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 June 30, 2020

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 August 19, 2020, there were 105,110,848,016 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 June 30, 2020 and December 31, 2019	1
Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2020 and 2019	2
Condensed Consolidated Shareholders’ Equity Statements for the Three and Six Months Ended June 30, 2020 and 2019	3
Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2020 and 2019	5
Notes to Condensed Consolidated Financial Statements	6
ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	10
ITEM 3. Quantitative and Qualitative Disclosures about Market Risk	16
ITEM 4. Controls and Procedures	16
PART II OTHER INFORMATION	17
ITEM 1. Legal Proceedings	17
ITEM 1A. Risk Factors	17
ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds	17
ITEM 3. Defaults Upon Senior Securities	17
ITEM 4. Mine Safety Disclosures	17
ITEM 5. Other Information	17
ITEM 6. Exhibits	18
Signatures	19
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)

	June 30, 2020		December 31, 2019
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	1,147,103	$	1,525,415
Accounts receivable, net		26,992		65,401
Inventories		1,779,923		1,757,012
Prepaid expenses and vendor deposits		298,520		269,833
Investment		12,857		24,000
TOTAL CURRENT ASSETS		3,265,395		3,641,661
Restricted cash		2,000,000		2,000,000
Property and equipment, net of accumulated depreciation		287,837		332,290
Intangible assets, net of accumulated amortization		1,795,418		1,923,447
Goodwill		956,000		956,000
Note receivable		333,396		343,387
Right of use asset – operating lease, net		4,396,343		4,663,019
Other assets		142,668		146,865
TOTAL ASSETS	$	13,177,057	$	14,006,669
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses	$	929,799	$	825,860
Contract liabilities		21,386		26,823
Current portion of line of credit		2,000,000		2,000,000
Current portion of loan payment		651,187		282,344
Operating lease liability, current		536,152		555,959
TOTAL CURRENT LIABILITIES		4,138,524		3,690,986
Loan payable, net of current portion		1,237,060		869,223
Operating lease liability, net of current		3,335,437		3,544,729
TOTAL LIABILITIES		8,711,021		8,104,938
COMMITMENTS AND CONTINGENCIES (SEE NOTE 8)
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 June 30, 2020 and December 31, 2019; 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; approximately 87.6 and 67.7 billion shares issued and outstanding as of June 30, 2020 and December 31, 2019, respectively		8,755,829		6,769,849
Additional paid-in capital		5,706,544		7,618,245
Accumulated deficit		(30,146,453)		(28,636,479)
TOTAL STOCKHOLDERS’ EQUITY		4,466,036		5,901,731
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	13,177,057	$	14,006,669

See notes to unaudited condensed consolidated financial statements

1

HEALTHIER CHOICES MANAGEMENT CORP.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2020		2019		2020		2019
SALES
Vapor sales, net	$	520,877	$	1,085,259	$	1,294,334	$	2,309,300
Grocery sales, net		2,788,035		2,731,754		6,050,749		5,887,819
TOTAL SALES, NET		3,308,912		3,817,013		7,345,083		8,197,119
Cost of sales vapor		212,457		442,931		531,537		952,347
Cost of sales grocery		1,723,161		1,711,791		3,732,362		3,679,587
GROSS PROFIT		1,373,294		1,662,291		3,081,184		3,565,185
OPERATING EXPENSES		2,168,159		2,534,492		4,540,540		5,524,947
LOSS FROM OPERATIONS		(794,865)		(872,201)		(1,459,356)		(1,959,762)
OTHER (EXPENSE) INCOME
Gain (loss) on investment		(1,286)		(19,286)		(11,143)		(44,999)
Interest income (expense), net		(22,529)		(12,827)		(39,475)		(12,082)
Total other (expense) income, net		(23,815)		(32,113)		(50,618)		(57,081)
NET LOSS	$	(818,680)	$	(904,314)	$	(1,509,974)	$	(2,016,843)
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		81,189,670,235		66,642,629,630		75,564,076,780		66,635,948,138

See notes to unaudited condensed consolidated financial statements

2

HEALTHIER CHOICES MANAGEMENT CORP.

CONDENSED CONSOLIDATED STOCKHOLDERS’ EQUITY STATEMENTS

FOR THE THREE MONTHS ENDED JUNE 30, 2020

(UNAUDITED)

	Convertible Preferred Stock				Common Stock				Additional Paid-In		Accumulated
	Shares		Amount		Shares		Amount		Capital		Deficit		Total
Balance – April 1, 2020		20,150	$	20,150,116		72,497,427,011	$	7,249,743	$	7,220,295	$	(29,327,773)	$	5,292,381
Issuance of common stock in connection with cashless exercise of Series A warrants		-		-		15,060,869,587		1,506,086		(1,506,086)		-		-
Stock-based compensation expense		-		-		-		-		(7,665)		-		(7,665)
Net loss		-		-		-		-		-		(818,680)		(818,680)
Balance – June 30, 2020		20,150	$	20,150,116		87,558,296,598	$	8,755,829	$	5,706,544	$	(30,146,453)	$	4,466,036

HEALTHIER CHOICES MANAGEMENT CORP.

CONDENSED CONSOLIDATED STOCKHOLDERS’ EQUITY STATEMENTS

FOR THE THREE MONTHS ENDED JUNE 30, 2019

(UNAUDITED)

	Convertible Preferred Stock				Common Stock				Additional Paid-In		Accumulated
	Shares		Amount		Shares		Amount		Capital		Deficit		Total
Balance – April 1, 2019		20,150	$	20,150,116		66,634,387,066	$	6,663,438	$	7,460,832	$	(26,949,632)	$	7,324,754
Issuance of common stock in connection with cashless exercise of Series A warrants		-		-		10,870,628		1,088		(637)		-		451
Stock-based compensation expense		-		-		-		-		83,175		-		83,175
Net loss												(904,314)		(904,314)
Balance – June 30, 2019		20,150	$	20,150,116		66,645,257,694	$	6,664,526	$	7,543,370	$	(27,853,946)	$	6,504,066

See notes to unaudited condensed consolidated financial statements

3

HEALTHIER CHOICES MANAGEMENT CORP.

CONDENSED CONSOLIDATED STOCKHOLDERS’ EQUITY STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2020

(UNAUDITED)

	Convertible Preferred Stock				Common Stock				Additional Paid-In		Accumulated
	Shares		Amount		Shares		Amount		Capital		Deficit		Total
Balance – January 1, 2020		20,150	$	20,150,116		67,698,494,244	$	6,769,849	$	7,618,245	$	(28,636,479)	$	5,901,731
Issuance of common stock in connection with cashless exercise of Series A warrants		-		-		19,859,802,354		1,985,980		(1,985,980)		-		-
Stock-based compensation expense		-		-		-		-		74,279		-		74,279
Net loss		-		-		-		-		-		(1,509,974)		(1,509,974)
Balance – June 30, 2020		20,150	$	20,150,116		87,558,296,598	$	8,755,829	$	5,706,544	$	(30,146,453)	$	4,466,036

HEALTHIER CHOICES MANAGEMENT CORP.

