10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

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

For the quarterly period ended September 30, 2019

Or

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

For the transition period from _____ to _____

Commission file number: 001-36469

HEALTHIER CHOICES MANAGEMENT CORP.

(Exact name of Registrant as specified in its charter)

Delaware	84-1070932
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)
3800 North 28Th Way
Hollywood, FL	33020
(Address of principal executive offices)	(Zip Code)

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

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

☒ Yes ☐ No

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

☒ Yes ☐ No

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

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

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

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

☐ Yes ☒ No

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

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

As of October 29, 2019, there were 67,698,494,241 shares of the registrant’s common stock, par value $0.0001 per share, outstanding.

TABLE OF CONTENTS

	PAGE
PART I FINANCIAL INFORMATION	1
ITEM 1. Financial Statements (Unaudited)	1
Condensed Consolidated Balance Sheets as of September 30, 2019 and December 31, 2018	1
Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2019 and 2018	2
Condensed Consolidated Shareholders’ Equity Statements for the Three and Nine Months Ended September 30, 2019 and 2018	3
Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2019 and 2018	5
Notes to Condensed Consolidated Financial Statements	6
ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	15
ITEM 3. Quantitative and Qualitative Disclosures about Market Risk	20
ITEM 4. Controls and Procedures	20
PART II OTHER INFORMATION	22
ITEM 1. Legal Proceedings	22
ITEM 1A. Risk Factors	22
ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds	22
ITEM 3. Defaults Upon Senior Securities	22
ITEM 4. Mine Safety Disclosures	22
ITEM 5. Other Information	22
ITEM 6. Exhibits	22
Signatures	23
Exhibit 31.1
Exhibit 31.2
Exhibit 32.1
Exhibit 32.2

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

HEALTHIER CHOICES MANAGEMENT CORP.

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

	September 30, 2019		December 31, 2018
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	4,248,984	$	7,061,253
Accounts receivable, net		42,371		51,951
Inventories		1,881,225		1,864,619
Prepaid expenses and vendor deposits		306,274		402,578
Investment		33,343		90,857
Contract assets		18,000		32,400
TOTAL CURRENT ASSETS		6,530,197		9,503,658
Property and equipment, net of accumulated depreciation		353,681		497,039
Intangible assets, net of accumulated amortization		2,029,610		3,062,204
Goodwill		1,437,314		1,437,314
Note receivable		390,757		528,007
Right of use asset – operating lease, net		4,528,468		-
Other assets		147,864		144,441
TOTAL ASSETS	$	15,417,891	$	15,172,663
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses	$	851,297	$	1,301,418
Contract liabilities		174,328		442,630
Operating lease liability, current		472,106		-
Loan payable, current		282,314		282,224
Credit line		2,000,000		1,868,460
Derivative liabilities – warrants		1,719,816		1,722,928
TOTAL CURRENT LIABILITIES		5,499,861		5,617,660
Loan payable, net of current portion		939,821		1,128,234
Operating lease liability, net of current		3,474,665		-
TOTAL LIABILITIES		9,914,347		6,745,894
COMMITMENTS AND CONTINGENCIES (SEE NOTE 9)
STOCKHOLDERS’ EQUITY
Series B convertible preferred stock, $1,000 par value per share, 30,000 shares authorized; 20,150 shares issued and outstanding as of September 30, 2019 and December 31, 2018; aggregate liquidation preference of $20.2 million		20,150,116		20,150,116
Common Stock, $0.0001 par value per share, 750,000,000,000 shares authorized; 67,698,494,241 and 66,623,514,522 shares issued and outstanding as of September 30, 2019 and December 31, 2018, respectively		6,769,849		6,662,351
Additional paid-in capital		7,587,828		7,348,390
Accumulated deficit		(29,004,249)		(25,734,088)
TOTAL STOCKHOLDERS’ EQUITY		5,503,544		8,426,769
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	15,417,891	$	15,172,663

See notes to unaudited condensed consolidated financial statements

1

HEALTHIER CHOICES MANAGEMENT CORP.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2019		2018		2019		2018
SALES
Vapor sales, net	$	898,229	$	1,106,596	$	3,207,530	$	3,556,130
Grocery sales, net		2,520,101		1,923,878		8,407,919		6,359,671
TOTAL SALES, NET		3,418,330		3,030,474		11,615,449		9,915,801
Cost of sales vapor		385,208		460,648		1,337,555		1,602,363
Cost of sales grocery		1,629,980		1,183,033		5,309,567		3,850,998
GROSS PROFIT		1,403,142		1,386,793		4,968,327		4,462,440
OPERATING EXPENSES		2,532,505		2,179,492		8,057,452		7,334,165
LOSS FROM OPERATIONS		(1,129,363)		(792,699)		(3,089,125)		(2,871,725)
OTHER (EXPENSE) INCOME
Gain (loss) on investment		(12,514)		11,999		(57,514)		11,999
Other income (expense), net		(146)		152,260		(838)		469,760
Interest income (expense), net		(8,280)		30,458		(19,669)		63,219
Gain (loss) on repurchase of Series A warrants		-		(10,696,774)		-		(10,696,774)
Total other (expense) income, net		(20,940)		(10,502,057)		(78,021)		(10,151,796)
NET LOSS	$	(1,150,303)	$	(11,294,756)	$	(3,167,146)	$	(13,023,521)
NET LOSS PER SHARE-BASIC AND DILUTED	$	0.00	$	0.00	$	0.00	$	0.00
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING-BASIC AND DILUTED		66,929,136,282		45,821,526,888		66,734,751,470		34,900,093,115

See notes to unaudited condensed consolidated financial statements

2

HEALTHIER CHOICES MANAGEMENT CORP.

CONDENSED CONSOLIDATED STOCKHOLDERS’ EQUITY STATEMENTS

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2019

(UNAUDITED)

	Convertible Preferred Stock				Common Stock				Additional Paid-In		Accumulated
	Shares		Amount		Shares		Amount		Capital		Deficit		Total
Balance – July 1, 2019		20,150	$	20,150,116		66,645,257,694	$	6,664,526	$	7,543,370	$	(27,853,946)	$	6,504,066
Issuance of common stock in connection with cashless exercise of Series A warrants		-		-		53,236,547		5,323		(3,112)		-		2,211
Issuance of awarded stock for board members		-		-		1,000,000,000		100,000		(100,000)		-		-
Stock-based compensation expense		-		-		-		-		147,570		-		147,570
Net loss		-		-		-		-		-		(1,150,303)		(1,150,303)
Balance – September 30, 2019		20,150	$	20,150,116		67,698,494,241	$	6,769,849	$	7,587,828	$	(29,004,249)	$	5,503,544

HEALTHIER CHOICES MANAGEMENT CORP.

CONDENSED CONSOLIDATED STOCKHOLDERS’ EQUITY STATEMENTS

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2018

(UNAUDITED)

	Convertible Preferred Stock				Common Stock				Additional Paid-In		Accumulated
	Shares		Amount		Shares		Amount		Capital		Deficit		Total
Balance – July 1, 2018		-	$	-		29,348,867,108	$	2,934,887	$	11,238,744	$	(14,299,592)	$	(125,961)
Issuance of common stock in connection with cashless exercise of Series A warrants		-		-		1,602,741,446		160,274		(93,958)		-		66,317
Stock options exercised		-		-		777,777,778		77,778		-		-		77,778
Issuance of preferred stock in connection with cashless exercise of Series A warrants		20,722		20,721,744		-		-		(1,692,747)		-		19,028,997
Modification of share-based payment awards to officers		-		-		19,000,000,000		1,900,000		(1,900,000)		-		-
Issuance of awarded stock for officers		-		-		3,000,000,000		300,000		(300,000)		-		-
Issuance of awarded stock for professional services		-		-		3,000,000,000		300,000		(300,000)		-		-
Preferred stock exercised		(572)		(571,628)		5,716,280,000		571,628		-		-		-
Stock swap		-		-		1,500,000,000		150,000		-		-		150,000
Stock-based compensation expense		-		-		-		-		140,356		-		140,356
Net loss												(11,294,756)		(11,294,756)
Balance – September 30, 2018		20,150	$	20,150,116		63,945,666,332	$	6,394,567	$	7,092,395	$	(25,594,348)	$	8,042,730

See notes to unaudited condensed consolidated financial statements

3

HEALTHIER CHOICES MANAGEMENT CORP.

CONDENSED CONSOLIDATED STOCKHOLDERS’ EQUITY STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2019

(UNAUDITED)

	Convertible Preferred Stock				Common Stock				Additional Paid-In		Accumulated
	Shares		Amount		Shares		Amount		Capital		Deficit		Total
Balance – January 1, 2019		20,150	$	20,150,116		66,623,514,522	$	6,662,351	$	7,348,390	$	(25,734,088)	$	8,426,769
Issuance of common stock in connection with cashless exercise of Series A warrants		-		-		74,979,719		7,498		(4,386)		-		3,112
Issuance of awarded stock for board members		-		-		1,000,000,000		100,000		(100,000)		-		-
Stock-based compensation expense		-		-		-		-		343,824		-		343,824
Cumulative Effect on adoption of ASC 842		-		-		-		-		-		(103,015)		(103,015)
Net loss		-		-		-		-		-		(3,167,146)		(3,167,146)
Balance – September 30, 2019		20,150	$	20,150,116		67,698,494,241	$	6,769,849	$	7,587,828	$	(29,004,249)	$	5,503,544

HEALTHIER CHOICES MANAGEMENT CORP.

CONDENSED CONSOLIDATED STOCKHOLDERS’ EQUITY STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2018

(UNAUDITED)

	Convertible Preferred Stock				Common Stock				Additional Paid-In		Accumulated
	Shares		Amount		Shares		Amount		Capital		Deficit		Total
Balance – January 1, 2018		-	$	-		29,348,867,108	$	2,934,887	$	10,080,238	$	(12,570,827)	$	444,298
Issuance of common stock in connection with cashless exercise of Series A warrants		-		-		1,602,741,446		160,274		(93,958)		-		66,317
Stock options exercised		-		-		777,777,778		77,778		-		-		77,778
Issuance of preferred stock in connection with cashless exercise of Series A warrants		20,722		20,721,744		-		-		(1,692,747)		-		19,028,997
Modification of share-based payment awards to officers		-		-		19,000,000,000		1,900,000		(1,900,000)		-		-
Issuance of awarded stock for officers		-		-		3,000,000,000		300,000		(300,000)		-		-
Issuance of awarded stock for professional services		-		-		3,000,000,000		300,000		(300,000)		-		-
Preferred stock exercised		(572)		(571,628)		5,716,280,000		571,628		-		-		-
Stock swap		-		-		1,500,000,000		150,000		-		-		150,000
Stock-based compensation expense		-		-		-		-		1,298,862		-		1,298,862
Net loss		-		-		-		-		-		(13,023,521)		(13,023,521)
Balance – September 30, 2018		20,150	$	20,150,116		63,945,666,332	$	6,394,567	$	7,092,395	$	(25,594,348)	$	8,042,730

See notes to unaudited condensed consolidated financial statements

4

HEALTHIER CHOICES MANAGEMENT CORP.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	Nine Months Ended September 30,
	2019		2018
OPERATING ACTIVITIES
Net loss	$	(3,167,146)	$	(13,023,521)
Adjustments to reconcile net loss to net cash used in operating activities:
Bad debt expense		(3,002)		(75,399)
Depreciation and amortization		449,071		269,729
Loss on disposal of assets		25,427		-
Loss on investment		57,514		-
Amortization of right-of-use asset		459,760		-
Loss on repurchase of Series A warrants		-		10,696,774
Stock-based compensation expense		343,824		1,298,862
Changes in operating assets and liabilities:
Accounts receivable		12,582		21,036
Inventories		(16,606)		(144,893)
Prepaid expenses and vendor deposits		94,110		(288,359)
Contract assets		14,400		(180,000)
Other assets		(3,423)		-
Accounts payable		(155,910)		(36,652)
Accrued expenses		(294,211)		(112,343)
Contract liabilities		(268,302)		1,968,682
Lease liability		(402,857)		-
NET CASH USED IN OPERATING ACTIVITIES		(2,854,769)		393,916
INVESTING ACTIVITIES
Collection of note receivable		137,250		10,083
Purchases of property and equipment		(12,967)		(42,520)
Purchases of patent		(25,000)		(37,500)
Gain on investment		-		(11,999)
Issuance of note receivable		-		(500,000)
NET CASH PROVIDED BY INVESTING ACTIVITIES		99,283		(581,936)
FINANCING ACTIVITIES
Proceeds from line of credit		131,540		500,000
Principal payments on loan payable		(188,323)		(1,573)
Proceeds from exercise of stock options		-		77,778
NET CASH PROVIDED BY FINANCING ACTIVITIES		(56,783)		576,205
DECREASE IN CASH		(2,812,269)		388,185
CASH AND CASH EQUIVALENTS — BEGINNING OF PERIOD		7,061,253		7,883,191
CASH AND CASH EQUIVALENTS — END OF PERIOD	$	4,248,984	$	8,271,376
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for interest	$	107,646	$	1,750

See notes to unaudited condensed consolidated financial statements

5

HEALTHIER CHOICES MANAGEMENT CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Note 1. ORGANIZATION, GOING CONCERN, AND BASIS OF PRESENTATION

Organization

Healthier Choices Management Corp. (the “Company”) is a holding company focused on providing consumers with healthier daily choices with respect to nutrition and other lifestyle alternatives. The Company currently operates nine retail vape stores in the Southeast region of the United States, through which it offers e-liquids, vaporizers and related products. The Company also operates Ada’s Natural Market, a natural and organic grocery store, through its wholly owned subsidiary Healthy Choice Markets, Inc and Paradise Health and Nutrition, stores that offer fresh produce, bulk foods, vitamins and supplements, packaged groceries, meat and seafood, deli, baked goods, dairy products, frozen foods, health & beauty products and natural household items through its wholly owned subsidiary Healthy Choice Markets 2, LLC. The Company also sells vitamins and supplements on the Amazon.com marketplace through its wholly owned subsidiary Healthy U Wholesale, Inc. The Company markets the Q-Cup™ technology under the vape segment; this patented technology is based on a small, quartz cup called the Q-Cup™, which a customer partially fills with either cannabis or CBD concentrate (approximately 50 mg) purchased from a third party. The Q-Cup™ is then inserted into the Q-Cup™ Tank or Globe, that heats the cup from the outside without coming in direct contact with the solid concentrate. This Q-Cup™ technology provides significantly more efficiency and an “on the go” solution for consumers who prefer to vape concentrates either medicinally or recreationally.

