain deferred tax assets reported in the 2024 consolidated financial statements were incorrectly attributed to HCWC and should have been retained by HCMC. Specifically, the following pre-spin tax attributes were incorrectly included in the 2024 deferred tax asset balance:

In accordance with ASC 250, Accounting Changes and Error Corrections, the Company has evaluated the materiality of this error on both the prior period (2024) and the current period (2025). The correction of this error had no impact on the Company’s previously reported consolidated statements of operations, total assets, liabilities, or cash flows for any period, as the Company maintains a full valuation allowance against its net deferred tax assets and the adjustment was fully offset by a corresponding reduction in the valuation allowance. Accordingly, management has concluded that the error was immaterial to the 2024 financial statements and that correction of the error in 2025 would not materially misstate the 2025 financial statements.

The following table presents the effect of the correction on the previously reported 2024 balances. The 2024 balances presented herein have been revised to reflect this correction.

As of December 31, 2024

The adjustment to the 2024 NOL carryforward reflects the removal of pre-spin federal and state net operating losses.

Income Tax Provision

The Company did not have a provision for income taxes (current or deferred) for the years ended December 31, 2025 and 2024. The following table reconciles income tax expense (benefit) computed at the U.S. federal statutory rate to the income tax expense (benefit) reflected in the accompanying statement of operations, and reconciles the U.S. federal statutory income tax rate to the Company’s effective income tax rate for the years then ended. The 2024 amounts have been revised to reflect the correction described above.

The 2024 revised income tax provision uses the full-year consolidated net loss before taxes of $4,506,466, which includes the Company’s results prior to the September 13, 2024 spin-off. The “Pre Spin-Off Tax Adjustment” line removes the tax effects of operations prior to the spin-off date, as responsibility for all taxes related to pre-spin periods is retained by HCMC under the TMA.

For the year ended December 31, 2025, the Company made no cash payments for income taxes, net of refunds received. Accordingly, disaggregation by jurisdiction is not applicable.

The reconciliation of the U.S. federal statutory income tax rate of 21.0% to the Company’s effective tax rate of 0% for the year ended December 31, 2025 is as follows:

The net effect of these items results in an effective tax rate of 0% for 2025, consistent with the Company’s full valuation allowance position.

Deferred Tax Assets and Liabilities

As of December 31, 2025 and 2024, the Company’s deferred tax assets and liabilities consisted of the effects of temporary differences attributable to the following:

Valuation Allowance

In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment.

After consideration of all of the positive and negative evidence available—including the Company’s history of cumulative losses, negative working capital, and going concern uncertainties—management has determined that a valuation allowance is required at December 31, 2025 and 2024 to reduce the deferred tax assets to amounts that are more likely than not to be realized.

The valuation allowance was $192,050 as of December 31, 2024 (revised). During 2025, the valuation allowance increased by $906,217, primarily related to current year net operating losses and other temporary differences. Accordingly, the valuation allowance balance as of December 31, 2025 was $1,098,268.

Should the factors underlying management’s analysis change, future valuation adjustments to the Company’s net deferred tax assets may be necessary.

Net Operating Loss Carryforwards

At December 31, 2025, the Company had U.S. federal and state post-2017 net operating loss carryforwards (“NOLs”) of approximately $2.5 million and $2.6 million, respectively. The Tax Cuts and Jobs Act (TCJA) allows NOLs incurred in tax years beginning in 2018 to be carried forward indefinitely, subject to an 80% limitation on taxable income under Internal Revenue Code Section 172. The decrease in NOL carryforwards from the prior year reflects the correction of an error in the 2024 financial statements, whereby certain pre-spin NOLs generated prior to September 13, 2024, were incorrectly attributed to the Company. Under the Tax Matters Agreement, these NOLs were always the property of HCMC, the former parent, and have been removed from the Company’s deferred tax assets upon finalization of HCMC’s 2024 tax returns.

Certain net operating loss carryforwards are also subject to annual limitations under Internal Revenue Code Section 382 and separate return limitation year (SRLY) rules, which may restrict the amount of pre-change losses that can be utilized in future periods. Florida, Kansas, and Oklahoma net operating losses generated in taxable years beginning after December 31, 2017, may be carried forward indefinitely and do not expire; however, NOLs in these states are subject to an annual limitation of 80% of taxable income. New York, New Jersey, and Virginia net operating losses expire after twenty years.

Recent Tax Legislation

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

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted, which, among other things, modifies certain business tax provisions, including interest expense limitations, depreciation and amortization rules, and selected energy-related incentives that interact with the IRA. The Company has evaluated the OBBBA and does not currently expect it to have a material impact on its consolidated financial statements.

Uncertain Tax Positions

The Company hadno unrecognized tax benefits andno amounts accrued for interest and penalties as of December 31, 2025 and 2024.

NOTE 21. SUBSEQUENT EVENTS

The Company evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that the consolidated financial statements were available to be issued. Based upon this review, the Company identified the following subsequent event that would have required disclosure in the consolidated financial statements.

On January 14, 2026, the Company converted $29,400 of principal amount under the October 24, 2025 debt exchange agreement (see Note 15, Debt) into 100,000 shares of its Class A Common Stock. On January 21, 2026, the Company converted $21,420 of principal amount into 75,000 shares of its Class A Common Stock. On January 27, 2026, the Company converted $65,320 of principal amount into 200,000 shares of its Class A Common Stock. On February 20, 2026, the Company converted $76,429 debt into 285,075 shares of its Class A Common Stock. Following these transactions, $4,273,116 in principal remains outstanding under the Loan and Security Agreement dated July 18, 2024.

On February 10, 2026, the Company entered into an Exchange Agreement with the same holders of its outstanding promissory notes issued pursuant to the Loan and Security Agreement dated July 18, 2024. Under the terms of the agreement, the holders agreed to exchange an aggregate principal amount of $1,200,000 of such notes for shares of the Company’s Class A common stock, par value $0.001 per share.

On February 25, 2026, the Company converted $274,100 of principal amount under the February 10, 2026 debt exchange agreement into 1,000,000 shares of its Class A Common Stock. Following these transactions, $3,999,116 in principal remains outstanding under the Loan and Security Agreement dated July 18, 2024.

On February 24, 2026, the Compensation Committee of the Board of Directors approved the grant of an aggregate of 2,545,719 shares of restricted Class A common stock to certain executive officers, directors, and employees under the Company’s 2024 Equity Incentive Plan. The restricted stock vests in eight equal quarterly installments over a two-year period, with full acceleration upon a Change of Control or a Major Financing resulting in net proceeds to the Company in excess of $10 million. Additionally, the Compensation Committee approved amendments to the vesting schedules of certain outstanding 2025 restricted stock awards to accelerate vesting upon the occurrence of a Major Financing or Change of Control. The Compensation Committee also approved an amendment to Section 3.1(a) of the 2024 Equity Incentive Plan to increase the number of shares available for grant by 1.4 million shares.

On March 6, 2026, the Company converted $26,670 of principal amount under the February 10, 2026 debt exchange agreement into 100,000 shares of its Class A Common Stock. Following these transactions, $3,972,346 in principal remains outstanding under the Loan and Security Agreement dated July 18, 2024.

On March 10, 2026, the Company converted $260,400 of principal amount under the February 10, 2026 debt exchange agreement into 1,000,000 shares of its Class A Common Stock. Following these transactions, $3,711,946 in principal remains outstanding under the Loan and Security Agreement dated July 18, 2024.