CONDENSED CONSOLIDATED STOCKHOLDERS’ EQUITY STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 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		-		-		21,743,172		2,175		(1,274)		-		901
Cumulative Effect on adoption of ASC 842		-		-		-		-		-		(103,015)		(103,015)
Stock-based compensation expense		-		-		-		-		196,254		-		196,254
Net loss		-		-		-		-		-		(2,016,843)		(2,016,843)
Balance – June 30, 2019		20,150	$	20,150,116		66,645,257,694	$	6,664,526	$	7,543,370	$	(27,853,946)	$	6,504,066

See notes to unaudited condensed consolidated financial statements

4

HEALTHIER CHOICES MANAGEMENT CORP.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	Six Months Ended June 30,
	2020		2019
OPERATING ACTIVITIES
Net loss	$	(1,509,974)	$	(2,016,843)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		286,559		302,277
Loss on disposal of assets		-		25,427
Loss on investment		11,143		44,999
Amortization of right-of-use asset		266,676		327,287
Stock-based compensation expense		74,279		196,254
Changes in operating assets and liabilities:
Accounts receivable		38,409		11,662
Inventories		(22,911)		(153,951)
Prepaid expenses and vendor deposits		(28,687)		34,893
Contract assets		-		14,400
Other assets		4,197		320
Accounts payable		119,686		9,526
Accrued expenses		(15,747)		(322,140)
Contract liabilities		(5,437)		(275,249)
Lease liability		(229,098)		(288,850)
NET CASH USED IN OPERATING ACTIVITIES		(1,010,905)		(2,089,988)
INVESTING ACTIVITIES
Collection of note receivable		9,991		87,154
Purchases of property and equipment		(24,663)		(4,584)
Purchases of patent		(89,415)		(25,000)
NET CASH USED IN INVESTING ACTIVITIES		(104,087)		57,570
FINANCING ACTIVITIES
Proceeds from line of credit		-		131,540
Principal payments on loan payable		736,680		(117,763)
NET CASH USED IN FINANCING ACTIVITIES		736,680		13,777
NET DECREASE IN CASH, CASH EQUIVALENT AND RESTRICTED CASH		(378,312)		(2,018,641)
CASH, CASH EQUIVALENTS AND RESTRICTED CASH— BEGINNING OF PERIOD		3,525,415		7,061,253
CASH, CASH EQUIVALENTS AND RESTRICTED CASH — END OF PERIOD	$	3,147,103	$	5,042,612
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for interest	$	69,520	$	69,220

See notes to unaudited condensed consolidated financial statements

5

HEALTHIER CHOICES MANAGEMENT CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Note 1. ORGANIZATION

Organization

Healthier Choices Management Corp. (collectively, the “Company”, “we”, “us” and “our”)) 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.

COVID-19 Management Update

In March 2020, the outbreak of COVID-19 (coronavirus) caused by a novel strain of the coronavirus has recently been recognized as a pandemic by the World Health Organization, and the outbreak has become increasingly widespread in the United States, including in the markets in which the Company operates.  The COVID-19 outbreak has had a notable impact on general economic conditions, including but not limited to the temporary closures of many businesses, “shelter in place” and other governmental regulations, reduced consumer spending due to both job losses and other effects attributable to the COVID-19, and there are many unknowns. The Company has adjusted certain aspects of the operations to protect their employees and customers while still meeting customers’ needs. While to date the Company has not been required to close any of its stores, the Company is currently operating under regular hours and we are expecting COVID-19 to have a long-term beneficial impact to the future financial results of the grocery segment. The Company continues to monitor the impact of the COVID-19 outbreak closely.  The extent to which the COVID-19 outbreak will impact our operations is controllable, and there is no imminent risk on business continuity and future operation.

Note 2. GOING CONCERN AND 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 $1.5 million for the six months ended June 30, 2020. As of June 30, 2020, cash and cash equivalents totaled approximately $1.1 million, excluding a restricted cash of $2 million. While we anticipate that our current cash and cash equivalents 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 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.

6

Note 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Reclassification

Certain amounts in the consolidated financial statements and related notes have been reclassified to conform to the current year presentation. Such reclassifications do not impact the Company's previously reported financial position or net income (loss).

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.

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 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.

Recently Adopted Accounting Pronouncements

The Company adopted Accounting Standards Update No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash (“ASU 2016-18”). The amendment requires that the statement of cash flows explain the change during the period in the total cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. The Company adopted ASU 2016-18 in the second quarter of 2020 using the retrospective transition method to each period presented. The adoption primarily resulted in the inclusion of the restricted cash balances within the overall cash balances and a reconciliation of cash, cash equivalents and restricted cash reported on the condensed consolidated balance sheet. The adoption of this standard did not have a material impact on the condensed consolidated financial statements and is not expected to have a material impact for the foreseeable future. See “Cash and Cash Equivalents and Restricted Cash” above for further discussion of the effects of the adoption of ASU 2016-18 on the Company’s significant accounting policies.

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, 2020. 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, 2019 included in the Company’s Annual Report on Form 10-K for such year as filed with the SEC on May 13, 2020.

7

Note 4. CONCENTRATIONS

Cash and Cash Equivalents and Restricted Cash 

The following table provides a reconciliation of cash, cash equivalents and restricted cash to amounts shown in the statement of cash flows: 

	June 30, 2020		December 31, 2019
Cash and Cash Equivalent	$	1,147,103	$	1,525,415
Restricted cash, non-current portion		2,000,000		2,000,000
Total cash, cash equivalents and restricted cash	$	3,147,103	$	3,525,415

Restricted Cash

The Company’s restricted cash consists of cash that the Company is contractually obligated to maintain in a money market account in accordance with the terms of its April 2018 revolving credit line agreement. See Note 8 for further discussion.

Note 5. 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 June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Vapor	$	520,877	$	1,085,259	$	1,294,334	$	2,309,300
Grocery		2,788,035		2,731,754		6,050,749		5,887,819
Total revenue	$	3,308,912	$	3,817,013	$	7,345,083	$	8,197,119
Retail Vapor	$	520,877	$	1,085,181	$	1,294,334	$	2,308,904
Retail Grocery		2,453,446		2,380,537		5,283,811		5,010,081
Food service/restaurant		245,828		310,124		574,967		657,775
Online/eCommerce		82,940		34,632		186,150		204,855
Wholesale Grocery		5,821		6,462		5,821		15,107
Wholesale Vapor		-		77		-		397
Total revenue	$	3,308,912	$	3,817,013	$	7,345,083	$	8,197,119

Note 6. INTANGIBLE ASSETS

Intangible assets, net are as follows:

June 30, 2020	Useful Lives (Years)		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Trade names		8-10 years	$	993,000	$	(405,141)	$	587,859
Customer relationships		4-10 years		1,228,000		(419,385)		808,615
Patents		10 years		359,665		(67,658)		292,007
Non-compete		4 years		174,000		(67,063)		106,937
Intangible assets, net			$	2,754,665	$	(959,247)	$	1,795,418

December 31, 2019	Useful Lives (Years)		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Trade names		8-10 years	$	993,000		(354,203)	$	638,797
Customer relationships		4-10 years		1,228,000		(293,260)		934,740
Patents		10 years		270,250		(49,027)		221,223
Non-compete		4 years		174,000		(45,313)		128,687
Intangible assets, net			$	2,665,250	$	(741,803)	$	1,923,447

8

Intangible assets are amortized on a straight-line basis over their estimated useful lives. Amortization expense amounted to approximately $0.2 million and $0.2 million for the six months ended June 30, 2020 and 2019, respectively. Future annual estimated amortization expense is as follows:

Years ending December 31,
2020 (remaining six months)	$	216,796
2021		426,591
2022		411,206
2023		172,341
2024		172,341
Thereafter		396,143
Total	$	1,795,418

Note 7. CONTRACT LIABILITIES

The Company’s contract liabilities 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 six months ended June 30, 2020 and 2019 is presented below:

	As of June 30,
	2020		2019
Beginning balance as January 1,	$	26,823	$	442,630
Issued		42,611		64,452
Redeemed		(47,580)		(67,781)
Breakage recognized		(244)		(1,222)
Fulfillment of contract		(224)		(270,698)
Ending balance as of June 30,	$	21,386	$	167,381

Note 8. DEBT

Line of Credit

On April 13, 2018, the Company agreed to a new revolving credit line of $2 million and a money market account of $2 million (“blocked account”) with Professional Bank in Coral Gables, Florida. On June 30, 2020, the Company reached agreement with Professional Bank to renew the credit line for one more year, and the next annual review will occur on or before July 15, 2021. The new agreement included a variable interest rate that it is based on a rate of 1.5% over what is earned on the collateral amount. The collateral amount established in the arrangement with the bank is $2 million. As of June 30, 2020, the Company had $2 million in the blocked account, which is recorded as restricted cash included in non-current assets.

Paycheck Protection Program

On May 15, 2020, the Company was granted a loan (the “Loan”) from Customers Bank, in the aggregate amount of $876,515, pursuant to the Paycheck Protection Program (the “PPP”) under Division A, Title I of the CARES Act, which was enacted March 27, 2020.