Liquidity

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

The Company incurred a loss from operations of approximately $3.1 million for the nine months ended September 30, 2019. As of September 30, 2019, cash and cash equivalents totaled approximately $4.2 million. While we anticipate that our current cash, cash equivalents, and cash to be generated from operations will be sufficient to meet our projected operating plans for the foreseeable future through at least a year and a day from the issuance of these unaudited condensed consolidated financial statements, should we require additional funds (either through equity or debt financings, collaborative agreements or from other sources) we have no commitments to obtain such additional financing, and we may not be able to obtain any such additional financing on terms favorable to us, or at all.

Basis of Presentation and Principles of Consolidation

The Company’s unaudited condensed consolidated financial statements are prepared in accordance with GAAP. The unaudited condensed consolidated financial statements include the accounts of all subsidiaries in which the Company holds a controlling financial interest as of the financial statement date.

The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Healthy Choice Markets, Inc., Healthy Choice Markets 2, LLC (“Paradise Health and Nutrition”), The Vitamin Store, LLC, Healthy U Wholesale, Inc., The Vape Store, Inc. (“Vape Store”), Vaporin, Inc. (“Vaporin”), Smoke Anywhere U.S.A., Inc. (“Smoke”), Emagine the Vape Store, LLC (“Emagine”), IVGI Acquisition, Inc., Vapormax Franchising LLC, Vaporin LLC, and Vaporin Florida, Inc. All intercompany accounts and transactions have been eliminated in consolidation.

6

Unaudited Interim Financial Information

The unaudited condensed consolidated financial statements have been prepared by the Company and reflect all normal, recurring adjustments that, in the opinion of management, are necessary for a fair presentation of the interim financial information. The results of operations for the interim periods presented are not necessarily indicative of the results to be expected for any subsequent quarter or for the year ending December 31, 2019. Certain information and footnotes normally included in financial statements prepared in accordance with GAAP have been omitted under the instructions to Form 10-Q and Article 10 of Regulation S-X of the Securities and Exchange Commission (“SEC”). These unaudited condensed consolidated financial statements and notes included herein should be read in conjunction with the audited consolidated financial statements and related notes thereto as of and for the year ended December 31, 2018 included in the Company’s Annual Report on Form 10-K for such year as filed with the SEC on March 27, 2019.

Note 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Reclassifications

Certain prior period amounts in the consolidated financial statements related to write-down of obsolete and slow moving inventory, due from merchant credit card processors, gain (loss) on investment and other income (expense), net have been reclassified to conform to the current period’s presentation. No changes to the Company’s net loss were made as a result of such reclassifications.

Use of Estimates in the Preparation of the Financial Statements

The preparation of condensed 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 condensed 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 allowances, reserves and write-downs of receivables and inventory, valuing equity securities and hybrid instruments, share-based payment arrangements, deferred taxes and related valuation allowances, and the valuation of the assets and liabilities acquired in business combinations. Certain of 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 of its accounting estimates at least quarterly based on these conditions and records adjustments when necessary.

Adopted Accounting Pronouncements

In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842)” (“ASU 2016-02”). ASU 2016-02 establishes a right-of-use (“ROU”) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. ASU 2016-02 is effective for annual periods beginning after December 15, 2018, and annual and interim periods thereafter, with early adoption permitted. The Company adopted ASU No. 2016-02 on January 1, 2019 using the cumulative-effect adjustment transition method, which applies the provisions of the standard at the effective date without adjusting the comparative periods presented.

Adoption of this standard resulted in the recognition of operating lease right-of-use assets of $4,988,000 and corresponding lease liabilities of $4,350,000 on the consolidated balance sheet as of January 1, 2019. An adjustment to Ada’s favorable lease of $739,000 and prepaid rent of $2,000, resulted in a cumulative effect adjustment of $103,000. The standard did not materially impact operating results or liquidity. Disclosures related to the amount, timing and uncertainty of cash flows arising from leases are included in Note 10, Leases.

Note 3. CONCENTRATIONS

Cash

Our cash balances are kept liquid to support our growing acquisition and infrastructure needs for operational expansion. The majority of the Company’s cash and cash equivalents are concentrated in one large financial institution, which is in excess of Federal Deposit Insurance Corporation (FDIC) coverage.

A summary of the financial institutions that had a cash and cash equivalents in excess of FDIC limits of $250,000 at September 30, 2019 and December 31, 2018 is presented below:

	September 30, 2019		December 31, 2018
Total Cash in excess of FDIC limits of $250,000	$	3,309,854		6,039,000

7

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

Vendor

We source from multiple suppliers. These suppliers range from small independent businesses to multinational conglomerates. For the nine months ended September 30, 2019, we purchased approximately 68% of the goods we sell from our top 20 suppliers.

Purchase from one vendor in excess of 20% of total purchase is summarized in below table:

	September 30, 2019		December 31, 2018
Purchase in excess of 20% of total purchase
Vendor A		22%		30%

Note 4. DISAGGREGATION OF REVENUES

The Company reports the following segments in accordance with management guidance: Vapor and Grocery. When the Company prepares its internal management reporting to evaluate business performance, we disaggregate revenue into the following categories that depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors.

	Three Months Ended				Nine Months Ended
	September 30, 2019		September 30, 2018		September 30, 2019		September 30, 2018
Vapor	$	898,229	$	1,106,596	$	3,207,530	$	3,556,130
Grocery		2,520,101		1,923,878		8,407,919		6,359,671
Total revenue	$	3,418,330	$	3,030,474	$	11,615,449	$	9,915,801
Retail Vapor	$	898,216	$	1,106,228	$	3,207,120	$	3,548,704
Retail Grocery		2,133,537		1,407,776		7,143,616		4,581,001
Food service/restaurant		291,435		370,609		949,211		1,167,006
Online/eCommerce		81,035		135,483		285,891		593,347
Wholesale Grocery		14,094		10,010		29,201		18,317
Wholesale Vapor		13		368		410		7,426
Total revenue	$	3,418,330	$	3,030,474	$	11,615,449	$	9,915,801

Note 5. INTANGIBLE ASSETS

Intangible assets, net are as follows:

September 30, 2019	Useful Lives (Years)		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Trade names		8-10 years	$	993,000	$	(328,733)	$	664,267
Customer relationships		4-10 years		1,228,000		(230,198)		997,802
Patents		10 years		270,250		(42,271)		227,979
Non-compete		4 years		174,000		(34,438)		139,562
Website		3 years		4,500		(4,500)		-
Intangible assets, net			$	2,669,750	$	(640,140)	$	2,029,610

December 31, 2018	Useful Lives (Years)		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Favorable lease		15 years	$	890,000	$	(150,580)	$	739,420
Trade names		8-10 years		993,000		(252,329)		740,671
Customer relationships		4-10 years		1,228,000		(41,010)		1,186,990
Patents		10 years		245,250		(22,940)		222,310
Non-compete		4 years		174,000		(1,812)		172,188
Website		3 years		4,500		(3,875)		625
Intangible assets, net			$	3,534,750	$	(472,546)	$	3,062,204

8

Intangible assets are amortized on a straight-line basis over their estimated useful lives. Amortization expense amounted to approximately $318,000 and $122,000 for the nine months ended September 30, 2019 and 2018, respectively. Due to adoption of ASU No. 2016-02 on January 1, 2019, the Company’s favorable lease intangible asset associated with its Ada’s Natural Market location, with a net balance of $739,000 as of December 31, 2018, was reclassified to right-of-use asset in the Ada’s lease amortization schedule to correct the January 1, 2019 opening balance sheet. Future annual estimated amortization expense is as follows:

Years ending December 31,
2019 (remaining three months)	$	106,160
2020		424,650
2021		417,650
2022		402,270
2023		163,400
Thereafter		515,480
Total	$	2,029,610

Note 6. CONTRACT ASSETS AND CONTRACT LIABILITIES

The Company’s contract assets consist of sales commissions to third parties that support and facilitate the completion of complex transactions, for which the Company has a performance obligation to pay due to the fact that the sales agreement was fully executed.

The Company’s deferred revenue consists of gift cards and loyalty rewards, for which the Company has a performance obligation to deliver products when customers redeem balances or terms expire through breakage. Our breakage policy is twenty four-month for gift cards, twelve months for Grocery loyalty rewards, and six months for Vapor loyalty rewards. As such, all contract liabilities are expected to be recognized within a twenty four-month period. Revenue is recognized when gift card and loyalty points are redeemed.

A summary of the net changes in contract liabilities activity for the nine months ended September 30, 2019 and 2018 is presented below:

	September 30, 2019		September 30, 2018
Beginning balance as January 1,	$	442,630	$	61,312
Issued		50,778		81,720
Redeemed		(57,319)		(113,954)
Breakage recognized		(1,563)		916
Fulfillment of contract		(260,198)		2,000,000
Ending balance as of September 30,	$	174,328	$	2,029,994

Note 7. STOCKHOLDERS’ EQUITY

Series A Warrants

A summary of warrant activity for the nine months ended September 30, 2019 is presented below:

	Exercise Price		Warrant Common Stock Equivalent		Remaining Contractual Term
Outstanding at January 1, 2019	$	0.0001		41,643,000,000		1.50
Warrants settlement	$	-		-
Cashless exercises for common stock	$	(0.0001)		(75,000,000)
Black Scholes Value adjustment	$	(0.0001)		(148,000,000)
Outstanding at September 30, 2019	$	0.0001		41,420,000,000		0.75

Pursuant to the Series A Warrant agreement, the Black Scholes value is calculated by a third-party and utilized in calculating the warrant common stock equivalents at the point of cashless exercise. As such, the value is computed at the end of each reporting period to determine the amount of warrant common stock equivalents outstanding using the formula below:

(Series A Warrants exercised * Black Scholes Value) / Closing common stock bid price as of two trading days prior.

9

A summary of the outstanding warrant common stock equivalents at September 30, 2019 and December 31, 2018 is presented below:

	September 30, 2019		December 31,  2018
Warrants outstanding (A)		2.7299		2.7348
Black Scholes value (B)		1,517,280		1,522,692
Subtotal (C)=(A) x (B)		4,142,023		4,164,258
Closing bid stock price (D)	$	0.0001	$	0.0001
Warrant common stock equivalent (C)/(D)		41,420,000,000		41,643,000,000

Stock Options

The Company recognized stock-based compensation in connection with the amortization of stock options, net of recovery of stock-based charges for forfeited unvested stock options. Stock-based compensation expense is included as part of operating expenses in the accompanying consolidated statements of operations.

A summary of Stock-based compensation expense recognized is presented below:

	Three Months Ended				Nine Months Ended
	September 30, 2019		September 30, 2018		September 30, 2019		September 30, 2018
Stock-based compensation	$	147,570	$	140,356	$	343,824	$	1,298,862

At September 30, 2019, the amount of unamortized stock-based compensation expense associated with unvested stock options granted to employees, directors and consultants was approximately $73,000, which will be amortized over a weighted average period of 1 year.

Loss Per Share

Basic loss per share is computed by dividing the net loss by the weighted average number of shares of common stock outstanding during the period. Diluted loss per share is computed using the weighted average number of shares of common stock outstanding and, if dilutive, potential shares of common stock outstanding during the period. Potential common shares consist of incremental shares of common stock issuable upon (a) the exercise of stock options (using the treasury stock method); (b) the conversion of Series A convertible preferred stock; (c) the exercise of warrants (using the if-converted method); (d) the vesting of restricted stock units; and (e) the conversion of convertible notes payable. Diluted income (loss) per share excludes the potential common shares, as their effect is antidilutive.

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

	September 30,
	2019		2018
Preferred stock		201,501,000,000		201,501,000,000
Stock options		91,062,000,000		90,012,000,000
Warrants		41,420,000,000		44,369,000,000
Total		333,983,000,000		335,882,000,000

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Note 8. 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:

● Level 1: Fair value measurement of the asset or liability using observable inputs such as quoted prices in active markets for identical assets or liabilities;

● Level 2: Fair value measurement of the asset or liability using inputs other than quoted prices that are observable for the applicable asset or liability, either directly or indirectly, such as quoted prices for similar (as opposed to identical) assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active; and

● Level 3: Fair value measurement of the asset or liability using unobservable inputs that reflect the Company’s own assumptions regarding the applicable asset or liability.

Nonfinancial assets such as goodwill, other intangible assets, and long-lived assets held and used are measured at fair value and tested for impairment annually, or when there is an indicator of impairment between annual tests.

