|
|
|
(State or other jurisdiction of
|
(I.R.S. Employer
|
|
incorporation or organization)
|
Identification No.)
|
|
|
||
|
|
|
(Address of principal executive offices)
|
(Zip Code)
|
Large accelerated filer
|
☐
|
Accelerated filer
|
☐
|
|
☒
|
Smaller reporting company
|
|
Emerging growth company
|
|
Title of each class
|
Trading Symbol
|
Name of each exchange on which registered
|
||
|
|
|
PAGE
|
|
1
|
|
1
|
|
1
|
|
2
|
|
3
|
|
5
|
|
6
|
|
17
|
|
24
|
|
24
|
|
26
|
|
26
|
|
27
|
|
27
|
|
27
|
|
27
|
|
27
|
|
28
|
|
29
|
|
June 30, 2023 (Unaudited)
|
December 31,
2022
|
||||
ASSETS
|
|||||
CURRENT ASSETS
|
|||||
Cash
|
$
|
|
$
|
|
|
Accounts receivable, net
|
|
|
|||
Notes receivable
|
|
|
|||
Inventories
|
|
|
|||
Prepaid expenses and vendor deposits
|
|
|
|||
Investment
|
|
|
|||
Other current assets
|
|
|
|||
Restricted cash
|
|
|
|||
TOTAL CURRENT ASSETS
|
|
|
|||
Property, plant, and equipment, net of accumulated depreciation
|
|
|
|||
Intangible assets, net of accumulated amortization
|
|
|
|||
Goodwill
|
|
|
|||
Right of use asset – operating lease, net
|
|
|
|||
Other assets
|
|
|
|||
TOTAL ASSETS
|
$
|
|
$
|
|
|
LIABILITIES, CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY
|
|||||
CURRENT LIABILITIES
|
|||||
Accounts payable and accrued expenses
|
$
|
|
$
|
|
|
Contingent consideration
|
|
|
|||
Contract liabilities
|
|
|
|||
Line of credit
|
|
|
|||
Current portion of loan payment
|
|
|
|||
Operating lease liability, current
|
|
|
|||
TOTAL CURRENT LIABILITIES
|
|
|
|||
Loan payable, net of current portion
|
|
|
|||
Operating lease liability, net of current
|
|
|
|||
TOTAL LIABILITIES
|
|
|
|||
COMMITMENTS AND CONTINGENCIES (SEE NOTE 13)
|
|
|
|||
CONVERTIBLE PREFERRED STOCK
|
|||||
Series E redeemable convertible preferred stock, $
|
|
|
|||
STOCKHOLDERS’ EQUITY
|
|||||
Series D convertible preferred
stock, $
|
|
|
|||
Common Stock, $
|
|
|
|||
Additional paid-in capital
|
|
|
|||
Accumulated deficit
|
(
|
(
|
|||
TOTAL STOCKHOLDERS’ EQUITY
|
|
|
|||
TOTAL LIABILITIES, CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY
|
$
|
|
$
|
|
Three Months Ended
|
Six Months Ended
|
||||||||||
June 30,
|
June 30,
|
||||||||||
2023
|
2022
|
2023
|
2022
|
||||||||
SALES
|
|||||||||||
Vapor sales, net
|
$
|
|
$
|
|
$
|
|
$
|
|
|||
Grocery sales, net
|
|
|
|
|
|||||||
TOTAL SALES, NET
|
|
|
|
|
|||||||
Cost of sales vapor
|
|
|
|
|
|||||||
Cost of sales grocery
|
|
|
|
|
|||||||
GROSS PROFIT
|
|
|
|
|
|||||||
OPERATING EXPENSES
|
|
|
|
|
|||||||
LOSS FROM OPERATIONS
|
(
|
(
|
(
|
(
|
|||||||
OTHER INCOME (EXPENSE)
|
|||||||||||
(Loss) gain on investment
|
(
|
|
(
|
|
|||||||
Change in contingent consideration
|
|
|
|
|
|||||||
Other income, net
|
|
|
|
|
|||||||
Interest income, net
|
|
|
|
|
|||||||
Total other income (expense), net
|
|
|
|
|
|||||||
NET LOSS
|
$
|
(
|
$
|
(
|
$
|
(
|
$
|
(
|
|||
Induced conversions of preferred stock
|
(
|
|
(
|
|
|||||||
Net loss attributable to common stockholders
|
(
|
|
(
|
|
|||||||
NET LOSS PER SHARE-BASIC AND DILUTED
|
$
|
|
$
|
|
$
|
|
$
|
|
|||
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING-BASIC AND DILUTED
|
|
|
|
|
|||||||
Series E Convertible Preferred Stock
|
Convertible
Preferred Stock
|
Common Stock
|
Additional
Paid-In
|
Accumulated
|
||||||||||||||||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
Shares
|
Amount
|
Capital
|
Deficit
|
Total
|
||||||||||||||||||||||||||||
Balance – April 1, 2023
|
|
$
|
|
|
$
|
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
||||||||||||||||||||
Series E convertible preferred stock redeemed
|
(
|
)
|
(
|
)
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Conversion of series E convertible preferred stock
|
(
|
)
|
(
|
)
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Issuance of award stock
|
-
|
-
|
|
|
|
|
(
|
)
|
|
|
||||||||||||||||||||||||||
Induced conversions of preferred stock
|
-
|
-
|
-
|
|
-
|
|
(
|
)
|
|
(
|
)
|
|||||||||||||||||||||||||
Stock-based compensation expense
|
-
|
-
|
-
|
|
-
|
|
|
|
|
|||||||||||||||||||||||||||
Net loss
|
-
|
-
|
-
|
|
-
|
|
|
(
|
)
|
(
|
)
|
|||||||||||||||||||||||||
Balance – June 30, 2023
|
|
$
|
|
|
$
|
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
Series E Convertible Preferred Stock
|
Convertible
Preferred Stock
|
Common Stock
|
Additional
Paid-In
|
Accumulated
|
||||||||||||||||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
Shares
|
Amount
|
Capital
|
Deficit
|
Total
|
||||||||||||||||||||||||||||
Balance – April 1, 2022
|
|
$
|
|
|
$
|
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
||||||||||||||||||||
Net loss
|
-
|
-
|
-
|
|
-
|
|
|
(
|
)
|
(
|
)
|
|||||||||||||||||||||||||
Balance – June 30, 2022
|
|
$
|
|
|
$
|
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
Series E Convertible Preferred Stock
|
Convertible
Preferred Stock
|
Common Stock
|
Additional
Paid-In
|
Accumulated
|
||||||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
Shares
|
Amount
|
Capital
|
Deficit
|
Total
|
||||||||||||||||||
Balance – January 1, 2023
|
|
$
|
|
|
$
|
|
|
$
|
|
$
|
|
$
|
(
|
$
|
|
|||||||||||
Series E convertible preferred stock redeemed
|
(
|
(
|
|
|
|
|
|
|
|
|||||||||||||||||
Conversion of series E convertible preferred stock
|
(
|
(
|
|
|
|
|
|
|
|
|||||||||||||||||
Issuance of awarded stock
|
-
|
-
|
|
|
|
|
(
|
|
|
|||||||||||||||||
Induced conversions of preferred stock
|
-
|
-
|
-
|
|
-
|
|
(
|
|
(
|
|||||||||||||||||
Stock-based compensation
|
-
|
-
|
-
|
|
-
|
|
|
|
|
|||||||||||||||||
Net loss
|
-
|
-
|
-
|
|
-
|
|
|
(
|
(
|
|||||||||||||||||
Balance – June 30, 2023
|
|
$
|
|
|
$
|
|
|
$
|
|
$
|
|
$
|
(
|
$
|
|
Series E Convertible Preferred Stock
|
Convertible
Preferred Stock
|
Common Stock
|
Additional
Paid-In
|
Accumulated
|
||||||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
Shares
|
Amount
|
Capital
|
Deficit
|
Total
|
||||||||||||||||||
Balance – January 1, 2022
|
|
$
|
|
|
$
|
|
|
$
|
|
$
|
|
$
|
(
|
$
|
|
|||||||||||
Net loss
|
-
|
-
|
-
|
|
-
|
|
|
(
|
(
|
|||||||||||||||||
Balance – June 30, 2022
|
|
$
|
|
|
$
|
|
|
$
|
|
$
|
|
$
|
(
|
$
|
|
Six Months Ended June 30,
|
|||||
2023
|
2022
|
||||
OPERATING ACTIVITIES
|
|||||
Net loss
|
$
|
(
|
$
|
(
|
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|||||
Depreciation and amortization
|
|
|
|||
Loss (gain) on investment
|
|
(
|
|||
Amortization of right-of-use asset
|
|
|
|||