The Loan, which was in the form of a Note dated May 6, 2020 issued by the Company, matures on May 6, 2022 and bears interest at a rate of 1% per annum, payable monthly commencing on November 6, 2020. The Note may be prepaid by the Borrower at any time prior to maturity with no prepayment penalties. Funds from the Loan may only be used for payroll costs, costs used to continue group health care benefits, mortgage payments, rent, utilities, and interest on other debt obligations incurred after May 6, 2020. The Company intends to use the entire Loan amount for these qualifying expenses. Under the terms of the PPP, certain amounts of the Loan may be forgiven if they are used for qualifying expenses as described in the CARES Act.

Note 9. STOCKHOLDERS’ EQUITY

Series A Warrants

In the six months ended June 30, 2020, the Company issued 19.9 billion shares in connection with the cashless exercise of the Series A warrants.

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Stock Options

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

	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Stock-based compensation	$	(7,665)	$	83,175	$	74,279	$	196,254

Income (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:

	As of June 30,
	2020		2019
Preferred stock		201,501,000,000		201,501,000,000
Stock options		68,062,000,000		68,012,000,000
Warrants		36,460,000,000		41,579,000,000
Total		306,023,000,000		311,092,000,000

Note 10. COMMITMENTS AND CONTINGENCIES

Legal Proceedings

Two lawsuits were filed against the Company and its subsidiaries in connection with alleged claimed battery defects for an electronic cigarette device. Plaintiffs claim these batteries were sold by a store of the Company’s subsidiary and have sued for an undetermined amount of damages (other than a total of $0.4 million of medical costs). The initial complaints were filed between January 2019 and April 2019. We responded to the complaints on April 2019 and May 2019, respectively. Given the lack of information presented by the plaintiffs to date, the Company is unable to predict the outcome of these matters and, at this time, cannot reasonably estimate the possible loss or range of loss with respect to these legal proceedings.

As of June 30, 2020, the Company has not accrued for a potential loss for these actions. Given the information received to date, the Company believes the allegations are without merit and intends to vigorously contest such actions. These lawsuits remain in the early stages and progressed minimally in 2020. With respect to legal costs, we record such costs as incurred.

Note 11. SUBSEQUENT EVENTS

The Company evaluated subsequent events through August 19, 2020, the date on which the June 30, 2020 unaudited condensed financial statements were originally issued. There are no significant events that require disclosure in these financial statements, except as follows:

Cashless Exercises of Series A Warrants

From July 1, 2020 through August 19, 2020, the Company issued 17.6 billion of common stock shares in connection with Series A Warrants exercises.

Expiration of Series A Warrants

On July 27, 2020, the remaining Company Series A Warrants expired and the balance of outstanding warrants not exercised was 355,661 warrants.

Renewal of Credit Line

On April 13, 2018, the Company agreed to a new revolving credit line of $2 million and a money market account of $2 million (“blocked account”) with Professional Bank in Coral Gables, Florida. On August 4, 2020, the Company reached agreement with Professional Bank to renew the credit line thru May 13, 2022, and the next review will occur on or before the expiration date. The new agreement included a variable interest rate that it is based on a rate of 1.50% over what is earned on the collateral amount. The collateral amount established in the arrangement with the bank is $2 million.

Term Loan and Security Agreement

On August 18, 2020, the Company agreed to a term loan and security agreement (the “Loan”) in the aggregate of $2.7 million with Sabby Healthcare Master Fund, LTD and Sabby Volatility Warrant Master Fund, LTD (“collectively, the Lender”). The loan has a non-refundable discount of 5% to the face amount of the loan and it matures on November 16, 2020. The proceeds received from the Loan will be used solely for the purchase of personal protective equipment (“PPE”) and any related expenses from the transactions. The Lender is entitled to 20% of all Net profits received from the sales of the PPE goods through the maturity date.

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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. (collectively, the “Company”, “we”, “us” and “our”) 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.

Going Concern and 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 $1.5 million for the six months ended June 30, 2020. As of June 30, 2020, cash and cash equivalents totaled approximately $1.1 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 June 30, 2020 and 2019 that is used in the following discussions of our results of operations:

	Three Months Ended June 30,				2020 to 2019
	2020		2019		Change $
SALES
Vapor sales, net	$	520,877	$	1,085,259	$	(564,382)
Grocery sales, net		2,788,035		2,731,754		56,281
TOTAL SALES, NET		3,308,912		3,817,013		(508,101)
Cost of sales vapor		212,457		442,931		(230,474)
Cost of sales grocery		1,723,161		1,711,791		11,370
GROSS PROFIT		1,373,294		1,662,291		(288,997)
OPERATING EXPENSES
Selling, general and administrative		2,168,159		2,534,492		(366,333)
Total operating expenses		2,168,159		2,534,492		(366,333)
LOSS FROM OPERATIONS		(794,865)		(872,201)		77,336
OTHER INCOME (EXPENSE)
Gain (loss) on investment		(1,286)		(19,286)		18,000
Interest income (expense)		(22,529)		(12,827)		(9,702)
Total other income (expense), net		(23,815)		(32,113)		8,298
NET LOSS	$	(818,680)	$	(904,314)	$	85,634

Net Vapor sales decreased $0.6 million to $0.5 million for the three months ended June 30, 2020 as compared to $1.1 million for the same period in 2019. The decrease in sales is primarily due to a major decreased in foot traffic or temporary closure of some stores a result of the Coronavirus (COVID-19) pandemic during the three months ended June 30, 2020 as compared to the same period in 2019.

Net Grocery sales increased $0.1 million to $2.8 million for the three months ended June 30, 2020 as compared to $2.7 million for the same period in 2019. The increase in sales is primarily due to COVID-19 pandemic and the company new strategy to offer its customer the option to delivery or curb side pickup their orders.

Vapor cost of goods sold for the three months ended June 30, 2020 and 2019 were $0.2 million and $0.4 million, respectively, a decreased of $0.2 million. The decrease is primarily due to decreases in product costs during three months ended June 30, 2020 as compared to the same period in 2019. Gross profit was $0.3 million and $0.6 million for three months ended June 30, 2020 and 2019, respectively.

Grocery cost of goods sold for the three months ended June 30, 2020 and 2019 were $1.7 million and $1.7 million respectively, an increased of $11,000. The increase is primarily due to increases in sales and cost of goods sold from the COVID-19 pandemic. Gross profit was $1.1 million and $1.0 million for the three months ended June 30, 2020 and 2019, respectively.

Selling, general and administrative expenses decreased $0.4 million to $2.2 million for the three months ended June 30, 2020 compared to $2.5 million for the same period in 2019. The decrease is primarily attributable to decreases in payroll and employee related cost of $0.1 million, stock compensation of $0.1 million,  meals, meals, travel and entertainment of $41,000, occupancy of $28,000, and insurance of $27,000.

Net other expense of $24,000 for the three months ended June 30, 2020 includes interest expense of $23,000, and loss on investment of $1,000, and Net other expense of $32,000 for the three months ended June 30, 2019 includes a loss on investment of $19,000, partially offset by interest income of $13,000.

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The following table sets forth our unaudited consolidated Statements of Operations for the six months ended June 30, 2020 and 2019 that is used in the following discussions of our results of operations:

	Six Months Ended June 30,				2020 to 2019
	2020		2019		Change $
SALES
Vapor sales, net	$	1,294,334	$	2,309,300	$	(1,014,966)
Grocery sales, net		6,050,749		5,887,819		162,930
TOTAL SALES, NET		7,345,083		8,197,119		(852,036)
Cost of sales vapor		531,537		952,347		(420,810)
Cost of sales grocery		3,732,362		3,679,587		52,775
GROSS PROFIT		3,081,184		3,565,185		(484,001)
OPERATING EXPENSES
Selling, general and administrative		4,540,540		5,524,947		(984,407)
Total operating expenses		4,540,540		5,524,947		(984,407)
LOSS FROM OPERATIONS		(1,459,356)		(1,959,762)		500,406
OTHER INCOME (EXPENSE)
Gain (loss) on investment		(11,143)		(44,999)		33,856
Interest income (expense)		(39,475)		(12,082)		(27,393)
Total other income (expense), net		(50,618)		(57,081)		6,463
NET LOSS	$	(1,509,974)	$	(2,016,843)	$	506,869

Net Vapor sales decreased $1.0 million to $1.3 million for the six months ended June 30, 2020 as compared to $2.3 million for the same period in 2019. The decrease in sales is primarily due to a major decreased in foot traffic or temporary closure of some stores a result of the Coronavirus (COVID-19) pandemic and a decrease in the number of stores open during the six months ended June 30, 2020 as compared to the same period in 2019.