The following table summarizes the liabilities measured at fair value on a recurring basis as of September 30, 2019:

	Level 1		Level 2		Level 3		Total
LIABILITIES
Derivative liabilities – warrants	$	-	$	1,719,816	$	-	$	1,719,816
Total derivative liabilities – warrants	$	-	$	1,719,816	$	-	$	1,719,816

The following table summarizes the liabilities measured at fair value on a recurring basis as of December 31, 2018:

	Level 1		Level 2		Level 3		Total
LIABILITIES
Derivative liabilities – warrants	$	-	$	1,722,928	$	-	$	1,722,928
Total derivative liabilities – warrants	$	-	$	1,722,928	$	-	$	1,722,928

Note 9. COMMITMENTS AND CONTINGENCIES

Legal Proceedings

From time to time the Company may be involved in various claims and legal actions arising in the ordinary course of our business. With respect to legal costs, we record such costs as incurred.

A subsidiary of the Company is a defendant in two lawsuits that stem from purported defect and negligence concerning electronic cigarette products it sold. The action was filed in state court in Broward County, Florida. Plaintiff is seeking damages for his physical injuries as well as his pain and suffering. Plaintiff claims that he was injured by a vape battery explosion that occurred in his pocket on or about September 2017 and that he purchased the battery from a store operated by the Company’s subsidiary.

The other lawsuit was filed in the 8th Judicial Circuit in and for Alachua Court, Florida. Plaintiff claimed that a battery explosion occurred in his pocket on or about May 1, 2018. Plaintiff sued the Company, alleging design and manufacturing defects in the subject battery, as well as breach of warranties and negligence, which caused or contributed to the Plaintiff’s injuries and damages.

While discovery is ongoing, the Company intends to vigorously dispute these claims that have been asserted against it.

Note 10. LEASE

The Company has various lease agreements with terms up to 20 years, including leases of retail stores, headquarter and equipment. All the leases are classified as operating leases. The Company adopted Accounting Standards Codification (“ASC”) 842, “Leases” (“ASC 842”) effective January 1, 2019 using the cumulative-effect adjustment transition method, which applies the provisions of the standard at the effective date without adjusting the comparative periods presented. We elected not to reassess whether any expired or existing contracts are or contain leases, reassess the lease classification for any expired or existing leases, nor reassess initial direct costs for any existing leases.

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The standard had an impact on the Company’s condensed consolidated balance sheets, but did not have a material impact on the Company’s condensed consolidated statements of operations or condensed consolidated statements of cash flows upon adoption. Upon adoption, the Company recognized right-of-use asset of $5.0 million and lease liability of $4.3 million for operating leases as of January 1, 2019.

The following table presents information about the amount, timing and uncertainty of cash flows arising from the Company’s operating leases as of September 30, 2019.

Maturity of Lease Liabilities by Fiscal Year
2019 (remaining)	$	165,350
2020		633,636
2021		507,682
2022		464,380
2023		441,262
Thereafter		2,888,699
Total undiscounted operating lease payments	$	5,101,009
Less: Imputed interest		(1,154,238)
Present value of operating lease liabilities	$	3,946,771

Balance Sheet Classification
Operating lease liability, current	$	472,106
Operating lease liability, net of current		3,474,665
Total operating lease liabilities	$	3,946,771

Other Information
Weighted-average remaining lease term for operating leases	11 years
Weighted-average discount rate for operating leases		4.8	%

Components of lease cost are as follows:

	September 30, 2019
Operating lease cost	$	380,901
Variable lease cost		238,996
Short-term lease cost		107,759
Total Rent Expense	$	727,656

Cash Flows

Cash paid for amounts included in the present value of operating lease liabilities was $403,000 for the nine months ended September 30, 2019 and was included in operating cash flows. The amortization of the right-of-use asset of $460,000 was included in operating cash flows.

Supplemental balance sheet information related to our operating leases is as follows:

	Balance Sheet Classification		January 1, 2019		September 30, 2019
Right of use asset		Other assets	$	4,988,227	$	4,528,468
Lease liability, current		Current liabilities	$	553,316	$	472,106
Lease liability, net of current		Other liabilities	$	3,796,312	$	3,474,665

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

The following discussion and analysis should be read in conjunction with our unaudited interim condensed consolidated financial statements and related notes appearing elsewhere in this report on Form 10-Q. In addition to historical information, this discussion and analysis contains forward-looking statements that involve risks, uncertainties, and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements. The terms “we,” “us,” “our,” and the “Company” refer to Healthier Choices Management Corp. and its wholly-owned subsidiaries, Healthy Choice Markets, Inc., Healthy Choice Markets 2, LLC (“Paradise Health and Nutrition”), The Vitamin Store, LLC, Healthy U Wholesale, Inc., The Vape Store, Inc. (“Vape Store”), Vaporin, Inc. (“Vaporin”), Smoke Anywhere U.S.A., Inc. (“Smoke”), Emagine the Vape Store, LLC (“Emagine”), IVGI Acquisition, Inc., Vapormax Franchising LLC, Vaporin LLC, and Vaporin Florida, Inc. . All intercompany accounts and transactions have been eliminated in consolidation.

Company Overview

Healthier Choices Management Corp. (the “Company”) is a holding company focused on providing consumers with healthier daily choices with respect to nutrition and other lifestyle alternatives. The Company currently operates nine retail vape stores in the Southeast region of the United States, through which it offers e-liquids, vaporizers and related products. The Company markets its Q-Cup™ technology under the vape segment. This Q-Cup™ technology provides significantly more efficiency and an “on the go” solution for consumers who prefer to vape concentrates either medicinally or recreationally. In October 2019, the Company announced the launch of the Q-Unit, a U.S. patented device made specifically for vaping concentrates.  The Q-Unit, which boasts a mechanism that prevents the concentrates from coming in direct contact with the heating element, allows consumers to vape uncut pure extract from a pure quartz cup. The Company also operates Ada’s Natural Market, a natural and organic grocery store, through its wholly owned subsidiary Healthy Choice Markets, Inc. and Paradise Health and Nutrition, stores that offer fresh produce, bulk foods, vitamins and supplements, packaged groceries, meat and seafood, deli, baked goods, dairy products, frozen foods, health & beauty products and natural household items through its wholly owned subsidiary Healthy Choice Markets 2, LLC.

Liquidity

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

The Company incurred a loss from operations of approximately $3.1 million for the nine months ended September 30, 2019. As of September 30, 2019, cash and cash equivalents totaled approximately $4.2 million. While we anticipate that our current cash, cash equivalents, and cash to be generated from operations will be sufficient to meet our projected operating plans for the foreseeable future through a year and a day from the issuance of these unaudited consolidated financial statements, should we require additional funds (either through equity or debt financings, collaborative agreements or from other sources) we have no commitments to obtain such additional financing, and we may not be able to obtain any such additional financing on terms favorable to us, or at all. If adequate financing is not available, the Company will further delay, postpone or terminate product and service expansion and curtail certain selling, general and administrative operations. The inability to raise additional financing may have a material adverse effect on the future performance of the Company.

Factors Affecting Our Performance

We believe the following factors affect our performance:

Vapor Retail: We believe the operating performance of our vapor retail stores will affect our revenue and financial performance. The Company has a total of nine retail vape stores, which are located in Florida, Georgia and Tennessee.

Inventory Management: Our vapor segment revenue trends are affected by an evolving product acceptance and consumer demand. We are creating and offering new products to our retail vapor customers. Evolving product development and technology impacts our licensing and intellectual properties spending. We expect the transition to vaporizer and advanced technology and enhanced performance products to continue and will impact our overall operating results in the future.

Increased Competition: The launch by national competitors in both of our business reporting segments have made it more difficult to compete on prices and to secure business. We expect increased product supply and downward pressure on prices to continue and impact our operating results in the future. We also expect the continued expansion of national grocery chains, which leads to greater competition, to impact our operating results in the future.

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Results of Operations

The following table sets forth our unaudited condensed consolidated Statements of Operations for the three months ended September 30, 2019 and 2018 that is used in the following discussions of our results of operations:

	Three Months Ended September 30,				2019 to 2018
	2019		2018		Change $
SALES
Vapor sales, net	$	898,229	$	1,106,596	$	(208,367)
Grocery sales, net		2,520,101		1,923,878		596,223
TOTAL SALES, NET		3,418,330		3,030,474		387,856
Cost of sales vapor		385,208		460,648		(75,440)
Cost of sales grocery		1,629,980		1,183,033		446,947
GROSS PROFIT		1,403,142		1,386,793		16,349
OPERATING EXPENSES
Advertising		46,190		56,021		(9,831)
Selling, general and administrative		2,486,315		2,123,471		362,844
Total operating expenses		2,532,505		2,179,492		353,013
LOSS FROM OPERATIONS		(1,129,363)		(792,699)		(336,664)
OTHER INCOME (EXPENSE)
Loss on repurchase of Series A warrants		-		(10,696,774)		(10,696,774)
Gain (loss) on investment		(12,514)		11,999		(24,513)
Other income (expense)		(146)		152,260		(152,406)
Interest income (expense)		(8,280)		30,458		(38,738)
Total other income (expense), net		(20,940)		(10,502,057)		10,481,117
NET LOSS	$	(1,150,303)	$	(11,294,756)	$	10,144,453

Net Vapor sales decreased $0.2 million to $0.9 million for the three months ended September 30, 2019 as compared to $1.1 million for the same period in 2018. The decrease in sales is primarily due to the decreased number of stores – nine stores open during the three months ended September 30, 2019 as compared to twelve retail stores and one wholesale location for the same period in 2018.

Net Grocery sales increased $0.6 million to $2.5 million for the three months ended September 30, 2019 as compared to $1.9 million for the same period in 2018. The increase in sales is primarily due to the acquisition of three Paradise Health and Nutrition stores.

Vapor cost of goods sold for the three months ended September 30, 2019 and 2018 were $0.4 million and $0.5 million, respectively, a decreased of $0.1 million. The decrease is primarily due to decreases in product costs during three months ended September 30, 2019 as compared to the same period in 2018. Gross profit was $0.5 million and $0.6 million for three months ended September 30, 2019 and 2018, respectively.

Grocery cost of goods sold for the three months ended September 30, 2019 and 2018 were $1.6 million and $1.2 million respectively, an increase increasedof $0.4 million. The increase is primarily due to increases in sales and cost of goods sold from the acquisition of three Paradise Health and Nutrition stores. Gross profit was $0.9 million and $0.7 million for the three months ended September 30, 2019 and 2018, respectively.

Selling, general and administrative expenses increased $0.4 million to $2.5 million for the three months ended September 30, 2019 compared to $2.1 million for the same period in 2018. The increase is primarily attributable to increases in payroll and employee related cost of $0.2 million, occupancy costs of $0.1 million, and depreciation and amortization of $0.1 million.

Net other expense of $21,000 for the three months ended September 30, 2019 includes loss on investment of $13,000, and interest expense of $8,000. Net other expense of $10.5 million for the three months ended September 30, 2018 includes a change in fair value of Series A Warrants of $10.7 million, offset by other income of $0.2 million, interest income of $30,000, and gain on investment of $12,000.

14

The following table sets forth our unaudited consolidated Statements of Operations for the nine months ended September 30, 2019 and 2018 that is used in the following discussions of our results of operations:

	Nine Months Ended September 30,				2019 to 2018
	2019		2018		Change $
SALES
Vapor sales, net	$	3,207,530	$	3,556,130	$	(348,600)
Grocery sales, net		8,407,919		6,359,671		2,048,248
TOTAL SALES, NET		11,615,449		9,915,801		1,699,648
Cost of sales vapor		1,337,555		1,602,363		(264,808)
Cost of sales grocery		5,309,567		3,850,998		1,458,569
GROSS PROFIT		4,968,327		4,462,440		505,887
OPERATING EXPENSES
Advertising		135,794		137,485		(1,691)
Selling, general and administrative		7,921,658		7,196,680		724,978
Total operating expenses		8,057,452		7,334,165		723,287
LOSS FROM OPERATIONS		(3,089,125)		(2,871,725)		(217,400)
OTHER INCOME (EXPENSE)
Loss on repurchase of Series A warrants		-		(10,696,774)		10,696,774
Gain (loss) on investment		(57,514)		11,999		(69,513)
Other income (expense)		(838)		469,760		(470,598)
Interest income (expense)		(19,669)		63,219		(82,888)
Total other income (expense), net		(78,021)		(10,151,796)		10,073,775
NET LOSS	$	(3,167,146)	$	(13,023,521)	$	9,856,375

Net Vapor sales decreased $0.3 million to $3.2 million for the nine months ended September 30, 2019 as compared to $3.6 million for the same period in 2018. The decrease in sales is primarily due to nine stores open during the nine months ended September 30, 2019 as compared to twelve retail stores and one wholesale location for the same period in 2018.

Net Grocery sales increased $2.0 million to $8.4 million for the nine months ended September 30, 2019 as compared to $6.4 million for the same period in 2018. The increase in sales is primarily due to the acquisition of three Paradise Health and Nutrition stores.

Vapor cost of goods sold for the nine months ended September 30, 2019 and 2018 were $1.3 million and $1.6 million, respectively, a decrease of $0.3 million. The decrease is primarily due to the decreased number of stores. Gross profit was $1.9 million and $2.0 million for the nine months ended September 30, 2019 and 2018, respectively.

Grocery cost of goods sold for the nine months ended September 30, 2019 and 2018 were $5.3 million and $3.9 million, respectively, an increase of $1.5 million. The increase is primarily due to increases in sales and cost of goods sold from the acquisition of three Paradise Health and Nutrition stores. Gross profit was $3.1 million and $2.5 million for the nine months ended September 30, 2018 and 2018, respectively.

