HCWC — what changed in the latest 10-Q

Text added vs the prior filing · source: 10-Q · 2026-08-14

• Net sales decreased $3.6 million to $16.6 million for the three months ended June 30, 2026 as compared to $20.2 million for the same period in 2025. The decrease was primarily attributable to a decline in same-store sales. The same-store sales decline reflects continued pressure on consumer spending…

• Cost of goods sold for the three months ended June 30, 2026 and 2025 were $10.2 million and $12.1 million, respectively. The decrease was primarily due to lower sales volume from the same-store sales decline. Gross profit was $6.4 million and $8.1 million for the three months ended June 30, 2026 and…

• Total operating expenses for the three months ended June 30, 2026 and 2025 were $9.0 million and $8.1 million, respectively, representing an increase of approximately $0.9 million. The increase was primarily driven by a $0.8 million increase in payroll and benefits and professional fees, and a $0.3 …

• Total other expenses, net was $0.4 million for the three months ended June 30, 2026, consisting of net interest expense of approximately $151,000, a $259,000 loss on debt extinguishment, a $18,000 loss on equity investment in HCMC, offset by other miscellaneous income of approximately $1,000. Total …

• The following table sets forth our unaudited condensed consolidated Statements of Operations for the six months ended June 30, 2026 and 2025 that is used in the following discussions of our results of operations:

Text removed vs the prior filing · source: 10-Q · 2026-05-15

• Net sales decreased $2.0 million to $18.2 million for the three months ended March 31, 2026 as compared to $20.2 million for the same period in 2025. The decrease consisted of a same-store sales decrease of $2.2 million, partially offset by a $0.2 million increase in CO-OP revenue.

• Cost of goods sold for the three months ended March 31, 2026 and 2025 were $11.3 million and $12.4 million, respectively. The decrease was driven by a $2.2 million reduction in net sales, which directly lowered variable cost of goods sold. Gross margin decreased 0.8 percentage points to 38.0% from 3…

• Total operating expenses for the three months ended March 31, 2026 and 2025 were $8.5 million and $8.3 million, respectively. The $0.2 million increase was primarily attributable to stock-based compensation expense, which was not incurred in the prior year period.

• Total other expenses, net for the three months ended March 31, 2026 were $2.1 million, consisting of net interest expense of approximately $0.2 million, loss on debt extinguishment of approximately $0.2 million, equity method loss of approximately $0.1 million, and impairment loss on equity method i…

• As of March 31, 2026, the Company has operating lease obligations totaling $10.0 million, with a weighted-average remaining term of 3 years and a weighted-average discount rate of 5.52%. Rent expense for the three months ended March 31, 2026 was approximately $1.0 million, consistent with the same p…

Text added vs the prior filing · source: 10-Q · 2026-08-14

• ● Lack of Formal Related Party Transaction Policy: The Company did not maintain a formal written policy and related controls for the timely identification, evaluation, and accounting treatment of transactions with related parties.

• ● Ineffective effective controls over the accounting for stock-based compensation, specifically related to the timing of the accelerated vesting recognition for Restricted Stock Awards (RSAs) as it pertains to the contemplated merger transaction.

• Our management concluded that considering internal control deficiencies that, in the aggregate, rise to the level of material weaknesses, we did not maintain effective internal control over financial reporting as of June 30, 2026 based on the criteria set forth in Internal Control-Integrated Framewo…

• As previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2025, management identified material weaknesses in our internal control over financial reporting and initiated an action plan to remediate these deficiencies. During the six months ended June 30, 2026, we conti…

• ● Segregation of Duties and Journal Entry Review: During the second quarter of 2026, the Company implemented a new cloud-based accounting and financial management system, Sage Intacct. The Sage Intacct system includes enhanced user access controls, role-based permissions, and segregation of duties f…

Text removed vs the prior filing · source: 10-Q · 2026-05-15

• ● Lack of Formal Related Party Transaction Policy: The Company did not maintain a formal written policy and related controls for the timely identification, evaluation, and accounting treatment of transactions with related parties. The absence of this formal framework resulted in the initial misappli…

• Our management concluded that considering internal control deficiencies that, in the aggregate, rise to the level of material weaknesses, we did not maintain effective internal control over financial reporting as of March 31, 2026 based on the criteria set forth in Internal Control-Integrated Framew…

• As previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2025, management identified material weaknesses in our internal control over financial reporting and initiated an action plan to remediate these deficiencies. During the three months ended March 31, 2026, we co…

• ● Segregation of Duties and Journal Entry Review: Remediation of this control is dependent upon the remediation of information technology general controls (“ITGCs”), specifically the removal or mitigation of super user privileges within the Company’s accounting systems that currently allow certain i…

• ● Related Party Transactions: The Company is finalizing a formal written policy for the identification, evaluation, approval, and accounting treatment of related party transactions. Implementation of this policy is expected during the second quarter of 2026. In addition, the Company is implementing …