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STOCKHOLDERS’ EQUITY
 12 Months Ended
Dec. 31, 2025
Equity [Abstract]  
STOCKHOLDERS’ EQUITY

NOTE 17. STOCKHOLDERS’ EQUITY

 

Spin-Off

 

HCMC announced on August 22, 2022 that its Board of Directors approved separation of the Grocery business, including wellness business, into an independent, publicly traded company (the “Spin-Off”). Prior to the Spin-Off, HCWC was a subsidiary under HCMC, which operated the Ada’s Natural Market, Paradise Health & Nutrition, Mother Earth’s Storehouse, Green’s Natural Foods, Ellwood Thompson’s, and GreenAcres Market retail brands, as well as licensed wellness centers and Healthy U Wholesale.

 

On the Spin-Off Date, after the NYSEAM market closing, the Spin-Off of the HCWC business was completed. On September 14, 2024, HCWC became an independent, publicly traded company, and on September 16, 2024, the stock was traded on the NYSEAM under the stock symbol “HCWC.”

 

HCMC distributed all the outstanding shares of Common Stock held by it on a pro rata basis to holders of HCMC’s common stock. For each 208,632 shares of HCMC common stock held as of 5:00 p.m., New York City time, on September 9, 2024, the record date for the Spin-Off (the “Record Date”), a HCMC stockholder was entitled to receive one (1) share of Class A common stock and three (3) shares of Class B common stock. The Distribution was made in book-entry form by a distribution agent as soon as practicable after the date of the Distribution.

 

Debt Conversion

 

On March 2, 2025, the Company entered into an agreement with certain note holders to exchange $450,000 of outstanding principal under its existing Loan and Security Agreement dated July 18, 2024 for 750,000 shares of the Company’s Class A common stock.

 

On April 3, 2025, the Company entered into an agreement with certain note holders to exchange $500,000 of outstanding principal under its existing Loan and Security Agreement dated July 18, 2024 for 1,136,364 shares of the Company’s Class A common stock.

 

On May 1, 2025, the Company entered into an agreement with the same note holders to exchange $175,000 of outstanding principal and $187,726 accrued interest under its existing Loan and Security Agreement dated July 18, 2024 for 863,637 shares of the Company’s Class A common stock.

 

On July 15, 2025, the Company entered into an agreement with the same note holders to exchange $1,000,000 of outstanding principal under its existing Loan and Security Agreement dated July 18, 2024 for 2,500,000 shares of the Company’s Class A common stock.

 

All of the above debt conversion agreements were completed on their respective dates, and the related shares of Class A common stock were issued accordingly.

 

On October 24, 2025, the Company entered into an agreement with the same note holders to exchange $2,000,000 of outstanding principal under its existing Loan and Security Agreement dated July 18, 2024 for variable shares of the Company’s Class A common stock. As of December 31, 2025, 2,325,000 shares of the Company’s Class A common stock were issued in exchange of $909,315 outstanding principal.

 

 

Series A Convertible Preferred Stock

 

The Company is authorized to issue 40,000,000 shares of Series A convertible preferred stock with par value of $0.001, none of which have been previously issued.

 

Prior to the Spin-Off, HCMC secured binding commitments of $13.25 million in equity financing for HCWC from the same group of investors that invested $13.25 million in HCMC Series E Preferred Stock. Pursuant to the Securities Purchase Agreement for the HCMC Series E Stock (“HCMC Series E SPA”), the purchasers of HCMC Series E Stock will also be required to purchase Series A Convertible Preferred Stock of HCWC in the same subscription amounts that the Purchasers paid for the HCMC Series E Stock (regardless of whether or not such HCMC Series E Stock has been converted into HCMC common stock). On October 30, 2025, the parties to the SPA entered into a Ninth Amendment to HCMC Series E SPA, pursuant to which HCMC and such parties agreed to amend the Completion Date to April 1, 2027. As of December 31, 2025, HCWC has received $5.25 million of the committed $13.25 million, leaving the contractually obligated $8.0 million binding commitments to be fulfilled. The parties, which comprise of the institutional investors that participated in the Spin-off as described above, have communicated their intent to further extend the Completion Date. For further details regarding the remaining $8.0 million commitment and its significance to the Company’s liquidity, see Note 2 - Going Concern.

 

Restricted Stock

 

On August 19, 2025, the Compensation Committee of the Company’s Board of Directors approved the grant of an aggregate of 2.6 million shares of restricted Class A common stock to certain employees, directors, and service providers of the Company, pursuant to the Company’s 2024 Equity Incentive Plan. The restricted stock awards, which are subject to the execution of individual Restricted Stock Award Agreements, are generally scheduled to vest in eight equal quarterly installments over a two-year period, commencing three months from the issuance date. The awards also contain an accelerated vesting provision in connection with a material transaction of the Company. As of December 31, 2025, 2.6 million shares of restricted Class A common stock were issued, approximately $98,000 of stock-based compensation expense related to these awards has been recognized in the accompanying consolidated financial statements.

 

The following table reflects the activity for all unvested restricted stocks during 2025:

 

   Shares  

Weighted

Average

Grant Date

Fair Value

 
Unvested at January 1, 2025   -   $- 
Granted   2,600,000    1,560,000 
Vested   -   -
Forfeited   -    - 
Unvested at December 31, 2025   2,600,000   $1,560,000 

 

As of December 31, 2025, there was approximately $1,462,500 of total unrecognized compensation cost related to unvested restricted stock awards granted under the 2024 Equity Incentive Plan. This cost is expected to be recognized over a weighted-average period of approximately 1.0 years. The weighted-average grant-date fair value of restricted stock awards granted during 2025 was $0.60 per share.

 

The Company accounts for forfeitures of restricted stock awards in accordance with ASC 718, Compensation—Stock Compensation. The Company has elected to account for forfeitures as they occur. Under this policy, compensation cost is recognized only for awards that ultimately vest. Shares that are forfeited due to an employee’s failure to satisfy a service condition (such as termination of employment prior to vesting) become available for future grant under the 2024 Equity Incentive Plan, consistent with the terms of the plan.

 

As of December 31, 2025, 19,990,750 shares of common stock and 5,250 shares of Series A Convertible Preferred Stock are outstanding.

 

For information regarding restricted stock grants approved subsequent to December 31, 2025, see Note 21, Subsequent Events.