DISCONTINUED OPERATIONS

6 Months Ended

Jun. 30, 2025

Discontinued Operations and Disposal Groups [Abstract]

DISCONTINUED OPERATIONS

NOTE 2. DISCONTINUED OPERATIONS

On September 13, 2024, the Company completed the previously announced separation and distribution of its Grocery segment into an independent publicly traded company, HCWC. The separation was structured as a tax-free spin-off, which occurred by way of a pro rata distribution to HCMC stockholders. Each of the HCMC stockholders received one share of HCWC Class A common stock and three shares of Class B common stock for every 208,632 shares of HCMC common stock held of record as of the close of business on September 13, 2024. HCWC is now an independent public company listed under the symbol “HCWC” on the NYSEAM. The Company retained no ownership interest in HCWC following the Separation.

In connection with the Separation, the Company entered into several agreements with HCWC that govern the relationship of the parties following the Spin-Off. These agreements include:

● a Separation Agreement that will set forth HCWC’s and the Company’s agreements regarding the principal actions that both parties will take in connection with the Spin-Off and aspects of our relationship following the Spin-Off;

● a Transition Services Agreement pursuant to which HCWC and the Company will provide each other specified services on a transitional basis to help ensure an orderly transition following the Spin-Off.

● a Tax Matters Agreement that will govern the respective rights, responsibilities and obligations of HCWC and the Company after the Spin-Off with respect to all tax matters and will include restrictions to preserve the tax-free status of the Spin-Off; and

● an Employee Matters Agreement that will address employment, compensation and benefits matters, including the allocation and treatment of assets and liabilities arising out of employee compensation and benefits programs in which our employees participated prior to the Spin-Off.

Under the terms of the transition services agreement, HCMC will provide to HCWC, on a transitional basis, certain services or functions, including information technology, accounting, human resources, and payroll functions. Generally, these services will be provided for a period of up to one year following the Spin-Off. Consideration and costs for the transition services will be determined using several billing methodologies as described in the agreements, including customary billing and pass-through billing. Costs for transition services provided to HCWC are recorded within the Consolidated Statements of Operations based on the nature of the services.

Financial Information of Discontinued Operations

Net Loss from Discontinued Operations in the Condensed Consolidated Statements of Operations reflects the financial results of the HCWC and includes allocation of general corporate overhead expense of the Company.

The following table summarizes the significant line items included in Net Loss from Discontinued Operations, in the Consolidated Statements of Operations for the three and six months ended June 30, 2024:

	Three Months Ended June 30, 2024			Six Months Ended June 30, 2024
SALES, NET	$	15,594,575		$	31,488,933
COST OF SALES		9,698,119			19,538,100
GROSS PROFIT		5,896,456			11,950,833
TOTAL OPERATING EXPENSES, NET		6,378,014			13,034,137
LOSS FROM OPERATIONS		(481,558	)		(1,083,304	)
OTHER INCOME (EXPENSE)		(114,149	)		(213,866	)
NET LOSS FROM DISCONTINUED OPERATIONS	$	(595,707	)	$	(1,297,170	)

The information presented as discontinued operations on the Condensed Consolidated Balance Sheets includes certain assets and liabilities that were transferred to HCWC pursuant to the Separation agreements.

	June 30, 2024
Cash and cash equivalents	$	964,246
Accounts receivable, net		157,335
Inventories		3,930,646
Prepaid expenses and vendor deposits		186,556
Other current assets		97,142
Assets held for sale		543,854
Current Assets of Discontinued Operations		5,879,779
Property and equipment, net of accumulated depreciation		1,984,939
Goodwill		-
Intangible assets, net of accumulated amortization		3,718,385
Right of use asset - operating lease		9,974,601
Due from related party		5,815,241
Other assets		474,476
Other Assets of Discontinued Operations	$	27,847,421
Accounts payable and accrued expenses	$	4,350,444
Contract Liabilities		123,375
Current portion of loan payable		2,495,340
Lease liability, current		2,665,438
Current Liabilities of Discontinued Operations		9,634,597
Due from related party		-
Loan payable, net of current portion		2,036,367
Lease liability, net of current		7,179,425
Other Long-term Liabilities of Discontinued Operations	$	18,850,389

There were no assets or liabilities classified as discontinued operations as of June 30, 2025 and December 31, 2024.

The following table summarizes the significant operating cash and noncash items, capital expenditures and financing activities of discontinued operations for the six months ended June 30, 2024:

	Six Months Ended June 30, 2024
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(1,297,170	)
Depreciation and amortization		724,958
Amortization of debt discount		71,293
Amortization of right-of-use asset		1,437,961
Write-down of obsolete and slow-moving inventory		1,484,648
Accounts receivable		(29,164	)
Inventories		(1,253,076	)
Prepaid expenses and vendor deposits		(11,586	)
Other current assets		(40,300	)
Due to related party		(2,062,238	)
Other assets		(7,420	)
Accounts payable and accrued expenses		(569,967	)
Contract liabilities		(84,138	)
Lease liability		(1,365,143	)
NET CASH USED IN OPERATING ACTIVITIES OF DISCONTINUED OPERATIONS		(3,001,342	)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment		(116,978	)
NET CASH USED IN INVESTING ACTIVITIES OF DISCONTINUED OPERATIONS		(116,978	)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from security purchase agreement		1,700,000
Principal payments on loan payable		(346,094	)
Investment from parent company		1,306,080
NET CASH PROVIDED BY FINANCING ACTIVITIES OF DISCONTINUED OPERATIONS		2,659,986
NET DECREASE IN CASH FROM DISCONTINUED OPERATIONS	$	(458,334	)