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Monday, October 18, 2021

Mighty Move Brewing on Healthier Choices Management Corp. (OTCMKTS: HCMC) As PMI Patent Infringement Lawsuit Gains Traction

Healthier Choices Management Corp. (OTCMKTS: HCMC) Currently trading several billion shares per day HCMC is looking to break out of its trading range. The stock is among the most exciting stocks in small caps that continues to be the most talked about stocks in small caps with well over 400,000 shareholders of record. Currently under heavy accumulation HCMC is looking to break out of its current trading range and blaze a path along the likes of Enzolytics or Tesoro and break out into a whole new dimension; a break over $0.0065 and its blue skies ahead.  

Microcapdaily first reported on HCMC in January 2021, when the stock was in the low triple zeroes, a fraction of current levels. HCMC is getting noticed as the Company pursues its patent infringement lawsuit against billion-dollar conglomerate Philip Morris USA, Inc. and Philip Morris Products S.A. A settlement or licensing deal could drive HCMC into a whole new stratosphere. The patent infringement lawsuit against Philip Morris USA, Inc. is moving forward and gaining steam. Representing HCMC is Cozen O’Connor ranked among the top 100 law firms in the country and employing more than 775 attorneys in 29 cities across two continents. The firm’s diverse client list includes global Fortune 500 companies, middle-market firms poised for growth, high-profile individuals and HCMC who must have a seriously solid case against PMI with outstanding chances. 

Healthier Choices Management Corp. (OTCMKTS: HCMC) is a U.S based Company providing consumers with healthier alternatives to everyday lifestyle choices. Operating under its wholly owned subsidiaries, Healthy Choice Markets and Healthy Choice Markets 2, the Company owns both Ada’s Natural Market, a 18,000 sq. ft. full-service grocery store serving the Fort Myers, FL, and three (3) Paradise Health & Nutrition locations in the greater Melbourne, FL area. HCMC also operates 8 vape stores across the southeast United States offering smokers an alternative to traditional cigarettes. Operating regionally, through its Vape Store brands, including The Vape Store, Vapor Max, Vulcan Vape, and The Grab Bag locations, the Company’s Vape Stores provide an endless selection of industry best vaping hardware and e-liquids, giving its consumers a way to get their nicotine without the smoke, tar, ash or carbon monoxide found in traditional cigarettes.  HCMC’s patented Q-Cup™ technology is based on a small, quartz cup called the Q-Cup™, which a customer can purchase already filled by a third party in some regions, or can partially fill themselves with either cannabis or CBD concentrate (approximately 50mg), also purchased from a third party.  The Q-Cup™ can then be inserted into the patented Q-Unit™, which heats the cup from the outside without coming in direct contact with the solid concentrate.  This Q-Cup™ and Q-Unit™ technology provides significantly more efficiency and an “on the go” solution for consumers who prefer to vape concentrates either medicinally or recreationally.  The Q-Cup™ can also be used in other devices as a convenient micro-dosing system.  

HCMC is doing over $1 million per month in sales in 2020; Last week HCMC announced its financial results for the three-month period ended March 31, 2021. Net sales from operations amounted to approximately $3.5 million, down 14% from the same period last year; a significant portion of the decline related to last March’s COVID-19 sales surge in the grocery segment. Total operating expenses were $2 million and the Company reported a small net loss. Adjusted EBITDA loss amounted to $394,000, an improvement of approximately 9% when compared to the same period last year.  

The Company is led by a powerhouse management team; the CEO Jeffrey Holman is a seasoned executive and corporate lawyer who also serves as President of Jeffrey E. Holman & Associates, P.A., a South Florida Based law firm. Mr. Hofman was also a partner at Holman, Cohen & Valencia. Christopher Santi, HCMC COO and President is sales executive who served as President of Santi Management Corporation before joining the Company. John Ollet the CFO previously served as Executive Vice President-Finance for Systemax, Inc. (NYSE:SYX) North America Technology Division for 10 years. SYX currently trades at $43 per share on the NYSE and does over a billion dollars in annual revenues.   

HCMC owns a valuable patent portfolio related to both vape technology and also manufacturing processes and procedures for an imitation nicotine product. Most recently, the company formed a wholly owned subsidiary, HCMC Intellectual Property Holdings, LLC, to hold and market its intellectual property assets. This subsidiary will own all of the patents, trademarks and other intellectual property of HCMC and will be utilized in the company’s attempt to monetize its intellectual property.     

The bulk of HCMC $1 million plus in sales per month come from the Company’s chain of Vape Stores across the southeast United States. The 10 Vape Stores have a clear foot hold in the still ever-growing e-cigarette / vaping market and are listed as among the top Vap distributors in the Country.  The Vape Store is made up of regionally branded stores, consisting of our flagship The Vape Store brand, along with Vapor Max, Vulcan Vape, and The Grab Bag store brands.  Selling top rated hardware brands from KangerTech to Aspire, and an endless assortment of premium and house e-liquids, the Vape Store is an endless selection of products to provide users a better alternative to traditional smoking. 