Write-down of obsolete and slow-moving inventory
|
|
|
|||
Stock-based compensation expense
|
|
|
|||
Change in contingent consideration
|
(
|
|
|||
Changes in operating assets and liabilities:
|
|||||
Accounts receivable
|
(
|
(
|
|||
Inventories
|
(
|
(
|
|||
Prepaid expenses and vendor deposits
|
(
|
|
|||
Other current assets
|
|
|
|||
Other assets
|
(
|
(
|
|||
Accounts payable and accrued expenses
|
(
|
|
|||
Contract liabilities
|
(
|
(
|
|||
Lease liability
|
(
|
(
|
|||
NET CASH USED IN OPERATING ACTIVITIES
|
(
|
(
|
|||
INVESTING ACTIVITIES
|
|||||
Acquisition of Mother Earth’s Storehouse
|
|
(
|
|||
Collection of note receivable
|
|
|
|||
Purchases of property and equipment
|
(
|
(
|
|||
NET CASH USED IN INVESTING ACTIVITIES
|
(
|
(
|
|||
FINANCING ACTIVITIES
|
|||||
Proceeds from line of credit
|
|
|
|||
Principal payments on loan payable
|
(
|
(
|
|||
Payment of induced conversions of preferred stock
|
(
|
|
|||
Payments for deferred offering costs
|
(
|
|
|||
Payment for series E preferred stock redemption
|
(
|
|
|||
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES
|
(
|
|
|||
NET DECREASE IN CASH AND RESTRICTED CASH
|
(
|
(
|
|||
CASH AND RESTRICTED CASH— BEGINNING OF PERIOD
|
|
|
|||
CASH AND RESTRICTED CASH — END OF PERIOD
|
$
|
|
$
|
|
|
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
|
|||||
Cash paid for interest
|
$
|
|
$
|
|
|
Cash paid for income tax
|
$
|
|
$
|
|
|
NON-CASH INVESTING AND FINANCING ACTIVITIES
|
|||||
Issuance of common stock in connection with series E preferred stock conversion
|
$
|
|
$
|
|
|
Right-of-use assets obtained in exchange for operating lease liabilities
|
$
|
|
$
|
|
|
1% stated value reduction on preferred stock redemption
|
$
|
|
$
|
|
|
Non-cash deferred offering cost
|
$
|
|
$
|
|
• |
Ada’s Natural Market, a natural and organic grocery store offering 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.
|
• |
Paradise Health & Nutrition’s
|
• |
Mother Earth’s Storehouse, a
|
• |
Greens Natural Foods’
|
• |
Licensing agreements for Healthy Choice Wellness Centers located at the Casbah Spa and Salon in Fort Lauderdale, FL, Boston Direct Health in Boston, MA and Green Care
Medical Services in Chicago, IL.
|
June 30, 2023
|
December 31, 2022
|
|||||||
Total cash in excess of FDIC limits of $
|
$
|
|
$
|
|
June 30, 2023
|
June 30, 2022
|
|||||||
Cash
|
$
|
|
$
|
|
||||
Restricted cash
|
|
|
||||||
Total cash and restricted cash
|
$
|
|
$
|
|
Three Months Ended June 30,
|
Six Months Ended June 30,
|
|||||||||||||||
2023
|
2022
|
2023
|
2022
|
|||||||||||||
Vapor
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Grocery
|
|
|
|
|
||||||||||||
Total revenue
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Retail Vapor
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Retail Grocery
|
|
|
|
|
||||||||||||
Food service/restaurant
|
|
|
|
|
||||||||||||
Online/eCommerce
|
|
|
|
|
||||||||||||
Total revenue
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Loss from operations-Vapor
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||||
(Loss) income from operations-Grocery
|
(
|
)
|
|
(
|
)
|
|
||||||||||
Corporate items
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||||
Total loss from operations
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
Description
|
June 30, 2023
|
December 31, 2022
|
||||
Promissory Note
|
$
|
|
$
|
|
Fair Market Value - Level 3
|
||||
Balance as of October 14, 2022
|
$
|
|
||
Remeasurement
|
(
|
)
|
||
Balance as of December 31, 2022
|
|
|||
Remeasurement
|
(
|
)
|
||
Balance as of June 30, 2023
|
$
|
|
Fair Market Value - Level 3
|
||||
Balance as of March 31, 2023
|
$
|
|
||
Remeasurement
|
(
|
)
|
||
Balance as of June 30, 2023
|
$
|
|
October 14, 2022
|
||||
Purchase Consideration
|
||||
Cash consideration paid
|
$
|
|
||
Promissory note
|
|
|||
Contingent consideration issued to Green's Natural seller
|
|
|||
Total Purchase Consideration
|
$
|
|
||
Purchase price allocation
|
||||
Inventory
|
$
|
|
||
Property and equipment
|
|
|||
Intangible assets
|
|
|||
Right of use asset - Operating lease
|
|
|||
Other liabilities
|
(
|
)
|
||
Operating lease liability
|
(
|
)
|
||
Goodwill
|
|
|||
Net assets acquired
|
$
|
|
||
Finite-lived intangible assets
|
||||
Trade Names (
|
$
|
|
||
Customer Relationships (
|
|
|||
Non-Compete Agreement (
|
|
|||
Total intangible assets
|
$
|
|
For Three Months Ended June 30, 2022
|
For Six Months Ended
June 30, 2022
|
|||||||
Sales
|
$
|
|
$
|
|
||||
Net loss
|
$
|
(
|
)
|
$
|
(
|
)
|
June 30, 2023
|
December 31, 2022
|
|||||||
Displays
|
$
|
|
$
|
|
||||
Building
|
|
|
||||||
Furniture and fixtures
|
|
|
||||||
Leasehold improvements
|
|
|
||||||
Computer hardware & equipment
|
|
|
||||||
Other
|
|
|
||||||
|
|
|||||||
Less: accumulated depreciation and amortization
|
(
|
)
|
(
|
)
|
||||
Total property, plant, and equipment, net
|
$
|
|
$
|
|
June 30, 2023
|
Useful Lives (Years)
|
Gross
Carrying Amount
|
Accumulated
Amortization
|
Net
Carrying Amount
|
||||||||
Trade names
|
|
$
|
|
$
|
(
|
$
|
|
|||||
Customer relationships
|
|
|
(
|
|
||||||||
Patents
|
|
|
(
|
|
||||||||
Non-compete
|
|
|
(
|
|
||||||||
Intangible assets, net
|
$
|
|
$
|
(
|
$
|
|
December 31, 2022
|
Useful Lives (Years)
|
Gross
Carrying Amount
|
Accumulated
Amortization
|
Net
Carrying Amount
|
||||||||
Trade names
|
|
$
|
|
(
|
$
|
|
||||||
Customer relationships
|
|
|
(
|
|
||||||||
Patents
|
|
|
(
|
|
||||||||
Non-compete
|
|
|
(
|
|
||||||||
Intangible assets, net
|
$
|
|
$
|
(
|
$
|
|
Years ending December 31,
|
||||
2023 (remaining six months)
|
$
|
|
||
2024
|
|
|||
2025
|
|
|||
2026
|
|
|||
2027
|
|
|||
Thereafter
|
|
|||
Total
|
$
|
|
June 30, 2023
|
December 31, 2022
|
|||||||
Beginning balance as January 1,
|
$
|
|
$
|
|
||||
Issued
|
|
|
||||||
Redeemed
|
(
|
)
|
(
|
)
|
||||
Breakage recognized
|
(
|
)
|
(
|
)
|
||||
Ending balance
|
$
|
|
$
|
|
_
|
June 30, 2023
|
December 31, 2022
|
||||||
Promissory note
|
$
|
|
$
|
|
||||
Other debt
|
|
|
||||||
Total debt
|
$
|
|
$
|
|
||||
Current portion of long-term debt
|
(
|
)
|
(
|
)
|
||||
Long-term debt
|
$
|
|
$
|
|
As of June 30,
|
||||||||
2023
|
2022
|
|||||||
Preferred stock
|
|
|
||||||
Stock options
|
|
|
||||||
Restricted stock
|
|
|
||||||
Total
|
|
|
•
|
Ada’s Natural Market, a natural and organic grocery store offering 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.