Selling, general and administrative expenses increased $0.7 million to $7.9 million for the nine months ended September 30, 2019 compared to $7.2 million for the same period in 2018. The increase is primarily attributable to increases in payroll and employee related cost of $0.9 million, occupancy costs of $0.3 million, depreciation and amortization of $0.2 million, and taxes, licenses & permits of $0.1 million, and insurance costs of $0.1 million, offset by a decrease in stock-based compensation of $1.0 million.

Net other expense of $0.1 million for the nine months ended September 30, 2019 was primarily due to a loss on investment of $0.1 million. Net other expense of $10.2 million for the nine months ended September 30, 2018 includes a change in fair value of Series A Warrants of $10.7 million, offset by other income of $0.5 million, and interest income of $0.1 million.

The company did not incur activity from discontinued operations for the nine months ended September 30, 2019 or for the same period in 2018.

15

Liquidity and Capital Resources

	Nine Months Ended September 30,
	2019		2018
Net cash used in operating activities	$	(2,854,769)	$	393,916
Net cash provided by investing activities		99,283		(581,936)
Net cash provided by financing activities		(56,783)		576,205
	$	(2,812,269)	$	388,185

Our net cash used in operating activities of $2.9 million for the nine months ended September 30, 2019 resulted from our net loss of $3.2 million, a net cash usage of $1.0 million from changes in operating assets and liabilities, offset by amortization of rigth-of-used asset of $0.5 million, depreciation and amortization expenses of $0.4 million and share-based compensation expense of $0.3 million. Our net cash used in operating activities of $0.4 million for the nine months ended September 30, 2018 resulted from a non-cash adjustment of $12.2 million, and a net cash usage of $1.2 million from changes in operating assets and liabilities, offset by a net loss of $13 million.

The net cash provided by investing activities of $0.1 million for the nine months ended September 30, 2019 resulted from payments received on the VPR Brands L.P. Note. The net cash used in investing activities of $0.6 million for the nine months ended September 30, 2018 resulted from the issuance and collection of a note receivable, and purchases of a patent and property and equipment.

The net cash used in financing activities of $0.1 million for the nine months ended September 30, 2019 resulted from $0.1 million proceeds from the credit line with Professional Bank, offset by $0.2 million of loan principle payment. The net cash provided by financing activities of $0.6 million for the nine months ended September 30, 2018 is due to proceeds from loan payable of $0.5 million and proceeds from exercise of stock options of $0.1 million.

At September 30, 2019 and December 31, 2018, we did not have any material financial guarantees or other contractual commitments with vendors that are reasonably likely to have an adverse effect on liquidity.

Our cash balances are kept liquid to support our growing acquisition and infrastructure needs for operational expansion. The majority of our cash and cash equivalents are concentrated in three financial institutions and are generally in excess of the FDIC insurance limit. The Company has not experienced any losses on its cash and cash equivalents. The following table presents the Company’s cash position as of September 30, 2019 and December 31, 2018.

	September 30, 2019		December 31, 2018
Cash	$	4,248,984	$	7,061,253
Total assets	$	15,417,891	$	15,172,663
Percentage of total assets		27.56%		46.54%

The Company reported a net loss of $3.2 million for the nine months ended September 30, 2019. The Company also had positive working capital of $1.0 million. The Company expects to continue incurring losses for the foreseeable future and may need to raise additional capital to satisfy warrant obligations, and to continue as a going concern.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements.

Critical Accounting Policies and Estimates

Our management’s discussion and analysis of financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States, or U.S. GAAP. The preparation of these 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 consolidated financial statements.

16

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

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

There have been no material changes to the Company’s critical accounting policies and estimates as compared to the critical accounting policies and estimates described in the 2018 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 consolidated financial statements.

Seasonality

We do not consider our business to be seasonal.

Cautionary Note Regarding Forward-Looking Statements

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

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

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

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable to smaller reporting companies.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our management, including our Principal Executive Officer and Principal Financial Officer, did not carry out an evaluation on internal controls as of September 30, 2019 in regard to the effectiveness of our disclosure controls and procedures as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, or the Exchange Act. As an evaluation was not carried out, our Principal Executive Officer and Principal Financial Officer concluded that our disclosure controls and procedures were ineffective as of the end of the period covered by this report.

In planning and performing its audit of our financial statements for the year ended December 31, 2018 in accordance with standards of the Public Company Accounting Oversight Board, our independent registered public accounting firm noted material weaknesses in internal control over financial reporting. A list of our material weaknesses are as follows:

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

● Weakness around our inventory count procedures

● Segregation of duties due to lack of personnel

Our management concluded that considering internal control deficiencies that, in the aggregate, rise to the level of material weaknesses, we did not maintain effective internal control over financial reporting as of September 30, 2019 based on the criteria set forth in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).

Changes in Internal Control over Financial Reporting

Following this assessment and during the nine months ended September 30, 2019, we have undertaken an action plan to

strengthen internal controls and procedures:

● We continue to improve the process around inventory counts and throughout the current year, we performed a blind-count for 75% of our overall inventory value with the purpose of validating our inventory records and increasing the staff knowledge around the importance of the new inventory procedures implemented. In addition, we had an independent third-party count over 50% of our inventory value conducted on September 30, 2019.

● Our management has increased its focus on the Company’s purchase order process in order to better manage inventory thereby improving cash management and ultimately leading to more reliable and precise financial reporting.

Our management continues to review ways in which we can make improvements in internal control over financial reporting.

18

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

From time to time the Company may be involved in various claims and legal actions arising in the ordinary course of our business. We do not have any legal proceedings which have a material impact to the financial statements as of September 30, 2019.

A subsidiary of the Company is a defendant in two lawsuits that stem from purported defect and negligence concerning electronic cigarette products it sold. The action was filed in state court in Broward County, Florida. Plaintiff is seeking damages for his physical injuries as well as his pain and suffering. Plaintiff claims that he was injured by a vape battery explosion that occurred in his pocket on or about September 2017 and that he purchased the battery from a store operated by the Company’s subsidiary.

The other lawsuit was filed in the 8th Judicial Circuit in and for Alachua Court, Florida. Plaintiff claimed that a battery explosion occurred in his pocket on or about May 1, 2018. Plaintiff sued the Company, alleging design and manufacturing defects in the subject battery, as well as breach of warranties and negligence, which caused or contributed to the Plaintiff’s injuries and damages.

While discovery is at its infancy, the Company intends to vigorously dispute these claims that have been asserted against it.

ITEM 1A. RISK FACTORS.

Not Applicable.

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

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4. MINE SAFETY DISCLOSURES.

Not Applicable.

ITEM 5. OTHER INFORMATION.

Not Applicable.

ITEM 6. EXHIBITS.

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

19

INDEX TO EXHIBITS

Exhibit		Incorporated by Reference			Filed or Furnished
No.	Exhibit Description	Form	Date	Number	Herewith
31.1	Certification of Principal Executive Officer (302)				Filed
31.2	Certification of Principal Financial Officer (302)				Filed
32.1	Certification of Principal Executive Officer (906)				Furnished *
32.2	Certification of Principal Financial Officer (906)				Furnished *
101.INS	XBRL Instance Document				Filed
101.SCH	XBRL Taxonomy Extension Schema Document				Filed
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document				Filed
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document				Filed
101.LAB	XBRL Taxonomy Extension Label Linkbase Document				Filed
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document				Filed

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

20

SIGNATURES

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

	HEALTHIER CHOICES MANAGEMENT CORP.
Date: October 29, 2019	By:	/s/ Jeffrey Holman
		Jeffrey Holman
		Chief Executive Officer
Date: October 29, 2019	By:	/s/ John Ollet
		John Ollet
		Chief Financial Officer

21

EX-31.1

Exhibit 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

I, Jeffrey Holman, certify that:

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

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

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

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

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

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

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

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

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

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

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

Date: October 29, 2019

/s/ Jeffrey Holman

Jeffrey Holman

Chief Executive Officer

(Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

I, John Ollet, certify that:

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

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

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

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

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

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

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

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

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

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

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

Date: October 29, 2019

/s/ John Ollet

John Ollet

Chief Financial Officer

(Principal Financial Officer)

EX-32.1

Exhibit 32.1

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

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

In connection with the quarterly report of Healthier Choices Management Corp. (the “Company”) on Form 10-Q for the quarter ending September 30, 2019, as filed with the Securities and Exchange Commission on the date hereof, I, Jeffrey Holman, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

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

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

Date: October 29, 2019

/s/ Jeffrey Holman

Jeffrey Holman

Chief Executive Officer

(Principal Executive Officer)

EX-32.2

Exhibit 32.2

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

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

In connection with the quarterly report of Healthier Choices Management Corp. (the “Company”) on Form 10-Q for the quarter ending September 30, 2019, as filed with the Securities and Exchange Commission on the date hereof, I, John Ollet, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

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

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

Date: October 29, 2019

/s/ John Ollet

John Ollet

Chief Financial Officer

(Principal Financial Officer)

XML

COMMITMENTS AND CONTINGENCIES

9 Months Ended

Sep. 30, 2019

COMMITMENTS AND CONTINGENCIES [Abstract]

COMMITMENTS AND CONTINGENCIES

Note 9. COMMITMENTS AND CONTINGENCIES

Legal Proceedings

From time to time the Company may be involved in various claims and legal actions arising in the ordinary course of our business. With respect to legal costs, we record such costs as incurred.

A subsidiary of the Company is a defendant in two lawsuits that stem from purported defect and negligence concerning electronic cigarette products it sold. The action was filed in state court in Broward County, Florida. Plaintiff is seeking damages for his physical injuries as well as his pain and suffering. Plaintiff claims that he was injured by a vape battery explosion that occurred in his pocket on or about September 2017 and that he purchased the battery from a store operated by the Company’s subsidiary.

The other lawsuit was filed in the 8th Judicial Circuit in and for Alachua Court, Florida. Plaintiff claimed that a battery explosion occurred in his pocket on or about May 1, 2018. Plaintiff sued the Company, alleging design and manufacturing defects in the subject battery, as well as breach of warranties and negligence, which caused or contributed to the Plaintiff’s injuries and damages.

While discovery is ongoing, the Company intends to vigorously dispute these claims that have been asserted against it.

XML

INTANGIBLE ASSETS

9 Months Ended

Sep. 30, 2019

INTANGIBLE ASSETS [Abstract]

INTANGIBLE ASSETS

Note 5. INTANGIBLE ASSETS

Intangible assets, net are as follows:

September 30, 2019	Useful Lives (Years)		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Trade names		8-10 years	$	993,000	$	(328,733)	$	664,267
Customer relationships		4-10 years		1,228,000		(230,198)		997,802
Patents		10 years		270,250		(42,271)		227,979
Non-compete		4 years		174,000		(34,438)		139,562
Website		3 years		4,500		(4,500)		-
Intangible assets, net			$	2,669,750	$	(640,140)	$	2,029,610

December 31, 2018	Useful Lives (Years)		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Favorable lease		15 years	$	890,000	$	(150,580)	$	739,420
Trade names		8-10 years		993,000		(252,329)		740,671
Customer relationships		4-10 years		1,228,000		(41,010)		1,186,990
Patents		10 years		245,250		(22,940)		222,310
Non-compete		4 years		174,000		(1,812)		172,188
Website		3 years		4,500		(3,875)		625
Intangible assets, net			$	3,534,750	$	(472,546)	$	3,062,204

Intangible assets are amortized on a straight-line basis over their estimated useful lives. Amortization expense amounted to approximately $318,000 and $122,000 for the nine months ended September 30, 2019 and 2018, respectively. Due to adoption of ASU No. 2016-02 on January 1, 2019, the Company’s favorable lease intangible asset associated with its Ada’s Natural Market location, with a net balance of $739,000 as of December 31, 2018, was reclassified to right-of-use asset in the Ada’s lease amortization schedule to correct the January 1, 2019 opening balance sheet. Future annual estimated amortization expense is as follows:

Years ending December 31,
2019 (remaining three months)	$	106,160
2020		424,650
2021		417,650
2022		402,270
2023		163,400
Thereafter		515,480
Total	$	2,029,610

XML

CONCENTRATIONS (Tables)

9 Months Ended

Sep. 30, 2019

CONCENTRATIONS [Abstract]

Concentration of Cash and Cash Equivalents

A summary of the financial institutions that had a cash and cash equivalents in excess of FDIC limits of $250,000 at September 30, 2019 and December 31, 2018 is presented below:

	September 30, 2019		December 31, 2018
Total Cash in excess of FDIC limits of $250,000	$	3,309,854		6,039,000

Concentration of Accounts Receivable

Purchase from one vendor in excess of 20% of total purchase is summarized in below table:

	September 30, 2019		December 31, 2018
Purchase in excess of 20% of total purchase
Vendor A		22%		30%

XML

INTANGIBLE ASSETS, Future Annual Estimated Amortization Expense (Details) - USD ($)	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Dec. 31, 2018
Intangible Assets, Net [Abstract]
Amortization expense	$ 318,000	$ 122,000
Intangible asset	2,029,610		$ 3,062,204
Future Annual Estimated Amortization Expense [Abstract]
2019 (remaining three months)	106,160
2020	424,650
2021	417,650
2022	402,270
2023	163,400
Thereafter	515,480
Net carrying amount	$ 2,029,610		3,062,204
Favorable Lease [Member]
Intangible Assets, Net [Abstract]
Intangible asset			739,420
Future Annual Estimated Amortization Expense [Abstract]
Net carrying amount			$ 739,420

