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) |
Large accelerated filer | ☐ | Accelerated filer | ☐ |
Non-accelerated filer | ☒ | Smaller reporting company | ☒ |
Emerging growth company | ☐ |
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 |
PAGE | |
September 30, 2020 | December 31, 2019 | March 31, 2021 | December 31, 2020 | |||||||
ASSETS | ||||||||||
CURRENT ASSETS | ||||||||||
Cash and cash equivalents | $ | 602,318 | $ | 1,525,415 | $ | 5,316,169 | $ | 925,475 | ||
Accounts receivable, net | 85,527 | 65,401 | 56,754 | 23,675 | ||||||
Inventories | 1,785,959 | 1,757,012 | 1,700,784 | 1,749,246 | ||||||
Prepaid expenses and vendor deposits | 328,008 | 269,833 | 237,831 | 286,065 | ||||||
Investment | 10,286 | 24,000 | 48,857 | 22,731 | ||||||
TOTAL CURRENT ASSETS | 2,812,098 | 3,641,661 | 7,360,395 | 3,007,192 | ||||||
Restricted cash | 4,386,081 | 2,000,000 | - | 2,000,000 | ||||||
Property and equipment, net of accumulated depreciation | 258,774 | 332,290 | 222,999 | 230,719 | ||||||
Intangible assets, net of accumulated amortization | 1,346,374 | 1,923,447 | 1,150,329 | 1,248,352 | ||||||
Goodwill | 916,000 | 956,000 | 916,000 | 916,000 | ||||||
Note receivable | 319,620 | 343,387 | 291,333 | 304,511 | ||||||
Right of use asset – operating lease, net | 4,234,280 | 4,663,019 | 3,955,886 | 4,078,621 | ||||||
Other assets | 89,595 | 146,865 | 88,595 | 89,598 | ||||||
TOTAL ASSETS | $ | 14,362,822 | $ | 14,006,669 | $ | 13,985,537 | $ | 11,874,993 | ||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||
CURRENT LIABILITIES | ||||||||||
Accounts payable and accrued expenses | $ | 1,090,831 | $ | 825,860 | $ | 813,870 | $ | 1,085,663 | ||
Contract liabilities | 19,400 | 26,823 | 18,170 | 21,262 | ||||||
Current portion of line of credit | 2,000,000 | 2,000,000 | - | 2,000,000 | ||||||
Current portion of loan payment | 3,392,466 | 282,344 | 842,228 | 2,072,484 | ||||||
Operating lease liability, current | 502,289 | 555,959 | 483,482 | 474,686 | ||||||
TOTAL CURRENT LIABILITIES | 7,004,986 | 3,690,986 | 2,157,750 | 5,654,095 | ||||||
Loan payable, net of current portion | 965,675 | 869,223 | 778,411 | 849,009 | ||||||
Operating lease liability, net of current | 3,225,215 | 3,544,729 | 3,001,335 | 3,114,521 | ||||||
TOTAL LIABILITIES | 11,195,876 | 8,104,938 | 5,937,496 | 9,617,625 | ||||||
COMMITMENTS AND CONTINGENCIES (SEE NOTE 8) | ||||||||||
COMMITMENTS AND CONTINGENCIES (SEE NOTE 10) | ||||||||||
STOCKHOLDERS’ EQUITY | ||||||||||
Series B convertible preferred stock, $1,000 par value per share, 30,000 shares authorized; 20,150 shares issued and outstanding as of September 30, 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 105.1 and 67.7 billion shares issued and outstanding as of September 30, 2020 and December 31, 2019, respectively | 10,511,085 | 6,769,849 | ||||||||
Series C convertible preferred stock, $1,000 par value per share, 30,000 shares authorized; 0 and 16,277 shares issued and outstanding as of March 31, 2021 and December 31, 2020; aggregate liquidation preference of $- million | - | 16,277,116 | ||||||||