|
•
|
Paradise Health & Nutrition’s three stores that likewise 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.
|
•
|
Mother Earth’s Storehouse, a two store organic and health food and vitamin chain in New York’s Hudson Valley, which has been
in existence for over 40 years.
|
•
|
Green's Natural Foods’ eight stores in New York
and New Jersey, offering a selection of 100% organic produce and all-natural, non-GMO groceries & bulk foods; a wide selection of local products; an organic juice and smoothie bar; a fresh foods department, which offers fresh and
healthy “grab & go” foods; a full selection of vitamins & supplements; as well as health and beauty products (www.Greensnaturalfoods.com).
|
Three Months Ended June 30,
|
2023 to 2022
|
|||||||
2023
|
2022
|
Change $
|
||||||
SALES
|
||||||||
Vapor sales, net
|
$
|
-
|
$
|
5,997
|
$
|
(5,997)
|
||
Grocery sales, net
|
13,574,896
|
6,126,063
|
7,448,833
|
|||||
TOTAL SALES, NET
|
13,574,896
|
6,132,060
|
7,442,836
|
|||||
Cost of sales vapor
|
-
|
562
|
(562)
|
|||||
Cost of sales grocery
|
8,493,213
|
3,800,625
|
4,692,588
|
|||||
GROSS PROFIT
|
5,081,683
|
2,330,873
|
2,750,810
|
|||||
OPERATING EXPENSES
|
||||||||
Selling, general and administrative
|
8,261,343
|
3,699,273
|
4,562,070
|
|||||
LOSS FROM OPERATIONS
|
(3,179,660)
|
(1,368,400)
|
(1,811,260)
|
|||||
OTHER INCOME (EXPENSE)
|
||||||||
(Loss) gain on investment
|
(3,943)
|
1,800
|
(5,743)
|
|||||
Change in contingent consideration
|
425,000
|
-
|
425,000
|
|||||
Other income, net
|
4,600
|
6,175
|
(1,575)
|
|||||
Interest income
|
101,248
|
14,910
|
86,338
|
|||||
Total other income (expense), net
|
526,905
|
22,885
|
504,020
|
|||||
NET LOSS
|
$
|
(2,652,755)
|
$
|
(1,345,515)
|
$
|
(1,307,240)
|
Six Months Ended June 30,
|
2023 to 2022
|
|||||||
2023
|
2022
|
Change $
|
||||||
SALES
|
||||||||
Vapor sales, net
|
$
|
38
|
$
|
255,560
|
$
|
(255,522)
|
||
Grocery sales, net
|
27,134,602
|
10,925,053
|
16,209,549
|
|||||
TOTAL SALES, NET
|
27,134,640
|
11,180,613
|
15,954,027
|
|||||
Cost of sales vapor
|
653
|
112,246
|
(111,593)
|
|||||
Cost of sales grocery
|
17,137,913
|
6,764,980
|
10,372,933
|
|||||
GROSS PROFIT
|
9,996,074
|
4,303,387
|
5,692,687
|
|||||
OPERATING EXPENSES
|
||||||||
Selling, general and administrative
|
15,158,780
|
7,026,693
|
8,132,087
|
|||||
LOSS FROM OPERATIONS
|
(5,162,706)
|
(2,723,306)
|
(2,439,400)
|
|||||
OTHER INCOME (EXPENSE)
|
||||||||
Gain (loss) on investment
|
(8,400)
|
5,314
|
(13,714)
|
|||||
Change in contingent consideration
|
402,900
|
-
|
402,900
|
|||||
Other income
|
9,250
|
23,049
|
(13,799)
|
|||||
Interest income (expense), net
|
198,900
|
31,513
|
167,387
|
|||||
Total other income (expense), net
|
602,650
|
59,876
|
542,774
|
|||||
NET LOSS
|
$
|
(4,560,056)
|
$
|
(2,663,430)
|
$
|
(1,896,626)
|
Six Months Ended June 30,
|
|||||
2023
|
2022
|
||||
Net cash (used in) provided by
|
|||||
Operating activities
|
$
|
(3,658,415)
|
$
|
(1,870,884)
|
|
Investing activities
|
(115,099)
|
(5,336,011)
|
|||
Financing activities
|
(11,806,463)
|
33,911
|
|||
$
|
(15,579,977)
|
$
|
(7,172,984)
|
June 30, 2023
|
December 31, 2022
|
||||
Cash
|
$
|
8,481,915
|
$
|
22,911,892
|
|
Total assets
|
$
|
39,338,975
|
$
|
55,255,030
|
|
Percentage of total assets
|
21.56%
|
41.47%
|
● |
Failure to have properly documented and designed disclosure controls and procedures and testing of the operating effectiveness of our internal control over financial
reporting.
|
● |
Failure to perform periodic and year-end inventory observations in a timely manner and
adequate controls to sufficiently perform required rollback procedures of inventory counts to the year-end.
|
● |
Weakness around our purchase orders and inventory procedures, inclusive of year-end physical
inventory observation procedures as well as physical count procedures.
|
● |
Segregation of duties due to lack of personnel.
|
● |
Information technology general controls (ITGCs) were not designed effectively to ensure that appropriate access security controls, change management and data center and
network operations ITGCs were in place.
|
● |
Continuing to increase headcount across the Company, with a particular focus on hiring individuals with strong internal control backgrounds and inventory expertise.
|
● |
Increasing 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. The Company implemented an open to buy program by comparing purchases with sales to better control overall inventory purchases.