Net Grocery sales increased $0.2 million to $6.1 million for the six months ended June 30, 2020 as compared to $5.9 million for the same period in 2019. The increase in sales is primarily due to COVID-19 pandemic and the company new strategy to offer its customer the option to delivery or curb side pickup their orders.

Vapor cost of goods sold for the six months ended June 30, 2020 and 2019 were $0.5 million and $1.0 million, respectively, a decrease of $0.4 million. The decrease is primarily due to a decreased in sales and product cost. Gross profit was $0.8 million and $1.4 million for the six months ended June 30, 2020 and 2019, respectively.

Grocery cost of goods sold for the six months ended June 30, 2020 and 2019 were $3.7 million and $3.7 million, respectively, an increase of $0.1 million. The increase is primarily due to increases in sales and cost of goods sold from the COVID-19 pandemic. Gross profit was $2.3 million and $2.2 million for the six months ended June 30, 2019 and 2019, respectively.

Selling, general and administrative expenses decreased $1.0 million to $4.5 million for the six months ended June 30, 2020 compared to $5.5 million for the same period in 2019. The decrease is primarily attributable to increases in payroll and employee related cost of $0.5 million, stock-based compensation of $0.1 million, professional fees of $0.1 million, taxes, licenses & permits of $0.1 million, insurance of $45,000, and occupancy of $32,000.

Net other expense of $0.1 million for the six months ended June 30, 2020 was primarily due to an interest expense of $39,000, and a loss on investment of $11,000. Net other expense of $0.1 million for the six months ended June 30, 2019 includes a loss on investment of 45,000, and interest expense of $12,000.

The company did not incur activity from discontinued operations for the six months ended June 30, 2020 or for the same period in 2019.

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Liquidity and Capital Resources

	Six Months Ended June 30,
	2020		2019
Net cash used in operating activities	$	(1,010,905)	$	(2,089,988)
Net cash provided by (used in) investing activities		(104,087)		57,570
Net cash provided by financing activities		736,680		13,777
	$	(378,312)	$	(2,018,641)

Our net cash used in operating activities of $1.0 million for the six months ended June 30, 2020 resulted from a net loss of $1.5 million, and a net cash usage of $0.1 million from changes in operating assets and liabilities, offset by a non-cash adjustment of $0.6 million. Our net cash used in operating activities of $2.1 million for the six months ended June 30, 2019 resulted from a net loss of $2.0 million and a net cash usage of $1.0 million from changes in operating assets and liabilities, offset by a non-cash adjustment of $0.9 million.

The net cash used in investing activities of $0.1 million for the six months ended June 30, 2020 resulted from the issuance and collection of a note receivable, and purchases of a patent and property and equipment. The net cash provided by investing activities of $58,000 for the six months ended June 30, 2019 resulted from payments received on the VPR Brands L.P. Note.

The net cash provided by financing activities of $0.7 million for the six months ended June 30, 2020 is due to proceeds received from the Payroll Protection Plan of $0.9 million, offset by loan of payments of $0.7 million on the loan payable. The net cash provided by financing activities of $14,000 for the six months ended June 30, 2019 is due to payments on the loan payable.

At June 30, 2020 and December 31, 2019, 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 June 30, 2020 and December 31, 2019.

	June 30, 2020		December 31, 2019
Cash	$	1,147,103	$	1,525,415
Total assets	$	13,177,057	$	13,177,057
Percentage of total assets		8.71%		11.58%

The Company reported a net loss of $1.5 million for the six months ended June 30, 2020. The Company also had negative working capital of $0.9 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 unaudited condensed 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 condensed consolidated financial statements requires us to exercise considerable judgment with respect to establishing sound accounting policies and in making estimates and assumptions that affect the reported amounts of our assets and liabilities, our recognition of revenues and expenses, and disclosure of commitments and contingencies at the date of the condensed consolidated financial statements.

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.

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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 2019 Annual Report, which we believe are the most critical to our business and the understanding of our results of operations and affect the more significant judgments and estimates that we use in the preparation of our condensed consolidated financial statements.

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 June 30, 2020 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, 2019 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 purchase orders and inventory write-off procedures

● Segregation of duties due to lack of personnel

During the second quarter of 2020, the Company's independent auditors identified a material weakness in our internal controls and procedures over the adoption of Accounting Standard Codification ("ASC") 230, Restricted cash. The material weakness in internal control over financial reporting resulted in a reclassification to the presentation of the Company's prior period financial statements. These reclassifications were done to conform to the presentation of the current financial statement and they had no effect on the previously reported net loss.

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 June 30, 2020 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 six months ended June 30, 2020, we have undertaken an action plan to

strengthen internal controls and procedures:

● We continue to improve the process around inventory controls and throughout the current year, we are planning to perform a blind-counts for 100% 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 are transitioning the independent third-party counts to a new company with the purposes of improving the accuracy of the quarterly and yearly counts perform for all retail stores. Due to the Coronavirus pandemic ("COVID-19") that started in early March 2020, the company was not able to conduct any independent third-party counts for the six months ended June 30, 2020.

● 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.

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PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

Two lawsuits were filed against the Company and its subsidiaries in connection with alleged claimed battery defects for an electronic cigarette device. Plaintiffs claim these batteries were sold by a store of the Company’s subsidiary and have sued for an undetermined amount of damages (other than a total of $0.4 million of medical costs). The initial complaints were filed between January 2019 and April 2019. We responded to the complaints on April 2019 and May 2019, respectively. Given the lack of information presented by the plaintiffs to date, the Company is unable to predict the outcome of these matters and, at this time, cannot reasonably estimate the possible loss or range of loss with respect to these legal proceedings.

As of June 30, 2020, the Company has not accrued for a potential loss for these actions. Given the information received to date, the Company believes the allegations are without merit and intends to vigorously contest such actions. These lawsuits remain in the early stages and progressed minimally in 2020. With respect to legal costs, we record such costs as incurred.

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.”

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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.

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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: August 19, 2020	By:	/s/ Jeffrey Holman
		Jeffrey Holman
		Chief Executive Officer
Date: August 19, 2020	By:	/s/ John Ollet
		John Ollet
		Chief Financial Officer

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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: August 19, 2020

/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: August 19, 2020

/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 June 30, 2020, 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: August 19, 2020

/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 June 30, 2020, 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: August 19, 2020

/s/ John Ollet

John Ollet

Chief Financial Officer

(Principal Financial Officer)

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Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2020	Aug. 19, 2020
Cover [Abstract]
Entity Registrant Name	Healthier Choices Management Corp.
Entity Central Index Key	0000844856
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Shell Company	false
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Common Stock, Shares Outstanding		105,110,848,016
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2020
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	Q2
Document Quarterly Report	true
Document Transition Report	false
Entity File Number	001-36469
Entity Tax Identification Number	84-1070932
Entity Incorporation, State or Country Code	DE
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