Series D convertible preferred stock, $1,000 par value per share, 5,000 shares authorized; 5,000 shares issued and outstanding as of March 31, 2021; aggregate liquidation preference of $5.0 million | 5,000,000 | - | ||||||||
Common Stock, $0.0001 par value per share, 750,000,000,000 shares authorized; approximately 307.7 and 143.8 billion shares issued and outstanding as of March 31, 2021 and December 31, 2020, respectively | 30,772,608 | 14,384,084 | ||||||||
Additional paid-in capital | 3,953,163 | 7,618,245 | 5,330,562 | 3,955,039 | ||||||
Accumulated deficit | (31,447,418) | (28,636,479) | (33,055,129) | (32,358,871) | ||||||
TOTAL STOCKHOLDERS’ EQUITY | 3,166,946 | 5,901,731 | 8,048,041 | 2,257,368 | ||||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 14,362,822 | $ | 14,006,669 | $ | 13,985,537 | $ | 11,874,993 |
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | Three Months Ended March 31, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | 2021 | 2020 | |||||||||||
SALES | ||||||||||||||||
Vapor sales, net | $ | 594,145 | $ | 898,229 | $ | 1,888,480 | $ | 3,207,530 | $ | 613,936 | $ | 773,458 | ||||
Grocery sales, net | 2,753,648 | 2,520,101 | 8,804,397 | 8,407,919 | 2,851,817 | 3,262,714 | ||||||||||
TOTAL SALES, NET | 3,347,793 | 3,418,330 | 10,692,877 | 11,615,449 | 3,465,753 | 4,036,172 | ||||||||||
Cost of sales vapor | 256,461 | 385,208 | 787,998 | 1,337,555 | 233,315 | 319,080 | ||||||||||
Cost of sales grocery | 1,729,213 | 1,629,980 | 5,461,574 | 5,309,567 | 1,741,728 | 2,009,200 | ||||||||||
GROSS PROFIT | 1,362,119 | 1,403,142 | 4,443,305 | 4,968,327 | 1,490,710 | 1,707,892 | ||||||||||
Selling, general and administrative | 2,195,275 | 2,532,505 | 6,735,815 | 8,057,452 | ||||||||||||
Impairment of intangible assets | 380,646 | - | 380,646 | - | ||||||||||||
OPERATING EXPENSES | 2,575,921 | 2,532,505 | 7,116,461 | 8,057,452 | 2,022,883 | 2,372,381 | ||||||||||
LOSS FROM OPERATIONS | (1,213,802) | (1,129,363) | (2,673,156) | (3,089,125) | (532,173) | (664,489) | ||||||||||
OTHER (EXPENSE) INCOME | ||||||||||||||||
Gain (loss) on investment | (2,571) | (12,514) | (13,714) | (57,514) | 26,126 | (9,857) | ||||||||||
Other expense, net | - | (146) | (100) | (838) | - | (76) | ||||||||||
Interest income (expense), net | (84,592) | (8,280) | (123,969) | (19,669) | ||||||||||||
Total other (expense) income, net | (87,163) | (20,940) | (137,783) | (78,021) | ||||||||||||
Interest expense, net | (72,915) | (16,872) | ||||||||||||||
Loss on extinguishment of debt | (117,296) | - | ||||||||||||||
Total other expense, net | (164,085) | (26,805) | ||||||||||||||
NET LOSS | $ | (1,300,965) | $ | (1,150,303) | $ | (2,810,939) | $ | (3,167,146) | $ | (696,258) | $ | (691,294) | ||||
NET LOSS PER SHARE-BASIC AND DILUTED | $ | 0.00 | $ | 0.00 | $ | 0.00 | $ | 0.00 | $ | 0.00 | $ | 0.00 | ||||
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING-BASIC AND DILUTED | 102,108,302,961 | 66,929,136,282 | 84,476,736,667 | 66,734,751,470 | 244,246,983,178 | 69,716,324,179 |
Convertible Preferred Stock | Common Stock | Additional Paid-In | Accumulated | |||||||||||||||||
Shares | Amount | Shares | Amount | Capital | Deficit | Total | ||||||||||||||
Balance – July 1, 2020 | 20,150 | $ | 20,150,116 | 87,558,296,598 | $ | 8,755,829 | $ | 5,706,544 | $ | (30,146,453) | $ | 4,466,036 | ||||||||