|
● |
Using business intelligence to combine business analytics, data tools and infrastructure to
help the Company quickly identify the issues in POS system and facilitate internal control over financial reporting.
|
● |
Establishing policies and procedures in the IT area to mitigate data breach,
unauthorized access, and address segregation of duties.
|
Exhibit
|
Incorporated by Reference
|
Filed or Furnished
|
||||||||
No.
|
Exhibit Description
|
Form
|
Date
|
Number
|
Herewith
|
|||||
31.1
|
Filed
|
|||||||||
31.2
|
Filed
|
|||||||||
32.1
|
Furnished *
|
|||||||||
32.2
|
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
|
||||||||
104
|
Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)
|
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.
|
HEALTHIER CHOICES MANAGEMENT CORP.
|
||
Date: July 24, 2023
|
By:
|
/s/ Jeffrey Holman
|
Jeffrey Holman
|
||
Chief Executive Officer
|
||
Date: July 24, 2023
|
By:
|
/s/ John Ollet
|
John Ollet
|
||
Chief Financial Officer
|
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; |
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. |
/s/ Jeffrey Holman | |
Jeffrey Holman | |
Chief Executive Officer | |
(Principal Executive Officer) |
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; |
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. |
/s/ John Ollet | |
John Ollet | |
Chief Financial Officer | |
(Principal Financial Officer) |
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. |
/s/ Jeffrey Holman | |
Jeffrey Holman | |
Chief Executive Officer | |
(Principal Executive Officer) |
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. |
/s/ John Ollet | |
John Ollet | |
Chief Financial Officer | |
(Principal Financial Officer) |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2023 |
Jun. 30, 2022 |
Jun. 30, 2023 |
Jun. 30, 2022 |
|
SALES | ||||
SALES, NET | $ 13,574,896 | $ 6,132,060 | $ 27,134,640 | $ 11,180,613 |
GROSS PROFIT | 5,081,683 | 2,330,873 | 9,996,074 | 4,303,387 |
OPERATING EXPENSES | 8,261,343 | 3,699,273 | 15,158,780 | 7,026,693 |
LOSS FROM OPERATIONS | (3,179,660) | (1,368,400) | (5,162,706) | (2,723,306) |
OTHER INCOME (EXPENSE) | ||||
(Loss) gain on investment | (3,943) | 1,800 | (8,400) | 5,314 |
Change in contingent consideration | 425,000 | 0 | 402,900 | 0 |
Other income, net | 4,600 | 6,175 | 9,250 | 23,049 |
Interest income, net | 101,248 | 14,910 | 198,900 | 31,513 |
Total other income (expense), net | 526,905 | 22,885 | 602,650 | 59,876 |
Net loss | (2,652,755) | (1,345,515) | (4,560,056) | (2,663,430) |
Induced conversions of Preferred Stock | (91,500) | 0 | (152,500) | 0 |
Net loss attributable to common stockholders | $ (2,744,255) | $ 0 | $ (4,712,556) | $ 0 |
NET LOSS PER SHARE-BASIC (in dollars per share) | $ 0 | $ 0 | $ 0 | $ 0 |
NET LOSS PER SHARE-DILUTED (in dollars per share) | $ 0 | $ 0 | $ 0 | $ 0 |
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING-BASIC (in shares) | 353,854,819,196 | 339,741,632,384 | 347,796,604,758 | 339,741,632,384 |
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING-DILUTED (in shares) | 353,854,819,196 | 339,741,632,384 | 347,796,604,758 | 339,741,632,384 |
Vapor [Member] | ||||
SALES | ||||
SALES, NET | $ 0 | $ 5,997 | $ 38 | $ 255,560 |
Cost of sales | 0 | 562 | 653 | 112,246 |
Grocery [Member] | ||||
SALES | ||||
SALES, NET | 13,574,896 | 6,126,063 | 27,134,602 | 10,925,053 |
Cost of sales | $ 8,493,213 | $ 3,800,625 | $ 17,137,913 | $ 6,764,980 |
ORGANIZATION |
6 Months Ended | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2023 | |||||||||||
ORGANIZATION [Abstract] | |||||||||||
ORGANIZATION |
Note 1. ORGANIZATION
Organization
Healthier Choices Management Corp. (the “Company”) is a holding company focused on providing consumers with healthier daily choices with respect to nutrition
and other lifestyle alternatives.
Through its wholly owned subsidiary HCMC Intellectual Property Holdings, LLC, the Company manages and intends to expand on its intellectual property
portfolio.
Through its wholly owned subsidiaries, the Company operates:
Through its wholly owned subsidiary, Healthy Choice Wellness, LLC, the Company operates:
These centers offer multiple vitamin drip mixes and intramuscular shots for clients to choose from that are designed to help boost immunity, fight fatigue
and stress, reduce inflammation, enhance weight loss, and efficiently deliver antioxidants and anti-aging mixes. Additionally, there are IV vitamin mixes and shots for health, beauty, and re-hydration.
Through its wholly owned subsidiary, Healthy U Wholesale, Inc, the Company sells vitamins and supplements, as well as health, beauty, and personal care
products on its website www.TheVitaminStore.com.
Additionally, the Company markets its patented 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 50mg) 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.
Spin-Off
The Company has commenced steps to spin off (“Spin-Off”) its grocery segment and wellness business into a new publicly traded company (hereinafter referred
to as “NewCo”). NewCo will continue the path of growth in the wellness verticals started by HCMC and explore other growth opportunities that comport with HCMC’s healthier lifestyle mission. Following the Spin-Off, HCMC will retain its entire patent
suite, the Q-Cup® brand, and continue to develop its patent suite through R&D as well as continuing its path of enforcing its patent rights against infringers and attempting to monetize said patents through licensing deals.
At the time of the Spin-Off, HCMC will distribute all the outstanding shares of Common Stock held by it on a pro rata basis to holders of HCMC’s common
stock. Shares of HCMC’s common stock outstanding as of the record date for the Spin-Off (the “Record Date”), will entitle the holder thereof to receive a certain number of shares of Common Stock in NewCo. The distribution will be made in book-entry
form by a distribution agent. Fractional shares of Common Stock will not be distributed in the Spin-Off and any fractional amounts will be rounded down. Please see more disclosure in Note 12 Stockholder Equity.
|
LIQUIDITY |
6 Months Ended |
---|---|
Jun. 30, 2023 | |
LIQUIDITY [Abstract] | |
LIQUIDITY |
Note 2. LIQUIDITY
The accompanying unaudited 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 currently and historically has reported net losses and cash outflows
from operations. As of June 30, 2023, the Company had cash of approximately $8.5 million and working capital of $6.3 million. The Company believes current cash on hand is sufficient to meet its obligations and capital requirements for at least the next twelve months from the date of filing. In the past,
the Company financed its operations primarily through issuances of common stock and convertible preferred stock. However, we have no commitments to obtain such additional
financing, and there can be no assurance that the Company will be able to raise the necessary funds to fund its operations.
|
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES |
6 Months Ended |
---|---|
Jun. 30, 2023 | |
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES [Abstract] | |
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES |
Note 3. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and
Regulation S-X and do not include all the information and disclosures required by generally accepted accounting principles in the United States of America (“GAAP”). The Company has made estimates and judgments affecting the amounts reported in the
Company’s unaudited condensed consolidated financial statements and the accompanying notes. The actual results experienced by the Company may differ materially from the Company’s estimates. The condensed consolidated financial information is
unaudited but reflects all normal adjustments that are, in the opinion of management, necessary to provide a fair statement of results for the interim periods presented. These condensed consolidated financial statements should be read in conjunction
with the consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, filed with the Securities and Exchange Commission (the “SEC”) on March 30, 2023. The condensed consolidated balance sheet as
of December 31, 2022 was derived from the Company’s audited 2022 financial statements contained in the above referenced Form 10-K. Results of the six months ended June 30, 2023, are not necessarily indicative of the results to be expected for the
full year ending December 31, 2023.