On December 14 HCMC formed a new wholly owned subsidiary to hold, market and expand on its intellectual property assets. This subsidiary, HCMC Intellectual Property Holdings, LLC, will own all of the patents, trademarks and other intellectual property of HCMC. HCMC currently owns a portfolio of patents related to both vape technology and also manufacturing processes and procedures for an imitation nicotine product. HCMC’s focus with this new subsidiary is to invest in innovation and encourage further development of core intellectual property. 

The big story on HCMC is its patent infringement lawsuit against Philip Morris USA, Inc. and Philip Morris Products S.A. in connection with their product known and marketed as “IQOS®.” The lawsuit was filed in the United States District Court for the Northern District of Georgia. The international law firm Cozen O’Connor has been engaged to represent HCMC in this matter. HCMC’s lawsuit includes claims that Phillip Morris is infringing HCMC’s patent rights in connection with IQOS®, an alternative tobacco product marketed and sold by Phillip Morris. Philip Morris claims that it is currently approaching 14 million users of its IQOS® product and has reportedly invested over $3 billion in their smokeless tobacco products. Philip Morris has been very open about their ongoing transition from traditional fully combustible cigarettes to their modified risk tobacco products, including IQOS®. The Philip Morris IQOS® product is currently the subject of two other patent infringement proceedings filed by RJ Reynolds Tobacco Company. One proceeding is before the International Trade Commission and seeks to stop the importation of the IQOS® product into the United States; the other is a patent infringement action currently pending in the Eastern District of Virginia. RJ Reynolds’ patents are unrelated and not affiliated with the patents asserted in the HCMC case.   

In its patent infringement lawsuit against Philip Morris, Cozen O’Connor is representing HCMC; Cozen O’Connor is ranked among the top 100 law firms in the country and employs more than 775 attorneys in 29 cities across two continents. Cozen O’Connor is a full-service firm with nationally recognized practices in litigation, business law, and government relations, and its attorneys have experience operating in all sectors of the economy. The firm’s diverse client list includes global Fortune 500 companies, middle-market firms poised for growth, high-profile individuals and ambitious upstarts like HCMC. Cozen O’Connor has been awarded as the #1 law firm of the year several times, amongst dozens of other awards and would not take on a giant such as Philip Morris unless they knew for sure they have a very strong case and excellent chances. 

Cozen O’Connor has been busy at court on behalf of HCMC; Upcoming events through beginning of May 2021:  

(1) HCMC’s Opposition to PM’s MTD (March 11, 2021): Absent an extension of time to respond, HCMC’s opposition to PM’s MTD is due on or before March 11, 2021. I would expect some form of opposition that includes arguments that (a) dismissal is not warranted because discovery has not happened yet and discovery is needed in order to determine whether combustion is a process that occurs in the accused devices, (b) dismissal is not warranted without a claim construction that construes, amongst other terms, the term “combustion”, and (c) testimony, by way of a declaration, explaining that it is not dispositive, based on the documentary evidence presented by PM’s MTD, that there is no combustion. A well written opposition brief hitting those points will likely result in denial of the MTD. I would also expect that there be a request by HCMC to correct any defects in their complaint, should the court deem there to be any defects. That request is granted liberally and would overcome the MTD for the time being.  

(2) Rule 26(f) Meet and Confer (March 15, 2021): This is held in private between lead counsel for all parties. The parties are required to confer in person in an effort to settle the case, discuss discovery, limit issues, and discuss other matters.  

(3) PM’s Reply to HCMC’s Opposition (March 25, 2021): Absent an extension of time, PM will have the opportunity to reply to HCMC’s opposition brief regarding the MTD.  

(4) Joint Preliminary Report and Discovery Plan (April 12, 2021). Absent an extension of time, the parties will file this report and plan that results from the parties’ Rule 26(f) meeting and conference and sets forth numerous details including, amongst other things, the progress of settlement discussions, a proposed schedule of the case for fact discovery, motion practice, expert discovery, and trial.  

(5) Infringement Contentions (May 12, 2021): HCMC is due to serve contentions showing infringement where HCMC will identify (these are usually exchanged between the parties and not made public or filed publicly with sensitive information redacted): (a) Each claim of each patent in suit that is allegedly infringed by each opposing party; (b) Separately for each asserted claim, each accused apparatus, method, composition or other instrumentality (“Accused Instrumentality”) of each accused party of which the claiming party is aware.

https://twitter.com/HCMC_Guru/status/1399421538890362887

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HCMC

On May 28 HCMC extended the expiration date of its Rights Offering from June 3, 2021 to June 10, 2021. HCMC has received reports that some brokers and custodians established internal “cut-off” dates that were earlier than the Expiration Date that their clients did not know about. Many of our international stockholders, as well as some U.S. stockholders, were informed by their brokers and online trading platforms that they were imposing a cutoff date as early as May 28, 2021 to have successfully submitted subscription forms and payments to participate in HCMC’s Rights Offering. 