Issuance of common stock in connection with cashless exercise of Series A warrants | - | - | 17,552,551,418 | 1,755,255 | (1,755,255) | - | - | |||||||||||||
Stock-based compensation expense | - | - | - | - | 1,875 | - | 1,875 | |||||||||||||
Net loss | - | - | - | - | - | (1,300,965) | (1,300,965) | |||||||||||||
Balance – September 30, 2020 | 20,150 | $ | 20,150,116 | 105,110,848,016 | $ | 10,511,084 | $ | 3,953,164 | $ | (31,447,418) | $ | 3,166,946 |
Convertible Preferred Stock | Common Stock | Additional Paid-In | Accumulated | |||||||||||||||||
Shares | Amount | Shares | Amount | Capital | Deficit | Total | ||||||||||||||
Balance – January 1, 2021 | 16,277 | $ | 16,277,116 | 143,840,848,017 | $ | 14,384,084 | $ | 3,955,039 | $ | (32,358,871) | $ | 2,257,368 | ||||||||
Series C Convertible Preferred Stock exercised | (16,277) | (16,277,116) | 162,771,153,001 | 16,277,116 | - | - | - | |||||||||||||
Stock options exercised | - | - | 775,000,000 | 77,500 | - | - | 77,500 | |||||||||||||
Issuance of Series D Preferred stock in connection with the Securities Purchase Agreement | 5,000 | 5,000,000 | - | - | - | - | 5,000,000 | |||||||||||||
Issuance of common stock | - | - | 1,182,831,056 | 118,283 | 1,289,273 | - | 1,407,556 | |||||||||||||
Issuance of awarded stock for officers | - | - | 2,200,000,000 | 220,000 | (220,000) | - | - | |||||||||||||
Issuance of awarded stock for board member | - | - | 50,000,000 | 5,000 | (5,000) | - | - | |||||||||||||
Cancellation of awarded stock for officers | - | - | (3,025,000,000) | (302,500) | 302,500 | - | - | |||||||||||||
Cancellation of awarded stock for board member | - | - | (68,750,000) | (6,875) | 6,875 | - | - | |||||||||||||
Stock-based compensation expense | - | - | - | - | 1,875 | - | 1,875 | |||||||||||||
Net loss | - | - | - | - | - | (696,258) | (696,258) | |||||||||||||
Balance – March 31, 2021 | 5,000 | $ | 5,000,000 | 307,726,082,074 | $ | 30,772,608 | $ | 5,330,562 | $ | (33,055,129) | $ | 8,048,041 |
Convertible Preferred Stock | Common Stock | Additional Paid-In | Accumulated | Convertible Preferred Stock | Common Stock | Additional Paid-In | Accumulated | |||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Capital | Deficit | Total | Shares | Amount | Shares | Amount | Capital | Deficit | Total | |||||||||||||||||||||||||||
Balance – July 1, 2019 | 20,150 | $ | 20,150,116 | 66,645,257,694 | $ | 6,664,526 | $ | 7,543,370 | $ | (27,853,946) | $ | 6,504,066 | ||||||||||||||||||||||||||||
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 | - | - | 53,236,547 | 5,323 | (3,112) | - | 2,211 | - | - | 4,798,932,767 | 479,894 | (479,894) | - | - | ||||||||||||||||||||||||||
- | - | 1,000,000,000 | 100,000 | (100,000) | - | - | ||||||||||||||||||||||||||||||||||
Stock-based compensation expense | - | - | - | - | 147,570 | - | 147,570 | - | - | - | - | 81,944 | - | 81,944 | ||||||||||||||||||||||||||
Net loss | (1,150,303) | (1,150,303) | - | - | - | - | - | (691,294) | (691,294) | |||||||||||||||||||||||||||||||
Balance – September 30, 2019 | 20,150 | $ | 20,150,116 | 67,698,494,241 | $ | 6,769,849 | $ | 7,587,828 | $ | (29,004,249) | $ | 5,503,544 | ||||||||||||||||||||||||||||