Significant Accounting Policies
There have been no material changes in the Company’s significant accounting policies to those previously disclosed in the 2022 Annual Report.
Reclassification
Certain amounts in the condensed 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). $150,000 inventory shrink was
originally presented in the statement of cash flow under change in operating assets inventory in cash used in operating activities for six months ended June 30, 2022, it was reclassified to under cash used in operating activities in the statement of cash
flow.
The change in the fair value measurement on contingent consideration was presented under Other (expense) income, net in the statement of operations for three months ended March 31, 2023. For the three months ended June 30, 2023, the Company
presented the change in fair value remeasurement as a separate line in the statement of operations.
|
CONCENTRATIONS |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
CONCENTRATIONS [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
CONCENTRATIONS |
Note 4. CONCENTRATIONS
Cash and Restricted Cash
The Company considers all highly liquid instruments with an original maturity of three months or less, when purchased, to be cash and cash equivalents. The
majority of the Company’s cash is concentrated in one large financial institution, which is in excess of Federal Deposit Insurance Corporation
(FDIC) coverage. The Company did not have any cash equivalent as of June 30, 2023, and December 31, 2022.
A summary of the financial institution that had cash in excess of FDIC limits of $250,000 on June 30, 2023 and December 31, 2022 is presented below:
The Company continually monitors its positions with, and the credit quality of, the financial institutions with which it invests, as deposits are held in
excess of federally insured limits. The Company has not experienced any losses in such accounts.
The following table provides a reconciliation of cash and restricted cash to amounts shown
in unaudited condensed consolidated statements of cash flow:
Restricted Cash
The Company’s restricted cash consisted of cash balances which were restricted as to withdrawal or usage under the August 18, 2022 securities purchase
agreement for the purpose of funding any amounts due under the Series E Certificate of Designation upon the redemption of the Series E Preferred Stock. The balance also
included cash held in the collateral account to cover the cash draw from the line of credit.
|
SEGMENT INFORMATION AND DISAGGREGATION OF REVENUES |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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SEGMENT INFORMATION AND DISAGGREGATION OF REVENUES [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SEGMENT INFORMATION AND DISAGGREGATION OF REVENUES |
Note 5. SEGMENT INFORMATION AND DISAGGREGATION OF REVENUES
In accordance with FASB ASC 280, "Disclosures about Segment of an enterprise and related information", the Company determined it has two reportable segments: grocery and vapor. There are no inter-segment revenues.
The Company's general and administrative costs are not segment specific. As a result, all operating expenses are not managed on segment basis.
The tables below present information about reportable segments for the three months and six months ended June 30, 2023, and 2022:
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NOTES RECEIVABLE AND OTHER INCOME |
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Jun. 30, 2023 | |||||||||||||||
NOTES RECEIVABLE AND OTHER INCOME [Abstract] | |||||||||||||||
NOTES RECEIVABLE AND OTHER INCOME |
Note 6. NOTES RECEIVABLE AND OTHER INCOME
On September 6, 2018, the Company entered into a secured, 36-month promissory note (the “Note”) with VPR Brands L.P. for $582,260. The Note bears an interest rate of 7.00%, which payments thereunder are $4,141 weekly. The
Company records all proceeds related to the interest of the Note as interest income as proceeds are received.
On August 31, 2022, the Company amended and restated the Note (the "Amended
Note") with VPR Brands L.P. to extend the maturity date for one year. The outstanding balance for the Amended Note is $211,355. The Amended Note bears an interest rate of 7.00%, which payments thereunder are $1,500 weekly, with such payments commencing as of September 3, 2022. The Amended Note has a balloon payment of $145,931 for all remaining accrued interest and principal balance due in the
final week of the 1-year extension of the Amended Note.
A summary of the Amended Note as of June 30, 2023 and December 31, 2022 is
presented below:
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ACQUISITION |
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ACQUISITION [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ACQUISITION |
Note 7. ACQUISITION
On October 14, 2022, the Company through its wholly owned subsidiary, Healthy Choice Markets IV, LLC, entered into an Asset Purchase Agreement (the “Purchase
Agreement”) with Dean’s Natural Food Market of Shrewsbury, Inc., a New Jersey corporation, Green’s Natural Foods, Inc., a Delaware corporation, Dean’s Natural Food Market of Chester, LLC, a New Jersey limited liability company, Dean’s Natural Food
Market of Basking Ridge, LLC, a New Jersey limited liability company, and Dean’s Natural Food Market, Inc., a New Jersey corporation (collectively, the “Sellers”), and shareholders of the Sellers. Pursuant to the Purchase Agreement, the Company
acquired certain assets and assumed certain liabilities of an organic and natural health food and vitamin chain with eight store locations in
New York and northern and central New Jersey (the “Stores”).
The cash purchase price under the Asset Purchase Agreement was $5,142,000, with $3,000,000 seller financing in the form of promissory note. In addition, the seller is entitled to a
contingent earn-out based on a certain revenue threshold within the one-year period of the closing.
The Company recorded $1,108,000 of contingent
consideration based on the estimated financial performance for the one year following closing. The contingent consideration was discounted at an interest rate of 3.8%, which represents the Company's weighted average discount rate. Contingent consideration related to the acquisition is recorded at fair value (level 3) with changes in fair value recorded
in other expense (income), net.
The following table summarizes the change in fair value of contingent consideration from acquisition date to June 30, 2023:
The following table summarizes the change in fair value of contingent consideration for the three months ended June 30, 2023:
The following table summarizes the purchase price allocation based on fair values of the net assets acquired at the acquisition
date:
The acquisition is structured as asset purchase in a business combination, and goodwill is tax-deductible, and amortizable over 15 years for tax purpose.
Revenue and Earnings
The following table represents the combined pro forma revenue and net loss for
the three and six months ended June 30, 2022:
The combined proforma revenue and net loss for the three and six months period ended June 30, 2022 were prepared as though acquisition occurred as of January
1, 2022.
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PROPERTY, PLANT, AND EQUIPMENT |
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PROPERTY, PLANT, AND EQUIPMENT [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
PROPERTY, PLANT, AND EQUIPMENT |
Note 8. PROPERTY, PLANT, AND EQUIPMENT
Property, plant, and equipment consist of the following:
The Company incurred approximately $143,746 and $63,656 of depreciation expense for the three months ended June 30, 2023 and 2022, and $286,306 and $113,592 of depreciation expense for the six months ended June 30, 2023 and 2022, respectively.
