Healthier Choices Management Corp.

Previous wording

Healthier Choices Management Corp. is a holding company focused on monetizing its intellectual property through royalty and licensing agreements, facilitated by its wholly owned subsidiary, HCMC Intellectual Property Holdings, LLC. HCMC’s IP portfolio includes patents related to innovative products, such as the Q-Cup and Imitine, which the company actively markets. In addition, HCMC is engaged in legal actions against R.J. Reynolds for patent infringement.

Current wording

Healthier Choices Management Corp. is a holding company focused on monetizing its intellectual property through its wholly owned subsidiary, HCMC Intellectual Property Holdings, LLC. The Company seeks to further monetize its patent suite through development and production of its patented products, including the Q-Cup™ technology and Imitine, licensing and royalty agreements, and enforcement actions against infringers of its intellectual property.

Previous wording

The Company currently and historically has reported net losses and cash outflows from operations. As of March 31, 2025, the Company had cash and cash equivalent of approximately $1.2 million and negative working capital of $1.7 million. The Company’s liquidity needs through March 31, 2025 have been satisfied through financing agreement with private lenders.

Current wording

The Company currently and historically has reported net losses and cash outflows from operations. As of June 30, 2025, the Company had cash and cash equivalent of approximately $1.1 million and negative working capital of $2.6 million. The Company’s liquidity needs through June 30, 2025 have been satisfied through financing agreement with private lenders.

Previous wording

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

Current wording

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

Previous wording

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

Current wording

The Company believes its cash on hand and its ability to draw on its $5 million line of credit will enable the Company to meet its obligations and capital requirements for at least 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.

Previous wording

Total operating expenses of $2.2 million for the three months ended March 31, 2025 remained consistent with the same period in 2024.

Current wording

Total operating expenses of $2.0 million for the three months ended June 30, 2025 remained consistent with the same period in 2024.

Previous wording

Total other income (expense), net of $14,000 for the three months ended March 31, 2025 consists of $23,000 loss on asset disposal offset by net interest income of $9,000. Total other income (expense), net of $43,000 for the three months ended March 31, 2024 primarily consists of interest income of $44,000, and loss on investment of $1,000.

Current wording

Total other income (expense), net of $2,000 for the six months ended June 30, 2025 consists of $22,000 loss on asset disposal offset by net interest income of $17,000 and other miscellaneous income of $3,000. Total other income (expense), net of $99,000 for the six months ended June 30, 2024 primarily consists of interest income of $100,000, and loss on investment of $1,000.

Previous wording

The following table and the discussion present the Company’s cash activities on continuing basis for three months ended March 31, 2025 and 2024:

Current wording

The following table and the discussion present the Company’s cash activities on continuing basis for six months ended June 30, 2025 and 2024:

Previous wording

Our net cash used in operating activities of approximately $1.0 million for the three months ended March 31, 2025 resulted from a net loss of $2.2 million, offset by a non-cash adjustment of $1.2 million and a net cash change of $40,000 from changes in operating assets and liabilities. Our net cash provided by operating activities of approximately $0.2 million for the three months ended March 31, 2024 resulted from a net loss of $2.2 million, offset by a non-cash adjustment of $1.2 million and a net cash change of $1.2 million from changes in operating assets and liabilities.

Current wording

Our net cash used in operating activities of approximately $2.0 million for the six months ended June 30, 2025 resulted from a net loss of $4.2 million, offset by a non-cash adjustment of $2.3 million and a net cash change of $0.1 million from changes in operating assets and liabilities. Our net cash provided by operating activities of approximately $0.5 million for the six months ended June 30, 2024 resulted from a net loss of $4.1 million, offset by a non-cash adjustment of $2.4 million and a net cash change of $2.2 million from changes in operating assets and liabilities.

Previous wording

There was no cash used in investing activities for the three months ended March 31, 2025. The net cash used in investing activities of $47,000 for the three months ended March 31, 2024 resulted from purchases of property and equipment.

Current wording

There was no cash used in investing activities for the six months ended June 30, 2025. The net cash used in investing activities of $47,000 for the six months ended June 30, 2024 resulted from purchases of property and equipment.

Previous wording

The net cash provided by financing activities of $0.5 million for the three months ended March 31, 2025 is primarily due to $1.0 million net transfer from HCWC and $0.5 million cash payment of the credit line. Net cash used in financing activities of approximately $0.9 million for the three months ended March 31, 2024 is due to $0.7 million investment in HCWC and $0.2 million payment for deferred offering cost related with Spin-Off.

Current wording

The net cash provided by financing activities of $1.5 million for the six months ended June 30, 2025 is primarily due to $1.9 million net transfers from HCWC and $0.4 million cash payment of the credit line. Net cash used in financing activities of approximately $1.8 million for the six months ended June 30, 2024 is due to $1.3 million investments in HCWC and $0.4 million payments for deferred offering cost related with Spin-Off.

Previous wording

The Company reported a net loss from continuing operation of $2.2 million for the three months ended March 31, 2025. The Company also had negative working capital of $1.8 million. The Company expects to continue incurring losses for the foreseeable future.

Current wording

The Company reported a net loss from continuing operation of $4.2 million for the six months ended June 30, 2025. The Company also had negative working capital of $2.6 million. The Company expects to continue incurring losses for the foreseeable future.

Previous wording

There have been no material changes to the Company’s critical accounting policies and estimates except allocation of corporate general expense as compared to the critical accounting policies and estimates described in the 2024 Annual Report, which we believe are the most critical to our business and the understanding of our results of operations and affect the more significant judgments and estimates that we use in the preparation of our condensed consolidated financial statements. Allocation of corporate general expenses to HCWC in year 2024 was a result of recently completed spin-Off of HCWC, which led to a reevaluation of how corporate general expenses were allocated. The Company adopted a proportional cost allocation method to allocate parent expense to the carve-out entity. There was no expense allocation for the three months ended March 31, 2025.

Current wording

There have been no material changes to the Company’s critical accounting policies and estimates except allocation of corporate general expense as compared to the critical accounting policies and estimates described in the 2024 Annual Report, which we believe are the most critical to our business and the understanding of our results of operations and affect the more significant judgments and estimates that we use in the preparation of our condensed consolidated financial statements. Allocation of corporate general expenses to HCWC in year 2024 was a result of recently completed spin-Off of HCWC, which led to a reevaluation of how corporate general expenses were allocated. The Company adopted a proportional cost allocation method to allocate parent expense to the carve-out entity. There was no expense allocation for the three and nine months ended June 30, 2025.