Balance – March 31, 2020 | 20,150 | $ | 20,150,116 | 72,497,427,011 | �� | $ | 7,249,743 | $ | 7,220,295 | $ | (29,327,773) | $ | 5,292,381 |
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 | - | - | 37,412,353,772 | 3,741,235 | (3,741,235) | - | - | |||||||||||||
Stock-based compensation expense | - | - | - | - | 76,154 | - | 76,154 | |||||||||||||
Net loss | - | - | - | - | - | (2,810,939) | (2,810,939) | |||||||||||||
Balance – September 30, 2020 | 20,150 | $ | 20,150,116 | 105,110,848,016 | $ | 10,511,084 | $ | 3,953,164 | $ | (31,447,418) | $ | 3,166,946 |
Convertible Preferred Stock | Common Stock | Additional Paid-In | Accumulated | |||||||||||||||||
Shares | Amount | Shares | Amount | Capital | Deficit | Total | ||||||||||||||
Balance – January 1, 2019 | 20,150 | $ | 20,150,116 | 66,623,514,522 | $ | 6,662,351 | $ | 7,348,390 | $ | (25,734,088) | $ | 8,426,769 | ||||||||
Issuance of common stock in connection with cashless exercise of Series A warrants | - | - | 74,979,719 | 7,498 | (4,386) | - | 3,112 | |||||||||||||
Cumulative Effect on adoption of ASC 842 | - | - | 1,000,000,000 | 100,000 | (100,000) | - | - | |||||||||||||
Cumulative Effect on adoption of ASC 842 | - | - | - | - | - | (103,015) | (103,015) | |||||||||||||
Stock-based compensation expense | - | - | - | - | 343,824 | - | 343,824 | |||||||||||||
Net loss | (3,167,146) | (3,167,146) | ||||||||||||||||||
Balance – September 30, 2019 | 20,150 | $ | 20,150,116 | 67,698,494,241 | $ | 6,769,849 | $ | 7,587,828 | $ | (29,004,249) | $ | 5,503,544 |
Three Months Ended March 31, | |||||
2021 | 2020 | ||||
OPERATING ACTIVITIES | |||||
Net loss | $ | (696,258) | $ | (691,294) | |
Adjustments to reconcile net loss to net cash used in operating activities: | |||||
Depreciation and amortization | 136,597 | 147,834 | |||
Loss on extinguishment of debt | 117,296 | - | |||
Loss (Gain) on investment | (26,126) | 9,857 | |||
Amortization of right-of-use asset | 122,735 | 158,724 | |||
Stock-based compensation expense | 1,875 | 81,944 | |||
Changes in operating assets and liabilities: | |||||
Accounts receivable | (33,079) | (1,081) | |||
Inventories | 48,462 | 40,036 | |||
Prepaid expenses and vendor deposits | 48,234 | 21,171 | |||
Other assets | 1,003 | 3,958 | |||
Accounts payable | (146,862) | 126,569 | |||
Accrued expenses | (122,765) | 47,124 | |||
Contract liabilities | (3,092) | (3,756) | |||
Lease liability | (104,390) | (140,374) | |||
NET CASH USED IN OPERATING ACTIVITIES | (656,370) | (199,288) | |||
INVESTING ACTIVITIES | |||||
Collection of note receivable | 13,178 | 7,362 | |||
Purchases of property and equipment | (30,855) | (10,805) | |||
Purchases of patent | - | (89,415) | |||
NET CASH USED IN INVESTING ACTIVITIES | (17,677) | (92,858) | |||
FINANCING ACTIVITIES | |||||
Principal payments on loan payable | (12,759) | (70,574) | |||
Principal payment on the line of credit | (2,000,000) | - | |||
Proceeds from security purchase agreement | 5,000,000 | - | |||
Proceeds from exercise of stock options | 77,500 | - | |||
NET CASH PROVIDED BY FINANCING ACTIVITIES | 3,064,741 | (70,574) | |||
NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENT AND RESTRICTED CASH | 2,390,694 | (362,720) | |||
CASH, CASH EQUIVALENTS AND RESTRICTED CASH— BEGINNING OF PERIOD | 2,925,475 | 3,525,415 | |||
CASH, CASH EQUIVALENTS AND RESTRICTED CASH — END OF PERIOD | $ | 5,316,169 | $ | 3,162,695 | |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | |||||
Cash paid for interest | $ | 81,313 | $ | 35,256 | |
NON-CASH INVESTING AND FINANCING ACTIVITIES | |||||
Issuance of common stock | $ | 1,407,556 | $ | - |
Nine Months Ended September 30, | |||||
2020 | 2019 | ||||
OPERATING ACTIVITIES | |||||
Net loss | $ | (2,810,939) | $ | (3,167,146) | |
Adjustments to reconcile net loss to net cash used in operating activities: | |||||
Bad debt expense | - | (3,002) | |||
Depreciation and amortization | 424,020 | 449,071 | |||
Loss on disposal of assets | - | 25,427 | |||
Loss on investment | 13,714 | 57,514 | |||
Amortization of right-of-use asset | 428,740 | 459,760 | |||
Stock-based compensation expense | 76,154 | 343,824 | |||
Impairment of intangible assets | 380,646 | - | |||
Changes in operating assets and liabilities: | |||||
Accounts receivable | (20,126) | 12,582 | |||
Inventories | (28,947) | (16,606) | |||
Prepaid expenses and vendor deposits | (58,175) | 94,110 | |||
Contract assets | - | 14,400 | |||
Other assets | 57,270 | (3,423) | |||
Accounts payable | 267,220 | (155,910) | |||
Accrued expenses | (2,249) | (294,211) | |||
Contract liabilities | (7,423) | (268,302) | |||
Lease liability | (373,184) | (402,857) | |||
NET CASH USED IN OPERATING ACTIVITIES | (1,653,279) | (2,854,769) | |||
INVESTING ACTIVITIES | |||||
Collection of note receivable | 23,767 | 137,250 | |||
Purchases of property and equipment | (24,663) | (12,967) | |||
Purchases of patent | (89,415) | (25,000) | |||
NET CASH USED IN INVESTING ACTIVITIES | (90,311) | 99,283 | |||
FINANCING ACTIVITIES | |||||
Proceeds from line of credit | - | 131,540 | |||
Principal payments on loan payable | (209,941) | (188,323) | |||
Proceeds from paycheck protection program | 876,515 | - | |||
Proceeds from loan and security agreement | 2,540,000 | - | |||
NET CASH USED IN FINANCING ACTIVITIES | 3,206,574 | (56,783) | |||
NET DECREASE IN CASH, CASH EQUIVALENT AND RESTRICTED CASH | 1,462,984 | (2,812,269) | |||
CASH, CASH EQUIVALENTS AND RESTRICTED CASH— BEGINNING OF PERIOD | 3,525,415 | 7,061,253 | |||
CASH, CASH EQUIVALENTS AND RESTRICTED CASH — END OF PERIOD | $ | 4,988,399 | $ | 4,248,984 | |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | |||||
Cash paid for interest | $ | 161,876 | $ | 107,646 |
September 30, 2020 | December 31, 2019 | March 31, 2021 | December 31, 2020 | ||||||||||||
Cash and Cash Equivalent | $ | 602,318 | $ | 1,525,415 | $ | 5,316,169 | $ | 925,475 | |||||||
Restricted cash, non-current portion | 4,386,081 | 2,000,000 | - | 2,000,000 | |||||||||||
Total cash, cash equivalents and restricted cash | $ | 4,988,399 | $ | 3,525,415 | $ | 5,316,169 | $ | 2,925,475 |
Three Months Ended September 30, | Nine Months Ended September 30, | Three Months Ended March 31, | |||||||||||||||||
2020 | 2019 | 2020 | 2019 | 2021 | 2020 | ||||||||||||||