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INTANGIBLE ASSETS |
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INTANGIBLE ASSETS [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INTANGIBLE ASSETS |
Note 9. INTANGIBLE ASSETS
Intangible assets, net are as follows:
Intangible assets are amortized on a straight-line basis over their estimated useful lives. Amortization expense was approximately $230,277 and $165,100 for the three months ended June 30, 2023 and 2022,
and $461,179 and $308,486 for the six months ended June 30, 2023 and 2022, respectively. Future annual estimated amortization expense is as follows:
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CONTRACT LIABILITIES |
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CONTRACT LIABILITIES [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
CONTRACT LIABILITIES |
Note 10. CONTRACT LIABILITIES
A summary of the contract liabilities activity at June 30, 2023
and December 31, 2022 is presented below:
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DEBT |
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DEBT [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
DEBT |
Note 11. DEBT
The following table provides a breakdown of the Company's debt as of June 30, 2023
and December 31, 2022 is presented below:
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STOCKHOLDERS' EQUITY |
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STOCKHOLDERS' EQUITY [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
STOCKHOLDERS' EQUITY |
Note 12. STOCKHOLDERS’ EQUITY
Series E Convertible Preferred Stock
On August 18, 2022, the Company entered into a Securities Purchase Agreement ("Series
E Preferred Stock") pursuant to which the Company sold and issued 14,722 shares of its Series E Redeemable Convertible Preferred Stock
to institutional investors for $1,000 per share or an aggregate subscription of $13.25 million. The number of shares issued to each participant is based on subscription amount multiplied by conversion rate of 1.1111. The Company also incurred offering costs of approximately $410,000, which
covers legal and consulting fee.
The HCMC Series E Preferred Stock has voting rights on as converted basis at the
Company’s next stockholders’ meeting. However, as long as any shares of HCMC Series E Preferred Stock are outstanding, the Company shall not, without the affirmative vote of the holders of a majority of the then outstanding shares of the HCMC Series
E Preferred Stock, (a) alter or change adversely the powers, preferences or rights given to the HCMC Series E Preferred Stock or alter or amend the Certificate of Designation, (b) increase the number of authorized shares of HCMC Series E Preferred
Stock, or (c) enter into any agreement with respect to any of the foregoing. Each share of Series E Preferred Stock shall be convertible, at any time and from time to time at the option of the Holder thereof, into that number of shares of
Common Stock (subject to the beneficial ownership limitations). The initial conversion price for the HCMC Series E Preferred Stock shall equal $0.0001.
Upon any liquidation, dissolution or winding-up of the Company, whether voluntary or involuntary that is not a Fundamental Transaction (as defined in the
Certificate of Designation), the holders of HCMC Series E Preferred Stock shall be entitled to receive out of the assets, whether capital or surplus, of the Company an amount equal to $1,000 per share of Series E Preferred Stock.
Unless earlier converted or extended as set forth below, a holder may require the redemption of all or a portion of the stated value of the HCMC Series E
Preferred Stock either (1) six months after closing or (2) the time at which the balance is due and payable upon an event of default.
On March 1, 2023, the Company entered into a First Amendment to HCMC Series E Preferred Stock with each purchaser ("Purchaser") identified as those who
participated in the HCMC Series E Preferred Stock, dated as of August 18, 2022. The parties amended the HCMC Preferred Stock related to the conversion payment whereby upon conversion of the Series E Preferred Stock prior to the record date for the
Spin-Off, the Company will pay the Purchaser ten percent (10%) of the stated value of the Series E Preferred Stock converted. The record date was May 1, 2023.
On May 15th, the Company and the Purchaser entered into the Second Amendment to the Securities Purchase Agreement, pursuant to which the Company agreed to extend the time period for the Conversion Payment
eligibility to December 1, 2023. The Company filed an amendment to the Certificate of Designation to make the redemption price of the Preferred Stock (the “Redemption Price”) equal the Stated Value regardless of the date on which it is redeemed.
Prior to this amendment, the Redemption Price was discounted by 1% for each month after the seven-month anniversary
of the Issue Date that the Purchaser elected not to redeem.
For the three months ended June 30, 2023, 9,150,000,000
shares of common stock were issued as a result of the Series E preferred stock conversion. 10,637 shares of Series E preferred stock were
redeemed and approximately $10,615,000 was paid for the redemptions.
As of June 30, 2023, 15,850,000,000 shares of common stock were issued as a result of the Series E preferred stock conversion. 11,193 shares of Series E preferred stock was redeemed and approximately $11,170,000
was paid for redemption.
Pursuant to the Securities Purchase Agreement, purchasers of the Series E Convertible Preferred Stock will also be required to purchase Series A Convertible
Preferred Stock of Healthy Choice Wellness Corp. ("HCWC") in the same subscription amounts that the Purchasers paid for the HCMC Series E Preferred Stock. HCWC is the HCMC subsidiary that will be spun off to HCMC’s stockholders in connection with the
spin off of HCMC’s grocery and wellness businesses.
Stock Options and Restricted Stock
During the six months ended June 30, 2023 and 2022, no
stock options of the Company were exercised into common stock.
On April 23, 2023, the Board of Directors (the “Board”) of HCMC approved the
Second Amendment to the 2015 Equity Incentive Plan (the “Amended Plan”). The Amended Plan increased the number of shares of HCMC common stock authorized for issuance under the Amended Plan to 225,000,000,000 shares.
On April 23, 2023, HCMC’s board of directors has approved the issuance of
approximately an additional 107,675,000,000 shares of
restricted common stock to the employees and executive officers of HCMC. Each grant of restricted common stock will commence vesting of 12.5% of the award on February 1, 2024 and will vest in 12.5% increments on the last day of each calendar quarter thereafter through September 30, 2025. All shares of restricted common stock related to the April 23, 2023 issuance
remain unvested as of June 30, 2023.
During the three months ended June 30, 2023 and 2022, the Company recognized stock-based compensation of approximately $1,127,000 and $0, respectively in connection with amortization of restricted stock and stock options. During the six months ended June 30, 2023 and 2022, the Company recognized stock-based compensation of approximately $1,177,000 and $0, respectively. Stock based compensation is included as part of selling, general and administrative expense in the
accompanying unaudited condensed consolidated statements of operations.
Income (Loss) Per Share
The following table summarizes the Company’s securities, in common share equivalents, which have been excluded from the calculation
of dilutive loss per share as their effect would be anti-dilutive:
The difference between our common shares outstanding as of June 30, 2023 of 463,266,632,384, and the weighted average number of common shares outstanding in our basic and diluted net loss per share is the exclusion of 107,675,000,000 shares of restricted common stock outstanding which are unvested as of June 30, 2023. There are no other reconciling items except for differences resulting from computing share
issuances on a weighted average basis.
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COMMITMENTS AND CONTINGENCIES |
6 Months Ended |
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Jun. 30, 2023 | |
COMMITMENTS AND CONTINGENCIES [Abstract] | |
COMMITMENTS AND CONTINGENCIES |
Note 13. 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
in 2019 and we exchanged additional support information with the plaintiff for one of the lawsuits in 2021. 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.
On November 30, 2020, the Company filed a patent infringement lawsuit against Philip Morris USA, Inc. and Philip Morris Products S.A. in the U.S. District
Court for the Northern District of Georgia. The lawsuit alleges infringement on HCMC-owned patent(s) by the Philip Morris product known and marketed as “IQOS®”. Philip Morris claims that it is currently approaching 14 million users of its IQOS® product and has reportedly invested over $3 billion in their smokeless tobacco products. On December 3, 2021, the District Court for the Northern District of Georgia effectively dismissed HCMC’s patent infringement action against Philip
Morris USA, Inc. and Philip Morris Products S.A. On December 14, 2021, the Company filed a notice of appeal of the District Court for the Northern District of Georgia’s dismissal of the Company’s patent infringement action against Philip Morris USA,
Inc. and Philip Morris Products S.A. The appeal brief was filed on February 28, 2022.