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($)	Jun. 30, 2020	Dec. 31, 2019
CURRENT ASSETS
Cash and cash equivalents	$ 1,147,103	$ 1,525,415
Accounts receivable, net	26,992	65,401
Inventories	1,779,923	1,757,012
Prepaid expenses and vendor deposits	298,520	269,833
Investment	12,857	24,000
TOTAL CURRENT ASSETS	3,265,395	3,641,661
Restricted cash	2,000,000	2,000,000
Property and equipment, net of accumulated depreciation	287,837	332,290
Intangible assets, net of accumulated amortization	1,795,418	1,923,447
Goodwill	956,000	956,000
Note receivable	333,396	343,387
Right of use asset - operating lease, net	4,396,343	4,663,019
Other assets	142,668	146,865
TOTAL ASSETS	13,177,057	14,006,669
CURRENT LIABILITIES
Accounts payable and accrued expenses	929,799	825,860
Contract liabilities	21,386	26,823
Current portion of line of credit	2,000,000	2,000,000
Current portion of loan payment	651,187	282,344
Operating lease liability, current	536,152	555,959
TOTAL CURRENT LIABILITIES	4,138,524	3,690,986
Loan payable, net of current portion	1,237,060	869,223
Operating lease liability, net of current	3,335,437	3,544,729
TOTAL LIABILITIES	8,711,021	8,104,938
COMMITMENTS AND CONTINGENCIES (SEE NOTE 8)
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 June 30, 2020 and December 31, 2019; 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; approximately 87.6 and 67.7 billion shares issued and outstanding as of June 30, 2020 and December 31, 2019, respectively	8,755,829	6,769,849
Additional paid-in capital	5,706,544	7,618,245
Accumulated deficit	(30,146,453)	(28,636,479)
TOTAL STOCKHOLDERS' EQUITY	4,466,036	5,901,731
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$ 13,177,057	$ 14,006,669

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - USD ($) $ in Millions	Jun. 30, 2020	Dec. 31, 2019
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)	87,600,000,000	67,700,000,000
Common stock, shares outstanding (in shares)	87,600,000,000	67,700,000,000

XML

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
SALES
TOTAL SALES, NET	$ 3,308,912	$ 3,817,013	$ 7,345,083	$ 8,197,119
GROSS PROFIT	1,373,294	1,662,291	3,081,184	3,565,185
OPERATING EXPENSES	2,168,159	2,534,492	4,540,540	5,524,947
LOSS FROM OPERATIONS	(794,865)	(872,201)	(1,459,356)	(1,959,762)
OTHER (EXPENSE) INCOME
Gain (loss) on investment	(1,286)	(19,286)	(11,143)	(44,999)
Interest income (expense), net	(22,529)	(12,827)	(39,475)	(12,082)
Total other (expense) income, net	(23,815)	(32,113)	(50,618)	(57,081)
NET LOSS	$ (818,680)	$ (904,314)	$ (1,509,974)	$ (2,016,843)
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)	81,189,670,235	66,642,629,630	75,564,076,780	66,635,948,138
Vapor [Member]
SALES
TOTAL SALES, NET	$ 520,877	$ 1,085,259	$ 1,294,334	$ 2,309,300
Cost of sales	212,457	442,931	531,537	952,347
Grocery [Member]
SALES
TOTAL SALES, NET	2,788,035	2,731,754	6,050,749	5,887,819
Cost of sales	$ 1,723,161	$ 1,711,791	$ 3,732,362	$ 3,679,587

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CONDENSED CONSOLIDATED STOCKHOLDERS' EQUITY STATEMENTS (Unaudited) - USD ($)	Common Stock [Member]	Additional Paid-In Capital [Member]	Accumulated Deficit [Member]	Convertible Preferred Stock [Member]	Total	Cumulative Effect, Period of Adoption, Adjustment [Member] Accumulated Deficit [Member]	Cumulative Effect, Period of Adoption, Adjustment [Member]
Balance at Dec. 31, 2018	$ 6,662,351	$ 7,348,390	$ (25,734,088)	$ 20,150,116	$ 8,426,769
Balance (ASU 2016-02 [Member]) at Dec. 31, 2018						$ (103,015)	$ (103,015)
Balance (in shares) at Dec. 31, 2018	66,623,514,522			20,150
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock in connection with cashless exercise of Series A warrants	$ 2,175	(1,274)			901
Issuance of common stock in connection with cashless exercise of Series A warrants (in shares)	21,743,172
Stock-based compensation expense		196,254			196,254
Net loss			(2,016,843)		(2,016,843)
Balance at Jun. 30, 2019	$ 6,664,526	7,543,370	(27,853,946)	$ 20,150,116	6,504,066
Balance (in shares) at Jun. 30, 2019	66,645,257,694			20,150
Balance at Mar. 31, 2019	$ 6,663,438	7,460,832	(26,949,632)	$ 20,150,116	7,324,754
Balance (in shares) at Mar. 31, 2019	66,634,387,066			20,150
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock in connection with cashless exercise of Series A warrants	$ 1,088	(637)			451
Issuance of common stock in connection with cashless exercise of Series A warrants (in shares)	10,870,628
Stock-based compensation expense		83,175			83,175
Net loss			(904,314)		(904,314)
Balance at Jun. 30, 2019	$ 6,664,526	7,543,370	(27,853,946)	$ 20,150,116	6,504,066
Balance (in shares) at Jun. 30, 2019	66,645,257,694			20,150
Balance at Dec. 31, 2019	$ 6,769,849	7,618,245	(28,636,479)	$ 20,150,116	5,901,731
Balance (in shares) at Dec. 31, 2019	67,698,494,244			20,150
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock in connection with cashless exercise of Series A warrants	$ 1,985,980	(1,985,980)			$ 0
Issuance of common stock in connection with cashless exercise of Series A warrants (in shares)	19,859,802,354				19,859,802,354
Stock-based compensation expense		74,279			$ 74,279
Net loss			(1,509,974)		(1,509,974)
Balance at Jun. 30, 2020	$ 8,755,829	5,706,544	(30,146,453)	$ 20,150,116	4,466,036
Balance (in shares) at Jun. 30, 2020	87,558,296,598			20,150
Balance at Mar. 31, 2020	$ 7,249,743	7,220,295	(29,327,773)	$ 20,150,116	5,292,381
Balance (in shares) at Mar. 31, 2020	72,497,427,011			20,150
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock in connection with cashless exercise of Series A warrants	$ 1,506,086	(1,506,086)			0
Issuance of common stock in connection with cashless exercise of Series A warrants (in shares)	15,060,869,587
Stock-based compensation expense		(7,665)			(7,665)
Net loss			(818,680)		(818,680)
Balance at Jun. 30, 2020	$ 8,755,829	$ 5,706,544	$ (30,146,453)	$ 20,150,116	$ 4,466,036
Balance (in shares) at Jun. 30, 2020	87,558,296,598			20,150

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($)	6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019
OPERATING ACTIVITIES
Net loss	$ (1,509,974)	$ (2,016,843)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	286,559	302,277
Loss on disposal of assets	0	25,427
Loss on investment	11,143	44,999
Amortization of right-of-use asset	266,676	327,287
Stock-based compensation expense	74,279	196,254
Changes in operating assets and liabilities:
Accounts receivable	38,409	11,662
Inventories	(22,911)	(153,951)
Prepaid expenses and vendor deposits	(28,687)	34,893
Contract assets	0	14,400
Other assets	4,197	320
Accounts payable	119,686	9,526
Accrued expenses	(15,747)	(322,140)
Contract liabilities	(5,437)	(275,249)
Lease liability	(229,098)	(288,850)
NET CASH USED IN OPERATING ACTIVITIES	(1,010,905)	(2,089,988)
INVESTING ACTIVITIES
Collection of note receivable	9,991	87,154
Purchases of property and equipment	(24,663)	(4,584)
Purchases of patent	(89,415)	(25,000)
NET CASH USED IN INVESTING ACTIVITIES	(104,087)	57,570
FINANCING ACTIVITIES
Proceeds from line of credit	0	131,540
Principal payments on loan payable	736,680	(117,763)
NET CASH USED IN FINANCING ACTIVITIES	736,680	13,777
NET DECREASE IN CASH, CASH EQUIVALENT AND RESTRICTED CASH	(378,312)	(2,018,641)
CASH, CASH EQUIVALENTS AND RESTRICTED CASH - BEGINNING OF PERIOD	3,525,415	7,061,253
CASH, CASH EQUIVALENTS AND RESTRICTED CASH - END OF PERIOD	3,147,103	5,042,612
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for interest	$ 69,520	$ 69,220

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ORGANIZATION

6 Months Ended

Jun. 30, 2020

ORGANIZATION [Abstract]

ORGANIZATION

Note 1. ORGANIZATION

Organization

Healthier Choices Management Corp. (collectively, the “Company”, “we”, “us” and “our”)) 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.