XML

STOCKHOLDERS' EQUITY, Loss Per Share (Details) - shares	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018
Common Share Equivalents Excluded from Calculation of Dilutive Loss Per Share [Abstract]
Antidilutive securities excluded from computation of diluted loss per share (in shares)	333,983,000,000	335,882,000,000
Preferred Stock [Member]
Common Share Equivalents Excluded from Calculation of Dilutive Loss Per Share [Abstract]
Antidilutive securities excluded from computation of diluted loss per share (in shares)	201,501,000,000	201,501,000,000
Stock Options [Member]
Common Share Equivalents Excluded from Calculation of Dilutive Loss Per Share [Abstract]
Antidilutive securities excluded from computation of diluted loss per share (in shares)	91,062,000,000	90,012,000,000
Warrants [Member]
Common Share Equivalents Excluded from Calculation of Dilutive Loss Per Share [Abstract]
Antidilutive securities excluded from computation of diluted loss per share (in shares)	41,420,000,000	44,369,000,000

XML

LEASE, Components of Lease Cost (Details)	9 Months Ended
	Sep. 30, 2019 USD ($)
Components of Lease Cost [Abstract]
Operating lease cost	$ 380,901
Variable lease cost	238,996
Short-term lease cost	107,759
Total Rent Expense	$ 727,656

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($)	Sep. 30, 2019	Dec. 31, 2018
CURRENT ASSETS
Cash and cash equivalents	$ 4,248,984	$ 7,061,253
Accounts receivable, net	42,371	51,951
Inventories	1,881,225	1,864,619
Prepaid expenses and vendor deposits	306,274	402,578
Investment	33,343	90,857
Contract assets	18,000	32,400
TOTAL CURRENT ASSETS	6,530,197	9,503,658
Property and equipment, net of accumulated depreciation	353,681	497,039
Intangible assets, net of accumulated amortization	2,029,610	3,062,204
Goodwill	1,437,314	1,437,314
Note receivable	390,757	528,007
Right of use asset - operating lease, net	4,528,468	0
Other assets	147,864	144,441
TOTAL ASSETS	15,417,891	15,172,663
CURRENT LIABILITIES
Accounts payable and accrued expenses	851,297	1,301,418
Contract liabilities	174,328	442,630
Operating lease liability, current	472,106	0
Loan payable, current	282,314	282,224
Credit line	2,000,000	1,868,460
Derivative liabilities, warrants	1,719,816	1,722,928
TOTAL CURRENT LIABILITIES	5,499,861	5,617,660
Loan payable, net of current portion	939,821	1,128,234
Operating lease liability, net of current	3,474,665	0
TOTAL LIABILITIES	9,914,347	6,745,894
COMMITMENTS AND CONTINGENCIES (SEE NOTE 9)
STOCKHOLDERS' EQUITY
Series B convertible preferred stock, $1,000 par value per share, 30,000 shares authorized; 20,150 shares issued and outstanding as of September 30, 2019 and December 31, 2018; aggregate liquidation preference of $20.2 million	20,150,116	20,150,116
Common Stock, $0.0001 par value per share, 750,000,000,000 shares authorized; 67,698,494,241 and 66,623,514,522 shares issued and outstanding as of September 30, 2019 and December 31, 2018, respectively	6,769,849	6,662,351
Additional paid-in capital	7,587,828	7,348,390
Accumulated deficit	(29,004,249)	(25,734,088)
TOTAL STOCKHOLDERS' EQUITY	5,503,544	8,426,769
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$ 15,417,891	$ 15,172,663

XML

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($)	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018
OPERATING ACTIVITIES
Net loss	$ (3,167,146)	$ (13,023,521)
Adjustments to reconcile net loss to net cash used in operating activities:
Bad debt expense	(3,002)	(75,399)
Depreciation and amortization	449,071	269,729
Loss on disposal of assets	25,427	0
Loss on investment	57,514	0
Amortization of right-of-use asset	459,760	0
Loss on repurchase of Series A warrants	0	10,696,774
Stock-based compensation expense	343,824	1,298,862
Changes in operating assets and liabilities:
Accounts receivable	12,582	21,036
Inventories	(16,606)	(144,893)
Prepaid expenses and vendor deposits	94,110	(288,359)
Contract assets	14,400	(180,000)
Other assets	(3,423)	0
Accounts payable	(155,910)	(36,652)
Accrued expenses	(294,211)	(112,343)
Contract liabilities	(268,302)	1,968,682
Lease liability	(402,857)	0
NET CASH USED IN OPERATING ACTIVITIES	(2,854,769)	393,916
INVESTING ACTIVITIES
Collection of note receivable	137,250	10,083
Purchases of property and equipment	(12,967)	(42,520)
Purchases of patent	(25,000)	(37,500)
Gain on investment	0	(11,999)
Issuance of note receivable	0	(500,000)
NET CASH PROVIDED BY INVESTING ACTIVITIES	99,283	(581,936)
FINANCING ACTIVITIES
Proceeds from line of credit	131,540	500,000
Principal payments on loan payable	(188,323)	(1,573)
Proceeds from exercise of stock options	0	77,778
NET CASH PROVIDED BY FINANCING ACTIVITIES	(56,783)	576,205
DECREASE IN CASH	(2,812,269)	388,185
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD	7,061,253	7,883,191
CASH AND CASH EQUIVALENTS - END OF PERIOD	4,248,984	8,271,376
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for interest	$ 107,646	$ 1,750

XML

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($)	Sep. 30, 2019	Dec. 31, 2018
Adopted Accounting Pronouncements [Abstract]
Operating lease right-of-use assets	$ 4,528,468	$ 0
Lease liabilities	3,946,771
Intangible asset	$ 2,029,610	3,062,204
Prepaid rent		2,000
Favorable Lease [Member]
Adopted Accounting Pronouncements [Abstract]
Intangible asset		739,420
ASU 2016-02 [Member]
Adopted Accounting Pronouncements [Abstract]
Operating lease right-of-use assets		4,988,227
Lease liabilities		4,349,628
Cumulative effect on adoption of ASC 842		$ (103,015)

XML

STOCKHOLDERS' EQUITY (Tables)

9 Months Ended

Sep. 30, 2019

STOCKHOLDERS' EQUITY [Abstract]

Warrant Activity

A summary of warrant activity for the nine months ended September 30, 2019 is presented below:

	Exercise Price		Warrant Common Stock Equivalent		Remaining Contractual Term
Outstanding at January 1, 2019	$	0.0001		41,643,000,000		1.50
Warrants settlement	$	-		-
Cashless exercises for common stock	$	(0.0001)		(75,000,000)
Black Scholes Value adjustment	$	(0.0001)		(148,000,000)
Outstanding at September 30, 2019	$	0.0001		41,420,000,000		0.75

Outstanding Warrant Common Stock Equivalents

A summary of the outstanding warrant common stock equivalents at September 30, 2019 and December 31, 2018 is presented below:

	September 30, 2019		December 31,  2018
Warrants outstanding (A)		2.7299		2.7348
Black Scholes value (B)		1,517,280		1,522,692
Subtotal (C)=(A) x (B)		4,142,023		4,164,258
Closing bid stock price (D)	$	0.0001	$	0.0001
Warrant common stock equivalent (C)/(D)		41,420,000,000		41,643,000,000

Compensation Expense Recognized

A summary of Stock-based compensation expense recognized is presented below:

	Three Months Ended				Nine Months Ended
	September 30, 2019		September 30, 2018		September 30, 2019		September 30, 2018
Stock-based compensation	$	147,570	$	140,356	$	343,824	$	1,298,862

Common Share Equivalent Excluded from Calculation of Dilutive Loss Per Share

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

	September 30,
	2019		2018
Preferred stock		201,501,000,000		201,501,000,000
Stock options		91,062,000,000		90,012,000,000
Warrants		41,420,000,000		44,369,000,000
Total		333,983,000,000		335,882,000,000

XML

LEASE, Cash Flows and Supplemental Balance Sheet Information Related to Operating Leases (Details) - USD ($)	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Dec. 31, 2018
Cash Flow, Operating Activities, Lessee [Abstract]
Cash paid for operating lease liabilities	$ 403,000
Amortization of right-of-use asset	459,760	$ 0
Supplemental Balance Sheet Information Related to Operating Leases [Abstract]
Right of use asset	4,528,468		$ 0
Lease liability, current	472,106		0
Lease liability, net of current	3,474,665		0
Other Assets [Member]
Supplemental Balance Sheet Information Related to Operating Leases [Abstract]
Right of use asset	4,528,468
Current Liabilities [Member]
Supplemental Balance Sheet Information Related to Operating Leases [Abstract]
Lease liability, current	472,106
Other Liabilities [Member]
Supplemental Balance Sheet Information Related to Operating Leases [Abstract]
Lease liability, net of current	$ 3,474,665
ASU 2016-02 [Member]
Supplemental Balance Sheet Information Related to Operating Leases [Abstract]
Right of use asset			4,988,227
ASU 2016-02 [Member] | Other Assets [Member]
Supplemental Balance Sheet Information Related to Operating Leases [Abstract]
Right of use asset			4,988,227
ASU 2016-02 [Member] | Current Liabilities [Member]
Supplemental Balance Sheet Information Related to Operating Leases [Abstract]
Lease liability, current			553,316
ASU 2016-02 [Member] | Other Liabilities [Member]
Supplemental Balance Sheet Information Related to Operating Leases [Abstract]
Lease liability, net of current			$ 3,796,312

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - USD ($) $ in Millions	Sep. 30, 2019	Dec. 31, 2018
STOCKHOLDERS' EQUITY
Series B convertible preferred stock, par value (in dollars per share)	$ 1,000	$ 1,000
Series B convertible preferred stock, shares authorized (in shares)	30,000	30,000
Series B convertible preferred stock, shares issued (in shares)	20,150	20,150
Series B convertible preferred stock, shares outstanding (in shares)	20,150	20,150
Series B convertible preferred stock, aggregate liquidation preference	$ 20.2	$ 20.2
Common stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Common stock, shares authorized (in shares)	750,000,000,000	750,000,000,000
Common stock, shares issued (in shares)	67,698,494,241	66,623,514,522
Common stock, shares outstanding (in shares)	67,698,494,241	66,623,514,522

XML

ORGANIZATION, GOING CONCERN, AND BASIS OF PRESENTATION

9 Months Ended

Sep. 30, 2019

ORGANIZATION, GOING CONCERN, AND BASIS OF PRESENTATION [Abstract]

ORGANIZATION, GOING CONCERN, AND BASIS OF PRESENTATION

Note 1. ORGANIZATION, GOING CONCERN, AND BASIS OF PRESENTATION

Organization

Healthier Choices Management Corp. (the “Company”) is a holding company focused on providing consumers with healthier daily choices with respect to nutrition and other lifestyle alternatives. The Company currently operates nine retail vape stores in the Southeast region of the United States, through which it offers e-liquids, vaporizers and related products. The Company also operates Ada’s Natural Market, a natural and organic grocery store, through its wholly owned subsidiary Healthy Choice Markets, Inc and Paradise Health and Nutrition, stores that offer fresh produce, bulk foods, vitamins and supplements, packaged groceries, meat and seafood, deli, baked goods, dairy products, frozen foods, health & beauty products and natural household items through its wholly owned subsidiary Healthy Choice Markets 2, LLC. The Company also sells vitamins and supplements on the Amazon.com marketplace through its wholly owned subsidiary Healthy U Wholesale, Inc. The Company markets the Q-Cup™ technology under the vape segment; this patented technology is based on a small, quartz cup called the Q-Cup™, which a customer partially fills with either cannabis or CBD concentrate (approximately 50 mg) purchased from a third party. The Q-Cup™ is then inserted into the Q-Cup™ Tank or Globe, that heats the cup from the outside without coming in direct contact with the solid concentrate. This Q-Cup™ technology provides significantly more efficiency and an “on the go” solution for consumers who prefer to vape concentrates either medicinally or recreationally.

Liquidity

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

The Company incurred a loss from operations of approximately $3.1 million for the nine months ended September 30, 2019. As of September 30, 2019, cash and cash equivalents totaled approximately $4.2 million. While we anticipate that our current cash, cash equivalents, and cash to be generated from operations will be sufficient to meet our projected operating plans for the foreseeable future through at least a year and a day from the issuance of these unaudited condensed consolidated financial statements, should we require additional funds (either through equity or debt financings, collaborative agreements or from other sources) we have no commitments to obtain such additional financing, and we may not be able to obtain any such additional financing on terms favorable to us, or at all.

Basis of Presentation and Principles of Consolidation

The Company’s unaudited condensed consolidated financial statements are prepared in accordance with GAAP. The unaudited condensed consolidated financial statements include the accounts of all subsidiaries in which the Company holds a controlling financial interest as of the financial statement date.

The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Healthy Choice Markets, Inc., Healthy Choice Markets 2, LLC (“Paradise Health and Nutrition”), The Vitamin Store, LLC, Healthy U Wholesale, Inc., The Vape Store, Inc. (“Vape Store”), Vaporin, Inc. (“Vaporin”), Smoke Anywhere U.S.A., Inc. (“Smoke”), Emagine the Vape Store, LLC (“Emagine”), IVGI Acquisition, Inc., Vapormax Franchising LLC, Vaporin LLC, and Vaporin Florida, Inc. All intercompany accounts and transactions have been eliminated in consolidation.