Vapor | $ | 594,145 | $ | 898,229 | $ | 1,888,480 | $ | 3,207,530 | $ | 613,936 | $ | 773,458 | |||||||
Grocery | 2,753,648 | 2,520,101 | 8,804,397 | 8,407,919 | 2,851,817 | 3,262,714 | |||||||||||||
Total revenue | $ | 3,347,793 | $ | 3,418,330 | $ | 10,692,877 | $ | 11,615,449 | $ | 3,465,753 | $ | 4,036,172 | |||||||
Retail Vapor | $ | 594,145 | $ | 898,216 | $ | 1,888,480 | $ | 3,207,120 | $ | 613,894 | $ | 773,458 | |||||||
Retail Grocery | 2,369,942 | 2,168,645 | 7,707,101 | 7,302,378 | 2,542,360 | 2,830,365 | |||||||||||||
Food service/restaurant | 248,757 | 291,435 | 823,724 | 949,211 | 287,722 | 329,139 | |||||||||||||
Online/eCommerce | 75,009 | 45,927 | 261,158 | 127,129 | 13,717 | 103,210 | |||||||||||||
Wholesale Grocery | 59,940 | 14,094 | 12,414 | 29,201 | 8,018 | - | |||||||||||||
Wholesale Vapor | - | 13 | - | 410 | 42 | - | |||||||||||||
Total revenue | $ | 3,347,793 | $ | 3,418,330 | $ | 10,692,877 | $ | 11,615,449 | $ | 3,465,753 | $ | 4,036,172 |
September 30, 2020 | Useful Lives (Years) | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | ||||||||||||||||||||
March 31, 2021 | Useful Lives (Years) | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | ||||||||||||||||||||
Trade names | 8-10 years | $ | 923,000 | $ | (418,068) | $ | 504,932 | 8-10 years | $ | 923,000 | $ | (465,505) | $ | 457,495 | ||||||||||
Customer relationships | 4-10 years | 883,000 | (420,635) | 462,365 | 4-10 years | 883,000 | (529,510) | 353,490 | ||||||||||||||||
Patents | 10 years | 359,665 | (76,650) | 283,015 | 10 years | 359,665 | (94,633) | 265,032 | ||||||||||||||||
Non-compete | 4 years | 174,000 | (77,938) | 96,062 | 4 years | 174,000 | (99,688) | 74,312 | ||||||||||||||||
Intangible assets, net | $ | 2,339,665 | $ | (993,291) | $ | 1,346,374 | $ | 2,339,665 | $ | (1,189,336) | $ | 1,150,329 |
December 31, 2019 | Useful Lives (Years) | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | ||||||||||||||||||||
December 31, 2020 | Useful Lives (Years) | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | ||||||||||||||||||||
Trade names | 8-10 years | $ | 993,000 | (354,203) | $ | 638,797 | 8-10 years | $ | 923,000 | (441,786) | $ | 481,214 | ||||||||||||
Customer relationships | 4-10 years | 1,228,000 | (293,260) | 934,740 | 4-10 years | 883,000 | (475,073) | 407,927 | ||||||||||||||||
Patents | 10 years | 270,250 | (49,027) | 221,223 | 10 years | 359,665 | (85,641) | 274,024 | ||||||||||||||||
Non-compete | 4 years | 174,000 | (45,313) | 128,687 | 4 years | 174,000 | (88,813) | 85,187 | ||||||||||||||||
Intangible assets, net | $ | 2,665,250 | $ | (741,803) | $ | 1,923,447 | $ | 2,339,665 | $ | (1,091,313) | $ | 1,248,352 |
Years ending December 31, | ||||||
2020 (remaining three months) | $ | 98,023 | ||||
2021 | 385,091 | |||||
2021 (remaining nine months) | $ | 287,069 | ||||
2022 | 369,706 | 369,706 | ||||
2023 | 130,841 | 130,841 | ||||
2024 | 130,841 | 130,841 | ||||
2025 | 125,341 | |||||
Thereafter | 231,872 | 106,531 | ||||
Total | $ | 1,346,374 | $ | 1,150,329 |
As of September 30, | As of March 31, | ||||||||||||
2020 | 2019 | 2021 | 2020 | ||||||||||
Beginning balance as January 1, | $ | 26,823 | $ | 442,630 | $ | 21,262 | $ | 26,823 | |||||