Consequently, the HCMC Board of Directors has determined to extend the Expiration Date to allow all stockholders, both international and domestic alike, additional time through June 10, 2021 to exercise their subscription rights. The extension of the Rights Offering does not require that the holders of subscription rights who have already subscribed to purchase shares under the Rights Offering take any action. All other terms and conditions of the Rights Offering remain the same as previously announced. 

The subscription rights are non-transferrable and may only be exercised during the subscription period. The subscription period for the Rights Offering commenced on May 19, 2021. We have extended the Expiration Date for the Rights Offering to 5:00 PM Eastern Time, on Thursday, June 10, 2021. If exercising subscription rights through a broker, dealer, bank or other nominee, or online platform, rights holders should promptly contact their nominee, or online platform, and submit subscription documents and payment for the rights subscribed for in accordance with the instructions and within the time period provided by such nominee, or online platform. The broker, dealer, bank or other nominee will establish a deadline before June 10, 2021, by which instructions to exercise subscription rights, along with the required subscription payment, must be received. Based upon recent occurrences, stockholders who wish to participate in the Rights Offering are urged to contact their broker or online trading platform as soon as possible to confirm their deadline and also to determine whether the broker will be charging a transaction fee. 

Under the Rights Offering, Healthier Choices Management Corp. will distribute one non-transferable subscription right for every four shares of common stock owned and each share of Series D preferred stock (on an as-if-converted-to-common-stock basis) held on the Record Date (May 18, 2021). Each subscription right will entitle the holder to purchase one share of common stock. When filling out the subscription rights form, the holder will use the Estimated Subscription Price, which is $0.001425. This number was calculated by taking the volume weighted average price (also known as the “VWAP”) from the last 5 trading days leading up to the Record date of the Rights Offering, and multiplying that number by 75%, thereby reflecting a 25% discount to that 5 day VWAP. In an effort to ensure that the Actual Subscription Price reflects the most current average weighted price available at the close of the Rights Offering, the Actual Subscription Price will be calculated by taking the VWAP from the last 5 trading days leading up to the termination date of the Rights Offering on June 3, 2021, and multiplying that number by 75%, providing a 25% discount to that 5 day VWAP for all shares purchased. 

The Rights Offering is being made pursuant to the Company’s effective registration statement on Form S-1 (Reg. No. 333-255356) and the prospectus relating to the Rights Offering on file with the Securities and Exchange Commission (“SEC”). Before you invest, you should read the prospectus and other documents the Company has filed with the SEC for more complete information about the Company and the Rights Offering. This press release shall not constitute an offer to sell or the solicitation of an offer to buy these securities, nor shall there be any sale of these securities in any state or other jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or other jurisdiction. Any offer will be made only by means of the prospectus forming a part of the effective registration statement. 

Jeffrey Holman, CEO of HCMC, commented, “We have received significant positive feedback regarding the Rights Offering. In addition, we have received a flood of communications in the last 2 days expressing concerns about stockholders having insufficient time to submit their subscription materials due to the short time frames resulting from submission deadlines set by their brokers, trading platforms and custodians. Accordingly, we have concluded to push back the Expiration Date of the Rights Offering to June 10, 2021 to provide all stockholders additional time to participate.”

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Currently trading several billion shares per day HCMC is looking to break out of its trading range. The stock is among the most exciting stocks in small caps that continues to be the most talked about stocks in small caps with well over 400,000 shareholders of record. Currently under heavy accumulation HCMC is looking to break out of its current trading range and blaze a path along the likes of Enzolytics or Tesoro and break out into a whole new dimension; a break over $0.0065 and its blue skies ahead.  Microcapdaily first reported on HCMC in January 2021, when the stock was in the low triple zeroes, a fraction of current levels. HCMC is getting noticed as the Company pursues its patent infringement lawsuit against billion-dollar conglomerate Philip Morris USA, Inc. and Philip Morris Products S.A. A settlement or licensing deal could drive HCMC into a whole new stratosphere. The patent infringement lawsuit against Philip Morris USA, Inc. is moving forward and gaining steam. Representing HCMC is Cozen O’Connor ranked among the top 100 law firms in the country and employing more than 775 attorneys in 29 cities across two continents. The firm’s diverse client list includes global Fortune 500 companies, middle-market firms poised for growth, high-profile individuals and HCMC who must have a seriously solid case against PMI with outstanding chances. Microcapdaily first reported on HCMC on January 27 as the stock was moving up in the low triple zeroes. We will be updating on HCMC when more details emerge so make sure you are subscribed to Microcapdaily so you know what’s going on with HCMC.

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Disclosure: we hold no position in HCMC either long or short and we have not been compensated for this article.

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