COVID-19 Management Update

In March 2020, the outbreak of COVID-19 (coronavirus) caused by a novel strain of the coronavirus has recently been recognized as a pandemic by the World Health Organization, and the outbreak has become increasingly widespread in the United States, including in the markets in which the Company operates.  The COVID-19 outbreak has had a notable impact on general economic conditions, including but not limited to the temporary closures of many businesses, “shelter in place” and other governmental regulations, reduced consumer spending due to both job losses and other effects attributable to the COVID-19, and there are many unknowns. The Company has adjusted certain aspects of the operations to protect their employees and customers while still meeting customers’ needs. While to date the Company has not been required to close any of its stores, the Company is currently operating under regular hours and we are expecting COVID-19 to have a long-term beneficial impact to the future financial results of the grocery segment. The Company continues to monitor the impact of the COVID-19 outbreak closely.  The extent to which the COVID-19 outbreak will impact our operations is controllable, and there is no imminent risk on business continuity and future operation.

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GOING CONCERN AND LIQUIDITY

6 Months Ended

Jun. 30, 2020

GOING CONCERN AND LIQUIDITY [Abstract]

GOING CONCERN AND LIQUIDITY

Note 2. GOING CONCERN AND 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 $1.5 million for the six months ended June 30, 2020. As of June 30, 2020, cash and cash equivalents totaled approximately $1.1 million, excluding a restricted cash of $2 million. While we anticipate that our current cash and cash equivalents 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 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.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

6 Months Ended

Jun. 30, 2020

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Note 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Reclassification

Certain amounts in the consolidated financial statements and related notes have been reclassified to conform to the current year presentation. Such reclassifications do not impact the Company's previously reported financial position or net income (loss).

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.

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 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.

Recently Adopted Accounting Pronouncements

The Company adopted Accounting Standards Update No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash (“ASU 2016-18”). The amendment requires that the statement of cash flows explain the change during the period in the total cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. The Company adopted ASU 2016-18 in the second quarter of 2020 using the retrospective transition method to each period presented. The adoption primarily resulted in the inclusion of the restricted cash balances within the overall cash balances and a reconciliation of cash, cash equivalents and restricted cash reported on the condensed consolidated balance sheet. The adoption of this standard did not have a material impact on the condensed consolidated financial statements and is not expected to have a material impact for the foreseeable future. See “Cash and Cash Equivalents and Restricted Cash” above for further discussion of the effects of the adoption of ASU 2016-18 on the Company’s significant accounting policies.

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, 2020. 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, 2019 included in the Company’s Annual Report on Form 10-K for such year as filed with the SEC on May 13, 2020.

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CONCENTRATIONS

6 Months Ended

Jun. 30, 2020

CONCENTRATIONS [Abstract]

CONCENTRATIONS

Note 4. CONCENTRATIONS

Cash and Cash Equivalents and Restricted Cash 

The following table provides a reconciliation of cash, cash equivalents and restricted cash to amounts shown in the statement of cash flows: 

	June 30, 2020		December 31, 2019
Cash and Cash Equivalent	$	1,147,103	$	1,525,415
Restricted cash, non-current portion		2,000,000		2,000,000
Total cash, cash equivalents and restricted cash	$	3,147,103	$	3,525,415

Restricted Cash

The Company’s restricted cash consists of cash that the Company is contractually obligated to maintain in a money market account in accordance with the terms of its April 2018 revolving credit line agreement. See Note 8 for further discussion.

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DISAGGREGATION OF REVENUES

6 Months Ended

Jun. 30, 2020

DISAGGREGATION OF REVENUES [Abstract]

DISAGGREGATION OF REVENUES

Note 5. 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 June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Vapor	$	520,877	$	1,085,259	$	1,294,334	$	2,309,300
Grocery		2,788,035		2,731,754		6,050,749		5,887,819
Total revenue	$	3,308,912	$	3,817,013	$	7,345,083	$	8,197,119
Retail Vapor	$	520,877	$	1,085,181	$	1,294,334	$	2,308,904
Retail Grocery		2,453,446		2,380,537		5,283,811		5,010,081
Food service/restaurant		245,828		310,124		574,967		657,775
Online/eCommerce		82,940		34,632		186,150		204,855
Wholesale Grocery		5,821		6,462		5,821		15,107
Wholesale Vapor		-		77		-		397
Total revenue	$	3,308,912	$	3,817,013	$	7,345,083	$	8,197,119

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INTANGIBLE ASSETS

6 Months Ended

Jun. 30, 2020

INTANGIBLE ASSETS [Abstract]

INTANGIBLE ASSETS

Note 6. INTANGIBLE ASSETS

Intangible assets, net are as follows:

June 30, 2020	Useful Lives (Years)		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Trade names		8-10 years	$	993,000	$	(405,141)	$	587,859
Customer relationships		4-10 years		1,228,000		(419,385)		808,615
Patents		10 years		359,665		(67,658)		292,007
Non-compete		4 years		174,000		(67,063)		106,937
Intangible assets, net			$	2,754,665	$	(959,247)	$	1,795,418

December 31, 2019	Useful Lives (Years)		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Trade names		8-10 years	$	993,000		(354,203)	$	638,797
Customer relationships		4-10 years		1,228,000		(293,260)		934,740
Patents		10 years		270,250		(49,027)		221,223
Non-compete		4 years		174,000		(45,313)		128,687
Intangible assets, net			$	2,665,250	$	(741,803)	$	1,923,447

Intangible assets are amortized on a straight-line basis over their estimated useful lives. Amortization expense amounted to approximately $0.2 million and $0.2 million for the six months ended June 30, 2020 and 2019, respectively. Future annual estimated amortization expense is as follows:

Years ending December 31,
2020 (remaining six months)	$	216,796
2021		426,591
2022		411,206
2023		172,341
2024		172,341
Thereafter		396,143
Total	$	1,795,418

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CONTRACT LIABILITIES

6 Months Ended

Jun. 30, 2020

CONTRACT LIABILITIES [Abstract]

CONTRACT LIABILITIES

Note 7. CONTRACT LIABILITIES

The Company’s contract liabilities 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 six months ended June 30, 2020 and 2019 is presented below:

	As of June 30,
	2020		2019
Beginning balance as January 1,	$	26,823	$	442,630
Issued		42,611		64,452
Redeemed		(47,580)		(67,781)
Breakage recognized		(244)		(1,222)
Fulfillment of contract		(224)		(270,698)
Ending balance as of June 30,	$	21,386	$	167,381

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DEBT

6 Months Ended

Jun. 30, 2020

DEBT [Abstract]

DEBT

Note 8. DEBT

Line of Credit

On April 13, 2018, the Company agreed to a new revolving credit line of $2 million and a money market account of $2 million (“blocked account”) with Professional Bank in Coral Gables, Florida. On June 30, 2020, the Company reached agreement with Professional Bank to renew the credit line for one more year, and the next annual review will occur on or before July 15, 2021. The new agreement included a variable interest rate that it is based on a rate of 1.5% over what is earned on the collateral amount. The collateral amount established in the arrangement with the bank is $2 million. As of June 30, 2020, the Company had $2 million in the blocked account, which is recorded as restricted cash included in non-current assets.

Paycheck Protection Program

On May 15, 2020, the Company was granted a loan (the “Loan”) from Customers Bank, in the aggregate amount of $876,515, pursuant to the Paycheck Protection Program (the “PPP”) under Division A, Title I of the CARES Act, which was enacted March 27, 2020.

The Loan, which was in the form of a Note dated May 6, 2020 issued by the Company, matures on May 6, 2022 and bears interest at a rate of 1% per annum, payable monthly commencing on November 6, 2020. The Note may be prepaid by the Borrower at any time prior to maturity with no prepayment penalties. Funds from the Loan may only be used for payroll costs, costs used to continue group health care benefits, mortgage payments, rent, utilities, and interest on other debt obligations incurred after May 6, 2020. The Company intends to use the entire Loan amount for these qualifying expenses. Under the terms of the PPP, certain amounts of the Loan may be forgiven if they are used for qualifying expenses as described in the CARES Act.

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STOCKHOLDERS' EQUITY

6 Months Ended

Jun. 30, 2020

STOCKHOLDERS' EQUITY [Abstract]

STOCKHOLDERS' EQUITY

Note 9. STOCKHOLDERS’ EQUITY

Series A Warrants

In the six months ended June 30, 2020, the Company issued 19.9 billion shares in connection with the cashless exercise of the Series A warrants.

