DISCONTINUED OPERATIONS

12 Months Ended

Dec. 31, 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.

Cash of $2.2 million held by HCWC and its subsidiary were transferred to HCWC on the Distribution Date. HCMC and HCWC settled intercompany balances in the amount of $1.2 million on the Spin-Off date.

During the third quarter of 2024, the Company recognized a net reduction to retained earnings of $1.0 million as a result of the Separation, primarily related to the transfer of certain assets and liabilities associated with its grocery business to HCWC.

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

	●	a Separation Agreement (“SA”) that sets forth HCWC’s and the Company’s agreements regarding the principal actions that both parties 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 provide each other specified services on a transitional basis to help ensure an orderly transition following the Spin-Off.
	●	a Tax Matters Agreement that governs the respective rights, responsibilities and obligations of HCWC and the Company after the Spin-Off with respect to all tax matters and includes restrictions to preserve the tax-free status of the Spin-Off; and
	●	an Employee Matters Agreement that addresses 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. Following the Spin-Off, the Company recognized a reduction of costs of $0.4 million for services provided to HCWC in the third and fourth quarters of 2024 pursuant to the transition services agreement.

Financial Information of Discontinued Operations

Net Loss from Discontinued Operations in the 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 thirty-six-week period ended September 13, 2024:

SCHEDULE OF DISCONTINUED OPERATION

		Thirty-Six Week Period Ended September 13, 2024
SALES, NET		$	46,349,908
COST OF SALES			28,691,071
GROSS PROFIT			17,658,837

OPERATING EXPENSES, NET
Selling, general and administrative			19,212,986
Gain on sale of asset			(205,146	)
TOTAL OPERATING EXPENSES, NET			19,007,840

LOSS FROM OPERATIONS			(1,349,003	)

OTHER INCOME (EXPENSE)			(2,426,556	)

NET LOSS FROM DISCONTINUED OPERATIONS		$	(3,775,559	)

There were no assets or liabilities classified as discontinued operations as of December 31, 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 period ended September 13, 2024:

		Thirty-Six-Week Period Ended September 13, 2024
Net loss		$	(3,775,559	)
Depreciation and amortization			1,069,958
Loss on warrant liability extinguishment			1,888,889
Gain on sale of building			(205,146	)
Non-cash interest expense			72,250
Change in allowance for credit losses			-
Loss on vendor settlement			-
Amortization of right-of-use asset			2,381,131
Write-down of obsolete and slow-moving inventory			2,032,995
Change in contingent consideration			-
Impairment of goodwill			-
Accounts receivable			(253,460	)
Inventories			(2,000,669	)
Prepaid expenses and vendor deposits			(48,693	)
Other current assets			20,520
Due from related party			(2,736,272	)
Other assets			(83,482	)
Accounts payable and accrued expenses			998,829
Contract liabilities			(156,904	)
Lease liability			(2,280,459	)
NET CASH USED IN OPERATING ACTIVITIES OF DISCONTINUED OPERATIONS			(3,076,072	)

Payment for acquisition			(5,475,000	)
Proceeds from sale of Saugerties building			749,000
Purchases of property and equipment			(145,680	)
NET CASH USED IN INVESTING ACTIVITIES OF DISCONTINUED OPERATIONS			(4,871,680	)

Proceeds from security purchase agreement			1,700,000
Proceeds from acquisition loan			7,500,000
Principal payments on loan payable			(349,082	)
Due from related party			(1,819,570	)
Net transfers to HCWC related to Spin-Off			(506,176	)
NET CASH PROVIDED BY FINANCING ACTIVITIES OF DISCONTINUED OPERATIONS			6,525,172

NET DECREASE IN CASH		$	(1,422,580	)