The following discussion and analysis should be read in conjunction with our
unaudited interim condensed consolidated financial statements and related notes
appearing elsewhere in this report on Form 10-Q. In addition to historical
information, this discussion and analysis contains forward-looking statements
that involve risks, uncertainties, and assumptions. Our actual results may
differ materially from those anticipated in these forward-looking statements.
The terms "we," "us," "our," and the "Company" refer to
Company Overview
Healthier Choices Management Corp. is a holding company focused on providing consumers with healthier daily choices with respect to nutrition and other lifestyle alternatives. Through its wholly owned subsidiaryHCMC Intellectual Property Holdings, LLC , the Company manages and intends to expand on its intellectual property portfolio. Through its wholly owned subsidiaries,Healthy Choice Markets, Inc. , Healthy Choice Markets 2, LLC, and Healthy Choice Markets 3, LLC, andHealthy Choice Markets IV, LLC respectively, the Company operates: •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.
•
bulk foods, vitamins and supplements, packaged groceries, meat and seafood, deli, baked goods, dairy products, frozen foods, health & beauty products and natural household items.
•
chain in
years.
•
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).
Through its wholly owned subsidiary,
Through its wholly owned subsidiary,
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Liquidity
The unaudited condensed consolidated financial statements included elsewhere in this Form 10-Q have been prepared in conformity with GAAP, which contemplate continuation of the Company as a going concern and realization of assets and satisfaction of liabilities in the normal course of business and do not include any adjustments that might result from the outcome of any uncertainties related to our going concern assessment. The carrying amounts of assets and liabilities presented in the financial statements do not necessarily purport to represent realizable or settlement values. The unaudited consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties.
The Company incurred a loss from operations of approximately
Factors Affecting Our Performance
We believe the following factors affect our performance:
Retail: We believe the operating performance of our retail stores will affect
our revenue and financial performance. The Company has four natural and organic
groceries and dietary supplement stores located in
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Results of Operations
The following table sets forth our unaudited condensed consolidated Statements
of Operations for the three months ended
Three Months Ended March 31, 2023 to 2022 2023 2022 Change $ SALES Vapor sales, net $ 38$ 249,563 $ (249,525) Grocery sales, net 13,559,706 4,798,990 8,760,716 TOTAL SALES, NET 13,559,744 5,048,553 8,511,191 Cost of sales vapor 653 111,684 (111,031) Cost of sales grocery 8,644,700 2,964,355 5,680,345 GROSS PROFIT 4,914,391 1,972,514 2,941,877 OPERATING EXPENSES Selling, general and administrative 6,897,438 3,327,420 3,570,018 LOSS FROM OPERATIONS (1,983,047) (1,354,906) (628,141) OTHER INCOME (EXPENSE) (Loss) gain on investment (4,457) 3,514 (7,971) Other (expense) income, net (17,450) 16,874 (34,324) Interest income 97,653 16,603 81,050 Total other income (expense), net 75,746 36,991 38,755 NET LOSS$ (1,907,301) $ (1,317,915) $ (589,386) 17
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Net vapor sales decreased approximately
Net grocery sales increased
Vapor cost of goods sold for the three months ended
Grocery cost of goods sold for the three months ended
Total operating expenses increased
Total net other income increased
Liquidity and Capital Resources
Three Months EndedMarch 31, 2023 2022
Net cash (used in) provided by
Operating activities$ (2,344,310) $ (679,629) Investing activities (109,931) (5,263,503) Financing activities (742,164) 34,558$ (3,196,405) $ (5,908,574) 18
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Our net cash used in operating activities of approximately
The net cash used in investing activities of
The net cash used in financing activities of
At
Our cash balances are kept liquid to support our growing acquisition and
infrastructure needs for operational expansion. Most of our cash is concentrated
in several financial institutions and is generally in excess of the
March 31, 2023 December 31, 2022 Cash$ 19,765,487 $ 22,911,892 Total assets$ 52,358,773 $ 55,255,030 Percentage of total assets 37.75% 41.47%
The Company reported a net loss of
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements.
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Critical Accounting Policies and Estimates
Our management's discussion and analysis of financial condition and results of
operations is based on our unaudited condensed consolidated financial
statements, which have been prepared in accordance with accounting principles
generally accepted in
We base our estimates on our historical experience, knowledge of our business and industry, current and expected economic conditions, the attributes of our products, the regulatory environment, and in certain cases, the results of outside appraisals. We periodically re-evaluate our estimates and assumptions with respect to these judgments and modify our approach when circumstances indicate that modifications are necessary. These estimates and assumptions form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.
While we believe that the factors we evaluate provide us with a meaningful basis for establishing and applying sound accounting policies, we cannot guarantee that the results will always be accurate. Since the determination of these estimates requires the exercise of judgment, actual results could differ from such estimates.
There have been no material changes to the Company's critical accounting policies and estimates as compared to the critical accounting policies and estimates described in the 2022 Annual Report, which we believe are the most critical to our business and the understanding of our results of operations and affect the more significant judgments and estimates that we use in the preparation of our condensed consolidated financial statements.
Seasonality
We do not consider our business to be seasonal.
Cautionary Note Regarding Forward-Looking Statements
This report includes forward-looking statements including statements regarding retail expansion, the future demand for our products, the transition to vaporizer and other products, competition, the adequacy of our cash resources and our authorized Common Stock, and our continued ability to raise capital.
The words "believe," "may," "estimate," "continue," "anticipate," "intend," "should," "plan," "could," "target," "potential," "is likely," "will," "expect" and similar expressions, as they relate to us, are intended to identify forward-looking statements. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs.
The results anticipated by any or all of these forward-looking statements might not occur. Important factors that could cause actual results to differ from those in the forward-looking statements include our future common stock price, the timing of future Series D preferred stock exercises and stock sales, customer acceptance of our products, and proposed federal and state regulation. We undertake no obligation to publicly update or revise any forward-looking statements, whether as the result of new information, future events or otherwise.
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