HEALTHY CHOICE WELLNESS CORP.

Previous wording

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

Current wording

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

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 of approximately $1.8 million and negative working capital of $2.4 million.

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 of approximately $4.7 million and positive working capital of $1.3 million.

Previous wording

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

Current wording

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

Previous wording

Net sales increased $4.4 million to $20.3 million for the three months ended March 31, 2025 as compared to $15.9 million for the same period in 2024. The increase in grocery sales of $3.7 million was primarily due to the acquisition of GreenAcres Market acquired in July 2024, and increase in same-store sales of $0.7 million. The increase in same-store sales was mainly attributable to the success of our new customer loyalty program

Current wording

Net sales increased $4.6 million to $20.2 million for the three months ended June 30, 2025 as compared to $15.6 million for the same period in 2024. The increase in grocery sales of $3.5 million was primarily due to the acquisition of GreenAcres Market acquired in July 2024, and increase in same-store sales of $1.1 million. The increase in same-store sales was mainly attributable to the success of our new customer loyalty program and CO-OP program.

Previous wording

Cost of goods sold for the three months ended March 31, 2025 and 2024 were $12.4 million and $9.8 million, respectively. The increase of $2.3 million is primarily due to the acquisition of GreenAcres Market, and in increase in same-store cost of goods sold of $0.3 million. Gross profit was $7.9 million and $6.1 million for the three months ended March 31, 2025 and 2024, respectively. Gross margin as a percentage of sales increased approximately 0.7% as compared to the same period in prior year.

Current wording

Cost of goods sold for the three months ended June 30, 2025 and 2024 were $12.1 million and $9.7 million, respectively. The increase of $2.2 million is primarily due to the acquisition of GreenAcres Market, and in increase in same-store cost of goods sold of $0.2 million. Gross profit was $8.1 million and $5.9 million for the three months ended June 30, 2025 and 2024, respectively. Gross margin as a percentage of sales increased approximately 2.3% as compared to the same period in prior year.

Previous wording

Total other (expenses) income, net of $0.3 million for the three months ended March 31, 2025 consists of net interest expense of $0.3 million, other miscellaneous expense of approximately $2,000, offset by $8,000 loss on debt extinguishment. Total other income (expense), net of $0.1 million for the three months ended March 31, 2024 primarily consists of interest expense of $103,000 and other miscellaneous income of $3,000.

Current wording

Total other expenses, net of $0.3 million for the three months ended June 30, 2025 consists of net interest expense of approximately $269,000, other miscellaneous expense of approximately $4,000, and $27,000 loss on debt extinguishment. Total other expense, net of $0.1 million for the three months ended June 30, 2024 primarily consists of interest expense of $118,000 and other miscellaneous income of $4,000.

Previous wording

Total operating expenses for the three months ended March 31, 2025 and 2024 were $8.3 million and $6.7 million, respectively. The increase of $1.6 million is due to $1.3 million from the acquisition of GreenAcres Market and $0.5 million increase in professional fees, and offset by $0.2 million decrease in same-store insurance expense and payroll and benefits expense.

Current wording

Total operating expenses for the six months ended June 30, 2025 and 2024 were $16.4 million and $13.0 million, respectively. The increase of $3.4 million is due to $2.7 million from the acquisition of GreenAcres Market and $0.7 million increase in professional fees and tax, license and permit expenses.

Previous wording

As of March 31, 2025, the Company has operating lease obligations totaling $13.3 million. The weighted-average remaining lease term is 4 years, with a weighted-average discount rate of 5.21%. Rent expense for the three months ended March 31, 2025 was $976,000, compared to $923,000 for the same period in 2024. This increase reflects new leases and variable payments expensed as incurred. We expect rent expense to rise incrementally over the next two years as additional leases reset to higher rates. Rising interest rates and inflation could increase the cost of future lease obligations. While the weighted-average discount rate increased marginally to 5.21% from 5.19% in 2024, a sustained rate hike environment may elevate borrowing costs for future lease liabilities.