Unaudited Interim Financial Information

The unaudited condensed consolidated financial statements have been prepared by the Company and reflect all normal, recurring adjustments that, in the opinion of management, are necessary for a fair presentation of the interim financial information. The results of operations for the interim periods presented are not necessarily indicative of the results to be expected for any subsequent quarter or for the year ending December 31, 2019. Certain information and footnotes normally included in financial statements prepared in accordance with GAAP have been omitted under the instructions to Form 10-Q and Article 10 of Regulation S-X of the Securities and Exchange Commission (“SEC”). These unaudited condensed consolidated financial statements and notes included herein should be read in conjunction with the audited consolidated financial statements and related notes thereto as of and for the year ended December 31, 2018 included in the Company’s Annual Report on Form 10-K for such year as filed with the SEC on March 27, 2019.

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ORGANIZATION, GOING CONCERN, AND BASIS OF PRESENTATION (Details)	3 Months Ended		9 Months Ended
	Sep. 30, 2019 USD ($) RetailStores	Sep. 30, 2018 USD ($)	Sep. 30, 2019 USD ($) RetailStores	Sep. 30, 2018 USD ($)	Dec. 31, 2018 USD ($)
ORGANIZATION, GOING CONCERN, AND BASIS OF PRESENTATION [Abstract]
Number of operating retail vape stores | RetailStores	9		9
Loss from operations	$ (1,129,363)	$ (792,699)	$ (3,089,125)	$ (2,871,725)
Cash and cash equivalents	$ 4,248,984		$ 4,248,984		$ 7,061,253

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CONTRACT ASSETS AND CONTRACT LIABILITIES (Tables)

9 Months Ended

Sep. 30, 2019

CONTRACT ASSETS AND CONTRACT LIABILITIES [Abstract]

Summary of Net Changes in Contract Liabilities

A summary of the net changes in contract liabilities activity for the nine months ended September 30, 2019 and 2018 is presented below:

	September 30, 2019		September 30, 2018
Beginning balance as January 1,	$	442,630	$	61,312
Issued		50,778		81,720
Redeemed		(57,319)		(113,954)
Breakage recognized		(1,563)		916
Fulfillment of contract		(260,198)		2,000,000
Ending balance as of September 30,	$	174,328	$	2,029,994

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

9 Months Ended

Sep. 30, 2019

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract]

Use of Estimates in the Preparation of the Financial Statements

Reclassifications

Certain prior period amounts in the consolidated financial statements related to write-down of obsolete and slow moving inventory, due from merchant credit card processors, gain (loss) on investment and other income (expense), net have been reclassified to conform to the current period’s presentation. No changes to the Company’s net loss were made as a result of such reclassifications.

Use of Estimates in the Preparation of the Financial Statements

The preparation of condensed 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 condensed 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 allowances, reserves and write-downs of receivables and inventory, valuing equity securities and hybrid instruments, share-based payment arrangements, deferred taxes and related valuation allowances, and the valuation of the assets and liabilities acquired in business combinations. Certain of 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 of its accounting estimates at least quarterly based on these conditions and records adjustments when necessary.

Adopted Accounting Pronouncements

Adopted Accounting Pronouncements

In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842)” (“ASU 2016-02”). ASU 2016-02 establishes a right-of-use (“ROU”) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. ASU 2016-02 is effective for annual periods beginning after December 15, 2018, and annual and interim periods thereafter, with early adoption permitted. The Company adopted ASU No. 2016-02 on January 1, 2019 using the cumulative-effect adjustment transition method, which applies the provisions of the standard at the effective date without adjusting the comparative periods presented.

Adoption of this standard resulted in the recognition of operating lease right-of-use assets of $4,988,000 and corresponding lease liabilities of $4,350,000 on the consolidated balance sheet as of January 1, 2019. An adjustment to Ada’s favorable lease of $739,000 and prepaid rent of $2,000, resulted in a cumulative effect adjustment of $103,000. The standard did not materially impact operating results or liquidity. Disclosures related to the amount, timing and uncertainty of cash flows arising from leases are included in Note 10, Leases.

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FAIR VALUE MEASUREMENTS

9 Months Ended

Sep. 30, 2019

FAIR VALUE MEASUREMENTS [Abstract]

FAIR VALUE MEASUREMENTS

Note 8. 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:

● Level 1: Fair value measurement of the asset or liability using observable inputs such as quoted prices in active markets for identical assets or liabilities;

● Level 2: Fair value measurement of the asset or liability using inputs other than quoted prices that are observable for the applicable asset or liability, either directly or indirectly, such as quoted prices for similar (as opposed to identical) assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active; and

● Level 3: Fair value measurement of the asset or liability using unobservable inputs that reflect the Company’s own assumptions regarding the applicable asset or liability.

Nonfinancial assets such as goodwill, other intangible assets, and long-lived assets held and used are measured at fair value and tested for impairment annually, or when there is an indicator of impairment between annual tests.

The following table summarizes the liabilities measured at fair value on a recurring basis as of September 30, 2019:

	Level 1		Level 2		Level 3		Total
LIABILITIES
Derivative liabilities – warrants	$	-	$	1,719,816	$	-	$	1,719,816
Total derivative liabilities – warrants	$	-	$	1,719,816	$	-	$	1,719,816

The following table summarizes the liabilities measured at fair value on a recurring basis as of December 31, 2018:

	Level 1		Level 2		Level 3		Total
LIABILITIES
Derivative liabilities – warrants	$	-	$	1,722,928	$	-	$	1,722,928
Total derivative liabilities – warrants	$	-	$	1,722,928	$	-	$	1,722,928

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DISAGGREGATION OF REVENUES

9 Months Ended

Sep. 30, 2019

DISAGGREGATION OF REVENUES [Abstract]

DISAGGREGATION OF REVENUES

Note 4. DISAGGREGATION OF REVENUES

The Company reports the following segments in accordance with management guidance: Vapor and Grocery. When the Company prepares its internal management reporting to evaluate business performance, we disaggregate revenue into the following categories that depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors.

	Three Months Ended				Nine Months Ended
	September 30, 2019		September 30, 2018		September 30, 2019		September 30, 2018
Vapor	$	898,229	$	1,106,596	$	3,207,530	$	3,556,130
Grocery		2,520,101		1,923,878		8,407,919		6,359,671
Total revenue	$	3,418,330	$	3,030,474	$	11,615,449	$	9,915,801
Retail Vapor	$	898,216	$	1,106,228	$	3,207,120	$	3,548,704
Retail Grocery		2,133,537		1,407,776		7,143,616		4,581,001
Food service/restaurant		291,435		370,609		949,211		1,167,006
Online/eCommerce		81,035		135,483		285,891		593,347
Wholesale Grocery		14,094		10,010		29,201		18,317
Wholesale Vapor		13		368		410		7,426
Total revenue	$	3,418,330	$	3,030,474	$	11,615,449	$	9,915,801

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CONTRACT ASSETS AND CONTRACT LIABILITIES (Details) - USD ($)	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018
Deferred Revenue [Abstract]
Period by which contract liabilities are expected to be recognized	24 months
Changes in Contract Liabilities Activity [Roll Forward]
Beginning balance	$ 442,630	$ 61,312
Issued	50,778	81,720
Redeemed	(57,319)	(113,954)
Breakage recognized	(1,563)	916
Fulfillment of contract	(260,198)	2,000,000
Ending balance as of September 30,	$ 174,328	$ 2,029,994
Gift Cards [Member]
Deferred Revenue [Abstract]
Breakage policy period	24 months
Grocery Loyalty Rewards [Member]
Deferred Revenue [Abstract]
Breakage policy period	12 months
Vapor Loyalty Rewards [Member]
Deferred Revenue [Abstract]
Breakage policy period	6 months

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FAIR VALUE MEASUREMENTS (Details) - USD ($)	Sep. 30, 2019	Dec. 31, 2018
LIABILITIES [Abstract]
Total derivative liabilities - warrants	$ 1,719,816	$ 1,722,928
Recurring [Member]
LIABILITIES [Abstract]
Derivative liabilities, warrants	1,719,816	1,722,928
Total derivative liabilities - warrants	1,719,816	1,722,928
Recurring [Member] | Level 1 [Member]
LIABILITIES [Abstract]
Derivative liabilities, warrants	0	0
Total derivative liabilities - warrants	0	0
Recurring [Member] | Level 2 [Member]
LIABILITIES [Abstract]
Derivative liabilities, warrants	1,719,816	1,722,928
Total derivative liabilities - warrants	1,719,816	1,722,928
Recurring [Member] | Level 3 [Member]
LIABILITIES [Abstract]
Derivative liabilities, warrants	0	0
Total derivative liabilities - warrants	$ 0	$ 0

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LEASE, Balance Sheet Classification and Other Information (Details) - USD ($)	Sep. 30, 2019	Dec. 31, 2018
Balance Sheet Classification [Abstract]
Operating lease liability, current	$ 472,106	$ 0
Operating lease liability, net of current	3,474,665	$ 0
Total operating lease liabilities	$ 3,946,771
Other Information [Abstract]
Weighted-average remaining lease term for operating leases	11 years
Weighted-average discount rate for operating leases	4.80%

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FAIR VALUE MEASUREMENTS (Tables)

9 Months Ended

Sep. 30, 2019

FAIR VALUE MEASUREMENTS [Abstract]

Liabilities Measured at Fair Value on a Recurring Basis

The following table summarizes the liabilities measured at fair value on a recurring basis as of September 30, 2019:

	Level 1		Level 2		Level 3		Total
LIABILITIES
Derivative liabilities – warrants	$	-	$	1,719,816	$	-	$	1,719,816
Total derivative liabilities – warrants	$	-	$	1,719,816	$	-	$	1,719,816

The following table summarizes the liabilities measured at fair value on a recurring basis as of December 31, 2018:

	Level 1		Level 2		Level 3		Total
LIABILITIES
Derivative liabilities – warrants	$	-	$	1,722,928	$	-	$	1,722,928
Total derivative liabilities – warrants	$	-	$	1,722,928	$	-	$	1,722,928

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DISAGGREGATION OF REVENUES (Tables)

9 Months Ended

Sep. 30, 2019

DISAGGREGATION OF REVENUES [Abstract]

Disaggregated Revenue

The Company reports the following segments in accordance with management guidance: Vapor and Grocery. When the Company prepares its internal management reporting to evaluate business performance, we disaggregate revenue into the following categories that depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors.

	Three Months Ended				Nine Months Ended
	September 30, 2019		September 30, 2018		September 30, 2019		September 30, 2018
Vapor	$	898,229	$	1,106,596	$	3,207,530	$	3,556,130
Grocery		2,520,101		1,923,878		8,407,919		6,359,671
Total revenue	$	3,418,330	$	3,030,474	$	11,615,449	$	9,915,801
Retail Vapor	$	898,216	$	1,106,228	$	3,207,120	$	3,548,704
Retail Grocery		2,133,537		1,407,776		7,143,616		4,581,001
Food service/restaurant		291,435		370,609		949,211		1,167,006
Online/eCommerce		81,035		135,483		285,891		593,347
Wholesale Grocery		14,094		10,010		29,201		18,317
Wholesale Vapor		13		368		410		7,426
Total revenue	$	3,418,330	$	3,030,474	$	11,615,449	$	9,915,801

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CONCENTRATIONS, Cash (Details) - USD ($)	Sep. 30, 2019	Dec. 31, 2018
CONCENTRATIONS [Abstract]
FDIC insured amount	$ 250,000
Total Cash in excess of FDIC limits of $250,000	$ 3,309,854	$ 6,039,000

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CONCENTRATIONS

9 Months Ended

Sep. 30, 2019

CONCENTRATIONS [Abstract]

CONCENTRATIONS

Note 3. CONCENTRATIONS

Cash

Our cash balances are kept liquid to support our growing acquisition and infrastructure needs for operational expansion. The majority of the Company’s cash and cash equivalents are concentrated in one large financial institution, which is in excess of Federal Deposit Insurance Corporation (FDIC) coverage.

A summary of the financial institutions that had a cash and cash equivalents in excess of FDIC limits of $250,000 at September 30, 2019 and December 31, 2018 is presented below:

	September 30, 2019		December 31, 2018
Total Cash in excess of FDIC limits of $250,000	$	3,309,854		6,039,000

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

Vendor

We source from multiple suppliers. These suppliers range from small independent businesses to multinational conglomerates. For the nine months ended September 30, 2019, we purchased approximately 68% of the goods we sell from our top 20 suppliers.