Issued | 33,221 | 50,778 | 46,627 | 60,309 | |||||||||
Redeemed | (39,405) | (57,319) | (49,585 | ) | (63,509 | ) | |||||||
Breakage recognized | (341) | (1,563) | (134 | ) | (556 | ) | |||||||
Fulfillment of contract | (898) | (260,198) | |||||||||||
Ending balance as of September 30, | $ | 19,400 | $ | 174,328 | |||||||||
Ending balance as of March 31, | $ | 18,170 | $ | 23,067 |
Principal | Debt Discount | Net Amount | |||||||||||||||||
Line of Credit | $ | 2,000,000 | $ | - | $ | 2,000,000 | |||||||||||||
_ | Due Date | Interest Rate | March 31, 2021 | December 31, 2020 | |||||||||||||||
Term Loan Credit Agreement | 870,925 | - | 870,925 | December 2023 | 7.00% | $ | 730,924 | $ | 800,924 | ||||||||||
Paycheck Protection Program | 880,051 | - | 880,051 | May 2022 | 1% | 884,431 | 882,264 | ||||||||||||
Line of Credit | July 2021 | 2.2% | - | 2,000,000 | |||||||||||||||
Loan and Security Agreement ("PPE Loan") | 2,667,000 | (66,322) | 2,600,678 | March 2021 | 5% | - | 1,232,414 | ||||||||||||
Other debt | 6,487 | - | 6,487 | April 2023 | 5.3% | 5,284 | 5,891 | ||||||||||||
Total debt | $ | 6,424,463 | $ | (66,322) | $ | 6,358,141 | $ | 1,620,639 | 4,921,493 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||
Stock-based compensation | $ | 1,875 | $ | 147,570 | $ | 76,154 | $ | 343,824 |
As of September 30, | As of March 31, | |||||||||||||||
2020 | 2019 | 2021 | 2020 | |||||||||||||
Preferred stock | 201,501,000,000 | 201,501,000,000 | 2,083,000,000 | 201,501,000,000 | ||||||||||||
Stock options | 68,062,000,000 | 91,062,000,000 | 69,087,000,000 | 68,062,000,000 | ||||||||||||
Warrants | - | 41,420,000,000 | - | 36,460,000,000 | ||||||||||||
Total | 269,563,000,000 | 333,983,000,000 | 71,170,000,000 | 306,023,000,000 |
Three Months Ended September 30, | 2020 to 2019 | Three Months Ended March 31, | 2020 to 2021 | |||||||||||||
2020 | 2019 | Change $ | 2021 | 2020 | Change $ | |||||||||||
SALES | ||||||||||||||||
Vapor sales, net | $ | 594,145 | $ | 898,229 | $ | (304,084) | $ | 613,936 | $ | 773,458 | $ | (159,522) | ||||
Grocery sales, net | 2,753,648 | 2,520,101 | 233,547 | 2,851,817 | 3,262,714 | (410,897) | ||||||||||
TOTAL SALES, NET | 3,347,793 | 3,418,330 | (70,537) | 3,465,753 | 4,036,172 | (570,419) | ||||||||||
Cost of sales vapor | 256,461 | 385,208 | (128,747) | 233,315 | 319,080 | (85,765) | ||||||||||
Cost of sales grocery | 1,729,213 | 1,629,980 | 99,233 | 1,741,728 | 2,009,200 | (267,472) | ||||||||||
GROSS PROFIT | 1,362,119 | 1,403,142 | (41,023) | 1,490,710 | 1,707,892 | (217,182) | ||||||||||
OPERATING EXPENSES | 2,022,883 | 2,372,381 | (349,498) | |||||||||||||
Selling, general and administrative | 2,195,275 | 2,532,505 | (337,230) | |||||||||||||
Impairment of intangible assets | 380,646 | - | 380,646 | |||||||||||||
Total operating expenses | 2,575,921 | 2,532,505 | 43,416 | |||||||||||||
LOSS FROM OPERATIONS | (1,213,802) | (1,129,363) | (84,439) | (532,173) | (664,489) | 132,316 | ||||||||||
OTHER INCOME (EXPENSE) | ||||||||||||||||
Gain (loss) on investment | (2,571) | (12,514) | 9,943 | 26,126 | (9,857) | 35,983 | ||||||||||
Other Income (expense) | - | (146) | 146 | |||||||||||||