On December 3, 2021, the District Court for the Northern District of Georgia
effectively dismissed HCMC’s patent infringement action against Philip Morris USA, Inc. and Philip Morris Products S.A. In connection with such dismissal, the defendants sought to recover attorney’s fees from the Plaintiff. On February 22, 2022, the
District Court for the Northern District of Georgia granted the defendant’s an award of approximately $575,000 in attorneys’ fees to be paid by the Company. The Company has fully provisioned this amount as of December 31, 2022. HCMC appealed this ruling on June 22, 2022.
On April 12, 2023, the U.S. Court of Appeals for the Federal Circuit ruled in favor of HCMC on two separate appeals it had filed in its patent infringement action against Philip Morris USA, Inc. and Philip Morris Products S.A. pending in the district court for the Northern District of
Georgia.
In the first appeal, HCMC appealed the ruling of the District Court dismissing HCMC’s patent infringement action and denying HCMC’s motion to amend its
pleading. In the second appeal, HCMC appealed the District Court’s award of attorneys’ fees to Philip Morris. In its decisions, the Federal Circuit ruled for HCMC by reversing both of those decisions and remanded the case back to the District Court for
further proceedings. As a result of the ruling, the Company reversed the $575,000 which was previously fully provisioned during the three months
ended March 31, 2023.
From time to time the Company is involved in legal proceedings arising in the
ordinary course of our business. We believe that there is no other litigation pending that is likely to have, individually or in the aggregate, a material adverse
effect on our financial condition or results of operations as of June 30, 2023. With respect to legal costs, we record such costs as incurred.
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SUBSEQUENT EVENTS |
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Jun. 30, 2023 | |
SUBSEQUENT EVENTS [Abstract] | |
SUBSEQUENT EVENTS |
Note 14.
SUBSEQUENT EVENTS
On July 7, 2023, the Company entered into a patent licensing agreement for one of its patents in the vape segment. The Company as the licensor, grants to
licensee during the term a non-exclusive right and license under the Licensed Patents to make, use, offer to sell, sell, and import licensed products in the territory of the United States of America. The licensee will pay to the licensor a royalty
based on net sales of all licensed products in the territory during the term of the agreement. Either party can cancel the agreement with 60-days
written notice.
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ORGANIZATION (Policies) |
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Jun. 30, 2023 | |
ORGANIZATION [Abstract] | |
Spin-Off |
Spin-Off
The Company has commenced steps to spin off (“Spin-Off”) its grocery segment and wellness business into a new publicly traded company (hereinafter referred
to as “NewCo”). NewCo will continue the path of growth in the wellness verticals started by HCMC and explore other growth opportunities that comport with HCMC’s healthier lifestyle mission. Following the Spin-Off, HCMC will retain its entire patent
suite, the Q-Cup® brand, and continue to develop its patent suite through R&D as well as continuing its path of enforcing its patent rights against infringers and attempting to monetize said patents through licensing deals.
At the time of the Spin-Off, HCMC will distribute all the outstanding shares of Common Stock held by it on a pro rata basis to holders of HCMC’s common
stock. Shares of HCMC’s common stock outstanding as of the record date for the Spin-Off (the “Record Date”), will entitle the holder thereof to receive a certain number of shares of Common Stock in NewCo. The distribution will be made in book-entry
form by a distribution agent. Fractional shares of Common Stock will not be distributed in the Spin-Off and any fractional amounts will be rounded down. Please see more disclosure in Note 12 Stockholder Equity.
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BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Policies) |
6 Months Ended |
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Jun. 30, 2023 | |
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES [Abstract] | |
Reclassification |
Reclassification
Certain amounts in the condensed 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). $150,000 inventory shrink was
originally presented in the statement of cash flow under change in operating assets inventory in cash used in operating activities for six months ended June 30, 2022, it was reclassified to under cash used in operating activities in the statement of cash
flow.
The change in the fair value measurement on contingent consideration was presented under Other (expense) income, net in the statement of operations for three months ended March 31, 2023. For the three months ended June 30, 2023, the Company
presented the change in fair value remeasurement as a separate line in the statement of operations.
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CONCENTRATIONS (Tables) |
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CONCENTRATIONS [Abstract] | |||||||||||||||||||||||||||||||||||||
Cash and Cash Equivalents in Excess of FDIC Limit |
A summary of the financial institution that had cash in excess of FDIC limits of $250,000 on June 30, 2023 and December 31, 2022 is presented below:
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Cash and Restricted Cash |
The following table provides a reconciliation of cash and restricted cash to amounts shown
in unaudited condensed consolidated statements of cash flow:
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SEGMENT INFORMATION AND DISAGGREGATION OF REVENUES (Tables) |
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SEGMENT INFORMATION AND DISAGGREGATION OF REVENUES [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disaggregated Revenue |
The tables below present information about reportable segments for the three months and six months ended June 30, 2023, and 2022:
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NOTES RECEIVABLE AND OTHER INCOME (Tables) |
6 Months Ended | ||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2023 | |||||||||||||||
NOTES RECEIVABLE AND OTHER INCOME [Abstract] | |||||||||||||||
Summary of Amended Notes |
A summary of the Amended Note as of June 30, 2023 and December 31, 2022 is
presented below:
|
ACQUISITION (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ACQUISITION [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Change in Fair Value of Contingent Consideration |
The following table summarizes the change in fair value of contingent consideration from acquisition date to June 30, 2023:
The following table summarizes the change in fair value of contingent consideration for the three months ended June 30, 2023:
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Purchase Price Allocation for Mother Earth's Storehouse, Inc. |
The following table summarizes the purchase price allocation based on fair values of the net assets acquired at the acquisition
date:
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Supplemental Pro Forma Information |
The following table represents the combined pro forma revenue and net loss for
the three and six months ended June 30, 2022:
|
PROPERTY, PLANT, AND EQUIPMENT (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
PROPERTY, PLANT, AND EQUIPMENT [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, plant, and equipment |
Property, plant, and equipment consist of the following:
|
INTANGIBLE ASSETS (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INTANGIBLE ASSETS [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Intangible Assets, Net |