Stock Options

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

	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Stock-based compensation	$	(7,665)	$	83,175	$	74,279	$	196,254

Income (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:

	As of June 30,
	2020		2019
Preferred stock		201,501,000,000		201,501,000,000
Stock options		68,062,000,000		68,012,000,000
Warrants		36,460,000,000		41,579,000,000
Total		306,023,000,000		311,092,000,000

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COMMITMENTS AND CONTINGENCIES

6 Months Ended

Jun. 30, 2020

COMMITMENTS AND CONTINGENCIES [Abstract]

COMMITMENTS AND CONTINGENCIES

Note 10. COMMITMENTS AND CONTINGENCIES

Legal Proceedings

Two lawsuits were filed against the Company and its subsidiaries in connection with alleged claimed battery defects for an electronic cigarette device. Plaintiffs claim these batteries were sold by a store of the Company’s subsidiary and have sued for an undetermined amount of damages (other than a total of $0.4 million of medical costs). The initial complaints were filed between January 2019 and April 2019. We responded to the complaints on April 2019 and May 2019, respectively. Given the lack of information presented by the plaintiffs to date, the Company is unable to predict the outcome of these matters and, at this time, cannot reasonably estimate the possible loss or range of loss with respect to these legal proceedings.

As of June 30, 2020, the Company has not accrued for a potential loss for these actions. Given the information received to date, the Company believes the allegations are without merit and intends to vigorously contest such actions. These lawsuits remain in the early stages and progressed minimally in 2020. With respect to legal costs, we record such costs as incurred.

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SUBSEQUENT EVENTS

6 Months Ended

Jun. 30, 2020

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

Note 11. SUBSEQUENT EVENTS

The Company evaluated subsequent events through August 19, 2020, the date on which the June 30, 2020 unaudited condensed financial statements were originally issued. There are no significant events that require disclosure in these financial statements, except as follows:

Cashless Exercises of Series A Warrants

From July 1, 2020 through August 19, 2020, the Company issued 17.6 billion of common stock shares in connection with Series A Warrants exercises.

Expiration of Series A Warrants

On July 27, 2020, the remaining Company Series A Warrants expired and the balance of outstanding warrants not exercised was 355,661 warrants.

Renewal of Credit Line

On April 13, 2018, the Company agreed to a new revolving credit line of $2 million and a money market account of $2 million (“blocked account”) with Professional Bank in Coral Gables, Florida. On August 4, 2020, the Company reached agreement with Professional Bank to renew the credit line thru May 13, 2022, and the next review will occur on or before the expiration date. The new agreement included a variable interest rate that it is based on a rate of 1.50% over what is earned on the collateral amount. The collateral amount established in the arrangement with the bank is $2 million.

Term Loan and Security Agreement

On August 18, 2020, the Company agreed to a term loan and security agreement (the “Loan”) in the aggregate of $2.7 million with Sabby Healthcare Master Fund, LTD and Sabby Volatility Warrant Master Fund, LTD (“collectively, the Lender”). The loan has a non-refundable discount of 5% to the face amount of the loan and it matures on November 16, 2020. The proceeds received from the Loan will be used solely for the purchase of personal protective equipment (“PPE”) and any related expenses from the transactions. The Lender is entitled to 20% of all Net profits received from the sales of the PPE goods through the maturity date.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

6 Months Ended

Jun. 30, 2020

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract]

Reclassification

Reclassification

Certain amounts in the consolidated financial statements and related notes have been reclassified to conform to the current year presentation. Such reclassifications do not impact the Company's previously reported financial position or net income (loss).

Use of Estimates in the Preparation of the Financial Statements

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.

Basis of Presentation

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 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.

Recently Adopted Accounting Pronouncements

Recently Adopted Accounting Pronouncements

The Company adopted Accounting Standards Update No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash (“ASU 2016-18”). The amendment requires that the statement of cash flows explain the change during the period in the total cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. The Company adopted ASU 2016-18 in the second quarter of 2020 using the retrospective transition method to each period presented. The adoption primarily resulted in the inclusion of the restricted cash balances within the overall cash balances and a reconciliation of cash, cash equivalents and restricted cash reported on the condensed consolidated balance sheet. The adoption of this standard did not have a material impact on the condensed consolidated financial statements and is not expected to have a material impact for the foreseeable future. See “Cash and Cash Equivalents and Restricted Cash” above for further discussion of the effects of the adoption of ASU 2016-18 on the Company’s significant accounting policies.

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CONCENTRATIONS (Tables)

6 Months Ended

Jun. 30, 2020

CONCENTRATIONS [Abstract]

Cash, Cash Equivalents and Restricted Cash

The following table provides a reconciliation of cash, cash equivalents and restricted cash to amounts shown in the statement of cash flows: 

	June 30, 2020		December 31, 2019
Cash and Cash Equivalent	$	1,147,103	$	1,525,415
Restricted cash, non-current portion		2,000,000		2,000,000
Total cash, cash equivalents and restricted cash	$	3,147,103	$	3,525,415

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DISAGGREGATION OF REVENUES (Tables)

6 Months Ended

Jun. 30, 2020

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 June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Vapor	$	520,877	$	1,085,259	$	1,294,334	$	2,309,300
Grocery		2,788,035		2,731,754		6,050,749		5,887,819
Total revenue	$	3,308,912	$	3,817,013	$	7,345,083	$	8,197,119
Retail Vapor	$	520,877	$	1,085,181	$	1,294,334	$	2,308,904
Retail Grocery		2,453,446		2,380,537		5,283,811		5,010,081
Food service/restaurant		245,828		310,124		574,967		657,775
Online/eCommerce		82,940		34,632		186,150		204,855
Wholesale Grocery		5,821		6,462		5,821		15,107
Wholesale Vapor		-		77		-		397
Total revenue	$	3,308,912	$	3,817,013	$	7,345,083	$	8,197,119

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INTANGIBLE ASSETS (Tables)

6 Months Ended

Jun. 30, 2020

INTANGIBLE ASSETS [Abstract]

Intangible Assets, Net

Intangible assets, net are as follows:

June 30, 2020	Useful Lives (Years)		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Trade names		8-10 years	$	993,000	$	(405,141)	$	587,859
Customer relationships		4-10 years		1,228,000		(419,385)		808,615
Patents		10 years		359,665		(67,658)		292,007
Non-compete		4 years		174,000		(67,063)		106,937
Intangible assets, net			$	2,754,665	$	(959,247)	$	1,795,418

December 31, 2019	Useful Lives (Years)		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Trade names		8-10 years	$	993,000		(354,203)	$	638,797
Customer relationships		4-10 years		1,228,000		(293,260)		934,740
Patents		10 years		270,250		(49,027)		221,223
Non-compete		4 years		174,000		(45,313)		128,687
Intangible assets, net			$	2,665,250	$	(741,803)	$	1,923,447

Future Annual Estimated Amortization Expense

Intangible assets are amortized on a straight-line basis over their estimated useful lives. Amortization expense amounted to approximately $0.2 million and $0.2 million for the six months ended June 30, 2020 and 2019, respectively. Future annual estimated amortization expense is as follows:

Years ending December 31,
2020 (remaining six months)	$	216,796
2021		426,591
2022		411,206
2023		172,341
2024		172,341
Thereafter		396,143
Total	$	1,795,418

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CONTRACT LIABILITIES (Tables)

6 Months Ended

Jun. 30, 2020

CONTRACT LIABILITIES [Abstract]

Summary of Net Changes in Contract Liabilities

A summary of the net changes in contract liabilities activity for the six months ended June 30, 2020 and 2019 is presented below:

	As of June 30,
	2020		2019
Beginning balance as January 1,	$	26,823	$	442,630
Issued		42,611		64,452
Redeemed		(47,580)		(67,781)
Breakage recognized		(244)		(1,222)
Fulfillment of contract		(224)		(270,698)
Ending balance as of June 30,	$	21,386	$	167,381

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STOCKHOLDERS' EQUITY (Tables)

