Financial Performance - Net sales increased by $4.4 million to $20.3 million for the three months ended March 31, 2025, compared to $15.9 million for the same period in 2024, driven by the acquisition of GreenAcres Market and a $0.7 million increase in same-store sales [160]. - Gross profit for the three months ended March 31, 2025, was $7.9 million, with a gross margin increase of approximately 0.7% compared to the same period in the prior year [160]. - Operating expenses rose to $8.3 million for the three months ended March 31, 2025, an increase of $1.6 million primarily due to the acquisition of GreenAcres Market and higher professional fees [161]. - The net loss for the three months ended March 31, 2025, was $0.7 million, slightly higher than the net loss of $0.7 million for the same period in 2024 [159]. - Adjusted EBITDA for the three months ended March 31, 2025, was $20,315, a significant improvement from an adjusted EBITDA of $(238,605) in the same period of 2024 [177]. Cash Flow and Financial Position - Cash provided by operating activities was approximately $1.1 million for the three months ended March 31, 2025, a significant improvement from a cash outflow of $2.5 million in the same period in 2024 [164]. - As of March 31, 2025, the company had cash of approximately $1.8 million and negative working capital of $2.4 million [156]. - The company has operating lease obligations totaling $13.3 million as of March 31, 2025, with an expected increase in rent expense due to new leases and variable payments [163]. Business Operations - The acquisition of GreenAcres Market in July 2024 contributed significantly to the increase in grocery sales and operating expenses [160][161]. - The company operates a total of 19 retail stores across Florida, New York, New Jersey, Virginia, Kansas, and Oklahoma, focusing on natural and organic products [157]. - The company does not consider its business to be seasonal, suggesting stable demand throughout the year [180]. Future Outlook and Risks - The company expects to continue incurring losses for the foreseeable future, indicating ongoing challenges in achieving profitability [169]. - Forward-looking statements include expectations regarding retail expansion and future product demand, highlighting strategic growth areas [182]. - The company acknowledges that actual results may differ from forward-looking statements due to various factors, including stock price and customer acceptance [184]. Cybersecurity - Cybersecurity is recognized as critical to the company's success, with ongoing evaluations of threats and their potential impacts on operations and financial condition [181]. - The board oversees cybersecurity risks through quarterly updates, emphasizing the importance of data protection in the company's strategy [181]. Accounting Policies - The company has not made material changes to its critical accounting policies compared to the 2024 Annual Report, ensuring consistency in financial reporting [179]. Expenses - Interest expense increased to $297,731 in Q1 2025 from $103,072 in Q1 2024, indicating higher borrowing costs [177]. - Depreciation and amortization expenses rose to $429,990 in Q1 2025, compared to $363,141 in Q1 2024, reflecting increased asset utilization [177].
Healthy Choice Wellness Corp.(HCWC) - 2025 Q1 - Quarterly Report