NOTE 2. GOING CONCERN

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.

Conditions Giving Rise to Substantial Doubt

As of June 30, 2026, the Company had cash and cash equivalents of approximately $0.9 million and negative working capital of $6.6 million. For the six months ended June 30, 2026, the Company incurred net losses of approximately $6.7 million and cash used in operating activities of approximately $1.2 million. These conditions, among others, raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date these financial statements are issued.

Management’s Plans to Alleviate Substantial Doubt

Management has developed and initiated several operational and financing plans to mitigate the conditions that raise substantial doubt about the Company’s ability to continue as a going concern.

Operationally, the Company has identified cost-saving opportunities, of which many have been implemented. These cost-saving measures are expected to reduce selling, general and administrative expenses and improve net income, thereby positively impacting operating cash flows. Management is also evaluating the performance of existing stores and rightsizing operations as necessary to improve store-level profitability and reduce cash burn. Additionally, the Company is pursuing strategic acquisitions to expand its store base and achieve economies of scale, which management believes will enhance profitability and generate positive operating cash flows over the long term.

On the financing front, the Company has secured binding commitments from institutional investors to purchase $13.25 million of its Series A Convertible Preferred Stock. As of June 30, 2026, the Company has received $5.25 million of this committed financing, with the remaining $8.0 million commitment extended to April 1, 2027 pursuant to the Ninth Amendment to the Healthier Choices Management Corp. (“HCMC”) Series E Securities Purchase Agreement (see Note 16- Stockholders’ Equity).

Subsequent to June 30, 2026, on August 7, 2026, the Company further reduced its debt obligations when holders converted $692,672 of outstanding principal under the Loan and Security Agreement into 2,565,450 shares of Class A common stock (see Note 18- Subsequent Events).

Management believes that the combination of these operational initiatives and committed equity financing will enable the Company to meet its obligations and capital requirements for at least twelve months from the date these financial statements are issued.

Conclusion

Based on the above, management has concluded that its plans, including the operational cost-saving initiatives and the financing arrangements described above, alleviate the substantial doubt raised by the Company’s historical operating results and financial condition. The Company believes that its cash on hand, the remaining $8.0 million commitment under the Series A Preferred Stock offering, and the reduction of debt obligations from the August 7, 2026 debt conversion will collectively enable the Company to meet its obligations and capital requirements for at least twelve months from the date these financial statements are issued. Accordingly, no adjustment has been made to the financial statements to account for this uncertainty.