6 Months Ended

Jun. 30, 2020

STOCKHOLDERS' EQUITY [Abstract]

Compensation Expense Recognized

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

	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Stock-based compensation	$	(7,665)	$	83,175	$	74,279	$	196,254

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:

	As of June 30,
	2020		2019
Preferred stock		201,501,000,000		201,501,000,000
Stock options		68,062,000,000		68,012,000,000
Warrants		36,460,000,000		41,579,000,000
Total		306,023,000,000		311,092,000,000

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ORGANIZATION (Details)	Jun. 30, 2020 Store
ORGANIZATION [Abstract]
Number of operating retail vape stores	9

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GOING CONCERN AND LIQUIDITY (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019	Dec. 31, 2019
GOING CONCERN AND LIQUIDITY [Abstract]
Loss from operations	$ (794,865)	$ (872,201)	$ (1,459,356)	$ (1,959,762)
Cash and cash equivalents	1,147,103		1,147,103		$ 1,525,415
Restricted cash	$ 2,000,000		$ 2,000,000		$ 2,000,000

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CONCENTRATIONS (Details) - USD ($)	Jun. 30, 2020	Dec. 31, 2019	Jun. 30, 2019	Dec. 31, 2018
Cash, Cash Equivalents and Restricted Cash [Abstract]
Cash and Cash Equivalent	$ 1,147,103	$ 1,525,415
Restricted cash, non-current portion	2,000,000	2,000,000
Total cash, cash equivalents and restricted cash	$ 3,147,103	$ 3,525,415	$ 5,042,612	$ 7,061,253

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DISAGGREGATION OF REVENUES (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Disaggregation of Revenue [Abstract]
Revenue	$ 3,308,912	$ 3,817,013	$ 7,345,083	$ 8,197,119
Vapor [Member]
Disaggregation of Revenue [Abstract]
Revenue	520,877	1,085,259	1,294,334	2,309,300
Grocery [Member]
Disaggregation of Revenue [Abstract]
Revenue	2,788,035	2,731,754	6,050,749	5,887,819
Retail Vapor [Member]
Disaggregation of Revenue [Abstract]
Revenue	520,877	1,085,181	1,294,334	2,308,904
Retail Grocery [Member]
Disaggregation of Revenue [Abstract]
Revenue	2,453,446	2,380,537	5,283,811	5,010,081
Food Service/Restaurant [Member]
Disaggregation of Revenue [Abstract]
Revenue	245,828	310,124	574,967	657,775
Online/eCommerce [Member]
Disaggregation of Revenue [Abstract]
Revenue	82,940	34,632	186,150	204,855
Wholesale Grocery [Member]
Disaggregation of Revenue [Abstract]
Revenue	5,821	6,462	5,821	15,107
Wholesale Vapor [Member]
Disaggregation of Revenue [Abstract]
Revenue	$ 0	$ 77	$ 0	$ 397

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INTANGIBLE ASSETS, Intangible Assets, Net (Details) - USD ($)	6 Months Ended	12 Months Ended
	Jun. 30, 2020	Dec. 31, 2019
Intangible Assets, Net [Abstract]
Gross carrying amount	$ 2,754,665	$ 2,665,250
Accumulated amortization	(959,247)	(741,803)
Net carrying amount	1,795,418	1,923,447
Trade Names [Member]
Intangible Assets, Net [Abstract]
Gross carrying amount	993,000	993,000
Accumulated amortization	(405,141)	(354,203)
Net carrying amount	$ 587,859	$ 638,797
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	(419,385)	(293,260)
Net carrying amount	$ 808,615	$ 934,740
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	$ 359,665	$ 270,250
Accumulated amortization	(67,658)	(49,027)
Net carrying amount	$ 292,007	$ 221,223
Non-compete [Member]
Intangible Assets, Net [Abstract]
Useful lives	4 years	4 years
Gross carrying amount	$ 174,000	$ 174,000
Accumulated amortization	(67,063)	(45,313)
Net carrying amount	$ 106,937	$ 128,687

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INTANGIBLE ASSETS, Future Annual Estimated Amortization Expense (Details) - USD ($)	6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Dec. 31, 2019
INTANGIBLE ASSETS [Abstract]
Amortization expense	$ 200,000	$ 200,000
Future Annual Estimated Amortization Expense [Abstract]
2020 (remaining six months)	216,796
2021	426,591
2022	411,206
2023	172,341
2024	172,341
Thereafter	396,143
Net carrying amount	$ 1,795,418		$ 1,923,447

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CONTRACT LIABILITIES (Details) - USD ($)	6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019
Deferred Revenue [Abstract]
Period by which contract liabilities are expected to be recognized	24 months
Changes in Contract Liabilities Activity [Roll Forward]
Beginning balance as January 1,	$ 26,823	$ 442,630
Issued	42,611	64,452
Redeemed	(47,580)	(67,781)
Breakage recognized	(244)	(1,222)
Fulfillment of contract	(224)	(270,698)
Ending balance as of June 30,	$ 21,386	$ 167,381
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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DEBT (Details) - USD ($)	6 Months Ended
	Jun. 30, 2020	May 15, 2020
Line of Credit [Abstract]
Collateral arrangement amount	$ 2,000,000
Revolving Credit Line [Member]
Line of Credit [Abstract]
Revolving credit line	$ 2,000,000
Renewal period	1 year
Basis adjustment to variable rate	1.50%
Money market amount	$ 2,000,000
PPP Loan [Member]
Paycheck Protection Program [Abstract]
Face amount		$ 876,515
Maturity date	May 06, 2022
Interest rate		1.00%
Frequency of payment	monthly

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STOCKHOLDERS' EQUITY, Series A Warrants (Details)	6 Months Ended
	Jun. 30, 2020 shares
STOCKHOLDERS' EQUITY [Abstract]
Issuance of common stock in connection with cashless exercise of Series A warrants	19,859,802,354

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STOCKHOLDERS' EQUITY, Stock Options (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Compensation Expense Recognized [Abstract]
Stock-based compensation	$ (7,665)	$ 83,175	$ 74,279	$ 196,254

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STOCKHOLDERS' EQUITY, Income (Loss) Per Share (Details) - shares	6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019
Common Share Equivalents Excluded from Calculation of Dilutive Loss Per Share [Abstract]
Antidilutive securities excluded from computation of diluted loss per share (in shares)	306,023,000,000	311,092,000,000
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)	68,062,000,000	68,012,000,000
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)	36,460,000,000	41,579,000,000

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COMMITMENTS AND CONTINGENCIES (Details) - Alleged Claimed Battery Defects For Electronic Cigarette Device [Member]	6 Months Ended
	Jun. 30, 2020 USD ($) Lawsuit
Legal Proceedings [Abstract]
Number of lawsuits | Lawsuit	2
Medical Costs [Member]
Legal Proceedings [Abstract]
Damages sought | $	$ 400,000

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SUBSEQUENT EVENTS (Details) - USD ($) $ in Millions			2 Months Ended	6 Months Ended
	Aug. 18, 2020	Aug. 04, 2020	Aug. 19, 2020	Jun. 30, 2020	Jul. 27, 2020
Subsequent Events [Abstract]
Issuance of common stock in connection with cashless exercise of Series A warrants (in shares)				19,859,802,354
Collateral arrangement amount				$ 2.0
Revolving Credit Line [Member]
Subsequent Events [Abstract]
Revolving credit line				$ 2.0
Basis adjustment to variable rate				1.50%
Money market amount				$ 2.0
Subsequent Event [Member]
Subsequent Events [Abstract]
Issuance of common stock in connection with cashless exercise of Series A warrants (in shares)			17,600,000,000
Series A warrants expired (in shares)					355,661
Collateral arrangement amount		$ 2.0
Subsequent Event [Member] | Revolving Credit Line [Member]
Subsequent Events [Abstract]
Revolving credit line		$ 2.0
Basis adjustment to variable rate		1.50%
Money market amount		$ 2.0
Subsequent Event [Member] | Term Loan and Security Agreement [Member]
Subsequent Events [Abstract]
Face amount	$ 2.7
Non-refundable discount percentage	5.00%
Percentage of net profits received from sales of PPE	20.00%