Purchase from one vendor in excess of 20% of total purchase is summarized in below table:

	September 30, 2019		December 31, 2018
Purchase in excess of 20% of total purchase
Vendor A		22%		30%

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Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2019	Oct. 28, 2019
Cover [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Quarterly Report	true
Document Period End Date	Sep. 30, 2019
Current Fiscal Year End Date	--12-31
Document Transition Report	false
Entity Registrant Name	Healthier Choices Management Corp.
Entity Incorporation, State or Country Code	DE
Entity File Number	001-36469
Entity Tax Identification Number	84-1070932
Entity Address, Address Line One	3800 NORTH 28TH WAY
Entity Address, City or Town	HOLLYWOOD
Entity Address, State or Province	FL
Entity Address, Postal Zip Code	33020
City Area Code	888
Local Phone Number	766-5351
Entity Filer Category	Non-accelerated Filer
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Small Business	true
Entity Common Stock, Shares Outstanding		67,698,494,241
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q3
Entity Central Index Key	0000844856

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CONDENSED CONSOLIDATED STOCKHOLDERS' EQUITY STATEMENTS (Unaudited) - USD ($)	Convertible Preferred Stock [Member]	Common Stock [Member]	Additional Paid-In Capital [Member]	Accumulated Deficit [Member]	Total
Balance at Dec. 31, 2017	$ 0	$ 2,934,887	$ 10,080,238	$ (12,570,827)	$ 444,298
Balance (in shares) at Dec. 31, 2017	0	29,348,867,108
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock in connection with cashless exercise of Series A warrants		$ 160,274	(93,958)		66,317
Issuance of common stock in connection with cashless exercise of Series A warrants (in shares)		1,602,741,446
Stock options exercised		$ 77,778			77,778
Stock options exercised (in shares)		777,777,778
Issuance of preferred stock in connection with cashless exercise of Series A warrants	$ 20,721,744		(1,692,747)		19,028,997
Issuance of preferred stock in connection with cashless exercise of Series A warrants (in shares)	20,722
Modification of share-based payment awards to officers		$ 1,900,000	(1,900,000)		0
Modification of share-based payment awards to officers (in shares)		19,000,000,000
Issuance of awarded stock for officers		$ 300,000	(300,000)		0
Issuance of awarded stock for officers (in shares)		3,000,000,000
Issuance of awarded stock for professional services		$ 300,000	(300,000)		0
Issuance of awarded stock for professional services (in shares)		3,000,000,000
Preferred stock exercised	$ (571,628)	$ 571,628			0
Preferred stock exercised (in shares)	(572)	5,716,280,000
Stock swap		$ 150,000			150,000
Stock swap (in shares)		1,500,000,000
Stock-based compensation expense			1,298,862		1,298,862
Net loss				(13,023,521)	(13,023,521)
Balance at Sep. 30, 2018	$ 20,150,116	$ 6,394,567	7,092,395	(25,594,348)	8,042,730
Balance (in shares) at Sep. 30, 2018	20,150	63,945,666,332
Balance at Jun. 30, 2018	$ 0	$ 2,934,887	11,238,744	(14,299,592)	(125,961)
Balance (in shares) at Jun. 30, 2018	0	29,348,867,108
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock in connection with cashless exercise of Series A warrants		$ 160,274	(93,958)		66,317
Issuance of common stock in connection with cashless exercise of Series A warrants (in shares)		1,602,741,446
Stock options exercised		$ 77,778			77,778
Stock options exercised (in shares)		777,777,778
Issuance of preferred stock in connection with cashless exercise of Series A warrants	$ 20,721,744		(1,692,747)		19,028,997
Issuance of preferred stock in connection with cashless exercise of Series A warrants (in shares)	20,722
Modification of share-based payment awards to officers		$ 1,900,000	(1,900,000)		0
Modification of share-based payment awards to officers (in shares)		19,000,000,000
Issuance of awarded stock for officers		$ 300,000	(300,000)		0
Issuance of awarded stock for officers (in shares)		3,000,000,000
Issuance of awarded stock for professional services		$ 300,000	(300,000)		0
Issuance of awarded stock for professional services (in shares)		3,000,000,000
Preferred stock exercised	$ (571,628)	$ 571,628			0
Preferred stock exercised (in shares)	(572)	5,716,280,000
Stock swap		$ 150,000			150,000
Stock swap (in shares)		1,500,000,000
Stock-based compensation expense			140,356		140,356
Net loss				(11,294,756)	(11,294,756)
Balance at Sep. 30, 2018	$ 20,150,116	$ 6,394,567	7,092,395	(25,594,348)	8,042,730
Balance (in shares) at Sep. 30, 2018	20,150	63,945,666,332
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Cumulative effect on adoption of ASC 842 | ASU 2016-02 [Member]				(103,015)	(103,015)
Balance at Dec. 31, 2018	$ 20,150,116	$ 6,662,351	7,348,390	(25,734,088)	8,426,769
Balance (in shares) at Dec. 31, 2018	20,150	66,623,514,522
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock in connection with cashless exercise of Series A warrants		$ 7,498	(4,386)		3,112
Issuance of common stock in connection with cashless exercise of Series A warrants (in shares)		74,979,719
Issuance of awarded stock for board members		$ 100,000	(100,000)		0
Issuance of awarded stock for board members (in shares)		1,000,000,000
Stock-based compensation expense			343,824		343,824
Net loss				(3,167,146)	(3,167,146)
Balance at Sep. 30, 2019	$ 20,150,116	$ 6,769,849	7,587,828	(29,004,249)	5,503,544
Balance (in shares) at Sep. 30, 2019	20,150	67,698,494,241
Balance at Jun. 30, 2019	$ 20,150,116	$ 6,664,526	7,543,370	(27,853,946)	6,504,066
Balance (in shares) at Jun. 30, 2019	20,150	66,645,257,694
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock in connection with cashless exercise of Series A warrants		$ 5,323	(3,112)		2,211
Issuance of common stock in connection with cashless exercise of Series A warrants (in shares)		53,236,547
Issuance of awarded stock for board members		$ 100,000	(100,000)		0
Issuance of awarded stock for board members (in shares)		1,000,000,000
Stock-based compensation expense			147,570		147,570
Net loss				(1,150,303)	(1,150,303)
Balance at Sep. 30, 2019	$ 20,150,116	$ 6,769,849	$ 7,587,828	$ (29,004,249)	$ 5,503,544
Balance (in shares) at Sep. 30, 2019	20,150	67,698,494,241

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LEASE, ASC 842 (Details) - USD ($)	Sep. 30, 2019	Dec. 31, 2018
Operating Leases [Abstract]
Right of use asset	$ 4,528,468	$ 0
Lease liability	$ 3,946,771
Maximum [Member]
Operating Leases [Abstract]
Lease agreements term	20 years
ASU 2016-02 [Member]
Operating Leases [Abstract]
Right of use asset		4,988,227
Lease liability		$ 4,349,628

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INTANGIBLE ASSETS, Net (Details) - USD ($)	9 Months Ended	12 Months Ended
	Sep. 30, 2019	Dec. 31, 2018
Intangible Assets, Net [Abstract]
Gross carrying amount	$ 2,669,750	$ 3,534,750
Accumulated amortization	(640,140)	(472,546)
Net carrying amount	2,029,610	$ 3,062,204
Favorable Lease [Member]
Intangible Assets, Net [Abstract]
Useful lives		15 years
Gross carrying amount		$ 890,000
Accumulated amortization		(150,580)
Net carrying amount		739,420
Trade Names [Member]
Intangible Assets, Net [Abstract]
Gross carrying amount	993,000	993,000
Accumulated amortization	(328,733)	(252,329)
Net carrying amount	$ 664,267	$ 740,671
Trade Names [Member] | Minimum [Member]
Intangible Assets, Net [Abstract]
Useful lives	8 years	8 years
Trade Names [Member] | Maximum [Member]
Intangible Assets, Net [Abstract]
Useful lives	10 years	10 years
Customer Relationships [Member]
Intangible Assets, Net [Abstract]
Gross carrying amount	$ 1,228,000	$ 1,228,000
Accumulated amortization	(230,198)	(41,010)
Net carrying amount	$ 997,802	$ 1,186,990
Customer Relationships [Member] | Minimum [Member]
Intangible Assets, Net [Abstract]
Useful lives	4 years	4 years
Customer Relationships [Member] | Maximum [Member]
Intangible Assets, Net [Abstract]
Useful lives	10 years	10 years
Patents [Member]
Intangible Assets, Net [Abstract]
Useful lives	10 years	10 years
Gross carrying amount	$ 270,250	$ 245,250
Accumulated amortization	(42,271)	(22,940)
Net carrying amount	$ 227,979	$ 222,310
Non-compete [Member]
Intangible Assets, Net [Abstract]
Useful lives	4 years	4 years
Gross carrying amount	$ 174,000	$ 174,000
Accumulated amortization	(34,438)	(1,812)
Net carrying amount	$ 139,562	$ 172,188
Website [Member]
Intangible Assets, Net [Abstract]
Useful lives	3 years	3 years
Gross carrying amount	$ 4,500	$ 4,500
Accumulated amortization	(4,500)	(3,875)
Net carrying amount	$ 0	$ 625

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STOCKHOLDERS' EQUITY, Stock Options (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Compensation Expense Recognized [Abstract]
Stock-based compensation	$ 147,570	$ 140,356	$ 343,824	$ 1,298,862
Unamortized stock based compensation expense	$ 73,000		$ 73,000
Weighted average amortization period			1 year

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LEASE

9 Months Ended

Sep. 30, 2019

LEASE [Abstract]

LEASE

Note 10. LEASE

The Company has various lease agreements with terms up to 20 years, including leases of retail stores, headquarter and equipment. All the leases are classified as operating leases. The Company adopted Accounting Standards Codification (“ASC”) 842, “Leases” (“ASC 842”) effective January 1, 2019 using the cumulative-effect adjustment transition method, which applies the provisions of the standard at the effective date without adjusting the comparative periods presented. We elected not to reassess whether any expired or existing contracts are or contain leases, reassess the lease classification for any expired or existing leases, nor reassess initial direct costs for any existing leases.

The standard had an impact on the Company’s condensed consolidated balance sheets, but did not have a material impact on the Company’s condensed consolidated statements of operations or condensed consolidated statements of cash flows upon adoption. Upon adoption, the Company recognized right-of-use asset of $5.0 million and lease liability of $4.3 million for operating leases as of January 1, 2019.

The following table presents information about the amount, timing and uncertainty of cash flows arising from the Company’s operating leases as of September 30, 2019.

Maturity of Lease Liabilities by Fiscal Year
2019 (remaining)	$	165,350
2020		633,636
2021		507,682
2022		464,380
2023		441,262
Thereafter		2,888,699
Total undiscounted operating lease payments	$	5,101,009
Less: Imputed interest		(1,154,238)
Present value of operating lease liabilities	$	3,946,771

Balance Sheet Classification
Operating lease liability, current	$	472,106
Operating lease liability, net of current		3,474,665
Total operating lease liabilities	$	3,946,771

Other Information
Weighted-average remaining lease term for operating leases	11 years
Weighted-average discount rate for operating leases		4.8	%

Components of lease cost are as follows:

	September 30, 2019
Operating lease cost	$	380,901
Variable lease cost		238,996
Short-term lease cost		107,759
Total Rent Expense	$	727,656

Cash Flows

Cash paid for amounts included in the present value of operating lease liabilities was $403,000 for the nine months ended September 30, 2019 and was included in operating cash flows. The amortization of the right-of-use asset of $460,000 was included in operating cash flows.

Supplemental balance sheet information related to our operating leases is as follows:

	Balance Sheet Classification		January 1, 2019		September 30, 2019
Right of use asset		Other assets	$	4,988,227	$	4,528,468
Lease liability, current		Current liabilities	$	553,316	$	472,106
Lease liability, net of current		Other liabilities	$	3,796,312	$	3,474,665

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CONTRACT ASSETS AND CONTRACT LIABILITIES

9 Months Ended

Sep. 30, 2019

CONTRACT ASSETS AND CONTRACT LIABILITIES [Abstract]

CONTRACT ASSETS AND CONTRACT LIABILITIES

Note 6. CONTRACT ASSETS AND CONTRACT LIABILITIES

The Company’s contract assets consist of sales commissions to third parties that support and facilitate the completion of complex transactions, for which the Company has a performance obligation to pay due to the fact that the sales agreement was fully executed.

The Company’s deferred revenue consists of gift cards and loyalty rewards, for which the Company has a performance obligation to deliver products when customers redeem balances or terms expire through breakage. Our breakage policy is twenty four-month for gift cards, twelve months for Grocery loyalty rewards, and six months for Vapor loyalty rewards. As such, all contract liabilities are expected to be recognized within a twenty four-month period. Revenue is recognized when gift card and loyalty points are redeemed.

A summary of the net changes in contract liabilities activity for the nine months ended September 30, 2019 and 2018 is presented below:

	September 30, 2019		September 30, 2018
Beginning balance as January 1,	$	442,630	$	61,312
Issued		50,778		81,720
Redeemed		(57,319)		(113,954)
Breakage recognized		(1,563)		916
Fulfillment of contract		(260,198)		2,000,000
Ending balance as of September 30,	$	174,328	$	2,029,994

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DISAGGREGATION OF REVENUES (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Disaggregation of Revenue [Abstract]
Revenue	$ 3,418,330	$ 3,030,474	$ 11,615,449	$ 9,915,801
Retail Vapor [Member]
Disaggregation of Revenue [Abstract]
Revenue	898,216	1,106,228	3,207,120	3,548,704
Retail Grocery [Member]
Disaggregation of Revenue [Abstract]
Revenue	2,133,537	1,407,776	7,143,616	4,581,001
Food Service/Restaurant [Member]
Disaggregation of Revenue [Abstract]
Revenue	291,435	370,609	949,211	1,167,006
Online/eCommerce [Member]
Disaggregation of Revenue [Abstract]
Revenue	81,035	135,483	285,891	593,347
Wholesale Grocery [Member]
Disaggregation of Revenue [Abstract]
Revenue	14,094	10,010	29,201	18,317
Wholesale Vapor [Member]
Disaggregation of Revenue [Abstract]
Revenue	13	368	410	7,426
Vapor [Member]
Disaggregation of Revenue [Abstract]
Revenue	898,229	1,106,596	3,207,530	3,556,130
Grocery [Member]
Disaggregation of Revenue [Abstract]
Revenue	$ 2,520,101	$ 1,923,878	$ 8,407,919	$ 6,359,671

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STOCKHOLDERS' EQUITY, Series A Warrants (Details) - USD ($)	9 Months Ended	12 Months Ended
	Sep. 30, 2019	Dec. 31, 2018
Exercise Price [Abstract]
Outstanding, beginning balance (in dollars per share)	$ 0.0001
Warrants settlement (in dollars per share)	0
Cashless exercises for common stock (in dollars per share)	(0.0001)
Black Scholes Value adjustment (in dollars per share)	(0.0001)
Outstanding, ending balance (in dollars per shares)	$ 0.0001	$ 0.0001
Warrant Common Stock Equivalent [Roll Forward]
Outstanding, beginning balance (in shares)	41,643,000,000
Warrants settlement (in shares)	0
Cashless exercises for common stock (in shares)	(75,000,000)
Black Scholes Value adjustment (in shares)	(148,000,000)
Outstanding, ending balance (in shares)	41,420,000,000	41,643,000,000
Remaining Contractual Term [Abstract]
Outstanding	9 months	1 year 6 months
Warrants Outstanding [Abstract]
Warrants outstanding (in dollars per share)	$ 2.7299	$ 2.7348
Black Scholes value	$ 1,517,280	$ 1,522,692
Subtotal	$ 4,142,023	$ 4,164,258
Closing bid stock price (in dollars per share)	$ 0.0001	$ 0.0001
Warrant common stock equivalent	$ 41,420,000,000	$ 41,643,000,000

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COMMITMENTS AND CONTINGENCIES (Details)	Sep. 30, 2019 Lawsuit
COMMITMENTS AND CONTINGENCIES [Abstract]
Number of pending lawsuits	2

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ORGANIZATION, GOING CONCERN, AND BASIS OF PRESENTATION (Policies)

9 Months Ended

Sep. 30, 2019

ORGANIZATION, GOING CONCERN, AND BASIS OF PRESENTATION [Abstract]

Liquidity

Liquidity

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

The Company incurred a loss from operations of approximately $3.1 million for the nine months ended September 30, 2019. As of September 30, 2019, cash and cash equivalents totaled approximately $4.2 million. While we anticipate that our current cash, cash equivalents, and cash to be generated from operations will be sufficient to meet our projected operating plans for the foreseeable future through at least a year and a day from the issuance of these unaudited condensed consolidated financial statements, should we require additional funds (either through equity or debt financings, collaborative agreements or from other sources) we have no commitments to obtain such additional financing, and we may not be able to obtain any such additional financing on terms favorable to us, or at all.