Current wording

As of June 30, 2025, the Company has operating lease obligations totaling $12.4 million. The weighted-average remaining lease term is 4 years, with a weighted-average discount rate of 5.24%. Rent expense for the three months ended June 30, 2025 was $974,000, compared to $940,000 for the same period in 2024. Rent expense for the six months ended June 30, 2025 was $1,951,000, compared to $1,864,000 for the same period in 2024. These increases reflect new leases and variable payments expensed as incurred. We expect rent expense to rise incrementally over the next two years as additional leases reset to higher rates. Rising interest rates and inflation could increase the cost of future lease obligations. While the weighted-average discount rate increased marginally to 5.24% from 5.19% in 2024, a sustained rate hike environment may elevate borrowing costs for future lease liabilities.

Previous wording

Our net cash provided by operating activities of approximately $1.1 million for the three months ended March 31, 2025 resulted from a net loss of $0.7 million, offset by a non-cash adjustment of $2.0 million and a net cash usage of $0.2 million from changes in operating assets and liabilities. Our net cash used in operating activities of approximately $2.5 million for the three months ended March 31, 2024 resulted from a net loss of $0.7 million, offset by a non-cash adjustment of $1.8 million and a net cash usage of $3.6 million from changes in operating assets and liabilities.

Current wording

Our net cash provided by operating activities of approximately $2.2 million for the six months ended June 30, 2025 resulted from a net loss of $1.1 million, offset by a non-cash adjustment of $4.1 million and a net cash usage of $0.8 million from changes in operating assets and liabilities. Our net cash used in operating activities of approximately $3.0 million for the six months ended June 30, 2024 resulted from a net loss of $1.3 million, offset by a non-cash adjustment of $3.7 million and a net cash usage of $5.4 million from changes in operating assets and liabilities.

Previous wording

The net cash used in investing activities of $0.1 million for the three months ended March 31, 2025 and 2024 is due to purchases of property and equipment.

Current wording

The net cash used in investing activities of $0.2 million for the six months ended June 30, 2025 and net cash used in investing activities of $0.1 million for the six months ended June 30, 2024 were due to purchases of property and equipment.

Previous wording

The net cash used in financing activities of $1.2 million for the three months ended March 31, 2025 consists of principal payment on loan payable of $0.3 million and $0.9 million payment to related party. The net cash provided by financing activities of approximately $2.2 million for the three months ended March 31, 2024 consists of cash proceeds of $1.7 million from Security Purchase Agreement (“SPA”) signed on January 18, 2024, $0.7 million of net parent investment from HCMC, and $0.2 million principal payment on loan payable.

Current wording

The net cash provided by financing activities of $0.7 million for the six months ended June 30, 2025 consists of net proceeds of $3.1 million from HCWC Preferred Stock offering, principal payment on loan payable of $0.5 million and $1.9 million payment to related party. The net cash provided by financing activities of approximately $2.7 million for the six months ended June 30, 2024 consists of cash proceeds of $1.7 million from Securities Purchase Agreement (“SPA”) signed on January 18, 2024, $1.3 million of net parent investment from HCMC, and $0.3 million principal payment on loan payable.

Previous wording

The Company reported a net loss of $0.7 million for the three months ended March 31, 2025. The Company also had negative working capital of $2.4 million. The Company expects to continue incurring losses for the foreseeable future.

Current wording

The Company reported a net loss of $1.1 million for the six months ended June 30, 2025. The Company also had positive working capital of $1.3 million. The Company expects to continue incurring losses for the foreseeable future.

Previous wording

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

Current wording

Our management’s discussion and analysis of financial condition and results of operations is based on our unaudited condensed consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of these unaudited condensed consolidated financial statements requires us to exercise considerable judgment with respect to establishing sound accounting policies and in making estimates and assumptions that affect the reported amounts of our assets and liabilities, our recognition of revenues and expenses, and disclosure of commitments and contingencies at the date of the condensed consolidated financial statements. These estimates include useful lives and impairment of long-lived assets, deferred taxes and related valuation allowances, allocation of corporate general expenses, and the valuation of the assets and liabilities acquired in business combinations.