S-1/A: Healthy Choice Wellness Corp. Plans Spin-Off and Public Listing on NYSE American

Healthy Choice Wellness Corp. (HCWC) is set to become an independent, publicly-traded company through a spin-off from Healthier Choices Management Corp. (HCMC), with plans to list its Class A common stock on the NYSE American exchange.

Summary

• Healthier Choices Management Corp. (HCMC) is spinning off its grocery and wellness business into a new entity, Healthy Choice Wellness Corp. (HCWC).
• HCWC will own and operate retail stores including Adas Natural Market, Paradise Health and Nutrition, Mother Earths Storehouse, Greens Natural Foods, and Ellwood Thompsons, as well as Healthy Choice Wellness Centers and the online entity thevitaminstore.com.
• HCMC is expected to be capitalized with approximately $4 million raised through a public offering (Offering), and has commitments for an additional $13.25 million upon the sale of HCWCs Series A Convertible Preferred Stock.
• HCWC has applied to list its Class A common stock on the NYSE American exchange under the symbol HCWC.
• Holders of HCMC common stock will receive shares of HCWC Class A and Class B common stock on a pro rata basis.
• The Class B common stock will be subject to a 90-day transfer restriction (the Lock Up Period) following the Spin Off and will automatically convert into freely tradeable Class A common stock on the expiration of the Lock Up Period.
• The spin-off is conditional upon several factors, including approval for listing on the NYSE American exchange and the effectiveness of the registration statement with the SEC.
• HCWC has entered into an agreement to sell and issue 13,250 shares of Series A Convertible Preferred Stock at a purchase price of $1,000 per share after the Distribution Date (the Initial Offering).

Sentiment

Score: 6

Explanation: The document presents a mix of positive and negative aspects. The spin-off and listing are positive steps, but the company faces risks and challenges. The sentiment is neutral to slightly positive.

Positives

• HCWC will have its own balance sheet and direct access to capital sources.
• HCWC will have a management team focused on enhancing the performance of HCWCs assets and finding value-creating opportunities.
• The separation will facilitate incentive compensation arrangements for employees more directly tied to the performance of each companys business.
• The separation will provide investors with two distinct, targeted investment opportunities and enable them to separately value HCMC and HCWC based on their unique investment identities.

Negatives

• HCWC may incur costs for certain functions previously performed by HCMC, such as accounting, tax and information technology functions, which are higher than the amounts reflected in HCWCs historical financial statements.
• The actions required to separate HCMCs and HCWCs respective businesses could disrupt HCWCs operations.
• Certain costs and liabilities that were otherwise less significant to HCMC as a whole will be more significant for HCWC as a standalone company.
• The shares of HCMC common stock, which currently include the value of the assets that will be spun-off as HCWC, are quoted currently on the OTC Pink at $0.0001 per share.
• One-time costs of the separation will be incurred.
• HCWC may not achieve the anticipated benefits of the separation for a variety of reasons.

Risks

• The Spin-Off could result in significant tax liability to HCMC and its stockholders.
• We could have an indemnification obligation to HCMC if the Spin-Off were determined not to qualify for non-recognition treatment.
• We may be unable to achieve some or all of the benefits that we expect to achieve from the Spin-Off.
• We have no operating history as an independent publicly-traded company, and our historical financial information is not necessarily representative of the results we would have achieved as an independent publicly-traded company and may not be a reliable indicator of our future results.
• We may not be able to access the credit and capital markets at the times and in the amounts needed on acceptable terms.
• No market for the Common Stock currently exists, and an active trading market may not develop or be sustained after the Spin-Off.

Future Outlook

The Company expects to pursue several strategies to continue its profitable growth, including expanding its store base, increasing sales from existing customers, growing its customer base, and improving operating margins.

Management Comments

• I am pleased to report that the previously announced spin-off (the Distribution) by Healthier Choices Management Corp., which we refer to as HCMC, of all of the outstanding shares of common stock of its Healthy Choice Wellness Corp. subsidiary is expected to become effective on , 2024.
• Healthy Choice Wellness Corp., a Delaware corporation, which we refer to as HCWC, will become a publicly-traded company on that date.
• HCWC will own the HCMC subsidiaries that operate the HCMC retail stores, namely Adas Natural Market, Paradise Health and Nutrition, Mother Earths Storehouse, Greens Natural Foods and Ellwood Thompsons, as well as Healthy Choice Wellness Centers and the online entity thevitaminstore.com.

Industry Context

The document highlights the competitive landscape of the natural and organic grocery and dietary supplement industry, noting the presence of various competitors including conventional supermarkets, specialty food markets, and online retailers.

Stakeholder Impact

• HCMC stockholders will receive shares of HCWC Class A and Class B common stock.
• HCWC employees will have incentive compensation arrangements more directly tied to the performance of HCWCs business.

Next Steps

• Completion of the spin-off transaction.
• Listing of Class A common stock on the NYSE American exchange.
• Sale and issuance of Series A Convertible Preferred Stock.
• Implementation of agreements with HCMC related to the spin-off.

Key Dates

Keywords

spin-off, HCWC, HCMC, grocery, wellness, NYSE American, listing, distribution, Class A common stock, Class B common stock, preferred stock, retail, organic, natural foods