Basis of Presentation and Principles of Consolidation

The Company’s unaudited condensed consolidated financial statements are prepared in accordance with GAAP. The unaudited condensed consolidated financial statements include the accounts of all subsidiaries in which the Company holds a controlling financial interest as of the financial statement date.

Principles of Consolidation

The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Healthy Choice Markets, Inc., Healthy Choice Markets 2, LLC (“Paradise Health and Nutrition”), The Vitamin Store, LLC, Healthy U Wholesale, Inc., The Vape Store, Inc. (“Vape Store”), Vaporin, Inc. (“Vaporin”), Smoke Anywhere U.S.A., Inc. (“Smoke”), Emagine the Vape Store, LLC (“Emagine”), IVGI Acquisition, Inc., Vapormax Franchising LLC, Vaporin LLC, and Vaporin Florida, Inc. All intercompany accounts and transactions have been eliminated in consolidation.

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STOCKHOLDERS' EQUITY

9 Months Ended

Sep. 30, 2019

STOCKHOLDERS' EQUITY [Abstract]

STOCKHOLDERS' EQUITY

Note 7. STOCKHOLDERS’ EQUITY

Series A Warrants

A summary of warrant activity for the nine months ended September 30, 2019 is presented below:

	Exercise Price		Warrant Common Stock Equivalent		Remaining Contractual Term
Outstanding at January 1, 2019	$	0.0001		41,643,000,000		1.50
Warrants settlement	$	-		-
Cashless exercises for common stock	$	(0.0001)		(75,000,000)
Black Scholes Value adjustment	$	(0.0001)		(148,000,000)
Outstanding at September 30, 2019	$	0.0001		41,420,000,000		0.75

Pursuant to the Series A Warrant agreement, the Black Scholes value is calculated by a third-party and utilized in calculating the warrant common stock equivalents at the point of cashless exercise. As such, the value is computed at the end of each reporting period to determine the amount of warrant common stock equivalents outstanding using the formula below:

(Series A Warrants exercised * Black Scholes Value) / Closing common stock bid price as of two trading days prior.

A summary of the outstanding warrant common stock equivalents at September 30, 2019 and December 31, 2018 is presented below:

	September 30, 2019		December 31,  2018
Warrants outstanding (A)		2.7299		2.7348
Black Scholes value (B)		1,517,280		1,522,692
Subtotal (C)=(A) x (B)		4,142,023		4,164,258
Closing bid stock price (D)	$	0.0001	$	0.0001
Warrant common stock equivalent (C)/(D)		41,420,000,000		41,643,000,000

Stock Options

The Company recognized stock-based compensation in connection with the amortization of stock options, net of recovery of stock-based charges for forfeited unvested stock options. Stock-based compensation expense is included as part of operating expenses in the accompanying consolidated statements of operations.

A summary of Stock-based compensation expense recognized is presented below:

	Three Months Ended				Nine Months Ended
	September 30, 2019		September 30, 2018		September 30, 2019		September 30, 2018
Stock-based compensation	$	147,570	$	140,356	$	343,824	$	1,298,862

At September 30, 2019, the amount of unamortized stock-based compensation expense associated with unvested stock options granted to employees, directors and consultants was approximately $73,000, which will be amortized over a weighted average period of 1 year.

Loss Per Share

Basic loss per share is computed by dividing the net loss by the weighted average number of shares of common stock outstanding during the period. Diluted loss per share is computed using the weighted average number of shares of common stock outstanding and, if dilutive, potential shares of common stock outstanding during the period. Potential common shares consist of incremental shares of common stock issuable upon (a) the exercise of stock options (using the treasury stock method); (b) the conversion of Series A convertible preferred stock; (c) the exercise of warrants (using the if-converted method); (d) the vesting of restricted stock units; and (e) the conversion of convertible notes payable. Diluted income (loss) per share excludes the potential common shares, as their effect is antidilutive.

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

	September 30,
	2019		2018
Preferred stock		201,501,000,000		201,501,000,000
Stock options		91,062,000,000		90,012,000,000
Warrants		41,420,000,000		44,369,000,000
Total		333,983,000,000		335,882,000,000

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LEASE, Maturity of Lease Liabilities (Details)	Sep. 30, 2019 USD ($)
Maturity of Lease Liabilities by Fiscal Year [Abstract]
2019 (remaining)	$ 165,350
2020	633,636
2021	507,682
2022	464,380
2023	441,262
Thereafter	2,888,699
Total undiscounted operating lease payments	5,101,009
Less: Imputed interest	(1,154,238)
Present value of operating lease liabilities	$ 3,946,771

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CONCENTRATIONS, Vendor (Details) - Suppliers	9 Months Ended	12 Months Ended
	Sep. 30, 2019	Dec. 31, 2018
Suppliers [Abstract]
Number of top suppliers	20
Purchases [Member]
Purchase in Excess of 20% of Total Purchase [Abstract]
Concentration risk percentage	68.00%
Vendor A [Member] | Purchases [Member]
Purchase in Excess of 20% of Total Purchase [Abstract]
Concentration risk percentage	22.00%	30.00%

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LEASE (Tables)

9 Months Ended

Sep. 30, 2019

LEASE [Abstract]

Maturity of Lease Liabilities

Maturity of Lease Liabilities by Fiscal Year
2019 (remaining)	$	165,350
2020		633,636
2021		507,682
2022		464,380
2023		441,262
Thereafter		2,888,699
Total undiscounted operating lease payments	$	5,101,009
Less: Imputed interest		(1,154,238)
Present value of operating lease liabilities	$	3,946,771

Balance Sheet Classification and Other Information

Balance Sheet Classification
Operating lease liability, current	$	472,106
Operating lease liability, net of current		3,474,665
Total operating lease liabilities	$	3,946,771

Other Information
Weighted-average remaining lease term for operating leases	11 years
Weighted-average discount rate for operating leases		4.8	%

Components of Lease Cost

Components of lease cost are as follows:

	September 30, 2019
Operating lease cost	$	380,901
Variable lease cost		238,996
Short-term lease cost		107,759
Total Rent Expense	$	727,656

Supplemental Balance Sheet Information Related to Operating Leases

Supplemental balance sheet information related to our operating leases is as follows:

	Balance Sheet Classification		January 1, 2019		September 30, 2019
Right of use asset		Other assets	$	4,988,227	$	4,528,468
Lease liability, current		Current liabilities	$	553,316	$	472,106
Lease liability, net of current		Other liabilities	$	3,796,312	$	3,474,665

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INTANGIBLE ASSETS (Tables)

9 Months Ended

Sep. 30, 2019

INTANGIBLE ASSETS [Abstract]

Intangible Assets, Net

Intangible assets, net are as follows:

September 30, 2019	Useful Lives (Years)		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Trade names		8-10 years	$	993,000	$	(328,733)	$	664,267
Customer relationships		4-10 years		1,228,000		(230,198)		997,802
Patents		10 years		270,250		(42,271)		227,979
Non-compete		4 years		174,000		(34,438)		139,562
Website		3 years		4,500		(4,500)		-
Intangible assets, net			$	2,669,750	$	(640,140)	$	2,029,610

December 31, 2018	Useful Lives (Years)		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Favorable lease		15 years	$	890,000	$	(150,580)	$	739,420
Trade names		8-10 years		993,000		(252,329)		740,671
Customer relationships		4-10 years		1,228,000		(41,010)		1,186,990
Patents		10 years		245,250		(22,940)		222,310
Non-compete		4 years		174,000		(1,812)		172,188
Website		3 years		4,500		(3,875)		625
Intangible assets, net			$	3,534,750	$	(472,546)	$	3,062,204

Future Annual Estimated Amortization Expense

Intangible assets are amortized on a straight-line basis over their estimated useful lives. Amortization expense amounted to approximately $318,000 and $122,000 for the nine months ended September 30, 2019 and 2018, respectively. Due to adoption of ASU No. 2016-02 on January 1, 2019, the Company’s favorable lease intangible asset associated with its Ada’s Natural Market location, with a net balance of $739,000 as of December 31, 2018, was reclassified to right-of-use asset in the Ada’s lease amortization schedule to correct the January 1, 2019 opening balance sheet. Future annual estimated amortization expense is as follows:

Years ending December 31,
2019 (remaining three months)	$	106,160
2020		424,650
2021		417,650
2022		402,270
2023		163,400
Thereafter		515,480
Total	$	2,029,610

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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
SALES
TOTAL SALES, NET	$ 3,418,330	$ 3,030,474	$ 11,615,449	$ 9,915,801
GROSS PROFIT	1,403,142	1,386,793	4,968,327	4,462,440
OPERATING EXPENSES	2,532,505	2,179,492	8,057,452	7,334,165
LOSS FROM OPERATIONS	(1,129,363)	(792,699)	(3,089,125)	(2,871,725)
OTHER (EXPENSE) INCOME
Gain (loss) on investment	(12,514)		(57,514)	0
Gain on Investments		11,999	0	11,999
Other income (expense), net	(146)	152,260	(838)	469,760
Interest income (expense), net	(8,280)	30,458	(19,669)	63,219
Gain (loss) on repurchase of of Series A warrants	0	(10,696,774)	0	(10,696,774)
Total other (expense) income, net	(20,940)	(10,502,057)	(78,021)	(10,151,796)
NET LOSS	$ (1,150,303)	$ (11,294,756)	$ (3,167,146)	$ (13,023,521)
NET LOSS PER SHARE-BASIC AND DILUTED (in dollars per share)	$ 0	$ 0	$ 0	$ 0
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING-BASIC AND DILUTED (in shares)	66,929,136,282	45,821,526,888	66,734,751,470	34,900,093,115
Vapor [Member]
SALES
TOTAL SALES, NET	$ 898,229	$ 1,106,596	$ 3,207,530	$ 3,556,130
Cost of sales	385,208	460,648	1,337,555	1,602,363
Grocery [Member]
SALES
TOTAL SALES, NET	2,520,101	1,923,878	8,407,919	6,359,671
Cost of sales	$ 1,629,980	$ 1,183,033	$ 5,309,567	$ 3,850,998

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

9 Months Ended

Sep. 30, 2019

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Note 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Reclassifications

Certain prior period amounts in the consolidated financial statements related to write-down of obsolete and slow moving inventory, due from merchant credit card processors, gain (loss) on investment and other income (expense), net have been reclassified to conform to the current period’s presentation. No changes to the Company’s net loss were made as a result of such reclassifications.

Use of Estimates in the Preparation of the Financial Statements

The preparation of condensed 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 condensed 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 allowances, reserves and write-downs of receivables and inventory, valuing equity securities and hybrid instruments, share-based payment arrangements, deferred taxes and related valuation allowances, and the valuation of the assets and liabilities acquired in business combinations. Certain of 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 of its accounting estimates at least quarterly based on these conditions and records adjustments when necessary.

Adopted Accounting Pronouncements

In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842)” (“ASU 2016-02”). ASU 2016-02 establishes a right-of-use (“ROU”) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. ASU 2016-02 is effective for annual periods beginning after December 15, 2018, and annual and interim periods thereafter, with early adoption permitted. The Company adopted ASU No. 2016-02 on January 1, 2019 using the cumulative-effect adjustment transition method, which applies the provisions of the standard at the effective date without adjusting the comparative periods presented.

Adoption of this standard resulted in the recognition of operating lease right-of-use assets of $4,988,000 and corresponding lease liabilities of $4,350,000 on the consolidated balance sheet as of January 1, 2019. An adjustment to Ada’s favorable lease of $739,000 and prepaid rent of $2,000, resulted in a cumulative effect adjustment of $103,000. The standard did not materially impact operating results or liquidity. Disclosures related to the amount, timing and uncertainty of cash flows arising from leases are included in Note 10, Leases.