Intangible assets, net are as follows:
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||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Future Annual Estimated Amortization Expense |
Intangible assets are amortized on a straight-line basis over their estimated useful lives. Amortization expense was approximately $230,277 and $165,100 for the three months ended June 30, 2023 and 2022,
and $461,179 and $308,486 for the six months ended June 30, 2023 and 2022, respectively. Future annual estimated amortization expense is as follows:
|
CONTRACT LIABILITIES (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
CONTRACT LIABILITIES [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Net Changes in Contract Liabilities |
A summary of the contract liabilities activity at June 30, 2023
and December 31, 2022 is presented below:
|
DEBT (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
DEBT [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Breakdown of Debt |
The following table provides a breakdown of the Company's debt as of June 30, 2023
and December 31, 2022 is presented below:
|
STOCKHOLDERS' EQUITY (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
STOCKHOLDERS' EQUITY [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Common Share Equivalent Excluded from Calculation of Dilutive Loss Per Share |
The following table summarizes the Company’s securities, in common share equivalents, which have been excluded from the calculation
of dilutive loss per share as their effect would be anti-dilutive:
|
ORGANIZATION (Details) |
6 Months Ended |
---|---|
Jun. 30, 2023
Store
| |
Paradise Health & Nutrition's [Member] | |
Company Organization [Abstract] | |
Number of stores | 3 |
Mother Earth's Storehouse [Member] | |
Company Organization [Abstract] | |
Number of stores | 2 |
Number of years the company has been operating | 40 years |
Greens Natural Foods' [Member] | |
Company Organization [Abstract] | |
Number of stores | 8 |
LIQUIDITY (Details) - USD ($) |
Jun. 30, 2023 |
Dec. 31, 2022 |
Jun. 30, 2022 |
---|---|---|---|
LIQUIDITY [Abstract] | |||
Cash and cash equivalents | $ 8,481,915 | $ 22,911,892 | $ 19,323,420 |
Working capital | $ 6,300,000 |
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) |
6 Months Ended | |
---|---|---|
Jun. 30, 2023 |
Jun. 30, 2022 |
|
Reclassification [Abstract] | ||
Write-down of obsolete and slow-moving inventory | $ 951,373 | $ 73,640 |
Changes in operating assets, inventories | $ 899,251 | 189,138 |
Reclassification, Adjustment [Member] | ||
Reclassification [Abstract] | ||
Write-down of obsolete and slow-moving inventory | 150,000 | |
Changes in operating assets, inventories | $ (150,000) |
CONCENTRATIONS (Details) |
6 Months Ended | |||
---|---|---|---|---|
Jun. 30, 2023
USD ($)
FinancialInstitution
|
Dec. 31, 2022
USD ($)
|
Jun. 30, 2022
USD ($)
|
Dec. 31, 2021
USD ($)
|
|
Cash and Cash Equivalents in Excess of FDIC Limits [Abstract] | ||||
Number of financial institution | FinancialInstitution | 1 | |||
FDIC insured amount | $ 250,000 | |||
Total Cash in excess of FDIC limits of $250,000 | 7,458,162 | $ 21,682,144 | ||
Cash and Restricted Cash [Abstract] | ||||
Cash | 8,481,915 | 22,911,892 | $ 19,323,420 | |
Restricted cash | 628,232 | 1,778,232 | 0 | |
Total cash and restricted cash | $ 9,110,147 | $ 24,690,124 | $ 19,323,420 | $ 26,496,404 |
NOTES RECEIVABLE AND OTHER INCOME (Details) - USD ($) |
6 Months Ended | ||||
---|---|---|---|---|---|
Aug. 31, 2021 |
Sep. 06, 2018 |
Jun. 30, 2023 |
Jun. 30, 2022 |
Dec. 31, 2022 |
|
Receivables with Imputed Interest [Abstract] | |||||
Proceeds | $ 32,928 | $ 27,122 | |||
Promissory Note [Member] | |||||
Receivables with Imputed Interest [Abstract] | |||||
Payment term | 36 months | ||||
Loan amount | $ 211,355 | $ 582,260 | |||
Interest rate | 7.00% | 7.00% | |||
Proceeds | $ 1,500 | $ 4,141 | |||
Balloon payment | $ 145,931 | ||||
Extension term | 1 year | ||||
Remaining balance | $ 156,297 | $ 189,225 |
INTANGIBLE ASSETS, Future Annual Estimated Amortization Expense (Details) - USD ($) |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2023 |
Jun. 30, 2022 |
Jun. 30, 2023 |
Jun. 30, 2022 |
Dec. 31, 2022 |
|
INTANGIBLE ASSETS [Abstract] | |||||
Amortization expense | $ 230,277 | $ 165,100 | $ 461,179 | $ 308,486 | |
Future Annual Estimated Amortization Expense [Abstract] | |||||
2023 (remaining six months) | 461,179 | 461,179 | |||
2024 | 922,358 | 922,358 | |||
2025 | 916,858 | 916,858 | |||
2026 | 838,877 | 838,877 | |||
2027 | 694,457 | 694,457 | |||
Thereafter | 710,603 | 710,603 | |||
Net carrying amount | $ 4,544,332 | $ 4,544,332 | $ 5,005,511 |
CONTRACT LIABILITIES (Details) - USD ($) |
6 Months Ended | 12 Months Ended |
---|---|---|
Jun. 30, 2023 |
Dec. 31, 2022 |
|
Changes in Contract Liabilities Activity [Roll Forward] | ||
Beginning balance | $ 198,606 | $ 23,178 |
Issued | 638,501 | 859,383 |
Redeemed | (635,391) | (628,012) |
Breakage recognized | (54,247) | (55,943) |
Ending balance | $ 147,469 | $ 198,606 |
DEBT (Details) - USD ($) |
Jun. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
Debt [Abstract] | ||
Debt | $ 2,649,933 | $ 2,914,603 |
Current portion of long-term debt | (552,001) | (536,542) |
Long-term debt | 2,097,932 | 2,378,061 |
Promissory Note [Member] | ||
Debt [Abstract] | ||
Debt | 2,649,933 | 2,913,788 |
Other Debt [Member] | ||
Debt [Abstract] | ||
Debt | $ 0 | $ 815 |
STOCKHOLDERS' EQUITY, Stock Options and Restricted Stock (Details) - USD ($) |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Apr. 23, 2023 |
Jun. 30, 2023 |
Jun. 30, 2022 |
Jun. 30, 2023 |
Jun. 30, 2022 |
|
Compensation Expense Recognized [Abstract] | |||||
Stock options exercised (in shares) | 0 | 0 | 0 | 0 | |
Stock-based compensation | $ 1,127,000 | $ 0 | $ 1,176,750 | $ 0 | |
2015 Equity Incentive Plan [Member] | |||||
Compensation Expense Recognized [Abstract] | |||||
Common stock available for grant (in shares) | 225,000,000,000 | ||||
2015 Equity Incentive Plan [Member] | Vesting on February 1, 2024 [Member] | |||||
Compensation Expense Recognized [Abstract] | |||||
Stock vesting percentage | 12.50% | ||||
2015 Equity Incentive Plan [Member] | Last Day of Each Calendar Quarter Thereafter Through September 30, 2025 [Member] | |||||
Compensation Expense Recognized [Abstract] | |||||
Stock vesting percentage | 12.50% | ||||
2015 Equity Incentive Plan [Member] | Restricted Stock [Member] | Employees and Executive Officers [Member] | |||||
Compensation Expense Recognized [Abstract] | |||||
Granted (in shares) | 107,675,000,000 |
COMMITMENTS AND CONTINGENCIES (Details) User in Millions |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Apr. 12, 2023
Appeal
|
Feb. 22, 2022
USD ($)
|
Jun. 30, 2023
USD ($)
Lawsuit
|
Jun. 30, 2023
USD ($)
Lawsuit
|
Nov. 30, 2020
USD ($)
User
|
|
Alleged Claimed Battery Defects For Electronic Cigarette Device [Member] | |||||
Legal Proceedings [Abstract] | |||||
Number of lawsuits | Lawsuit | 2 | 2 | |||
Philip Morris [Member] | |||||
Legal Proceedings [Abstract] | |||||
Number of users approached | User | 14 | ||||
Invested amount | $ 3,000,000,000 | ||||
Philip Morris [Member] | Patent Infringement Litigation [Member] | |||||
Legal Proceedings [Abstract] | |||||
Attorney fees paid | $ 575,000 | ||||
Number of appeals filed in patent infringement | Appeal | 2 | ||||
Reversal of litigation provision | $ 575,000 | ||||
Medical Costs [Member] | Alleged Claimed Battery Defects For Electronic Cigarette Device [Member] | |||||
Legal Proceedings [Abstract] | |||||
Damages sought | $ 400,000 |
SUBSEQUENT EVENTS (Details) - Subsequent Event [Member] |
Jul. 07, 2023
Patent
|
---|---|
Subsequent Event [Abstract] | |
Number of patents | 1 |
Written notice period to cancel agreement | 60 days |
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