Interest income (expense) | (84,592) | (8,280) | (76,312) | |||||||||||||
Total other income (expense), net | (87,163) | (20,940) | (66,223) | |||||||||||||
Other expense, net | - | (76) | 76 | |||||||||||||
Interest expense, net | (72,915) | (16,872) | (56,043) | |||||||||||||
Loss on extinguishment of debt | (117,296) | - | (117,296) | |||||||||||||
Total other expense, net | (164,085) | (26,805) | (137,280) | |||||||||||||
NET LOSS | $ | (1,300,965) | $ | (1,150,303) | $ | (150,662) | $ | (696,258) | $ | (691,294) | $ | (4,964) |
Nine Months Ended September 30, | 2020 to 2019 | |||||||
2020 | 2019 | Change $ | ||||||
SALES | ||||||||
Vapor sales, net | $ | 1,888,480 | $ | 3,207,530 | $ | (1,319,050) | ||
Grocery sales, net | 8,804,397 | 8,407,919 | 396,478 | |||||
TOTAL SALES, NET | 10,692,877 | 11,615,449 | (922,572) | |||||
Cost of sales vapor | 787,998 | 1,337,555 | (549,557) | |||||
Cost of sales grocery | 5,461,574 | 5,309,567 | 152,007 | |||||
GROSS PROFIT | 4,443,305 | 4,968,327 | (525,022) | |||||
OPERATING EXPENSES | ||||||||
Selling, general and administrative | 6,735,815 | 8,057,452 | (1,321,637) | |||||
Impairment of intangible assets | 380,646 | - | 380,646 | |||||
Total operating expenses | 7,116,461 | 8,057,452 | (940,991) | |||||
LOSS FROM OPERATIONS | (2,673,156) | (3,089,125) | 415,969 | |||||
OTHER INCOME (EXPENSE) | ||||||||
Gain (loss) on investment | (13,714) | (57,514) | 43,800 | |||||
Other income (expense) | (100) | (838) | 738 | |||||
Interest income (expense) | (123,969) | (19,669) | (104,300) | |||||
Total other income (expense), net | (137,783) | (78,021) | (59,762) | |||||
NET LOSS | $ | (2,810,939) | $ | (3,167,146) | $ | 356,207 |
Nine Months Ended September 30, | |||||
2020 | 2019 | ||||
Net cash used in operating activities | $ | (1,653,279) | $ | (2,854,769) | |
Net cash provided by (used in) investing activities | (90,311) | 99,283 | |||
Net cash provided by financing activities | 3,206,574 | (56,783) | |||
$ | 1,462,984 | $ | (2,812,269) |
Three Months Ended March 31, | |||||
2021 | 2020 | ||||
Net cash provided by (used in) | |||||
Operating activities | $ | (656,370) | $ | (199,288) | |
Investing activities | (17,677) | (92,858) | |||
Financing activities | 3,064,741 | (70,574) | |||
$ | 2,390,694 | $ | (362,720) |
September 30, 2020 | December 31, 2019 | March 31, 2021 | December 31, 2020 | |||||||
Cash | $ | 602,318 | $ | 1,525,415 | $ | 5,316,169 | $ | 925,475 | ||
Total assets | $ | 14,362,822 | $ | 14,006,669 | $ | 13,985,537 | $ | 11,874,993 | ||
Percentage of total assets | 4.19% | 10.89% | 38.01% | 7.79% |
● | 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 |
● |
● | 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. |
● | Vendor payments and cash disbursement are reviewed on weekly basis by management and accounting team to ensure timely payment. Cash balance are communicated to management on weekly basis to improve cash management. |
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 |
* | 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: | By: | /s/ Jeffrey Holman |
Jeffrey Holman | ||
Chief Executive Officer | ||
Date: | By: | /s/ John Ollet |
John Ollet | ||
Chief Financial Officer |